Dan Lynch Quoted on Impact of Winter Storm Uri on Texas Energy Markets
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For its article “How The Texas Winter Storm Has Affected Power Contracts,” Law360 quoted Akin Gump global project finance partner Dan Lynch on the impact of Winter Storm Uri on Texas energy markets.
The article notes that, as a result of huge financial losses by companies that used fixed-shape hedges, structures intended to reduce producer risk in times of market volatility, those hedges have been set aside. Lynch noted, “It's been six months, so I haven't seen the entire market, but I haven't seen a single fixed-shape hedge post-Uri.”
On hedge contracts being negotiated in the area of force majeure or “act of God” provisions, Lynch said, “The question [I'm getting asked] is, If there's another winter storm that comes through, does force majeure cover it?”
He said that some project owners, in their hedge and offloading contracts, want to define that the next Uri-sized winter storm would be classified as a force majeure event: “That's a mixed bag. There is sometimes pushback against it, and there's no one way that it's shaking out.”
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