Skip to Main Content
December 30, 2010
Brattle Principals Author Article on the Evolution of Energy Price Risk Management for Electric Light & Power

Brattle principals Jamie Read, Rich Goldberg, and Peter Fox-Penner authored an article on the evolution of energy price risk management that was published in the December 2010 issue of Electric Light & Power. The article discusses how in the current environment of rapidly changing fuel prices, technologies, and regulatory policies, risk management for utilities is more important and complex than ever before. In the article, they address how the ascendance of financial risk management coincided with the restructuring of the electric utility industry, which revealed the underlying financial risks and how they are managed. They also look toward the future and anticipate the changes that may occur from the standpoint of market price volatility and risk management. They conclude that the changes will be mostly favorable, with the most favorable implications for price risk management stemming from the expansion of smart meters and dynamic pricing. However, they note that the forthcoming technological and institutional developments (i.e., greater renewables, more storage, smart meters, and dynamic prices) will involve policy and transition risks, and therefore an increased focus on risk management policies of all types will be needed. For more information, please visit the Electric Light & Power website.