Energy Business: NZ Operator For Electricity Hedge Market “Preferable”
April 27th, 2010
Energy Minister Gerry Brownlee says he would be “a bit disappointed” if NZX and the power company owners of the EnergyHedge trading platform for electricity derivatives can’t make it work. However, the more important goal is “we get a hedge market and given it’s all virtually traded … possibly it’s irrelevant, but it would, I think, be preferable if we could get a NZ-based trading system.” However, Brownlee says there is no role for Govt intervention to make this happen. “Our long term objective is price stability. We’re not going to sacrifice that for the location of a virtual trading system.”
NZX and EnergyHedge are targeting May 24 for the launch of “phase one” of a new electricity derivatives market, with “phase two” due in September. However, NZX is reportedly having difficulty finding a global clearing participant to stand behind its derivatives initiative, which includes plans for dairy and stock price futures. A clearing participant is essential to operating a trusted, liquid derivatives market. NZX’s trans-Tasman rival, ASX, already offers limited NZ electricity derivatives and is keen to pick up the baton if NZX is unable to meet EnergyHedge’s requirements.
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