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Do you guys know what US power trading is? It's under commodities desks, but I'm not sure what exact commodities they trade.(ex. natural gas) Do they trade other assets like equities and bonds too??

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Comments (16)

  • LIBOR's picture

    watch "Smartest Guys in the Room" to get an idea of what Enron power traders did

  • EnteringRealLife's picture

    US Power Trading ( hopefully they have a physical presence...if not then it's a clown factory ):

    Usually firms will own peaker plants or have operational rights to base load power plants in various ISO zones ( ERCOT, CAISO, PJM, MISO being the most popular b/c they're deregulated unlike SERC which is a relic from the 1950s ). Using that firms are able to get information on how power is flowing across the various grids ( ie where power is congested - very important, you may have rights to power being produced in ERCOT West but b/c of congestion you'll never get it over to Dallas/Houston ; or where demand is etc..., or if a power plant has tripped )

    Using that information they can trade real-time power, or engaged in structured deals with clients who want to hedge against changes in fuel prices or power demand.

    Most power desks will have a weather team, as you need it to figure out how much power demand is going to change b/c of temp. Enron made lots of money b/c California is kind of stupid and draws all their power from coal plants in Utah, or from the NW, so Enron just bought tons of options and then shut down their plants. Now days that's illegal, so no more big bucks. Also, CAISO can just declare that volatile movements in power prices were a technical glitch and reset value at which trades actually occurred...so trading in CAISO actually blows.

  • In reply to EnteringRealLife
    monty09's picture

    EnteringRealLife:
    US Power Trading ( hopefully they have a physical presence...if not then it's a clown factory ):

    Usually firms will own peaker plants or have operational rights to base load power plants in various ISO zones ( ERCOT, CAISO, PJM, MISO being the most popular b/c they're deregulated unlike SERC which is a relic from the 1950s ). Using that firms are able to get information on how power is flowing across the various grids ( ie where power is congested - very important, you may have rights to power being produced in ERCOT West but b/c of congestion you'll never get it over to Dallas/Houston ; or where demand is etc..., or if a power plant has tripped )

    Using that information they can trade real-time power, or engaged in structured deals with clients who want to hedge against changes in fuel prices or power demand.

    Most power desks will have a weather team, as you need it to figure out how much power demand is going to change b/c of temp. Enron made lots of money b/c California is kind of stupid and draws all their power from coal plants in Utah, or from the NW, so Enron just bought tons of options and then shut down their plants. Now days that's illegal, so no more big bucks. Also, CAISO can just declare that volatile movements in power prices were a technical glitch and reset value at which trades actually occurred...so trading in CAISO actually blows.

    +1

    I am a power trader and agree... working with the enron guys is actually like a smart history lesson...

  • EarTotheStreet's picture

    Who are some of the big power players? Do Vitol, Trafigura, etc all have power desks also?

  • In reply to EarTotheStreet
    monty09's picture

    EarTotheStreet:
    Who are some of the big power players? Do Vitol, Trafigura, etc all have power desks also?

    phy or fin?

    Vitol does. Traf does not

  • EnteringRealLife's picture

    MS, JPM, GS, Citi, the utilities, one oil company at some point did

    I'm very curious as to what happens at those places if/when Volcker kicks in. Real-Time is pure prop? right....

  • In reply to EnteringRealLife
    monty09's picture

    EnteringRealLife:
    MS, JPM, GS, Citi, the utilities, one oil company at some point did

    I'm very curious as to what happens at those places if/when Volcker kicks in. Real-Time is pure prop? right....

    your list is incorrect. He asked for power players not firms that trade power.

    MSCG - does a lot of biz in Midwest and NE
    JP- picked up bear book who came from calpine so very focused in west but does a lot of biz in east too.
    GS- does a lot of biz in NE
    Citi- does not do much on phy side

    are are fin focused but the above is what they do in phy . I would say JP is best mix of both followed by MSCG only in terms of banks

    Calp, Southern, AEP, Exelon would be the biggest players in size however does not mean they are making most money or anything like that...

    Vitol only trades fin power

  • In reply to monty09
    monty09's picture

    monty09:
    EnteringRealLife:
    MS, JPM, GS, Citi, the utilities, one oil company at some point did

    I'm very curious as to what happens at those places if/when Volcker kicks in. Real-Time is pure prop? right....

    your list is incorrect. He asked for power players not firms that trade power.

    MSCG - does a lot of biz in Midwest and NE
    JP- picked up bear book who came from calpine so very focused in west but does a lot of biz in east too.
    GS- does a lot of biz in NE
    Citi- does not do much on phy side

    are are fin focused but the above is what they do in phy . I would say JP is best mix of both followed by MSCG only in terms of banks

    Calp, Southern, AEP, Exelon would be the biggest players in size however does not mean they are making most money or anything like that...

    Vitol only trades fin power

    real time is not only prop. If you have gen rights or managing gen load you have that aspect as well.

  • Shake's picture

    Like monty said, MSCG has large Northeast and Midwest books and they're pretty hell bent in expanding their West presence. The Vancouver office should help in that regards.

    Anyone have a stint trading power real-time? I understand the hours can ridiculous, but depending on the group/rotation, you're looking at up to a week off after pulling the late shift.

  • marcellus_wallace's picture

    monty has traded some real-time. I know a few guys who did here, you can get more than a week off depending on the rotation as you said. It requires a certain type of person to adapt and enjoy that lifestyle.

    MSCG is trading US west power out of Vancouver, thats bit odd but works I guess as long as they get the right licensing. Vancouver like San Deigo is prolly one of the nicer cities to trade energy I bet (as long as you dont mind getting in at 4am that is).

  • In reply to Shake
    monty09's picture

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