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ACCRUAL ACCOUNTING
When specific on-balance-sheet exposures are hedged using swaps, they are often accounted for on an accrual basis. Under the accrual method, the net payment or receipt in each period is accrued and recorded as an adjustment to income or expense.

AFTER HOURS TRADING
Trading outside the regular trading hours of the futures markets.

AMERICAN-STYLE OPTION
An American-style option may be exercised at any point during its lifetime, up to and including the expiration date.

ANCILLARY SERVICES
A system that helps control the flow of electricity and provides energy reserves to maintain reliability by creating a market for buying and selling ancillary services.  This market is created by an independent system operator and is designed to ensure reliability of power supply to end-users. Ancillary services can include regulation, spinning reserve, non-spinning reserve and replacement reserve.

ANNUAL CAP
The annual cap is a term in a gas buyer’s purchase agreement where there is often a limit, higher than the annual contract quantity (ACQ), above which the seller is not liable to sell. This is usually stated as a percentage of the ACQ. Also known as maximum annual quantity (MAQ).

ANNUAL CONTRACT QUANTITY (ACQ)
In a buyer’s nomination purchase contract for one year, this is the amount of gas specified. Some rights, such as make-up gas and take-or-pay, may need to be taken into account depending on the amount of gas taken versus the amount contracted for.

ARBITRAGE
The difference in price of a specified commodity either in the same location or in different geographical locations.

ARBITRAGE-FREE MODEL
Any theoretical model that does not allow arbitrage on the underlying variable.

ASIAN OPTION
Asian (or average) options have payoffs that depend on an average of prices for the underlying commodity over a period of time, rather than the price of the commodity on a single date. The averaging period may correspond to the entire life of the option, or may be shorter.

AT-THE-MONEY
An option whose strike is the same as the prevailing market price of the underlying rate or price whether it for spot or a forward contract.

AVAILABLE TRANSFER CAPABILITY (ATC)
A measure of the transfer capability remaining in the physical transmission network for further commercial activity over and above already committed uses. ATC is defined as the Total Transfer Capability (TTC), minus the Transmission Reliability Margin (TRM), minus the sum of existing transmission commitments (which includes retail customer service) and the Capacity Benefit Margin (CBM).

AVERAGE DAILY TEMPERATURE
The average of the actual daily high temperature and the actual daily low temperature (Tmax + Tmin / 2).

AVERAGE OPTION
See Asian Option.