SAO PAULO, April 6 (Reuters) - Two Brazilian exchanges are planning to launch electricity futures contracts this year, betting that companies will jump at the chance to protect against big price swings amid an uncertain outlook for the sector.
BBCE, an over-the-counter, electronic platform to trade power, and Brix, an electricity exchange partly owned by the Intercontinental Exchange (ICE), said they are working on the derivatives’ terms and seeking regulatory approval.
Brazil spot power prices have oscillated widely in the last three years as a harsh drought followed by one of the strongest El Nino weather patterns on record dramatically changed projections for power generation on the country’s mostly hydroelectric power matrix.
“We might be able to have that available for trade from May,” BBCE’s head Victor Kodja told Reuters, referring to the contract.
Both exchanges plan to develop non-deliverable forward contracts with financial liquidation only. They hope to attract investors outside the power sector to improve liquidity and give a boost to the mechanisms. (Reporting by Luciano Costa; Writing by Marcelo Teixeira; Editing by Jonathan Oatis)