HOUSTON, Nov. 2, 2004 (PRIMEZONE) -- KWI, the leading provider of risk management and trading software for the global energy industry, is today encouraging energy companies to be less cautious and become market makers. Research conducted by KWI found that traders must first understand the business models in which they operate before determining the optimal strategy for operations. Poor credit ratings and industry regulations were found to be stifling companies attempting to take advantage of the lucrative asset heavy trading market.
The ability to extract commercial value from assets will remain a challenge unless trading and P&L is dominant at management level according to KWI's study. Further findings highlight the catch 22 currently impacting the market in that energy companies require a good credit rating to make their business model work, but also need a very good credit rating to take risks.
The survey by KWI also showcased best practice organizational structures and business processes including the benefits that a chief risk officer (CRO) or equivalent reporting to the CFO delivers by driving separate reporting lines for risk management right down to the trading floor. Respondents also recognized that deals conducted by sales and marketing should be re-priced on demand and booked into the trading system as a position once committed.
David Bucknall, chief executive office, KWI, said, "The sustained bull market that the energy industry is experiencing provides a great opportunity for lucrative asset heavy trading. Despite the challenges still facing businesses, we have seen some best practices emerge which is an encouraging sign for the future of energy trading. However, the fact that asset heavy energy companies generally remain risk averse is a concern and we encourage traders to review their structures, processes and systems to maximize the opportunities available. It is time for new market makers to emerge."
The study began in August 2004 and has involved KWI interviewing the world's leading energy trading organizations. Highlights of the initial findings were presented by David Bucknall in a panel discussion, which also included Brian Count, chief executive officer, RWE Trading, Mark Klein, energy risk director, Scottish Power, and Luca Baccarini, managing director, Gaselys, at Gas & PoweRisk 2004 on October 27, 2004. KWI was one of the two main sponsors of Gas & PoweRisk 2004.
Upon completion of the study, a comprehensive report with quantitative results will be produced for distribution to the participating energy trading organizations. To learn more or to participate in this global study, please contact Emma Behan at emma.behan@kwi.com
About KWI
KWI is a leading provider of trading and risk management software for the global energy industry. Developed specifically for global energy businesses, KWI's flagship product, K2, is a comprehensive suite of componentized, integrated applications for multi-commodity trading and risk management.
KWI is an international software company with customers in North America, Europe and Asia, including BP, ATEL, CEZ, ENEL, Energi E2, MVM, WPS Energy Services, Ontario Power Generation (OPG), PacifiCorp and BNFL Magnox Generation.
More information available at www.kwi.com
About WPS Energy Services
WPS Energy Services, Inc., is a diversified natural gas and electric marketer, which serves customers in the northeast quadrant of the United States and adjacent portions of Canada. It currently serves over 250,000 retail natural gas and electric customers. WPS Energy Services has total annual retail and wholesale sales of 493 billion cubic feet of natural gas and 9,200 Gigawatt-hours of electricity. Its corporate mission is to "Provide Customers with the Best Value in Energy and Related Services."
For more information visit: www.wpsenergy.com.