Rumours that generators have been buying this week and across the curve have been emanating in the market. It is no surprise that we hear these stories if you were a generator you would want to enhance the myth. It is likely that February will be a bullish month and this hump will be interesting as it will start to bring the players who are short to the market and cash in on the recent falls. Do not be surprised if prices start to rise up again.

The long term is looking more positive as nPower annouced that they were building a new ccgt in Northampton and although they have had planning permission since 1995 it is only now that they can afford to build the plant. Do not be surprised if a long term power deal was constructed six months ago and is being used to finance the project. Which will cost £800m for 1500MW of plant. At £533/KW for new build this is good value. Bought and operating plant has been valued at £100-£200 higher than this number.

New build tends to have teething problems and this is often priced in at the beginning. As there are few actual power station builders the buyer has some significant negotiating power.