45-928   Energy Finance

Financial markets and financial institutions have become an integral part of the energy industry. This course covers the critical aspects of this relationship. It begins with some history and institutional description. When did the "financialization" of the energy industry begin? Why? What exactly does this mean? Has it been an unambiguously good thing, or has it led to some unanticipated side effects (e.g., bubbles) that prompt introspection? The course goes on to explore what makes "energy finance" distinct from other areas of corporate finance. Examples include distinctive financing structures such as project finance and tax-based equity vehicles, the ubiquitous role played by government regulation and tax policy, forms of business organization known as Master Limited Partnerships (MLPs), "energy accounting and valuation," and a variety of financial modeling issues that are often referred to as real option models. The course will not be overly technical. It will be more of a broad overview than an in-depth technical analysis of a particular topic. It places more emphasis on corporate finance that on capital markets. The course is relevant for careers in the energy industry and the energy-related finance industry, as well as careers in supporting industries such as consulting. (CT, 11/2014) http://bertha.tepper.cmu.edu/telmerc/45928energy/