Many players on flexible contracts have seen that some of the far dated products are priced very cheaply e.g Winter 10 is being quoted at £44.20/£44.50. It seems incredible to think that in the middle of an emissions period likely to bite that this product is trading at a mere £3 Summer 07. There is no doubt that comparing Summer with Winters on a historical basis is a little dangerous. The relationships are changing this is partly due to fuel mx but also emissions. Further increases in night time loading are also exacerbating prices overnight.

On a raw fundamental Winter 10 looks like a good buy, and assuming that the price is likely to remain relatively stable it might be better to look at buying an option (call) to buy before the renegotiations on the flexible contracts apply. This would potentially lock in some value and more importantly allow less cash and credit to be freed up at this early stage. Long dated products have low vol values which increase over time, but it is likely that if this is used for insurance purposes only (i.e. sunking premium) then it could return a good dividend if it starts to move.