Electric Market Dynamics

Upon completing Electric Market Dynamics, you should be able to analyze and understand the electric markets in a specific region and be able to determine potential business opportunities in those markets. Specific areas of knowledge include:

• The various market structures that exist and participants in each structure
• Concepts of supply and demand and how electric prices behave in various market structures
• Services offered in electric markets including capacity, energy, ancillary services, transmission rights, and retail sales
• Types of markets including bilateral, electronic exchanges, ISO, and utility, and details on how each market works
• How the various types of markets function under different market structures
• Strategies participants use in electric markets
  This knowledge will empower you to make better business decisions based on your own company's activities and to better interact with market participants who do business under the various market structures.
  

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This seminar is essential for anyone needing a broader perspective on how electric markets function. Specifically, you should take the course if you are a(n):

• Senior manager needing a broader understanding of electric markets
• Professional who has worked in the electric industry for one year or more
• Engineer working in the electric industry who needs to understand how
  markets function
• Experienced energy industry employee needing a deeper understanding of electric markets
• Sales professional providing services to the electric industry
• Finance, legal, accounting, public relations, or regulatory professional
• Technical professional becoming involved in electric markets

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Introduction

• Course objectives
• Electric units
• Important terms used in the course
  

Electric Market Structures and the Roles of Market Participants

• What is an electric market?
• The differences between monopoly and competitive markets
• The unique properties of electricity that affect how markets function
• The 5 sectors of market participants (electric suppliers, transmission owners and system operators, distribution companies, retail suppliers, consumers)
• The electric market transaction chain (how electricity is physically delivered and how ownership of supply changes throughout the chain)
• Market structures
  • Vertically-integrated monopoly utility
  • Single buyer with competitive generation
  • Wholesale/industrial competition
  • Complete retail competition
  • Hybrid (retail competition with default utility supply)
• Markets with ISOs and RTOs
• A look at market models by state
  

Principles of Electric Supply and Demand

• Definition of electric demand
• The key factors affecting electric demand (short term and long term)
• Load curves
• Key demand quantities (baseload demand, average demand, peak demand, load factor)
• Load duration curves
• How residential customers use electricity and characteristics of their usage
• How commercial customers use electricity and characteristics of their usage
• How industrial customers use electricity and characteristics of their usage
• How agricultural customers use electricity and characteristics of their usage
• How electric demand varies with time, weather, business activity, and season
• Does price affect electric demand?
• Demand side management (DSM) programs (energy efficiency, load management) and how they are used to reduce demand
• Models used to forecast demand (aggregated and sectoral end-use models)
• Key factors driving electric supply (short term and long term)
• Technologies and fuels used to generate electricity in the U.S.
• Key characteristics of generation types (capital cost, variable cost, flexibility, time to construct, environmental regulations, location of unit)
• Key variables that impact which units are scheduled
• Variable costs of generation
• How fuel costs affect the marginal cost of electricity
• Typical operating expenses for various types of generation
• DSM as a supply option
• How generation is scheduled to match demand and how this affects price
• Using models to predict supply availability
  

Electric Services and the Markets They Trade In

• Self-owned assets as an alternative to buying services in markets
• Bilateral markets
• Electronic exchanges
• ISO markets
• Utility and transmission services
• Forward capacity (call options, capacity obligations)
• Forward energy
• Day-ahead energy
• Real-time energy
• Ancillary services (spinning reserves, supplemental reserves, scheduling and dispatch, regulation and frequency response (AGC), energy imbalance, voltage support (VARs), black start)
• Physical and financial transmission rights
• Retail sales (regulated utility service and competitive supply)
• What services trade in which markets
  

Trading Arrangements: How Electric Markets Work

• A definition of trading arrangements
• The variables that determine how trading arrangements are structured
• The Wheeling Model
  • Trading arrangements
  • Ensuring sufficient capacity
  • Scheduling
  • Pricing
  • Roles for market participants
• The Integrated Model
  • Trading arrangements
  • Ensuring sufficient capacity
  • How capacity obligations are allocated
  • Sources of capacity
  • Capacity auctions
  • Scheduling
  • Generator bids
  • Transmission scheduling
  • Pricing
  • Locational marginal pricing (LMP)
  • Roles for market participants
• The Decentralized Model
  • Trading arrangements
  • Ensuring sufficient capacity
  • Generation and load scheduling
  • Transmission congestion
  • Scheduling ancillary services
  • Pricing
  • Real-time energy and dispatch
  • Roles for market participants
    

Market Strategies for Key Electric Industry Players

• The 2 paradigms for business in electric markets (regulated vs. competitive)
• The relationship between earnings and the level of risk required to achieve them
• Risks inherent in the electric business (price, basis, volume, counterparty, execution, operational, regulatory, legal)
• Physical tools used to manage risk (pricing, take obligations, fuel costs, asset ownership, contractual provisions, internal procedures, portfolio hedging)
• Market strategies for Utility Distribution Companies (UDCs)
  • Goals
  • Key risks
  • How regulated prices are set in the rate case process
  • How UDCs create earnings
  • How UDCs increase earnings
  • How UDCs participate in electric markets
  • How UDCs handle key risks
  • The key skills necessary for UDC success
• Market strategies for Independent Generators
  • Goals
  • Key risks
  • How independent generators create earnings
  • The services independent generators supply and how deals for these services are structured (capacity, forward energy, day-ahead energy, real-time energy, ancillary services)
  • How prices are determined
  • Bidding strategies for ISO markets
  • How independent generators increase earnings
  • How independent generators handle key risks
  • The key skills necessary for independent generator success
  • How an independent generator uses markets to maximize earnings on assets
• Market strategies for Wholesale Marketers
  • Goals
  • Key risks
  • Wholesale trading strategies
  • How wholesale marketers create earnings
  • How supply and sales commitments are structured and why this is critical
  • How wholesale marketers increase earnings
  • How wholesale marketers handle key risks
  • The key skills necessary for wholesale marketer success
• Market strategies for Retail Marketers
  • Goals
  • Key risks
  • Retail marketing strategies
  • How retail marketers create earnings
  • How an appropriate price is determined
  • How supply and sales commitments are structured and why this is critical
  • How retail marketers increase earnings
  • How retail marketers handle key risks
  • The key skills necessary for retail marketer success
    

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You may view this course as many times as you wish during the license period (45 days for a full-length course and 15 days for a short course). However, you may not share access to the course with anyone else. Enerdynamics will not be liable to you, or to anyone who may claim any right due to a relationship with you, for any acts or omissions in the performance of services under the terms of this license unless such acts or omissions are due to willful misconduct. With your purchase and/or use of this course you are accepting the terms of this license agreement.

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This Enerdynamics online training product has been uniquely designed to offer the best value in the business. With your purchase, you will receive:

• A 45-day single user subscription (15 days for short courses) to the course: view the course material as many times and in any order you like during the subscription period.
• E-mail access to Enerdynamics: feel free to ask any questions relevant to the course material.
• Professional audio and animated content developed by experienced education professionals: this is not a page turner!
• Online exercises and interactions: designed to cement your understanding.
• Reference materials: a list of acronyms and a glossary that you can view online with your course.
• Expert instruction: this course was developed by professionals with decades of energy experience in the industry.
• Full-color presentations: our seminars are carefully designed for maximum impact and interest.
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