- ACS - Nationally Accredited Certification Scheme
-
Nationally Accredited Certification Scheme for Gas Businesses and Individual
Gas Fitting Operatives. Any person or business wishing to do gas work has to
prove their competence, after which they have also to register with the Gas
Safe RegisterTM which from 1 April 2009, has replaced the CORGI gas registration
scheme in Great Britain.
- Additionality
-
If an action leads to a genuine reduction in emissions, over and
above business as usual, the reductions are 'additional'.
If an emissions reduction project would have happened anyway as part
of 'business as usual', it is not additional. For example,
if a consumer buys renewable energy which was going to be produced
anyway, or invests in a carbon-offset project which was already going
to happen, then the consumer is not helping to reduce emissions.
Debates over the additionality of projects are important because if
reductions are not additional then people might believe that they are
benefiting the environment through their actions when actually they
have no impact.
We offer a tariff, Zero Carbon, that operates under the principle
of additionality.
- Annual Incentive Scheme (AIS)
-
The AIS provides a focus on the delivery of the financial targets set out in the operating plan. It rewards the achievement of strategic priorities for the year that position the Group well for strong future performance and also the delivery of personal objectives.
- Assets
-
Everything a firm owns.
- Auditor
-
An independent firm or person who checks the accounts against agreed standards.
- Capital
-
The money invested into a firm by shareholders.
- Carbon capture and storage (CCS)
-
-
Carbon capture
This is the removal of CO2 from fossil fuels either before
or after combustion.
-
Carbon storage
Sometimes called carbon sequestration, this is the long-term storage
of carbon or CO2. In nature, large forests and oceans act as
carbon 'sinks' and help to remove carbon dioxide from the
atmosphere. Artificial sequestration, such as injecting CO2
into geological formations (often under the seabed), requires technology
such as carbon capture and storage.
Estimates suggest that carbon capture and storage
could reduce carbon emissions by 80-90% from a power station. Carbon
capture and storage can be referred to as CCS.
Given the large investment we are making in other low carbon technologies
and the current uncertainties surrounding CCS we decided to end our involvement
in the Eston Grange CCS clean coal power station project on Teesside. While we
are not looking to develop any further projects, we believe in time CCS
technology will be commercially viable and we may be involved in this technology
in the future. See also clean coal technologies.
- Carbon credit
-
A credit or permit from a greenhouse gas emissions reduction scheme, such as emissions
trading, Joint implementation (JI) or Clean Development Mechanism (CDM).
See carbon trading.
- Carbon Emissions Reduction Target (CERT)
-
This is an obligation on the major energy suppliers to improve domestic energy efficiency, which replaced the Energy Efficiency Commitment (EEC). Suppliers have to deliver twice the energy savings under CERT as they did under EEC. The main objective of CERT is carbon reduction to tackle climate change but there is also a focus on delivering energy efficiency measures to low-income customers. Microgeneration and measures to encourage behaviour change are included within the scope of CERT, which runs from 2008-2011.
-
A carbon footprint is a measure of greenhouse gas emissions, usually expressed in
carbon dioxide units. You can calculate the carbon footprint of a product, an
individual or an organisation, for a single activity or over a period of time.
- Carbon intensity
-
Carbon intensity measures the volume of carbon dioxide emitted per unit of electricity
generated. This allows you to compare the efficiency of two differently sized companies
doing similar things, which a carbon footprint comparison would not.
We publish the carbon intensity of our UK power generation assets. This is calculated
from the verified emissions data (under the EU Emissions Trading Scheme) and figures are
based on the average annual emissions from all wholly owned UK power generation assets and
all other power generation assets from which Centrica is entitled to output under site-specific
contracts in the UK. In 2008 the carbon intensity of the power we generate was significantly
lower than the other five major UK suppliers.
- Carbon offsetting
-
Carbon offsetting involves calculating a carbon footprint and then investing in a
project that reduces greenhouse gases emissions into the atmosphere by an equivalent amount.
To be effective, an offset must be additional (See Additionality).
- Carbon Reduction Commitment (formerly Energy Efficiency Commitment)
-
The Carbon Reduction Commitment (CRC) is a UK government emissions trading
scheme for large organisations which are not eligible for EU Emissions Trading.
This includes banks, large offices, universities, large hospitals, large local
authorities and central government departments. The scheme is mandatory and
expected to cover 4,000-5,000 organisations. The CRC is expected to deliver
emissions reductions totalling 0.5m tonnes of carbon (MtC) per year by 2015,
rising to 1.2MtC per year (an 8% reduction) by 2020.
- Carbon trading
-
Carbon trading controls carbon emissions by putting a limit on total emissions
from certain activities or sectors. This puts a price on carbon and creates a market
whereby participants can trade their carbon allowances. Allowances are initially
allocated, perhaps through a free distribution or through an auction. The carbon
price provides an economic incentive to reduce emissions and allows for any
reductions to take place at the lowest cost across the scheme. The limit on
total emissions is adjusted periodically (See Carbon Credit).
- Cash book
-
A record of a firm's cash and bank accounts.
- Clean coal technologies (CCTs)
-
Clean coal technologies (CCTs) make using coal as a power source more environmentally
satisfactory. There are significantly higher greenhouse gas emissions for each unit
of electricity produced by coal-fired generation than there are for alternative methods
of generation. CCTs involve reducing the carbon emissions per unit of energy generated
from coal.
- Clean Development Mechanism
-
The Clean Development Mechanism (CDM) is defined within the Kyoto Protocol.
The CDM rewards with Certified Emission Reductions (CER) investments in projects
that reduce emissions in developing countries. These CERs can then be used by
industrialised nations to meet their emissions targets under the Kyoto Protocol.
The CDM is governed by the Executive Board (CDM EB), which makes sure that
accredited projects deliver real and enduring emissions reductions. Part of
the requirements under the European Union Emissions Trading Scheme (EU ETS)
an be met by using CERs.
- Climate Change Agreement
-
This is an agreement between the Government and a business user in an energy-intensive industry,
where the user commits to reducing energy usage or carbon emissions in return for paying a lower
Climate Change Levy.
- Climate Change Levy
-
The Climate Change Levy (CCL) was introduced by the Government in 2001 as part of its commitment under
the Kyoto Protocol to tax non-domestic energy use. The CCL aims to promote energy efficiency and reduce
greenhouse gas emissions. Businesses that have Climate Change Agreements with the Government get an 80%
reduction on the levy. Other exemptions from the CCL include renewable electricity sold under a renewable
source contract and energy sold to charities for certain activities. Gas and electricity suppliers are
responsible for charging CCL to their business customers and then paying the Government.
- Combined cycle gas turbine (CCGT)
-
A combined cycle gas turbine employs more than one thermodynamic cycle.
A gas turbine generator generates electricity and the waste heat is used to
make steam to generate additional electricity via a steam turbine; this last
step enhances the efficiency of electricity generation. All our gas-fired power
stations are CCGT plants.
- Combined heat and power (CHP)
-
Combined heat and power (CHP) is a technology that generates electricity and heat at the same time.
This is different to conventional power stations, where the heat produced is wasted.
- Commodity prices
-
The prices of raw materials and primary products for example wholesale gas.
- CORGI
-
See Gas Safe RegisterTM
- Cost of sales
-
Total cost of buying goods for resale.
- Counterparty
-
One of the opposing parties involved in a transaction.
- Credit rating
-
A rating from an independent institution that assess creditworthiness or the credit risk, and provides credit ratings that are publicly available and used by investors as well as analysts as a guide for investment decisions in regard to relative credit standing or strength. (examples of credit rating agencies, Standard & Poor's and Moody's Investor Service).
- Currency fluctuations
-
The ongoing changes between the relative value of the currency issued by one country when compared to a different currency. Currency fluctuations may appear as both upward and downward movements. Our profitability could be adversely affected because of currency fluctuations against pounds sterling, which is the reporting currency of the Group. Our main exposure is in US and Canadian dollars and euros.
- Current ratio
-
It is the ratio of a company's current assets to current liabilities. It
is a general indication of the solvency of a company, the adequacy of its working
capital, and its ability to meet day-to-day calls upon it.
- Deferred and Matching Share Scheme (DMSS)
-
Assists with employee retention and incentivises the creation of long-term value for shareholders and delivery of sustained high performance.
- Depreciation
-
Loss of value of assets through wear and tear.
- Derivative financial instruments
-
A mechanism, such as an option, futures contract, or swap, of which the criteria and value are determined by those of an underlying asset such as a stock, currency, or commodity. Derivatives are used extensively in the hedging of financial and treasury risks.
- Distributed generation
-
This refers to electricity generation, usually on a relatively small scale, that is connected to the
distribution networks rather than directly to the national transmission systems. At a community level
this could include combined heat and power (CHP generation). At a domestic level, this could include
solar panels.
- Diversify
-
Moving into another area of business.
- Dividend cover
-
Dividend cover takes into account all aspects of trading, tax and finance, from the ordinary shareholders' point of view. Dividend cover can also be calculated using cash flow in place of profit.
dividend cover =
Profit attributable to shareholders
divided by: Dividends
- Dividend yield
-
This measure shows shareholders how much income they receive in relation to the current share price. Analysts will sometimes predict dividend growth and calculate a prospective dividend yield.
dividend yield =
Gross dividend per share
divided by: Share price
- Dividends
-
Share of profits paid to shareholders twice yearly as an interim
dividend and a final dividend.
- Earnings per share (EPS)
-
This is an important ratio, signalling the growth in earnings attributable to the ordinary shareholders for each share they hold. It must be disclosed at the bottom of the profit and loss account for listed companies such as Centrica.
EPS =
Profit after tax
divided by: Weighted average ordinary shares in issue
- Economies of scale
-
These result in the company benefiting from a reduction in the average cost per unit.
- Emissions reduction units (ERUs)
-
ERUs are credits awarded to emission reducing projects that take place under the Joint Implementation
(JI) Scheme of the Kyoto Protocol. JI projects operate in a similar manner to those under the Clean
Development Mechanism but take place in developed countries.
- Emissions trading (EU ETS)
-
The EU Emissions Trading Scheme (ETS) is a form of carbon trading using carbon allowances.
The scheme covers approximately 11,000 power generation and industrial manufacturing plants
across the EU, limiting the total amount of carbon dioxide emissions allowed. Each site must
submit an allowance for every tonne of carbon dioxide emitted. We are a major trader in the
scheme, which began in January 2005.
We are a strong supporter of the ETS and believe it remains the cornerstone mechanism for
reducing emissions across the EU.
- Energy Efficiency Commitment (EEC)
-
The Government introduced the Energy Efficiency Commitment to oblige domestic energy suppliers
with more than 20,000 customers to increase energy efficiency in British homes. Suppliers meet
their targets by installing measures such as loft insulation. At least 50% of the benefits focus
on disadvantaged households. The EEC programme ended in 2008, and was replaced by CERT.
(See Carbon Emissions Reduction Target).
- Energy Performance Certificate (EPCs)
-
Energy Performance Certificates (EPCs) give information on how to make your
home more energy efficient and reduce carbon dioxide emissions. The certificate
provides an energy efficiency rating for the property on a scale of A to G,
with A being the most efficient with lower running costs and G being the least
efficient with higher running costs. EPCs also contain a recommendation
report with suggestions to reduce energy use and carbon dioxide emissions.
From 4th January 2009 all homes in the UK that are built, sold or rented
require an EPC.
- Energy Services Directive (ESD)
-
The Energy Services Directive aims to promote energy efficiency in the UK by developing a market for
energy services and delivering energy efficiency programmes and measures to energy end users. The
Directive's full name is the EC Directive on Energy End Use Efficiency and Energy Services.
The ESD focuses on market actors and institutions rather than specific technologies or measures.
It applies to providers of energy efficiency measures, energy distributors, distribution system
operators and retail energy sales companies; and all energy users except those involved with the
EU carbon emissions trading scheme.
The main requirements of the Directive are:
- national indicative energy savings target of 9% by 2017
- public sector to fulfil an exemplary role in meeting the target
- to place obligations on energy suppliers and distributors to
promote energy efficiency
- requirements on metering and billing to allow consumers to
make better informed decisions about their energy use
- Equity assets
-
Shareholdings held in stock market listed companies.
- Expenditure
-
Costs flowing out of the firm.
- Gas Safe RegisterTM
-
Gas Safe RegisterTM has replaced CORGI in Great Britain
and the Isle of Man. See also ACS
By law, anyone carrying out work on gas installations and appliances must
be on the Gas Safe RegisterTM. All British Gas engineers are on
the Gas Safe RegisterTM and all registered engineers carry an ID
card.
- Gearing
-
The ratio of a company's share capital to its debt.
- Green tariffs
-
We have signed onto Ofgem's Green Supply Guidelines which define a Green Tariff
as one that must deliver an additional environmental benefit. This will raise the
standard of industry products, ensure genuine benefits for the environment and
provide transparent and consistent information to reduce consumer confusion around
tariff labelling.
- Gross profit margin
-
Total profit made in a year as a percentage of sales. This ratio is deemed to be an important indicator of profitability, and comparisons can be made against companies selling similar items.
Since gross profit is defined as 'turnover minus cost of sales' this ratio will move if the relationship between these two variables changes. This could be due to changes in selling price, unit costs or product mix (where gross margins vary between different markets). The published information can only provide a superficial guide. Analysts will seek to further analyse this ratio into appropriate market segments.
Gross margin =
Gross profit
divided by: Turnover
- Income
-
Money from sales, or revenue flowing into the firm.
- Incorporated
-
A firm with a separate legal existence.
- Integrated Gasification Combined Cycle (IGCC)
-
IGCC plants initially turn the feedstock into gas, which is then passed through a conventional
combined cycle set up. IGCCs can be designed to use a range of raw fuel inputs, including coal,
oil products and wastes.
- Interest cover
-
The ratio below is used to demonstrate how easily the company can service any debt it may have by showing how many times its profit exceeds the interest charge. In particular, when used along-side a review of how much the company has borrowed from banks, this ratio can highlight the company's exposure to fluctuations in interest rates. It is also possible that an 'interest cover' ratio may be calculated for cash flow, to see whether a company is generating enough cash to pay its interest costs.
Interest cover =
Profit before interest for period
divided by: Interest charge for the period
- Interest rates
-
The percentage charged by a bank or other financial organisation for borrowing money or earned by placing money on deposit.
- Intergovernmental Panel on Climate Change (IPCC)
-
Founded in 1988, the IPCC is a scientific intergovernmental body founded by the World Meteorological
Organisation (WMO) and the United Nations Environment Programme (UNEP). It aims to provide an objective
source of information about climate change to policy-makers by assessing the latest scientific, technical
and socio-economic literature worldwide on the human causes of climate change. It is open to all member
countries of WMO and UNEP and scientists from around the globe contribute to its work as authors, contributors
and reviewers.
- ISO 14001
-
ISO 14001 is an internationally accepted standard for establishing an effective Environmental Management
System (EMS). It aims to balance the need for profitability with best practice in terms of protecting the
environment.
- Leasing
-
Renting equipment through financing.
- Levy Exemption Certificate (LEC)
-
A Levy Exemption Certificate (LEC) is issued by Ofgem to accredited power stations for each megawatt hour
of renewable source electricity that they generate. All business customers need to pay a climate change
levy for electricity they use. However, they can get an exemption if the electricity comes from a renewable
source. Business customers who wish to purchase electricity generated from renewable sources can enter into
a renewable source contract with their electricity supplier. LECs act as proof that an equivalent amount of
electricity has been generated according to the terms of the contract. That's why electricity sold
with LECs comes at a premium.
If an electricity supplier cannot generate enough renewable source electricity, it can purchase LECs
from other suppliers to meet its obligations. Suppliers must periodically notify Ofgem of the LECs they
have allocated to the renewable source electricity supplied to business customers. LECs are used to show
exemption from the Climate Change Levy.
- Liabilities
-
Everything a firm owes.
- Limited liability
-
Owners are not personally liable for debts.
- Liquefied Natural Gas (LNG)
-
When natural gas is cooled to a temperature of approximately -160 degrees Celsius at atmospheric pressure it condenses
to a liquid called liquefied natural gas (LNG). This liquid takes up 600 times less the volume of the gas,
making it possible to transport in container ships. Natural gas is composed primarily of methane (typically,
at least 90%).
- Liquefied Petroleum Gas (LPG)
-
LPG is a gas, usually propane or butane, that is derived from oil and put under pressure so that it is in
liquid form. It is often used to power portable cooking stoves or heaters and to fuel some types of vehicle,
eg some specially adapted road vehicles and forklift trucks.
- Liquid assets ratio
-
The ability to meet short-term debts without selling stock.
Liquidity ratio =
Current assets
divided by: Current liabilities
- Liquidity
-
A firm's ability to meet short-term debts.
- Long Term Incentive Scheme (LTIS)
-
Rewards long-term value creation via longer term earnings, share price and dividend growth and the delivery of total returns to shareholders.
- Low carbon buildings programme (LCBP)
-
Launched in 2006, the LCBP is a UK Government programme that provides funding towards the
cost of installing microgeneration and other low carbon technologies at certain types of
properties. LCBP Phase 2 provides grants for local housing authorities, housing associations,
schools and other public sector buildings and charitable bodies. (LCBP Phase 1 was open
to domestic households and commercial businesses as well but they are not eligible for
funding under Phase 2.)
Grants are only available for certified products, which must be installed by accredited suppliers.
A British Gas-led consortium is one of only seven accredited Framework Suppliers for LCBP Phase 2.
We are the only framework supplier that provides all five microgeneration technologies -
solar pv, solar thermal, ground source heat pumps, biomass and wind turbines - which are
eligible for grant funding of up to 50%.
- Low-carbon economy
-
Addresses the global challenges of diminishing fossil fuel reserves, climate change, environmental management and finite natural resources serving an expanding world population. To achieve a low-carbon economy there needs to be a transition to the following:
- Energy should be produced using low-carbon energy sources and methods - renewable and alternative energy sources, fuels and sequestration
- All resources (in particular energy) should be used efficiently - more efficient energy conservation devices, combined heat and power
- Wherever practical local needs should be served by local production - food materials, energy
- All waste should be minimised - reduce, reuse, recycle
- There is high awareness and compliance with environmental and social responsibility initiatives - industry, commerce and individuals.
- Renewable Energy Guarantees of Origin (REGOs)
-
REGOs are electronic certificates attached to electricity produced from renewable sources across the EU. They were introduced in 2003 in response to the Renewables Directive, which aims to increase the amount of electricity generated in European Member States from renewable energy sources. The Directive requires Member States to issue a Guarantee of Origin, on request, for electricity produced from renewable energy sources.
In 2005 a new standard licence condition was introduced into electricity supply licences, obliging electricity suppliers to give their customers details of the mix of fuels used to produce the electricity supplied to them. Suppliers must show this on bills. REGOs (in some countries they are called Guarantees of Origin - GoOs) are issued in the UK as evidence that the electricity is generated from a 'renewable source', with one REGO representing one kilowatt/hour of electricity.
- Renewables Obligation (RO)
-
The Renewables Obligation (RO) is the main government market mechanism to support renewable energy. The Obligation requires licensed electricity suppliers to source a specific and annually increasing percentage of the electricity they supply from renewable sources. It was introduced in 2002 and provides a substantial market incentive for all eligible forms of renewable energy.
- Renewables Obligation Certificates (ROCs)
-
Renewables Obligation Certificates (ROCs) are awarded to eligible renewable generators for each MWh of electricity generated. ROCs confirm that the power has come from renewable sources - for example, a wind farm. These certificates can then be sold to suppliers, in order to fulfil their Renewables Obligation (RO). Suppliers can either present enough certificates to cover the required percentage of their output, or they can pay a 'buyout' price for any shortfall. All proceeds from buyout payments are recycled to suppliers in proportion to the number of ROCs they present. The buyout price is set each year by Ofgem, and in 2008-2009 stands at £35.76 (Source: Ofgem, Feb 2009, 'The Renewables Obligation Buy-out Price and Mutualisation 2009-2010')'. ROCs have increased the profitability of renewable energy generation as the certificates have an additional value over and above the price of electricity itself.
- Renewable Source Contract
-
This is a contract where an electricity supplier agrees to supply electricity generated from renewable sources to a business customer. The contract contains a renewable source declaration. Renewable source electricity is exempt from the Climate Change Levy provided certain conditions are met.
- Renewable Source Declaration
-
This is a declaration made by suppliers that, in each averaging period, the amount of electricity supplied is not greater than the amount of renewable source electricity acquired or generated. It is one of the conditions for exemption from the climate change levy that a renewable source declaration is contained in each renewable source contract.
- Renewable Source Electricity
-
This is electricity generated from sources of energy other than fossil fuel and nuclear. Wind energy, small-scale hydro, tidal, wave and photovoltaics are all included. Supply of renewable source electricity under a renewable source contract is exempt from the Climate Change Levy (provided certain conditions are met).
- Reserves
-
Unused cash that a firm has available.
- Retained profits
-
Withheld dividend payments to shareholders.
- Return on capital employed (ROCE)
-
Percentage earnings on capital invested in the business by the shareholders.
This measure is used to estimate the return the company has achieved on the assets
it uses. The calculation uses average capital employed over a period (usually the
financial year), attributable to funds provided by the shareholders. Average
capital employed excludes interest bearing borrowings and cash deposits.
ROCE =
Profit before interest and taxes
divided by: Average capital employed
Roger Carr
Sam Laidlaw
Helen Alexander CBE
Phil Bentley
Mary Francis CBE
Mark Hanafin
Nick Luff
Andrew Mackenzie
Paul Rayner
Chris Weston
Grant Dawson
Catherine May
Anne Minto OBE