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. In accordance with another aspect of the present invention, the process takes place on a ‘clearing platform’ for such energy transactions.

1 . A financial instrument comprising:
 in an energy market, assigning delivery and payment obligations on a multi-lateral basis to a third party via novation.   
     
     
         2 . The financial instrument of  claim 1  further wherein the payment obligations are assigned through an independent transmission provider. 
     
     
         3 . The financial instrument of  claim 1  further wherein the payment obligations are assigned through a gas pipeline. 
     
     
         4 . The financial instrument of  claim 1  further wherein an obligation of a power seller to deliver energy to a power purchaser is assigned to a neutral, third-party clearing entity. 
     
     
         5 . The financial instrument of  claim 1  further wherein the energy market comprises a natural gas market. 
     
     
         6 . The financial instrument of  claim 1  further wherein the energy market comprises a power market. 
     
     
         7 . A financial instrument comprising:
 integrating with spot markets to determine the amount of physical collateral to assign to energy supply resources.   
     
     
         8 . The financial instrument of  claim 7  further wherein the physical collateral comprises power generators. 
     
     
         9 . The financial instrument of  claim 7  further wherein the physical collateral comprises gas. 
     
     
         10 . The financial instrument of  claim 7  further wherein the spot market comprises a pipeline market. 
     
     
         11 . The financial instrument of  claim 7  further wherein the spot market comprises an independent transmission provider market. 
     
     
         12 . The financial instrument of  claim 11  further wherein the independent transmission provider is a regional transmission operator. 
     
     
         13 . The financial instrument of  claim 11  further wherein the independent transmission provider is an independent system operator. 
     
     
         14 . The financial instrument of  claim 7  further wherein the wherein the spot market comprises an independent system operator market. 
     
     
         15 . The financial instrument of  claim 7  further wherein the spot market comprises a day head market. 
     
     
         16 . The financial instrument of  claim 7  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. 
     
     
         17 . 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.   
     
     
         18 . The financial instrument for energy markets of  claim 17  further wherein one length term cash flows are longer-term cash flows and the different length term cash flows are shorter-term cash flows. 
     
     
         19 . The financial instrument for energy markets of  claim 18  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. 
     
     
         20 . The financial instrument for energy markets of  claim 18  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.