Rome recently announced that they scored a big win with the NYISO. As Rome mentions in their press release…

NYISO operates New York States bulk electricity grid and administers their wholesale electricity markets. Recent growth in the wholesale electricity market and evolving market design requirements resulted in increasingly complex credit data and processes as well as integration issues. After internal evaluation and feedback from market participants, they determined a critical need to create an automated credit management system with near real-time credit risk assessment and a web interface for market participants to manage their credit position as a portfolio.

Even beyond this particular deal, I suspect Rome is going to have a very good year. Given ever increasing costs for commodities and the higher levels of capital moving to the markets, counter party credit exposures are growing. With prices increases for energy commodities running up to 30-40% year-over-year, equivalently sized (volumetric) deals poise significantly higher credit risk for market participants than they ever have.

Combined with the effect of the growing interrelationship amongst the various asset classes - energy commodities being held by trading houses along side equities and debt instruments - sellers of wholesale energy have to be cognizant of not only their exposures to possible losses arising from counterparty failures due to energy price volatility, but also must include in their calculus the potential for losses due to changes in what were once considiered unassociated markets - such as the near disaster that occurred with Bear Energy being hammered by their parent company’s collapse due to the mortgage crises.