Customers in the past have tried to persuade suppliers that because they are a baseload type of customer with a high load factor they should be rewarded with a lower price. In the past this has been the case, as suppliers tended to have some long term contracts from generators, and this long term contracts tended to be baseload slanted. If a supplier could attract a baseload customer then the shape risk was mitigated. However, as the industry has evolved, most suppliers have ripped up the long term contracts they had and entered into a vertically integrated world, with a portfolio of plant able to meet pretty much any generation pattern they want.

In the cold light of day generation is where these vertical players have made most of their money, you only have to look at Centrica's results the supply side made a loss! So if you were the operations director for a portfolio of generators, you would notice that on an average day the half hour with the greastest return is the peak. This has as a gross generalisation always been the case, but the throughout the day the generator would make money. Now nights are proving to be more interesting as generators, are having to use emissions credits to keep their plant running overnight which is more cost efficient than gas plant. This in effect means that for some periods they are operating at a loss. Furthermore, to minimise the loss night prices have rocketed, and the general price curve has flattened significantly in comparison to two or three years ago.

What does all of this mean. Well the likelihood is that if emissions prices continue to rise, the effects of switching between gas and coal kick in, you will start to see some portfolio players schedule their gas plant to run oevrnight in the winter, because the option value on the emissions units will increase to make it worthwhile. This will mean that those who have a shape which is low in night usuage may well be in for a more pleasant surprise, as the suppliers reward those who reduce their buying costs and save the emissions burden.