•Energy trading involves both the physical settling trades (forwards and futures involving the physical delivery of commodity) and the financial trades (swaps and futures which are settled financially).
•Apart from the derivatives needed for hedging, there exists other trades in energy business due to its nature:
îA physical commodity is to be traded and there is a delivery structure or process associated with each commodity.
îDue to varied factors like liberalization, generation, transmission and consumption, each function has its own functions like the transmission facility has to maintain balance at storage points.
•All this results in trades like Storage Contracts, Capacity Contracts, Transport Contracts and Imbalance Contracts.
Gas Storage and Transport
•Natural gas storage facilities provide capacity and other services like transportation etc. Customer can buy the storage capacity from the gas facility. There are storage points and delivery points (injection points and withdrawal points).
•"Delivery" means the transfer of gas from an interstate pipeline or other transporter to the Company at a point of interconnection to the Company's distribution system.
•"Redelivery" means the transfer of gas from the Company to the Buyer at the meter at the Buyer's facility.
•"Delivery point" means any point on the Company's gas distribution system at which an interconnection exists with an interstate pipeline or other transporter to enable the Company to receive gas owned by the Buyer for redelivery to the Buyer's facility.
îInjection point: delivery point where gas will be injected by the buyer of storage.
îWithdrawal Point: delivery point where gas will be withdrawn by the buyer of storage.
•Apart from the derivatives needed for hedging, there exists other trades in energy business due to its nature:
îA physical commodity is to be traded and there is a delivery structure or process associated with each commodity.
îDue to varied factors like liberalization, generation, transmission and consumption, each function has its own functions like the transmission facility has to maintain balance at storage points.
•All this results in trades like Storage Contracts, Capacity Contracts, Transport Contracts and Imbalance Contracts.
Gas Storage and Transport
•Natural gas storage facilities provide capacity and other services like transportation etc. Customer can buy the storage capacity from the gas facility. There are storage points and delivery points (injection points and withdrawal points).
•"Delivery" means the transfer of gas from an interstate pipeline or other transporter to the Company at a point of interconnection to the Company's distribution system.
•"Redelivery" means the transfer of gas from the Company to the Buyer at the meter at the Buyer's facility.
•"Delivery point" means any point on the Company's gas distribution system at which an interconnection exists with an interstate pipeline or other transporter to enable the Company to receive gas owned by the Buyer for redelivery to the Buyer's facility.
îInjection point: delivery point where gas will be injected by the buyer of storage.
îWithdrawal Point: delivery point where gas will be withdrawn by the buyer of storage.
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