Litigation, arbitration, and regulatory matters
Mosaic economists have extensive experience as testifying and consulting experts to legal counsel in a broad range of cases in the energy, commodity, and financial sectors. Particular areas of focus include:
Disputes over contract terms can have substantial economic implications in breach of contract cases and bankruptcies. Mosaic Economic Consulting provides expertise in assessing liability and calculating contract damages. Our experts have assessed the impact of power plant construction delays, performance of co-generation plants and the value of associated contracts, contracts between petrochemical manufacturers, and breaches of commodity purchase and sale agreements. Mosaic economists have a deep understanding of the economic and engineering concerns as well as contracting practices in these markets. They deploy a range of market modeling, financial, and statistical tools to meet the needs of the case.
Both enforcement agencies and private plaintiffs have brought actions alleging harm from market manipulation in commodity and financial markets. Cases often also include allegations of collusion or monopolization. Mosaic economists have extensive experience as testifying and consulting experts in such cases. They are knowledgeable about physical and financial traded markets, trading and risk management practices, hallmarks of different types of manipulation, and analysis of trading data.
Mosaic economists have deployed an array of modeling techniques to analyze the complex and often voluminous multi-market data generated in these cases. As examples, they have modeled prices that would have prevailed but-for alleged conduct price movements to assess liability and damages. They have analyzed patterns in trade and order book data to detect manipulative conduct. They have assessed economic theories of harm to competition and methods of manipulation, and estimated damages.
Energy trading and risk management practices have evolved in the decades following the advent of exchange trading of natural gas and electricity. Mosaic experts have worked in trading and risk management environments and are knowledgeable about industry practices and quantitative techniques used in trading and risk management. They have assessed trading strategies, risk management procedures, compliance with market rules and federal regulations, and the accuracy of public disclosures regarding business practices of trading organizations. They have valued portfolios of vanilla and exotic instruments. They have built detailed models of commodity trading activity, analyzed sources of profit and risk in the portfolios of trading organizations, and modeled the risk in utility portfolios consisting of power plants, contracts, customer load, and the traded portfolio.
The pricing of energy commodities and derivatives may be a key point of contention in many types of cases. Mosaic economists have served as experts in cases involving a variety of pricing issues. As examples, our experts assessed the fair value of forward contracts for natural gas delivery in the aftermath of Hurricanes Katrina and Rita, and whether the contracts at issue were commodity forward agreements under the bankruptcy code. They analyzed the reasons for oil price changes and their impact on petrochemical manufacturing cost. They forecast future prices for electricity in cases involving power plants. They assessed allegations of mispriced transactions and the pass-through of costs to prices.
The energy and financial industries are subject to myriad laws and regulations governing participant behavior. Mosaic staff provide expert assistance to legal teams to understand the economic effects of relevant laws, regulations, and market rules, and apply economic theory to assess whether a firm’s business activity complies with them and to quantify applicable fines and damage payments. Mosaic economists have worked on behalf of both plaintiffs and defendants in cases ranging from financial trading and risk management practices to the disposal of waste from nuclear power plants.
Advisory Services
Mosaic economists have extensive experience in a broad range of engagements in the energy, commodity, and financial sectors. We bring to our engagements extensive knowledge of the industries and deep quantitative expertise. Particular areas of focus include:
With extensive experience in wholesale power and gas markets, Mosaic economists help clients assess investment opportunities and risks in energy markets. Team members have been engaged by utilities, merchant energy companies, investment banks, and private equity firms to forecast energy market prices, simulate the operations of plants, and to evaluate the potential revenue and risks of transactions in these markets. In addition to using commercial market forecasting models, Mosaic develops proprietary and custom tools for tailored analyses, including Monte Carlo price forecasting and simulation models, stochastic pro forma financial models, portfolio analysis and resource planning tools, decision analysis models, and unified models of generation, traded positions, and retail obligations.
Whether as a producer, consumer, or trader of electricity, natural gas, or other commodities, firms must deal with the risk of volatile prices. Mosaic economists work with clients to understand their exposure to such risks, and assess their internal risk management practices. Engagements have dealt with analyzing the riskiness of trading and risk management practices, the strategies of trading and marketing organizations, and the pricing and valuation of transactions. In addition, we have advised on the development surveillances for potentially manipulative trading.
Energy markets are affected by changes in regulations that address power plant emissions, natural gas production, the tax treatment of different types of energy production, and the rules governing market participation. Such regulations can have significant financial impacts on the industry, creating winners and losers. Mosaic economists understand how such regulations affect energy markets, and work to assess their economic impacts to individual companies, market sectors, and the wider macroeconomy.
The structure of electricity prices is key to sending signals to consumers and producers for the efficient consumption and production of electricity, as well as for decisions on the allocation of capital for building and maintaining our generation, transmission, and distribution infrastructure. Mosaic Economic Consulting works with electric utilities and industry groups on the design and implementation of retail electricity pricing structures, on the estimation of demand response to prices and the implications for power supply procurement, and the revenue implications of alternative prices and structures.
Whether working as experts in legal proceedings or as advisors to commercial enterprises, much of our work relies on deep quantitative analysis, some of it using sophisticated financial or econometric tools or performed on “big data.” Mosaic economists are experienced in conducting analyses that provide results that an expert can rely on, and we understand the importance of choosing the right analytical framework. We are well-versed in the software, modeling, and mathematical tools used in the financial and energy industries, and those that can be applied to a broad array of analyses. Sometimes, this means using or adapting commercially available software. Sometimes, it means building the analytical tools ourselves.