Mighty River Power's next chief executive, Fraser Whineray,
sees flat demand as the biggest challenge facing the
electricity generator and retailer.
New Zealand's power consumption has been static at around
38-39 billion kilowatt hours a year since 2008 due to a
number of factors.
Plant closures in the high energy use area such as pulp and
paper, subdued economic conditions after the global financial
crisis, better insulation and more efficient electrical
appliances have all weighed on demand.
"The biggest challenges in front of us right now are in the
business environment," Whineray said at news conference
called to announce his appointment.
"We have continued to grow for some time, despite flat demand
because of our positioning in geothermal development which
has displaced other generators," said Whineray, who will take
over from current chief executive Doug Heffernan on September
Whineray said the company had also achieved growth through
innovations at the customer level, such as pay-as-you-go
products and through the rollout of smart meters.
He said he was optimistic about the company's future growth,
which he said would come from a variety of sources but not
through the building of new power stations over the next
three to five years. Electricity for transportation purposes
had huge potential, he said.
"We have a deeply renewable electricity market but a totally
non-renewable transport fuel market," he said. "The
technology will get there at some point but it won't happen
tomorrow," he said.
Mighty River shares, which listed on the share market in May
last year, were issued at $2.50. They debuted strongly on the
NZX at $2.73 but quickly came under downward pressure when
the Labour and Greens released their joint plan to centralise
control of the power market.
The Labour-Greens' plan also weighed on the partial sale of
the state's other generators - Meridian last year and Genesis
Energy this year.
But markets have since become more relaxed as Labour has
continued to fare badly in the opinion polls.
Last month, a Herald DigiPoll survey showed Labour's support
fell by nearly six points to 29.5 per cent. The survey said
National could govern alone with 50.8 per cent if the poll
were translated to an election result.
Asked about the possible change to the system under a
Labour-Greens' administration, Whineray said the sector was a
"very long-term game".
"We have at least 30 electoral cycles in front of this
company and we've had about 30 historically," he said. "I
expect that we'll have to adjust if that change does come to
pass, and adapt to it," he said.
Whineray said the centralised model had in the past resulted
in the construction of the most expensive power stations in
the country, which was unlikely to occur under the current
market-led system with generators exposed to the analytical
rigor of the investment community.
Mighty River chairwoman, Joan Withers, said Whineray was a
"standout candidate" resulting from a global search that
started in 2013.
She said the list of serious candidates were from Australia
and New Zealand and were in the "10s of 10s" in terms of
Whineray will receive a base salary of $850,000 and will also
be eligible to receive short and long-term incentives.
Heffernan announced his intention to step down last year
around the time of Mighty River's initial public offer.
The company's operations include nine hydro stations on the
Waikato River and five geothermal power stations in the
central North Island.
Mighty River's shares traded today at $2.33 and have rallied
sharply since hitting $1.94 on January 30.
New Mighty River Power chief executive: Fraser Whineray:
* Salary : $850,000
* Joined Mighty River Power in 2008.
* Previous employers: Carter Holt Harvey and Credit Suisse
* Experience: Fast moving consumer goods, performance
management, strategy, capital markets and mergers and