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Fundamentals of Structured Energy Transactions - In Partnership with SNL Energy


A Two-Day Classroom Seminar (CPE Approved)

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Standardized derivatives (what you might call "plain vanilla") like swaps, options, and futures have long been a common way for energy companies to manage risk, and many people have gotten quite comfortable with the pricing, transactions and risks of these highly liquid products. Frequently, though, the specific risks of a large physical asset can't be effectively managed with a standardized derivative approach. The risks of the asset are too different from the payoffs of those standard contracts.

In these cases, a better way to match the risks is to enter into a more specialized transaction, with terms and underlying commodities specific to the asset in question. Structured contracts are customized with specialized terms. Because of their non-standard features, these structured transactions are not as transparent, or easy to evaluate, but they are very common in energy companies. They can be extremely useful in terms of matching risks and generating margin. But, because of their complexity, structured transactions require extreme care. If they are mispriced, or executed incorrectly, they can lead to huge losses.

Common examples of structured contracts include: Power Purchase Agreements; Cross Commodity Contracts; Tolling Contracts; Full Requirements/Load Following Contracts; Structured Retail Products; Bulk Energy Contracts.

These contracts are typically managed by the term and intra-month trading function within an energy company, where they are optimized and hedged in liquid forward markets. As a result, risk on structured contracts is typically governed using the Value at Risk (VaR) metrics that govern other trading activity. However, for complex structured contracts, the fundamental risk management metrics don't tell the whole story. In this course, you will focus on the fundamental relationships governing the valuation and development of structured contracts.

A laptop is suggested because the seminar's agenda includes learning to navigate and understand websites useful in constructing analyses.

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What You Will Learn
  • Explain how structured contracts differ from "plain vanilla" derivatives
  • List the most commonly used structured contracts and describe the advantages/disadvantages of each
  • Identify the type of financing required for these kinds of transactions
  • Understand how to measure and manage the risks associated with structured products
  • Evaluate the risks involved with each type of contract
  • Outline the key accounting and back office issues with derivatives and structured transactions Determine whether specific derivatives are transacted for hedging, trading, or dealing purposes
  • Identify the inputs and risk information required to properly value a structured contract
  • Value the six most common structured contracts
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Seminar Agenda
Untitled Document

Day One  

7:45 am

Registration and Continental Breakfast Opens

8:30 am

Foundations of Structuring

  • Derivatives refresher: Futures, Forwards, Swaps, Options - Pricing and mechanics
  • Structured Contracts: What they are and how they differ from plain vanilla derivatives
  • Accounting and back office issues with derivatives and structured transactions
  • Deal Capture and Compliance: Financing needed for these kinds of transactions - Margining, Counterparty credit, etc.

10:15 am

Refreshment Break

10:30 am

Risk in Structured Products

  • Measuring risk in transactions
  • Statistics of structuring
  • Managing Risk in transactions
  • Markets and hedging
  • Component risk and risk adjusted performance and value

12:00 pm

Lunch

1:00 pm

Structured Transactions Overview

1:30 pm

Wholesale Electric Structuring

  • Bulk Energy Contracts and Power Generators
  • Spark Spreads and heat rates
  • Merchant Generator economics
  • Building the Business Case for Energy Storage - Example of optionality
  • Renewable Portfolio Standards and Wind Energy and Photovoltaic
  • Hedging Generation Assets
  • Different power products/structures (7x8, 2x16)

3:30 pm

Refreshment Break

3:45 pm

Power Purchase Agreements

  • Inputs to value
  • Risks
  • Model & Example to Price

5:00 pm

Day One Concludes

Day Two  

8:00 am

Continental Breakfast Opens

8:30 am

Tolling Contracts

  • Inputs
  • Risks
  • Model & Example to Price

Financial Contracts that Mimic Physical Assets

  • Cross Commodity Energy Swaps
  • Spark Spread Options
  • Heat Rate Call Options
  • Examples of pricing the above

Default Service/Provider of Last Resort/Full Requirements

  • Pricing the RFP
  • Wholesale Portfolios and bidding
  • Managing switching/migration risk
  • Managing shape risk
  • Example

Retail Electric Structuring

  • The role of aggregators
  • Valuing Consumer Volumetric Risk - 1hour
  • Pricing Retail Adders
  • Contractual Issues
  • Example/ Case
  • Mitigating Risks to Value

1:00 pm

Program concludes

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Hotel and Seminar Information
The seminar will start promptly at 8:30 AM and will finish at 5:00 PM on the first day. On the second day, the seminar will resume at 8:30 AM and will finish at 1:00 PM. The program includes continental breakfast, lunch and all program work materials. Dress is business casual.
COVID 19 Information: Please click here for the PGS Covid-19 policy. You can confirm each hotel's specific COVID 19 policy using the link(s) provided below.
Registration Fee and Discounts
The price for this comprehensive two-day seminar is $1,995 (USD).
Register online or Call (843) 212-4038.
  • Additional attendees and government employees receive a 10% discount.
  • Register 4 or more attendees and receive 20% Off. Special pricing is available for groups of 5 or more.
    If you want attendees to pay with separate credit cards or have other questions, please call (843) 212-4038 for assistance.
Payments and Cancellations
Payment is due prior to the start of the seminar by Visa, Master Card, American Express, or corporate check. Seminar fees will be charged to your credit card at the time of registration unless other arrangements have been made. Please make checks payable to "PGS Energy Training" 26 Teal Lane • Hilton Head Island, SC 29926. Cancellations will result in a credit that is good for 2 years which can be transferred to a colleague. Substitutions may be made at any time. For more information on PGS policies regarding administrative matters and complaint resolution, please contact our offices at (843) 212-4038.
CPE Credits in Specialized Knowledge

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. As of January 1, 2002, sponsored learning activities are measured by program length, with one 50-minute period equal to one CPE credit. One-half CPE credit increments (equal to 25 minutes) are permitted after the first credit has been earned in a given learning activity. You may want to verify that the state board from which your participants will be receiving credit accept one-half credits.

PGS Energy Training is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org. CPAs interested in attending any seminars should contact our offices for details on CPE credits granted and any prerequisite requirements.
PGS Energy Training is registered with GARP as an Approved Provider of Continuing Professional Development (CPD) credits. If you are a Certified FRM or ERP, please record this activity in your Credit Tracker at http://www.garp.org/cpd. Please inform PGS Energy Training that you are a GARP CPE participant upon seminar registration.

The Global Association of Risk Professionals (GARP) is a not-for-profit membership association dedicated to preparing professionals and organizations for making better-informed risk decisions. GARP's membership represents more than 150,000 risk management practitioners and researchers at academic institutions, banks, corporations, government agencies, and investment management firms in 195 countries and territories. GARP administers the Financial Risk Manager (FRM) and Energy Risk Professional (ERP) Exams – certifications recognized by risk professionals worldwide. Visit www.garp.org/cpd.
Who Should Attend

Credit risk analysts; Market risk managers; Energy traders and managers; End-users of derivatives in corporations; Risk consultants; Risk and audit committee members; Finance department professionals; Compliance managers.

Prerequisites and Advance Preparation

This fundamental level group live seminar has no prerequisites. No advance preparation is required before the seminar.

Why Choose PGS?

PGS in Partnership with SNL Energy seminars are known for their clear explanations and in-depth content. Register today, and join the energy professionals who have already attended one of these proven programs.

Program Level & Delivery Method
Intermediate level. CPE delivery method is "Group-Live."