Volume 3 — Valuation and Risk Metrics © Copyright 2002, CCRO. All rights reserved. 54 EXAMPLE 1 Qty Market Deal Price Value (MWh) Price A: FMV of Asset without Hedges Sell Power -800 40 -32000 Buy Fuel 800 35 28000 Net FMV (Gain)/Loss -4000 B: MTM of Hedges Power -400 40 35 2000 Fuel 400 35 32 -1200 Net MtM (Gain)/Loss on Hedge 800 C: Contract Revenue Stream of Hedges without Overheads Sell Power -400 35 -14000 Buy Fuel 400 32 12800 Net Hedge (Gain)/Loss -1200 Value Based Percentage Hedged C/(A+B) 0.375 EXAMPLE 2 Qty Market Deal Price Value (MWh) Price A: FMV of Asset without Hedges Sell Power -800 30 -24000 Buy Fuel 800 35 28000 Net FMV 0 B: MTM of Hedges Sell Power -400 30 35 -2000 Buy Fuel 400 35 32 -1200 Net MtM (Gain)/Loss on Hedge -3200 C: Contract Revenue Stream of Hedges without Overheads Sell Power -400 35 -14000 Buy Fuel 400 32 12800 Net Hedge (Gain)/Loss -1200 Value Based Percentage Hedged C/(A+B) 0.375