US power hedging suffers from low prices

Low power prices have dented the need for electricity producers and consumers to hedge with derivatives, while regulatory reform is also making life difficult for market-makers. But market participants are optimistic the trend could be reversed. Pauline McCallion reports

US power

In the US power market, there is plenty of nostalgia for the bygone years of volatile electricity prices, along with the abundant trading and hedging opportunities that came with them. Those days no longer prevail, and the past few years have seen much lower demand for hedging from both producers and consumers as a result of cheaper power. Meanwhile, banks have been forced to step back from the market due to regulatory pressure – and in some cases, have exited the market altogether. But amid

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