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Evaluating Credit Risk in Power and Gas Companies - October 2013  -  October 16-17, 2013

7:30 am

DAY ONE - Tuesday, October 16

Registration and continental breakfast open.

All sessions taught by Ellen Lapson, CFA, unless otherwise noted

8:15 am

Program begins

Welcome and Introductions

Overview of Credit Risk Analysis in Power and Gas Companies; Economic and Regulatory Framework
  • How credit analysis is used
  • The role of credit agencies and the implications of their actions
  • Statistical basis of ratings (probability of default and Loss Given Default)
  • Alternatives to traditional ratings
Financial Statement Techniques for Credit Risk Analysis
  • The importance of sustainable cash flow; cash flow measures of leverage
  • Key drivers of cash flow for utilities and non-utility energy providers
  • Commodity price sensitivity and its effects on the financial statements
  • The relationship between regulatory accounting and financial accounting
  • GAAP earnings versus free cash flow
  • Implications of positive or negative free cash flow in the sectors

Credit Implications of Corporate Structure
  • Mini-Cases: The corporate structure, capitalization and business profiles of an electric utility, an independent power producer, and a holding company
The Structure of Corporate Bonds and Bank Agreements (Case Study)
  • Ownership structure of the utility and its relationship to credit
  • Capital structure and major types of debt
  • Holding company groups and parent/subsidiary relationships


Evaluating Credit Risk of Counterparties
Guest Speaker: Donna McMonagle, Director of Credit Risk, NRG Energy 

  • Sources of counterparty exposure in normal commercial transactions
  • Measuring counterparty exposures
  • Calculating expected losses
  • Setting limits on unsecured exposures
  • The environment of counterparty credit management

Energy Trading Risk and Derivatives Exposure
  • Overview of how hedging is used
  • Risks in energy trading 
  • Interpreting derivatives disclosures
Liquidity Analysis
  • Sources of internal and external liquidity
  • Capital expenditures, internal and external funding sources
  • Commodity exposure, energy trading markets and liquidity
5:00 pm

Day One concludes

8:00 am

DAY TWO - Thursday, October 17

Continental Breakfast open
8:15 am

Program begins

Review of Day One

Financial Analysis: Ratio Analysis (Case Study); Valuation Approaches
  • Best practices in use of financial ratios in the power and gas sector
  • Peer company analysis
  • Case Study: Analyzing credit ratios, comparing ratios against comparable peers and rating agency target ratios
Qualitative Analysis/Management Strategy and Experience
  • Consideration of different factors affecting outlook for a regulated and competitive entities
  • Evaluation of management effectiveness
  • Effect of other business related functions on outlook

Insolvency, Bankruptcy, and Recovery
  • Insolvency and consequences
  • The primary drivers of bankruptcy and insolvency in the sectors
  • The bankruptcy and reorganization process
  • Recovery experience and recovery analysis for utilities and gencos
  • Case Study: Bankruptcies and reorganizations of a utility and a competitive generator; contrasting methods of bankruptcy valuation and recovery by creditors
Warning Signals; Developing Your Own Forward Credit View
  • Regulated utilities
  • GenCos and non-regulated energy providers
  • Holding companies
  • Symptoms of deteriorating credit standing: financial, non-financial and market indicators
Sector Outlook, Conclusions, Group Exercise and Discussion
  • Consolidating multiple analyses to develop a comprehensive assessment of an institution's creditworthiness
  • Combining the qualitative and quantitative analysis for a credit analysis
  • Quantitative and market-based alternatives for credit ratings
  • The credit implications of emerging issues
  • Group Exercise: Students will use what has been learned during the course to develop a credit view of a real case company.
12:30 pm

Program concludes

Ellen Lapson, CFA (Primary Instructor)
Instructor, SNL Knowledge Center

Ellen has more than thirty-five years of experience in the fields of utility credit analysis and infrastructure financing. Prior to forming Lapson Advisory in 2011, she was a Managing Director at Fitch Ratings, where she oversaw ratings criteria and directed fixed-income investor outreach for the Utilities Group. 

In her 17 years at Fitch, Ellen led the credit evaluations or chaired Fitch rating committees for hundreds of North American utilities and projects, from the largest to the smallest entities. She directed and participated in credit assessments of innovative energy technology projects including renewable energy sources, advanced coal plants, new nuclear power plants, and nuclear enrichment. 

In 2010-2011, Ellen chaired Fitch's Corporate Finance Criteria Committee, the group responsible for determining the global criteria and guidelines the agency used to rate corporations, banks and financial institutions, insurers, and global infrastructure projects. 

Ellen has served for eight years as a member of the Electric Power Research Institute's Advisory Council and chaired the Advisory Council. She is a Chartered Financial Analyst and a member of the Wall Street Utility Group. She earned an MBA in accounting from New York University and a BA in literature from Barnard College.

Donna McMonagle (Guest Instructor)
Director of Credit Risk, NRG Energy
Event Date:
October 16-17, 2013
Event Location:
Downtown Conference Center
157 William Street
New York, NY, US
Registration Fee:

Prerequisites: Evaluating Credit Risk presumes that participants are familiar with basic corporate accounting principles.

This program will be of greatest benefit to:

  • Credit, risk and accounting professionals within utilities seeking an integrated perspective on their work
  • Investors in taxable and tax exempt bonds
  • Investors in corporate commercial paper
  • Bank lenders and investment banking associates
  • Contractual counterparties doing business with companies in the sector, such as equipment and fuel vendors, and participants in derivative contracts
Event Date:
October 16-17, 2013
Downtown Conference Center
157 William Street
New York, NY, US
(212) 618-6990

Although lodging is not provided as part of this program, the hotels listed below are convenient to the Downtown Conference Center. Please call the Downtown Conference Center to inquire about negotiated rates or with any other lodging related questions (212) 618-6990.

Millennium Hilton
55 Church St.

Gild Hall
15 Gold St.

Seaport Inn 
33 Peck Slip

Hampton Inn Seaport
320 Pearl St.

Conrad Hotel
102 North End Ave.

Eurostars Wall Street Hotel 
129 Front St.

Wall Street Inn 
9 S William St.

Ritz-Carlton Battery Park 
2 West St.

CFA Institute
11 hours of Professional Development Credit
SNL Knowledge Center is registered with CFA Institute as an Approved Provider of professional development programs. This program is eligible for 11 CE credit hours as granted by CFA Institute. If you are a CFA Institute member, CE credit for your participation in this program will be automatically recorded in your CE Diary.
National Association of State Boards of Accountancy
12.5  hours of CPE Credit
Participants at this program qualify for 12 hours of CPE credit (Specialized Knowledge and Applications). Program Level: Beginner. Delivery Method: Group-Live. SNL Knowledge Center is registered with the National Association of State Boards of Accountancy (NASBA), as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be addressed to the National Registry of CPE Sponsors, 150 4th Ave N, Ste 700, Nashville, TN, 37219-2417. Web site: www.nasba.org.

What is the dress code?
Business casual

Do I need a laptop?
No, but a hand-held calculator will be helpful in class.

Are there any prerequisites for the course?
The only prerequisite is a basic understanding of corporate accounting and financial statements.

Will this course be rewarding if I am already working in, or covering, the utility or energy sector
Yes, practitioners with experience in the sector will find that the course improves their mastery and helps to integrate their knowledge.

What is your cancellation policy?
Cancellations for this program are eligible for a full refund, less a $150.00 administrative fee, if received at least 15 business days prior to the start of the program. Cancellations received after that date but at least 5 business days prior to the start of the program receive a credit in the amount of the registration fee, less a $150.00 administrative fee, to attend another SNL Knowledge Center program within 13 months. Due to commitments and expenses, cancellations received fewer than 5 business days prior to the start of the program are not eligible for a refund or credit.

Substitutions from the same company may be made at any time.

In the event of a cancellation from a group discount, refunds or credits are issued beginning with the most heavily discounted price, minus a $150.00 administration fee.

"No shows" - or those who cancel within 15 days of the program - and have registered under the Invoice option, remain liable for the full program fee.

SNL Knowledge Center reserves the right to cancel/change programs, content, speakers or venue at any time. SNL Knowledge Center reserves the right to make portions of the program registration information available to program sponsors. SNL Knowledge Center will not be held liable for any costs incurred by registrant due to individual registration cancellation. In the event that a seminar is cancelled due to inclement weather, faculty cancellation or force majeure, SNL Knowledge Center will refund the registrant's tuition in full, however SNL Knowledge Center will not be liable for incidental or consequential out of pocket expenses incurred by the registrant. If you have questions regarding SNL Knowledge Center's refund, complaint or program cancellation policy, please call us at (434) 951-7786.

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