Utilizing cash flow contracts and physical collateral for energy-related clearing and credit enhancement platforms

Abstract

In accordance with the present invention, a financial instrument for the energy market is created. The financial instrument comprises a derivative instrument related to accounts receivable or accounts payable or both. In a preferred embodiment, the derivative instrument normally consists of two sets of linked swaps. In the first set, the seller exchanges two things with a third party: (i) the right for payment of accounts receivable within a month from the buyer is exchanged for the right to payment of such accounts receivable within a week from the third party; and (ii) the obligation to deliver energy to the buyer is exchanged for the obligation to deliver to the third party. The buyer exchanges the mirror image of those with a third party, to wit: (i) the obligation to pay within a month to the seller is exchanged for the obligation to pay within a week to the third party, but the buyer receives financing to offset the cash flow ramifications; and (ii) the obligation to take delivery from the seller is exchanged with the obligation to take delivery from the third party. The swap can further be utilized to net payment obligations under multiple cash and forward commodity transactions between the buyer and the seller. Physical collateral is utilized as margin. In accordance with another aspect of the present invention, the process takes place on a ‘clearing platform’ for such energy transactions.

1 . A method of creating a financial instrument comprising: 
 for an energy market, creating a derivative instrument related to accounts receivable or accounts payable or both.    
     
     
         2 . The financial instrument of  claim 1  further wherein the derivative instrument is a swap.  
     
     
         3 . The financial instrument of  claim 1  further wherein the derivative instrument is a futures contract.  
     
     
         4 . The financial instrument of  claim 1  further wherein the derivative instrument is a forward contract.  
     
     
         5 . The financial instrument of  claim 4  further wherein the forward contract is a forward contract for physical delivery.  
     
     
         6 . The financial instrument of  claim 1  further wherein the derivative instrument is an option.  
     
     
         7 . The financial instrument of  claim 1  further wherein the energy market comprises a natural gas market.  
     
     
         8 . The financial instrument of  claim 1  further wherein the energy market comprises a power market.  
     
     
         9 . A financial instrument comprising: 
 in an energy market, assigning delivery obligations on a multi-lateral basis to a neutral, third-party clearing entity.    
     
     
         10 . The financial instrument of  claim 9  further wherein the delivery obligations are assigned through an independent transmission provider.  
     
     
         11 . The financial instrument of  claim 10  further wherein the independent transmission provider is a regional transmission operator.  
     
     
         12 . The financial instrument of  claim 10  further wherein the independent transmission provider is an independent system operator.  
     
     
         13 . The financial instrument of  claim 9  further wherein the delivery obligations are assigned through a gas pipeline.  
     
     
         14 . The financial instrument of  claim 9  further wherein an obligation of a power purchaser to pay a power seller for purchases of energy is assigned to a neutral, third-party clearing entity.  
     
     
         15 . The financial instrument of  claim 9  further wherein the energy market comprises a natural gas market.  
     
     
         16 . The financial instrument of  claim 9  further wherein the energy market comprises a power market.  
     
     
         17 . A financial instrument comprising: 
 in an energy market, assigning delivery and payment obligations on a multi-lateral basis to a third party via novation.    
     
     
         18 . The financial instrument of  claim 17  further wherein the payment obligations are assigned through an independent transmission provider.  
     
     
         19 . The financial instrument of  claim 17  further wherein the payment obligations are assigned through a gas pipeline.  
     
     
         20 . The financial instrument of  claim 17  further wherein an obligation of a power seller to deliver energy to a power purchaser is assigned to a neutral, third-party clearing entity.  
     
     
         21 . The financial instrument of  claim 17  further wherein the energy market comprises a natural gas market.  
     
     
         22 . The financial instrument of  claim 17  further wherein the energy market comprises a power market.  
     
     
         23 . A financial instrument comprising: 
 in a commodity market, utilizing accounts receivable swaps, accounts payable swaps or both accounts receivable swaps and accounts payable swaps to net cash and forward commodity transactions.    
     
     
         24 . The financial instrument of  claim 23  further wherein the commodity comprises energy.  
     
     
         25 . The financial instrument of  claim 24  further wherein an obligation of the energy purchaser to pay the energy seller is exchanged with a third party.  
     
     
         26 . The financial instrument of  claim 24  further wherein the energy market comprises a natural gas market.  
     
     
         27 . The financial instrument of  claim 24  further wherein the energy market comprises a power market.  
     
     
         28 . A financial instrument comprising: 
 utilizing physical collateral as margin in an energy clearinghouse.    
     
     
         29 . The financial instrument of  claim 28  further wherein the physical collateral comprises energy plant dispatchability or the rights to plant dispatchability.  
     
     
         30 . The financial instrument of  claim 28  further wherein the physical collateral comprises energy reserves or the rights to use energy reserves.  
     
     
         31 . The financial instrument of  claim 28  further wherein the physical collateral comprises transmission capacity or the rights to transmission, including firm and non-firm, physical and financial rights.  
     
     
         32 . The financial instrument of  claim 28  further wherein the energy market comprises a natural gas market.  
     
     
         33 . The financial instrument of  claim 28  further wherein the energy market comprises a power market.  
     
     
         34 . A financial instrument comprising: 
 integrating with spot markets to determine the amount of physical collateral to assign to energy supply resources.    
     
     
         35 . The financial instrument of  claim 34  further wherein the physical collateral comprises power generators.  
     
     
         36 . The financial instrument of  claim 34  further wherein the physical collateral comprises gas.  
     
     
         37 . The financial instrument of  claim 34  further wherein the spot market comprises a pipeline market.  
     
     
         38 . The financial instrument of  claim 34  further wherein the spot market comprises an independent transmission provider market.  
     
     
         39 . The financial instrument of  claim 38  further wherein the independent transmission provider is a regional transmission operator.  
     
     
         40 . The financial instrument of  claim 38  further wherein the independent transmission provider is an independent system operator.  
     
     
         41 . The financial instrument of  claim 34  further wherein the wherein the spot market comprises an independent system operator market.  
     
     
         42 . The financial instrument of  claim 34  further wherein the spot market comprises a day head market.  
     
     
         43 . The financial instrument of  claim 34  further including integrating a bid stack of supply offers into an independent transmission provider market as a basis for calculating a call option value as a source of collateral.  
     
     
         44 . The financial instrument of  claim 43  further wherein the independent transmission provider is a regional transmission operator market.  
     
     
         45 . The financial instrument of  claim 43  further wherein the independent transmission provider is an independent system operator market.  
     
     
         46 . The financial instrument of  claim 43  further wherein the supply offers are in an independent transmission provider day-ahead market.  
     
     
         47 . The financial instrument of  claim 43  further wherein the supply offers are in an independent transmission provider real-time market.  
     
     
         48 . The financial instrument of  claim 34  further wherein the spot market comprises a natural gas market.  
     
     
         49 . The financial instrument of  claim 34  further wherein the spot market comprises a power market.  
     
     
         50 . A financial instrument for energy markets comprising: 
 a swap that exchanges one length term cash flows of a standard underlying wholesale energy transaction for different length term cash flows.    
     
     
         51 . The financial instrument for energy markets of  claim 50  further wherein one length term cash flows are longer-term cash flows and the different length term cash flows are shorter-term cash flows.  
     
     
         52 . The financial instrument for energy markets of  claim 50  further wherein the shorter-term cash flows are accounts payable cash flows.  
     
     
         53 . The financial instrument for energy markets of  claim 50  further wherein the shorter-term cash flows are accounts receivable cash flows.  
     
     
         54 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows are accounts payable cash flows.  
     
     
         55 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows are accounts receivable cash flows.  
     
     
         56 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows of the standard underlying wholesale energy transaction are monthly cash flows and the shorter term cash flows are weekly cash flows.  
     
     
         57 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows of the standard underlying wholesale energy transaction are semi-monthly cash flows and the shorter term cash flows are weekly cash flows.  
     
     
         58 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows of the standard underlying wholesale energy transaction are bi-monthly cash flows and the shorter term cash flows are weekly cash flows.  
     
     
         59 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows of the standard underlying wholesale energy transaction are weekly cash flows and the shorter term cash flows are daily cash flows.  
     
     
         60 . The financial instrument for energy markets of  claim 51  further wherein the longer-term cash flows of the standard underlying wholesale energy transaction and the shorter term cash flows are varying term cash flows.  
     
     
         61 . The financial instrument of  claim 51  further wherein the energy market comprises a natural gas market.  
     
     
         62 . The financial instrument of  claim 51  further wherein the energy market comprises a power market.  
     
     
         63 . A financial instrument for energy markets comprising: 
 a novation that assigns delivery and payment obligations on a multi-lateral basis to an independent, third party clearing entity.    
     
     
         64 . The financial instrument of  claim 63  further wherein the delivery obligations are assigned through an independent transmission provider.  
     
     
         65 . The financial instrument of  claim 63  further wherein the delivery obligations are assigned through a gas pipeline.  
     
     
         66 . The financial instrument of  claim 63  further wherein the delivery obligation of the energy seller to deliver energy to an energy purchaser is exchanged with the clearing entity.  
     
     
         67 . The financial instrument for energy markets of  claim 63  further wherein the clearing entity converts physical contracts into cash flow contracts between the clearing entity and a power seller, and between the clearing entity and a power buyer.  
     
     
         68 . The financial instrument for energy markets of  claim 67  further wherein the clearing entity comprises a delivery entity that manages the underlying commodity transaction and a clearing entity that manages clearing of the cash flow contracts.  
     
     
         69 . The financial instrument for energy markets of  claim 68  further wherein the clearing entity comprises a forward contract merchant under the regulation of the Commodity Futures Trading Commission.  
     
     
         70 . The financial instrument for energy markets of  claim 68  further wherein the clearing entity comprises a swaps participant under the regulation of the Commodity Futures Trading Commission.  
     
     
         71 . The financial instrument for energy markets of  claim 68  further wherein the clearing entity begins as a Forward Contract Merchant/Swaps Participant and then become a Derivatives Clearing Organization under the regulation of the Commodity Futures Trading Commission.  
     
     
         72 . The financial instrument for energy markets of  claim 68  further wherein the clearing entity comprises a Derivatives Clearing Organization under the regulation of the Commodity Futures Trading Commission.  
     
     
         73 . The financial instrument for energy markets of  claim 68  further wherein the delivery entity comprises an energy utility under the jurisdiction of the Federal Energy Regulatory Commission.  
     
     
         74 . The financial instrument for energy markets of  claim 68  further wherein the delivery entity enters into a swap with the clearing entity under which the clearing entity assigns payments received from the power buyer under the cash flow contract to the delivery entity in exchange for a payment guarantee from the delivery entity to the power seller.  
     
     
         75 . The financial instrument for energy markets of  claim 68  further including a neutral finance entity that provides financing to manage the time value of the difference in cash flows.  
     
     
         76 . The financial instrument for energy markets of  claim 68  further wherein the delivery entity assumes an obligation of a power buyer to pay a power seller for purchases of electricity in a spot market in exchange for the power buyer and power seller entering into separate cash flow contracts with the clearing entity.  
     
     
         77 . The financial instrument for energy markets of  claim 68  further wherein the cash flow contract is protected under Bankruptcy Code.  
     
     
         78 . The financial instrument for energy markets of  claim 77  further wherein the cash flow contract fits within Bankruptcy Code definition of forward contract.  
     
     
         79 . The financial instrument for energy markets of  claim 77  further wherein the cash flow contract fits within Bankruptcy Code definition of swap agreement.  
     
     
         80 . The financial instrument for energy markets of  claim 63  further wherein the clearing entity fits within Bankruptcy Code definition of forward contract merchant.  
     
     
         81 . The financial instrument for energy markets of  claim 63  further wherein the clearing entity fits within Bankruptcy Code definition of swap participant.  
     
     
         82 . The financial instrument of  claim 63  further wherein the energy market comprises a natural gas market.  
     
     
         83 . The financial instrument of  claim 63  further wherein the energy market comprises a power market.  
     
     
         84 . The financial instrument of  claim 63  further wherein the energy market is selected from the group comprising a coal market, an air emissions market, a power generation capacity market, a power transmission capacity market, a natural gas storage capacity market, a natural gas pipeline capacity market, a demand response market, a renewable energy market, an energy efficiency market, an exchange traded market, an over-the-counter market, a bilateral market, a brokered market, an independent transmission provider market, a regional transmission organization market, an independent system operator market, a pipeline market, an electronic bulletin board market, a spot market, a real-time market, an imbalance market, a balancing market, an hourly market, an intra-day market, a next day market, a day ahead market, a forward market, a weekly market, a balance of week market, a monthly market, a balance of month market, a quarterly market, a calendar market, a multiple year market, and combinations thereof.