New player enters Dunedin power market

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Let there be power . . . Genesis Energy retail manager Dean Carroll (left) and chief executive Albert Brantley, who yesterday announced the electricity generator and retailer was entering the Dunedin market ahead of a wider South Island push. Photo by Gregor Richardson

Genesis chief executive Albert Brantley said the move into the South Island was made possible by the Government reallocating electricity generation assets, in which Genesis will gain Tekapo A and B power stations, its first South Island generation capacity.

He rejected claims by the current operator of those stations, Meridian Energy, that changing control would lead to price rises, because of greater security of supply in dry years.

Mr Brantley said the changes meant southern consumers would have more generators seeking their business, which would keep prices down.

"We don't agree with Meridian. The specific intent of the reforms is to get competition."

Mr Brantley described the results of the ministerial review, which recommended reallocating generation assets, as "very sound", and which the company supported.

As well as shifting control of some generation assets, the reforms required the swap of "virtual assets" or forced companies to generate more electricity for competitors in the island where they did not have capacity, creating an accessible electricity hedge market, and also allowed lines companies back in to retailing.

Legislation putting this in place was before a Select Committee, but Mr Brantley said Genesis was preparing for changes in the sector.

"We see the scene is certainly going to change in the next couple of months and it is up to us to prepare ourselves."

Genesis already has a small South Island presence, with about 100 Dunedin and some rural customers who are members of rural servicing co-operative, CRT.

Transmission issues between and within the two islands meant Genesis previously relied on a hedged market, in which southern generators supplied its customers, but Mr Brantley said it created too great a risk for the company to develop the market from its North Island generation assets.

"In simple terms, we have generation a long way from here," he said in Dunedin yesterday.

Genesis was offering lower prices and other sweeteners to gain market presence, but Mr Brantley said the lower prices were achieved based on a commercial assessment.

"We believe we can make an acceptable margin but we are not giving it away for free."

Retail manager Dean Carroll said Genesis would offer retail prices about $210 a year cheaper than Contact Energy and pledged to hold those prices until "at least" February next year.

After its push into Dunedin, Mr Carroll said the company would target new customers throughout the South Island.