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Experience

Experience 2017-10-30T14:45:38+00:00
Contract disputes and bankruptcies 2018-02-27T13:41:17+00:00

  • Mosaic economists have been engaged in numerous arbitration proceedings arising from contract disputes during new power plant construction, in order to assess damages arising from schedule delays and from failure of the power plants to perform to contract specifications. These cases include:
    • A multi-billion dollar international arbitration case involving the construction of a first-of-a-kind nuclear power plant, in which Mosaic economists developed a model of Nordic power markets that was used to calculate damages to the power plant owner arising from lost market revenues during construction delays.
    • An industrial cogeneration facility, where Mosaic economists modeled the operation of a complex co-generation plant, the financial impact to the owner of schedule delays and of the facility performing below contract efficiency levels, and the incentives of the owner to terminate the contract with the engineering, construction, and procurement firm.
    • Delays in construction of natural gas-fired power plants, in which Mosaic economists assessed lost market revenues during the time the plant was supposed to be operational.
  • Filed expert reports and provided deposition testimony on behalf of the California Attorney General’s office in State of California ex rel. Christopher J. Schroen, et. al., v. BP America Production Company, et. al. (Case No. CGC-12-522063) regarding the market value of natural gas transactions with embedded optionality. The case settled for $102 million on the eve of trial.
  • In the bankruptcy litigation matter In re National Gas Distributors, LLC., Mosaic economists provided eleven expert reports and mediation support on behalf of members of a joint defense group on (1) the fair market value of forward contracts for the delivery of natural gas following Hurricanes Katrina and Rita in response to fraudulent conveyance claims; and, (2) on contracting practices for natural gas and whether the contracts at issue were commodity forward agreements under the bankruptcy code.
  • Mosaic economists coauthored expert disclosures on behalf of Performance Fibers, Inc. on the causes of oil price movements and their relation to manufacturing costs of petrochemical inputs into the manufacture of polyester fiber. The analysis measured the impact of events on oil price movements. The matter was an arbitration case involving a contract dispute over a price adjustment clause.
  • Mosaic economists evaluated trading and risk management practices, the pricing of structured and vanilla transactions, and the allocation of risk between partners to a joint venture of two energy companies in arbitration proceedings.
  • In a contract dispute in the chemical industry, Mosaic economists analyzed the economics of the contract, value to the parties of the contract, damages, and the incentives of the parties to breach the contract.
Market manipulation in commodity and financial markets 2017-10-30T14:50:59+00:00

Mosaic economists have been retained as testifying or consulting experts in a number of cases of alleged market manipulation in commodity and financial markets.  Our economists have analyzed high frequency trading, trade and order books, daily price movements and trading patterns, and fundamental supply and demand factors, and the prices that would have prevailed but for the alleged conduct.  Examples include:

  • Prefiled, deposition, and trial testimony as a rebuttal witness on behalf of FERC Enforcement staff in FERC proceedings in the Amaranth natural gas manipulation case involving allegations of settlement price manipulation. Evaluated at-issue price movements, Defendants’ trading patterns, and the effect of fundamental supply and demand factors.
  • Expert report in CFTC v. Parnon Energy Inc., et al., Case No. 11-cv-3543 (SDNY) involving alleged manipulation of crude oil calendar spreads. Analyzed whether NYMEX Light Sweet Crude Oil Futures Contract calendar spread prices were artificial on specified dates, the degree of artificiality, and whether Defendants’ actions were a proximate cause of the artificiality.
  • Litigation support in multiple cases of alleged manipulation and collusion in financial markets. Assessed the economics of theories of liability and harm to competition, potential manipulative strategies, empirical evidence of potential manipulation, and generated preliminary estimates of harm to plaintiffs.
  • Litigation support in cases of alleged manipulation in commodity markets. Assessed economic theories of harm, methods of manipulation, and potential sources of damages.
  • Analysis of high-frequency trade and order data and the limit order book to detect patterns that might indicate or counter allegations of manipulation, including the development of methods to identify at-issue trading.
Trading and Risk Management 2017-10-30T14:51:05+00:00

  • Mosaic team members have analyzed high frequency trading of options and futures for an exchange to detect practices that may be manipulative or cause extraordinary volatility, and developed methods to identify at-issue trading.
  • We evaluated the risk assessment and planning model used by a major utility to quantify the risk of its electric portfolio, including power plants, on behalf of the utility and its regulator.
  • We analyzed business practices, trading and risk management practices, transaction pricing, and sources of risks and profits in a trading portfolio in energy markets.
  • Mosaic economists evaluated trading and risk management practices, the pricing of structured and vanilla transactions, and the allocation of risk between partners to a joint venture of two energy companies in arbitration proceedings.
  • Mosaic economists developed a unified framework for valuing and risk managing all positions (traded positions, generating assets, and full-requirement contracts) in the portfolio for a major European utility. The framework was used profitably by our client.
Commodity pricing and valuation 2018-02-27T13:42:04+00:00

  • Analyzed approaches to valuing a portfolio of illiquid options, and assessed issues related to liability as a testifying expert in a case involving option trading in energy markets.
  • Filed expert reports and provided deposition testimony on behalf of the California Attorney General’s office in State of California ex rel. Christopher J. Schroen, et. al., v. BP America Production Company, et. al. (Case No. CGC-12-522063) regarding the market value of natural gas transactions with embedded optionality. The case settled for $102 million on the eve of trial.
  • In the bankruptcy litigation matter In re National Gas Distributors, LLC., filed eleven expert reports and provided mediation support on behalf of members of a joint defense group on (1) the fair market value of forward contracts for the delivery of natural gas following Hurricanes Katrina and Rita in response to fraudulent conveyance claims; and, (2) on contracting practices for natural gas and whether the contracts at issue were commodity forward agreements under the bankruptcy code.
  • Coauthored expert disclosures on behalf of Performance Fibers, Inc. on the causes of oil price movements and their relation to manufacturing costs of petrochemical inputs into the manufacture of polyester fiber. The analysis measured the impact of events on oil price movements. The matter was an arbitration case involving a contract dispute over a price adjustment clause.
  • Conducted econometric analysis on behalf of four oil companies to determine the pass-through rate of wholesale costs to prices in the gasoline market, in rebuttal to allegations related to temperature-induced changes in the volume of gasoline.
Market assessment and transaction support 2017-10-30T14:51:18+00:00

Mosaic economists have extensive experience working on transactions in the energy industry, advising investment banks, private equity firms, utilities, and merchant energy companies in transactions.  We have undertaken market modeling, financial analysis and structuring, and risk analysis for deals ranging from individual power plants to large portfolios of energy assets to entire electric utilities.

  • We performed market assessment, price forecasting, generation asset valuation, and liquidity analysis for the lenders to the US subsidiary of an international independent power producer to support financial restructuring.
  • On behalf of the government of Singapore, Mosaic economists worked on an economic feasibility study for the potential construction of a nuclear power plant. We designed a financial model to project the levelized cost of different nuclear technologies, installed at different locations in Singapore, and with different assumptions regarding environmental costs and the costs of alternative sources of new power generation.
  • For a client investigating the market potential of a fast-cycling battery technology, Mosaic economists developed market models to assess the technology’s ability to capture value in response to real-time electricity market price fluctuations.
  • Mosaic consultants were retained by a multinational energy company to perform a strategic evaluation of their North American natural gas storage and trading organization. The resulting study identified impacts to the firm of the changing nature of natural gas demand arising from environmental regulations, energy efficiency programs, and the transportation sector; natural gas supply from the development of shale gas resources; and structural changes in the industry’s seasonality.
  • For a client considering the construction of new electricity generating capacity in the New York City area, Mosaic economists developed a custom market simulation model that assessed the value of the power plant’s flexibility to respond to real-time price fluctuations in power and ancillary service (regulation) markets, allowing the client to determine if designing the facility for such flexibility would justify the additional cost.
  • For a private equity firm seeking to acquire a significant stake in an electric utility company, Mosaic economists assessed the utility’s financial risk arising from uncertain power demand arising from low economic growth and customer defection to third-party providers.
  • On behalf of private equity investors, we conducted economic due diligence on dozens of power plants, involving assessment of energy markets, forecasting electricity prices, modeling the operation of plants in those markets, and assessment of contracts including fuel supply and transportation, sale of energy, and contracts with the steam host for cogeneration plants.
  • On behalf of private equity investors and on behalf of an international energy company, we conducted economic due diligence on energy trading and marketing companies, evaluating their positions and capabilities and credit requirements.
  • In addition to providing price forecasting and market assessment services to clients, Mosaic economists have built price models to forecast prices and assess risk for clients and have helped clients develop their in-house capabilities.
Statutory and regulatory actions 2017-10-30T14:51:24+00:00

  • As consulting experts to the U.S. Department of Justice in a claim against the federal government, Mosaic economists successfully demonstrated that the transaction price of a nuclear power plant was not adversely affected by the storage of spent nuclear fuel on-site at the facility, rather than at a long-term storage facility that the government must ultimately provide.
  • In another claim against the federal government for its delay in accepting spent nuclear fuel for permanent storage, Mosaic economists demonstrated that actual damages were substantially lower than claimed.
  • Mosaic staff represented the owner of a large fleet of coal-fired power plants in a lawsuit dealing with New Source Review under the Clean Air Act. We were involved in assessing the extent to which changes in power plant emissions were the result of modifications to the power plants.
  • On behalf of a regulated electric utility, Mosaic economists were engaged to demonstrate to a state utility commission that its resource procurement plan was economically reasonable.
Energy and environmental policy analysis 2017-10-30T14:51:45+00:00

  • Mosaic economists have worked for industry trade groups to assess the impact of federal energy and environmental policies and regulations on those industries. Major regulations we have studied include the EPA’s Clean Power Plan and the Mercury and Air Toxics rule (MATS).
  • Mosaic economists have analyzed the market for ethanol and the impact of changes in federal programs involving ethanol standards and subsidies.
Retail electricity pricing and analysis of demand response 2017-10-30T14:51:38+00:00

Mosaic economists have worked with clients to design and implement retail electricity pricing structures, to analyze demand response to new pricing structures and to integrate the demand response into dispatch algorithms, to analyze reliability and advanced metering infrastructure projects. These projects have included:

  • Analysis of the impact on system reliability of reliability and smart grid projects;
  • Review of advanced metering infrastructure in selected states and provinces;
  • Advise on regulatory issues for a private equity firm assessing the acquisition of a regulated utility;
  • Modeling the impact on electricity demand of time varying pricing and incorporating the impact in system dispatch algorithms;
  • Modeling the impact of offering a portfolio of electricity pricing products based on analysis of customer selection of different electricity pricing programs, and electricity demand response on different programs;
  • Analysis of the impact on electricity demand to time-varying rates, demand-related rates, inverted and declining block rates, and curtailable rates for customers in the U.S. and the U.K.
Quantitative analysis 2017-10-30T14:51:58+00:00

Mosaic specializes in the rigorous quantitative analysis required to provide economic insight in complicated legal disputes and major commercial transactions. Some of the tools we have deployed or developed for project work include:

  • Commercial and custom-built energy market simulation and valuation models;
  • Cogeneration plant operating models;
  • Stochastic pro forma, portfolio analysis, and resource planning tools;
  • Decision analysis and real options models;
  • Portfolio risk analyses in the energy trading and banking industries;
  • Surveillance models to detect market manipulation based on trade data and order patterns;
  • Econometric models to determine the price that would have prevailed but for alleged market manipulation;
  • Econometric models to predict customer choice of energy products, evaluate their use of financial services, and determine how customer demand changes due to changes in prices;
  • Development of custom econometric software to carry out advanced estimation and simulation analyses;
  • Design and evaluation of surveys of consumer decision-making in the energy and financial industries.
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