Many people are asking Powerisk whether they should go completely flexible or whether they should go completely fixed. There is no simple answer to this because each company has a different appetite to risk. Currently looking back at history if you were to run a daily buying programme, by buying day ahead this would be buying at £5-£10 discount to the forward price. In reality, this means taking some significant power exposures, and this in the past has not always been the best policy. However, with the market in contango i.e. The front is cheaper than the back, the advantages are significant. This suggests that risk limits should be calculated and then the maximum that a company can afford to go on should go on day ahead or flexible purchasing. The next problem, is that if companies are measuring risk and assessing their exposure to power prices, the numbers can be quite surprising. As a result the risk limits become so tight that they cause problems in that the moment the market moves in a direction the company does not wish, it will have to trade out its position. Almost so quickly that there was no point in having the limits in the first place. This dichotomy can only be solved by stress testing risk limits against market movements. Risk is about managing upside gain as well as downside pain.