Posts Tagged "spot market"

Rethinking Gas Markets – and Capacity

The “US Model” of natural gas markets is based on long-term, point-to-point commercial capacity rights that reflect the physical capacity of the pipeline and are traded frequently among system users (shippers) in markets independent of the transmission system operator (TSO). When physical capacity is complex and scarce and the gas market is dynamic these rights must be continually reallocated and reconfigured, making trading difficult/illiquid and market outcomes suboptimal. read more →

Spot Market Clearing

Recent years have seen a growing awareness of credit issues in the energy industry, and improved efforts to manage these risks. Despite this trend, however, the credit risk protections employed by most electricity spot markets remain rudimentary, placing participants at risk of receiving a socialized share of large, unpredictable and unhedgeable losses. Spot Market Clearing offers a comprehensive solution to this problem, leveraging the proven clearing house infrastructure of futures markets, and extending it, to provide robust counter-party credit protection for spot markets in electricity. read more →

Taking Care of Risky Business: Credit Risk Management in Spot Markets

The collapse of Enron and recent energy industry credit crunch has again brought the issue of energy market credit risk management to the fore. An oft neglected area in these discussions is the management of spot market credit risk. Unlike forward markets, where fairly sophisticated risk management processes are available, the management of credit risk in many spot markets remains rudimentary. Changes to a few key processes, however, could significantly improve the way this risk is managed. read more →