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Managing the Hedging Risk

By Elie Zabal, Senior Vice President, Treasury and Regulatory Compliance Division, Triple Point Technology, January, 28, 2010 - Deferring the financial impact of a derivative hedge transaction to smooth quarterly earnings in line with the FAS 133 and IAS 39 regulations is a perilous task. Recent corporate history provides us with plenty of examples of firms that have had to restate earnings thanks to errors in their hedge accounting practices and the consequences they have suffered -- earnings become anything but smooth. They have to be re-stated, and with that you lose the trust of the market, forfeit a good portion of your reputation for sound management and see the value of your firm drop.  more...
Article Viewed 954 Times  |  1 Comments

Improving Intra-Day Positions Integrating Generation and Demand Data in Near Real-Time

By Edward Cuoco, Director of Utilities and Energy Markets, Martin Dawes Analytics, January, 14, 2010 - Lower commodity prices and more competition in energy markets continue to pressure profits and margins which, in turn, increase the importance of fast and accurate risk reporting in energy trading. Internally, faster position reporting and optimization cycles are required to in order to maintain a competitive position. Simultaneously, this reporting must maintain a high level of granularity as regulators and auditors seek balance at 60, 30 and sometimes even 15 minute intervals. While organizations continue to move towards intra-day position reporting, the breadth of detailed data and the frequency with which they are provided are not adequately leveraged through the normal risk reporting process.  more...
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What Do You Know and How Do You Know It? Knowledge Management Might be the Answer

By Robert Mayfield, Plant Manager, Tenaska Virginia Partners L.P., January, 07, 2010 - What does it mean to say you "know" something? And, more importantly, how do you gain that knowledge in the first place and how do you capture it, retain it and retrieve it when needed? Without spiraling into an existential discussion on the "nature of knowing," it is critical to understand that not all knowledge is created equal and so not all knowledge can be retained and retrieved in the same way.  more...
Article Viewed 1615 Times  |  2 Comments

Proactive Reconciliation Process in Power Scheduling

By Mithun Balaji Rajaram, Consultant - ETRM Practice, InfosysTechnologies, December, 16, 2009 - Abstract:  more...
Article Viewed 1717 Times  |  Be the first to comment on this article.

A Suggested Component-Level, Units-of-Production Plant Depreciation Method

By Ramon Mischkot, Principal Consultant, Transactive Management, November, 09, 2009 - Introduction  more...
Article Viewed 1738 Times  |  Be the first to comment on this article.

Energy Trading Compliance Programs: Basic Components in a Changing Energy Regulatory Environment

By Glenn Reitman, Partner, Thompson & Knight LLP, October, 30, 2009 - Currently energy trading in the United States, both physical and financial, is regulated by the federal government. One of the theories behind such regulation is to facilitate just and reasonable rates for the trading of energy commodities and determine the propriety of any exemptions. Even with exemptions, however, the regulation of financial trading of energy commodities requires participants to ensure that their actions are carried out in a manner that accurately reflects market prices, as well as supply and demand. Therefore, U.S. regulators have called for, and industry participants have voluntarily agreed to, the creation of some form of energy trading compliance programs for businesses engaging in energy trading.  more...
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Term and Spot Contracts -- Finding a Balance

By Kapil Veluri, Senior Consultant, Infosys Technologies, Ltd., October, 28, 2009 - Trade flows are fundamentally driven by the "supply-demand" balance in any market, be it oil, money, consumer goods, pharmaceuticals, apparel, etc. The footprint of "supply-demand" is apparent in each and every business function across the life-cycle of the commodity, from planning, manufacturing, trading, logistics, to finance. In the portfolio of an energy company, there exists a blend of different types of contracts involving different players in the industry. A producer/consumer for various reasons would like to secure term contracts with customers for a decided portion of its portfolio, while contracting for the rest of the volumes on a spot basis. This article discusses the pros and cons of spot and term contracting, and offers opinion of achieving a judicious balance between "term" and "spot" contracting.  more...
Article Viewed 2296 Times  |  5 Comments

The Smart Grid and the Free Rider Issues Of Locational Marginal Pricing

By Thomas Lord, President, Volatility Managers, LLC, October, 06, 2009 - The latest rush is to create the smart grid. It is good that the impetus is governmental funds because there is a long term problem for the smart grid from a real option basis. The problem is that any corporate or individual investment in demand control/demand reduction has greater benefit to the rest of the grid than it does to the person making the investment. I wrote as early as 2003 here at Energy Pulse that LMP markets would make infrastructure investment an issue in the power market. The smart grid is just infrastructure investment writ large.  more...
Article Viewed 2503 Times  |  26 Comments

How to Trade Natural Gas, Crude Oil & Gold ETFs

By Chris Vermeulen, Founder, www.TheGoldAndOilGuy.com, September, 18, 2009 - How to trade hot commodities like natural gas, oil and gold -- We should see big moves in the coming weeks as gas bottoms, and oil & gold breakout or breakdown. A lot of money is going to be exchanging hands quickly and the key is to be on the receiving end of things. Below are some charts showing where these commodities are trading.  more...
Article Viewed 2127 Times  |  1 Comments

Costless Collars: A Poor Hedge for Utility Customers

By Tom Matthews, Energy Commodity Risk Administrator, Tri-State Generation and Transmission Association, September, 16, 2009 - Costless collars are an attractive low-cost strategy for speculators who have a directional view on the underlying market. They are not a prudent strategy for a utility looking to reduce commodity price risk to end-use distribution customers. Utilities that employ a costless collar hedging strategy are likely exposing their customers to excess price risk and higher commodity costs versus employing a hedging strategy that uses simple forward contracts. Utility company and utility commission documents available through the Internet suggest the many electric and natural gas utilities employed costless collar hedge strategies on behalf of their customers between 1998 and 2008. This article examines the performance of a costless collar hedging strategy as compared to a forward contract hedging strategy for a hypothetical natural gas utility within the 1998 through 2008 time frame. Key assumptions to this comparison are that the utility has no view on future market prices and that the utility employs a dollar-cost averaging strategy to place hedges.  more...
Article Viewed 2738 Times  |  3 Comments
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