System and method for implementing risk management strategies in regulated and/or deregulated energy markets

• US 20040034584A1
• Filed: 05/12/2003
• Published: 02/19/2004
• Est. Priority Date: 05/12/2002
• Status: Abandoned Application

• Current Assignee: Brian David Bizzano, John Raborg Sr. Cory
• Original Assignee: Brian David Bizzano, John Raborg Sr. Cory
• Inventors: Cory, John Raborg Sr., Bizzano, Brian David
• Application Number:
  US10/435,595
• Publication Number:
  US 20040034584A1
• Time in Patent Office: Days
• US Class Current: 705/35
• CPC Class Codes: G06Q 30/02 Marketing; Price estimation or determination; Fundraising
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes

Abstract

A system, method, and computer program product are provided for enabling risk management in regulated and/or deregulated commodity markets through selection of Bundled Utility Services along with volumetric and/or energy commodity risk hedge productsBundled Utility Service. Risk management strategy may be implemented by determining a rate structure associated with a commodity delivered by a Utility and demand information to develop a hedge based on a composite of underlying market quoted products. The invention further provides system and methods for mitigating commodity price risks, Counterparty Credit Risk, and Physical Supply Risks. In one aspect of the invention, a system and method are provided for hedging utility prices associated with varying tariff cost structures, wherein no market product previously existed for tracking tariff cost structures.

Claims

1. A method of mitigating risks associated with transacting in commodities, comprising:

determining a rate structure associated with each of the commodities;

determining demand information for the commodities; and

developing a hedging strategy based at least on the rate structure and the demand information.

2. The method according to claim 1, wherein determining the rate structure comprises obtaining underlying components of a tariff-based rate structure.

3. The method according to claim 1, wherein determining the rate structure comprises obtaining components from a contracted rate structure.

4. The method according to claim 1, wherein determining the rate structure comprises obtaining a weighted average of a contracted rate structure.

5. The method according to claim 1, wherein developing the hedging strategy comprises assembling market quoted products.

6. The method according to claim 5, wherein the market quoted products comprise at least one of traded contracts, investments, physical assets, physical liabilities, transactions, securities, and weather derivatives.

7. The method according to claim 1, further comprising aggregating demand information from a plurality of end users to develop the hedge strategy.

8. The method according to claim 1, further comprising selecting at least one supplier from which to transact in the commodities based on a rating of the at least supplier.

9. The method according to claim 8, wherein the at least one supplier is a regulated utility.

10. The method according to claim 1, further comprising selecting at least one supplier from which to transact in the commodities based on an ability to deliver the commodities.

11. The method according to claim 10, wherein selecting the at least one supplier comprises selecting a regulated utility.

12. A device for mitigating risks associated with transacting in commodities, comprising:

a rate structure determining module, associated with each of the commodities, that is adapted to determine a rate structure of each commodity;

a demand information determining module, associated with selected end users, that is adapted to determine demand information for the commodities corresponding to the selected end users; and

a hedging strategy developing module in communication with the rate structure determining module and the demand information determining module that is adapted to develop a hedge based at least on the rate structure and the demand information.

13. The device according to claim 12, wherein the rate structure determining module is adapted to obtain underlying components of a tariff-based rate structure.

14. The device according to claim 12, wherein the rate structure determining module is adapted to obtain components from a contracted rate structure.

15. The device according to claim 12, wherein the hedging strategy developing module is adapted to develop hedging strategy using market quoted products.

16. A device for mitigating risks associated with transacting in commodities, comprising:

rate structure determining means for determining a rate structure of each commodity;

demand information determining means, associated with selected end users, for determining demand information for the commodities corresponding to the selected end users; and

hedging strategy developing means for developing a hedge based at least on the rate structure and the demand information.

17. The device according to claim 16, wherein the rate structure determining means obtains underlying components of a tariff-based rate structure.

18. The device according to claim 16, wherein the rate structure determining means obtains components from a contracted rate structure.

19. The device according to claim 16, wherein the hedging strategy developing means develops hedging strategy using market quoted products.

20. A computer readable medium having computer readable program code embodied therein for mitigating risks associated with transacting in commodities, comprising:

computer-readable program code for causing a computer to determine a rate structure associated with each of the commodities;

computer-readable program code for causing the computer to determine demand information for the commodities; and

computer-readable program code for causing the computer to develop a hedging strategy based at least on the rate structure and the demand information.