STRUCTURING (ANALYTICAL) SERVICES
Modeling Costs and Risks
The quantitative analysts in APM’s Structuring Group use sophisticated market simulation and forecasting software to examine how transactions – actual or anticipated – impact the costs and risks in a power supply portfolio. compressed.jpg)
APM Portfolio Model
The Portfolio Model employed by APM's Structuring Group evaluates a company’s power supply portfolio, by calculating the expected average variable cost (AVC) to serve native load as well as the expected variation (risk) around this AVC. Impacts to expected cost and risk can help determine the best transactions and the best overall portfolio strategy (to meet an Owner's or Client's specific risk hedging objectives).
Probabilistic Approach
The detailed probability distribution provided by APM’s Portfolio Model – based on Monte Carlo simulation – contrasts sharply with models that provide point estimates only for costs, prices, fuel needs, etc.
Model Variables
Some of the variables that APM’s Structuring Group can probabilistically model include:
- Power prices
- Fuel prices - natural gas, coal and oil
- Emission allowance prices
- Native load and long-term sales obligations
- Incremental transactions and hedging activities
- Generation outages and de-rates
The APM Merchant Plant Model
The Merchant Plant Model measures expected operations and potential profit or loss for a merchant power plant (a plant that is selling power competitively and is not in a utility’s rate base). Hedging strategies for both fuel and power sales transactions are modeled to assist in the development of fuel supply, trading and marketing strategies.
Other Structuring Group Products and Services
Pricing Desk
APM pricing desk – which is constantly collecting market intelligence including fundamental supply and demand information - can help a client evaluate and correctly price both standard and structured products
Contract Valuation
APM can evaluate existing or proposed contracts - valuing them against market alternatives – to determine if the contracts should be entered into, extended or terminated.
The types of transactions that APM can evaluate include
- Contract buy-outs
- Heat rate and tolling transactions
- Unit outage insurance
- Long-term structured products
- Full-requirements deals
- Partial-requirements deals
Generation Plant Evaluations
APM can perform analysis evaluating the economics and different cost and risk impacts between building a power plant, buying a power plant or relying on the market to serve power needs.
Structured Product Determination
APM can analyze a load profile and determine what structured products or peaking products best fit in the portfolio, and provide a valuation of these products that can be used in contract negotiations with suppliers.
General Consulting
APM can perform a variety of technical analyses on power-related issues (such as pricing or contract evaluation) to help a client make better decisions about its power supply portfolio.
Contact a Business Development Representative.