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OAEN 2580 - Energy regulation

Type d'enseignement : Seminar

Semester : Spring 2017-2018

Number of hours : 24

Language of tuition : English

Voir les plans de cours et bibliographies

Pre-requisite

Some knowledge of energy trading or energy industry and / or some non-energy related financial regulations experience

Course Description

Energy regulation has been evolving over the last 20 years particularly electricity deregulation. This evolution is a result of growth and development of economic policy combined with market design technologies. As the push to deregulate markets occurs, regulatory frameworks need to be considered as a means to allow a fair playing field for all participants while protecting the interests of society. Participants include producers, consumers (industrial, commercial, and retail), transporters, distributors and energy traders/marketers. The reason behind regulations and the impact of regulations will be discussed. Is regulation required in energy markets? Should energy markets be deregulated? A case study discussion during the course. Energy market deregulation is a relatively recent event. Natural Gas markets began deregulation in the 1980's and electricity market in the mid 1990's. As energy market design evolves there have been two approaches used. Lead with regulation or follow with regulation. This course will start by describing the concept of energy regulation and the history of regulation processes. Regulation will be presented from three perspectives economic, social and environmental. Different methodologies of regulation will be presented from various regions of the world. Several case studies will be used to illustrate the successes and challenges of regulatory frameworks. The impact of the evolving financial regulation landscape will be discussed in terms of the impact on energy market trading volumes.

This course takes an applied approach with many references to real world examples.

Teachers

MORRISON, Eleanor (Managing Director, Commodity Reach Ltd, London, UK)

Pedagogical format

Each class is two hours. The first hour will focus on the lecture material following the course syllabus. The second hour of the course will focus on a case study and practical applications of the lecture material. Discussions will include reference to case studies as well as recent events. The global and regional perspective will be considered during these class discussions. The reading list is extensive and may seem overwhelming. This list is intended to provide an introduction to concepts covered in the class and to provide more in-depth information to complement this course.

Course validation

Students will complete a short in-class presentation on a selected topic (25%), one term paper (25%) and one take home final exam (50%). Students will be expected to participate during in-class organized discussions. The final exam should be completed over a 3 hour period of time on an agreed day after the course has finished. Further details will be provided during the course introduction

Workload

Students should expect to spend at least 40 hours outside of class time to prepare for class discussions, research and prepare their term paper. Students should be prepared to discuss assigned readings in class.

Required reading

  • Energy Deregulation – lessons learned from California, P. Navarro and M. Shames, Energy LJ, 2003
  • PBS.org Is it FERC's fault? Online article regarding various organisations views on regulation
  • Conspiracy of Fools, Kurt Eichenwald, 2005
  • Electricity deregulation in OECD countries, A. Al-Sunaidy, R. Green, Energy, 2006
  • European Review of Energy Markets, Volume 3, issue 3, October 2009, Energy regulation in Europe : Regulatory Policies and politics of regulation, Jorge Vasconcelos

Additional required reading

  • EU REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL, The state of the European carbon market in 2012

Plans de cours et bibliographies

Session 1: History of Regulation, Types of Regulations, Case Study: FERC vs. Barclays Bank

Required readings:

  • A Brief History of Regulations Regarding Financial Markets in the United States: 1789 to 2009, Alejandro Komai, Gary Richardson, NBER Working Paper No. 17443, September 2011 (from page 20 to end, starting at Section E)

Session 2: The Role of Regulators

Required readings:

  • Tomain, J. P. (2002). The past and future of electricity regulation. Environmental Law, 435-474 ( first 15 pages, and conclusion indicating 5 challenges going forward)

Session 3: European and UK Regulatory Environment

Required readings:

  • from IAEE website link: National Policies for Renewable Electricity are an obstacle to market integration in EU, Thomas P. Tangeras, 2014

Session 4: European and UK Regulatory Environment (continued)

Required readings:

  • from IAEE Web Forum: Electricity Transmission Reliability Management, Marten
    Ovaere, 2014

Session 5: North American Regulatory Structure

Required readings:

Session 6: North American Regulatory Structure

Required readings:

  • IAEE Web Forum: Manipulation of Day Ahead Electricity Prices through Virtual Bidding in US Markets, C. Lo Prete, W.W. Hogan, 2014

Session 7: Regulatory Differences: Financial vs. Physical Trading

Required readings:

  • IAEE article: Problems created by financial trading in US Wholesale Electricity Markets, JE Parsons, C Colbert, J. Larrieu, T.Martin, E. Mastrangelo, 2016

Session 8: Challenges in regulatory implementations, compliance and enforcement

Required readings:

Session 9: In-class case study: current regulatory example

Required readings:

  • IAEE article: On the future of Electricity Supply: Competitive Markets or Planned Economies, R. Haes, H.Auer and M. Hartner, 2016

Session 10: Regulations limitations in fast moving / innovative markets

Required readings:

  • Energy Storage Innovation and Regulation: European Commission Staff Working Document: Energy Storage: the role of Electricity, 2017

Session 11: Limitations of Regulations, Regulations in Economic Development Model, Group Presentations

Session 12: Course Summary, Group Presentations

Supplementary readings

  • FERC Order 888
  • FERC order 436
  • FERC order 889
  • OFGEM Emerging Thinking consultation document – Alternative ex ante and ex post regulatory frameworks, January 2010
  • Nuclear Power in Europe, Finnish Energy Industries, 2014
  • IEA Key recommendations for European electricity market design
  • ACER REMIT Annual Report 2016
  • Electricity Wholesale Market Design in low Carbon Future, 2010, Hogan, W.W., Part of Harnessing Renewable Energy journal
  • UK ECCC Energy Revolution and Future Challenges for UK Energy and Climate Change, 2014
  • Electricity Transmission – A Primer, National Council on Electric Policy, Brown and Sedano, 2014

short biography

Eleanor J. Morrison is an energy and finance professional with 20 years' experience working internationally in public and private sectors.  After many years of trading and portfolio management in volatile energy markets through several economic cycles, Eleanor believes that balancing the requirements of an evolving regulatory landscape with innovative risk management strategies is essential for long term success. She is completing the final year of her PhD in Finance and Management at SOAS, University of London, researching firm and market risk metrics within debt capital markets.
Eleanor's expertise includes energy trading and risk management, asset pricing, energy and financial market regulation, project financing, sustainable development and renewable energy economics. She has worked in the banking sector (Goldman Sachs, Lehman Brothers), the utility sector (BC Hydro) and in a technology start-up environment (mobile banking). She has held two board director positions, including roles on the audit and finance committees