Energy Markets Advanced Trading & Hedging
March 2-3, 2021 | Online :: Central Time
This course is geared toward those who want to build on a base-line knowledge of energy markets transacting, power trading and hedging. It will cover market dynamics and the difference between transacting in traditional bilateral markets, OTC and exchange energy markets as well as wholesale electricity (ISO) markets. The content will examine the different market players and their motives, as well as the difference between hedging and speculation. The course will also address various instruments and the implications of credit and collateral on prudent decision-making.
The content explains the various tools used to control the associated risks. It also details how these contracts work, how and when they should be used, and how they are priced. Case examples and problem-solving illustrations optimized for power and natural gas trading are used throughout the course to enhance the understanding of the material. Finally, it will identify and illustrate best practices associated with the sound measurement of uncertainty and building solid risk metrics for portfolio management and risk management through optimal hedging and solid hedging program design.
- Review portfolio management in traditional utility/balancing area, OTC, Exchange and ISO-based market transactions
- Assess market distinctions and price driver dynamics
- Discuss relationships between power market trading and hedging
- Examine market, credit and counterparty risk management best practices
- Evaluate energy trading compliance programs and their application in the current regulatory environment
- Demonstrate meaningful uncertainty framework for developing utility and power portfolio hedging programs
- Describe and illustrate simulation analysis and risk metrics for utilities and power trading organizations
- Build, design, develop and implement a hedge program
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.
This program will use PowerPoint presentations, case studies and group discussions.
Requirements For A 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.
Tuesday, March 2, 2021 Central Time
8:15 – 8:30 a.m. :: Log In and Welcome
8:45 a.m. – 5:00 p.m. :: Course Timing
8:30 – 8:45 p.m. :: Overview and Introductions
8:45 – 9:45 a.m. :: Energy Markets Advanced Trading & Hedging
- Physical forward contracts
- Case study — hedging with futures vs swaps
- Comparative analysis of use of instruments in hedging strategies
- Recognizing market players and their objectives
9:45 – 10:00 a.m. :: Break
10:00 – 11:00 a.m. :: Energy Markets Advanced Trading & Hedging (cont’d)
- Basis swaps
- Hedging natural gas exposures with futures and basis swaps
- Congestion hedge instruments
- Financial transmission rights (FTRs) and congestion revenue rights (CRRs)
- FTR obligations and options
- Case studies of hedging strategies and potential manipulation in gas and power markets
11:00 – 11:15 a.m. :: Break
11:15 a.m. – 12:15 p.m. :: Energy Markets Advanced Trading & Hedging (cont’d)
- Calls and puts
- What drives the value of option premiums?
- Options as insurance
- Are options a cost or an investment?
- Option strategies: Collars
- Why most utilities should have options as part of their hedging program
- Case study — best instruments for different portfolios
Q&A and Discussion Forum
12:15 – 1:00 p.m. :: Mid-day Break
1:00 – 2:00 p.m. :: Market Risk Management
- Market risk measurement and reporting
- Distinction and applications of
- Mark-to-Market (MtM)
- Value at Risk (VaR)
- Cost at Risk (CaR)
- Rates at Risk (RaR)
- Gross Margin at Risk (GMaR)
- Sensitivity analysis and stress tests
- Position management for portfolios with assets, physical contracts and financial instruments
2:00 – 2:15 p.m. :: Break
2:15 – 3:15 p.m. :: Counterparty Risk Management
- Counterparty risk management and internal rating systems
- Counterparty risk limits
- Collateral and netting
- Current and potential counterparty exposures
- Counterparty risk policies
3:15 – 3:30 p.m. :: Break
3:30 – 4:30 p.m. :: Simulation Analysis and Risk Metrics for Utilities
- Risk metrics and simulation
- Introduction to distributions
- Best practices in management of weather, load and price risk for utilities
- Volumetric risk and hedging
- Supply and demand risk
- The cost of ignoring volume uncertainty in hedge programs
- Lessons learned from utility hedging debacles
- Designing optimal hedge programs for the entire energy portfolio
- Retail load
- Unit characteristics
- Forced outages
4:30 – 4:45 p.m. :: Q&A and Day One Review
Wednesday, March 3, 2021 : Central Time
8:45 – 9:00 a.m. :: Log In and Welcome
9:00 a.m. – 12:30 p.m. :: Course Timing
9:00 – 10:00 a.m. ::Meaningful Uncertainty Framework to Develop Utility Hedging Programs
- How to produce realistic weather, load, gas and price scenarios
- Creating a portfolio view of physical and financial exposures
- Integrating price and volume risk modeling in a coherent framework
- Modeling expected costs and revenues
- How to assess and visualize market and weather risk factors on cash flows
10:00 – 10:15 a.m. :: Break
10:15 – 11:15 a.m. :: In-Depth Hedge Program Design and Implementation
- Hedging tactics vs. hedging strategy
- A roadmap to implementing an effective hedging strategy
- Understanding and quantifying risk profile and appetite
- 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
11:15 a.m. – 12:15 p.m. :: Case Studies with Energy Portfolios
- Market vs contracted cost
- Dispatch to load vs dispatch to price
- Integrated portfolio views
- Purchases and sales positions
- Distinct load and generation positions
- Integrated utility value vs portfolio component value
- Active vs. passive portfolio management
- Case study – understanding the revenue-at-risk of different portfolios
- Case study – considering the value of a battery with a wind asset
- Case study – execution of a hedge strategy under different market conditions
12:15 – 12:30 p.m. :: Q&A and Discussion Forum
12:30 p.m. :: Program Adjournment
Scott Wrigglesworth, Managing Director, Operations & Strategy, Ascend Analytics
Scott Wrigglesworth is Director of Analytics and Strategy with Ascend Analytics. Before joining the company, he spent 17 years with Dayton Power and Light and the AES Corporation. There he focused on practical solutions in energy analytics, actionable reporting, margin modeling and portfolio optimization. In that role, Mr. Wrigglesworth provided analytic expertise for portfolio optimization, planning, and risk management activities. These activities included merchant generation optimization, fuel procurement, wholesale hedging, retail energy, load auctions, rate case preparation, asset valuation, and commercial budget development. Mr. Wrigglesworth teaches a course in Energy Markets at the University of Dayton from where he also earned his MBA. He holds a BA in Global Economics and International Business from Cedarville University.
We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.
- You will receive a meeting invitation will include a link to join the meeting.
- Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
- You will need to join the appropriate meeting at the appropriate time.
- If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
- The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.
Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ
If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event