This paper examines the use of derivatives by a utility company. The hedging problem for utilities is atypical; the goal is not strictly to minimize average costs. Rather, the objectives are to minimize the upside risk associated with extreme bills, volatility of bills, and average expected...

Natural gas company managers concerned with customer satisfaction attempt to minimize the occurrence of extreme bills. Previously, only price fluctuations were addressed with derivative instruments; exchange-traded weather derivatives present a means of hedging exposure to increases in quantity...

Our research is motivated by the Corn Products vs. Arkansas Best Supreme Court decisions that pitched the controversy of the tax treatment of gains and losses from futures hedging. The use of futures contracts as risk management tools depends on the tax code. In this paper we address...