Miscellaneous wrote:And if I was a director I'd be arguing that it's swings and roundabouts and that when we forward buy and the price falls we have to take the hit.
The thing is, though, that is definitely so in a highly competitive market, but the difference between the two prices that CP mentioned indicates to me, especially when combined with the Boilerjuice charts, that just isn't the case here for those domestic prices.
In any event, forward buying, except in extremis, allows Certas to insure themselves against price moves as they can then quote accordingly, and that is almost certainly what they are doing rather than buying forward as a profit opportunity of itself.
And, regarding the failure of all these electricity companies, failure to cover themselves on their forward price commitments in the form of all those fixed price deals is almost certainly at the heart of the failures. The p&l looked OK when prices were stable, but the risks were huge. Ironically, at the time when prices were stable or falling, the cost of covering that risk would have been relatively low. They shouldn't have ever been betting the company on future prices.