Public Utilities Fortnightly and POWERdat®
Doug Nordham is a principal consultant for Platts Research.
In the wake of recent power and gas market volatility and retail deregulation, large end-users have suddenly realized that they are now energy market participants. To control their energy budgets in this environment, corporate energy managers (CEMs) must quickly become familiar with markets in which they are inexperienced participants. Moreover, they must become accustomed to sophisticated risk management tools in order to protect their companies’ bottom-line.
Energy end-users are generally risk averse and are typically the least knowledgeable energy market participants. Due, in large measure, to a long-standing reliance on their gas and electric utilities to shelter them from true market volatility, many end-users are being forced to learn about and implement energy risk management techniques. Prior to the catastrophic energy market events on the West Coast coupled with tremendous natural gas volatility and the market upheaval created by Enron’s failure, most energy end-users had never thought much about managing energy price and counter-party risk.