The first day back in the office for 2007 tends to make traders and players look at the year they have just had (see 2006 summary) and the year ahead. The year ahead should be easy to predict, plentiful gas, coal appears to unvolatile, demand normal, weather mild, emissions over supplied and the energy industry is trying to get its head round green growth at a pace which keeps up with the politicians avarice for green votes. Whilst Drax's shares have risen 62% in 2006 another performance from them will be incredible as they grapple with new turbines and greater green controls. If anything 2007 is the year that will dictate how good 2008. Many players have switched to flexible contracts looking benfiting hugely from recent falls, but these contracts encourage trading as opposed to some fundamental long term buys and if prices continue to fall to fundamental lows, it will be difficult not to justify long term buys potentially out to 2007.

Flexible contracts will start to develop financial for physical swaps as well as growth in the CfD market for long dated products. This will also see greater credit risks, and all players will be aware of the situation with regard to Enron.