By - Jon Brown

Introduction to Risk Management for Wholesale Electricity Markets
February 5-6, 2020 | Houston, TX

Download PDF


Electricity markets differ from other commodity markets because electricity in the AC (alternating current) form cannot be stored and must be produced and used instantaneously. Price volatility in wholesale electricity markets tend to remain high due to interaction of supply and demand of electricity, weather patterns, as well as correlation trends with natural gas-fired pickers, which tend to set real-time spot market prices under peak load conditions.  Also, the fast-changing landscape in the arena of fuel- mix due to ever increasing penetration of renewables, such as wind and solar, in the wholesale electricity markets, putting a lot of pressure on conventional based-load fossil-fired and nuclear plants. As a result, trading and hedging becomes more important as part of risk management. As such, this market structure is much more complex than traditional trading markets, requiring good background knowledge of uniqueness of electricity, how RTOs/ISOs offer energy market platforms for real-time and day-ahead markets, elements of trading and tools for risk management for beginners.

This course will provide comprehensive set of introductory information about basics of power systems, RTOs/ISOs, and electricity trading and hedging for professionals working at power companies, financial and energy companies.

Learning Outcomes

  • Review the basics of electric power system, types of electricity and their characteristics, terminology and measurement units
  • Compare Regional transmission organizations (RTOs) / Independent system operators (ISOs)
  • Compare types of markets offered by RTOs/ISOs
  • Discuss types of resources and their role in energy markets
  • Identify key players in energy markets
  • Discuss locational marginal pricing (LMP) and its characteristics 
  • Review transmission congestion and hedging
  • Discuss regulatory oversight of RTOs/ISOs and anti-manipulation authority of FERC 
  • Identify the basics of power marketing, trading, and hedging
  • Discuss the introduction to developing commodity price risk hedging strategies
  • Review fundamentals of risk oversight
  • Review an overview of common financial instruments 
  • Assess real time vs. forward markets
  • Assess typical energy market participants and their risk profiles, implications on risk oversight
  • Discuss the lifecycle of energy transactions from inception through accounting and settlement
  • Discuss the basics of energy commodity regulatory requirements



EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.1 CEUs for this event.


Requirements for Successful Completion of Program

Participants must sign in/out each day and be in attendance for the entirety of the course  to be eligible for continuing education credit.

Instructional Methods

PowerPoint presentations and case studies will be used


Wednesday, February 5, 2020

8:30 – 9:00 a.m. :: Registration & Continental Breakfast

9:00– 9:15 a.m. :: Introduction

9:15 – 10:15 a.m. :: Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs)

  • RTOs/ISOs in U.S. and Canada
  • RTO functions and characteristics
  • RTO drivers
  • RTO stakeholders

10:15 – 10:45 a.m. :: Regulatory Oversight

  • Role of FERC, State regulatory agencies, and market monitor
  • FERC’s anti-market manipulation authority

10:45 – 11:00 a.m. :: Morning Break

11:00 – 11:30 a.m. :: Overview of Power Systems

  • Fundamentals of electricity, terms/definitions, and units
  • Characteristics of electricity as it applies to energy markets
  • Overview of source to socket power system components – generation, transmission, distribution, and loads
  • Types of generation resource
  • Demand response and energy efficiency participation in energy markets
  • High level explanation of power system losses as it applies to energy markets

11:30 a.m. – 12:30 p.m. :: Wholesale Energy Markets

  • Wholesale electricity price volatility
  • Types of energy markets
    • Physical vs. financial
    • Forward vs. real time
  • Locational marginal prices as market price
  • Components of LMP – cost of energy, losses and transmission congestion and examples
  • Nodal, Hub, and Zonal LMPs in RTOs
  • Cost of transmission congestion, example
  • FTRs for transmission congestion hedging, example
  • FTR market offered by RTOs

12:30 – 1:30 p.m. :: Group Luncheon

1:45 – 2:30 p.m. :: Front Office: Basics of Energy Trading and Hedging

  • Overview of the energy transacting lifecycle, focus on front office roles and responsibilities
  • Introduction to physical vs. financial markets and transactions
  • Overview of energy market participants and risk profiles; implications on risk governance and oversight requirements
    • Price taker
    • Asset optimizer
    • Proprietary trader
  • Hedging vs. trading
  • Market participants
  • Price volatility, counterparties and contracts
  • Real time vs. forward markets, forward price curves
  • Overview of common financial hedging instruments:
    • Futures contracts
    • Swaps contracts
    • Options (calls and puts)
    • Case study: executing different instruments under different market conditions
    • Exchange, over-the-counter, and bilateral transactions

2:30 – 3:00 p.m. :: Networking Break

3:00– 4:45 p.m. :: Middle Office: Basics of Risk Oversight, Measurement and Monitoring

  • Revisit the energy commodity transacting lifecycle
  • Middle office roles and responsibilities
  • Fundamentals of energy commodity risk oversight
    • Governance
    • Organization and segregation of duties
    • Policies and controls
    • Risk reporting and monitoring
  • Market risk
    • Price
    • Volatility
    • Correlation
  • Credit risk
    • Current exposure
    • Collateral and collateral-at-risk
    • Liquidity planning
    • Margin: initial, maintenance, and variation
    • Case Study: potential future exposure
  • Limits: position limits, transaction limits, risk limits
  • Measuring and reporting risk exposures
    • Different risk simulation techniques (historical, parametric, Monte Carlo)
    • Advanced “at-risk” metrics
    • Pros and cons of different risk metrics
    • Case Study: applying different risk quantification techniques
    • Key inputs in determining the most appropriate risk metric for your organization

4:45 p.m. :: End of Day One

Thursday, February 6, 2020

8:00 – 8:30 a.m. :: Continental Breakfast

8:30 – 8:45 a.m. :: Review of Previous Day Topics; Opportunities for Questions and Discussion on Previous Day’s Material

8:45 – 10:45 a.m. :: Hedge Program Design

  • Hedging tactics vs. hedging strategy
  • A roadmap to implementing an effective hedging strategy
  • Understanding and quantifying your risk profile and risk appetite
  • Case Study: understanding the revenue-at-risk of different wind projects
  • Defining hedge strategy objectives, linkage to performance objectives
  • Building hedge strategy alternatives – different types of hedge decisions
    • Programmatic (dollar cost averaging) hedges
    • Defensive (risk limits) hedges
    • Contingent hedges (managing foregone opportunities)
  • Hedge strategy design and scenario analysis
  • Case Study: an iterative approach to evaluating the effectiveness of a hedge strategy
  • Implementing a hedge strategy
    • Tactical planning
    • Ongoing monitoring and reporting
    • Case study: the execution of a hedge strategy under different market conditions

10:45 – 11:00 a.m. :: Morning Break

11:00 a.m. – 12:15 p.m. :: Overview of Enabling Technology

  • Elements of a risk management program
  • Pitfalls many organizations face
  • Information and communication
  • Benefits of seeing around the corner
  • Key takeaways
  • Demonstration: how to bring it all together

12:15 – 1:30 p.m. :: Wrap-up and Adjourn


Raj Rana, PE, MBA, CEM, PMP – Consultant

At present, Mr. Rana provides consulting services in the electric utility industry in the areas of NERC compliance, energy markets, power system planning and operation, resources integrations, and project management.

Previously, while serving as Director – RTO Policy and NERC Compliance at American Electrical Power, Mr. Rana was responsible for coordination of energy, transmission, market structure, finance, and governance related RTO policy issues among the AEP business units, development of corporate positions/policies, and advocacy of such positions at regulatory agencies as well as at stakeholder forums in PJM, SPP, and ERCOT RTOs. He was also responsible for the development and coordination of strategic direction of AEP’s power system reliability compliance program among all business units as well as coordination and facilitation of compliance plans, policies and procedures within the company to ensure timely and successful compliance of NERC and regional reliability standards.

Mr. Rana also worked in AEP’s System Planning department in various positions. His experience at AEP includes planning and operation of the bulk transmission network, generation interconnections, tariff and regulatory/legislative issues, system integration, asset management, mergers and acquisitions, as well as planning and engineering studies for international transmission and generation projects.

Mr. Rana holds a BSEE degree from M. S. University (India), an MSEE degree from West Virginia University, and an MBA degree from University of Dayton. Mr. Rana also completed the AEP Management Development Program at the Fisher Business College of the Ohio State University. He is a life-senior member of IEEE and holds Ohio State PE license. Mr. Rana is also a certified energy manager and a project management professional.

Stephen Engler, Managing Director, Deloitte Advisory

Steve is a Managing Director in Deloitte’s Energy & Resources practice with over 25 years of experience in the energy industry in various engineering, operations and consultative roles.  With Deloitte, Mr. Engler works primarily with clients who are active in trading, procuring, and delivering energy commodities.  Steve leads the Commodity Risk Analytics practice which specializes in performing both qualitative and quantitative assessments of clients’ commodity risk management and hedging programs.  In this capacity, Steve provides risk advisory services focusing on risk governance and oversight, transacting processing, risk monitoring and supporting technology.  He has worked with a number of clients to help them quantify their energy commodity risk exposure, evaluate risk appetite and risk management objectives, and develop strategies to mitigate commodity risk through the design, testing and implementation of hedging programs and supporting infrastructure.

Steve has worked with clients across the energy and resources industry, including oil and gas exploration companies, refineries, power and gas transmission and distribution companies, refined product wholesalers and retailers, and power generation utilities and independent power producers.

Timothy Metts, Senior Manager, Deloitte Advisory

Tim is a Senior Manager in the Deloitte & Touche LLP’s Commodity Risk Analytics practice specializing in risk assessment, risk advisory services, hedge program design, risk oversight and governance, credit risk management and compliance. He has more than 11 years of experience in the energy risk management industry. He advises numerous utility, IOUs and publics, oil and gas, energy companies, IPPs, electricity retailers and industrial clients in developing and implementing hedge programs aligned with the clients’ business objectives.  He is experienced in profiling commodity exposure, quantifying risk pertaining to energy markets (cash flow-at-risk, gross margin-at-risk, cost-at-risk, revenue-at-risk, etc.), and developing structured hedging programs to contain exposure within defined tolerances.  He has commodity risk management experience across natural gas, crude oil, refined products, electricity, liquids, specialty products, metals and agriculture commodities.

In support of Deloitte’s Market Risk services, Tim has led the development of a suite of risk simulation tools designed to support the delivery of Deloitte’s Commodity Risk Analytics service offering.  This includes stochastic price simulation tools, hedge strategy simulation tools, and a cloud-based Commodity and Trading Risk Management system, called Decipher.


Hilton Garden Inn Houston/Galleria Area

3201 Sage Rd

Houston, TX 77056

Reserve your room:

please call 1-713-629-0101

Room Block Reserved For:

Nights of February 4 – 5, 2020

Room rate through EUCI:

$159.00 single or double plus applicable taxes
Make your reservations prior to January 15, 2020.


Event Standard RateAttendees

By clicking Accept or closing this message, you consent to our cookies on this device in accordance with our cookie policy unless you have disabled them. more information

By clicking Accept or closing this message, you consent to our cookies on this device in accordance with our cookie policy unless you have disabled them. You can change your cookie settings at any time but parts of our site will not function correctly without them. We use cookies during the registration process and to remember member settings.