Uncertainty in the Electric Power Industry

The book explores the challenges faced by electricity-generating companies amid global liberalization and privatization of the electricity industry. It highlights how increased competition exposes utilities to significant risks and uncertainties, including volatile wholesale prices and fuel price fluctuations. Unlike in regulated environments, utilities cannot transfer these risks to customers through price hikes. The discussion emphasizes the impact of sunk investments and the limited options for long-term hedging, providing a comprehensive look at the evolving landscape of the electricity market.