Please be advised that the Passport Implementation Group will meet 

Tuesday, May 21st at 2:00pm EST/1:00pm CST

For more information about this working group go to CCRO Passport Implementation

If you have joined as a participant you will be able to enter the secure site.

Dial Information: ... continued

Monday, Tim sent out a word document with the draft questions mapped into the seven categories we agreed to last week - 

Tim also had some comments in that document regarding additional suggestions about organizing & clarifying the questions.  This morning, Sid sent-in some of his comments & edits of that document - this should provide the latest draft for our conference call today...

  if you are logged-in, you can get directly to that draft below.....

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SAS RiskAdvisory and the CCRO cordially invite you to an invitation-only Private Dinner on Wednesday, May 15, 2013.  The dinner is just a few blocks from the 

Energy Risk USA conference.

On May 15, 2013 the CCRO, along with our sponsor SAS/RiskAdvisory, will be hosting a networking style dinner. There will be no formal presentations. This is pure networking and relationship building. Please let me know BY END OF DAY Wednesday, MAY 8th whether you are available to attend the event on behalf of the CCRO. As seating is limited and we want to ensure there is lots of room for non-CCRO members, we will confirm your attendance later next week.

Join us for great food and networking with your peers and members of SAS RiskAdvisory and the CCRO. Restaurant Wine Director, Jose Perez, has helped us choose wines for the evening. He will join us and share his knowledge to set the stage for an enjoyable dining experience and inspired conversation.

Request an Invitation by May 8, 2013

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The call today was very productive, thanks to all that dialed--in.  Following is my summary of what was decided....

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Just added a few slides contributed by participants to help the leadership team structure questions for the survey that fit companies of all sizes.  Please have a look at them - a link to the slides is found if you follow the continued...

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In response to inquiries from members and policy-makers, the Committee of Chief Risk Officers (CCRO), with the assistance of Deloitte and Touche LLP, polled market participants with a small set of straightforward questions regarding market liquidity.

To date, 20 participants have responded.  Most respondents are wholesale marketer/traders, merchant generators, or natural gas producers.  Two municipal entities participated.

Overall, the survey focused on getting the “pulse” of the current natural gas markets.  The majority of respondents detected a decrease in market liquidity and a decrease in counter-parties available.  Respondents are split with regard to whether the nature of counter-parties available had shifted toward financial institutions or not.

Click here for the Dodd-Frank and Market Liquidity Survey

Questions should be directed to:

admin@ccro.org<mailto:admin@ccro.org> or 281-825-4870

Bob Anderson

Executive Director, CCRO

281-825-4870 office

281-382-2538 cell

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Questions have arisen among some policy-makers about the effects of Dodd-Frank Act regulation on the liquidity of energy markets.  The CCRO has agreed to do a quick and simple survey to gauge whether members, or other natural gas market participants cooperating in this survey, have encountered adverse effects on the liquidity of the natural gas markets in which they participate.

The survey is intended to document initial market participant experience with liquidity changes in energy transactions occurring within the last six to nine months since CFTC Dodd-Frank implementation.

An adequate response to this survey will:

*  Allow the CCRO to establish the industry’s foundational knowledge of Dodd-Frank impacts on energy markets

*  Facilitate a discussion about monitoring for unintended consequences to liquidity

Given expectations for policy consideration of this matter in the near future, CCRO would greatly appreciate your taking a few minutes to answer these questions promptly.

From the Leadership Team for the Dodd Frank working group,

Click here for the Dodd-Frank and Market Liquidity Survey

Questions should be directed to:

admin@ccro.org<mailto:admin@ccro.org> or 281-825-4870

Bob Anderson

Executive Director, CCRO

281-825-4870 office

281-382-2538 cell

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Please join us Monday April, 22nd from 4:30PM est to 5:00PM est/3:30PM cst to 4:00PM cst for the Updating Your Risk Policy call.

  Agenda:

• Introduction of new members to the working group
• Recap of the last meeting
• Relevant ideas discussed at the March CCRO meeting
• Additional contributions that people would like to make
• Wrap up (encourage continued contribution to the online document, discuss next time we will get together for a call, target a date for first round revisions to be complete)

If you have joined as a participant you will be able to enter the secure site.

Dial Information: ... continued

The CCRO Risk Organizations survey working group has put forth slides drafting the objectives and timeline for the survey development, as well as organization of major topics into a structure that will facilitate development off survey questions in the weeks ahead.  

One of the take-aways from today's Monday working group call was to gather some information about the organizational specifics of the working group participant companies.

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The Dodd Frank Working Group is now taking-up the task force that has been discussing in detail the issue of how to define "bona fide" hedges for the purpose of CFTC position limits.  The task force has had a meeting with the CFTC staff and several conference calls about this & other issues related to CFTC perspectives on positions & hedging practices at energy companies.  

Now that the task force has decided to tackle the specific issue of Bona Fide Hedges, it has been decided that it is best to open to detail discussion to the wider Dodd Frank Working Group. Starting with an extended discussion at the March 19th meeting.

Jim Allison added slides for the CCRO general meeting discussion on the 19th of March - and a spreadsheet that supports analyses from the presentation....

CLICK HERE to view the discussion slides

CLICK HERE to view the analysis spreadsheet

10:00 Central Time,  90 min

Working Group: Risk and Compliance Under Dodd Frank

Members and meeting guests are encouraged to join in this open discussion which will include introductory comments from Jim Alison, Ann Marie Hanley, Glen Mackey, Mike Prokop, CCRO Contributor Vince Kaminski, and others.  

For more information, join the Bona Fide Hedges task force....click on your name / profile at the top right of the screen.

CLICK HERE TO GO TO THE TASK FORCE WEBSITE

Get Involved!

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Defining “Bona Fide Hedges”. An extended discussion between members & expert guests.

At issue is the possibility that proposed CFTC regulatory language may lend itself to different interpretation, versus existing language found in statutory definition. This definition of course is specifically which contracts will qualify as "bona fide hedges" for certain regulatory exemptions.

One central issue here arises from the best practice "probabilistic view" of future exposures, and the associated risk management actions taken in advance to manage those potential exposures...

• Should the common practice of putting specific transactions in place in anticipation of a potential, but as yet uncertain commitment, qualify as "bona fide"?
• How might companies clearly denote such anticipatory trades?
• How does the CFTC proposed language differ in this respect from the statutory language?
• What happens to such anticipatory trades in the event that the potential exposure originally anticipated, ultimately resolves to zero?
• Is there an issue for cases where the merchandizing energy company has placed these anticipatory contracts well in advance of physical assets even being constructed?
• Are there some good case-study examples that some of our members might contribute to add clarity?

The task force is hoping that this discussion will help to advance their work efforts with a firm grasp on the views of members and experts. Their goal is to quickly publish a CCRO document or article that will provide expert, independent perspectives. Clarifying this definitive issue for energy trading.

BE SURE TO CHECK-OUT THE ON_GOING DISCUSSION FOR THE WORKING GROUP - it provides some additional thoughts that will be helpful for participation in the discussion...

Jim Allison added slides for the CCRO general meeting discussion on the 19th of March - and a spreadsheet that supports analyses from the presentation....

CLICK HERE to view the discussion slides

CLICK HERE to view the analysis spreadsheet

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John Judge

FirstEnergy Corp

Vice President, Corporate Risk and Chief Risk Officer

John W. Judge is vice president, Coporate Risk and chief risk officer.  He oversees FirstEnergy’s Credit, Enterprise Risk Management, Insurance, and Risk Control functions.

John began his career with FirstEnergy in 1998 as a senior staff analyst. He was promoted to manager, Generation Strategy, then was named manager, Cross Business Initiatives. In 2001 he was promoted to director of Information Technology Strategy. In 2002 John was named director, Gas Product Line, for the company’s natural gas business. In 2004 he was named director, Commodity Supply Planning, for FirstEnergy Solutions, the company’s competitive subsidiary. In 2007 he was named director, Integrated Business Planning, and in 2009 was named director, Supply Chain. He was promoted to vice president, Supply Chain in February 2011 and moved to his current position in August, 2012.

Prior to joining FirstEnergy, he was employed by Bell Atlantic Corporation in a variety of business analyst positions.

John graduated from the University of Miami with a Bachelor of Arts Degree in economics and international studies.  He earned a master’s degree in business administration from Georgetown University.

John is a member of the graduate faculty at the University of Akron where he teaches in the Finance Department.  He serves on the boards of the Ohio & Erie Canalway Coaliton, Habitat for Humanity of Summit County, and the Barberton Community Development Corporation.  He is a graduate of Leadership Akron Class XXV.

John, his wife Jill, and their three children live in Akron, Ohio.

Bob Stibolt

Galway Group

Managing Director

Robert D. Bob Stibolt has 28 years of experience in the energy industry covering topics ranging from economic evaluation and risk analysis for upstream oil & gas exploration and development opportunities to merchant power and LNG project development, long-dated structured energy transactions, energy trading, and risk management. 

Mr. Stibolt leads the SDG-Galway Energy Strategy Practice, an alliance between Strategic Decisions Group and Houston-based Galway Group that serves clients in upstream and midstream oil & gas, LNG, and energy marketing & trading. A former partner in SDG Oil & Gas Practice, Mr. Stibolt is currently a managing director at Galway. He is also Global Finance Advisor to the New Zealand-based Tukia Group and serves on the board of directors of the Denkmann Companies.

Prior to his current position, Mr. Stibolt was senior managing director and chief risk officer of Bear Energy LP and, following the merger of the Bear Stearns Companies, Inc., into JP Morgan Chase, managing director in the JP Morgan Global Commodities Market Risk organization. 

Earlier in his career, Mr. Stibolt was senior vice president of strategy, portfolio & risk management for Suez Energy North America, Inc., vice president of risk strategy for Sonat Energy Services, manager of decision analysis for Atlantic Richfield Company, and a project manager with Natomas Company. 

Mr. Stibolt has been invited to testify on various energy issues by both the U.S. Congress and the FERC. He was among the founders of the Committee of Chief Risk Officers (CCRO) as SUEZ Energy's representative, and has published several articles on the topics of real options and risk management. His most recent publication, A Practitioner's Perspective on Modeling Prices and Trade in a Globalizing Natural Gas Market, appeared in a special issue of The Energy Journal in 2009. 

Mr. Stibolt holds a BSE degree from Princeton University in aerospace & mechanical sciences/ engineering-physics and an MS degree from Stanford University in management science & engineering.

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Dave Macway

Macway Uhl, LLC

Managing Director

David Macway has over 25 years experience in strategy and decision consulting, executive education, and major capital project risk management. He is recognized as a leader in the practical application of strategy and decision principles to a diverse set of industries and applications. He frequently facilitates senior executive planning retreats and holds seminars on strategy and decision making. 

Dave’s current practice focuses on strategy and capital project management, with much of his work in the energy industry. Recent engagements include developing a strategy, portfolio management, and budgeting process for a large, independent oil and gas company; creating a cost and schedule risk management process for major capital investment projects at several energy clients; and creating an R&D portfolio management system for a consumer products company. 

Much of Dave’s time is spent helping large energy clients analyze and manage cost and schedule risk associated with major capital projects, ranging in size from $50 million to over $40 billion. These projects include some of the largest oil field developments, processing facilities (such as LNG, Gas-to-Liquids, refineries, and petrochemical complexes), power plants, and infrastructure investments in the world.

Dave has a B.S. in Chemical Engineering from the University of California, Davis, and an MBA from Stanford University. He is a consulting lecturer in Stanford University’s Department of Management Sciences and Engineering.

CLICK HERE for Dave's presentation at the March 19, 2013 CCRO meeting

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Michael Finger

EDP Renewables

Director, Risk & Markets

Michael Finger is the Director of Risk & Markets for EDP Renewables North America.  He is responsible for supporting the identification and capture of investment and commercial opportunities and enabling the efficient and effective governance of associated risks.  Over the past five years with EDP Renewables, Michael has been involved with investments in over 3,000 MW of new wind assets in US markets and with commercial transactions ranging from long term Power Purchase Agreements to short term hedging of merchant energy and congestion.

Michael has twelve years of experience in the energy business.  Prior to EDP Renewables, Michael spent four years with the Boston Consulting Group primarily serving clients in the power and gas industries on topics such as coal fleet environmental retrofit decisions, gas generating asset M&A, utility ratemaking and EPS improvement, and LNG and gas pipeline investment opportunity assessment. He also spent two years as a Marketing Associate with Falcon Gas Storage and a year in Enron’s Analyst & Associates program.  Along with this experience, Michael spent six years as a Civil Engineer.

Michael earned a Masters in Business Administration degree from the Jones Graduate School of Management at Rice University in 2002 and a Bachelor of Science degree in Civil Engineering from Texas A&M University in 1994.

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The working group leadership team is eager to get into the details of what the CCRO members would agree are sensible requirements for a verification inspector for the CCRO Passport program.  The CCRO envisions a list of candidate inspectors that would be available to companies that request a passport, who would carry-out the steps for verification of compliance with the published CCRO risk management standards.

During the late September 2012 CCRO Summit, there were a few FCM use-related questions splashed onto the in-room screens.  The FCM Discussion was a great one for sure, and the results of the room's surveys contributed to the direction that discussion took....For CCRO members and working group participants, below are the screens as they appeared during the discussion: ... continued

An important announcement regarding this proposal from the CFTC... ... continued

The "Next Steps to Risk and Compliance with Dodd Frank" working group started a new on-line discussion.
CCRO members and Working Group Leaders may join this discussion and contribute their comments.  The topic is sure to be a part of the working group's discussion at the CCRO meeting this week...
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1.       Develop the  package that will go to an ISO Member that wants to take advantage of the CCRO “passport” 

COMMENT:
It was proposed the CCRO may be able to  defray some of the Working Group's costs by assessing an "appropriate cost recovery fee" for the services  being provided. This fee could be assessed to those market participants wishing to participate within the Passport program.

COMMENT:
By way of a quick update, ERCOT has decided to implement their own Verification Process which I believe will begin in January 2013.  I have spoken with  Mark Ruane concerning this decision.  He will try to adjust his scheduled so he will be able to participate on this call.

2.       Develop a guide for the inspector/auditor to follow when conducting the verification. 

3.       Develop the training program for inspectors/auditors.

COMMENT:
We hope  Items 2 & 3  will provide a viable intersection point for the ISOs/RTOs and CCRO to actively  collaborate on this project.  We hope the development of the inspector's guide and the training program could be performed in concert with a group of representatives from the ISOs/RTOs. 

I look forward to not only Marc's continued participation in this Working Group but also the participation from representatives  of all of the ISOs/RTOs.

4.       Develop a selection guide for qualifications for inspectors/auditors.  This would be the time to address issues like how a firms external auditor may qualify to be the inspector/auditor.

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GET INVOLVED... JOIN A WORKING GROUP TODAY!

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The objective of most risk analyses is to achieve one or more of the following objectives:

·      To quantify a risk

·      To gain insight into the level and drivers of a risk

·      To assist in decision making related to the risk

·      To support a governance / compliance program

The risk analyses to support each objective are often somewhat different, even when the underlying risk to be assessed may be the same.  Further, the risk analysis to achieve a particular objective may differ depending on the nature of the risk tot be analyzed.  In short, there is no “one-size-fits-all” risk analysis or metric that will address all of the above objectives for all risks.

While there is no “one-size-fits-all” risk analysis or metric, there are some “best practices” in performing risk analyses that lead to consistent success. ... continued

Is there enough natural gas that is findable and deliverable to plug most of the gap created by the projected closure of 25.5 gigawatts (GW) of coal-fired U.S. generating capacity between now and year-end 2015?

That is an increasingly urgent question facing U.S. utilities, power and gas marketers and regulators.

The risks of brownouts and perhaps even blackouts on weekdays challenged by extreme weather loom as a growing risk that could trigger a backlash against emissions regulations, renewable sources of electricity and competitive power markets.

The principal source of concern is the most recent report by the U.S. Energy Information Administration based on its Form EIA-860, “Annual Electric Generator Report.”

The coal-fired electricity projected to be retired over the next five years is more than four times greater than retirements executed during the preceding five-year period, a mere 6.5 GW by comparison. The estimated 9 GW of coal-fired capacity retirements expected in 2012 will likely be the largest one-year amount EVER. And that record likely won’t stand very long because 10 GW are projected to be retired in 2015.

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Jack Yeager of The De Laval Yeager Group and CCRO Executive Director Bob Anderson drove a discussion at the CCRO’s April 2012 to help launch the new CCRO Working Group Risk Metrics sub-committee at the annual Risk Networking Summit September 26-28 in The Woodlands, Texas.

Yeager was quick to point out that many risk managers tend to settle on a metric “before they even know what question it is they’re trying to answer.” CCRO members don’t want to calculate risk metrics just for the sake of having metrics. “We typically calculate them because somebody has a burning question they need to answer,” Yeager said.  ... continued

IntercontinentalExchange (ICE) is overhauling the trading of energy contracts.

In anticipation of steps needed to comply with the new Dodd-Frank law, ICE said it will convert its cleared swap and option contracts and open interest to an economically-equivalent future or option contract, and continue to be listed and traded in the same manner on the ICE platform.

The move and its timing surprised many in the energy trading community. It is likely to be heralded by lawmakers and regulators who have decried the lack of transparency and the need to reduce systematic risk in energy and financial markets. It could be a sign of other changes to come.

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As Dodd-Frank regulations begin to take effect and a new set of financial instruments are going to be required to clear, most trading entities are taking a closer look at the relationships they have with their Futures Commission Merchants (FCM’s).  Add to this the fall of MF Global and the subsequent demise of PFGBest and the it’s no wonder the clearing industry is in turmoil.

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JOIN OUR NEW SUBCOMMITTEE ON RISK METRICS

The objective of standards 25 through 27 of the CCRO's Risk Management Standards recommendations is to provide security and data integrity to properly serve natural gas and power marketers, utilities and regional transmission organizations, or RTOs.

The systems used may vary by organization to reflect differences in business objectives, markets, and products associated with a company’s energy transactions.

A proper risk infrastructure is necessary to provide accurate and timely information for decision-makers. Typically, it is a marriage of technology, business processes and communications.

Standards 25, 26 and 27 reflect these themes:

• A risk management system must capture transaction details, and support operational requirements, risk metric calculations, and financial reporting.
  

• There must be policies and controls that protect the security and integrity of the data and information within the system.
  

• The risk infrastructure must provide the capability to monitor, aggregate and present relevant information on a timely basis to stakeholders.

Joining the CCRO provides member companies access to this and all previous white papers, as well as, the future content and working group projects. The Risk Management Standards paper is available here.

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Finding and keeping personnel is integral to a comprehensive energy risk management framework. In this the third of a series of blog posts on the CCRO's recent white paper on Risk Management Standards, we touch on Standards 23 and 24.

Underpinning the success of the risk framework is the widespread understanding and daily usage of key risk management concepts throughout the firm. It is critical to ensure personnel are qualified and experienced. Since qualifications must develop as the firm’s risk taking activities develop, it is impossible to separate the need for qualifications from the need for on-going
education and focused training.

In a risk-aware organization, the quality of the education program is readily apparent in the consistent manner that communication and discussion of risks are undertaken. The standards address qualification and training requirements for individuals involved in
Commercial Activities, oversight of Commercial Activities and Associated Risks, and the Governing Body.

Find out more by securing your own copy of the Risk Management Standards paper here.

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Any company looking pass a 'smell' test about its risk management standards should have a robust array of risk policies and procedures in place. In this the second of four blog posts about the CCRO's recently approved "Risk Management Standards" white paper, we dive into standards 7 through 22. ... continued

With the influx of new natural gas supplies from various shale formations throughout the continental U.S., the risks of relying too much, or not enough, on natural gas to generate power to achieve targeted returns on generation assets is front-of-mind for many risk managers and their C-suite colleagues. 

AEP CEO Nicholas Atkins expressed concern about over-reliance on natural gas at a recent speech before the U.S. Chamber of Commerce. He reminded lunch-goers of gas' price volatility. He probably has lots of company. ... continued

As published in the Jan/Feb issue of Electric Light & Power magazine.

The Committee of Chief Risk Officers (CCRO) is leading an effort among utilities, power marketers and regional power grid operators to adopt standards that will help them manage risks that threaten the uninterrupted sale and purchase of electricity and associated financial transmission rights.

In response to the first major credit action (Order 741) by the Federal Energy Regulatory Commission (FERC) directed at organized wholesale electricity markets and related regulatory responsibilities by the Commodities Futures Trading Commission (CFTC), a working group of theCCRO on Nov. 28 drafted a white paper, “Risk Management Standards for Energy Market Participants,” and shared it with interested parties in front of a Dec. 14 compliance filing deadline. ... continued

This article first appeared in the 2011 Year End issue of Energy Risk Magazine

With the use of some helpful props, CME Group’s Mike Prokop talks Pauline McCallion through a career spanning more than a quarter of a century in the world of energy trading

A visit to Mike Prokop’s office at CME Group’s Houston location is like a trip down memory lane for the energy markets, featuring paraphernalia from a 26-year career that also includes stints serving on Commodity Futures Trading Commission committees and other key industry bodies such as the Committee of Chief Risk Officers.

On his desk, he keeps a glass obelisk that was given to him by Conoco (now ConocoPhillips) to mark its first ever crude oil options trade on December 22, 1986, which was completed on the opening bell. Prokop worked on the deal as a broker, a year after he took his first job out of college in New York with Rudolf Wolff Commodity Brokers (later Rudolf Wolff Futures). ... continued

Megawatt Daily

August 12, 2011

CCRO forms group to look at ISO risk rules

The Committee of Chief Risk Officers is forming a working group to develop standards independent system operators can use to verify market participants have adequate risk management policies.

In defining the standards, the CCRO hopes to position itself to conduct the verification process on behalf of the ISOs.

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