Unit 3

Serving end customers, from a complex, competitive, volatile market, filled with stochastic generation, on a gross 4% margin makes “power retail” a challenging business. Building on the Course Director’s international experience the key risks to cashflow and profit are discussed. Then the challenges presented are escalated to: managing both customer demand uncertainty as the heat market decarbonises and renewable embedded generation negates demand. From a practical intercompany perspective all these factors must be priced and set into tariffs.

• Privatisation
• The UK electricity retail market
• Regulators and legislation
• Electricity supply and prices
• The value destruction of customer churn
• Quick growth and minimising overheads with the use of technology
• Balancing risks
• Price hedging with power purchase agreements
• Transfer price matrix between energy trading and the sales force
• Complicated tariff setting
• Mismatch seasonality of cash flows and billing cycle
• Data and billing errors
• Finding and matching competitive renewable generation
• Margin requirements under industry codes