Trading places

ET&R has grown from a small pioneering group to a centre of excellence in power and fuel trading.

Energy Trading and Regulation (ET&R) is ESB Power Generation's (PG) trading division. It's difficult to capture the wide range of activities carried out in ET&R in a few sentences, but if you ever wondered who sources the best deals in coal, gas, oil and CO2 for Power Generation on world energy markets, that's the team in ET&R. And if you ever wondered who's responsible for the wholesale pricing and trading of all of the electricity produced by ESB Power Generation, that's team ET&R also.

Established in 2002 on the 5th floor of ESB's Head Office building, ET&R has grown from a small pioneering group. They charted a course for PG through the early years of energy market deregulation, to a centre of excellence in power and fuel trading and all of the associated financial, regulatory and reporting requirements associated with those activities.

Single Electricity Market (SEM)
The introduction of the allisland market in November 2007 presents a challenge to all divisions of ESB. None more so than PG. SEM requires a radical change in regulatory/business model. In the current bilateral market, PG's revenue is primarily determined by a Bulk Power Agreement with ESB Customer Supply.

In effect, CER determines PG's allowed revenue at the start of each year and makes adjustments at year-end to take account of any under or over recovery.

In the new market, all of that will change, the regulated Bulk Power Agreement with ESB Customer Supply will be discontinued and PG's revenue will be determined by our ability to produce and trade wholesale power competitively. End-of-year regulatory adjustments will no longer feature, presenting PG with the significant but welcome challenge of a more dynamic competitive market.

New Structure for New Market
A culture of flexibility and continuous change has been a cornerstone of ET&R since its inception. The new organisation structure is simply regarded as a part of that ongoing change process.

Power Trading and Strategy is the front office function responsible for power system modelling, development of PG's trading strategy and execution of PG's power contracts. These contracts with supply companies will allow PG to lock in a profit margin and limit PG's exposure to pool price risk.

Fuel Trading and Operations is the front office function responsible for negotiating PG's fuel procurement contracts/ trades, delivery on PG's CO2 obligations and for transacting commodity derivatives in the management of fuel prices. It will also direct PG's generation portfolio through the Energy Management Centre to optimise PG revenue for the whole portfolio.

Settlement, ET&R's back office, is responsible for validating and administering all of the income and payments associated with power, fuel and financial trades in the new market.

Risk and Regulation fulfils the middle office role, ensuring that PG only enters into trades with approved credit worthy counterparties and monitors and audits on an ongoing basis the activities of the front and back offices. It also deals with all regulatory issues for PG.

ET&R's Projects team is responsible for PG's preparation for SEM and is charged with the development and implementation of all of the new business processes and systems necessary for participation in the new market.

If any member of staff would like to visit ET&R, please contact Elisa Grace (Ext 26805). EM