Consumers can now reap the rewards of flexible energy purchasing with enhanced risk management protection thanks to next-generation technology from ENER-G Procurement. ENER-G Procurement’s new RiskManager software monitors wholesale market prices in real time, automatically tracking, recording and reporting market movements as they happen to support decision making.
ENER-G’s analysts work closely with customers to develop a personalised purchasing and risk management strategy and a detailed implementation programme. RiskManager then automatically prompts for action, based on this strategy, helping the analysts to finetune each transaction within the constraints of the pre-defined risk limits.
“By projecting market activity and tracking live evolution of the price curve throughout the day, our technology helps us to anticipate actions, and then identify the most opportune time to place trades for our customers,” said Mark Alston, General Manager of ENER-G Procurement.
“Unlike other energy brokers’ systems, RiskManager removes the human error of position monitoring, automatically alerting our team when a customer’s limit or trigger is approaching.
“It’s all about precision timing and informed negotiation. A failure to act in real time can mean budget limits are exceeded or price opportunities missed. Our analysts are able to see the second-by-second evolution of a market price, and are provided with prompts on the required action specific to each customer.”
This helps to ensure energy volumes are purchased (or excess generation is sold) when market prices are most advantageous, while an in-depth knowledge of live market trades and price history means ENER-G’s market specialists can negotiate from a strong position on the final price.
“A key feature of RiskManager is its use of Value at Risk (VaR) methodology to estimate the likely range of cost for the market exposure involved over an agreed time frame,” said Alston. This helps warn of future limit breaches rather than just reacting after the event.
The system’s automatic Mark-to-Market (MTM) reporting also gives clients a regular update of the current market cost of completing all outstanding purchases. Benchmarking MTM against a pre-defined budget or alternative criteria provides the most up-to-date picture of performance, combining actual purchases already made with the current cost of completing all floating periods.
”Mark-to-Market, together with Value at Risk, provides us with the complete risk picture for our clients and helps us to inform their procurement decisions, for example to take early action, or to judge the risk of delayed purchasing,” Alston said.