Economic uncertainty adds to challenge of hedging in US power markets

Uncertainty has plagued the US power sector since the financial crisis. Although many believe an economic recovery is in sight, forecasting load growth continues to be a headache for those looking to manage risk in this market. Pauline McCallion reports

For the US electric power sector, the collapse of the global financial markets in 2008 created a credit vacuum that affected utilities’ ability to access funds for infrastructure investment. The recession also drastically skewed load growth forecasts as demand, particularly in the industrial sector, shrunk back dramatically. Even though many economists see an economic recovery on the horizon, for risk managers – who have had the unenviable task of attempting to forecast and plan during the