Financial Modelling & Tariff Setting for Utility Sector

Introduction

Electricity markets are structurally different to other commodities, and the real-time dynamic balancing of the electricity network involves many external factors. Because of this, it is not a simple matter to transfer conventional models of financial time series analysis to wholesale electricity prices. Its unique features are not observed in other markets, such as weekly and daily seasonality’s, on-peak vs off-peak hours, price spikes, etc. The fact that electricity is not easily storable and the requirement to meet the demand always makes forecasting techniques challenging.

This GLOMACS Financial Modelling & Tariff Setting for Utility Sector training course presents the current state-of-the-art electricity price and financial forecasting methods, including statistical time series analysis, equilibrium models, and portfolio methods. It is designed to help delegates build their own utility tariff setting model from scratch and engage in simulation cases to acquire the best practices in modelling revenue requirements.

Objectives

By the end of this Financial Modelling & Tariff Setting for Utility Sector training course, the participants will be able to: 

• Understanding the new challenges of the Energy sector
• Evaluate the impact of the latest Energy regulatory frameworks
• Develop economic models relevant to the Power Industry: RAB 
• Understand the dynamics and challenges of Forecasting and Modelling Utility Price
• Evaluate the performance of Power Industry projects using financial models

Training Methodology

The delegates on this training course will receive thorough training on the subjects utilising a variety of proven adult learning teaching and facilitation techniques include the following:

• A presentation in a highly interactive manner
• Individual and group activities, interspersed throughout the sessions, along with appropriate case studies
• Video documentaries that will highlight the significant teaching features

Organisational Impact

Professionals in the power sector need specialised skills, particularly financial modelling for tariff setting, which is a core skill set lacking in the municipal and utility space.

The organisation will gain a broader range of benefits that participants gain and apply to benefit their organisations.

• The rationale behind Traditional Financial Models vs Utility Tariff Model
• The quantitative techniques of tariff paths such as regulatory asset base, the weighted average cost of capital, and energy and input costs
• Understand the dynamics and challenges of Forecasting and Modelling Utility Price
• Tools to Forecasting in Utility Sector (OPEX, CAPEX and Depreciation)
• The practical skills to build a Tariff Model from Scratch
• Sensitivity of Tariff to WACC and Capital Costs

Personal Impact

The course will see delegates build their financial model for “utility tariff setting”, with the constituent parts (regulatory asset base, the weighted average cost of capital, energy/input costs etc.) unpacked and developed in detail throughout the week.

By attending this Financial Modelling & Tariff Setting for Utility Sector training course, the delegates will acquire the following skills and competencies:

• Develop a greater understanding of the intricacies of Utility Regulatory Framework
• Acquire financial engineering vocabulary
• Build Economic Tariff Model from the scratch
• Develop investment calculations: OPEX, CAPEX & Depreciation
• Make more sound decisions regarding future Utility projects and plans