Electricity, Power price hedging

[Sebastjan Vidovic]

Greetings!

I work for big retail company where we buy from distributors great amounts of power, electricity. I heard that in the past we had some huge losses due to buying huge quantities for 4 years upfront and then right after the prices went down dramatically. Since I know few things about thse things I am just wondering if anyone has some experience about hedging electricity? Should this be the job of supplier (distrubutor) ?
Here in Europe the problem itself is liquidity.

Best regards

 

[yetanotherquant]

Hi Sebastjan,

I am just wondering if anyone has some experience about hedging electricity?

I do.

Should this be the job of supplier (distrubutor)?

It is a job of supplier, i.e. of your employer.
A distributor (if you mean Netzbetreiteber/network operator) is technically responsible for a smooth supply of the end-customer (even if a supplies, i.e. your company) reserves (nominates) a not (perfectly) correct amount of power. But a distributor transfers his costs to the supplier.

Here in Europe the problem itself is liquidity.

Europe != Europe.
Some German Futures are quite liquid:
Phelix Futures
And don't forget the OTC trading