Hedging against Risk in Wholesale Energy Markets

May 17, 2018 @ 8:30 am – 3:45 pm
The Pyle Center, Rm 235
University of Wisconsin: Pyle Center
702 Langdon St, Madison, WI 53706
$100 for members, $150 for non-members
Lori Sakk
Draft agenda

Hedging against Risk in Wholesale Energy Markets

0.6 CEUs

Attendees will be introduced to the types of business transactions and risk associated with hedging in wholesale energy markets.
Participants will gain an understanding of the wholesale energy markets, the reasons for hedging,
and the financial tools available for risk management.


8:15-8:30              Registration check in and welcome coffee

8:30-9:30              Wholesale Energy Markets – This session will provide an overview of the wholesale energy markets and the types of transactions that occur, how energy hedging differs from other industries, and which “risks” are assumed from participation in wholesale energy markets.   Jeff Klarer, Market Strategist, WEC Energy Group  Klarer presentation

9:30-10:30            Financial Hedging – An introduction to financial hedging, including the use of futures and options contracts, and the practical concept of price convergence.  Enrique Bacalao, Chief Economist, Public Service Commission of Wisconsin  Bacalao presentation

10:30-10:45          Break

10:45-11:30          Understanding Risk and Regret in Hedging in the Wholesale and Retail Energy Markets – With hedging, risk can be mitigated, to a greater or lesser extent, and on a static or a dynamic basis. If hedging is imperfect, are regrets involved? If so, how does one factor regret into any hedging decision? How does one think about regret? Is it a real cost, or is it simply a bad mental habit?  Steve Kihm, Principal and Chief Economist, Seventhwave  Kihm presentation

11:30-12:15          Financial Transmission Rights (FTRs)/Auction Revenue Rights (ARRs) – In order to hedge against price uncertainty in MISO, Market Participants can obtain financial hedges. The discussion will include FTR market principles and how these financial hedges are beneficial to their holders.  Blagoy Borissov, Manager, Forecasting Engineering, Operations Planning Department, Midcontinent Independent System Operator  Borissov presentation

12:15-1:00            Lunch

1:00-2:00              FTRs and ARRs, continued Blagoy Borissov

2:00-2:45              Hedging Wholesale Power Market Risk: Practical Application from a Utility Perspective — Hear how Dairyland Power Cooperative manages its energy and capacity market risk. Also discussed during this session will be the similarities and differences between wholesale power markets and other “commodity markets.”  John Carr, Vice President, Generation, Dairyland Power Cooperative   Carr presentation

2:45-3:00              Break

3:00-3:45              Examples, continued John Carr

3:45                       Adjourn

Your registration fee includes welcome coffee, breaks, and lunch.

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