Why A One-Way Asset Swap Would Suit Genesis Fine
October 6th, 2009
• Genesis self interest involved.
• Opens South Island retail market.
• Company not performing well.
Genesis Energy’s support for wholesale electricity market reforms giving it South Island hydro assets has more than a whiff of self-interest about it. Not only does Genesis appear the willing servant of a govt seeking change, but its proposal would give it valuable South Island opportunities while further weakening Meridian Energy’s market position. Genesis proposes it be given three mid-Waitaki Meridian-owned power stations -Aviemore and Tekapo A and B – with an apparently generous offer not to foist thermal assets on Meridian because this would destroy its renewables-only branding.
This would have the desired effect of spicing up relatively lacklustre South Island retail electricity market competition by making it worthwhile for North Island-only Genesis to retail in the South Island. The SOE argues there is no need to force more Meridian retail action in the North Island, since competition is stronger in the North Island already.
- – -NOT A SUBSCRIBER? – - – - – - – - – - – - – - – - – - – - – - – - – - –
NZ’S LEADING INFORMATION SOURCE FOR ANALYSIS AND INTERPRETATION OF THE CRUCIAL ENERGY AND ENVIRONMENT ISSUES AHEAD.
NEW ZEALAND ENERGY & ENVIRONMENT BUSINESS WEEK
Powerful and up-to-date, it covers Emissions Trading Scheme, Climate Change & Carbon Trading, the Resource Management Act, the Kyoto Protocol, Energy Supply Security, Electricity Generation, Renewable Energy, Oil & Gas Exploration, Energy Efficiency, Water Management, Sustainability. Covers policy announcements, draft legislation, amendments to Acts and regulations. Also includes NZ Energy & Environment Weekly Digest. Published every Tuesday. 46 issues per year.
http://nzenergy-environment.co.nz/home/special-introductory-offer
- – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
On this basis, Genesis argues proposals from the Ministerial Electricity Technical Advisory Group that Meridian take over Genesis’s most efficient new gas-fired unit, e3p near Huntly, are unnecessary. Other submissions have suggested giving Meridian responsibility for the 1000MW coal and gas-fired Huntly power station, which Genesis is keen to start progressively closing down unless it can achieve commercially justifiable rates of return from running it. Genesis has already exited the Time of Use contract market for major supply because it is choosing to run Huntly less.
Meanwhile, its new Statement of Corporate Intent (see separate article) makes clear Genesis is struggling in the current environment. It would welcome the dry year risk management and portfolio diversity that a large chunk of South Island hydro would offer. This may explain more than anything else why Genesis is so keen on a one-way asset swap.
One option for Huntly is it becomes part of a new approach to reserve energy, given the existing reserve energy backstop, using the Whirinaki peaker station, is most unlikely to continue in its current form.
Submissions to the ETAG are almost unanimous in supporting the closure, sale and possible relocation in NZ of the Whirinaki plant, which was installed in 2004 after the 2003 dry winter power shortage scare.
Copyright © Media Information Ltd
NZ Energy & Environment Business Week
Amalgamated Dairies