Traders have been buying up spark spreads on the back of a predicted Summer squeeze in the UK due to coal plant failing to operate during the Summer, as a result of the LCPD. This is a very dangerous game to play, firstly the LCPD only effects 9 plant, seondly most of the plant would have been off during Summers as demand dropped anyway, and so it was already operating under an peaking policy.

Traders are gambling that this plant being out will force coal plant off and only gas plant can pick up any slack, if the Summer is mild like last year then demands will remain low and the need for gas and the gas power stations will not be that high and so those over paying for the spark spread will be caught out.

It will be interesting to track the changes seen in the spark spread and if they start to get too high some trading houses will sell into the strength.