Course 13 of 20 · Power and Electricity Desk Academy

Collateral, Margin & Working Capital for a Power Book

Stage C, Commercial exposure and hedging. Level 6 of 10.

The collateral, initial and variation margin, and working capital cycle that a hedged power book consumes.

119 chapters · 11 modules · every chapter one 8 to 10 minute explainer · builds on: Course 05, Course 06, Course 12

Enrol or enquire See the 119 chapters
How a chapter is sized

One chapter is one idea taken to the point of use

Each chapter is a single self-contained explainer of 8 to 10 narrated minutes, covering one idea to the point where you can use it.

Chapters run in order. Each one assumes only what the chapters before it taught, and capability belonging to a later course is named and deferred rather than half-covered.

Curriculum

11 modules · 119 chapters

Open any module for its full chapter list, in teaching order.

M0 The Money Behind a Settled Megawatt-Hour Ch 1-9
  1. Nobody Pays You For a Megawatt-Hour on the Day It Flows
  2. Three Separate Pots of Cash a Power Desk Must Keep Full
  3. Why an Electricity Book Has No Cargo to Finance
  4. The Half-Hour as the Unit of Money
  5. Capital Lodged Before You Are Allowed to Trade
  6. Who Controls Cash on an Electricity Desk
  7. Return on the Capital a Trading Strategy Locks Up
  8. The Vocabulary This Course Uses
  9. How the Modules Fit and What Is Left to Other Courses
M1 The Settlement Cash Calendar Ch 10-20
  1. Drawing the Payment Calendar for One Delivery Month
  2. Wholesale Trades Settle Before the Month Even Ends
  3. Imbalance Cash-Out Arrives on Its Own Schedule
  4. Network and Use of System Charges Fall Due Regardless
  5. Converting Days of Lag Into a Funding Number
  6. Why a Supply Book Pays Out Faster Than It Collects
  7. A Generator Collects Monthly and Pays Fuel Weekly
  8. Levies, Obligations and Money You Collect for Someone Else
  9. Netting Wholesale Flows With One Trading Counterparty
  10. Cross-Border Settlement Across Two Currencies and Two Calendars
  11. A Worked Delivery Month of Cash In and Cash Out
M2 Credit Cover Held by the Market Operator Ch 21-31
  1. Why the System Operator Holds Your Money
  2. How an Indebtedness Figure Is Built Against You
  3. The Cover Percentage That Triggers a Default Notice
  4. Letters of Credit and Cash as Acceptable Cover
  5. Sizing Cover Against a Cold Snap You Have Not Seen Yet
  6. The Lodgement Deadline and the Hours You Actually Have
  7. Cover Released Late and the Money Standing Idle
  8. Suspension, Deregistration and Losing the Right to Trade
  9. Cover for a Supply Licence and the Customers Behind It
  10. Cover Posted to a Transmission Owner for Connection and Use
  11. A Worked Cover Position Through a Price Spike
M3 Collateral at the Power Exchange and the Bid You Can Afford Ch 32-42
  1. The Bid Limit Set by Yesterday's Collateral
  2. How an Exchange Values Your Open Auction Exposure
  3. Lodging Collateral Before the Gate Closes
  4. Collateral That Moves While You Trade Intraday
  5. The Position You Could Not Close Because Cover Ran Out
  6. Allocating One Collateral Pool Across Several Market Areas
  7. Negative Prices and a Collateral Call for Selling
  8. Broker Clearing, Give-Up and Who Holds the Cover
  9. Membership, Capital Requirements and the Cost of Direct Access
  10. Forecasting Tomorrow's Auction Cover From Tonight's Position
  11. A Week of Auction Collateral, Day by Day
M4 Clearing House Margin on a Shaped Hedge Book Ch 43-54
  1. Why the Hedge That Protects You Empties the Account
  2. Initial Margin on a Baseload Forward
  3. Why a Peak Contract Costs More Margin Than Its Volume Suggests
  4. Spread Margining and the Offset a Shaped Hedge Earns
  5. The Cascade Date That Changes Your Margin Overnight
  6. Variation Margin Against a Monthly Revenue Stream
  7. A Winter Rally Through a Sold Forward Position
  8. Eligible Collateral and the Haircut That Shrinks It
  9. An Intraday Call With Hours to Settle
  10. Three Clearing Accounts That Will Not Net
  11. Projecting the Call From the Open Hedge Book
  12. The Hedge Lifted Because the Cash Ran Out
M5 Reconciliation Runs and the Cash That Comes Back Years Later Ch 55-64
  1. A Settled Month That Is Not Final
  2. Estimated Data Now, Actual Data Later
  3. Sizing the Cash a Future Run Will Demand
  4. A Correction That Arrives After the Customer Has Left
  5. Provisioning, Accruals and the Number the Board Sees
  6. Chasing a Metering Error Worth More Than the Trade
  7. Reconciliation Against a Hedge Already Closed
  8. Disputed Volumes and the Payment You Withhold
  9. Carrying a Reconciliation Tail Across a Company Sale
  10. A Worked Reconciliation Tail Over Three Runs
M6 Funding a Generation Book: Fuel, Carbon and the Spread Ch 65-75
  1. Paying for Fuel Before Selling the Power
  2. Carbon Allowances as a Cash Event Before Compliance
  3. The Spark Spread Hedge and Its Three Cash Legs
  4. A Tolling Agreement Seen From the Cash Side
  5. An Unplanned Outage While the Hedge Stays Open
  6. Funding a Renewable Plant With No Fuel Bill
  7. Maintenance, Spares and the Capital That Is Not Trading
  8. Project Debt Covenants Against a Trading Hedge
  9. Cash Trapped Inside an Asset Company
  10. Negative Prices and Paying to Keep Running
  11. A Worked Running Month for One Thermal Unit
M7 Counterparty Credit on a Power Book Ch 76-87
  1. The Credit Question a Power Trade Asks
  2. A Vertically Integrated Utility as Counterparty
  3. An Independent Supplier With Thin Capital
  4. A Merchant Generator Behind Project Debt
  5. An Industrial Buyer Whose Plant Can Stop
  6. Reading a Group Structure for the Real Obligor
  7. Replacement Cost on a Forward Delivery Not Yet Made
  8. Settlement Exposure Across Overlapping Delivery Periods
  9. Potential Future Exposure on a Three-Year Power Curve
  10. Setting a Limit a Trader Can Actually Use
  11. Close-Out Netting When a Supplier Fails Mid-Month
  12. A Written Assessment of One Power Counterparty
M8 Credit Support Instruments and Bilateral Collateral Ch 88-98
  1. Turning a Promise Into Something You Can Collect
  2. Parent Guarantees Inside a Utility Group
  3. A Letter of Credit Sized to a Delivery Quarter
  4. Drawing on Security When Deliveries Are Still Flowing
  5. Cash Deposits From a Supplier You Will Not Carry
  6. The Credit Support Annex and Its Three Dials
  7. Negotiating Thresholds Against a Shaped Hedge Book
  8. Cleared Against Bilateral: A Cash Comparison
  9. Adequate Assurance and Asking for More
  10. Expiry Dates, Renewal and a Book Quietly Unsecured
  11. A Worked Default on a Power Trading Counterparty
M9 Facilities, Covenants and the Lender Relationship Ch 99-108
  1. The Facilities a Power Book Actually Needs
  2. Committed Money and Money a Bank May Decline
  3. Sizing a Facility to a Winter You Hope Not to See
  4. What Borrowing Costs a Power Desk
  5. Explaining a Megawatt-Hour to a Credit Committee
  6. Financial Covenants in a Trading Facility
  7. Measuring Headroom and Forecasting a Breach
  8. Managing a Breach Before the Test Date
  9. Reporting to a Lending Group Every Month
  10. Spreading Funding Across Lenders and Instruments
M10 A Funded Delivery Year, End to End Ch 109-119
  1. The Book We Will Fund
  2. April to June: Opening Positions and Lodging Cover
  3. July to September: Maintenance, Low Prices and Released Margin
  4. October to December: Cover, Margin and Receivables Together
  5. January to March: Collection, Release and the Reconciliation Tail
  6. The Same Year With a Two-Week Cold Snap
  7. The Same Year With a Plant Out for a Quarter
  8. Reducing Peak Requirement Without Shrinking the Book
  9. The Funding Charge Every Deal Should Carry
  10. Where Collateral and Credit Stop Helping
  11. The Monthly Funding and Credit Review

The brochure gives each of these 119 chapters a paragraph on what it covers and what you can do once you have worked through it.

This is course 13 of twenty

It stands alone, and it is also the entry point to the Power and Electricity Desk Academy pathway.

Enrol or enquire See the whole pathway