Real-time position data: an essential tool in a changing and challenging energy market
<p>Energy trading is increasingly complex and taking place at a faster pace; with multiple commodities, inter-connecting business functions and increased reporting requirements to consider in a challenging market of higher costs and lower energy prices.</p>
<p>As a result, the industry’s business processes continue to change significantly and more organisations are investing in ETRM systems that provide the flexibility to grow and evolve with the business. However, there is one significant new software capability that, despite its ability to deliver enormous benefits and competitive advantage, is not being fully utilised.</p>
<p>In a world where energy has moved from a stable longer-term horizon to a faster paced renewables market, and where volatility and liquidity are closer in on the forward curve, the emphasis for many businesses is increasingly on intra-day trading and less on forward period trading. Alongside this, survival in an era of higher costs and lower energy prices means having to increase efficiency and focus on protecting margins.</p>
<p>Being able to access data quickly and efficiently is essential in this challenging energy market. Demand and production must be forecast or managed on an ever shorter-term basis, and so timely and accurate position data is critical to the responsiveness of a business.</p>
<p>Organisations need to be able to access data in near real time, however, many energy businesses in the UK do not have this capability.</p>
<p>Many businesses are using ETRM systems based on old technology, or are using spreadsheets, so will usually have to wait until the end of the day, or even the next day to get a true understanding of their exposure across the business. The more complex the operation is, the more risk there will be, and, while individual traders will know what their portfolio looks like, they will be unable to see the picture as a whole. This lack of knowledge will lead to missed opportunities and may make an organisation risk averse.</p>
<p>However, ETRM systems built with a modern architecture and that make use of the latest technological developments handle data differently, and can provide granular trading reports in near real time.</p>
<p>Contigo’s enTrader disaggregates the trade immediately at the point of trade, storing more data in greater detail. It supports multiple time series granularities down to 15 minute intervals, which means that, when there is the need to look at positions, the data is already available to view, and organisations can access it quickly and with ease. </p>
<p>In a fast-paced and challenging market, real-time position information should be an essential component of a modern ETRM system. Organisations should be looking at their systems to see if they have the architecture to achieve this important capability, and if not, planning for the future. Greater flexibility with fast and simple access to positon data is only likely to become more crucial over future years.</p>
<p><em>Adrian Bullock, Managing Director of <a href="//www.contigosoftware.com">Contigo</a></em></p>
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Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.