How can Power Nominals help with capital planning?

In its usual form, Power Nominals is limited to three years. That is the limit to the effectiveness of our methodology. Nevertheless, clients have many times requested values as far out as thirty years. Frankly, there is no forecasting methodology that can reliably model prices for any commodity that far, never mind electricity. Longer term time frames are inherently vulnerable to "Black Swans".

Nevertheless, we will work with clients to deliver modeled forward curves of very long duration as long as everyone is clear about what these mean. That is: long term curves presume broadly stable relationships among the fuels and with power and that historical congestion relationships will persist.

Can RisQuant Power Nominals be used to support financing decisions? Yes. Often, the lack of a forward curve impedes the underwriting process. Power Nominals can be used as one element that illuminates value. Power Nominals curves have already been used in such instances.

Can RisQuant Power Nominals be used in FERC cases? No. At this time, FERC only accepts market data that complies with their guidelines. Those guidelines specify that only reported trades are acceptable. While this is an admirable goal, it fails to recognize the realities of the power marketplace.

Can RisQuant Power Nominals be used in state rate cases? We do not know. Each state has their own rules and practices. To our knowledge, it has never been tried.