Genesis Energy set to acquire Tekapo A and B power stations

Genesis Energy set to acquire Tekapo A and B power stations

A new chapter in South Island generation and energy retailing is about to open as Genesis Energy prepares itself to acquire the Tekapo A and B hydro power stations on 1 June 2011.

The Board of Directors of Genesis Energy has received and accepted directions from the Government to acquire the two stations. The Company will also work to a related Water Management Agreement with the vendor, Meridian Energy and a short-term hedge which requires Genesis Energy to sell a portion of the output from the Tekapo stations to Meridian, at market prices, with that portion declining over four years to zero.

Settlement of the sale and purchase agreement between Genesis Energy and Meridian Energy will take place on 1 June. Handover of the operation and control of the stations will also happen on 1 June, although Genesis Energy personnel have been on site for several months familiarising themselves with the Stations, the local environment and community.

Genesis Energy Chairman, Dame Jenny Shipley, DNZM, said the acquisition would create greater competition in the South Island electricity market and would provide access to long life assets which are not easily replicated in the New Zealand market.

Genesis Energy Chief Executive Albert Brantley said the acquisition next month would signal a new era for the Company and its customers.

“Since the proposed sale was announced at the end of 2009 we have been focused on encouraging South Islanders to join us as customers. Our success in gaining more than 20,000 South Island customers in the past year demonstrates a desire from consumers for a fresh approach and competitive price offers.”

A number of benefits for Genesis Energy will arise with the acquisition of Tekapo A and B, which have a combined generation capacity of 185MW. The acquisition will provide the Company with a more balanced and diversified generation portfolio. It will also reduce the carbon intensity of the Company’s generation assets and will have lower operating costs per unit than for thermal assets.

Genesis Energy is keen to forge a positive and constructive relationship with the Tekapo community and other South Island stakeholders. Senior management and plant operating staff have been meeting regularly with Tekapo and Canterbury stakeholders. The Company intends to build further connections with the local community in the coming months.

“We understand that the business of running hydro stations and generating energy for New Zealand from local resources impacts the communities and environments in which we operate. We value our local relationships and work hard to be known as a good neighbour. After all, the support of these communities is what enables us to continue to supply energy to more than 650,000 homes and businesses across the country,” Mr Brantley said.

Further information on the operating agreements with Meridian Energy and Genesis Energy’s operations regarding Tekapo A and B will be released when the acquisition takes place on 1 June 2011.

ENDS

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