This seminar takes participants from the basic statistics underlying value-at-risk to the most sophisticated techniques used by energy companies today. Learn how a set of effective planning tools can be used to frame, analyze and manage your organization's exposures.

Value-at-risk or VaR methodology is a user-friendly tool for measuring and controlling overall portfolio risk. Today, companies are extending VaR to also measure corporate earnings-at-risk (EaR), and using EaR to develop an enterprise wide risk management framework. VaR and EaR popularity, however, can hide many complex nuances in the use of these powerful tools.

In addition to presenting the fundamental concepts of Var, EaR and risk management, this seminar will also address the statistical tools that are required to effectively manage energy risk. Learn a comprehensive energy risk management methodology that addresses energy risk from the strategic perspective of the enterprise level all the way down to the detailed management of specific individual risks.

This programwill then focus on how to make value-at-risk work in practice—how to design, implement and use scalable production value-at-risk measures on real trading floors. Real-world challenges are discussed relating to measurement and computation of energy related uncertainty and risk. Don't let the complexity of VaR blindside your organization. Or worse, discourage you from using VaR altogether. View Past Seminar Attendees

What You Will Learn:

• What is Enterprise Risk Management and its relationship to energy risk

• The components of enterprise risk management and why they are important

• Energy as a percent of Cost of Goods Sold and the impact to Corporate Earnings

• The difference between systematic and specific risk and what to do about them

• Fundamentals of CAPM and RAROC for capital energy investments

• How to develop a Strategic Risk Management Plan and why it’s important

• Risk Framing: what it is and how it can be used to manage risk

• Risk Decision Matrix: How to identify, assess, control and monitor energy risk

• Fundamentals of hedging energy risk exposure

• Layered hedging strategies for volatile energy markets

• Using triggers and stop losses in dynamic hedging decisions

• Combining spot purchases, forward contracts and options to manage risk

• How to optimize supply portfolios using probability theory

• Using Demand Side Management options to manage price risk

• Combining Commodity Risk Reduction and Demand Side Management

• How to use statistical methods to measure energy risk

• Forward price simulation, how it’s used and how to do it

• Using Monte Carlo methods to measure price and volumetric uncertainty

• How to measure expected energy budget probability distributions

• Risk Quantification (Tools) including VaR, TEVaR, CVaR, CFaR

• What is earnings at risk (EaR) and how it applies to energy risk

• How to calculate VaR, TEVaR, and EaR

• How to Stress Test and Back Test the VaR calculation

Seminar Agenda

1. What You will Learn (Session #1 - 2.0 hours)
1. Sources of energy risk – Where is it?
2. What is Energy Risk Management and why its used
3. How is energy risk measured?
4. Enterprise Risk Management – what is it and why it used
5. Components of Enterprise Risk Management and there relationship to Energy Risk

1. The Internal Environment
2. Objective Setting
3. Event Identification
4. Risk Assessment
5. Risk Response
6. Control Activity
7. Information and Communication
8. Monitoring

6. What is Risk Appetite and how it relates to the risk management strategy
7. What is the Efficient Frontier?
8. Where is the best portfolio on the frontier?

Application:
Example – Identifying the risk facing an energy supplier

2. What You will Learn (Session #2 - 2.0 hours)
1. Developing a Strategic Risk Management Plan

1. Key elements of a Strategic Risk Management Plan
2. Components of a Risk Response Matrix
3. Systematic vs. Specific Risk
4. The decision to manage vs. accept risk exposure

2. Hedging Risk

1. Review of Hedging Strategies
2. Common Hedging Instruments – Futures, Forwards and Derivatives

Application:
A Hedging Primer: Examples of hedging energy price risk.
Application:
Combining energy price hedging with demand response opportunities: The net effect of commodity risk reduction and demand side management

3. Strategic Hedging Strategies

1. Portfolio diversification
2. Layered hedging strategy
3. Triggers and Stop Loss

Application:
Example – Setting-up a layered hedging strategy and comparing results for two different long-term sustainable price estimates

3. What You will Learn (Session #3 - 2.0 hours)
1. What is value-at-risk or VaR
2. Why value-at-risk is the risk measurement method of choice at most energy firms and what are the alternative approaches.
3. The assumptions we need to know before using value-at-risk.
4. What are TVaR, and Earnings-at-Risk (EaR) and why they are needed?
5. The relationship between earnings-at-risk and the enterprise wide risk management strategy
6. How energy price uncertainty impacts earnings-at-risk
7. What the three different VaR calculation methodologies are and how they compare.
8. Caveats and cautions when using VaR.
9. How to calculate VaR and EaR using a simple example (no advance math!)

4. What You will Learn (Session #4 - 2.0 hours)
1. Portfolios and volatility – getting the units right
2. The two approaches to calculating VaR – historical simulation and model-building – advantages and disadvantages
3. How to Stress Test and Back Test the VaR calculation
4. Reporting change in Daily VaR, change in 5-Day VaR Moving Average, and change in the Stress Test extreme value over a historic time horizon

Application:
Example – Calculating the settlement VaR from a real-time obligation to serve electricity (valuing load and demand serving contracts). The pros and cons of simulation vs. closed-form solutions.

Your Instructor

Kenneth Skinner, Ph.D. –Dr. Skinner is Vice President and Chief Operating Officer of Integral Analytics (IA), an analytical software and management consulting firm focused on operational, planning, and market research solutions. Reaching every aspect of the energy industry, the IA proprietary analytical, programming and statistical methods allow clients more precise valuation, faster and more affordably. Dr. Skinner has over 15 years of energy industry experience including 5 years as the Derivative Structuring Manager for Sempra Energy Solutions, a national energy supplier, focused on developing retail commodity supply strategies including portfolio risk management, hedging strategy, and least-cost supply opportunities. Having worked with several energy consulting companies including Summit Blue Consulting, RDI Consulting and PHB Hagler Bailly, Dr. Skinner has significant experience in economic analysis and modeling of energy assets including development of portfolio VaR models, structured valuation of distributed generation and electricity and natural gas commodity transactions, financial risk assessment and valuation of energy hedging strategies.

Who Should Attend this Seminar?

Electric utilities, generators, marketers and industrials; corporate planners, economists, rate making staff, energy and electric power executives; government regulators; traders & trading support staff; marketing, sales, purchasing & risk management personnel; accountants & auditors; plant operators, and engineers.

Prerequisites

This fundamental-to-advanced level group live seminar has no prerequisites. No advance preparation is required before the seminar.

Why Choose PGS?

PGS seminars are known for their clear explanations and in-depth content. Register for a PGS program today, and team up with the leader in electric power and energy education. Join over 5,000 energy and financial professionals who have already attended one or more of PGS's proven courses. View Past Seminar Attendees

Hotel & Seminar Information

This one-day seminar will be held at the hotel listed below or can be conducted on-site at your facilities. The seminar will start promptly at 8:00 AM and will finish at 4:00 PM. The program includes continental breakfast, lunch, and coffee/cookie breaks. Attendees also receive a professionally produced seminar manual that can serve as a valuable office reference. Dress is casual for all seminars.

Courtyard Marriott Houston by the Galleria
2900 Sage Road
Houston, Texas 77056
Telephone 1-713-622-3611
View Hotel Website

PGS Energy Training has secured a limited number of Courtyard Marriott hotel rooms at a special discounted rate. Please dial 1-713-622-3611 and mention the PGS Energy Training event for your discounted rate.

Registration Fee & Discounts

Register Now and invest in your future. The price for this one-day seminar is $895 (USD).

• Additional attendees and government employees receive a 10% discount.
   
• Sign up for 4 or more classroom seats during the same month and all attendees will receive a 20% total discount. ( If you plan to register 4 or more classroom seats, but want attendees to pay by separate credit cards, register one party now and mention this fact in the "Comments" section of the registration form. We will manually subtract the 20% discount from the first registrant's seminar fee. Tell other parties in your group to mention your name when they register, and we will give them the 20% discount as well.) Please call 412-521-4737 for more information.
  

Payment & Cancellations

Payment is due prior to the start of the seminar by Visa, Master Card, American Express, Diners Club, or corporate check. Seminar fees will be charged to your credit card at the time of registration unless other arrangements have been made. Please make checks payable to "PGS Energy Training" 43 Fawnvue Drive, Suite 700 • Mckees Rocks, PA 15136. Cancellations can be made up to three (3) business days prior to the start of the seminar for a full refund. No refunds will be made thereafter, but credit will be given toward future workshops. Substitutions may be made at any time. For more information on PGS policies regarding administrative matters and complaint resolution, please contact our offices at 412-521-4737.

CPE Credits

This group live seminar is eligible for 7.0 CPE credits. Be aware that state boards of accountancy have final authority on the acceptance of individual courses for CPE credit. As of January 1, 2002, sponsored learning activities are measured by program length, with one 50-minute period equal to one CPE credit. One-half CPE credit increments (equal to 25 minutes) are permitted after the first credit has been earned in a given learning activity. You may want to verify that the state board from which your participants will be receiving credit accept one-half credits.

PGS  Energy Training is registered with the National Association of State Boards of Accountancy (NASBA)  as a sponsor of continuing professional education  on the National Registry of CPE Sponsors. State boards of accountancy have final authority on  the acceptance of individual courses for CPE  credit. Complaints regarding registered sponsors  may be addressed to the National Registry of  CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN, 37219-2417. Web site: www.nasba.org. CPAs interested in attending any seminars  should contact our offices for details on CPE credits granted and any prerequisite requirements.