The CFD index fell by around 20% this month, not because contract prices fell, but because nine of the 16 CFDs included in the index have terms of five years or greater. This tends to average out some of the high prices currently making up the ASX forward curve.

Four CFDs have terms of 10 years. FPVV terms are also longer than the typical, but none went beyond five years.

The main contract index rose 0.9% to hit 11.4 cents/kWh.

The rise in futures prices across the entire four years in the forward curve, since early February has been unprecedented in our market since the futures first listed in July 2009. But then so is a major war in Europe, at least as far as its impact on global energy prices is concerned.

Inflows into southern hydro lakes are also about as low as they get for this time of year, with Manapouri at a record low level.

As far as we can tell, the futures prices rose due to a combination of concerns about the cost of coal in case we have a prolonged dry period, along with a recently announced outage for the Taranaki Combined Cycle plant (TCC) early this winter.

Another contributing factor is that inflation, here and overseas, is reversing the downward trend in the cost of new renewable generation, at least for the time being.

The phrase "the perfect storm" springs to mind when we look at how these factors all tend to push prices up, with the only downward pressure coming from a substantial pipeline of new renewable generation coming on stream starting in the near future.

Concerns about the cost of coal also appear to influence the futures prices beyond this winter, although reliance on coal-fired generation at Huntly is expected to fall off rapidly going into 2023, and the overall gas supply situation is steadily improving.