Hosking told Reuters the exchange was looking at contracts to cover peak load, improve hedging against the daily spot market and adding contracts for Queensland and South Australia.

Hosking said changes to the exchange's electronic trading platform in first quarter 1998 would allow the exchange greater flexibility in providing new risk management tools.

"As soon as that is available I think you will see the SFE come out with a number of new instruments that can readily be put on the screen and give the electricity industry a wider choice in what they trade," he said.

Hosking added the exchange was also assessing opportunities from the National Electricity Market, due to begin on November 15.

The SFE launched Australia's first power industry contracts, based on the New South Wales and Victorian markets, on September 29 last year.

Sometraders have criticised the contracts for being based on prices averaged over a month, and for not providing coverage for peak power demand.

Traders said the over-the-counter market could offer greater flexibility, while lack of concern about counter-party risk also limited interest in using the futures exchange.

Hosking said the exchange had deliberately taken a conservative approach in first offering a simple contract to an industry not accustomed to risk management tools.

"Over time, we will work on developing products which better reflect peak load times. We will differentiate much more than we have with this standard type of contract we have got in the first place," he said.

The exchange noted that despite small daily volume, use of the contract was rising. Combined open interest for the two contracts was 2,692 by the end of September.

The SFE said September was a record month for the power futures with 2010 contracts traded. The average monthly turnover for the year to the end of September was880 contracts.

Hosking said the launch of the futures had facilitated development of over-the-counter power trading and both sectors would grow as the market matured.

But he said it may take a few more price spikes and crises to convince the electricity sector of the benefits of futures in minimising counter-party risk.

"People have to experience the horrors, unfortunately, of having to unwind an OTC-type derivative instrument in a time of crisis before they see the real value of an exchange traded market," he said.

"Ultimately it is very, very essential for exchange traded markets to develop, but it just takes time."

Government reluctance to press ahead with power-industry privatisation was a potential limiting factor to the risk industry's growth in the electricity sector, Hosking said.

"It does slow the growth of all the derivatives markets because the amount of risk being taken on a commercial basis is reduced," he said.