Luke Blincoe: An open letter to Meridian Energy

Water spilling from the Meridian-owned Benmore Dam in the Waitaki Valley. Photo / Simon Baker, File

OPINION

Dear Meridian. We hope you had a good Christmas. But we need to talk about your environmental credentials.

We called you out on your TV adverts claiming consumers should "switch to Meridian for power that doesn't cost the earth". The Advertising Standards Authority agreed with us that this was misleading.

We know you are proud that your generation business is 100 per cent renewable. To be fair this is more to do with the way ECNZ was broken up 20 years ago instead of anything you've done.

The ECNZ breakup saw you get the largest fleet of hydro generation assets, built by our forebears and paid for by the Government and taxpayers. But hey, good on you.

If we look under your bonnet, we are not sure we will see an electric motor, more likely a coal-fired steam engine with an electric motor's sticker on it.

The "swaption" arrangement you have with Genesis means that the coal- and gas-fired Huntly Power Station is run more than anyone wants. Anyone except you and Genesis, I guess.

Then last week there was the Electricity Authority's finding of an "undesirable trading
situation".

According to the authority "... Meridian's use of what it terms 'non-clearing tranches' means that generation is effectively withheld from the market". Between December 3 and 27, 2019 "the average extra generation Meridian could have achieved is 82MW, and around one-third of the spill at Benmore could have been used to generate. We estimate the spot market impact of this was $70m".

Julie Anne Genter, the Green Party Energy spokesperson, was spot on: "It looks like Meridian behaved in a way that increased power prices and saw extra fossil fuels being burnt instead of low-cost, clean hydro generation". We think this is power that does cost the earth, both ways.

Your behaviour meant Huntly belched out an additional 6000 tonnes of CO2. That's equivalent to putting an extra 50,000 Toyota Corollas on the road.

We wonder how you'll account for these emissions in your Group greenhouse gas emissions reporting, and the Gold Standard Verified Emission Reductions offsets.

We don't think converting 90 per cent of your own car fleet to electric vehicles by 2020, or partnering for one electric plane, will be much of an offset for the CO2 emissions you have caused.

Like most Kiwis, we are big fans of any efforts to reduce CO2 emissions, but you seem to be okay with not just putting more CO2 than is necessary into the atmosphere but profiting from it as well. This isn't helping, and maybe it's time for some self-reflection. Something to think about on your summer break, maybe?

Luke Blincoe. Photo / Supplied

We hope the Energy Minister heeds Julie Anne Genter's warning that if the Electricity Price Review reforms don't work "we need to ask whether it's time to talk about structural separation again".

A smaller Meridian without market power wouldn't be able to increase its profits by spilling water.

So please Meridian, consider whether making good on your environmental ambitions would be a good New Year's resolution.

Kind regards,
Luke.

• Luke Blincoe is chief executive of Electric Kiwi.