Power Trading & Hedging Fundamentals

Demystify the nuances and quirks of trading and hedging in the power markets while getting a thorough understanding of the instruments, tools and techniques essential to being a successful trader in the power markets.

At A Glance

Industry Segment Power
Course Level Intermediate
CPE Credits 12
DTN Credits 6
Competency Path Certified Energy Trading Professional, Power, Trading & Risk Management

What You Will Learn

Topics 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.