What happens if one of your counterparties fails to meet its obligations with your utility? Maybe it's non-payment. Maybe a major player files bankruptcy. Maybe a utility has an emergency outage and they don't deliver the energy you were expecting. Any one of these events can have a serious impact to your organization. And while a certain amount of good faith is required to succeed in energy trading, there are seven essential steps any market participant should take to manage its credit risk exposure. The Energy Authority (TEA) is a non-profit energy marketing and trading organization owned by six public power entities. That means TEA's tolerance for credit risk and its operating performance metrics may be different from those of investor-owned utilities or energy marketers. But, TEA, exists to extract the maximum value from the wholesale markets on each member's and customer's energy portfolio while ensuring that overall credit risk exposure remains within acceptable parameters. To that end, TEA has developed a credit risk management methodology based on the following seven essentials.
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