The hedge markets are relatively stable at present, with the only significant movement in the last month being in the ASX electricity futures prices for the current quarter, through to Q4 2022.

The CFD index appears to have followed the futures prices up a little this month, whereas the FPVV index fell, taking the overall index down by 7.6%.

Last month there were three contracts disclosed that had no price attached, and this month there are six contracts with no price - refer to the exclusions table at the end of this post. Contracts of ten or more years do not have to have the price disclosed. Last month's three long-term contracts related to, we think, Contact Energy's Tauhara geothermal expansion project, with one fifteen year contract for Genesis Energy and one ten-year contract each for Oji Fibre Solutions and Pan Pacific Forest Industries, the latter two being members of the Major Electricity Users Group.

We don't have any real clues about the latest six ten-year contracts, but it is interesting to see this level of activity in the long-term contract area, which is unprecedented in terms of the number of such contracts signed over such a short period.  Whether this is a one-off or the start of a trend, remains to be seen.

Looking ahead, spot prices are likely to get more volatile as the penetration of renewable energy increases, which could make it riskier to invest in new generation as demand grows. But, if investors find it easier in future to contract directly with power purchasers, this could help to keep the new generation pipeline as full in the transition away from fossil fuels.

Tiwai is always near front of mind, and this month there were two interesting developments. First, the Electricity Authority's long-awaited wholesale market review came out basically saying the current Tiwai price ($35/MWh) is too low and that other consumers are subsidising Tiwai.  There could begreaterscrutiny ofmajor contractsinfuture,whichcould makeitvirtuallyimpossiblefor Tiwaito geta simiarly sweetdealinfuture.

Second, the proposed 60-100 MW data centre in Southland took a step closer with the announcement that a new undersea fibrecable is likely to connect Christchuch, Dunedinand Invercargill directly to North America and Aisa.