Reliability at Any Cost - Risk Management through Contract Technology

Trading of electricity has exploded worldwide and price is displacing system planners as the means to ensure supply matches demand. Who will best ensure reliable supply? The quality of supply will be driven by the quality of the supply contract, not by whether the supplier owns physical assets. There is no economic way to target delivery on the integrated electric grid. When faced with a supply shortage, prices can and will rise. Those unable to impose a high, fully compensatory penalty for nondelivery will be forced into buying from the spot market or worse. Efficient allocation of operating and planning risk will be effected through the profit motive catalyzed by contract technology. “Price Majeure”, disguised as Force Majeure will end as market sophistication grows.