power risk management Flashcards
what is load a function of?
temperature
how is power priced regionally?
OTC
what is transmission?
transportation of power over long distances over high voltage grids
key drivers of power prices in 2011
- temperature anomalies
- nuclear outage
- nat gas pipe constraints
- increase in use of hydroelectic
primary objectives of power risk management?
- comply with regulators
- protect the business from unexpected events
- obtain a good credit rating
- optimize risk/return trade off
controls of risk management?
- find the risk of the overall system
- limit the risk to the parameters specified
scientific aspects of risk management?
building quantitative models, doing stress tests, forecasting
artistic aspects of risk management?
common sense, intuition/interpretation, communication
ESOQ vs EPOQ
esoq = economic sales opportunity quantity epoq = economic purchases opportunity quanity
what is true daily generation capacity?
= generation capacity - forced/planned outages
what is EAG?
economically available generation
calculation of ESOQ/EPOQ model
= EAG - Expected Native Load
If EAG > Expected Load then?
If EAG < Expected Load then?
- ESOQ; the ability to hedge generation risk by selling off excess power
- EPOQ; the ability to hedge excess generation by buying power to ensure native load
natural positions of power generation plant?
short nat gas, long power
what is the heat rate?
heat rate is how efficient a generator is running; measured by the amount of BTUs necessary to create a kilowatt hour of energy
