Energy

Energy

CRA is a leading global consulting firm that blends decades of energy industry knowledge with world-class economic and analytical expertise—a unique and powerful combination that yields deeper insights and better-informed decisions. Our comprehensive understanding of the energy sector includes expertise in market design, investment strategy, portfolio risk management, mergers and acquisitions, asset and enterprise valuation, and regulatory strategy.

The consulting and testifying experts in CRA's Energy Practice have researched, published, taught, and consulted on energy matters worldwide. Our work in the energy industry has established legal precedents and set new standards in market oversight. We have advised on developing the structure of national and regional competitive markets, reorganized multi-billion-dollar companies, testified in hundred-million-dollar damages litigation, and played a key role in most North American utility mergers and acquisitions that have taken place over the last decade.

Energy consulting services

Regulatory strategy and support

CRA provides regulatory strategy and consulting support to energy infrastructure owners, investors, and financiers. Our energy experts help clients gain desired approvals, policy and rule changes, and other important regulatory outcomes in state, federal, and international jurisdictions.

Sample engagements
CRA energy experts have provided consulting support in a wide range of regulatory engagements.

  • Testified at FERC on behalf of generation owners on capacity market rules
  • Developed the net benefit analysis for a utility’s transmission project that was filed with US state and federal regulators
  • Developed and supported a seven-year energy infrastructure investment plan for replacing and modernizing transmission and distribution assets in the Midwest United States
  • Advised Ofgem, the UK electricity and gas regulator, on retail price controls and on National Grid Transco price controls

Related expertise

Click the links below for more examples of CRA's regulatory strategy and support expertise.

  • Energy and capacity market rules
    • CRA has been involved in the structuring of many structured electricity and capacity markets in North America, South America, and the United Kingdom. CRA energy consultants often provide regulatory support to market participants around the development of new energy markets and the refinement of rules in existing energy markets. For example, CRA energy consultants were retained in the development of the ISO-NE forward capacity market, the restructuring of the California energy markets after the Energy Crisis is 2001, the development of market rules in ERCOT, the recent refinement of the capacity market rules in PJM, and the design of the UK capacity market. CRA also provided guidance to stakeholders in Mexico’s energy market, which is transforming from a vertically integrated, single owner structure to an unbundled competitive structure.
  • Transmission planning
    • CRA supports owners and operators of energy infrastructure, as well as potential investors and financiers, in the development of new transmission projects. CRA’s energy consulting support in this area includes analysis of net benefits of proposed projects, development of project revenue requirements, and competitive filing strategy. CRA evaluates transmission project benefits using market models (described under Transactions Support) to evaluate price, capacity, and other impacts. Our energy consultants also have significant experience preparing filings for competitive transmission projects, including the structuring of cost control provisions and the valuing and positioning of net benefits. CRA has been involved in supporting stakeholders considering the implications of Order 1000 on competitive transmission.
  • Infrastructure replacement and modernization plans
    • CRA supports utilities and other asset owners with the development of robust infrastructure replacement and modernization plans toward gaining regulatory approvals. In recent years, regulators have focused attention on grid resiliency and the need for the system to handle extreme events. Energy regulators also are interested in new smart grid technologies that can improve customer service. CRA's energy consultants have supported utilities in their development of long-term investment plans that have been filed with and approved by state regulators in the US, as well as DNOs under the UK RIIO price control approach. These plans have included an expert identification of system investment need and the estimated incremental benefits to customers of the utility’s prioritized capital investment plan.
  • Transaction-related regulatory support
    • CRA supports energy asset owners with regulatory activities related to transactions, including purchase, sale, and refinancing. For more information on these services, please see the Transactions Support section above.

Investment strategy, planning, and prioritization

Our energy consulting professionals work with leadership at energy companies and investment groups to develop capital investment strategies to optimize portfolio performance. CRA’s experience has ranged from helping a merchant generator identify strategic investment opportunities in new RTOs, to supporting a utility in its development of a corporate growth strategy premised on coal retirement and natural gas reinvestment.

Click the links below for more examples of CRA's CRA's investment strategy, planning, and prioritization expertise.

  • Strategic advisory
    • CRA energy consultants work with executives at energy companies to develop short- and long-range strategic plans to drive earnings growth, control costs, and limit risk. We frequently help energy companies with scenario planning exercises and development of forecasts of business unit performance. Our energy consulting practice combines that analysis with an examination of business unit Economic Profit, a concept pioneered by CRA’s Marakon division decades ago. CRA’s EP approach determines the value add associated with each business line, which helps rationalize the company’s portfolio.
  • Capital prioritization
    • CRA energy consultants work with executives at energy companies to develop short and long-range strategic plans to drive earnings growth, control costs, and limit risk. CRA professionals frequently help energy companies with scenario planning exercises and development of forecasts of business unit performance. CRA combines that analysis with an examination of business unit Economic Profit, a concept pioneered by CRA’s Marakon division decades ago. CRA’s EP approach determines the value-add associated with each business line, which helps rationalize the company’s asset portfolio.

Transactions support

CRA energy consultants regularly provide advisory, due diligence, and expert services related to energy sector transactions, including purchases, sales, financings, and bankruptcies. Transactions have ranged from advising an infrastructure fund with an electric utility acquisition, to serving as the natural gas expert to the creditors’ committee in one of the largest energy company bankruptcies in U.S. history.

Related expertise
Click the links below for more examples of CRA's transactions support expertise.

  • Advisory services
    • Our energy consultants provide strategic guidance to energy asset owners and investors considering investment or divestment opportunities. CRA relies on sector-specific expertise combined with portfolio modeling capabilities to answer complex energy portfolio questions.

      CRA operates a collection of licensed and proprietary models for analyzing portfolio performance and recommending acquisition or divestment, including electric and natural gas market models, capacity market models, renewable credits and emission pricing models, capacity expansion models, revenue requirement models, and detailed financial models. For more information on our energy models, please click here.

  • Due diligence
    • CRA energy consultants provide market due diligence services to stakeholders in energy sector transactions. Market due diligence includes expert analysis of market structure and market fundamentals and development of market forecasts to support asset and portfolio valuation. CRA has provided market due diligence in a range of energy sector transactions in both the U.S. and Europe, including the purchase and sale of electric generation assets, electric and gas utilities, natural gas pipelines, and electric transmission lines. CRA relies on a collection of licensed and proprietary models, described under Advisory Services above.
  • Expert services
    • CRA energy consultants provide a range of expert services in support of transactions. Our PhD economists and energy sector experts have provided testimony and affidavits around market power, system outcomes, and customer impacts related to electric and natural gas transactions.

Portfolio and enterprise risk management

CRA energy consultants regularly provide strategic guidance and advisory services to energy asset owners and investors related to valuation of generation assets and storage facilities, commodity contracts, energy derivatives, as well as guidance on energy risk management, deal structuring, hedging strategies and portfolio optimization.

Related expertise
Click the links below for more examples of CRA's portfolio and enterprise risk management expertise.

  • Valuation of generation assets
    • CRA has developed numerous stochastic and hybrid energy risk models which accounts for the unique behavior of energy prices and operational constraints of physical assets. We have analyzed a variety of generator types including nuclear, gas and coal-fired base load plants, gas and oil fired-peakers and mid-merit generators, run-of-river and pumped storage hydro facilities and wind farms.
  • Portfolio optimization
    • CRA provides strategic guidance to market participants either looking to diversify their existing generation portfolio, consider new investment opportunities, or divest or retire existing assets. We also advise clients on repowering options including technical upgrades on existing generation assets to meet environmental and regulatory constraints or rebuilding new generation units on the same site.
  • Derivatives pricing
    • CRA provides guidance to energy asset owners and investors on structuring, hedging, and pricing derivative contracts to achieve the desired balance of risk and return. CRA also provides transaction support with structuring appropriate hedging strategies as a part of purchases, sales, financings or bankruptcy proceedings.
  • Storage valuation
    • CRA advises market participants on structuring and hedging volumetric uncertainty embedded in a variety of gas storage and swing contracts, as well as providing clients with state-of-the-art quantitative methodologies and tools to optimize the use of storage.
  • Energy risk management
    • CRA provides a range of advisory services to market participants on the matters involving assessment, modeling and managing energy risk. CRA has extensive experience in development of quantitative risk assessment models and custom tailored risk management tools, based on a variety of VAR and cash-flow based risk metrics, such as Delta VAR, Monte Carlo VAR, and revenue/margin/cash flow at risk.
  • Energy trading
    • CRA advises market participants as well as regulators on energy trading and hedging strategies. CRA performs detailed quantitative analyses of energy trading books or individual trading strategies. We often investigate historical data records to either identify illegal trading patterns as part of a damages calculation, or to identify potentially manipulative market behavior as part of a government investigation, or litigation or policy design.

Expert testimony and support

CRA professionals regularly provide expert-related services in complex legal and regulatory matters involving diverse energy topics. CRA’s energy experts include PhD economists, mathematicians and statisticians, accounting and finance professionals, and energy industry practitioners who are leading experts in their field. CRA works with inside and outside counsel for energy infrastructure manufacturers, owners, investors, operators, and customers.

CRA’s energy litigation work has ranged from valuing stranded costs for a European nuclear plant owner that was forced to retire due to new legislation, to analyzing complex energy trades where market manipulation was suspected. Our regulatory work in the energy industry has ranged from developing testimony around proposed changes to PJM capacity market rules to testifying on market power related to a proposed utility acquisition.

Our extensive energy litigation expertise informs the entire litigation process, from initial pleading through discovery, expert report preparation, hearings, and briefings.

Market design and restructuring

CRA energy consultants have designed and supported the development of electricity and natural gas markets worldwide. Our work has included advising the State of California on retail market structure, supporting ISO-NE and PJM stakeholders on capacity market development, and advising stakeholders in the U.K. on market reform. CRA also has recently advised ISOs on implementation of FERC Order 1000 with respect to non-biased project selection.

CRA’s economic and financial experts have substantial experience in efficient market design, including designating electricity and capacity products, developing robust and effective market rules, performing system impact studies and analysis, price forecasting, and pro forma project analysis under new market schemes. CRA frequently works with regulators, generators, utilities, and energy investors to develop and navigate these complex changes.

Procurement and competitive bidding

CRA provides extensive expertise in energy-related auctions and market design and implementation. CRA’s experience ranges from developing power procurement programs for investor owned utilities to designing and running default energy service auctions in Ohio and Pennsylvania and designing and implementing a €1 billion/year auction process for one of the largest German utilities. CRA’s Energy Practice works closely with its Auctions and Competitive Bidding Practice, which also supports clients in other industries.

Related expertise
Click the links below for more details on CRA's procurement and competitive bidding expertise.

  • Design of bidding mechanisms
    • CRA develops auctions and other market designs that are tailored to our client’s situation. We work with clients to confirm objectives and desired outcomes; design the products and contracts that the client wants purchased or sold (e.g., energy, capacity, fuel, FTRs); assess likely bidders and their characteristics; design and optimize bidding mechanism; and formalize a clear and comprehensive set of rules.
  • Implementation of bidding processes
    • CRA has implemented and managed hundreds of successful trading events with transaction values ranging from hundreds of thousands to billions of dollars. CRA can provide document preparation, communication protocols, stakeholder consultation, data room, bidder qualification, and a customized trading platform (CRA’s proprietary Auction Management System). We also can conduct trading events in multiple languages.
  • Auction and market monitoring
    • CRA provides independent analysis and monitoring of auctions and market mechanisms. We facilitate the entire process, improving the design and implementation of the market mechanism to ensure that it is conducted in accordance with the stated rules or requirements. We can be involved from the initial stages through conclusion and provide a final report that includes an assessment of the process and the outcome as well as recommendations for improvements.
  • Bidder support and strategy
    • CRA provides auction and market participants with strategic advice and other valuable support services prior to and during the auction process. Depending on specific needs, we can prepare participants for bidding processes through analysis of bidding mechanisms and rules; conducting financial analyses and valuation of assets being offered; assessing competitors and their likely strategies; providing advice on optimal bidding strategies and bids; conducting mock auctions; and developing a logistics plan to support effective bidder participation.

EU state aid analysis and support

Our European CRA professionals have extensive experience providing economic analysis and advice on matters related to EU State Aid regulations. Our experts have conducted Market Economy Investor Principle assessments and various analyses in support of restructuring State Aid approvals for energy companies.