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Financial Accounting Advisory Services Tackling risk and regulation in the power and utilities sector
March 2015
Page 2 Tackling risk and regulation in the power and utilities sector
Tackling risk and regulation in the power and utilities sector 3 About EY 9 Contacts 11
Agenda
Page 3 Tackling risk and regulation in the power and utilities sector
Tackling risk and regulation in the power and utilities sector
Page 4 Tackling risk and regulation in the power and utilities sector
Global energy wholesale market trends Key challenges in the power and utilities sector
Energy wholesale markets are highly dynamic – companies, regulators and policy-makers in the power and utilities sector face challenges on national, regional and international levels.
► Almost all activities in the power and utilities sector are significantly affected by the volume and value of demand and supply in energy commodities.
► Energy wholesale markets around the globe – where demand and supply meet – are evolving at different speeds, as they are subjected to worldwide market dynamics.
► Energy commodity risks must be systematically analyzed, reported and mitigated in the long, mid and short term.
► Depending on the stage of development and specific national issues, energy wholesale markets are governed by diverse regulations (e.g., climate change, and commercial and financial markets regulations).
► Energy wholesale market dynamics are accompanied, and often driven, by the evolution of the regulatory context.
► Companies in the power and utilities sector must develop and maintain methods and systems to ensure compliance with current and future regulations.
► Energy wholesale market dynamics can influence the actions of participants within the power and utilities sector, as they work to mitigate commodity risks, achieve compliance and pursue their corporate goals.
► Evolving regulatory contexts define the development of market model frameworks. ► Policy-makers and regulators must continuously evolve regulations to meet political goals
regarding security of supply, energy economy, internationalization and environmental impact.
Addressing commodity risks
Helping ensure compliance in evolving regulation
Influencing regulation in dynamic markets
Page 5 Tackling risk and regulation in the power and utilities sector
Risk and regulation in energy markets Questions for the power and utilities sector
EY’s multidisciplinary team can help you to address commodity risks, to ensure compliance with energy wholesale market regulations and to take an active approach to regulatory developments.
About regulation … About commodity risk … About compliance …
How can I assess demand and supply volume and price risks?
What goals should I set for dealing with commodity risks?
How can I organize the mitigation of commodity risks?
What regulations apply to my activities in the energy wholesale markets?
What can I do to ensure compliance with current and future regulations?
How will future changes in regulation affect my organization?
How can we support the energy market to meet regulatory goals?
What lessons can we learn from developments in other markets?
How can we achieve international harmonization of energy wholesale markets?
Page 6 Tackling risk and regulation in the power and utilities sector
Tackling risk and regulation EY power and utilities services
Challenge
EY services
Addressing commodity risks Helping ensure compliance in evolving regulation
Influencing regulation in dynamic markets
► Developing commodity risk assessment methodology for monitoring energy volumes and prices
► Commodity risk control and mitigation plan
► Commodity risk management framework with methods and procedures for energy wholesale markets
► Audit support and audit committee advisory
► Regulatory compliance assessment
► Methods and procedures for compliance with energy wholesale market regulation
► Development plan to prepare for new and changing regulations
► Audit support and audit committee advisory
► Gap analysis of energy wholesale market regulation with respect to national, regional and international goals
► Options for amending energy wholesale market regulations
► Regulatory development plan for systematically evolving market models
Option A Option B
Page 7 Tackling risk and regulation in the power and utilities sector
What benefits can you expect? EY power and utilities services
Benefits for your organization Goal
Control ► Transparency on energy commodity risks ► Defined goals for monitoring and mitigating commodity risks ► Effective commodity risk management procedures
Compliance ► Map of regulatory requirements and effectiveness of current compliance procedures ► Ongoing compliance with relevant regulations ► Road map for compliance development to anticipate future changes in regulation
Market development
► Defined requirements for energy wholesale market development ► Clear concepts for regulatory initiatives ► Road map for market model transformation
EY support can help you to increase the security of energy wholesale market activities and establish clear road maps for future market development.
Page 8 Tackling risk and regulation in the power and utilities sector
Why should you choose EY? Financial Accounting Advisory Services for power and utilities
EY’s Power and Utilities teams support you in tackling risk and regulation
► EY has a team of experienced professionals who understand the sector and wholesale markets, and who will work with you to: ► Assess and control the
commodity risks underlying your activities
► Comply with regulatory requirements in an effective, cost-efficient manner
► Contribute to future market developments aimed at meeting corporate, governmental and regulatory goals
► We have the reach to support you with your response to global market dynamics.
► We have a proven track record in the power and utilities sector. And we can transform our experience into value for you and your organization.
EY makes a difference
Strategy and management
Support functions
Transmission and distribution
Generation Wholesale market Sales
Power and utilities value chain
Helping ensure compliance in evolving
regulation
Addressing commodity risks
Influencing regulation in dynamic markets
Page 9 Tackling risk and regulation in the power and utilities sector
About EY
Page 10 Tackling risk and regulation in the power and utilities sector
Your regional EY network
Africa Angola, Botswana, Cameroon, Chad, Congo, Democratic Republic of Congo, Equatorial Guinea, Ethiopia, Gabon, Ghana, Guinea, Ivory Coast, Kenya, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Rwanda, Senegal, Seychelles, South Africa, South Sudan, Tanzania, Uganda, Zambia, Zimbabwe
Belgium and Netherlands
Germany, Switzerland and Austria
Commonwealth of Independent States Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Russia, Ukraine, Uzbekistan
Central and Southeast Europe Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Greece, Hungary, Kosovo, Latvia, Lithuania, FYR of Macedonia, Malta, Moldova, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Turkey
France, Maghreb and Luxembourg Algeria, France, Luxembourg, Monaco, Morocco, Tunisia
Financial Services Organizations Belgium, Channel Islands, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland, the UK
India Bangladesh, India
Mediterranean Italy, Portugal, Spain
Middle East and North Africa Afghanistan, Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Pakistan, Palestinian Authority, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates
Nordics Denmark, Finland, Norway, Iceland, Sweden
United Kingdom and Ireland The UK, the Isle of Man, the Republic of Ireland
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Financial Accounting Advisory Services Contacts
Thomas Edelmann [email protected] +49 175 524 4137
Carsten Buhl [email protected] +49 160 939 21596
EY | Assurance | Tax | Transactions | Advisory
About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
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ED None In line with EY’s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.
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