Compensating cable is a type of thermocouple cable that uses a different composition to extension cable (true thermocouple cable) that is only used to extend a thermocouple signal from the thermocouple sensor back to instrumentation.
Compensating cable is made from cheaper alloys than extension cable. Where extension cables contain thermocouple elements, and can be used to manufacture thermocouples, compensating cables contain alloys that only have a similar temperature vs EMF relationship to its extension cable counterpart over a limited range. Although they can only be used in ambient temperatures, and are less accurate that extension cables, they are much cheaper, which means it can be economical to run compensating cable to your instrumentation rather than extension cable.
Common compensating cables include Type Vx/KCB (for Type K thermocouples) and Type U (for Type R and S thermocouples).
Compensating cables are often insulated with PVC as their operating temperatures are within PVCs physical limits.
See also: Extension cable