Measure hedge effectiveness

Trigger: The close of a financial reporting period or a scheduled risk management review initiates the assessment of active derivative instruments.

1. Extract market pricing data and forward utility curves
2. Map derivative instruments to underlying hedged items like fuel contracts or power sales
3. Execute quantitative effectiveness tests using statistical methods
4. Calculate the effective and ineffective portions of the hedge
5. Document testing results to satisfy financial compliance standards
6. Generate accounting entries for the corporate reporting system

Outcome: The performance of the hedge against its underlying risk is quantified, documented, and the corresponding accounting entries are posted.