Energy firms increasingly using stress tests to cope with regulatory change

Utilities and other energy firms are working hard to refine and enhance the scenarios they use for stress testing. Given recent market events, the impact of regulatory change and large-scale liquidity crises are taking on an increasingly important role. Gillian Carr reports

Companies have a tendency not to consider worst-case scenarios when times are relatively placid. In 2012, energy markets were significantly quieter than during the preceding years – volatility stood at relatively low levels in both crude oil and natural gas, financial markets were comparatively calm and there were few major geopolitical conflagrations. Nonetheless, energy market participants are