Credit Risk in the Wholesale Energy Market

NEW YORK, Feb. 19 /PRNewswire/ -- Phil Gootee, President, Global Credit Services, addressed emerging RTO credit policies and practices across the country at the January North American Power Credit Organization (NAPCO) conference in Las Vegas, Nevada. NAPCO is an organization that provides education relating to current credit issues in the wholesale energy industry.

Mr. Gootee was invited to discuss the development and unique characteristics of the Regional Transmission Organizations (RTOs). Perhaps the most notable credit characteristic of the RTOs is the Mutualization of Credit Losses - the allocation of bad debt to all remaining market participants (MPs) within that RTO. Mr. Gootee discussed recently implemented and proposed changes to credit policies and settlement practices by the various RTOs. He explained how each of these changes was designed to identify and mitigate the credit risk and impact of one market participant's Total Potential Exposure (TPE) upon the remaining MPs in the RTO. The need to re-evaluate the methods used to identify and mitigate credit exposure gained national focus recently when one of the RTOs experienced credit losses in excess of $70 million dollars.

"Mr. Gootee's presentation was particularly timely and beneficial to our members. The Federal Energy Regulatory Commission issued a Notice of Proposed Rulemaking addressing seven credit policy items impacting the wholesale electricity markets on January 21st. Phil's presentation at NAPCO the following day addressed in detail all of these topics. It is clear that Mr. Gootee and Global Credit Services should be considered among the leaders developing the next generation of Best Practices for the wholesale power industry," commented John Vinski, President of NAPCO.

The goal of Global Credit Services is to help its clients manage and reduce their risk. With its 14 years of credit risk management experience and its newly introduced ClearPath suite of flexible, web-based tools, GCS puts credit managers in control of credit analysis, collateral tracking, exposure monitoring, and portfolio management. Global's ClearPath speeds and standardizes routine credit-risk management decisions with in-depth, on-demand data tools and expert analysis. In addition to the customized client-based reporting modules, GCS industry experts provide concise reports on a quarterly basis that tie together operational performance, liquidity, leverage, competitive, and other factors to assign a risk-based rating and outlook.

Global Credit Services is a leading provider of web-based credit information and risk management solutions. Global's in-depth research and analysis allows corporations to make informed decisions about their prospects, customers and partners. With its innovative software and experienced credit analysts, Global delivers accurate, unbiased and timely ratings information. Global helps corporations measure, control, and mitigate credit risk with industry-specific credit scoring models and a robust database covering U.S. and international companies. For more than 14 years, Global has been a trusted resource for credit professionals. http://www.globalcreditservices.com

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SOURCE Global Credit Services