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Genesis Energy’s headquarters in Oakland.
photo: Source: Genesis Energy
Genesis Energy says it is doing its part to deliver energy to New Zealand and that a sudden change in electricity market rules could come at an unfair cost.
The announcement comes after grid operator Transpower announced it would allow generators to draw more water from hydro lakes to cope with the country’s Power Issues.
Genesis Announcement of full-year earningsThe company’s revenue fell to $131 million due to low gas, hydro and wind generation and an outage at the Huntly power station.
Costs increase as companies must burn more coal to make up for the shortfall.
Chief executive Malcolm Johns said his company’s clients were protected from the volatility of the industry.
“We’ve increased our investment in fuel by $160 million in the last 12 months… We’ve just done a deal with Methanex. We’ve ordered more coal. We feel that at the moment we are carrying our fair share, probably more than our fair share of delivering energy to New Zealand.”
“The risk of using fuels like coal is very high. If you order coal, it takes three to six months for it to be here. If Mother Nature rains in the meantime, you suddenly have a lot of coal that can’t be converted into electricity because the price has dropped.”
Chief Executive Officer Malcolm Johns.
photo: Provided/Brett Phibbs/PhibbsVisuals
Johns said a change in the rules by Transpower on how much water it takes from hydro lakes could harm his company.
He said it was important to pump more power into the grid to address shortages, but it was equally important to have clear, predictable market rules.
“We just brought in some very expensive natural gas from Methanex to smooth out the wholesale price curve. So if water floods the market, we’re going to end up bearing the costs of that.”
“For an organisation like Genesis, it is inevitable that it will eventually have to take on a lot of fuel risk. In a dry year, a sudden rule change can be very costly.”
exist Wholesale electricity prices soarJohns said Genesis does offer products for that market, and it’s up to the customer to decide whether to buy it.
“99.99% of our customers have no exposure to the spot market. So the products we sell are available for any customer to buy and ultimately those products are chosen by the customer and they can choose how to structure their risk management and energy profile.”
He said the government and regulators were responsible for problems across the electricity system.
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