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Title: Price risk analysis in electricity supply
Author: Barrow, Robert Mark
Awarding Body: University of Edinburgh
Current Institution: University of Edinburgh
Date of Award: 1998
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The imminent Franchise Break, the latest step in the opening up to competition of the UK Electricity Supply market, has highlighted the issues that will affect the prices which customers pay for electricity. In particular, the fluctuating wholesale price of electricity has exposed the industry to new risks and an ever-increasing need for better information and analysis. At present, Suppliers purchase electricity wholesale from the UK market for electricity, the Pool, and sell it on to end-users, hoping to achieve a profit: there are many companies eager to become involved in this business. Since most electricity contracts between Supplier and end-user are agreed on the basis of fixed tariffs the Suppliers are exposed to significant risk. In order to quote a customer a tariff, or set of tariffs, for his future use of electricity, the Supplier needs to forecast both the customer's demand and the price of electricity in the Pool. The amount of revenue the Suppler receives from a customer depends on the actual amount and pattern of electricity that the customer consumes and the tariffs that the Supplier has agreed to charge. The cost to the Supplier of supplying this electricity depends, in part, on the actual prices of electricity in the Pool. If the Supplier's forecasts are significantly different from the actual behaviour of the customer's demand and the Pool price, the contract can perform in a very unexpected manner. This may lead to the Supplier making no profit on a contract. In the worst case, the Supplier can lose money. This thesis discusses these risks and describes a decision support system, the Electricity Sales Integrated Price and Risk Analysis System (ESIPRAS), which has been developed to provide a useful analytical tool for electricity Suppliers. The system helps a Supplier to price contracts with clients and aims to provide him with a clearer understanding of the level of risk each contract might represent.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available