Power Trading at an Electric Company

redrocksky's picture
Rank: Orangutan | 275

There is an electric company at my school doing OCR for some positions. I'm vaguely interested in trading, but I would like to specifically know more about power trading. I know for oil trading positions at the super majors you have to work as a scheduler before you can trade and I was wondering if there is a similar process at power companies.

The roles that are being recruited for are: rates analyst and power settlements analyst. From talking to a professor, settlements analyst sounds like an accounting role. I know nothing about the other position and an internet search has provided contradictory information.

If I were to get an internship and possible employment with this company, would any of these two positions allow me to transition into a trading role?

Comments (21)

Apr 2, 2014

Anyone?

Apr 2, 2014

I work in power.

"I was wondering if there is a similar process at power companies" --> Yes, its the same. Maybe quicker in power.

Rates analyst and settlement analyst are not scheduler roles but they will definitely get your foot in the door. Unfortunately I could not assure you if the above mentioned jobs will allow you to move on to a scheduler role later on.

If you can go directly to scheduling then it would be better.

Apr 2, 2014

Ok, thanks.

If you don't mind answering, what does a rate analyst exactly do? Broadly, I'm guessing the position has to do with optimization support for the traders and schedulers.

Apr 3, 2014

Schedulers try to execute the trader's strategy on the physical markets in order to yield as much value as possible on the trades. They do not need any analysis coming from a rate analyst. I guess the work coming from a rates analyst will be most useful for traders and originators but don't take my word for it.

Apr 3, 2014

"Responsible for performing various rate analyses and assisting in the development of power rates and related studies involving wholesale rate design and structure, retail rate models and interplay with wholesale models and market structure, performance, conduct and regulation."

That's one description I found...if that's similar to your description, it seems like it might have decent interaction with traders. Based on my limited knowledge, stuff like this could eventually qualify you for some FTR/transmission congestion analysis -> trading. Do you know if this position works from the trading floor?

Learn More

Boost your resume and land a finance job by passing the FINRA SIE. 264 pages & 1981 smart flashcards written by a former 8X top Fidelity instructor. Try it for 0 bananas here.

Apr 3, 2014

Yes, that was one of them, which from my understanding means assisting on pricing and optimization. Another vaguely stated that it entails "analyze retail rates".

I don't know if the role is on the trading floor. At this point I'm trying to gather as much information as possible so I don't look like an idiot in front of the recruiters tomorrow.

Apr 3, 2014

"Responsible for performing various rate analyses and assisting in the development of power rates and related studies involving wholesale rate design and structure, retail rate models and interplay with wholesale models and market structure, performance, conduct and regulation."

This sounds like a job to support the origination desk.

Apr 3, 2014

Depends on who the firm is and how they actually trade vs optimize, basically if you could find out how big their trade desk and if each role deals with the trade desk and how much timewise.

Anyways, "Settlements analyst" basically is a backoffice role dealing with accounting similar to any settlements role out there. That said at a firm like this moving from this role to a job on the trading/optimization side is way more likely than a bank. "Rates Analyst" either has to do with working on the retail marketing side or the origination team, depends how much of said business is wholesale vs retail. The origination side will deal much closer with trading and looking at trading fundumentals. While the retail side supports more the marketers and possibly the people who go door-to-door getting people to sign up.

Apr 5, 2014

What kind of electric company? A utility? Neither of these sound like they will lead to trading. Rates analyst sounds like someone who works on the regulated side - no where near trading. Settlements analyst is closer to trading - but still very back office.

Apr 5, 2014

IM me with direct questions

Apr 5, 2014

Please feel free to call me and I might be able to give you some useful color.
All the best,
--George

bGeorge H. Stein, CFA
Commodities Recruiting
[email protected] +1 917 545-9850b

George H. Stein, CFA
Commodities Recruiting
[email protected] +1 917 545-9850b

Apr 5, 2014

Can you clarify what part you don't understand?

Trading power is just like trading any other commodity, except that power can't be stored (not easily, anyway).

Maybe try the ISO's web sites (ie., ERCOT, NEPOOL, NYISO, CAISO, etc.), they explain a lot about the markets, it just won't explain the more complex OTC derivative structures.

Apr 5, 2014

Is your question about Canadian or American markets? Well Ontario is basically the only Canadian market really. Though the west has a market too.

Apr 5, 2014

How developed are the Canadian power markets? Any view on whether carbon markets will ever get off the ground in Canada?

Apr 5, 2014

They are developed, Ontario moves with most of the eastern US and other factors. The west power markets only matter really in the Winter, in the summer the load is not that high. Ontario on the other hand has big swings left and right in the summer.

Ontario also is undergoing plans to get rid of coal, in 10-20 years, by introducing more nuclear and natural gas, so all power traders are watching that closely.

Carbons - The big problem with Canada, like the US, is first all provinces and the feds, have to get on board with a plan for how carbons will be traded. Alberta and Saskatchewan are far from the table on this. While Ontario recently has joined BC and others in considering this.

The Montreal Climate Exhchange opened in late May. RBC and some other banks are trading on it, I beleive.

We got a long ways to go.....

Apr 5, 2014

How often do power traders blow up? The volatility must be rough, but you don't hear very much about big losses in the press. Didn't SAC and Morgan Stanley lose a lot of money recently?

Apr 5, 2014

I have always been hoping for the chance to explain power training a newbie, so here's my big chance...

Like any other commodity (oil, gas, wheat, gold, rice, sugar ...), 'power' is just another product that is consumed by a mass market.

Power is produced by a generator and then physically distributed via transmission and distribution networks, to a local substation, then via power poles (or underground cables) to your house.

There are two types of power trading, the physical kind and what I like to call the virtual kind.

The power produced by a number of generators, is sold to a number of energy retailer on a spot market.

Then there is a virtual kind of power trading. Many generators are worried that the price they sell a unit of power is going to be too low to cover their costs, whilst retailers are worried that the price they pay is too high, (or higher than the fixed rate that they charge customers), thus derivatives are used to handle this volatility.

Does this give a good explanation?

Apr 5, 2014
Comment
Apr 5, 2014