Accident Frequency Rate (AFR)

The number of Lost Time Accidents (LTAs) divided by the number of hours worked, multiplied by 100,000.

Annual General Meeting (AGM)

Annual General Meeting of shareholders of the Company.

Asset-backed trading

The selling of the electricity generated and fuel used by our power stations.

Availability

A measure giving the proportion of electrical energy that was actually available to be generated during the period, after taking account of both planned and unplanned outages, expressed as a percentage of the maximum potential electrical energy generation.

Bond

Financial instrument that obligates the issuing company (the borrower) to make specified payments to the holder (the lender).

Brownfield

An area of land that has previously been developed, such as the site of a demolished building.

Call option

An option to buy a security at a pre-determined price.

Capacity (installed)

Generator capacity (measured in megawatts), usually indicated on a nameplate physically attached to the generator.

Combined cycle plant

Combined cycle gas turbine (CCGT) - the combination of a gas turbine (GT) and steam turbine (ST) in a configuration that enables electricity to be generated directly from a generator driven by the GT and, by using exhaust gases from the GT to produce steam, a ST coupled to the same generator or another generator.

CEO

Chief Executive Officer.

CFO

Chief Financial Officer.

CO₂

Carbon dioxide.

Cogeneration

The simultaneous generation of electricity and heat in the form of steam, typically where the need for both arises for industrial or commercial purposes and where the steam is generated by utilising the waste heat from electricity generation.

Combined Code

The Code which sets out the expected corporate governance standards for companies listed on the London Stock Exchange.

Corridor approach

Under this approach to recognising surpluses and deficits in defined benefit pension plans, actuarial gains and losses are not recognised immediately. Only when the cumulative gains or losses fall outside the corridor is a specified portion recognised in the income statement from the following year onwards. The corridor is 10% of the present value of the pension rights accrued or of the fund assets at market value, if greater.

CR

Corporate responsibility.

CSR

Corporate social responsibility.

Dark spread

The difference between the cost of coal to generate electricity and the price at which electricity is sold.

Debt capitalisation

Net debt divided by the sum of the net debt and total equity.

Demerger

The process whereby National Power split its UK and international operations (International Power) into separate businesses.

Desalination plant

Plant which produces drinking water from sea water.

Due diligence

A process undertaken before the acquisition of a business to ensure all significant risks, rewards and issues are identified and considered before any offer is made to the vendor or an acquisition takes place.

Emission allowances

Under various environmental schemes, emission allowances are required to cover the amount of relevant emissions made by a power station. Cap and trade schemes are a common type of scheme. Under a cap and trade scheme, operators are required to purchase sufficient emission allowances to cover their actual emissions, and the operator may or may not be granted an initial volume of allowances. Examples of such schemes include the EU Emissions Trading Scheme (EUETS) which covers emissions of CO₂, based on a cap and trade system. Other examples include the Clean Air Act in the US which covers emissions of NOx and SOx.

EPC contract

Engineering, procurement and construction contract, used principally for the building of power stations by a turnkey provider.

EPS

Earnings per share. It is calculated by dividing the profit after interest, tax and minority interests by the weighted average number of Ordinary Shares in issue.

ERCOT

Electric Reliability Council of Texas - responsible for managing the Texas generating and transmission systems.

ETS

Emissions trading scheme - programme for the trading of emissions permits relating to CO₂ output.

EUETS

European Union Emissions Trading Scheme.

FGD

Flue gas desulphurisation - a process which removes sulphur from the flue gas emissions of a coal plant.

Forced outage rate

A measure giving the proportion of electrical energy that was actually unavailable for generation during the period, after taking account of planned and unplanned outages, expressed as a percentage of the maximum potential electrical energy generation.

Fossil fuel

It is generally accepted that fossil fuels are formed from the fossilised remains of dead plants and animals by exposure to heat and pressure in the Earth’s crust over hundreds of millions of years. They are found within the top layer of the earth’s crust and range from very volatile materials with low carbon to hydrogen ratios like methane, to those with high carbon to hydrogen ratios like liquid petroleum. They also include non-volatile materials composed of almost pure carbon, like anthracite coal. Fossil fuels are non-renewable resources because they take millions of years to form.

Functional currency

The currency of the primary economic environment in which the entity operates.

Gearing

Net debt as a percentage of total equity.

Generator nameplate capacity

The maximum output of a generator, under specific conditions designated by the manufacturer.

Greenfield land

A piece of undeveloped land, either currently used for agriculture or just left to nature.

Grid (the)

The electricity transmission network.

GSA

Gas supply agreement.

GT

Gas turbine.

GW

Gigawatt, one thousand million watts.

Gigawatt hour (GWh)

A watt hour is the amount of energy used by a one-watt load, such as a small light bulb, drawing power for one hour. The kilowatt-hour (kWh) is 1,000 times larger than a watt-hour and is a useful size for measuring the energy use of households and small businesses and also for the production of energy by small power plants. A typical household uses several hundred kilowatt-hours per month. The gigawatt-hour (GWh) is 1,000,000 times larger than the kilowatt-hour and is used for measuring the energy output of large power plants.

Hedge contracts

A contract that gives protection against risks of future price movements.

Heat recovery steam generator (HRSG)

Used in Combined Cycle Plants.

HS&E

Health, safety and environment.

HUBCO

The Hub Power Company.

IASs

International Accounting Standards.

IASB

International Accounting Standards Board.

ICOM

Investment Committee.

IFRSs

International Financial Reporting Standards.

IPO

International Power Opatovice A.S. (a subsidiary in the Czech Republic which provides power and district heating to the city of Prague).

IPP

Independent power producer.

ISO 14001

The international standard of environment management systems.

Joule

A measure of energy (work done), the ability to generate one watt for one second.

KAPCO

The Kot Addu Power Company.

KPI

Key performance indicator.

kW

Kilowatt - 1,000 watts.

Kilowatt hour (kWh)

A watt hour is the amount of energy used by a one-watt load, such as a small light bulb, drawing power for one hour. The kilowatt-hour (kWh) is 1,000 times larger than a watt-hour and is a useful size for measuring the energy use of households and small businesses and also for the production of energy by small power plants. A typical household uses several hundred kilowatt-hours per month.

Kyoto Protocol

A protocol to the International Framework Convention on Climate Change with the objective of reducing greenhouse gases in an effort to prevent anthropogenic climate change.

LCPD

Large Combustion Plant Directive.

LDs

Liquidated damages, being a reasonable pre-estimate of loss specified in a contract, payable if one party breaches one part of a contract.

LNG

Liquefied natural gas.

Load factor

The proportion of electricity actually sold, compared with the maximum possible sales of electricity at maximum net capacity.

Lost Time Accident (LTA)

24-hour absence from work.

Letter of Credit (LoC)

A credit facility provided by a bank.

M&A

Mergers and acquisitions.

Mark to market

The act of attributing a fair or market value to a financial instrument rather than its historical cost. Marking to market is required under accounting rules for certain derivatives and financial instruments.

Merchant market

A merchant market is a deregulated market. It is a market in which electricity is bought and sold competitively by multiple market participants.

Merchant plant

Our merchant plants operate in deregulated markets selling power into the traded market without long-term Power Purchase Agreements (PPAs).

MIGD

Millions of imperial gallons per day.

MISO

Midwest Independent System Operator.

Mitsui

Mitsui & Co. of Japan.

Mothball

To temporarily suspend operation at a project in such a way that it can be returned to service in the future.

MoU

Memorandum of understanding.

MW

Megawatt; one MW equals 1,000 kilowatts or one million watts.

Megawatt hour (MWh)

A watt hour is the amount of energy used by a one-watt load, such as a small light bulb, drawing power for one hour. The kilowatt-hour (kWh) is 1,000 times larger than a watt-hour and is a useful size for measuring the energy use of households and small businesses and also for the production of energy by small power plants. A typical household uses several hundred kilowatt-hours per month. The megawatt-hour (MWh) is 1,000 times larger than the kilowatt-hour and is used for measuring the energy output of large power plants.

MWth

One megawatt of thermal power, which is used to measure heat.

National Allocation Plan

The Plan issued under the EU Emissions Trading Scheme that sets out how greenhouse gas emission allowances will be allocated to affected industry sectors and the carbon-producing assets within the relevant sector.

NEPOOL

New England power pool.

Non-recourse debt

Debt secured on an asset, and where the lender has no recourse to the shareholder.

NOx

Oxides of nitrogen.

NPV

Net present value, being the value of an asset calculated by reference to its future cash flows.

O&E

Operations and Engineering.

O&M

Operations and maintenance, usually used in the context of operating and maintaining a power station.

OCGT

Open cycle gas turbine - turbines, typically fuelled by gas or diesel oil, are used to drive the generators to produce electricity, with no use of the waste heat for subsequent power generation.

Offtake agreement

Power purchase agreement between a company owning a power station and its customer (the offtaker) whereby the customer takes the electricity generated by a power station.

OHSAS 18001

Occupational Health and Safety Assessment Series 18001. A management system specification, developed by British Standards Institute which is now an accepted international standard, for health and safety which is compatible with ISO 9001:1994 (Quality) and ISO 14001:1996 (Environmental) management.

OPERA

Operating plant engineering risk assessment, an internally developed tool for assessing engineering risk at assets.

OSA

Oil supply agreement.

Outage

When a generating unit is removed from service to perform maintenance work. This can either be planned or unplanned.

Peak load

The maximum demand for electricity during a specified high demand period. This may require use of plant (for example pumped storage) that is kept in reserve for peak periods.

Peaking plant

Plant that runs only in times of short supply (normally during peak demand), when prices are high.

PJM

Pennsylvania, New Jersey and Maryland power pool.

Power Purchase Agreement (PPA)

See also Offtake agreement. A PPA is generally a long-term contract between an electricity generator and a purchaser of energy or capacity (power or ancillary services).

Proprietary trading

The trading of commodities for the purposes of making a profit, when the commodity, such as electricity, is not generated by our own power stations or purchased for use by our own power stations, also known as non-asset backed trading.

Pumped storage

A method of energy generation that involves moving water between reservoirs at different elevations. When electricity prices are low, typically overnight, electricity from the grid system is used to pump water into a raised reservoir and then at times of peak demand, when electricity prices are higher, the water is released back into the lower reservoir through a turbine.

Put option

An option to sell a security back to the issuer at a pre-determined price.

PWPA

Power and water purchase agreements.

Recourse debt

Debt where the lender has recourse to parties other than the borrower, usually a parent company or shareholder.

Reserve margin

The amount of available plant reserve capacity above the system’s peak electricity requirements.

RGGI

Regional Greenhouse Gas Initiative, a US regulation towards carbon emission reduction in ten north eastern states.

RPI

Retail Price Index.

SCR

Selective catalytic reduction - equipment to reduce the content of oxides of nitrogen in flue gases.

SO₂

Sulphur dioxide.

SOx

Oxides of sulphur.

Spark spread

The difference between the gas cost to generate electricity and the price at which electricity is sold.

Spot price

Market price at a particular point in time.

Spread

The difference between the fuel costs to generate electricity and the price at which electricity is sold.

Technical availability

A measure giving the proportion of electrical energy that was actually available to be generated during the period, after taking account of both planned and unplanned outages, expressed as a percentage of the maximum potential electrical energy generation.

Tolling agreement

A form of long-term electricity contract where the buyer of electricity also supplies the fuel and the generator provides plant and operational services.

TSR

Total shareholder return.

Turnkey contract

A contract where one party takes full responsibility for the construction and commissioning of a plant, delivering the plant in full working order to the owner.

Turnbull Guidance

The Turnbull Guidance expands upon the Combined Code requirements for the Directors’ review of the effectiveness of the Group’s system of internal controls.

UAE

United Arab Emirates.

US Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 was enacted in reaction to the highly publicised bankruptcies of Enron and WorldCom and is concerned with strictly enforcing corporate governance and financial disclosure.

Watt

Unit of power, which is the rate at which energy is delivered (i.e. work is done at a rate of one watt when one ampere flows through a potential difference of one volt).