Commodities

Threading the needle of risk, volatility and value
Threading the needle of risk, volatility and value

Energizing your future through strategic commodity trading

It's an inescapable fact. Energy, capacity, renewables and financial trading are becoming increasingly intertwined. It’s easy to understand why. As markets continue to fluctuate and spreads diminish, liquidity is in higher demand than ever. New variables, such as different types of exchanges and commodities, renewables and imbalanced markets, are appearing. Renewables entering the scene have introduced volatility in the supply stack, increased must-run and low cost energy, putting a premium on capacity. Markets for capacity have also increased in importance for both ISO and unorganized markets with fewer participants, such as merchants and financial firms exiting.

As a result, you may be finding yourself engaging in commodity trading to improve or add flexibility to your asset position. This increased activity at the sector level of course further impacts price volatility, short- and long-term contract prices, the choices of your end customers, and, inevitably, the regulatory landscape governing both energy and financial markets.

Unfortunately, commodity market commitments are highly affected by regulatory incertitude – including some still-undefined Dodd-Frank provisions – as well as other pending legislation. Add to all of this the constant pressure you face to meet your growth and performance targets, while reducing your O&M costs, and it’s no wonder you face a high-stakes operating environment.

In this industry it’s never been more important – or more challenging – to thread the needle of risk in order to come out ahead. And it’s never been more critical to get the right kind of help.

Translating risk into reward, and volatility into value

With our deep technical capabilities, our market knowledge and our vigilant focus on improving performance while minimizing risk, PwC is well positioned to help you master these challenges – and turn volatility into value. Specifically, we can offer you:

  • A sophisticated analysis of regulations – including quantification of costs and compliance
  • A portfolio-wide, quantified view of your risk exposure on a trade by trade basis – including exposure to your subsidiaries’ counterparties
  • A path to simplified, commodity processes – including improved trading systems and control frameworks, as well as managed services such as application outsourcing
  • Quick market readiness – including exposure to carbon markets, independent system operators (ISOs) and international markets
  • Effective systems integration – including technologies to increase your commodity transaction velocity and transparency
  • Advanced enterprise risk management for your wholesale and retail operations
  • Timely governance, accounting and compliance advice – including help managing the accounting and tax impact of your trading and use of financial instruments
  • A 360-degree assessment of your strategic choices in a rapidly changing landscape

PwC Power & Utilities commodities: More than the sum of the parts

At PwC, we understand the big picture — and the many fast-changing drivers that constantly shape and reshape that picture.

Our professionals are here to help you develop clear strategies which align and engage with your market environment in ways that are consistent with your commercial imperatives and risk appetite — while helping you align your activities to the ever-present new developments.

Contact us to learn more about how we can help you create a commodities culture of excellence, focused on risk-adjusted decision making — and strategies that bring results.