Come a day early for
PMA’s most popular, in-depth seminar:
Fundamentals of Power Marketing
Wednesday, March 29, 2000; 9:00 a.m. to 5:00 p.m.
There are two distinct markets for power— wholesale and retail. The
skills and capabilities, the products required in each differ dramatically. This one
program will introduce you to what you need to know to succeed in either- as buyer or
seller.
1. Introduction to the Power Industry.
A brief history of today’s power industry— private, public, regulated and
independent. The physical plant: powerplants, transmission and distribution lines. The
institutional structures: Federal and state rate regulation, Independent System Operators
and control areas, FERC Order 888.
2. Getting Started as a Marketer.
Obtaining power marketer status; the importance of membership in the Western Systems Power
Pool; how and why to enter into "pro forma" transmission tariffs, and
standardized interchange agreements. Review capital, personnel and software and equipment
requirements.
3. Lexicon of Power Marketing.
The major price indices; the forward curve; NYMEX electricity futures contracts; basis
contracts; puts and calls; collars; recallable contracts; swaps; arbitrage; tolling
agreements.
4. Marketer Products & Their Applications:
Indexed Transactions.
The simplest, lowest margin product is the index transaction. Distinguish between market
indices and artificial indices, when indexed transactions make sense and when to convert
to fixed.
Swaps.
Any expense or revenue stream can be converted into another expense or revenue stream to
create custom products.
Tolling Agreements.
How to design and price and agreement under which you "rent" the use of a
powerplant to convert fuel to electricity, or vice versa, on both a physical and financial
basis.
Option-Type transactions.
Options can be used to create price floors and ceilings, to devise no-cost
"collars", and recallable contracts. How to price and design option contracts.
Finance-Type Transactions.
Project finance; valuation of generation capacity; mark-to-market accounting; long-term
purchase agreements; Unwinding existing agreements
Serving the Retail Power Market.
90% of all customers simply want a price, fixed, for the year. How to provide it using a
combination of futures, basis contracts, options and swaps.
5. Retail Power Marketing: Lessons From the First Open Access
Markets:
Review of the highlights of the California and Pennsylvania open access legislation, of
the Massachusetts New York and Illinois Pilot Programs.
6. Key issues in Retail Access:
Stranded investment calculation, recoupment, and securitization; practicable tariff
design; utility affiliate abuses; fly-by-night competitors; tax issues; metering
requirements; credit and redlining.
7. Nuts and Bolts of Retail Marketing:
Marketing and Sales:
Branding, multiple product lines, sales force management;
Customer analysis and pricing.
The key functions: scheduling, nominations, balancing and billing.
8. Wrapup:
The $2 trillion deregulated electric power market of tomorrow will hold plenty of
opportunities for companies of all sizes and capabilities. What will the industry look
like tomorrow? Where will the profit opportunities lie, and for whom?
Instructor:
Scott Spiewak has acted as advisor to many of the largest power marketing firms in their
efforts to establish themselves as leaders in this new market. Among his clients are
Enron, Natural Gas Clearinghouse, Utilicorp, Williams, Zeigler Coal and Peabody Coal.
Mr. Spiewak’s retail energy marketing firm, Metromedia Energy,
markets natural gas and electricity in deregulated retail markets in the N.Y. region.
He is a member of the NYMEX Advisory Committee on electric power
contracts and Secretary of the Power Marketing Association. Mr. Spiewak may be contacted
at (201) 784-5349; sspiewak@metromediaenergy.com
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