Complex scheduling and supply chains, an evolving regulatory environment, and unprecedented volatility in energy prices are significant challenges facing energy companies. To effectively deal with these challenges, today's energy companies and utilities need next-generation energy trading and risk management (ETRM) software to manage commodity transactions end-to-end throughout the value chain. Learn more in "3 Trends in Oil & Gas Driving the Need for ETRM Software."
Complex Scheduling and Supply Chains
Energy markets will always fluctuate. Although we are currently in a period of low commodity prices, history tells us this won’t last. Keeping pace with the rapid changes in the market is challenging. Extremely complicated itineraries with multiple legs and multiple modes have become typical, and support for high volume modes of movement and transport are required, including pipeline, truck, rail, vessel, and barge. The net effect is that the complexity and volatility of the energy markets are here to stay and will most likely increase in the coming years.
Evolving Regulatory Environment
Complying with government and regulatory requirements such as Dodd-Frank is an increasingly important part of risk management and corporate governance initiatives. Energy producers and traders face a complicated set of testing, documenting, and reporting mandates from the use of financial derivatives to manage risk.
Unprecedented Volatility in Energy Prices
Volatility in energy markets has become the order of the day. Energy market participants that produce, process, or market energy products have seen prices fluctuate dramatically. Sudden swings in energy prices impair forecasts and negatively impact bottom lines.
Features to Look for in Next-Generation ETRM Software
To face these challenges, energy companies need a fully integrated, multi-commodity, next-generation ETRM software platform for trading, risk, processing, scheduling, logistics, and accounting.
Trading
- Physical contract capture for contracts of any time period along with complex pricing features such as crack spreads, spark spreads, and formula-based deals
- Linked buy/sell deals where the purchase and sale are linked within one transaction
- Comprehensive management of exchange, over-the-counter (OTC), foreign exchange
(FX), and interest rate (IR) derivatives - Updates of energy portfolios to provide a real-time view of mark-to-market and positions at detailed and rolled-up levels
- Customized reporting
Supply Chain & Logistics
- Logistics operations and processes including storage contracts, all associated fees, and the impacts upon title transfers and exposures
- Multiple units of measurement, including weight and volume conversion
- Transportation deals where receipt and delivery occurs on different dates
- Management of heat rates at a pipeline and individual transaction level
- Multiple forms of energy and volume units for pipes and locations
- Tariffs of differing currency and unit of measure
- Both energy-based and volume-based tariffs
- Storage cost capture and various storage valuation types
- All types of storage plans
Risk
- Real-time demand, supply, and P&L visibility across physicals and derivatives
- Alerts for counterparty credit limit breaches
- Sophisticated analytic and visualization tools to support scenario optimization, “what-if” deals, stress testing, VaR, and other advanced risk management techniques
- BalMo curves, scalars, and the ability to group indexes and then view exposures by specific groups of indexes
- Two-way credit to view the counterparty’s exposure to the transacting company
- Credit netting
- Credit exposure by contract group
Regulatory Compliance
- Hedge allocations, effectiveness testing, hedge management, compliance documentation, and regulatory reporting
- Integration with trade repositories to support compliance reporting for Dodd-Frank
- Multiple tax types, including location based taxes, dynamic taxes, and other specific location based fees
- Manage exemptions at the transacting company level as well as counterparty level
- Customized settlement cycles
Eka's Next-Generation ETRM Software
Unprecedented volatility in energy prices, complex supply chains, and evolving regulatory requirements are key challenges faced by energy companies. Eka’s software provides greater control over trading, risk management, and the supply chain of energy businesses than first-generation ETRM platforms.
Eka's InSight CM is a fully integrated multi-commodity ETRM software platform for crude & refined products, natural gas, natural gas liquids (NGL), liquefied natural gas (LNG), power, coal, and biofuels covering all aspects of a transaction lifecycle including trading, risk, processing, scheduling, logistics, and accounting.