Forward contracts for the operation of an electricity industry under spot pricing

• Published in: IEEE transactions on power systems Vol. 5; no. 1; pp. 46 - 52
• Main Authors: Kaye, R.J., Outhred, H.R., Bannister, C.H.
• Format: Journal Article Conference Proceeding
• Language: English
• Published: New York, NY IEEE 01.02.1990; Institute of Electrical and Electronics Engineers
• Subjects: 20 FOSSIL-FUELED POWER PLANTS; 296000 > Energy Planning & Policy > Electric Power; Applied sciences; Australia; CONTRACTS; Economic data; Economic forecasting; Electric energy; ELECTRIC POWER; ELECTRIC POWER INDUSTRY; Electricity; Energy; Energy economics; ENERGY PLANNING, POLICY AND ECONOMY; Exact sciences and technology; Forward contracts; General, economic and professional studies; INDUSTRY; Instruments; Intelligent systems; Marketing and sales; POWER 200600 > Fossil-Fueled Power Plants > Economic, Industrial, & Business Aspects > (1990-); Power system simulation; PRICES; Pricing; SIMULATION; Supply and demand; Uncertainty; Forward contract; Energy economy; Spot pricing; Electric energy; Tariffication; Electric utility; Contract
• ISSN: 0885-8950; 1558-0679
• DOI: 10.1109/59.49085

A study is reported of the use of forward contracts as risk instruments for electricity industries operating under spot pricing. Forward contracts involve financial transactions or commitments which relate to a physical trade at a later time instance. Price setting and appropriate participant responses are discussed. Simulation studies are used to demonstrate that forward contracts offer participants an opportunity to reduce their risk exposure without removing the incentive to respond to higher spot prices.< >