This paper investigates the opportunities for risk hedging available to competitive electric power suppliers through the use of forward contracts. We formulate the production and marketing decision process of suppliers as a two-stage optimization problem. This optimization problem is solved employing the dynamic programming technique given the mean variance cost function. Due to the unique characteristics of uncertainties in electricity markets it is shown that the production decisions and the marketing decisions are interrelated dissimilar to the earlier results. This is the direct consequence of using the two-stage model which explicitly considers the intertemporal effects. A more general formulation over many time periods is also presented however its complexity renders it difficult to solve.