What is the cost of buying forward. If we look at the day ahead at the moment it is priced at around £20, this is in one sense the purest price you can see, because all market information is priced in.

The question that many are asking is that given we cannot see a pure price for the future what level of premia would you be prepared to pay to ensure that buying forward was worth hedging your risk. With Winter at £32 the premia is £12 (though we can strip £6 out of this for carbon costs). So if one could guarantee a secure safe price for next year and pay £6 for the priviledge is this fair.

Powerisk would argue that for 2008 it is not that fair for 2009 it is getting fairer and for 2020 it is more than fair. Long term fundamentals suggest that new plant will come on in 2009/10 but how much and when is a question that is difficult to answer with prices low these decisions can "afford" to slip and so perhaps the premia is too much.