Use of derivatives and energy trading has been limited in Italian power markets – the price of electricity is not volatile in the country. Jeffrey Butrico, chief risk officer at Milan-based utility Edison, says contracts use an “arcane system”, based around an index of a basket of commodities – Brent crude, diesel and light-sulphur fuel oil – averaged over the previous three months.

Brent takes up the bulk of the basket, accounting for two-thirds of the price, and the curve has a