What should a small load serving entity use to hedge its procurement cost risk?
| Autor: | Ren Orans, Michele Chait, Brian Horii, Chi Keung Woo |
|---|---|
| Rok vydání: | 2019 |
| Předmět: |
Actuarial science
Process (engineering) business.industry 020209 energy 02 engineering and technology 010501 environmental sciences 01 natural sciences Procurement Cross hedging Management of Technology and Innovation 0202 electrical engineering electronic engineering information engineering Key (cryptography) Forward price Business Electricity Business and International Management Hedge (finance) Futures contract 0105 earth and related environmental sciences Energy (miscellaneous) |
| Zdroj: | The Electricity Journal. 32:11-14 |
| ISSN: | 1040-6190 |
| Popis: | This paper answers the question: what should a small load serving entity (LSE) use to hedge its procurement cost risk? In doing so, it proposes a transparent process to compute a hedging strategy’s procurement cost expectations and ceilings. Its key finding is that if the LSE is risk averse, it should use electricity forwards when the forward price premium is relatively small and cross hedging with natural gas futures is relatively ineffective. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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