Power Marketers

Unpredictable power prices are making the buying and selling of power riskier than ever. Power marketers must manage outage, price, volume, credit and weather related risks.

Outage risk often requires prudently managed companies to keep a reserve -- either physical or financial -- to protect assets and shareholders against market volatility. ACE PowerBacker^SM provides a financial backstop in the event generation unavailability exposes a marketer to price risk, potentially to the point where a transaction becomes unprofitable.

Maintaining physical reserves for these contingencies may eliminate market opportunities and may not provide complete protection for the extreme event. Further, by limiting transactions to financially firm products, a marketer may be foregoing the opportunity to market surplus supply from smaller market players, such as cogenerators and small cities which often will not sell energy under these terms.

ACE Power Products can assist marketers in locking in gains on transactions by transferring risks that cannot be retained or hedged efficiently in the financial markets. With ACE PowerBacker outage risk can be transferred at a known, predictable cost. This eliminates the basis risk of some derivative products.

A wide variety of structures are available, so customers can buy precisely the amount and type of coverage needed.

Coverage options

• Include multi-year transactions and complete system covers.

• Value At Risk (VAR) can be reduced by transferring exposure to unit outages and market prices, freeing up capital for growth.

• Limits of up to $150 million are available.

• Additional triggers - e.g., maximum daily temperature - can be incorporated to increase coverage during extreme heat.