Genesis Energy buys time for Huntly station

Photo / Greg Bowker

Genesis Energy says a deal it has done with Meridian Energy has bought time for its ageing Huntly power station.

Genesis chief executive Albert Brantley said Huntly's continuing availability to the electricity system depended on there being commercial arrangements in place to cover its fixed and operating costs.

"The Meridian deal does not solve the problem. It only buys us time," he said. Terms of the hedging agreement were confidential.

The company's principal challenge remains the prospect that Huntly's 1000MW of coal-fired generation, commissioned in the early 1980s, will be called on a lot less than in the past, Brantley said.

"We realise that raises policy issues about long-term security of supply. We are actively involved in the search for solutions."

But he expects two of Huntly's four units to stay in the market for "quite a few years yet".

"Huntly is a well maintained asset built to an extremely high design standard. There is no reason it couldn't stay in the mix for another 20 or 25 years," he said.

Genesis is looking at upgrading its small gas-fired peaking plant at Huntly into a more efficient combined cycle plant which would raise its capacity from 48MW to around 100MW.

It also has plans for a 480MW gas-fired plant at Rodney but this would depend on certainty of gas supplies. Brantley could not say when a decision on Rodney would be made. If it did get the green light it would take two or three years to build.

State-owned Genesis is the country's third-biggest generator and yesterday reported a net loss after tax of $136 million for the year ended June 30, compared with a profit of $99 million in 2008, a dry year when Huntly was run hard and wholesale prices were some 41 per cent higher.

Excluding asset revaluations the underlying profit was $82 million, down from $99 million in 2008, but in line with earnings in the three years before that.

The bottom-line loss of $136 million included a $183 million downward revision of value of the coal-fired plant at Huntly by First NZ Capital.

It reflects the estimated impact on future earnings of emissions pricing and expectations that Huntly will be dispatched less than in the past.

All but $29 million of the writedowns were offset by upward revaluations of hydro and gas-fired generation assets, but those gains were not reflected in the profit statement.

It is paying a final dividend to the Government of $10.4 million, bringing total dividends in the 2009 financial year to $20.8 million.

Genesis' total revenue for the year was $1.9 billion, down from $2.4 billion the previous year.

DIVIDENDS
* Meridian Energy: $294m
* Mighty River Power: $230m
* Genesis Energy: $20.8m