Risk management options for electricity retailers

This issues paper sets out our preliminary findings from a review into risk management to test whether the availability of over-the-counter risk management contracts, in the context of other risk management options, is creating a barrier to entry or expansion in the retail electricity market, and therefore harming competition.

We welcome feedback on the preliminary findings in this paper and any further evidence that could address any of the areas of uncertainty that we have set out in the paper.

We will consider feedback early in 2025 and then:

• Recalibrate any Task Force package 1 initiatives if the relevant part of the evidence base (the risk management review findings) changes in any material way
• Confirm as soon as possible whether any further policy responses (outside of the Task Force initiatives) are needed, other than in relation to internal transfer prices and the related disclosures regime.

Note: On 17 December 2024 we extended the consultation period, changing the deadline for submissions from 5pm 18 December to 5pm 20 December 2024.