N

NAKED OPTION
An option which is purchased or sold without an offsetting position in the underlying.

NAKED SWAP
A swap position without a corresponding asset or liability.

NATURAL GAS
Gas consisting mainly of methane and ethane which occurs naturally in the earth’s crust. It is often found in association with crude oil, when it is called associated gas.

NATURAL GAS LIQUIDS
Liquids produced along with natural gas. They consist mainly of propane, butane, natural gasoline and condensate.

NATURAL HEDGE
A natural hedge is the reduction in risk that can arise from an institution’s normal operating procedures. A company which has significant sales in one country holds a natural hedge to its currency risk if it also generates expenses in that currency.

NBP
See National Balancing Point

NETBACK
A provision in a physical power contract that allows the bearer to net a debt position with one counterparty by offsetting it with a credit position with another counterparty.

NET POSITION
The difference between the entity’s open long contracts and open short positions in any one commodity.

NET PRESENT VALUE (NPV)
A technique for assessing the worth of future payments by looking at the present value of those future cashflows discounted at today’s cost of capital.

NOMINATION
The notification to put into effect a contract or part of a contract, eg, a gas flow nomination from a shipper to advise the pipeline owner of the amount of gas it wishes to transport or hold in storage on a given day.

NON FIRM SERVICE
Electric transmission service offered to customers that anticipates possible interruption of deliveries.

NOTIONAL
The underlying principal value of either an exchange-traded or over-the-counter transaction, referred to as the notional value.

NOTIONAL PATH
In Gas, usually the shortest route along which gas would travel from entry point to exit point.