2006 looks to a be a year where the gas and power industries will review their stall, and look to finally invest in upgrading systems and plants to be able to maintain security of supply. Inevitably short term issues will crop up causing the market to become more volatile, if the Russian Ukraine debacle had occured this week rather than last, then prices would have risen much higher. But the combination of a quiet market and few senior traders able to push it, meant that the concentration was on the very short term and not the medium term.

From a customer point of view probably the best way to have a good year is to hedge some of your exposure early on (ideally on a dip) but then to pick your moments wisely as to when you cash out the final exposure. Moreover do not be lulled into a false sense of security in your hedging strategy, it may well be worth getting approval to buy long dated power and gas. Summer 07 is in backwardation and this look attractive in comparison to the contango seen in most markets none more so than the emissions market.