The hard-hat world of the power & utility industries and the hard-ball world of financial trading have progressively become more intertwined.
Greater liquidity, increased participation of financial players, new types of exchanges and new types of commodities, such as emission rights, have all contributed to the growing importance of the use of financial instruments and, in some sectors, trading.
Companies are increasingly engaging in trading to improve and add more flexibility to their asset position. The increase in commodity trading in markets affecting power & utility companies has an impact on short- and long-term contract prices, on price volatility, on the choices faced by end-customers and on the regulatory landscape governing markets.
These changes are producing new types of risk for companies that require a re-examination of their risk strategies and the way they conduct their risk management.
PwC has a global expert team dealing with commodity trading and risk management within the power & utilities industries.