ERAC Cheat Sheet 2026

The 30 highest-yield ERAC facts, distilled from real exam questions. Print it, save it as a PDF, or study it here — free, no sign-up.

1. A midstream company transports gas for multiple shippers. What type of risk does the auditor focus on when evaluating exposure to shipper non-payment? → Counterparty credit risk
2. A risk auditor is assessing basis risk in a natural gas hedge. Basis risk arises when: → The price of the hedged commodity and the hedging instrument do not move in lockstep
3. Which regulatory framework primarily governs financial reporting disclosures for publicly traded US energy companies regarding commodity price risk? → SEC Regulation S-K Item 305
4. Which regulatory body in the US has primary oversight over wholesale electricity market risk and trading practices? → FERC
5. What distinguishes a Energy Risk Auditor Certification certified professional from a non-certified practitioner? → Certification validates competency through standardized assessment against benchmarks
6. In a wind energy assessment, what is the significance of the 'Weibull distribution'? → It statistically describes the frequency distribution of wind speeds at a site
7. Which of the following best describes 'basis risk' in an energy market context? → Divergence between the hedged price index and the actual price received
8. What is the main purpose of the Sarbanes-Oxley Act (SOX) in the energy sector? → Improve corporate governance
9. Which statement BEST describes the relationship between Energy Risk Auditor Certification certification and industry evolution? → Requirements evolve periodically to reflect advances in knowledge and practice
10. Which provision of the Energy Policy Act of 2005 granted FERC backstop siting authority for interstate electric transmission facilities? → Section 216
11. When documenting assessment findings in ERAC practice, which approach is MOST appropriate? → Record objective findings, measurements, and observations factually
12. In energy data analytics, what does an M&V (Measurement & Verification) protocol primarily confirm? → Actual energy savings achieved from efficiency measures
13. In energy reporting, what does the term 'sub-metering' refer to? → Measuring energy consumption at the equipment or system level below the main utility meter
14. Under Dodd-Frank Title VII, which category of energy derivatives is generally subject to mandatory central clearing requirements? → Standardized swaps designated by the CFTC as subject to clearing
15. Liquidity risk in energy trading most commonly arises from: → Inability to exit or offset a position without significant market impact
16. Which metric indicates profitability before interest and taxes? → EBIT
17. A natural gas utility uses a weather derivative tied to heating degree days. This is an example of managing which type of risk? → Volumetric risk
18. The Social Cost of Carbon (SCC) is primarily used by policymakers to: → Estimate the economic damages associated with emitting one additional ton of CO2
19. When auditing an energy trading desk, which of the following would be MOST concerning regarding value-at-risk (VaR) model reliability? → Back-testing shows exceptions far exceed the expected frequency
20. Which ASHRAE standard provides guidelines for energy auditing levels (Level I, II, and III)? → ASHRAE 211
21. Under the EU Emissions Trading System (EU ETS), what is 'Phase 4' primarily focused on? → Increasing the annual linear reduction factor to align with the EU Green Deal 2030 targets
22. How frequently should ongoing assessments be conducted in Energy Risk Auditor Certification practice? → At regular intervals and as conditions change
23. Which financial reporting standard is commonly followed in the United States? → GAAP
24. Which foundational principle is MOST important for success in Energy Risk Auditor Certification? → Commitment to continuous learning, ethical practice, and quality outcomes
25. Which metric is most commonly used to evaluate the economic performance of a renewable energy project over its lifetime? → Levelized Cost of Energy (LCOE)
26. What is the MOST effective way for new ERAC professionals to build competency? → Combining formal education, mentored practice, and ongoing professional development
27. What is the primary purpose of a 'buffer pool' in voluntary carbon forestry projects? → To hold a reserve of credits that can replace those lost due to project reversal risks
28. In energy market financial reporting, a 'mark-to-market' valuation requires that derivative positions be recorded at: → Current fair market value
29. When assessment results for a Energy Risk Auditor Certification evaluation are inconclusive, the BEST practice is to: → Conduct additional assessment using alternative methods
30. Which metric is used to convert different greenhouse gases into a common unit for carbon trading purposes? → Global Warming Potential (GWP) expressed as CO2-equivalent