News Column

Data on Energy Economics Reported by Researchers at Norwegian University of Science and Technology (NTNU)

January 31, 2014

By a News Reporter-Staff News Editor at Energy Weekly News -- Research findings on Energy Economics are discussed in a new report. According to news reporting originating from Trondheim, Norway , by VerticalNews correspondents, research stated, "We analyze risk management trends in electricity commodity markets using the production and transaction data and written hedging policies of 12 Norwegian hydropower companies. The scope of our analysis is the hedging of physical electricity production using the power derivatives available at NASDAQ OMX Commodities ." Our news editors obtained a quote from the research from the Norwegian University of Science and Technology (NTNU), "In their hedging policy, these companies either use a Cashflow at Risk (C-FaR) approach or a hedge ratio approach, or follow no explicitly stated approach. We find that the derivative cashflows constitute substantial profits for these companies. Furthermore, hedging contributes to reducing the C-FaR for 10 of the companies. These findings are surprising considering that we expect hedging to yield zero expected profit and to smooth the earnings." According to the news editors, the research concluded: "Overall, our findings reveal that a practice of incorporating market views in hedging decisions is widespread in the sample companies, as both sanctioned in their written hedging policy and as indicated by the substantial hedging profits." For more information on this research see: Selective hedging in hydro-based electricity companies. Energy Economics , 2013;40():326-338. Energy Economics can be contacted at: Elsevier Science Bv, PO Box 211, 1000 Ae Amsterdam, Netherlands . ( Elsevier - ; Energy Economics - ) The news editors report that additional information may be obtained by contacting G.E. Sanda , Norwegian University Science & Technology, Dept. of Ind Econ & Technol Management , NO-7491 Trondheim, Norway . Additional authors for this research include E.T. Olsen and S.E. Fleten . Keywords for this news article include: Norway , Europe , Trondheim, Energy Economics Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC

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Source: Energy Weekly News

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