MEL - Meridian Energy

[xafalcon]

You will have exactly the same number of MEL as MELCA on the 30/4/15 but the MELCA won't become MEL until you pay the 50c instalment. Your second paragraph is total rubbish. The first theoretical trading price on the market will simply be 50c higher than the last MELCA share.

Your first sentence is rubbish. You do not have MEL until the extra $0.50 is paid and you can't pay that until 5th?? May at the earliest. You have MELCA until then. You don't have the same number of MELCA and MEL, ever.

[Joshuatree]

Article in stuff - http://i.stuff.co.nz/business/industries/67726996/New-Zealand-Aluminium-Smelters-calls-for-cheaper-power

Excellent thanks huxley. Lots of good info there. I think there is enough uncertainty re whether Tiwai will go sooner or later. That creates uncertainty longer term. Thanks for your thoughts too dingo; I'm not as sure as you are atp. Im surprised there is not more discussion here; investors living in the moment maybe; a little blasé', maybe. with the runup in s/p..

[blackcap]

Your first sentence is rubbish. You do not have MEL until the extra $0.50 is paid and you can't pay that until 5th?? May at the earliest. You have MELCA until then. You don't have the same number of MELCA and MEL, ever.

Its actually quite simple really. You will be able to trade MEL on a delayed delivery basis. If you call your broker to sell MEL and they check your holding and you have none, they will not allow you to sell. Once you have paid the 50 cents per installment receipt and have been allocated your MEL you can then sell them.

[777]

Your first sentence is rubbish. You do not have MEL until the extra $0.50 is paid and you can't pay that until 5th?? May at the earliest. You have MELCA until then. You don't have the same number of MELCA and MEL, ever.

I will say it another way. The number of MEL shares you end up with will be the same number of MELCA shares you had at the 30/4/15. But of course you won't have MELCA once you have MEL.

[Jantar]

I will say it another way. The number of MEL shares you end up with will be the same number of MELCA shares you had at the 30/4/15. But of course you won't have MELCA once you have MEL.
And you won't have any MEL until you pay $0.50 per share.

[xafalcon]

And according to my broker there is currently no way to verify your MEL holding until listing date. So how many MEL do you hold that can be traded on a deferred payment basis from 30 April??? Who keeps count of your trading balance?

If previous MELCA holding is used to establish a theoretical MEL holding, and MELCA is no longer listed (so no current trading balance), and MEL is not yet allocated, what is to stop a dodgy person selling their MEL shares several times over? Buyers may not actually get the shares at the price they thought.

If MEL trading doesn't start after MELCA is removed, what does that do to share price and liquidity? The MEL shares aren't actually allocated until about a week after the payment window closes mid May.

[stoploss]

And according to my broker there is currently no way to verify your MEL holding until listing date. So how many MEL do you hold that can be traded on a deferred payment basis from 30 April??? Who keeps count of your trading balance?

If previous MELCA holding is used to establish a theoretical MEL holding, and MELCA is no longer listed (so no current trading balance), and MEL is not yet allocated, what is to stop a dodgy person selling their MEL shares several times over? Buyers may not actually get the shares at the price they thought.

If MEL trading doesn't start after MELCA is removed, what does that do to share price and liquidity? The MEL shares aren't actually allocated until about a week after the payment window closes mid May.
presumably if they , or a system cannot verify your balance , the trading system will not accept the order .
As to who keeps count of your trading balance , if you are that big that it's a problem hire a lacky ......

[sb9]

Nice divvy in the bank today..some help towards paying the instalments money :t_up:

[Goldendigger]

Good to see the SP back up, been a real roller coaster ride after the instalment payment announcement... Might start seeing some more gains after the repayment due to shorter supply? I can't see many people selling straight after paying 50c.

[Jantar]

Due to the short time allowable for making payments it is conceivable that some will simply not pay, and those shares could appear on the market.

I know that I will likely be travelling in may and I had to check that I would be in a position to receive the details on how to pay within the time period.

[Baa_Baa]

Fwiw, my $ set aside for payment. Very happy to convert to MEL, for the long game.


Due to the short time allowable for making payments it is conceivable that some will simply not pay, and those shares could appear on the market.

I know that I will likely be travelling in may and I had to check that I would be in a position to receive the details on how to pay within the time period.

[Goldendigger]

Fwiw, my $ set aside for payment. Very happy to convert to MEL, for the long game.
Same here, looking forward to having some crisp new MEL shares 😊

[Jantar]

Fwiw, my $ set aside for payment. Very happy to convert to MEL, for the long game.
Same here. It is not the cost that concerned me, but the fact that during part of that payment period 6th - 16th May, I intend to be travelling and may not have access to a computer to retrieve emails and make payments. Fortunately I shall be home on most of those days so can manage OK. But as early payment is not permitted, it is conceivable that some people will be out of the country or unable to access any of the payment methods even though they have the funds ready and want to pay.

[mouse]

Same here. It is not the cost that concerned me, but the fact that during part of that payment period 6th - 16th May, I intend to be travelling and may not have access to a computer to retrieve emails and make payments. Fortunately I shall be home on most of those days so can manage OK. But as early payment is not permitted, it is conceivable that some people will be out of the country or unable to access any of the payment methods even though they have the funds ready and want to pay.

Exactly. A bit like Russia, years ago, or NZ, years ago. Pay when I tell you to pay. Early payment is a crime, punished by losing shares!!! Actually, quite unbelievable.

[Joshuatree]

Article in stuff - http://i.stuff.co.nz/business/industries/67726996/New-Zealand-Aluminium-Smelters-calls-for-cheaper-power

A few points we need to think about in future.

"Electricity demand would require about a decade to recover if Tiwai pt closed a government report says"

"Tiwai used re 13 % of national electricity usage in 2013"

"The ministries modelling suggests that the smelters decision relating to production levels beyond 2017 are finely balanced"

"The smelter can terminate the contract completely from Jan 2017 provided it gives 15 months notice" Oct 2015?

The smelter says it pays some of the highest power prices in the world

"There is still considerable uncertainty about future production and decommissioning the smelter after 2017...."

There are 8 scenarios listed ranging from closure to less MW usage

A positive i wasn't aware of is that the smelter is not old and inefficient but is" one of the most efficient in the world"

Transmission costs also talked about re re being the highest in the world for a smelter.

Transmission costs have gone up but power cheaper than 8 years ago.

[xafalcon]

Has anyone heard any more specific info regarding capital return? There was some mention that it was contingent on Tiwai supply contract continuation, but I have not heard any more about it.

[Snow Leopard]

Same here, looking forward to having some crisp new MEL shares 

Actually they just paint over the 'CA' with correction fluid and then send them back. It is allowing the fluid to dry properly which is the cause of all the delay.

Best Wishes
Paper Tiger

[Goldendigger]

Actually they just paint over the 'CA' with correction fluid and then send them back. It is allowing the fluid to dry properly which is the cause of all the delay.

Best Wishes
Paper Tiger ugh... correction fluid is so tacky, they couldn't afford to re-print them?

[Joshuatree]

CME group Aluminium futures are ,from April 2015 1986.50 with a steady rise to 2386.75 in Mar 2017.
Have no idea whatsoever re accuracy here but the trend looks positive for Tiwai albeit just one strand to factor in.

[Baa_Baa]

Is there an energy sector guru in the house? Could you explain please what is between the lines here.

Tiwai Point aluminium smelter 'squarely in the black'

http://www.stuff.co.nz/business/industries/67896822/tiwai-point-aluminium-smelter-squarely-in-the-black-analyst

After negotiation with Meridian in 2013, the smelter got a price cut on 572MW of supply from 2013 to 2016. But to keep the lower price after that the smelter must cut the amount supplied through the contract to 400MW. It must make that decision by the end of 2015.

On face value it seems to say that the smelter is unlikely to shut shop, that's encouraging; that 572MW (per annum?) energy is committed to be used to retain the special price through 2016; that using 400MW would retain the special price after 2016; therefore freeing up 172MW that MEL can sell into the wholesale market (if there's a market that can absorb it?), at better margins; with that smelter balance of 172MW being distributed to another supplier, Contact maybe, presumably at a special price.

[horus1]

Firstly I think the notification date is 31st of July and it has to be a positive notification, i.e. if they say nothing it drops of . I do not think anyone else can supply at the prices Tiwai want and make aprofit. A domestic customer in NZ pays 26-28c/Kwhr, an industrial about 8- 10 c/Kwhr and tiwai about 3c/Kwhr.after paying for the very high transmission security they have.

[Jantar]

Firstly I think the notification date is 31st of July and it has to be a positive notification, i.e. if they say nothing it drops of . I do not think anyone else can supply at the prices Tiwai want and make aprofit. A domestic customer in NZ pays 26-28c/Kwhr, an industrial about 8- 10 c/Kwhr and tiwai about 3c/Kwhr.after paying for the very high transmission security they have.
Those numbers appear accurate. But a consumer has the network and transmission costs hidden in that 26 - 28 c/kwh (Wish we could it that cheap in Central Otago), whereas the commercial users pay those network and transmission costs seperately. I would be very surprised if any other company will step in and supply Tiwai with energy as cheap as they wish. Only Meridian have a hope of supplying at those low prices.

[Baa_Baa]

Those numbers appear accurate. But a consumer has the network and transmission costs hidden in that 26 - 28 c/kwh (Wish we could it that cheap in Central Otago), whereas the commercial users pay those network and transmission costs seperately. I would be very surprised if any other company will step in and supply Tiwai with energy as cheap as they wish. Only Meridian have a hope of supplying at those low prices.

Interesting, do you mind me filling some gaps? I think you're implying that MEL is more likely to retain the whole supply contract, than the balance of 172kw going elsewhere, assuming the smelter doesn't bail out, and if that's the case nothing changes?

It does seem unlikely that another company can or will materialise a 172kw excess to supply the smelter at a heavy discount to wholesale (there's two big leaps of faith there), creating the opportunity for MEL to on sell existing 172kw capacity overage at a premium on the current price they get from the smelter.

Is this all a storm in a teacup?

disc: holding MELCA soon to be MEL

[Jantar]

Interesting, do you mind me filling some gaps? I think you're implying that MEL is more likely to retain the whole supply contract, than the balance of 172kw going elsewhere, assuming the smelter doesn't bail out, and if that's the case nothing changes?....

I wouldn't like to speculate on what the smelter might do. I suspect Meridian would be happy if the smelter decide to reduce their operation by 1 potline and come down to 400 MW.

[Joshuatree]

I wouldn't like to speculate on what the smelter might do. I suspect Meridian would be happy if the smelter decide to reduce their operation by 1 potline and come down to 400 MW.

That sounds like a great win/win scenario jantar.
There does look like there will be some uncertainty leading up to the 31st of july(closer than many of us thought) which may affect the s/p.
Great to get some discussion here at last guys;thank you:)

[horus1]

Jantar . Those prices are for energy only. It shows how domestic customers are being ripped off. When batteries arrive it all changes. Generator/retailer shares are VERY risky

[Joshuatree]

Hadn't considered batteries in the short to medium term.Do you mean like Batteries storing cheaper night energy to use during the day?Can you give any more info there horus and what time frame are you talking about; cheers JT

[Jantar]

Jantar . Those prices are for energy only. It shows how domestic customers are being ripped off. When batteries arrive it all changes. Generator/retailer shares are VERY risky
The prices for Tiwai and industrial users are indeed energy only, but the retail prices include the network and transmission charges. There are only two areas in all of New Zealand where retail customers pay their network charges sperately from their main supplier's bill. However major industrial users are billed seperately, and even smaller industrial users have their network charges shown seperately on their bill.

As for battery technology making gentailer shares risky, I'm very happy to take that risk for another decade at least.

[xafalcon]

Cheap, long life, high capacity, safe electricity storage batteries will promote distributed generation domestic electricity self-sufficiency. Not cheap or long life atm. Watch for progress on the aluminium battery in the news recently. Medium-long term scenario 10-25yr imo

[Harvey Specter]

Hadn't considered batteries in the short to medium term.Do you mean like Batteries storing cheaper night energy to use during the day?Can you give any more info there horus and what time frame are you talking about; cheers JTNo - hooked upto solar so that you use teh suns energy when you are actually at home. Vector Trialed it but has pulled the plug waiting for battery costs to come down.

http://www.stuff.co.nz/business/industries/9697467/Sun-shines-on-Vector-roll-out

[Baa_Baa]

Thanks for your posts and answers to my questions last night, much appreciate you sharing your insights here Jantar. Cheers, BAA


The prices for Tiwai and industrial users are indeed energy only, but the retail prices include the network and transmission charges. There are only two areas in all of New Zealand where retail customers pay their network charges sperately from their main supplier's bill. However major industrial users are billed seperately, and even smaller industrial users have their network charges shown seperately on their bill.

As for battery technology making gentailer shares risky, I'm very happy to take that risk for another decade at least.

[blackcap]

No - hooked upto solar so that you use teh suns energy when you are actually at home. Vector Trialed it but has pulled the plug waiting for battery costs to come down.

http://www.stuff.co.nz/business/industries/9697467/Sun-shines-on-Vector-roll-out

Isn't the problem with that that we (people) generally are not home during the day? Ie we use the most energy when the sun is actually gone?

[RTM]

With respect to solar...and I am repeating myself so apologies. It isn't necessary to make power. Much of the power we use goes into hot water heating. So another way to skin the cat is simply to put in a solar water heating system. Works a treat. We have not heated any water at all using power since before Christmas.

[fish]

With respect to solar...and I am repeating myself so apologies. It isn't necessary to make power. Much of the power we use goes into hot water heating. So another way to skin the cat is simply to put in a solar water heating system. Works a treat. We have not heated any water at all using power since before Christmas.

not everyone lives in kerikeri-when did you last have a whole day of rain ?

[Joshuatree]

I remember Roger checking out solar pretty thoroughly and his conclusion was it still doesn't stack up.And some expensive components need replacing quite regularly. Batteries a way off still imo. We hear about super duper new tech ones often ; which disappear without trace.Come in Roger.

[Harvey Specter]

Isn't the problem with that that we (people) generally are not home during the day? Ie we use the most energy when the sun is actually gone?Exactly. Solar panels charge the battery during the day and then the battery powers the home during the night. The issue is that batteries are expensive, especially when you already have a grid tied home (if you are off grid, it can make sense depending on the cost of connection).

It has the added benefit of seamless battery backup in the event of a power cut. Did you know that normal grid tied solar disconnects itself from your house as a safety measure in the event of a power cut - so even if sunny, you have no power!

[Harvey Specter]

I remember Roger checking out solar pretty thoroughly and his conclusion was it still doesn't stack up.And some expensive components need replacing quite regularly. Batteries a way off still imo. We hear about super duper new tech ones often ; which disappear without trace.Come in Roger.Its getting very close to parity but that requires good sun exposure (and sun) and it is hard to model the replacement parts (inverter life is shorter than panels and panels diminish over time - the 25 year warranty is only for 80% of original generation). You also cant forsee what the future power prices will be, nor the opportunity cost should have a system and improved technology comes out.

I note Elon Musk (or Tesla and Solarcity (the US one, not NZ) fame, and Paypal!) is building a huge battery plant to reduce the cost of batteries significantly.

[RTM]

not everyone lives in kerikeri-when did you last have a whole day of rain ?

We last filled our tanks just before Christmas. However your comment equally applies to trying to make power and store it from solar.
Heating water is cheap, its a cheap way to store energy rather than converting solar to electricity....and then using the electricity to heat water.

[Poet]

Solar Power is now firmly on the Moore's law curve and prices for the panels will come down exponentially from here. Installation costs will rise though. Don't be surprised if basic panel costs are 80% lower than they are now in ten years time.

Batteries, not so much. There is probably a 50% improvement available in the theoretical performance given existing commercial technology (NMC) and elon musk might bring the price down with mass production but will need a paradigm shift to get these on to Moore's curve.

Cost of traditional grid power is only going one way

Overall though, ten years from now these power co's wil be seriously disrupted and struggling.

[westerly]

If you are building a house solar water heating makes sense to me.

westerly

[BlackPeter]

If you are building a house solar water heating makes sense to me.

westerly

It does if you are happy to pay a premium for the environment. We installed a solar hot water system (coupled with a wet back on our log burner) 5 years ago. Works fine, and no need to supplement with electricity on sunny days. Obviously in winter the wetback does its job ... the most problematic times are overcasted but warm days in summer / autumn (nothing but electricity to heat the water ...).

However if I look at the cost of the system - and the annual payback in reduced power bills - than you look at a roughly 15 years payback period (without considering any interest ...). Investing the money in power generator shares and using the dividends to pay the electricity bill makes more financial sense, but hey ... this way we can feel like Greenies:p

[PSE]

It does if you are happy to pay a premium for the environment. We installed a solar hot water system (coupled with a wet back on our log burner) 5 years ago. Works fine, and no need to supplement with electricity on sunny days. Obviously in winter the wetback does its job ... the most problematic times are overcasted but warm days in summer / autumn (nothing but electricity to heat the water ...).

However if I look at the cost of the system - and the annual payback in reduced power bills - than you look at a roughly 15 years payback period (without considering any interest ...). Investing the money in power generator shares and using the dividends to pay the electricity bill makes more financial sense, but hey ... this way we can feel like Greenies:p

Yup I agree people need to consider cost of debt BP, buying MELCA at $1 was better now I would be a seller if I had any left. Paying a steep price for a no growth business I blinked a long time ago.
Harvey Specter the other important risk of installing panels now is if the power companies refuse further offset
subsidies (I.e letting people get 27c for a kWh which would wholesale at 6c, which they will do if there is significant uptake.
Poet computer processors doubled in speed regularly as transistor gates got thinner and thinner until the quantum mechanical tunnelling limits were reached and they started needing crazy cooling systems.
If you think solar panels will follow similar exponential growth, what is the mechanism and it's limiting factors.

[Sideshow Bob]

BP - was that a new build or existing house you installed solar to? I think Westerley was probably driving at the fact that easiest/ perhaps most economical to install when building new.

[Harvey Specter]

Harvey Specter the other important risk of installing panels now is if the power companies refuse further offset
subsidies (I.e letting people get 27c for a kWh which would wholesale at 6c, which they will do if there is significant uptake.

I thought they had all dropped their price. Agree don't expect anymore than 8c going forward.

For new builds definitely design for solar hot water, retro PV and passive solar heating. Basic design shouldn't increase the build cost at all.

[Poet]

Yup I agree people need to consider cost of debt BP, buying MELCA at $1 was better now I would be a seller if I had any left. Paying a steep price for a no growth business I blinked a long time ago.
Harvey Specter the other important risk of installing panels now is if the power companies refuse further offset
subsidies (I.e letting people get 27c for a kWh which would wholesale at 6c, which they will do if there is significant uptake.
Poet computer processors doubled in speed regularly as transistor gates got thinner and thinner until the quantum mechanical tunnelling limits were reached and they started needing crazy cooling systems.
If you think solar panels will follow similar exponential growth, what is the mechanism and it's limiting factors.

You are right Moore's law is somewhat faster than we might expect for solar - turns out there is Swanson's Law with a somewhat lower exponent than Moore - here is a nice article from the economist. This article pretty much looks at price trends for silicon wafer technologies - there is also currently a lot of effort, with some success, going into organic alternatives and other more exotic technologies such as perovskites.

http://www.economist.com/news/21566414-alternative-energy-will-no-longer-be-alternative-sunny-uplands

[Poet]

Here is a nice article on the possible disruptor technology

http://cen.acs.org/articles/92/i8/Tapping-Solar-Power-Perovskites.html

"Almost overnight, researchers catapulted the conversion efficiency of perovskite solar cells from a few percent to more than 16%. “It’s tough to predict where this technology will end up,” Snaith says, but it certainly has “the right ingredients” to deliver exceptional efficiencies at the lowest possible cost.
He adds, “So long as we can improve the stability of this technology, I would say we are witnessing the emergence of a contender for ultimately low-cost solar power.”

[Baa_Baa]

In the meantime, MEL will continue to make profits and disperse the excess to investors, who will be happy to hold this excellent company for the foreseeable future, regardless of all the sideshows and maybe's.

[PSE]

In the meantime, MEL will continue to make profits and disperse the excess to investors, who will be happy to hold this excellent company for the foreseeable future, regardless of all the sideshows and maybe's.
Agreed it is an outstanding set of assets the state hydro department built but selling for a stupidly high price almost certainly a recipe for low or negative long term returns.
The yield is now down to the bank rate (or close to). I admit the strong balance sheet and the fact that the depreciation is really an accounting fiction as the assets don't need to be replaced (or do they?) means they can pay out . Nonetheless the price is predicated on everything going right, I like to see dividends paid from profit - in which case MEL would be paying even less right.
In reality nothing ever follows a smooth path into the future as analysts so confidently predict. If you are taking all the free cash flow out of a business and still getting around the bank rate you are not being compensated for the risk pf investing in a business, subject to normal vaguaries and vicissitudes.
Don't say I didn't warn y'all, there may be an even bigger sucker to buy the shares off you for a higher price but don't kid yourself that this is investing.
May as well go hit up the blackjack table, at least you get free drinks while they clean out your bank balance.

[PSE]

Recycle your capital into something unloved and underappreciated people. Always be nervous following the crowd, the safe bets are in things analysts hates - with the very important caveat that the business needs to be sound.
I am not a financial adviser giving advice, just stating what I have done and why.
I was loving this company at 90c - an outstanding company is a losing investment when you pay too much people. I will see if I can think of some more fun ways to lose money - there most be heaps.

[PSE]

Here is a nice article on the possible disruptor technology

http://cen.acs.org/articles/92/i8/Tapping-Solar-Power-Perovskites.html

"Almost overnight, researchers catapulted the conversion efficiency of perovskite solar cells from a few percent to more than 16%. “It’s tough to predict where this technology will end up,” Snaith says, but it certainly has “the right ingredients” to deliver exceptional efficiencies at the lowest possible cost.
He adds, “So long as we can improve the stability of this technology, I would say we are witnessing the emergence of a contender for ultimately low-cost solar power.”

Thanks poet, this stuff is not a sideshow but long term a thing for Meridian to be aware of.
I will look into it but sounds to me like still stuff in the lab, there was great promise for nanotech to continue Moore's law but I can't see it happening. Having said that there was not really a need for computers to get faster.
Will stop bothering the Meridian thread on that one though but to say that if we are relying on a disruptive technology emerging then reason and experience would say there are at least no guarantees.

[PSE]

I thought they had all dropped their price. Agree don't expect anymore than 8c going forward.

For new builds definitely design for solar hot water, retro PV and passive solar heating. Basic design shouldn't increase the build cost at all.

Yes they dropped their price for excess sold back to the grid last year, SolarCity responded by offering panels that will offset consumption only. People may have bought the systems expecting to offset their consumption long term and if so they will get a shock when the gentailers decide to stop paying this second stage of subsidy, which they should do and the sooner the better in my view.
Subsidies on non-economic systems are a crime against the consumer who has to pay more than they should.
To clarify, the grid is built for peak demand and until you disconnect completely you are still incurring costs for the lines companies, who will be sizing their gear to cover your happily oblivious selves during your peak demand acooking your dinner after the sun goes down in winter.
It's obvious to me but of course not so I guess for people who just throw the switch and see the lights go on. Which is as it should be.

[Harvey Specter]

Subsidies on non-economic systems are a crime against the consumer who has to pay more than they should.Agree.

The retailers are subsidising them by paying to high a buy back rate.
The lines companys are (reluctantly) subsidising them as there consumption is lower but they are still added to peak demand which lines companies have to build for. Not only that they have to over invest in the network as solar feed in stuffs up the network harmonics which they have to correct. It is for this reason some places restrict solar panels (Florida has banned solar feed in and Hawaii requires line company approval which they are reluctant to give).

EDIT: this is the story re Hawaii blocking solar grid feed: http://mobile.nytimes.com/2015/04/19/business/energy-environment/solar-power-battle-puts-hawaii-at-forefront-of-worldwide-changes.html

[Joshuatree]

The Alu elephant in the room, July the 31st (notification date) is suddenly looming close. Will be very int to see what happens s/p wise with this uncertainty.

[xafalcon]

Agree.

The retailers are subsidising them by paying to high a buy back rate.
The lines companys are (reluctantly) subsidising them as there consumption is lower but they are still added to peak demand which lines companies have to build for. Not only that they have to over invest in the network as solar feed in stuffs up the network harmonics which they have to correct. It is for this reason some places restrict solar panels (Florida has banned solar feed in and Hawaii requires line company approval which they are reluctant to give).

EDIT: this is the story re Hawaii blocking solar grid feed: http://mobile.nytimes.com/2015/04/19/business/energy-environment/solar-power-battle-puts-hawaii-at-forefront-of-worldwide-changes.html

Relax. There is no retailer subsidisation going on with PV solar. $0.08/kWhr is the average Otahuhu wholesale rate. Yes, the lines company is able to price gouge a teeny-tiny fraction less, which is a good situation. The fierce battle to "protect" the consumer from electricity cost breakdown illustrates how much profit is at stake. All grid tied inverters must conform to standards specified by the lines companies. If their specification is inadequate and causes problems with their existing network infrastructure, that is not the fault or responsibility of the consumer/installer. All grid tied distributed generation in NZ requires both lines company and retailer approval before authority to connect is granted.

Consumer ROI for distributed generation PV solar is way below what generators/retailers/lines companies are acheiving with their investments. And the real kicker is that if the cost of electricity to the domestic consumer was more realistically priced, it would make PV solar ROI even less and supress installation. The companies (lines in particular) involved are actually causing the movement to distributed generation because their pricing is crazy. This is well illustrated by most other countries needing to provide true (installation-type) subsidies to make PV solar worthwhile.

I am not a greeny, I hold shares in most power companies, I buy all my power from one of them, and do not have any distributed generation (PV solar or other) capability.

[Harvey Specter]

Relax. There is no retailer subsidisation going on with PV solar. $0.08/kWhr is the average Otahuhu wholesale rate. Average, or daytime average. Definitely more realistic than the 25c previously paid by one, though I think some still give good rates for the first few kw per day.


Yes, the lines company is able to price gouge a teeny-tiny fraction less, which is a good situation. Lines companies make a regulated return so if the solar owner isn't paying their fair share for the peak demand infrastructure, then someone else is. The lines company is ambivalent.


All grid tied inverters must conform to standards specified by the lines companies. If their specification is inadequate and causes problems with their existing network infrastructure, that is not the fault or responsibility of the consumer/installer. All grid tied distributed generation in NZ requires both lines company and retailer approval before authority to connect is granted.Yes they are approved but how long ago was that. It isn't an issue now when you have one solar user per suburb but if everyone on the street has solar, you will get network issues on a sunny day with intermittent cloud as as feed in power spiked and plummets. Getting new standards through the EA is also an issue, especially since the good inverters cost a lot more.

[horus1]

The retailers are on to a good thing in the short term, buy back at 8c/Kwhr sell to next door neighbour at 28c/Kwhr but long term destroys them. the trouble is that with solar and batteries the peak demand reduces with customers effectively becoming generators. As you know generators do not pay for any transmission charges , it is all loaded onto the other customesr, if that continues going up the customers will leave the grids. Years ago there was a policy in Transpower called the Glide path which forsaw this situation but it was abandoned and transpower know has a grid heavily overbuilt and over capitilised. So the shareholders throughout the total electricity industry will have to take Substantial writedowns on their assets in the future when batteries arrive.

[xafalcon]

Average, or daytime average. Definitely more realistic than the 25c previously paid by one, though I think some still give good rates for the first few kw per day.

Lines companies make a regulated return so if the solar owner isn't paying their fair share for the peak demand infrastructure, then someone else is. The lines company is ambivalent.

Yes they are approved but how long ago was that. It isn't an issue now when you have one solar user per suburb but if everyone on the street has solar, you will get network issues on a sunny day with intermittent cloud as as feed in power spiked and plummets. Getting new standards through the EA is also an issue, especially since the good inverters cost a lot more.

Sorry, I don't know how to multi-quote you

In the order you raised them

- eye-ball yearly average of the past 12 month. Heywoods and Benmore similar. The price is reasonable for both parties. There are zero "bonus rate" kWhrs with TrustPower or Meridian (I did not seek info from any others, but would doubt any do)

- fair share is a great term to use for lines charges. Everybody is paying way more than their fair share. Just because something is regulated does not make it "fair". With such low ROI for distributed generation, nobody in their right mind would currently build a system that feeds anything meaningful back into the grid. All "years to repay" are based on offsetting demand at retail prices ($0.28/kWhr), not feeding back into the grid for $0.08/kWhr. Hence the "economic analysis based" PV solar generator does pay their fair share of lines charges because they are almost always using electricity from the grid. The problem is with associating lines/network charges with a unit of electricity. It should be a fixed charge per point of supply, not a variable charge, unless time of use is also included for everyone in NZ. This is not the fault of the distributed generator

- electricity users pay a lines charge for the network infrastructure, which funds the changing needs of the network - expansion, new technology, connecting new places of generation etc. Distributed generation is just another change that needs to be factored in. The more distributed generation PV solar there is, the more the output is averaged, exactly like commercial wind generation, but on a much smaller and less significant scale.

The inescapable fact is that the combined companies that supply especially domestic users with electricity are charging way too much, and the market (the consumer) is reacting with cheaper alternatives. This will accelerate until the pricing issue is resolved, or a tipping point is reached with distributed generation storage capacity and cost (batteries).

The fact this PV solar uptake is happening in NZ without subsidies, where other countries need to heavily subsidise to get penetration, is clear evidence of a pricing problem in NZ

[stoploss]

Sorry, I don't know how to multi-quote you

In the order you raised them

- eye-ball yearly average of the past 12 month. Heywoods and Benmore similar. The price is reasonable for both parties. There are zero "bonus rate" kWhrs with TrustPower or Meridian (I did not seek info from any others, but would doubt any do)

- fair share is a great term to use for lines charges. Everybody is paying way more than their fair share. Just because something is regulated does not make it "fair". With such low ROI for distributed generation, nobody in their right mind would currently build a system that feeds anything meaningful back into the grid. All "years to repay" are based on offsetting demand at retail prices ($0.28/kWhr), not feeding back into the grid for $0.08/kWhr. Hence the "economic analysis based" PV solar generator does pay their fair share of lines charges because they are almost always using electricity from the grid. The problem is with associating lines/network charges with a unit of electricity. It should be a fixed charge per point of supply, not a variable charge, unless time of use is also included for everyone in NZ. This is not the fault of the distributed generator

- electricity users pay a lines charge for the network infrastructure, which funds the changing needs of the network - expansion, new technology, connecting new places of generation etc. Distributed generation is just another change that needs to be factored in. The more distributed generation PV solar there is, the more the output is averaged, exactly like commercial wind generation, but on a much smaller and less significant scale.

The inescapable fact is that the combined companies that supply especially domestic users with electricity are charging way too much, and the market (the consumer) is reacting with cheaper alternatives. This will accelerate until the pricing issue is resolved, or a tipping point is reached with distributed generation storage capacity and cost (batteries).

The fact this PV solar uptake is happening in NZ without subsidies, where other countries need to heavily subsidise to get penetration, is clear evidence of a pricing problem in NZ

Yep , so the smelter closing would be a benefit to all , a cut in the price we all pay for domestic power ...It might even increase demand at the lower price so , overall there would be no loss to Meridian .

[horus1]

You are completely correct

[xafalcon]

Yep , so the smelter closing would be a benefit to all , a cut in the price we all pay for domestic power ...It might even increase demand at the lower price so , overall there would be no loss to Meridian .

I don't think the Tiwai Point smalter closing would be a benefit to all.

Power company shareholders (the Mums & Dads the government promoted the IPO towards), regardless of the company, would get hammered. MEL more so due to HVDC link transmission constraints. Those nice dividends that we & the government enjoy would be slashed and the SP would head south effecting NZ Super fund. Bluff and Southland economies would get hammered, thousands of jobs would be effected directly or indirectly, social welfare costs increase, all when the Chch rebuild is starting to wind down. It would be a major economic shock in 2017 if the smelter were to close. Bill's surplus would be gone, and it's an election year

The smelter is not the problem. The real problem is the huge difference in electricity price paid by the smelter v's Joe Bloggs (domestic supply profit much much greater than Tiwai supply profit [if there is any]), and the individual cost components being hidden in domestic kWhr pricing (allows each cost contributor to point the finger at someone else, accountants are very good at that).

My read is that those 3 new transformers currently being installed are a sign that the smelter isn't closing anytime soon, but the shift towards distributed generation will slowly accelerate because no company on the supply side will voluntarily reduce their margins, and there was such fierce industry opposition to separating out the individual cost components of the kWhr price (even though they already do it for large commercial customers). However this PV solar is a long game, due to high entry cost of distributed generation. ie. $6k investment for a tiny 1.5kW system

[PSE]

xrfalcon and Harvey Specter on the same sheet, we need the research for cheap solar panels and batteries and once this is in place we can start the glide path and wean ourselves off the big grid.
I think the gentailers are sharing the additional costs among consumers and they should stop doing that as they will put the price up I suspect it is the media that would kill them as they are well hated by the public becuase privatisation has proved so much more expensive.
The glide path will never work in NZ of course because we have an islanded network and our peak demand is in the cold winter, a sharp comparison to the intercontinental united states grid for example which is much stronger and has peak demand in summer for airconditioning load.

[PSE]

I don't think the Tiwai Point smalter closing would be a benefit to all.

Power company shareholders (the Mums & Dads the government promoted the IPO towards), regardless of the company, would get hammered. MEL more so due to HVDC link transmission constraints. Those nice dividends that we & the government enjoy would be slashed and the SP would head south effecting NZ Super fund. Bluff and Southland economies would get hammered, thousands of jobs would be effected directly or indirectly, social welfare costs increase, all when the Chch rebuild is starting to wind down. It would be a major economic shock in 2017 if the smelter were to close. Bill's surplus would be gone, and it's an election year

The smelter is not the problem. The real problem is the huge difference in electricity price paid by the smelter v's Joe Bloggs (domestic supply profit much much greater than Tiwai supply profit [if there is any]), and the individual cost components being hidden in domestic kWhr pricing (allows each cost contributor to point the finger at someone else, accountants are very good at that).

My read is that those 3 new transformers currently being installed are a sign that the smelter isn't closing anytime soon, but the shift towards distributed generation will slowly accelerate because no company on the supply side will voluntarily reduce their margins, and there was such fierce industry opposition to separating out the individual cost components of the kWhr price (even though they already do it for large commercial customers). However this PV solar is a long game, due to high entry cost of distributed generation. ie. $6k investment for a tiny 1.5kW system
xafalcon, am I hearing the gentailers can't end their subsidy for offsetting solar?. Surely they could have an additional charge for solar connections and this is what they will do at some point, before too much more money is wasted?
Subsidies for industry are bad news and not good for all when ended but neccesssary to be done gradually. My feeling is that Tewai will be in negotiation with the thermal stations and if agreement can be reached a CCGT may not need to be mothballed.
I don't think I need to analyse the market to prevent overcapacity, that's what markets do best - probably a flat wholesale market for a few years but no crisis. Maybe will trigger losses for people who paid to much for gentailers but a fool and their money are soon parted.

[Joshuatree]

Courtesy of Huxley on genesis thread. Tiwai point made $74 million profit last year

http://i.stuff.co.nz/business/indust...ugh-conditions (http://i.stuff.co.nz/business/industries/68003103/Tiwai-Point-profitable-despite-tough-conditions)

[Baa_Baa]

You might be right, in the long game, who knows really (or cares)? Meantime MEL are amongst the best investments on the market right now. Pontificating about solar isn't going to change the immediate facts, and even yourself has admitted IPO holders at their buy price are in the money.


xrfalcon and Harvey Specter on the same sheet, we need the research for cheap solar panels and batteries and once this is in place we can start the glide path and wean ourselves off the big grid.
I think the gentailers are sharing the additional costs among consumers and they should stop doing that as they will put the price up I suspect it is the media that would kill them as they are well hated by the public becuase privatisation has proved so much more expensive.
The glide path will never work in NZ of course because we have an islanded network and our peak demand is in the cold winter, a sharp comparison to the intercontinental united states grid for example which is much stronger and has peak demand in summer for airconditioning load.

[Joshuatree]

Being one of only two smelters in the world to produce"ultra high purity aluminium" has to create some sort of premium i guess. And re the future pricing of ALU (on geniuses thread) arguments for higher and lower pricing creates the uncertainty (until July 1?)that mkts don't like.
Re Tiwai going on about the super high transmission costs, i guess its because they are the only ones using that particular infrastructure; no one else to share the costs with.

The expensive task of rehabilitating Tiwai point ; 100's of millions of $?. One more reason to stay operating.

[Harvey Specter]

Being one of only two smelters in the world to produce"ultra high purity aluminium" has to create some sort of premium i guess. Not necessarily but unless you own the other one, you cant really close it down without major impacts on the market (assuming people acutally want ultra high purity) which would cause someone to start up a new one???

Plus remember they have to pay half a Billion remediation costs if they close. They wont be looking at short or even medium term prices. They will be looking long term.

[Joshuatree]

Yes agree with that as said in my post. July the 1st a storm in a teacup maybe.

"The expensive task of rehabilitating Tiwai point ; 100's of millions of $?. One more reason to stay operating.[/QUOTE] JOSH

[Rep]

At the IPO price incl the instalment to be paid, the yield is pretty reasonable and represents a good rate of return to compensate for the earnings risk associated with the Tiwai Point supply contract.

Medium term, despite the adoption of technology, I can't see that consumption of electricity per capita is going to reduce. LED lighting uses less electricity but when you start getting used to that level of light in every room you end up using more power, for every PV advancement - there's another step toward more electric vehicles and I've lost count of the number of devices that seem to require charging daily. Add an Apple Watch instead of a quartz or the automatic one I still wear and that's another increment. Our McMansion has heat pumps which are efficient but we used to make do with wearing more clothes and a thicker duvet on the bed in winter...

Add to the overall drift upwards in population growth, then unless something really disruptive comes along to wean householders away from using it as electricity did to coal ranges - then medium term we are still going to be relying on the gentailers for a while longer....

[PSE]

Baa baa IPO holders will be in the money if they sell, which they should do while the price is high.
Otherwise it is a profit on paper only.
Solar will adversely affect the gentailers profits due to the misalocation of capital into an uneconomic source and they should stop the waste. Will always need the grid in NZ.

[Baa_Baa]

PSE with respect, I took your point to be about ROE, which at the IPO price if held until your doomsday scenario, will be a nice earner for the patient investor. There have already been significant dividends paid out, which will stop if the shares are sold. The capital gain is immaterial as you say unless it is realised by selling the shares. The current price is declining back to being a reasonable earner, if not as appealing as the IPO, hence yield investors interest will increase. I doubt many MEL investors are particularly concerned about solar energy threatening their investment anytime soon, but JMHO.
Cheers
BAA


Baa baa IPO holders will be in the money if they sell, which they should do while the price is high.
Otherwise it is a profit on paper only.
Solar will adversely affect the gentailers profits due to the misalocation of capital into an uneconomic source and they should stop the waste. Will always need the grid in NZ.

[PSE]

Baa fair enough, solar is very long term.
Speculators for yield may buy at $1.90 but investors have recycled their investment into more reasonably priced companies. The yield is misleading as it is free cashflow not profit so is not attractive for a no growth investment like MEL.

[airedale]

The performance of MELCA as we reach the point where holders must pay up another 50 cents is interesting. Usually the price of the head shares {melca in this case} drop and then become volatile as investors sell to raise funds for the next instalment. Not in this case, which suggests that the market is happy to pay up and hold the shares.

[dingoNZ]

mainly because the selldown has already happened, down from above $2.10 to where we are now, tells me Mr. Market needed funds to pay the $0.50

[Baa_Baa]

Baa fair enough, solar is very long term.
Speculators for yield may buy at $1.90 but investors have recycled their investment into more reasonably priced companies. The yield is misleading as it is free cashflow not profit so is not attractive for a no growth investment like MEL.

I'm not sure how yield can be misleading, yield is simply a mathematical calculation. The lower the share price, the more attractive the yield becomes, particularly for a company with free cashflow that accumulates in a low/no growth investment, which is paid out as dividends to shareholders. The yield may never be better than it is/was for IPO buyers, but there will be plenty of kiwi investors interested in the yield opportunity as MEL's share price declines to a mathematical attraction. Not everyone here is fixated with company growth, if they are they probably wouldn't be looking at the energy sector. These energy company's just make a lot of money over and above that which is required to run the company and pay out a handsome percentage to investors. Is that the definition of a yield play?

[Baa_Baa]

mainly because the selldown has already happened, down from above $2.10 to where we are now, tells me Mr. Market needed funds to pay the $0.50

Portraying the IPO's as 'needy' for cash is just one perspective. Another viewpoint may be that it was prudent to sell a very small percentage of shares which had reached speculative prices, in order to fund the instalment which will keep the investor in the yield game for the long run. JMHO.

[PSE]

I'm not sure how yield can be misleading, yield is simply a mathematical calculation. The lower the share price, the more attractive the yield becomes, particularly for a company with free cashflow that accumulates in a low/no growth investment, which is paid out as dividends to shareholders. The yield may never be better than it is/was for IPO buyers, but there will be plenty of kiwi investors interested in the yield opportunity as MEL's share price declines to a mathematical attraction. Not everyone here is fixated with company growth, if they are they probably wouldn't be looking at the energy sector. These energy company's just make a lot of money over and above that which is required to run the company and pay out a handsome percentage to investors. Is that the definition of a yield play?
My point is that a yield paid out of profit is not the same as a yield paid out of free cash flow.
A hypothetical company could make more profit than MEL but have a lower yield and an improving balance sheet, shareholders shouldn't penalise it for that.
If the market just considers yield they are being too hasty.
Yield play argument, this comes down to the next punter will pay more for it than I did. Maybe so but I am out for the count - not my game.

[percy]

Interestingly enough MELCA shares have gone up 61.02% during the past year while TPI have dropped 29.52%.

[PSE]

Interestingly enough MELCA shares have gone up 61.02% during the past year while TPI have dropped 29.52%.
Sorry I should stick to MELCA.

[Joshuatree]

Suggest you refresh the TPI thread PSE .

[Joshuatree]

The performance of MELCA as we reach the point where holders must pay up another 50 cents is interesting. Usually the price of the head shares {melca in this case} drop and then become volatile as investors sell to raise funds for the next instalment. Not in this case, which suggests that the market is happy to pay up and hold the shares.

Last day today to sell if one doesn't want to pay the 50c i believe. Agree s/p holding up ,hunt for yield maybe.

[McGyro]

Interesting to see if the shares jump straight up the extra 50 cents or take some time to make a new platform.

[sb9]

Interesting to see if the shares jump straight up the extra 50 cents or take some time to make a new platform.

My presumption is that they add 50c to today's closing price and start trading under new ticker "MEL" and let the market do its thing from there....happy to be corrected though.

[Joshuatree]

Nice runup today as i was hoping; have sold enough to pay for instalments and to plan a little for poss uncertainty re tiwai pt announcement on July 1 or 31

[Joshuatree]

No sales yet for MEL .Buy $2.43 , Sell $2.49.

[sb9]

Yeah, don't think anyone would want to sell than $2.50 me thinks....time will tell. I think this will be close to $2.75 very soon in my opinion.

[sb9]

Well, first trade gone thro at $2.49...

[rayonline]

Just a question, I bought some MELCA shares just late last year. I don't need to pay 50c more right?

Disregard ..

Please find attached a copy of an NZX Appendix 7 detailing the final
instalment of 50 cents (NZD) per share to be paid on 15 May 2015 by those
shareholders on the company's share register as at 4 May 2015.
End CA:00263026 For:MEL Type:APPNDX7 Time:2015-04-13 14:51:03

[Jantar]

Just a question, I bought some MELCA shares just late last year. I don't need to pay 50c more right?

Disregard ..

Please find attached a copy of an NZX Appendix 7 detailing the final
instalment of 50 cents (NZD) per share to be paid on 15 May 2015 by those
shareholders on the company's share register as at 4 May 2015.
End CA:00263026 For:MEL Type:APPNDX7 Time:2015-04-13 14:51:03

Yes, you got it. You do need to pay an extra $0.50 per share, but the share did go up by more than that today, :t_up:

[rayonline]

I bought MELCA on the market via ASB. How do they charge us? Do we get invoiced or do we need to keep some funds in our management account or .. ?

[Jantar]

My understanding is that we get invoiced this coming week, and we have from the 6th to the 16th to pay.

[silu]

The e-mail just got out. I assume they were sent by mail as well. Paying by direct debit was as easy as.

[blackcap]

The e-mail just got out. I assume they were sent by mail as well. Paying by direct debit was as easy as.

Yeah that was painless. All you need was your CSN (and postcode). Just be aware that the money gets debited on the 16th May so that you have enough funds.

[Jantar]

The e-mail just got out. I assume they were sent by mail as well. Paying by direct debit was as easy as.
+1. Nice and quick.

[Sideshow Bob]

I haven't received an email and nothing by post. Will look to contact Monday as from my perspective a shambles.

Receive other computershare info by email - can't have elected it for MEL(CA).

[Baa_Baa]

Letter arrived here yesterday. Thought I was on email as well though.

[percy]

I was in panic mode yesterday morning as I had not had mail or email from the registry,and I am heading away on Sunday for a book selling trip to Dunedin.
All turned out well as both mine and the wife's notification turned up in the post,and I did both our payments online .

[Sideshow Bob]

I was in panic mode yesterday morning as I had not had mail or email from the registry,and I am heading away on Sunday for a book selling trip to Dunedin.
All turned out well as both mine and the wife's notification turned up in the post,and I did both our payments online .

Many thanks for the reassurance Percy and Baa Baa.

Post arrived this afternoon, and once had the notification it was very easy.

[blackcap]

Letter arrived here yesterday. Thought I was on email as well though.

Still ridiculous from the company and registry though isnt it. Leaves little time and for most retail investors who are not initiated in the workings of the sharemarket this is not good enough. My partner who dabbles occasionally had not received any correspondence either and would not know what to do if it wasn't for my gentle prodding and help. Come on Meridian et al... up the game.

[Rep]

Housekeeping
So to keep everything tidy in my ASB Sharetrading portfolio, I did a manual 'sell' contract note of my MELCA instalments liquidating them at their original $1.00 per instalment and did a manual 'buy' contract note for MEL shares at $1.50. Given I have the obligation for the final MELCA instalment, then if I were to sell it would be a MEL share.

Payment
The payment process for the final instalment was fairly painless and given that the current market price exceeds my $1.50 total buy price by about 60%, I think I'm duly compensated by the "faffing" about.

[Xerof]

Still ridiculous from the company and registry though isnt it. Leaves little time and for most retail investors who are not initiated in the workings of the sharemarket this is not good enough. My partner who dabbles occasionally had not received any correspondence either and would not know what to do if it wasn't for my gentle prodding and help. Come on Meridian et al... up the game.

It actually shouldn't involve Meridian, as the funds go to the Crown. I sold mine a wee while ago, so didn't receive any paperwork obviously, so not sure if Meridian did get involved, but it should have been a simple process managed by the Registry. I would also presume there is a requirement to physically mail out a demand for the 50c, so I would also be putting some blame on the disgraceful delivery service we now get from NZ Post

[blackcap]

Fair call Xerof, I guess Meridian could have put some pressure on the registry to get things out earlier. What is the point of posting the letter on the 5th or 6th, which is the opening day for payments as it is well known it can take up to a week for mail to arrive. And why the short window of 10 days? I just do not get the motivation. Its not like they are going to make a lot of money from people defaulting as those ppl will just get mkt price - 50 cents anyway. Sighs!

[stoploss]

Fair call Xerof, I guess Meridian could have put some pressure on the registry to get things out earlier. What is the point of posting the letter on the 5th or 6th, which is the opening day for payments as it is well known it can take up to a week for mail to arrive. And why the short window of 10 days? I just do not get the motivation. Its not like they are going to make a lot of money from people defaulting as those ppl will just get mkt price - 50 cents anyway. Sighs!

Computershare did send out a Preliminary Notice on 1 Apr , to remind everyone to get ready and how much would be required ....

[dingoNZ]

It has been pretty well documented, the onus really is on the holder. You should have been made aware multiple times over the past 12 months.

[percy]

It has been pretty well documented, the onus really is on the holder. You should have been made aware multiple times over the past 12 months.

Yes I held myself "at the ready" since the IPO.
Yet, if you are out of town for a few days,you can have cause for concern.
The problem is made more so with NZ post's slow delivery.You need the paper work before you either pay on line or take the risk of missing due date by posting a cheque.

[Harvey Specter]

Yes I held myself "at the ready" since the IPO.
Yet, if you are out of town for a few days,you can have cause for concern.
The problem is made more so with NZ post's slow delivery.You need the paper work before you either pay on line or take the risk of missing due date by posting a cheque.Agree most peopel knew it ws coming but what to do if overseas on holiday.

[Rep]

Agree most peopel knew it ws coming but what to do if overseas on holiday.

Opt for the email communication?

[macduffy]

Opt for the email communication?

Seems to be the safest option. After all, we're expected to be available 24/7 these days and to respond instantly to all communications!

;)

[Harvey Specter]

Opt for the email communication?I thought people have been saying even though the did opt for email, they still only got a hard copy.

Doens't help if you are travelling in a country with poor internet. When I did africa a few years ago, I think I only logged in about 4 times in 6 weeks.

[Rep]

I thought people have been saying even though the did opt for email, they still only got a hard copy.

Doens't help if you are travelling in a country with poor internet. When I did africa a few years ago, I think I only logged in about 4 times in 6 weeks.


I have only received the email communication along with the helpful link to set up the direct debit - about 2 minutes to pop thru the details and I was done with a emailed confirmation that I had submitted the authority.

[percy]

I thought people have been saying even though the did opt for email, they still only got a hard copy.

Doens't help if you are travelling in a country with poor internet. When I did africa a few years ago, I think I only logged in about 4 times in 6 weeks.
I help out on a trust.A lawyer is also a trustee.The other trustee is my late friend's wife.She goes over seas for a couple of months each winter.August is the month when most companies want to raise funds.The only way we get around most of the problems, is having the trust's shares in "custodial keeping" with Macquaries.Even then I have to email her to get her to direct Macquaries to apply for whatever SPP we are entitled to.A couple of years ago it was Ebos, on very favourable terms.Had I not been watching we would have missed out.INA in Aussie had a couple of SPPs.I received the paper work thanks to NZ Post after the SPP had closed!!
So generally I do not think there is enough time between receiving the paper work,and the closing date.
Otherwise never leave home for more than 3 days>>!! lol.

[Jantar]

I have not yet received a hard copy, but there was sufficient information included in the market announcement that I was able to sort everything out online before I received the email. It would be difficult for someone who was overseas or did not have email access to actually pay their contribution.

[xafalcon]

I had a terrible experience. I called the 0800 90 30 90 info line run by computershare last Thursday because I hadn't received an invoice. They looked up their info on me, and said I was listed for email correspondence and I should check my junk folder. They also updated my profile to letter correspondance (at least the third time I have had to do this with computershare in the last 2 years). I said I had received the first info letter through post a few weeks back, so it was difficult to understand why it would change by itself. Anyway, that eveing I checked my junk folder, but nothing there. Called them again on Friday, got the same story, I'm set up for email communications. Hang on, just yesterday my profile was updated wasn't it???? No. The woman kindly emailed me an electronic copy and updated my profile again. Then Saturday I get an invoice in the mail (I'm rural so it took an extra day) and it's dated 6 May (the day before I first called computershare).

Complete and utter incompetence. They don't appear to be able to identify how they are communicating shareholders.

This was similar to my query with GEN loyalty shares. No communication, written or electronic, ever. I called (the same number, computershare again) and was told I was allocated 217 bonus shares. A few more than I expected, bonus. But when they emailed me the invoice above, they also included a holding statement - GEN allocation was different......

And we trust these people with our shares

[IAK]

Looks like electricity demand is back on the rise. The following is courtesy of Meridian.

Electricity demand in April 2015 was 1.9% higher than the same month last year; Demand in the last 12 months is 2.2% higher than preceding 12 months; National storage increased to 102% of average by 12 May 2015

- Meridian's April 2015 monthly inflows were 105% of average

- Meridian's Waitaki catchment storage increased from 72% to 80% of average
by 30 April 2015

[stoploss]

Looks like electricity demand is back on the rise. The following is courtesy of Meridian.

Electricity demand in April 2015 was 1.9% higher than the same month last year; Demand in the last 12 months is 2.2% higher than preceding 12 months; National storage increased to 102% of average by 12 May 2015

- Meridian's April 2015 monthly inflows were 105% of average
- Meridian's Waitaki catchment storage increased from 72% to 80% of average
by 30 April 2015

Plenty more water on the way ...
http://www.stuff.co.nz/southland-times/news/68506668/queenstown-and-wanaka-face-flood-threat-as-heavy-rain-continues

[stoploss]

I had a terrible experience. I called the 0800 90 30 90 info line run by computershare last Thursday because I hadn't received an invoice. They looked up their info on me, and said I was listed for email correspondence and I should check my junk folder. They also updated my profile to letter correspondance (at least the third time I have had to do this with computershare in the last 2 years). I said I had received the first info letter through post a few weeks back, so it was difficult to understand why it would change by itself. Anyway, that eveing I checked my junk folder, but nothing there. Called them again on Friday, got the same story, I'm set up for email communications. Hang on, just yesterday my profile was updated wasn't it???? No. The woman kindly emailed me an electronic copy and updated my profile again. Then Saturday I get an invoice in the mail (I'm rural so it took an extra day) and it's dated 6 May (the day before I first called computershare).

Complete and utter incompetence. They don't appear to be able to identify how they are communicating shareholders.

This was similar to my query with GEN loyalty shares. No communication, written or electronic, ever. I called (the same number, computershare again) and was told I was allocated 217 bonus shares. A few more than I expected, bonus. But when they emailed me the invoice above, they also included a holding statement - GEN allocation was different......

And we trust these people with our shares

My Wifes Final payment notice arrived in the mail today(WGTN) dated 6 may ....Mine came last weekend ...... I rang the number to let them know they may have an issue with NZ Post ..... All they wanted to say was get it by email it will be faster .......
Very poor service , surely they should be happy to take this up with NZ Post .....Also Meridian must pay Computershare hundreds of thousands , so they could be a little more helpful with investors imo . Had the payment lined up already as I knew what to do
from my one ..... I pity anyone who gets snail mail like me that doesn't know what to do .

[okane]

I authorised automatic payment on the 15th May at https://www.meridianinstalmentpayment.co.nz but the money hasn't left my account yet. Anyone else in the same boat?

[silu]

I authorised automatic payment on the 15th May at https://www.meridianinstalmentpayment.co.nz but the money hasn't left my account yet. Anyone else in the same boat?

Will go out of your account before midnight most likely.

[blackcap]

I authorised automatic payment on the 15th May at https://www.meridianinstalmentpayment.co.nz but the money hasn't left my account yet. Anyone else in the same boat?

Yep same thing here. But having some experience with our banking system it may go out at midnight?

[sb9]

Yeah same here, money hasn't been taken out yet. Checked with a friend of mine, same situation. It might go out tonite I guess.

[IAK]

I talked to kiwibank today, they said payment will go out between 7 - 10 pm.

[blackcap]

Well I just had a quick look and the money is still in my account as I type... :)

[limmy]

Midnight transfer.

[Onion]

Payments went out over night. I'm now a proper Meridian shareholder.

[Baa_Baa]

The journey to boredom and consistent returns has been overly full of excitement. A controversial state asset sale and IPO, price decline post-IPO, Labour/Greens spooking the mum's & dad's, National win election, SP sought after by yield players, dry summer concerns over lake levels, SP over bought and sell-down, instalment receipts due, MEL finally emerges amidst significant spike in lake levels. Hopefully MEL settles down now to being the low stress long hold strongly performing company that was the reason I bought it in the first place.

[Joshuatree]

RIO looking to sell its pacific aluminium assets (cnbc just now). Maybe less uncertainty re July 1st announcement re continuing power off take for tiwai.RIO have tried selling before but arguably the future for ALU prices looking better atm

[bull....]

if they sell out wont they leave electricity contract for new owners to decide

[tony64peter]

[QUOTE=bull....;572503]if they sell out wont they leave electricity contract for new owners to decide[/QUOTE.

There is no where else to get the power. Not a strong position to be in negotiating a contract for power after one has already bought and paid. I suspect RIO have a long term arrangement in play.

[xafalcon]

I think those brand new big shiny transformers were a huge clue to how ongoing power supply negotiations are progressing. One transformer needed replacement, but 3 were purchased. If there was uncertainty in Tiwai offtake, prudent business management would have replaced only the one that was necessary to maintain station operation

I'm wondering what will happen to SP and volume once normal trading resumes. I'm thinking deferred settlement is weighing on SP at the moment.

[xafalcon]

I think those brand new big shiny transformers were a huge clue to how ongoing power supply negotiations are progressing. One transformer needed replacement, but 3 were purchased. If there was uncertainty in Tiwai offtake, prudent business management would have replaced only the one that was necessary to maintain station operation

I'm wondering what will happen to SP and volume once normal trading resumes. I'm thinking deferred settlement is weighing on SP at the moment.

[mouse]

Tiwai Point is a good point. Maybe the best move for Meridian would be to sell Manapori to Rio Tinto. Meridian could then use the cash to buy back the top Twizel lake from Genesis and use the other half of the cash to give a cash return to investors. It is certainly a possibility. Comments please.

I think those brand new big shiny transformers were a huge clue to how ongoing power supply negotiations are progressing. One transformer needed replacement, but 3 were purchased. If there was uncertainty in Tiwai offtake, prudent business management would have replaced only the one that was necessary to maintain station operation

I'm wondering what will happen to SP and volume once normal trading resumes. I'm thinking deferred settlement is weighing on SP at the moment.

[Jantar]

....Meridian could then use the cash to buy back the top Twizel lake from Genesis and use the other half of the cash to give a cash return to investors. It is certainly a possibility. Comments please.Tekapo is Genesis' only South Island asset. In that respect owning that group is worth far more to them portfolio wise than the the simple value of the group.
On the other hand Meridian will always get the water from Tekapo even without owning the two stations, so the value to them of owning Tekapo is far less than the simple value of the group. I can't see a match happening there.

[mouse]

Tekapo is Genesis' only South Island asset. In that respect owning that group is worth far more to them portfolio wise than the the simple value of the group.
On the other hand Meridian will always get the water from Tekapo even without owning the two stations, so the value to them of owning Tekapo is far less than the simple value of the group. I can't see a match happening there.

Well, maybe we should take the whole lot of cash from Tiwai and share it amongst the shareholders. How much do you think its worth? A dollar each share maybe? Or more?

[warthog]

Anybody know who is selling MEL down?

Seems like a huge holder is divesting.

[Joshuatree]

Tiwai point decision coming up creating a little uncertainty i think hence weakness recently(until int rate drop)

Tiwai has the option on july 1st(sorry I've used few diff dates in my posts) to terminate the whole deal.
Another option is to reduce its Meridian contract from 572 MW to 400MW and get the balance from another company maybe Contact.

Here is an excerpt from Stuff 20/4 to refresh;so one can make decision and get their tactics and maybe their cash ready depending on what you believe will happen.

"After negotiation with Meridian in 2013, the smelter got a price cut on 572MW of supply from 2013 to 2016. But to keep the lower price after that the smelter must cut the amount supplied through the contract to 400MW.
It must make that decision by the end of 2015.
It also has an option to decide on July 1 whether to terminate the whole deal, triggering closure in 2017.
Kidd said the closure scenario was unlikely, particularly because it would mean site remediation costs of about $500m.
It was more probable that the smelter would cut its Meridian contract to 400MW and try to get a price deal on the extra 172MW from another power company, possibly Contact Energy.
"There is we think a strong and shared incentive across all suppliers to retain [the smelter] load in full," he said.
Without demand from Tiwai, wholesale electricity prices would were likely to drop significantly and reduce profit margins for the industry, "an outcome that the sector has a strong collective reason to want to avoid", Kidd said.
The smelter has said little about its financial condition in the lead-up to its July decision deadline, a silence Kidd attributed to a gagging clause in its $30m deal with the Government.
According to contract terms disclosed by New Zealand Aluminium Smelters (NZAS), the Rio Tinto/Sumitomo joint venture, it must repay the $30m Government handout in full if it announces a review of the smelter's viability before June 30 this year.
In April NZAS chairman Brian Cooper told Stuff that the smelter was paying some of the highest prices in the world for its electricity.
"No decision had been made about the future of the smelter, and we are doing everything we can to secure a long-term commercially competitive electricity price for the smelter," he said.
Although the smelter itself is a tolling operation, which simply charges Rio Tinto and Sumitomo for production costs and does not make a profit, it is effectively reliant on whether its owners can make a profit on the aluminium it produces.
Kidd said although those companies did report some financial results,"group structures are opaque and it is difficult to gauge where and to what extent transfer prices and margins are captured".
His analysis was based on modelling of the overall business.

[fish]

Joshuatree have you researched current profits the smelter is making?
I would imagine they are large.
Its the highest quality aluminium and sells at a premium.
It seems a no brainer to close down a profitable smelter and pay $500m in remediation costs.
do you believe closure is a real possibility or do you think the market is fearful rather than realistic.
Personally I like buying when the market reaches its peak fear

[bull....]

aluminium prices have fallen sharply of recent esp premiums so I do not think the smelter will be as profitable at the moment as it was last yr

[xafalcon]

aluminium prices have fallen sharply of recent esp premiums so I do not think the smelter will be as profitable at the moment as it was last yr

Aluminium is not alone, many commodities have seen prices fall. Just another pricing cycle that will turn, sometime. Automakers are increasing aluminium usage to decrease fuel usage. So I think there is more up-side potential than down-side risk.

3 new transformers for manapouri was a clear sign of intent. I believe the deal has already been inked

[IAK]

From the Meridian Energy operating report for May 2015 - "Electricity demand 2.3% higher than preceding 12 months".

[Joshuatree]

Joshuatree have you researched current profits the smelter is making?
I would imagine they are large.
Its the highest quality aluminium and sells at a premium.
It seems a no brainer to close down a profitable smelter and pay $500m in remediation costs.
do you believe closure is a real possibility or do you think the market is fearful rather than realistic.
Personally I like buying when the market reaches its peak fear

Fish i replied a while back and my post vaporised and I'm slow at this.Here is another smaller shot.

An earlier post of mine showed the operator of Tiwai point "made $74 mill profit last year a 10% increase on previous year and the result does not include the remaining 21 % of the smelter owned by SUMITOMO Chemical(japan) .

2012 was aloss of $548 mill." Cyclical big time

Tiwai is "one of the most efficient smelters i the world" Tiwai contributes $525 mill to the Southland economy or 10.5 % of its GDP.
I have read bullish longterm forecasts for Aluminium and bearish forecasts ; i don't know .

I think most here think its a "No brainer"(hate that expression)as not many are int in discussion.

"Mkt fearful rather than realistic" seems to be.Maybe Instos have to take the low risk route and sell; sit on the side and buy back on the news as part of their mandate on risk.

Are any share traders here doing that? i haven't looked at the volumes going thru.

The selloff in Gentailers reversed with the Int rate cut. Be int to see what happens to S/P's in the weeks ahead.

Mkt hates uncertainty

Meridian could still be a loser of 172 MW if Tiwai goes to Contact for cheaper price. as it is permitted to do from July 1 (i think).

Is that feasible anyone?. Just a simplecase of another Gentailer simply supping cheaper?I have no idea.


I heard that Rio was once again trying to find a buyer with little success for Tiwai(unsubstantiated).

There are a lot of complexities iand machinations in the power Industry i don't have clue about.
One can't ignore the idea of 572 MW becoming available in 2 years. Maybe it would create a growth boom for nZ and all prosper; maybe not.

[Hoop]

Not sure which currency Rio Tinto would be more happy with.. but the Aluminium price has seen better days...I can understand the worries now as Al is receding back to the prices during the lost making 2012 2013 year

If one looks back on a longer term chart the current Al price doesnt seem to be at extreme lows..so one has to ask the question why the smelther is causing a few financial headaches for Rio Tinto ..has there been a big rise in power price over the longer term?

Below are clickable charts ..26 year (US$) to give a overall more balanced perspective..a 5year showing the continual downtrend (US$) and a 5 year chart in Ozzie $ which shows a nice recovery..

So what does Rio Tinto prefer in its financial set up?.. prices in $US or $A??...I bet I know which chart they will present at the negotiation table..eh.


<div><a href="http://www.infomine.com/investment/metal-prices/aluminum/all/"><img border="0" src="http://charts.infomine.com?365" alt="Historical Aluminum Prices - Aluminum Price History Chart" width="180" height="150" /></a></div>
<div><a href="http://www.infomine.com/investment/metal-prices/aluminum/5-year/"><img border="0" src="http://charts.infomine.com?257" alt="5 Year Aluminum Prices - Aluminum Price Chart" width="180" height="150" /></a></div>
<div><a href="http://www.infomine.com/investment/metal-prices/aluminum/5-year/"><img border="0" src="http://charts.infomine.com?257" alt="5 Year Aluminum Prices - Aluminum Price Chart" width="180" height="150" /></a></div>

[Hoop]

meh!! I stuffed up.... I'll try again

This time I arranged the charts showing a better perspective..

http://i458.photobucket.com/albums/qq306/Hoop_1/Aluminium%203%20charts%2012062015.png (http://s458.photobucket.com/user/Hoop_1/media/Aluminium%203%20charts%2012062015.png.html)

[xafalcon]

In USD terms, Rio Tinto's electricity price has potentially decreased by 18% since the previous electricity contract was signed due to exchange rate movement. Any forward cover they may/may not have is a business decision and is unlikely to influence anything

And since electricity price is the main contributor to aluminium price I'm sure they are very happy with the current situation

I do not see any generator gaining a significant commercial advantage by undercutting Meridian

[IAK]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11466053

On the surface sounds promising...."Under the so-called "Application A" version of the proposals, the Tiwai Point smelter could expect to pay around $10 million a year in grid transmission charges instead of around $60 million at present, removing one of the sources of threat that the smelter might shut up shop in New Zealand, at major cost to the Southland economy and national exports."

[sb9]

From the Meridian Energy operating report for May 2015 - "Electricity demand 2.3% higher than preceding 12 months".

Well, it certainly seems like that if last few days in Akl are anything to go by. Freezing last night and seem same today as well. Gentailers would be hoping for more of this.

[mouse]

Well, it certainly seems like that if last few days in Akl are anything to go by. Freezing last night and seem same today as well. Gentailers would be hoping for more of this.

More arrived today, in Christchurch.
Now about selling off Manapouri to Tiwai Point. How much is it worth? Should we just get paid the proceeds as a Cash Refund?

[xafalcon]

Meridian signaled that after the Tiwai Pt supply agreement is finalised, a capital return to shareholders was expected to be anounced conditional on Rio Tinto not closing up shop and leaving in 2017

[Hoop]

Meridian signaled that after the Tiwai Pt supply agreement is finalised, a capital return to shareholders was expected to be anounced conditional on Rio Tinto not closing up shop and leaving in 2017


I normally don't get that excited with Special dividends as it sometimes shows that Management can not see additional future growth, it brings up negative thoughts of a cash cow maturing into a lost leader phase.

I'm happy though if the Management's growing strategy is unexpectedly smothered in an avalanche of profits and they have money pouring out of the doors and windows and they decide to throw some my way......or......the Company's share price is grossly undervalued due to prolonged negative sentiment..

Otherwise, I'm only happy to see it when used as a defense weapon to hostile takeovers, or as in CEN case "Use it or lose it" (excess imputation credits) before the controlling stakeholder sells out...

[PSE]

.....
Mkt hates uncertainty

Meridian could still be a loser of 172 MW if Tiwai goes to Contact for cheaper price. as it is permitted to do from July 1 (i think).

Is that feasible anyone?. Just a simplecase of another Gentailer simply supping cheaper?I have no idea.

...........

JT, an analyst report I read suggested that yes it is likely another gentailer would support the Tiwai load because it is not in the interests of the industry as a whole to lose such a large consumer.
In this scenario a CCGT would end up with it's life extended to support the smelter.

Alternatively if agreement cannot be reached we would see a CCGT shut down early to bring the system back to balance, with a few years of volatility.

I thought this a pretty well reasoned argument and either eventuality is not too catastrophic.
I am not holding the gentailers as they are too expensive, I have warned of this for a while. If the uncertainty continues there may be an attractive re-entry point.
I have no idea one way or the other.
P.S I don't think the smelter is efficient in comparison to newer plants but it produces a high purity aluminium. Like the pacific steel scrap furnace it wouldn't make sense but for some kind of crazy recipie.
Kiwi's are still very ingenious.

[Joshuatree]

Haha ; ieee what you mean Hoop.

Iak $50 mill savings for Tiwai and it looks like there is a strong push for this new Lines charge' scenario to happen

xafalcon Great points ,thanks

sb9 Is that why the Gentailers are shrinking as the temp drops(price wise:). The Tiwai effect?

mouse i wish things were that simple ehh

PSE cheers for that of course ; why not

So who thinks Tiwai is going to blow; split this joint, Sayonara,Finito?
Who is getting $ together to buy Gentailers shortly/now as the price drops esp MEL BEFORE the announcement.?
Who is short of available $ atm anyway, MOI.

[PSE]

Wow, I didn't realise it was back to $2. Its not a horrible price (fair value IMO) but I have too many better options on my plate.
Outstanding assets though.

[Baa_Baa]

7.6m through. SSH coming?

[Nasi Goreng]

Wow, I didn't realise it was back to $2. Its not a horrible price (fair value IMO) but I have too many better options on my plate.
Outstanding assets though.

I'm holding this for the long term so I'm not too concerned with market movements but it does make me feel that my recent $0.50c per share installment has gone into thin air :ohmy:

[Baa_Baa]

I'm holding this for the long term so I'm not too concerned with market movements but it does make me feel that my recent $0.50c per share installment has gone into thin air :ohmy:

Or +48% return on IPO is another way to look at it.

[Sideshow Bob]

Or +48% return on IPO is another way to look at it.

Wouldn't that be plus divvies! :cool:

[bull....]

d day a

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11470604

and aluminium is hovering at the lows

[tony64peter]

Not my favourite author but worth a read.

http://www.whaleoil.co.nz/2015/06/what-would-you-say-if-i-told-you-each-wind-turbine-needs-225-tonnes-of-coal-to-produce/

[Joshuatree]

No not worth a second.Toxic and biased and trained crosby/textor ; wrong thread.

[Daytr]

Really? Worth a read? The Green Taliban!
Off topic so I wont go further.

Difficult to know if RIO just wants rid and get out of aluminium altogether as it seems to be the industry of choice for every developing nation to justify investment in electricity generation. Sound familiar? Rio purchased a large chunk of their aluminium business for a ridiculous price about 10 years ago & have had to write off a huge amount of that since.
Whatever the smelter is a political hot potato & with diary price already gazumped I'm not sure National would test the resolve of the two electorates that cover Southland & I'm sure there will be plenty of political pressure to ensure the smelter keeps running, whether that's a good or bad thing overall.


Not my favourite author but worth a read.

http://www.whaleoil.co.nz/2015/06/what-would-you-say-if-i-told-you-each-wind-turbine-needs-225-tonnes-of-coal-to-produce/

[Joshuatree]

Morning Admin.How does one put a poll up with maybe the following

" Will Tiwai terminate the whole deal on July 1st triggering closure in 2017" yes or No or Don't know? thanks JT

[Joshuatree]

Thanks anyone else want to do it. ?

[workingdad]

I think I managed it :)

[sb9]

Interesting to see MEL bucking the trend today...

[warthog]

Is it any one or combination of these?

* Flight to dividend yield
* Smelter decision positive
* Relative generator insulation from Grexit
* ???

Disc. Now HOLDING


Interesting to see MEL bucking the trend today...

[workingdad]

some pretty decent volumes being bought up.... makes one wonder - positive Tiwai decision would surely have to be a factor

[Daytr]

You wouldn't be suggesting insider trading would you? Surely not! Yeah right.
If it is. I hope they get hung out to dry.
Tired of insider trades & nothing done about it.

[Joshuatree]

Right JULY the 1st is Tiwai DAY; good luck and hope you're all set .Meanwhile the DOW is set for a big DOWner. Int times

[Joshuatree]

Tues or Wed?

Tiwai Point Aluminium Smelter electricity contract deadline expires on Wednesday (https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CEIQqQIwBg&url=http%3A%2F%2Fwww.stuff.co.nz%2Fbusiness%2Findu stries%2F69810394%2Ftiwai-point-aluminium-smelter-electricity-contract-deadline-expires-on-wednesday&ei=GCyRVdzaF4Of8QWQjYOoAw&usg=AFQjCNFF89qeSiifEhQqt30T71uPzirjug&bvm=bv.96783405,d.dGc)

[Hoop]

There is a behavioural pattern that when the market starts to turn to custard, investors perceive Ultilities as a "safer haven"....The old saying goes, "everyone still has to buy the necessities of life"

[skid]

There is a behavioural pattern that when the market starts to turn to custard, investors perceive Ultilities as a "safer haven"....The old saying goes, "everyone still has to buy the necessities of life"

Were they the last time the market tanked?(I honestly cant remember)

disc--not saying its a sure thing market tank-but its not looking to rosey atm--they say the Dow reaction tonight will be the key(for now)

[Joshuatree]

Were they the last time the market tanked?(I honestly cant remember)

disc--not saying its a sure thing market tank-but its not looking to rosey atm--they say the Dow reaction tonight will be the key(for now)

Sounds like Thailand is chilling you out skid;:)way to goah

[workingdad]

There is a behavioural pattern that when the market starts to turn to custard, investors perceive Ultilities as a "safer haven"....The old saying goes, "everyone still has to buy the necessities of life"

if the anticipated Tiwai announcement today or tomorrow is positive the greece situation may also give the power shares an added boost for those seeking the 'safer haven'.

I rolled the dice and have a vested interest in seeing this happen :p

[Joshuatree]

$200-$400 million rehab
Smelter site rehab 'encouraged' in district plan (https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&ved=0CEYQqQIwCA&url=http%3A%2F%2Fwww.stuff.co.nz%2Fbusiness%2Findu stries%2F69790812%2Fsmelter-site-rehab-encouraged-in-district-plan&ei=_K6RVbyoOYTEmAWh2bSAAg&usg=AFQjCNHutPfIwM9HE-vzJ8ax9E_Pf7dlkA&bvm=bv.96783405,d.dGY)

[Harvey Specter]

$200-$400 million rehab
Smelter site rehab 'encouraged' in district plan (https://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=web&cd=9&ved=0CEYQqQIwCA&url=http%3A%2F%2Fwww.stuff.co.nz%2Fbusiness%2Findu stries%2F69790812%2Fsmelter-site-rehab-encouraged-in-district-plan&ei=_K6RVbyoOYTEmAWh2bSAAg&usg=AFQjCNHutPfIwM9HE-vzJ8ax9E_Pf7dlkA&bvm=bv.96783405,d.dGY)In the same paper but a different article it says $500m: http://www.stuff.co.nz/business/industries/69810394/tiwai-point-aluminium-smelter-electricity-contract-deadline-expires-on-wednesday

Why trust a journalist to provide financial news - they hardly earn enough money to eat. ;)

[Joshuatree]

Too hungry to check the veracity.
Ive had a glass half empty strategy myself.:scared:

[Harvey Specter]

Too hungry to check the veracity.
Ive had a glass half empty strategy myself.:scared:I personally have 5 glasses, each partially full. I have enough in the MEL glass to be interested, though I am quietly confident they will stay.

[Daytr]

With Ma & Pa's electricity prices rising around 7% pa mostly due to line charges, its quite incredible that Tiwai might get a $50M reduction?
Very wrong. $500M ain't small change. Would they use the carrot of staying open to reduce that remediation bill?
The only good reason I can see this to stay open is the impact on Southland if its closed.
And that's the poison chalice for the government particularly with dairy prices having being smashed.
Two electoral seats at stake, both held by National.

[Hoop]

There is a behavioural pattern that when the market starts to turn to custard, investors perceive Ultilities as a "safer haven"....The old saying goes, "everyone still has to buy the necessities of life"


Were they the last time the market tanked?(I honestly cant remember)
........

Trust power technically broke in Jan 2008 two months after NZX50 broke..it regained to be 5% off its highs in MayJune 2008 while NZX50 tanked to be -20%.
Contact technically broke in Nov in tandem with the NZX50 ...it too like TPW regained against the flow of the NZX50 to form an equal top in April then again in June 2008.
Both Ulitilities performed very well in the 1st and 2nd stages of the NZX50 bear market cycle although CEN was a scary ride..
After June the NZX50 entered Stage 3 and capitulated (~-45%) and there was nowhere to hide.. CEN losing ~-50% and TPW losing ~-25%

Vector VCT chart went against the cycles it was downtrending during the NZX50 bull cycle and bottomed in May 2008 .. well before NZX50 capitulated
At the moment Vector would be one of the best performers

[Crackity]

From the poll thread - thanks Workingdad

Meridian Energy and New Zealand Aluminium Smelters Ltd (NZAS) have last night agreed to amend their electricity agreement by extending the date on which NZAS can give a termination notice to Meridian under the electricity agreement between them. The date on which a notice can be given will move from 1 July 2015 to 3 August 2015. All other terms of the Agreement remain unchanged.

[bull....]

if they need another month to think about it- means they are weighing there options and no certainty it will remain open?

[Sideshow Bob]

if they need another month to think about it- means they are weighing there options and no certainty it will remain open?

Or using the extension to string Meridian (and Govt) along for another month.....??

[RGR367]

Or using the extension to string Meridian (and Govt) along for another month.....??

Yeah, I'll go along with another round of stringing the Gov't on this one.

[Daytr]

Agree. I recon the government will be throwing the kitchen sink at Rio to keep this open & Rio will milk it for what its worth.
A $500M clean up bill is a pretty good reason to try & milk the NZ taxpayer for more.


Or using the extension to string Meridian (and Govt) along for another month.....??

[Hoop]

Or using the extension to string Meridian (and Govt) along for another month.....??

Yep...Its a cat and mouse game...and no prize for guessing who's the mouse

[sb9]

http://www.interest.co.nz/news/76236/key-says-government-wont-add-nz30-million-support-given-rio-tinto-keep-tiwai-pt-open-govt

Not according to JK, good on him, its time govt shown them the stick, so does Meridian.

They (NZAS) had their fair share of taxpayers money, not anymore. If they were to shut and go, it might dampen the whole market in the medium term, but will sort out in the long run.

[bull....]

http://www.interest.co.nz/news/76236/key-says-government-wont-add-nz30-million-support-given-rio-tinto-keep-tiwai-pt-open-govt

Not according to JK, good on him, its time govt shown them the stick, so does Meridian.

They (NZAS) had their fair share of taxpayers money, not anymore. If they were to shut and go, it might dampen the whole market in the medium term, but will sort out in the long run.

lol but they might give them 50m by changing electricity tariffs

[Hoop]

http://www.interest.co.nz/news/76236/key-says-government-wont-add-nz30-million-support-given-rio-tinto-keep-tiwai-pt-open-govt

Not according to JK, good on him, its time govt shown them the stick, so does Meridian.

They (NZAS) had their fair share of taxpayers money, not anymore. If they were to shut and go, it might dampen the whole market in the medium term, but will sort out in the long run.

I think the market assumed the Govt wasn't going to throw more money at this, hence the market uncertainty...

Another angle not visible yet to this pleb...My question "how excited are the other suppliers in picking up this 172 MW parcel?"......Is there enough profit in it after assessing the future risk?...maybe this could partly be the reason which has caused a month extension?....

thoughts???.

[Daytr]

Yep agree & there aren't may things I agree on in regards Key.
Being the cynic I am I wonder if he knows its a done deal to stay open bar the pricing?
If it closes all of NZ barring Southland will be better off.
If I'm Rio & I'm still making a buck in a very depressed ali market & the alternative is to pay a massive clean up bill, it stays open.




http://www.interest.co.nz/news/76236/key-says-government-wont-add-nz30-million-support-given-rio-tinto-keep-tiwai-pt-open-govt

Not according to JK, good on him, its time govt shown them the stick, so does Meridian.

They (NZAS) had their fair share of taxpayers money, not anymore. If they were to shut and go, it might dampen the whole market in the medium term, but will sort out in the long run.

[Harvey Specter]

Another angle not visible yet to this pleb...My question "how excited are the other suppliers in picking up this 172 MW parcel?"......Is there enough profit in it after assessing the future risk?...maybe this could partly be the reason which has caused a month extension?....Its not whether there is profit in selling the 172MW, it is what costs/losses are avoided by ensuring NZAS stays open. MEL is doing its bit with the 400MW so has laid it on the table that it wants one of the other 4 Gentailers to pick up the slack for the balance. Those four are obviously pointing at each other hoping anyone but them takes the hit. I wonder if we will see that syndicated and shared amount all 4. Getting 4 parties to agree in % share and a rate would take a lot of time.

[Harvey Specter]

Being the cynic I am I wonder if he knows its a done deal to stay open bar the pricing?He knows because he 'owns' 50% of 3 of the 5 Gentailers. Hell know they are squabbling over details and this way it ensures it isn't the government paying the cash, but the gentailers taking the hit.

[mouse]

Yep...Its a cat and mouse game...and no prize for guessing who's the mouse

It's not me. I hate Cats as well.

[mouse]

My sixpennyth is that Meridian will supply the 400MW, but no more. They will then sell the other 172MW on the open market. Making a bit both way. Why should Meridian support Tiwai more than is profitable for Meridian? Which brings me to the other option. Sell Manapouri to Tiwai. How much is it worth? Possibly even a dollar each share? Any other offers?

[Hoop]

It's not me. I hate Cats as well.
.....:D:D.....

[Zaphod]

Yep agree & there aren't may things I agree on in regards Key.
Being the cynic I am I wonder if he knows its a done deal to stay open bar the pricing?
If it closes all of NZ barring Southland will be better off.
If I'm Rio & I'm still making a buck in a very depressed ali market & the alternative is to pay a massive clean up bill, it stays open.

Overall, IMO a closure would have a significant negative economic effects across the entire country. A significant surplus of cheap power would also wipe several hundreds of millions off generators and retailers nationwide, leading to job losses and lower rates of investment in infrastructure. Our balance of trade would also be negatively impacted.

We'd all like to think that closure would be the golden egg for electricity consumers (and there would be some benefits), but I think overall it would be decidedly negative.

[warthog]

Overall, IMO a closure would have a significant negative economic effects across the entire country. A significant surplus of cheap power would also wipe several hundreds of millions off generators and retailers nationwide, leading to job losses and lower rates of investment in infrastructure. Our balance of trade would also be negatively impacted.

We'd all like to think that closure would be the golden egg for electricity consumers (and there would be some benefits), but I think overall it would be decidedly negative.

So Rio Tinto are playing amateurs English, Joyce and co., as well as MEL?

[Xerof]

Who owns Manapouri? Does it ONLY feed the smelter? how much would it take to tie it into the grid?

don't answer - I remember this was discussed quite a while ago, so I'll trawl for it myself

[mouse]

Who owns Manapouri? Does it ONLY feed the smelter? how much would it take to tie it into the grid?

We have already used power from Manapouri when South Island lakes were a bit low. Tiwai shut off some of their pots. Plus I Think that Meridian would not have to pay for the Grid costs of connexion since we have Transpower?, for that. ATM we only need to connect the 172MW should Tiwai opt for only 400MW.

[Daytr]

Really? They are selling the power already at a hugely discounted rate. Any money that the generators lost would end up in the hands of Joe Citizen.
Power companies have been scalping NZers for too long. Job loses as well. What job losses? Money in peoples pockets will be spent & create jobs & a boost to the economy.


Overall, IMO a closure would have a significant negative economic effects across the entire country. A significant surplus of cheap power would also wipe several hundreds of millions off generators and retailers nationwide, leading to job losses and lower rates of investment in infrastructure. Our balance of trade would also be negatively impacted.

We'd all like to think that closure would be the golden egg for electricity consumers (and there would be some benefits), but I think overall it would be decidedly negative.

[Baa_Baa]

Really? They are selling the power already at a hugely discounted rate. Any money that the generators lost would end up in the hands of Joe Citizen.
Power companies have been scalping NZers for too long. Job loses as well. What job losses? Money in peoples pockets will be spent & create jobs & a boost to the economy.

That's a heavy burden for the shareholders who thought they were buying a boring utility that had low growth prospects and would be sharing it's profits. We didn't ask the government to sell down it's 50%, we just bought it off them, and look what's happened, we've had to ride out massive uncertainty and capital value fluctuations that frankly only the government should have had to deal with. It's about time they dealt with them, by focusing on transmission charges which are rorting the system, as opposed to the gentailers who are fiercely competing on retail margins. imho.

[Daytr]

BaaBaa, the risk in regards the smelter has always been there in fact I remember posting something about it when the government floated the assets. I agree though re the generators. The industry is generally heavily protected & stifles alternative energy generation such as solar.

[Zaphod]

Really? They are selling the power already at a hugely discounted rate. Any money that the generators lost would end up in the hands of Joe Citizen.
Power companies have been scalping NZers for too long. Job loses as well. What job losses? Money in peoples pockets will be spent & create jobs & a boost to the economy.

If you were suggesting that the underlying problem (if there is one) causing relatively high electricity pricing in this country would be resolved, then I would be all for it. However what you're advocating is to artificially lower the price by flooding the market with excess energy. That won't fix the issue, especially in the long term. All it will do is destroy the wealth of shareholders, including the taxpayer and give consumers a very short term fix.

[Daytr]

Artificial? I would suggest demand is artificially being propped up by Tiwai. Remember the $30M National pumped in only a few years back?
One of the main reasons electricity prices are very high in NZ & climbing (or so we are told) is to meet peak demand of a couple of hours a day.
Tiwai closing would help resolve this.
Personally I don't think it will close, but who knows.
As mentioned before.
Tiwai has been a known risk for investors for sometime & its a bit rich to expect the rest of NZ to subsidise your dividends.

[robbo24]

Artificial?

And to think, people took confidence from an extension of negotiations.

There is no certainty in an extension. In fact, there is less certainty.

Be fearful when others are greedy! (Obviously the greedy came out when others were fearful!)

[Xerof]

robbo, I think the market has worked out NZAS is a prostitute - the only issue now is the price and whether NZAS will service more than one client.......

mouse, thanks for your comments last evening

[robbo24]

robbo, I think the market has worked out NZAS is a prostitute - the only issue now is the price and whether NZAS will service more than one client.......

mouse, thanks for your comments last evening

Servicing two or more power companies at once while the rest just sit and watch.

Meanwhile the big boss who owns the smelter rakes in the cash...

[Xerof]

That 50mill per year saving by not subsidising the Northlanders, and Coasters, would be a no-brainer game changer, for NZAS.

Winston and Damian will whinge of course, but the Nats will find a way to compensate them by other methods, separated by 2 degrees from power prices - four lane bridges anyone? regional differentials for the dole? Regional WINZ power allowances?

Or perhaps just add another special rating to the Aucklanders rates bills - they can clearly afford it, given the ludicrous prices they pay for some very average quality houses

[Zaphod]

Artificial? I would suggest demand is artificially being propped up by Tiwai. Remember the $30M National pumped in only a few years back?
One of the main reasons electricity prices are very high in NZ & climbing (or so we are told) is to meet peak demand of a couple of hours a day.
Tiwai closing would help resolve this.
Personally I don't think it will close, but who knows.
As mentioned before.
Tiwai has been a known risk for investors for sometime & its a bit rich to expect the rest of NZ to subsidise your dividends.

Tiwai would not have closed if the Government refused to provide a $30M subsidy. In hindsight, the Government's bluff was called and they lost, but that's clearly not happening this time.

Having a taxpayer asset such as Manapouri subsiding your power prices through what amounts to quantitative easing, is not a viable long term solution to the pricing situation.

[Zaphod]

Servicing two or more power companies at once while the rest just sit and watch.

Meanwhile the big boss who owns the smelter rakes in the cash...

Yes, the real winner in all this is the smelter (and their accountants/lawyers). Hopefully the other generators are playing hardball in their pricing negotiations.

[Daytr]

It may not have closed, so why then give them $30M? You are suggesting the government made a mistake, if so I agree.
Lower electricity prices amounts to QE. I suggest you read a little bit about what QE is.
Would it create stimulus to the NZ economy? Definitely and that's where the similarity ends. f
The stimulus would be far more direct & wide spread than any QE program has achieved.
Are you suggesting that NZ energy demand wont grow in the future to eventually take up the slack?
Demand will grow over time & with lower prices quicker than they would have.
The real question for me is we should be allowing more generation, but instead of South Island generation that is very inefficient, should we be producing more localized energy where it is being consumed i.e. in the upper half of the North Island.


Tiwai would not have closed if the Government refused to provide a $30M subsidy. In hindsight, the Government's bluff was called and they lost, but that's clearly not happening this time.

Having a taxpayer asset such as Manapouri subsiding your power prices through what amounts to quantitative easing, is not a viable long term solution to the pricing situation.

[Zaphod]

It may not have closed, so why then give them $30M? You are suggesting the government made a mistake, if so I agree.

Yes, we agree on this point. They should not have supplied a subsidy.
To be fair though, I think the Government were between a rock and a hard place on this issue. Don’t supply a subsidy and Tiwai closes? They’ll be blamed. Supply a subsidy and Tiwai doesn’t close? They’ll be chastised for wasting money.



Lower electricity prices amounts to QE. I suggest you read a little bit about what QE is.

No, that's not what I said.



Would it create stimulus to the NZ economy? Definitely and that's where the similarity ends. f
The stimulus would be far more direct & wide spread than any QE program has achieved.

The degree to which it would create an economic stimulus is extremely debatable. Projections on areas of economic growth centre around less electricity intensive industries, such as those in the service sector.

A strong manufacturing sector (which would presumably involve higher levels of electricity demand) is highly unlikely to return despite lower electricity prices.



Are you suggesting that NZ energy demand wont grow in the future to eventually take up the slack?
Demand will grow over time & with lower prices quicker than they would have.


Electricity demand growth is projected to be low. Home PV, wind, micro hydro etc. and rapid increases in efficiency will all help sustain this slow growth trend.



The real question for me is we should be allowing more generation, but instead of South Island generation that is very inefficient, should we be producing more localized energy where it is being consumed i.e. in the upper half of the North Island.

I agree. Investment in North Island generation and transmission infrastructure is critical to efficiently servicing the key economic growth areas.

[rayonline]

Just a question. My ASB Watchlist still list MELCA and MEL. I thought people moved to MEL? Please educate me.

[mouse]

The next question we should ask, which I do not know the answer to, is the weather systems for Manapouri and Twizel. I THINK that they are two separate systems. So Twizel could be lacking water, but Manapouri still has oodles of rain. Hence the value of Meridian getting its hands on spare capacity from Tiwai. It looks to me as if only supplying 400MW to Tiwai is very good business for Meridian. Which makes me scratch my head as to why the share price is not looking very happy. Any ideas?

[stoploss]

Just a question. My ASB Watchlist still list MELCA and MEL. I thought people moved to MEL? Please educate me.

Maybe just delete MELCA if MEL is showing accurately in your portfolio , if not maybe manually adjust :)

[Joshuatree]

Because its not a done deal yet ,mouse.

[Zaphod]

The next question we should ask, which I do not know the answer to, is the weather systems for Manapouri and Twizel. I THINK that they are two separate systems. So Twizel could be lacking water, but Manapouri still has oodles of rain. Hence the value of Meridian getting its hands on spare capacity from Tiwai. It looks to me as if only supplying 400MW to Tiwai is very good business for Meridian. Which makes me scratch my head as to why the share price is not looking very happy. Any ideas?

Uncertantly around the outcome of the deal. If you're a prepared to make a bet then at some point over the next month, make a move on the shares!

[Daytr]

Zaphod, "The degree to which it would create an economic stimulus is extremely debatable."
I think we will have to agree to disagree on that one. haha.

[Xerof]

Uncertantly around the outcome of the deal. If you're a prepared to make a bet then at some point over the next month, make a move on the shares!
Yes, some uncertainty around the smelter, but I also think offshore has been selling as the currency is starting to kill their returns. IIRC, foreign investors buy shares on an unhedged basis (bonds are hedged though)

[robbo24]

Yes, some uncertainty around the smelter, but I also think offshore has been selling as the currency is starting to kill their returns. IIRC, foreign investors buy shares on an unhedged basis (bonds are hedged though)

All this talk of lowering NZ OCR to 2.5% won't do wonders for the NZD but internally it should bring some interest in yield stocks :D

[Nasi Goreng]

All this talk of lowering NZ OCR to 2.5% won't do wonders for the NZD but internally it should bring some interest in yield stocks :D

I agree, it will be NZ investors looking for yield driving prices up vs foreign investors taking their money away. I don't mind the NZD dropping a bit but it will cause problems at the other end if the iphone 7 costs me $2000.

[xafalcon]

Tiwai Pt smelter is for sale, it will not close. And here is why I believe this

Manapouri has recently been upgraded with new transformers. One was needed, but three were purchased. No sensible business would spend a cent on an asset of dubious future earning potential.

Once a pot line is closed, I understand it cannot be restarted. Scaling down but not closing entirely reduces economies of scale, so is undesirable

The remediation (closure) cost for Rio is huge. The more product it is deferred against, the lower the unit cost impact. Plus continued production defers the cost

Energy prices have already fallen substantially as they are NZD based. This is the largest cost component of aluminium

Worldwide aluminium demand will continue to rise as more auto components are made of this lightweight metal to increase milage

Commodity cycles always turn, it's just a matter of time

NZ smelted aluminium is super-high grade, not entry-level metal. Specialist products are less effected by commodity price movements (despite what Rio is probably saying)

Aluminium battery technology appears promising and requires a high grade aluminium

I fully expect the broad aspects of the deal were inked around the time Manapouri transformers were planned for purchase as replacement and contingency spares

Rio played chicken last time. This is simply their negotiating tactic. I don't read anything into the delayed anouncement. Most likely ironing out the finer details

But it would not be out of the question to see some sort of a JV emerging from this, not necessarily involving Rio in the medium-long term

[Daytr]

You may well be right & I think if Rio could sell they would, however that's I think the issue, could.
Who would buy it?
With such a large liability hanging over it, RIO would possibly have to pay someone to take it off their hands.
I agree re demand increasing, but supply has been increasing even quicker.
There is certainly no shortage of bauxite & plenty of developing nations that want to build more power capacity & one way of justifying this is to build alumina smelters just like NZ did in the 70s.
In saying all that I would agree with you in regards cycles & its likely that ali prices will be quite a bit higher at some point.

[Daytr]

Here's a thought, could the power companies get together & buy it?
It could end up a bit like Marsden Point with all the stakeholders or in this case electricity suppliers owning a share.

[Zaphod]

Zaphod, "The degree to which it would create an economic stimulus is extremely debatable."
I think we will have to agree to disagree on that one. haha.

LOL! Well, at the risk of derailing this thread for many pages we'll move on, it’s not important :)

[Zaphod]

Here's a thought, could the power companies get together & buy it?
It could end up a bit like Marsden Point with all the stakeholders or in this case electricity suppliers owning a share.

It'd certainly provide an interesting value-add for the generators (I assume you'd also include retailers?) and potentially provide them with some additional revenue, however it would expose them to significant additional risk and could have the potential to distract them from their core business.

Depending on the price it is sold for, anything's possible. But I imagine Rio will want to extract maximum value from it, given their current modus operandi.

[Daytr]

With $500M of liability Rio might sell it for a buck. Similar to what Branson did with the Chunnel when it was loaded with debt.

[Crackity]

With $500M of liability Rio might sell it for a buck. Similar to what Branson did with the Chunnel when it was loaded with debt.


Daytr - that entire statement gets a LOL - �� - suggest you check your facts for both statements - no personal offence intended

[bull....]

Alcoa reported last night in the us not flash aluminium premiums and prices collapsed last quarter they say china exporting so much aluminium fllooding the market so prices could weaken further but forecast demand as steady although they say cost of production is loss making in some cases because of low prices

[Hoop]

Alcoa reported last night in the us not flash aluminium premiums and prices collapsed last quarter they say china exporting so much aluminium fllooding the market so prices could weaken further but forecast demand as steady although they say cost of production is loss making in some cases because of low prices


http://www.kitconet.com/charts/metals/base/spot-aluminum-5y-Large.gifhttp://www.kitconet.com/charts/metals/base/spot-aluminum-30d-Large.gif

[xafalcon]

Here's a thought, could the power companies get together & buy it?
It could end up a bit like Marsden Point with all the stakeholders or in this case electricity suppliers owning a share.

Comcom would not allow this, because the politicians would wear the combined fury of the domestic and business consumers.

Just imagine if the power companies (and maybe transpower) all got together (formally or informally) and took ownership. Then they decided that to make some money from aluminium they had sell power to Tiwai at 1 cent per unit. What would that do to other commercial and domestic unit prices? This would make the smelter very cost competitive, so more pot lines may be added. Prices for other users then go even higher.....

The comparison with Marsden Pt is flawed.

Marsden refines product for it's owners to sell, and if Marsden Pt isn't competitive then more refined fuel is imported.

Tiwai Pt owned by power companies would be incentivised to reduce power cost to the smelter and crank up the cost for other users

[bull....]

aluminium hit new low 1661 looks like headed lower.

wonder how much this affects rio decision? of course if they close good for meridian not good for others

[sb9]

From NBR online y'day....highlighted the important bit in the middle...

No more govt sweeteners to keep Tiwai Point open, Key says
The foreign owners of the Tiwai Point aluminium smelter have had discussions with Finance Minister Bill English about further sweeteners to keep the New Zealand's most energy-intensive industrial plant open and been told there is no scope for further assistance, says Prime Minister John Key.
The smelter's majority owner, Anglo-Australian metals giant Rio Tinto, wrung $30 million in cash out of the government in 2013 when it forced its electricity supplier, Meridian Energy [NZX:MEL (https://nzx.com/markets/NZSX/securities/MEL)], to cut the price of electricity to the smelter following a collapse in global metal prices after the global financial crisis, using the government's desire to partially privatise Meridian as a bargaining chip to gain both the lower power price and the additional taxpayer-funded sweetener.
It pushed for a $60 million payment, which the government refused, and announced a new contract with Meridian with a trigger date of July 1, 2015 for a decision on whether to keep the plant, which uses one-seventh of the country's total electricity production, open or to close it in 2017.
That deadline was extended late last month to Aug. 3. Energy industry analysts spoken to today by BusinessDesk believe Rio Tinto and its minority shareholder in the smelter, Sumitomo of Japan, will keep the plant open but may opt to drop 172 Megawatts of the 572 MW available to it under the contracts renegotiated in 2013.
Meridian is seeking to stitch together a deal that could see Contact Energy, Genesis Energy and possibly Todd Energy in a supporting role, stumping up the 172MW that, if Meridian is to supply it, will be more expensive than the deal struck two years ago.
The smelter is a major employer in Southland and has invested heavily in more efficient technology and processes, but still struggles for profitability amid low metal prices and over-supply from newer, lower cost Chinese smelters. The lower New Zealand dollar exchange rate is expected to improve its prospects and the current owners are looking for a buyer.
Whoever owns the smelter would be liable for perhaps $400 million in site remediation costs if they closed the smelter, meaning Rio Tinto may prefer to run it at a loss than to face the up-front costs of the clean-up required if the smelter closes.
"I know that there have been discussions between the Minister of Finance's office and the company indicating that the government wasn't prepared to put any more resources in," Key told his weekly press conference.
He stood by the decision to make a direct cash grant to the smelter at "a very vulnerable time...but the government isn't interested in putting another cash injection in."
There had been no discussion about other kinds of inducements to convince the smelter owners to keep the plant open, said Key.

[xafalcon]

aluminium hit new low 1661 looks like headed lower.

wonder how much this affects rio decision? of course if they close good for meridian not good for others

By my calculator 1661 / 2.205 = $753.29/lb which is slightly higher than above charts??

But NZD depreciation also helping since most of aluminium cost is the electricity

[Daytr]

How did you not see the "a bit like"
I didn't realize power companies didn't retail aluminium. There you go. ;-)
Anyway, what you are suggesting was similar to what I was getting at.
I don't necessarily think its a good thing, especially if the end result was NZ citizens subsidizing aluminium production, but its a thought.

D-day #2 approaching...


Comcom would not allow this, because the politicians would wear the combined fury of the domestic and business consumers.

Just imagine if the power companies (and maybe transpower) all got together (formally or informally) and took ownership. Then they decided that to make some money from aluminium they had sell power to Tiwai at 1 cent per unit. What would that do to other commercial and domestic unit prices? This would make the smelter very cost competitive, so more pot lines may be added. Prices for other users then go even higher.....

The comparison with Marsden Pt is flawed.

Marsden refines product for it's owners to sell, and if Marsden Pt isn't competitive then more refined fuel is imported.

Tiwai Pt owned by power companies would be incentivised to reduce power cost to the smelter and crank up the cost for other users

[Crackity]

From NBR online y'day....highlighted the important bit in the middle...

1.

No more govt sweeteners to keep Tiwai Point open, Key says



2

if Meridian is to supply it, will be more expensive than the deal struck two years ago.



.


I have parsed slightly and highlighted what I feel are the important bits......

800 jobs potentially in Southland affected if Tiwai closes and a National seat....I'm still picking Tiwai ain't closing anytime soon.

[Baa_Baa]

SP is saying no worries mate. Believe the market.

[Daytr]

The several hundred million dollars of environmental liability will probably be the swing factor in the smelter staying open.

[Crackity]

The several hundred million dollars of environmental liability will probably be the swing factor in the smelter staying open.

Several hundred million would pretty much buy you Invercargill. With Nightcaps thrown in for nothing....

[bull....]

SP is saying no worries mate. Believe the market.

share price going up could mean 172mw meridian will have to sell after nxt mth will be at higher prices or if they close meridian will have the whole lot to sell at higher prices or if they stay open just more of the same until 2017?

[mouse]

share price going up could mean 172mw meridian will have to sell after nxt mth will be at higher prices or if they close meridian will have the whole lot to sell at higher prices or if they stay open just more of the same until 2017?

exactly. It sums up the sums pretty well. meridian will make money, whatever happens. but a few of the other generators could lose a bit.

[fish]

Not true. Because of line constraints that extra energy cannot be transferred out of the lower South Island. So the only stations affected will be Manapouri, Roxburgh and Waipori hydro (and Clyde to a lesser extent), and White and Mahinerangi wind farms. Contact owns the Clyde and Roxburgh stations, but also has significant geothermal and thermal plant in the North Island. So overall it would only be Meridian that would be adversely affected in the short term.

Once Transpower upgrade the circuits to all more of Manapouri's generation to flow north, then that would co-incide with the scheduled progressive shutdown of genesis's remaining Huntly coal fired units, the net gain to the nation in energy by adding Tiwai's demand and subtracting Huntly's generation is only 85 MW.

So will meridian really gain a lot if tiwai closes?

[Jantar]

So will meridian really gain a lot if tiwai closes?
Not in the short term. Maybe some gain after 5 or 6 years.

[Snoopy]

xafalcon wrote: "if that extra electricity is released to market it will reduce returns of all generators and sp will follow."

Not true. Because of line constraints that extra energy cannot be transferred out of the lower South Island. So the only stations affected will be Manapouri, Roxburgh and Waipori hydro (and Clyde to a lesser extent), and White and Mahinerangi wind farms. Contact owns the Clyde and Roxburgh stations, but also has significant geothermal and thermal plant in the North Island. So overall it would only be Meridian that would be adversely affected in the short term.

Once Transpower upgrade the circuits to all more of Manapouri's generation to flow north, then that would co-incide with the scheduled progressive shutdown of genesis's remaining Huntly coal fired units, the net gain to the nation in energy by adding Tiwai's demand and subtracting Huntly's generation is only 85 MW.

Which of the other Gentailers has the most interest in picking up the remainder of the Tiwai contract, the bit that Meridian is keen to shed?

1/Is it Contact because they have the largest alternative generating capacity south of the Benmore Transpower grid node? This would be especially relevant if Transpower do not upgrade the power grid further OR
2/ Is it Genesis, because they have nominally the highest cost large generation thermal plant, for which they have no renewable energy substitute. Of course with take or pay gas, Genesis may not be able to shut down Huntly even if in a genuinely free market for energy, they should.

As an additional complicating factor, I should note that Meridian has a virtual 150MW power station within Huntly because of an energy swap contract with Genesis, already agreed to in July 2014. However as mentioned in the Genesis HY2015 report p6:

"The new four year agreement has a provision to terminate after the first two years in the event Meridian's contract with New Zealand Aluminium Smelter Limited sees a reduction in volume."

So it could be that Meridian retains most of their power supply contract with NZAS, yet still terminates this swap agreement. But if Genesis are going to lose this swap agreement if Meridian just reduces its supply agreement to NZAS, why would Genesis then step up to 'help' Meridian by making their own power supply agreement to partially supply NZAS?

SNOOPY

[PSE]

....................

"The new four year agreement has a provision to terminate after the first two years in the event Meridian's contract with New Zealand Aluminium Smelter Limited sees a reduction in volume."

So it could be that Meridian retains most of their power supply contract with NZAS, yet still terminates this swap agreement. But if Genesis are going to lose this swap agreement if Meridian just reduces its supply agreement to NZAS, why would Genesis then step up to 'help' Meridian by making their own power supply agreement to partially supply NZAS?

SNOOPY

Because taking over the 172MW is the best of two bad options for GNE, the other being a depressed wholesale electricity market.

[Baa_Baa]

Another week of uncertainty until 3 Aug when NZAS have to decide whether to terminate the agreement with Meridian.

The SP has failed twice in the past three weeks to break out and hold above the 200EMA and remains in a progressive downward price channel. Technical indicators turned over again, pointing to further price weakness in the short term.

Steel yourselves, the premium to the election breakout around $2.02 may well be re-tested and perhaps even the pre-election SP beneath that around $1.92-$1.95.

Optimistically, further price weakness short term should present accumulation or buy-in opportunity should the Tiwai decision be favourable.

[tony64peter]

If Manapouri was to supply the national grid, what percentage of its generation would be lost, in transmission[ ie heat ] to the North island?

[Traderx]

If Manapouri was to supply the national grid, what percentage of its generation would be lost, in transmission[ ie heat ] to the North island?

I don't believe that power grids actually work in that way. essentially all power flows in the whole system will adjust, effectively there will be a bit of a shuffle up the country i.e the lower SI will export more to the central SI and the Central SI will export more to the LNI via the HVDC and the LNI/CNI will export more to the UNI and a thermal plant or two will close/operate less in the UNI or CNI. Of course this is all dynamically changing.

A more correct question would be - will overall grid losses increase and by how much as a result of a Tiwai closure shuffle. I would say a bit but not massively. The "valve" of the HVDC is not actually that far from Manapouri.

But certainly spot prices will reduce relative to the rest of the country in the lower SI

Any people with actual engineering ability care to comment beyond my simple person thoughts..?

[Jantar]

If Manapouri was to supply the national grid, what percentage of its generation would be lost, in transmission[ ie heat ] to the North island?

Prior to the HVDC (Cook Strait Cable) upgrade there was an average 8% loss between the islands. Its is now around 4%. However, if Tiwai was to close fully, the lines north of Roxburgh will not allow any more power to flow over them than what they are currently carrying, so there would be no increase in losses. Just a lowering of price in the lower south island.


I don't believe that power grids actually work in that way. essentially all power flows in the whole system will adjust, effectively there will be a bit of a shuffle up the country i.e the lower SI will export more to the central SI and the Central SI will export more to the LNI via the HVDC and the LNI/CNI will export more to the UNI and a thermal plant or two will close/operate less in the UNI or CNI. Of course this is all dynamically changing.

......
If the line from Roxburgh to Livingstone to Islington was upgraded, with an additional upgrade of the line from Livingstone to Waitaki to Benmore, then Traderx has accurately described what would happen. The losses are effectively measured by the difference in nodal prices over various parts of the country.
Right now nodal prices are:
Manapouri $38.33
Benmore $ 41.82
Haywards $44.31
Wairakei $45.18
Otahuhu $47.80

It can be seen that prices climb steadily from the bottom of the South Island to the top of the North Island which reflects the overall movement of energy from South to North. the HVDC is carrying 460 MW but could handle almost 800 MW under present conditions.

Overall estimates suggest even with line upgrades to allow greater transfer from South to North, that that the effect would be quite small.

[tony64peter]

Thanks for the info

[mouse]

Thanks Jantar. Plus very useful info on the DC link being able to handle almost 800MW. From 460MW. Further, they could build a new line from Manapouri to Christchurch, Islington, and chop my electric costs down here. I am paying 18 cents a kWh at present for the line to Christchurch from Twizel. It is of course total robbery and I should not be subsidising the whole of the North Island.

[xafalcon]

Lots of pre-decision buying today

[xafalcon]

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=3926267