It is easy to see why the market has continued to remain at these levels but many ask why is it that Winter 09 and Summer 10 can be traded as much as they are when so much more information is required to come out on the decisions. In both of these two seasons cases they are in fact being traded as part of a bigger trade, often linked with spark spreads. But this is not where it ends, if we assume that the spark spread is at £10 and the dark spread is at £15 it is fair to say that coal plant would run before gas.

If you have a coal plant station as your client you might well look to sell this spread now, in the hopes that the market will fall. In order to hedge yourself financially you might also tend to buy the spark spread now you are trading the difference between gas and coal, something which many traders are looking to do to manage their fundamental beliefs, which are that gas will eventually be the predominant fuel type. They cannot predict when (though with the LPCD) coming in in 2015 it is likely to happen long before then.