London, July 2010

The liberalisation and development of the gas and power markets in Europe over the last 15 years has exposed energy consumers and their suppliers to much higher price risks than they were used to in the old administered systems. That is because the volatility of prices set freely in the markets is of a different order compared to the fluctuations in rates set by the public authorities which, although not always fully predictable, are at least frequently smoothed over time. Suppliers and industrial customers have had to adapt their strategies to this growing exposure to the markets. In addition to the volume risk, they now have to actively manage their price risk. The financial communication from the incumbent suppliers is a good illustration of this trend.

By Franck Schuttelaar; Gaselys