Electricity prices are highly volatile, yet yield readily to a standardized futures contract.
The MGE designed and launched the electricity contract at the request of one of the largest utilties in the upper Midwest United States and with input from several utilities and power marketers in the United States and central Canada. The on-peak electricity contract traded 215 contracts, an increase of 27 percent over fiscal year 1999. Deregulation of the electricity markets is an ongoing but slow process. Until pure competition on the retail side of the power industry becomes a reality there is little incentive for industry risk management. MGE waits quietly in the background, ready to provide when needed these services to the power industry, as it has for so many years to other industries.