Meridian positive about new Govt
Power company keen to engage with proposals
Outgoing Meridian Energy chief executive Mark Binns says there is a lot of detail in the coalition proposals f rom Prime Minister Jacinda Ardern’s Government the company is keen to engage with and overall it is positive about what has been flagged to date.
“We now have a new Government with different priorities and approach to the previous one. I have read the coalition agreement and there are aspects that will have implications for the electricity sector,” said Binns in speech notes for yesterday’s annual meeting.
Binns will stand down at the end of the year to be replaced by general manager of retail Neal Barclay.
The incoming Government’s commitment to convert the government car fleet to electric by 2025/26 where practicable was positive, Binns said.
He also noted the coalition was committed to an independent Climate Change Commission to advise on the setting of carbon reduction targets and hold the Government accountable for delivery.
“Meridian believes that climate change is real and tangible action over the next year should be welcomed by shareholders, given Meridian’s commitment to New Zealand growing renewables,” he said.
Meridian was supportive of the new Government’s emphasis on water quality but “the devil is always in the detail, so understanding the framework within which this will be considered is important”.
Freshwater was an issue that could not be dealt with “piecemeal”, he said. Hopefully, by this time next year it would be known how the Government intended to approach the issue, given its material importance to the economy.
Binns said he also hoped the Government would have completed its full-scale review of retail power pricing. He noted that competition had kept electricity prices low and was likely to continue doing so.
“If the Government wanted to look at some sacred cows for efficiency gains, it may pay them to look at the number of network companies in New Zealand — 29 compared to five in the state of Victoria, with a comparable population.”
The Government should look at low fixed charges for low users, a policy that was meant to help lowerincome households on the premise that these households were low users.
However, “when you see a number of people here at Meridian, for example, who don’t fall into lowincome households, qualify for this break — you know it is misdirected”.
Outside of New Zealand, Binns said he was looking forward to seeing Meridian’s growth initiatives in Australia, Britain and Europe develop, given low demand growth in New Zealand.
The Australian market “is not for the faint-hearted”, he said.
Meridian had just signed off on the parameters for the final negotiation of power purchase agreements with a number of Australian developers, potentially underwriting a number of solar and wind projects in Victoria and New South Wales. The arrangements were expected to be completed in coming months, he said.
Binns said he expected “meaningful growth” in the 2018 calendar year in Britain, where Meridian had licensed the Powershop platform and brand to nPower and would be adding gas functionality in January.
Meridian was also engaging with nPower’s German parent, Innogy, with a view to franchising the platform in other European countries, said chairman Chris Moller in his address.
The aim was to make an “inprinciple” decision early next year but a final commitment by both parties — assuming there was agreement — could take until the middle of 2018.
On guidance for the current financial year, Moller said the company got away to a slow start by entering the year with depleted water reserves following the lowest hydro inflows ever between February and June.
However, “perversely there has been above-average rainfall since July, not only in our catchments but across the total country, which has seen wholesale and forward prices fall significantly”.
The start of the year “has not been optimal, but weather patterns can, and do, change quickly”, he said.
Meridian shares closed down 1.5c yesterday at $2.81.