From Genesis a revelation: price hikes likely

Genesis electricity consumers could face further price hikes of up to 4 per cent this year.

But the state-owned company's chief executive Albert Brantley says too much is said about retail prices and not enough about the lack of new generation.

Genesis held its first annual public meeting in Hamilton yesterday as part of the Government's push to make the country's SOEs more publicly accountable and profitable.

The meeting featured a promotional video, fronted by former rugby league star Tawera Nikau in his home town Huntly, which lasted longer than both the speeches by chairwoman Jenny Shipley and Mr Brantley.

Mr Brantley said that Genesis was carrying out a number of feasibility studies looking at new generation in wind, hydro and geothermal.

"The key for us strategically is generation, that's one of the main issues facing us going forward."

Mr Brantley said that unpredictable wholesale electricity prices were impacting on companies' ability to plan for investment in new generation.

"There has been lots to say on the wholesale front in relation to retail prices because it affect customers but ultimately people have to make up their minds at some point whether we want any more capacity build or not."

He said the unpredictability of wholesale pricing was a concern and other players in the market have come out saying the uncertainty could end up affecting long-term supply if there was no new generation investment.

Mr Brantley said Genesis customers were likely to see staged price increases throughout the network this year of between 2 per cent and 4 per cent as the company tried to absorb network increases.

He told the meeting that despite making a loss of $136 million last year, following a massive write-down of $261m on the value of the Huntly power station, the company was tracking back up again.

Last month Genesis reported a half-year net profit to $64.6m despite losing customers and selling less, Mr Brantley said.

He said the company was focused on expanding its South Island push into Queenstown and Christchurch after a successful launch in Dunedin. It was also looking to expanding the rollout of 35,000 advanced meters and looking to continue investment in feasibility studies for new generation.

The company's 31 per cent stake in the Kupe gas field in Taranaki was also expected to start impacting on its bottom line as commissioning of the plant began and first sales gas and condensate being processed.

He said Genesis' new contract with Meridian, which would see Tekapo A and B hydro power stations transferred from Meridian to Genesis, would allow the company some breathing room to extend the life of the Huntly station but Huntly was no longer paying for itself and the company had to look at how it could recoup its costs.

The company had been considering the retirement of Huntly one and two between 2011 to 2014 but he said the Meridian deal extended this by up to 20 months.

Genesis' assets include the Huntly thermal power station, hydro stations at Tongariro and Lake Waikaremoana, and the Hau Nui wind farm in the Wairarapa.

The company has about 650,000 retail customers.

- © Fairfax NZ News