1. Energy Enterprise Trading and Risk Management Industry Study1

2. Why should my company participate?
Benchmarking helps establish an organization’s true competitive position.
Improves operational management.
Improves strategic planning.

3. Why should my company participate?
… to effect change
Resources
Human
Info Gathering
Data Analysis
Decision Analysis
Risk Mgmt
Risk Mitigation
Physical Disposal
Basic
Competent
Advantaged
Increasing skill level
Level

4. Why should my company participate?
… to effect change
Improve,
Redesign,
Reengineer
Monitor
Utility
Monitor
Reallocate
Resources
Performance
Level

5. Key business drivers Business Asset valuation/ optimization
Convergence
Increased market volatility
Real-time decision support
Business processes
Complexity of technical plant operations/ performance
Risk assessment and management
Enterprise
Integration and standardization
Mergers/acquisition
Performance measurement and reporting
Regulatory issues (FASB 133, GISB, EITF)
Technological
Real-time data
System customization
E-commerce (internet sales, auctions)
Lack of proper system integration
Rapidly changing business needs
System selection and update

6. Key Business Drivers characteristics of leading companies
Are innovative and opportunistic.
Scale is good for increasing returns from certain business functions. Negative returns to scale can also result.
Use risk management programs as integral parts of their business model.

7. Key Business Drivers characteristics of leading companies
Commodity price volatility can quickly destroy or enhance shareholder value.
Work in a real-time environment to anticipate and mitigate potential risk

8. Key Business Drivers characteristics of leading companies
Have a comprehensive understanding of the risks in these volatile markets, coupled with resource commitments.
Have integrated strategies across the entire value chain.
Undertake ownership or control of energy assets, control of transmission/ transportation capacity, have effective back office operations, specialized information systems, or superior ERM business processes.

9. What is the Energy Enterprise Study?
partial areas of interest
Risk
Measurement
VaR / DEaR
Risk Adjusted
Performance
Stress
Testing
Option Greeks
Management
Reporting
Daily P&L
Limits and
Position Tracking
Coordinate Cash and Financial
Stress
Testing
Daily Mgmt
Report
Transaction
Documentation
Deal Capture
Data Entry
Verbal Confirms
Initial
Reconciliation
Written
Confirms
Program
Standardization
Transaction
Settlements
Brokerage
Commissions
Margins &
Premiums
Liquidity &
Cash Flow
Invoicing
Program
Evaluation
Trading Process
Flow
Report
Design
Efficiency of
Systems 3P
Document- ation
Forward Risk
Coordination

10. What is the Energy Enterprise Study?
The wholesale origination/structuring interface.
The retail origination/structuring/risk management interfaces.
Asset management activities versus trading activities.
The quantitative analysis function.

11. What is the Energy Enterprise Study?
Risk management focus that differentiates control and performance functions.
Inclusive FTE definition of mid-office categories to enhance comparability.
Inclusive FTE definition of back-office categories to enhance comparability.

12. What is the Energy Enterprise Study?
Careful definition of parent company/corporate metrics and expense allocation criteria to enhance comparability.
Regional analysis of physical volumes, revenue, COGS, and compensation Inclusive definition of bonuses and stock options.
Use of cash flow metrics to determine the ability to convert revenue to cash.
Review of income statement, balance sheet, and ROCE metrics on a trading-operation-specific basis.

13. TERA
Teknecon Energy Risk Advisors (TERA), LLC is a consulting firm with focus in the oil, natural gas, and electricity industries.  
TERA’s business reputation is built on a thorough understanding of trading and risk management, and how the marketplace views energy companies through the drivers of shareholder value.

14. Alliance of Energy Suppliers
The Alliance of Energy Suppliers, a new division of the Edison Electric Institute, serves the needs and advances the commercial interests of power producers and marketers.
By providing new business tools, strategic market intelligence, and advocacy in multiple forums, the Alliance is helping to define the markets and new rules for this competitive industry.