NSW Privatisation, 2010 electricity futures. Liquidity increasing, prices falling.
Wed 8 Apr 2009
During the 9 months to March 2009, the dcypha SFE Electricity Futures and Options Market traded 87 Terawatt hours of contracts across 2010. The increase in liquidity has been accompanied by a sharp sell off in contract prices, with the 2010 Eastern Power Index falling 14% to close at $49.07/MWh.
The Eastern Power Index is an index calculated daily from the Settlement Prices of dcypha SFE futures contracts across NSW, VIC and QLD. The EPI (and it’s recent price history) can be viewed at www.d-cyphaTrade.com.au
NSW Privatisation
Of relevance to the NSW energy privatisation, the largest fall in price of any component of the EPI was NSW 2010, falling 16% from $58.59/MWh to $49.08/MWh during this period.
Newly privatised NSW electricity retailers could also benefit from cost savings if the Australian Energy Markets Commission approves the Futures Offset Rule change proposal (see here: Retailer Direct FOAs link). Historically, this initiative would have allowed privatised NSW electricity retailers to use their dcypha SFE electricity futures hedges to reduce duplicated costs arising from muliti-billion dollar spot market credit support by up to 77% (e.g. Q3 2008).