Many people still incorrectly state that 'Reiki' translates as 'universal energy' - and it must be said that the other common translation: 'Spiritual energy', while perhaps moving far more in the right direction is, it seems, still not quite correct...

In writing the single word 'Reiki' we use the two kanji which in isolation represent two separate words: Rei, and Ki respectively - though Reiki is not 'Rei Ki'...

There are many words in Japanese that may be described as ‘ki-words’ - compound-words formed by adding the kanji for ‘ki’ [1] to the kanji for another word.

Unfortunately, if we attempt to understand such compound-words by simply translating and combining the meanings of the two individual original words, this will not necessarily give us an accurate translation of the compound-word itself.

“The meaning of the whole is greater than (& often quite different to) the meaning of the parts”

As a loose, general guide, the meaning of a word written with a specific kanji-pair is ultimately (if often indirectly) based on / derived from, a synthesis of the meanings of the individual kanji making up that pair.

For example, if we take the single word tenki :

As a stand-alone, the individual word ten signifies heaven, or sky. The word ki is of course most commonly translated as spirit, energy (or feeling).

So, if in an attempt to arrive at the meaning of the single word tenki, we simply combine the meanings of the two other words ten and ki, we would end up with something like :
“Heavenly Spirit”?
or maybe
“Heaven Energy” (as opposed to Earth Energy)?

In fact, tenki simply means: Weather.

Let us now look at several other “ki-words”

As is the case with 'tenki' (and also 'Reiki'), it is important to remember that each of the following, although written using two kanji, are in fact single, complete words in their own right.

Kekki ['blood ki' ]  actually means:                   vigour, ardour

Denki ['dragon ki']  means:                              electricity

Konki ['root ki']  means:                                    perseverance, patience

Heiki ['flat (or even) ki' ]  means:                      calmness (also indifference)

Gen ki ['foundation ki']  means:                        ones health - being in good spirits 

Ninki ['person ki']  means:                                popularity        

Yoki ['positive ki', ('Yang' ki)]  means:              liveliness - cheerful, jolly

Inki ['negative ki', ('Yin' ki) ]  means:                gloomy, melancholy

Kuki ['sky ki']  means:                                      air

Reiki [2] '[cold ki']  means:                               cold air

And in some ki words, the ki kanji does not actually add anything to the meaning of the other kanji - it simply speaks to the dynamic aspect of the whole word

Jōki ['steam ki']  means:                                   steam or vapour

Yuki ['brave ki']  means:                                    courage, bravery

Byōki ['illness ki']  means:                                 illness, disease, sickness

Jiki ['magnet (also porcelain) ki' ]  means:        magnetism

And so it is that, just as in the examples given above, simply combining the literal meanings of the two individual words whose kanji are paired to form the separate individual word 'Reiki’, will not really give us a truly accurate understanding of the single word 'Reiki' itself.

Ongoing research would suggest that Reiki - as the term is used in the name Usui Reiki Ryoho - more immediately translates simply as ‘spirit’ or 'spiritual'; thus Usui Reiki Ryoho translates most clearly as: Usui's spiritual healing-method

Now while it would be perhaps somewhat incorrect to deny that, at least on a very simplistic level, the single word Reiki still carries with it a sense of 'spiritual energy', it can, amongst other things, also be understood to mean:

'spiritual essence'
'spiritual feeling'
'spiritual intent'
'spiritual influence'
'spiritual emanation'

also:
'soul power'
'soul force'

and, quite importantly, I feel:

'Aura' (i.e. the emanation of spirit around the body) [3] 

As the term Reiki is used in the name Usui Reiki Ryoho, there is not necessarily any direct reference to ‘energy’
- in this context, the ki part of the compound would simply seem to speak to the dynamic - the effect of spirit in action.

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 [ADDITIONAL NOTE - for purposes of clarification  (Sept 2015)
 Some people seem to be confused about this article.
 The article is about some of the possible translations of the Japanese word 'Reiki' itself into English, rather than about our personal subjective (and I do not use this word in a derogatory sense) interpretations of the word.
We all have – and rightly so – our own personal, soul-level, experienced-based understandings of what Reiki (in the sense of the 'phenomenon' at the heart of the Reiki Ryoho system) means to us.
The article is not intended to demean such profound personal realisation in any way.]

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[1] I am of course here referring to the 'ki' kanji as used in writing the word Reiki. 
Perhaps somewhat confusingly, there are actually somewhere in the region of 35-40 Japanese words pronounced as ki.
However these are all written using different kanji, and have different meanings.

[2] Not the same 'Rei' kanji as in our 'Reiki'

[3] Thus, 'Usui Reiki Ryoho' can also have the connotation: 'Usui Aura-healing Method'