Industry Submissions

Sale of NSW Electricity Businesses: Eliminating Credit Default risk

Fri 24 Sep 2004

This proposal provides NSW Treasury with a solution that eliminates credit default risk associated with existing electricity OTC hedge contracts via the sale of NSW electricity businesses.

The paper provides an overview of;

1. the EFP mechanism
2. the steps to be taken to effect the transfer of OTC contract positions to futures contracts; and
3. a detailed example of the transfer process with a cash flow and costs analysis.