Risk management associated with tariff-linked agreements

• Main Author: Mahlatsi, Tsatsi Jonas
• Other Authors: Begemann, E.
• Format: Others
• Language: en
• Published: 2009
• Subjects: Risk Management; Tariff-Linked Agreements; Price risk; Financial risk; Commodity price risk; Market risk; Electricity tariff; Commodity price; Commodity-Linked Agreement; Commodity hedging; 658.155; Risk management; Tariff
• Online Access: Mahlatsi, Tsatsi Jonas (2009) Risk management associated with tariff-linked agreements, University of South Africa, Pretoria, <http://hdl.handle.net/10500/1079>; http://hdl.handle.net/10500/1079

The study focuses on tariff-linked (or commodity-linked) agreements entered into between a power utility and commodity producers. The main purpose of these types of agreements is to link electricity tariff payable by commodity producers to the price of the commodity produced thereby transferring a certain level of commodity price risk to the power utility. The study looks at risk management practices of a power utility company with a particular reference to tariff-linked agreements. Also, the study critically analyses risk hedging mechanisms put in place by the power utility. The report makes practical recommendations, where applicable, in dealing with these risks. Risk management continuously evolve to meet the challenges of complex financial world. Despite the latest sophisticated risk management tools available commodity producers still encounter difficulties to hedge the price risk. The challenge for the power utility is the application of new risk management tools to effectively manage price risk. === Business Management === M.Com. (Business Economics)