Small energy retailers face limited options to secure hedging contracts for electricity futures after Bell Potter became the second institution to withdraw its clearing services amid a surge in market volatility.
“Not so long ago, 20 or 30 cents moves were normal, then it became $1 or $2 moves. In recent times, there have been moves that are many multiples higher and these are common. That is a lot of capital that a clearing house will need to hold,” said one industry source.Chorus of complaints The limited hedging options come as electricity retailers have begun buying wholesale electricity for the coming years and would typically acquire hedges against those positions either through the ASX electricity futures or OTC derivatives such as contracts for difference.