Mixed Deck — All ERAC Topics Flashcards
100 cards from real ERAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 20 Mixed Deck — All ERAC Topics flashcards as text
Which regulatory framework governs greenhouse gas emissions reporting?
Answer: Greenhouse Gas Reporting Program
The Greenhouse Gas Reporting Program (GHGRP) is an EPA initiative that requires large greenhouse gas (GHG) emission sources, fuel and industrial gas suppliers, and CO2 injection sites in the United States to report their GHG data. This program provides comprehensive data to inform climate policy and track emissions trends across various sectors, including energy. It is a key tool for environmental regulation.
What is meant by 'hedging' in energy risk management?
Answer: Offsetting risk exposure
Hedging in energy risk management is the strategic use of financial instruments or physical contracts to offset potential losses from adverse price movements or other market risks. The goal is to reduce or eliminate exposure to specific risks, such as volatile energy prices, by taking an opposite position in a related asset. This helps stabilize revenues and costs for energy producers and consumers.
Which key performance indicator (KPI) measures the ratio of useful energy output to total energy input in a facility?
Answer: Energy Utilization Index (EUI)
The Energy Utilization Index (EUI) measures energy consumption per square foot per year and is a primary KPI for benchmarking building energy performance.
When auditing an energy trading desk, which of the following would be MOST concerning regarding value-at-risk (VaR) model reliability?
Answer: Back-testing shows exceptions far exceed the expected frequency
Excessive back-testing exceptions indicate the VaR model underestimates actual risk, meaning the model's confidence intervals are not reliable.
Which statement BEST describes the relationship between Energy Risk Auditor Certification certification and industry evolution?
Answer: Requirements evolve periodically to reflect advances in knowledge and practice
Certification requirements evolve to keep pace with professional and technological advances.
Under CFTC regulations, a company that regularly makes markets in swaps and whose swap dealing exceeds the de minimis threshold must register as what?
Answer: Swap Dealer (SD)
Entities that deal in swaps above the de minimis threshold (currently $8 billion in aggregate gross notional amount) must register as Swap Dealers with the CFTC.
In energy trading, 'basis risk' refers to:
Answer: The difference between the spot price and the futures hedge price at delivery
Basis risk is the residual price risk that remains when the hedge instrument does not perfectly match the exposure location or specification.
Under CFTC rules, a firm that uses commodity derivatives solely to hedge physical energy price exposure may qualify for:
Answer: Bona fide hedger status, exempting it from speculative position limits
Bona fide hedgers using derivatives to offset commercial price risk can receive exemptions from speculative position limits imposed by the CFTC.
Which financial reporting standard is commonly followed in the United States?
Answer: GAAP
Generally Accepted Accounting Principles (GAAP) is a set of common accounting standards and procedures used in the United States for financial reporting. These principles ensure consistency, comparability, and transparency in financial statements, allowing investors and other stakeholders to make informed decisions. Most publicly traded U.S. companies must adhere to GAAP.
What is the MOST effective way for new ERAC professionals to build competency?
Answer: Combining formal education, mentored practice, and ongoing professional development
Building competency requires formal education, mentored practice, and ongoing development.
In energy auditing data collection, what is the primary purpose of a 'data logger'?
Answer: To capture time-series measurements of parameters like temperature, power, or flow at set intervals
A data logger is an electronic device that records time-stamped measurements of physical parameters at preset intervals, enabling auditors to characterize equipment performance without constant manual monitoring.
In energy portfolio management, 'netting' reduces credit risk exposure by:
Answer: Offsetting gains and losses across all trades with the same counterparty to determine net exposure
Netting allows offsetting of positive and negative mark-to-market values across a counterparty's portfolio, reducing the total credit exposure compared to gross settlement.
In energy financial reporting, 'gross margin per MWh' is most useful for comparing the performance of:
Answer: Power generation units with different fuel types and capacities
Gross margin per MWh normalizes performance across generating units of different sizes and fuel types, enabling apples-to-apples profitability comparison.
Under the Verra Verified Carbon Standard (VCS), what does 'VCU' stand for?
Answer: Verified Carbon Unit
A Verified Carbon Unit (VCU) is the tradable credit issued by Verra under the VCS program, representing one metric ton of CO2-equivalent emission reduction or removal verified by an accredited third-party auditor.
What is the purpose of internal audits in energy companies?
Answer: Evaluate compliance and controls
Internal audits in energy companies serve to independently evaluate the effectiveness of an organization's internal controls, risk management processes, and governance. They assess whether the company is complying with laws, regulations, and internal policies, identifying areas for improvement to enhance operational efficiency and mitigate risks. This proactive approach strengthens the company's overall control environment.
When auditing an oil refinery's operational risk controls, which document best evidences that emergency shutdown procedures have been tested?
Answer: Drill logs and post-exercise after-action reports
Drill logs and after-action reports provide direct evidence that emergency shutdown procedures have been executed and reviewed, confirming control effectiveness.
Which statement BEST describes the relationship between Energy Risk Auditor Certification certification and industry evolution?
Answer: Requirements evolve periodically to reflect advances in knowledge and practice
Certification requirements evolve to keep pace with professional and technological advances.
Which regulatory body in the US has primary oversight over wholesale electricity market risk and trading practices?
Answer: FERC
The Federal Energy Regulatory Commission (FERC) regulates wholesale electricity markets, transmission, and associated trading activities in the US.
In energy data analytics, what does an M&V (Measurement & Verification) protocol primarily confirm?
Answer: Actual energy savings achieved from efficiency measures
M&V protocols, such as those outlined in IPMVP, confirm that energy savings from efficiency measures are real and quantifiable.
Which assessment method provides the MOST reliable data for ERAC professionals making critical decisions?
Answer: Standardized tools combined with professional observation
Combining standardized tools with professional observation provides the most comprehensive data.