Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Meridian takes flick at reforms as asset swap confirmed

Meridian takes flick at reforms as electricity “virtual asset swap” confirmed

By Pattrick Smellie

Dec. 17 (BusinessDesk) – A major plank of the government’s electricity reforms is in place, with state-owned Meridian Energy, Genesis Energy and MightyRiverPower confirming they had signed new contracts that will back all three companies’ expansion into national electricity retailing.

However, Meridian continued to make clear its underlying opposition to the moves, saying in its statement on the “virtual asset swaps” that it had been “directed” to sign the agreements.

“Our directors are legally required to act in the best interests of the company,” Meridian’s general manager of markets and products, Neal Barclay, told BusinessDesk. “The reform package is not necessarily in Meridian’s best interests. The policy-makers are taking an industry-wide view, but the directors themselves have been directed to carry out Meridian’s side.”

MRP and Genesis both also issued statements, but without any reference to central government coercion.

The move would “enable Genesis to further grow its South Island business in the coming years,” said chair Jenny Shipley. “The lack of South Island generation has meant that Genesis has not had the opportunity in the past to actively seek South Island customers.”

Genesis and Meridian continue to negotiate over a physical asset swap that will see Genesis own the Tekapo A and B hydro power stations, currently owned by Meridian. Brownlee said he expected that transaction to occur in the first half of next year, and Genesis announced its intention to partially fund the purchase with a $300 million unsecured, subordinated capital notes issue.

Under the virtual asset swap contracts announced today, MRP and Genesis will be buying access to electricity generated in the South Island, where neither used to operate actively, while Meridian will gain access to North Island-generated electricity so that it can pursue a bigger customer base outside its South Island base.

MRP chief executive Doug Heffernan said the virtual asset swaps were “positive for the company and the energy sector”, and that MRP had “chosen” to enter into the 15 year 700 Gigagwatt hours per year arrangement with Meridian “because it is in the best interests of the company.”

For its part, Genesis will purchase up to 450 GWh annually from Meridian, and sell that quantity to Meridian in the north. In total, Meridian will be committing to 1150GWh of access to North Island generation.

Cook Strait cable and other national grid limitations have previously discouraged retailers other than Contact Energy to seek customers actively on both islands, preferring instead to secure customer bases that are close to their generating assets.

These new contractual arrangements are also expected to kick life into the electricity futures market that has also been established as part of the reforms.

The major generators are required to be offering 3000GWh of “open interest” contracts on the platform by June next year. Meridian has supported the market since before it became a mandatory activity, while both Genesis and MRP have announced in recent days that they have registered as “market-makers” for the ASX-administered market.

At the end of last month, some 439GWh of open interest contracts were available to trade, around 15% of the target, compared with just 100GWh a year earlier.

“My expectation that (with the virtual swaps in place), there will be a lot more trading as people thing about trading on the margins of that,” said the executive director of the Major Electricity Users Group, Ralph Matthes.

Barclay also told BusinessDesk that Meridian was supporting the government’s wish to allow a tender for the Whirinaki peaking station, which is Crown-owned and has previously been operated by Contact.


© Scoop Media

Business Headlines | Sci-Tech Headlines


RNZ: Housing Boom Could Get Worse, Economist Warns

Economists are calling on the Reserve Bank to reinstate lending restrictions, warning the housing market is spiralling out of control. More>>


Westpac: Sets Out Plan To Go Cheque-Free

Westpac NZ has announced details of its plan to phase out cheques, after signalling in May that it would be supporting a move to other forms of payment. Cheques will cease to be available as a means of payment after 25 June 2021. Westpac NZ General ... More>>


NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>


Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>


Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Economy: NZ Small Business Recovery Continues In September

Xero, the global small business platform, today released its Small Business Insights (XSBI) for September revealing an uptick in small business jobs and year-on-year revenue growth in New Zealand. Nationwide, the average number of jobs in the small ... More>>


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>