Power Trading & Hedging Fundamentals

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In two dynamic, information-packed days, you'll develop a solid foundation in both power trading and hedging as you examine all of the instruments, tools and techniques available to the energy trader today.

This program brings you from basic terminology to trading mechanics. You’ll learn about marginal cost, load capacity, LMP, Power volatility, implied heat rates, and forward contracts.

We’ll also cover hedging accounting; portfolio and position management, value at risk, stress testing and credit risk. You'll explore the nuances and quirks specific to the power markets, understand the risks and rewards across sectors and develop a macro view designed to improve your working knowledge of the power market complex.

What You Will Learn

Topic covered include:

  • Basic terminology. How does the grid work? Generation technologies and marginal costs. Load. Capacity. 
  • Reliability. FERC, NERC and the ISO/RTOs. 
  • Locational Marginal Price (LMP), Energy Component.
  • LMP, congestion, FTRs, ARRs, Negative congestion and negative prices. Scarcity pricing. Ancillary Services. 
  • Market fundamentals. How do fuel and weather interact to determine value? How do the power markets seem to defy, yet follow economic principles? Implied Heat Rate. Emissions. Capacity Markets. 
  • Forward contracts and trading: ICE, NYMEX, ISDA, Nodal. Exchange v bilateral. Financial v Physical. Firm v non-Firm. Terms traded. 
  • Trading mechanics, market participants and motivations. 
  • Power volatility. Spreads.  Long term fundamentals. 
  • Option mechanics. The framework for risk analysis.  
  • Office roles. Hedge accounting - FAS 133, Fair Value - FAS 157, value at risk, time frames, stress testing, hedging tradeoffs, returns to risk, credit risk. 
  • Portfolio and position management. What best practices should be implemented to ensure adherence with entity requirements? 

Who Should Attend

Power and fuel purchasers, analysts, traders, trade support staff, finance and auditing personnel. Entry-level to intermediate professionals from: merchant generators, banks, utilities, power marketers, retail providers, back office, hedgers, marketers, end-users, and government agencies.