Hindsight is 20-20. And this can be a problem, as far as utilities are concerned, when it comes to regulators deciding whether a utility's hedging programme has worked effectively to fulfil its proper purpose. Especially when the two sides often do not agree on what that purpose is: should utility hedging simply smooth out rates for consumers or actively reduce them?
A good example of the disagreements that can arise is the recent natural gas hedge-backtesting programme undertaken by Winnipeg
The week on Risk.net, July 7-13, 2018Receive this by email