Once rising air reaches the LCL or, condensation level, and clouds begin to form, we can no longer refer to the lifting as a dry adiabatic process. When a parcel of air becomes saturated and condensation begins, the process of condensation releases latent heat into the surrounding air. This latent heat further warms the air making the air even more buoyant. We refer to this as a moist adiabatic or saturated adiabatic process. Moist adiabatic expansion increases the instability of the parcel. The moist adiabatic lapse rate is not as steep as the dry adiabatic lapse rate meaning a parcel of air that has risen above the LCL will not cool as rapidly as it did before reaching the LCL. If this process of moist adiabatic expansion continues, all of the water may condense out of the rising parcel and precipitate out, yielding a dry parcel. The potential temperature of that new dry parcel is called the equivalent potential temperature (e) of the original moist parcel. So, the equivalent potential temperature is the potential temperature of a parcel of air after all of the water vapor has condensed and fallen out of the parcel.
Let's continue with our example of the air lifting up the side of the mountain. If the mountain is high enough, and the parcel or layer of air continues to lift, all of the moisture in the lifting air could condense and fall out of the air in the form of precipitation. Once this occurs, the potential temperature of the now dry air is considered the equivalent potential temperature of the original moist parcel before condensation began. Like the potential temperature and the LCL, the equivalent potential temperature will also be a key player when we discuss vertical stability. The equivalent potential temperature will help us determine the stability of a thick layer of air versus the stability of a single isolated parcel. Once again, this is one piece in the puzzle that will be necessary later when we try to attach all of the pieces together.