You have to understand the whole package of finance not just pull out one section.
Yes at the minute spot is possibly double what a long forward achieves but a long forward contract is guaranteed. There is risk not locking in some income and locking in finance etc
With higher possible margins the space gets filled very quickly and you may end up with a situation where there is excess capacity ( like with coast seam gas on Australia east coast and LNG ) where a lot of projects come on line at once .
The extreme circumstance other one where lots of companies get caught is where in the future they can't roll their finance as there is no market to sell power into as everyone has bought forward or like with oil the price collapses with low demand , excess production. In that case they closed in fields etc.
Just pointing out there is 2 sides to the equation of extra margin on spot market or shorter finance terms that need to be rolled. .
CCE Price at posting:
3.1¢ Sentiment: None Disclosure: Not Held
