This proven program is for energy and electric power professionals who are looking for a comprehensive and clearly explained understanding of natural gas, oil and electricity financial instruments, the markets they trade in, and how these powerful tools can be used to manage risk and structure profitable transactions.
Among those who will benefit from this seminar include energy and electric power executives; attorneys; government regulators; traders & trading support staff; marketing, sales, purchasing & risk management personnel; accountants & auditors; plant operators; engineers; and corporate planners. Types of companies that typically attend this program include energy producers and marketers; utilities; banks & financial houses; industrial companies; accounting, consulting & law firms; municipal utilities; government regulators and electric generators.
This live group seminar is eligible for 13.5 CPE credits. Be aware that state boards of accountancy have final authority on the acceptance of individual courses for CPE credit.
The program includes continental breakfast, lunch, and coffee breaks on the first day. On the second day a continental breakfast, snack or lunch and coffee breaks are included. Attendees also receive a professionally produced seminar manual that can serve as a valuable office reference. Dress is business casual for all seminars.
Overview of the three different energy & electric power forward markets, terminology, the purposes served by these markets, price & spread hedgers and the basics of energy and electricity physical transactions.
The differences between futures commission merchants (“FCM”), over-the-counter brokers, traders, market-makers, and energy/power marketers.
The four different methods used to manage energy and electricity price, basis, spread, delivery, operational, and volumetric (intermittency) risks.
The dangers of liquidity risk, and when it can blow up a company.
What physically-settled energy futures contracts are; why only 1% of physical energy futures go to physical delivery and what the difference is between a physically-settled energy future contract and a physical forward contract.
How the CME and ICE futures exchanges are structured and the role of the CME and Ice Clear Clearinghouses.
How physically-settled and cash-settled energy futures contracts trade electronically on CME Globex and ICE Futures.
The broker account maintenance, margin deposit, cash management and “funding risk” issues associated with clearing a financial or physical energy transaction through the CME, Ice Clear or Nodal Exchange Clearinghouses.
How buyers and sellers hedge natural gas, crude oil, heating oil and gasoline price risk with CME physically-settled futures contracts.
The “political” risks of hedging and the factors that can weaken the effectiveness of a futures hedge.
How “Active Hedging”, “Dynamic Hedging” and “Hedgulation” can hurt your company’s hedging program.
What the difference is between the locational “basis” and a locational price spread.
The five different ways the term “basis” is used in the energy markets.
How the “Master Energy Hedging Equation” is defined, and what its implications are.
What basis risk is, and how it can destroy your futures hedges.
Two examples of natural gas “basis blowout” and how it relates to LMP spread risk in ISO electricity markets.
The difference between a commodity swap, contract-for-differences (“CFD”), cash-settled futures contract and cash-settled swap futures contract.
The definition and use of common energy/electricity cash-settled financial instruments including fixed-for-floating, penultimate, exchange-indexed, basis, index, swing, dart, outright swap and cash-settled futures products.
How buyers and sellers use cash-settled futures contracts and swaps to hedge natural gas, oil and electricity price, basis, spread, and LMP risk.
How buyers and sellers can use cash-settled financial instruments to turn natural gas into virtual oil or virtual electricity (And vice-versa); Day Ahead LMP into Real Time LMP (And vice-versa); An average of daily prices into a fixed or monthly index price; and many other forms of “slicing & dicing.”
An overview of how the “ICE OTC” energy & electricity trading platform works.
What the differences are between ICE OTC, ICE Futures, CME Globex, CME Clearport Services CME Direct and The Nodal Exchange.
Where to find the four different Master Sales & Purchase Agreement templates which contain the standard industry bilateral contract language for physical & financial natural gas and electric power transactions.
How basis & spread swaps work; and how these swaps relate to cash-settled futures contracts.
The difference between the financial and physical locational basis (“fin” and phys”).
What a “trigger deal” is, and why it is economically and politically efficient.
Why so many energy industry buyers and sellers outsource the execution of their hedges and risk management solutions.
How the “Master Energy Hedging Equation” is a simple and powerful way to quickly understand many different types of energy transactions and to quickly convert one form of transaction into another.
How the “Master Energy Hedging Equation” underlies the structure of a firm’s energy trading books.
The basics of the “Value-at-Risk” (“VaR”) calculation, and why to be careful.
Additional Electricity Material ( Optional Session at 4:30 pm).
How heat-rate-linked power transactions can convert natural gas futures, options, and swaps into electric power financial instruments which can then be used to hedge electricity risks or to structure profitable power deals.