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S&P to apply stress test to power firms

Standard & Poor’s (S&P) is to apply a stress test designed to measure how well power companies can stand price swings in volatile electricity markets. The move is part of the credit rating agency’s effort to combat criticism of rating agency failure to spot the impending collapse of Enron.

In a report published last month, S&P analyst Tobias Hsieh said many energyproviders have failed to recognise the risks inherent in requirements obligations.These contracts are typically fixed-price, but always variable-volume power salescontracts that have become a risk-management tool for many load-serving entities.Load-serving entities, such as local distribution companies or co-operatives

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