Interesting little press statement on Friday.
Genesis Power Limited, trading as Genesis Energy, is considering making an offer of up to $300 million unsecured, subordinated Capital Bonds to the New Zealand public.
The proceeds of the offer are intended to be used as part of the funding for the acquisition of the Tekapo power stations.
Whether it pushes prices up will depend on what happens to the cash that Meridian gets. If it is used to pay down their debt then it is all neutral and will make no difference to prices.
If Bill English is successful in his attempt to withdraw capital from Meridian then the overall indebtedness of the companies will increase and power prices will go up to cover the increase in interest costs.
We will be watching.
$300 million wouldnt even cover a week of Englishs borrowing binge.
Id like Labour to paint English as the Finance Minister who has borrowed the most in NZ history. Probably more than all the others put together. ( except Muldoon !!)
Labour of course reduced the borrowing during its period of office . While English and Key would have borrowed even more during the good years rather than reducing debt.
PIGSZ anyone
Ghostie – if Michael Cullen hadn’t emptied the coffers and taken NZ into recession a year before the rest of the world borrowing $300m a week would not be necessary to pay for the insidious WFF and the train set as just two examples.
Cullen had surpluses. Banked them. Key and Engiish called for tax cuts which would have meant deficits. When in government they gave big tax cuts to high income earners. Deficit $300m/week. And you try and blame Cullen – get a life.
@!$%&*!!!!!
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English and Key inherited a decade of deficits and Cullen vindictively left nothing in the coffers for two reasons.
1. To buy as many votes as possible
2. Knowing that Labour were going to lose the election to make life as difficult as possible for National.
As has been well documented power prices went up 70% under your governments watch. Please save us your tears. They reek.
Decade of deficits – buy me a tui.
And spot prices have never ever been as high as over the last week when the lakes are almost full. Brownlee sticking his fingers where they shouldn’t go is just being played by the generating companies.
Dr Cullen was gleeful in the hours after his final budget. He smirked and gloated that he had left no money for National. In fact he agreed in an interview with Gordon Campbell that his budget was a “booby trap” for National. …
Swings and roundabouts Trevor, spot prices go down as well as up.
The deficit that Labour had in its last budget was because of the tax cuts , necessary to stimulate the economy because of the worst recession since the 1930s.
And as for the ‘train set’ , that was a one off payment that doesnt get paid every year since. In fact Nats have committed more money for new trains as they recognise its a great investment. meanwhile $1.5 bill went into the coffers of a small finance company
During the 9 long years between 1999 and 2008, under the Labour Government, average residential electricity prices went up by a massive 72 percent.
In the nearly 2 years since National came into office, prices have risen by 6 percent, and that is including the effect of the emissions trading scheme.
These are facts – Perhaps if you didnt mismanage so badly then it wouldn’t be an issue.
Labour – Id love you to campaign on power prices next year – upshot is you have zero credibility on this matter.
King Gerry!
!
Hey, Monty. Another policy wallop courtesy of the nats hitting your stated, already under pressure income.
Maybe you could take your washing and ironing into work and scrounge electric of your boss like you do with coffee.
You can hide your head in the sand and be an apologist all you like, but if you’re a core supporter, and you’re being dumped on, what hope the rest of us
Power prices are set by the market with weather (largely through South Island hydro lake inflows) and plant availability being the two biggest factors affect how much electricity is available at market.
We don’t control the weather so it’s hard to blame any govt for that. Plant availability could be improved but the legacy of under maintenance (not the least of which occurred under Labour (when future MP Charles Chauvel was a Meridian board member) because they collected billions in SOE dividends instead of reinvesting it in plant maintenance).
Trevor Mallard ought to know this. If he does then he is misleading people (though I’d hardly be surprised if this were the case) or else he’s ignorant and in three decades of politics hasn’t learned anything about the energy sector.
Fascinating to me that a price today is determined by what “might” happen in two months time. I was around and listening when Max Bradford championed the free market as driving our prices down.
pdm, sometimes I wonder at whether you really believe some of the things you write.Can you show me how NZ was the first country in recession?
It’s quite reasonable to blame Michael Cullen because he took about a billion dollars out of Meridian before the 2005 election, that was used to pay for campaign promises (Roading spending). And he took about $300 million in 2008 to pay for nationalising Kiwirail.
How do you suppose Meridian paid for that? Maybe they drew it out of a hat, or they have a money tree somewhere, or more likely they put up prices or borrowed money.
Was that the money from the sale at a massive profit of Aussie wind farm that National opposed Meridian taking the lead in developing, and Cullen stuck extra capital into Meridian to finance.
Try again Swampy.
And the second special dividend was the cash for building the then delayed wind farm down south. In that case a contract was entered into to get cash back to Meridian when the court battles concluded.
That Trevor
!
National have made things worse for the costs and prices of electricity in NZ but it must be admitted that power generation and distribution in NZ has been in a sad state for some time. Pretty much ever since the Max Bradford reforms of the mid 1990s.
It, like telecommunications, needs to returned to being a state monopoly so that it can be administered rationally again.
In the US, they’re called RINOs or Blue Dogs…
What are PIGSZ..?
Yeah! Tell me too!
off thread – use the iPredict one or Kiwiblog. Trevor
As others have pointed out Mr Mallard power prices rose some 70% during the term of your government. There was no obvious reason for this other than the withdrawal of capital (the same as referred to by yourself above) and people are entitled to such conclusions in the absence of official response.
I have been a Meridian customer for 7 years and in that period the cost per unit has risen from $0.12 per unit in 2003 to $0.21 in 2009 so that is 75% increase in 6 years and the Labour government never explained why.
Swampy there was almost no generation built during the 1990s – and precious little planning. Most of the profits during Labour’s term went into the biggest build of new generation in a generation. Gas, geothermal and wind.
PIGSZ – Portugal, Ireland, Greece, Spain…
Zimbabwe..?
Yet, we do find in 2008 Meridian stating they had to borrow money in order to pay that year’s dividend.
I am but an ordinary Kiwi, neither blue nor red, if National hike power prices, what will Labour do instead?
Trevor’s analysis of power industry history, current spot prices, SOE power company balance sheets and commercial requirements and dividend policy is rather lacking.
Let us hope that Mr Chauvel rather than him has any future influence in this area.
“Swampy there was almost no generation built during the 1990s ”
Yeah if you want to ignore Southdown, Stratford and Otahuhu B, two of which were funded by private enterprise…
Let’s not kid ourselves politicians can take credit for these. They can take credit for that roaring success Whirinaki – provider of the most expensive electricity in NZ and the most underutilised power station built. Genius!
(that’s insider with a small ‘i’ – can big I Insider consider an alternative name or addition please)
Insider have a good look at the supply demand graphs and ask yourself why the government agreed to the Whirinaki emergency generator. It was to keep lights on because of poor planning flowing from the Bradford decisions. It paid generators to tighten supply to push prices up. It didnt pay to build new supply Gerry’s approach has exacerbated the problem.
I love the fact that you’re ignoring the fact that power prices skyrocketed under labour. 72% in nine years? That’s 8% a year. Power prices aren’t increasing at that rate under National. Power prices may never have been as high as they are now, but that’s because you caused them to rise at a rate more than double what they are now.
Deleted. offensive. You are warned. Clare
That’s so bad Trev
@ Trvor
Have to disagree. It was nothing to do with supply and demand trends – the system had plenty of surplus capacity when it was commissioned. It was always designed as a back up in case of a short term system failure not as a baseload or peaking station.
The big problem was Whirinaki socialised the risk of such a failure to taxpayers, meaning the powercos were able to take their eyes off the ball or ignore it because they knew they wouldn’t pay if they mucked up – a bit like the banking crisis they were able to increase risk but not compromise profit.
Meddlesome GPSs by meddlesome ministers (Of which you were one, even if you were probably one of the better ones to be fair
) distorted that decisionmaking further. Despite all that we really only needed Whiri once, and even then, if the Meridian and Genesis had played nicely early on, we might never have had to switch it on.
@Bob
Don’t waste your breath. They are big on rhetoric but short on answers. Perhaps New Zealand really has become a single party state.
Power prices are going up. Yes great. Yes, the Natz are evil. But what does Labour offer instead?
That question lingers on the tongues of New Zealand voters unanswered. And I really hope Labour find the answers soon because if Key pulls a SNAP ELECTION early in the new year (i predict he will) anything less will be too little too late.
I just dont understand the argument/justification/rationalisation of
It went up under Labour so no one can complain if it goes up under National. Didnt National and it’s supporters want a better deal fro NZers, not the deal they had before but under different faces?
Ryansway, everytime a Labour MP on this blog suggests a different way the blog post fills up with “you had nine years to do something” … and that is supposed to satisfy and drown out any criticism of National for putting GST up, borrowing for tax cuts, being a aprty to lies so a foreign company can get more of our hard earned money, giving $20m to people not even covered by the guarantee and live offshore, not generating jobs from their Job Summit aka “do-fest”… and so on.
@Tracey
The people are wide awake to John Keys right wing agenda. And he won’t get away with the middle-of-the-road party trick he pulled at the last election. Voters are over it, his smile wears as thin as his hair.
And you’ll know from history that once the Natz start showing their right wing teeth, the public turns on them. And Key’s grin has peeled back so far now his fangs are clearly visible. There is no longer any warmth toward the people in his hollow smile because his disciples on the far right are sticking needles in his back.
But in order to capitalize, perhaps Labour needs to suck up the occasional “you had nine years” and use the opportunity to accept the mistakes made, apologize for them, then attempt to gain redemption by assuring the people that under Labour power prices will be regulated by an independent commission that can balance the needs of the Corporation with the needs of the people. Sounds fair, right? Kiwis like fair, fair wins votes.
So Labour doesn’t need to say it’s going to freeze power prices, it just needs to give the people an option to vote for change via innovative new policies that show that lessons were learned from past mistakes, and that it has the means and will to ensure they can’t happen again.
Currency, cost of essential goods and services, the welfare and care of our poor, sick and injured, they are the issues begging innovative solutions. And not the type of innovating John Key is attempting with deception to take more from the poor to give to the rich.
Be creative quickly, and win the election if it happens sooner than expected. John Key “thinks” he’s clever, and calling a SNAP ELECTION is something he can use to show off his cleverness.
Arent snap elections usually seen as a sign of fear? Or are you saying they are riding so high in the polls they want to truncate the campaigning time to reduce debate over big issues, then get elected and claim a mandate for all the things they wished they could have done this past two years?
@Tracey – ” just dont understand the argument/justification/rationalisation of “It went up under Labour so no one can complain if it goes up under National.’” Its not a rationalisation. Its a response to some here are trying to get mileage out the fact power prices have gone up since National took power. But blithely ignore the fact that it went up much, much more under Labour. That, again, is not rationalisation, just facts. No one is saying its fine for prices to go up as they did under Labour, they are merely questioning why those in ‘glasshouses are throwing stones’. Simple question; Did power prices increase 72% or not under Labours watch and what did they do to alleviate it ?
@Ryansway “The people are wide awake to John Keys right wing agenda.” looks like 55% like that agenda.
55% of a sample and who knows how informed or not that sample is?
@Tracey
Few in New Zealand believe Key and English are so dumb to have ruined the country in just 2 short years.
But the “financial crisis” John Key is “painting” could serve as an ideal catalyst for a snap election. Why else paint such a bleak picture going into an election year?
And I don’t think Key will want the people understanding the wider implication of the mandates they plan to take to the polls. So a Snap Election would assist in minimizing public debate and maximize their perceived popularity.
A Snap Election is a possibility that Labour should be prepared because currently they are not, which is another reason Key might take the opportunity to strike.
@Dave
55% is a dated snapshot and they’ll be needing more than that to survive public discovery of the right wing mandates they have yet to disclose.
Right now we see the privatization of ACC, and my bet is that 55% has already eroded to 50%.