MCY Mercury NZ ( MRP Mighty River Power)

[Tyro]

No one seems to be posting any more on the thread entitled "who's in for the Mighty River Power float. Any investors want to blog about ongoing prospects for MRP?

[Master98]

MRP price expected face pressure with the looming of meridian ipo, but actually last couple weeks the price seems strongly recovered from all-time low $2.16, bought few more at $2.17, interesting to see what's going on when meridian ipo started, decided to buy into all up coming SOE ipo.

[robbo24]

Divvies being paid on Monday, funny to see a little uptrend over last week to $2.30.

[robbo24]

The Board has declared a fully imputed final dividend of 7.2 cents per share (cps), in line with the IPO forecast and paid less than five months after listing. This brings total dividends declared in FY2013 to $168 million (or 12cps), which represents a gross dividend yield of 6.7% on the IPO price of $2.50.

For the coming financial year, FY2014, the Board remains comfortable with our IPO forecasts of significant growth in EBITDAF, reflecting the earnings contribution from the new Ngatamariki geothermal plant. The forecasts at the time of the IPO also anticipated an 8.3% increase in fully imputed full year dividends from 12cps to 13cps for FY2014. Based on our share price on 20 September, this represents a gross yield of 8.1%.

Can't complain too much, it's exactly what people calculated it would be at the IPO and then some.

Annual report is what it is: https://www.nzx.com/companies/MRP/announcements/241788

[PartyPooper]

With the Dividends today and the amount of MRP shares I've collected at 2.17. At the current share price I've finally broken even on my initial IPO investment if I sold tomorrow. Pretty happy at the moment hopefully once meridian is done the price may hold at 2.30 for awhile *fingers crossed*

[robbo24]

With the Dividends today and the amount of MRP shares I've collected at 2.17. At the current share price I've finally broken even on my initial IPO investment if I sold tomorrow. Pretty happy at the moment hopefully once meridian is done the price may hold at 2.30 for awhile *fingers crossed*

But didn't the Greens convince us that power companies were making SUPERPROFITS?

Where's all the damn SUPERPROFITS?

Clearly we need a single buyer model......... Hahaha

[macduffy]

MRP has just announced a share buyback. Who picked that one?

http://www.mightyriver.co.nz/Media-Centre/Latest-News/Mighty-River-Power-announces-share-buyback-program.aspx

[RTM]

Was far far away from my thoughts. Desperate times call for desperate measures eh ! First they hint at dividend increases....and now this. All in an attempt to elevate the SP prior to Meridian float. Wow. Not complaining tho...as have a few.

What happens to the shares they buy ? Are they retired ? Or can they be sold again should the money be needed in the future ? Or used for staff bonuses ?

[CJ]

MRP has just announced a share buyback. Who picked that one?Never saw that coming. Good use of cash, especially if there are insufficient IC's to fully impute.

[Xerof]

Will also reduce the 'bonus share' liability on those retail holders who sell. Incremental, but still saves a few bob.

[CJ]

What happens to the shares they buy ? Are they retired ? Or can they be sold again should the money be needed in the future ? Or used for staff bonuses ?They have said they will hold as treasury stock, not cancel them.

[RTM]

Another thought.......who will they buy the shares from ? Major holder is the government. 50:50 government and market ? Or just market ? If just market....then ratio of Government owned shares to public will alter. How would they determine price to buy from Government ?

[CJ]

It is an onmarket buy back so only from the Market, not the government I would have thought. Even if the Govt did sell, there is a market price.

I wonder what will happen if the Govt creaps up to say 55% due to the buy backs - will it offload onto the market or hold shoudl there be a future capital raising so that they can be diluted back down to 51%?

[RTM]

Maybe they can buy them back over time with this strategy ? :t_up:

[blackcap]

Green Party co-leader Metiria Turei said five months after the listing of MRP shares, promising a golden opportunity for 'mum and dad' investors, the company was buying them back at a loss for investors.

"If Mighty River Power has $50m laying around, its priority should be cutting electricity prices for families and businesses."


You can not be serious. Shows how economically inept the greens really are.

[fungus pudding]

Green Party co-leader Metiria Turei said five months after the listing of MRP shares, promising a golden opportunity for 'mum and dad' investors, the company was buying them back at a loss for investors.

"If Mighty River Power has $50m laying around, its priority should be cutting electricity prices for families and businesses."


You can not be serious. Shows how economically inept the greens really are.

Shows how bad her grammar is too.

[Zaphod]

Let's hope she doesn't notice AirNZ's $1B cash surplus lying around!

[winner69]

Let's hope she doesn't notice AirNZ's $1B cash surplus lying around!

Not really Air NZ cash that $1b .... most of it prepaid travel .... still have to spend a lot of that cash to fly the travellers to wherever

Zonks ago AIR raved about that $1b we have in the bank ... we wont go broke and all that stuff .... then the govt bailed them out eh

Ah so --- does AIR make most of its money from investing all this money then?

[peat]

Green Party co-leader Metiria Turei said ... "If Mighty River Power has $50m laying around, its priority should be cutting electricity prices for families and businesses."

So unfair leaving out the old people...

[CJ]

So unfair leaving out the old people...Its the first home buyers I feel sorry for!

[Silverlight]

It is an onmarket buy back so only from the Market, not the government I would have thought. Even if the Govt did sell, there is a market price.

I wonder what will happen if the Govt creaps up to say 55% due to the buy backs - will it offload onto the market or hold shoudl there be a future capital raising so that they can be diluted back down to 51%?

Only 2% (25m shares) of the shares are been bought back, so would move the govt from 51% to just over 52% on a pro rata basis.

If they only buy back 24 of the 25m Govt holding would be 51.9966%, they would not even have to file an SSH notice.

[CJ]

Yes but if they did 1% per year ...

I actually thought the 2% referred to the full shareholding, not just the non govt shareholding. Unlikely they will buy the full 25m as they have only allcoated $50m - I assume they wont let it drop to $2 per share before buying.

[Winston001]

Forgive me but why not repay debt? Call me old fashioned but paying off debt is always number one in my business dealings.

[winner69]

Forgive me but why not repay debt? Call me old fashioned but paying off debt is always number one in my business dealings.

Repaying debt is not 'capital management' winston

Sometimes !capital management! Even goes as far borrowing more and buying back shares at the Sam time ....at least MRP not doing that

'

[jamiec26]

Its the first home buyers I feel sorry for!

That's why i'm here. Can't sump the deposit on the house. Now i'm reading this forum and buying shares. Not a bad outcome when SML is involved.

[CJ]

Forgive me but why not repay debt? Call me old fashioned but paying off debt is always number one in my business dealings.because debt is cheap at the moment so a much better return by buying shares.

[GTM 3442]

If the company has more money than it knows what to do with, then as a shareholder, I'd rather that they just gave it to me. I like money, and I'll gladly take it off their hands.

A share buyback means that someone else gets the money, and that I can only get some money if I sell my shares. That seems perverse to me.

Ask all those Blackberry shareholders. . .

[GTM 3442]

the buy back is a very goooooood! idea as the company is cheap as chips as one broker put it recently.....

and the market now has had a chance to pick up a lot of share cheap....

If you say so, but I'd still rather have the money than a paper profit. . .

[Zaphod]

Not really Air NZ cash that $1b .... most of it prepaid travel .... still have to spend a lot of that cash to fly the travellers to wherever

Zonks ago AIR raved about that $1b we have in the bank ... we wont go broke and all that stuff .... then the govt bailed them out eh

Ah so --- does AIR make most of its money from investing all this money then?

Things could turn for AIR without a doubt, but as a company it is in the strongest shape it has been for a long time and especially so compared to other airlines. AIR are buying back their shares as well as investing in new more efficient equipment to lower overheads while simultaneously allowing them to expand into new markets.

But regardless of this, the point is that any cash that cannot be spent by the company effectively to is being ploughed back to the shareholders via a buyback which makes perfect sense. We now have Labour claiming (as per the TV3 news tonight) that MRP are taking a further $50m from the pockets of taxpayers to try and increase the SP back to its listing price and intimated that they are doing so at the behest of the Government. What a load of bollocks.

[Master98]

Things could turn for AIR without a doubt, but as a company it is in the strongest shape it has been for a long time and especially so compared to other airlines. AIR are buying back their shares as well as investing in new more efficient equipment to lower overheads while simultaneously allowing them to expand into new markets.

But regardless of this, the point is that any cash that cannot be spent by the company effectively to is being ploughed back to the shareholders via a buyback which makes perfect sense. We now have Labour claiming (as per the TV3 news tonight) that MRP are taking a further $50m from the pockets of taxpayers to try and increase the SP back to its listing price and intimated that they are doing so at the behest of the Government. What a load of bollocks.

Seems Labour and Green speakers don't have the basic knowledge about the stock market, or just simply against anything related to National.

[fungus pudding]

Seems Labour and Green speakers don't have the basic knowledge about the stock market, or just simply against anything related to National.

Yes, it's politics. Labour/Greens have done everything possible to sabotage this float, which has lessened the price the taxpayer receives. That includes Parker completely discarding his analysis of electricity retailing and going along with their nonsense proposal purely in pursuit of power. They are quite delighted that they have managed to destroy the value of the power companies. Frightening stuff.

[RTM]

I think anyone who thinks that this buyback by MRP is not politically motivated and driven and timed is very naïve.
Who appoints the board ? The shareholders. Who was the only shareholder when the current board were appointed ? The government.
They will do anything they can to try to support the Meridian float. And they need to....to get the best return for the crown.

What a money go round.

Disc. Hold MRP, wavering on whether to purchase Meridian or not.

[Vaygor1]

"Hold MRP, wavering on whether to purchase Meridian or not."

if the share price is cheap why not buy it back

yes its probably been discussed with the major shareholder but its hardly anything but good balance sheet management and provides support for all shareholders and future shareholders

MRP is a good long term hold and at 2.17 it was the time to buy

becuase its under priced so good on them

I agree whole-heartedly.
This is an excellent signal to buy more.
MRP have timed this well, knowing that a lot of short-term-thinking people/institutions will likely be selling MRP to go for Meridian thus dropping the price further (now counteracted my MRP actively scooping them up).
MRP's board know so much more than anybody else regarding their own Company's future.
If the board believes the Company's share price and true value is $2.75/share now (as the institutions do) and $3.00/share in 6 months after positive announements, then buying around $2.20 gives an 80c/share return over 6 months = 74%/annum ROI. Far better return than repaying debt.

If enough people sell MRP to buy Meridian, you might find MRP complete this buy-back in less than a month... and then they'll announce another one.
Also, I get to increase my %age ownership of MRP and my dividend by 2%, for free.

[Jay]

Peter Lynch (One up on Wall Street) is a big fan of share buybacks, which I agree with on the whole.

The funds used are excess cash?? but what I'm not quite sure on is what is meant by being held as Treasury Stock, does this mean for example there were 100 shares in total, they buy back 10 to be held in Treasury Stock, does this not mean that there is still 100 shares and therefore the value is still the same, so how has "you and me " as shareholders gained anything . I must be missing something - probably are :-)


Disc: Not a holder at present - made a small profit on the ipo though.

[macduffy]

All this talk of government/board conspiracy reminds me of the old, now non-pc saying about N's and woodpiles. I'm not sure that there's a woodpile here, let alone an n! Just good balance sheet management and a bit of fortuitous timing!

[macduffy]

QUOTE[
The funds used are excess cash?? but what I'm not quite sure on is what is meant by being held as Treasury Stock, does this mean for example there were 100 shares in total, they buy back 10 to be held in Treasury Stock, does this not mean that there is still 100 shares and therefore the value is still the same, so how has "you and me " as shareholders gained anything . I must be missing something - probably are :-)

QUOTE=Jay;432118]Peter Lynch (One up on Wall Street) is a big fan of share buybacks, which I agree with on the whole.

It has the same status as "nominal" capital used to have in the days when companies had a nominal, as distinct to actual, issued capital. No effect until it is re-issued for cash or other consideration. Meanwhile, shareholders benefit from proportionately bigger shares of the pie!

[CJ]

but what I'm not quite sure on is what is meant by being held as Treasury Stock, does this mean for example there were 100 shares in total, they buy back 10 to be held in Treasury Stock, does this not mean that there is still 100 shares and therefore the value is still the same, so how has "you and me " as shareholders gained anything . I must be missing something - probably are :-) A company can hold upto 5% of its shares as treasury stock. If it buys more than that, it must cancel them.

The shares lose all their rights while held as treasury stock so no dividends or voting etc so that is why you benefit.

The benefit to the company in holding treasury stock is they can sell them again easily without needing to do reissue/capital raising, as would be the case if they cancelled the shares.

[Master98]

A company can hold upto 5% of its shares as treasury stock. If it buys more than that, it must cancel them.

The shares lose all their rights while held as treasury stock so no dividends or voting etc so that is why you benefit.

The benefit to the company in holding treasury stock is they can sell them again easily without needing to do reissue/capital raising, as would be the case if they cancelled the shares.

clear as mud! cheers

[blackcap]

A company can hold upto 5% of its shares as treasury stock. If it buys more than that, it must cancel them.

The shares lose all their rights while held as treasury stock so no dividends or voting etc so that is why you benefit.

The benefit to the company in holding treasury stock is they can sell them again easily without needing to do reissue/capital raising, as would be the case if they cancelled the shares.

Thanks for that CJ. Something I was not aware of. That makes sense and easy understanding.

[Jay]

Yes ditto to what balckcap said Thanks CJ

[robbo24]

Plenty of water up there at the moment - guess MRP is not at risk of drought for the time being.

[RTM]

Wow...$2.16 today. Lots of water in the lake !
Wonder where the price might be if they weren't trying to support it ! ?
Hope they leave more on the table with Meridian for the punters.

[RTM]

Wow...$2.16 today. Lots of water in the lake !
Wonder where the price might be if they weren't trying to support it ! ?
Hope they leave more on the table with Meridian for the punters.

[Bobcat.]

With a buy back underway, once this stock comes out from under its current selling pressure and starts to climb, it will soon settle into an upward trend, IMHO.

I'm watching daily with an expectation it will head north before it drops to $2.

BC

[Beagle]

Is the weakest ever price explained by people selling MRP to rebalance their portfolio in light of the Meridian float or is the market sufferring fatigue from power company floats generally...and this on the day the American's announce they've sorted their B.S. for a while.
Doesn't bode well for the future of MRP's price in my opinion.

If people lose money on Meridian the Government will have to do a Macca's deal to float Genesis. (Buy one share get one free), or here's a novel idea, float the thing at a realistic price earnings multiple instead of being so bloody greedy.

[Arbroath]

Wow...$2.16 today. Lots of water in the lake !
Wonder where the price might be if they weren't trying to support it ! ?
Hope they leave more on the table with Meridian for the punters.

The buyback does not add that much support on a daily basis but over time it will soak up weaker hands. IMO the weakness is more to do with funds looking to swap to MEL and freeing up funds rather than over-allocating to power companies.

My guess is MRP will be $2.30 by the end of October.

[mouse]

MRP looks as if it is a well run company. It supplies electricity to the North Island. Its Geothermal generators run 24/7, supplying the base load. The Hydro dams on the river supply additional power when required. They are switched on and off.
A further factor for MRP is that it is not reliant on the Cook Strait Cable. Nor very long cable lengths to supply its customers.
Anything under $2.25 must be a 'buy'. Why it went to $2.17 today is beyond me.

[warthog]

MRP looks as if it is a well run company. It supplies electricity to the North Island. Its Geothermal generators run 24/7, supplying the base load. The Hydro dams on the river supply additional power when required. They are switched on and off.
A further factor for MRP is that it is not reliant on the Cook Strait Cable. Nor very long cable lengths to supply its customers.
Anything under $2.25 must be a 'buy'. Why it went to $2.17 today is beyond me.

The hog is trying to get this straight.

MRP is "well run". Opinion.

Supplies energy to NI. Yes.

Geothermal 24/7. Yes.

CS cable. Yes.

How does the above lead one to the conclusion that $2.25 is good value?

$2.15 close today says Mr Market disagrees with you.

The hog presumes you were lining up to soak up anything under $2.25 today?

[Bobcat.]

I'll be buying MRP on the way up from around $2. Better value IMHO than the over-marketed, over-hyped Meridian.

BC

[Jasemc]

Factor in the latest poll shows a change of government will happen next year!

[mouse]

The hog is trying to get this straight.

MRP is "well run". Opinion.

Supplies energy to NI. Yes.

Geothermal 24/7. Yes.

CS cable. Yes.

How does the above lead one to the conclusion that $2.25 is good value?

$2.15 close today says Mr Market disagrees with you.

The hog presumes you were lining up to soak up anything under $2.25 today?

As a maintenance engineer, at least in my previous life, I have to weigh up how close the customers are to the supply chain. Each extra link in the chain provides an additional concern. The fact that MRP is not reliant on the Cook Strait Cable becomes important, plus the very long DC link for Meridan is important. All links need maintenance and can fail. MRP equally relies on the Grid. But it is shorter. So less reliance on it.
Which brings me to Hanmer. I was in the Hot Pools. Chatting to a few Maori chaps from Timaru. Who were working maintaining the link. They have a good head for heights. To stop being 'Racist' the Company decided to employ a Whitey to also do the job. The Maoris were suspected of hunting Wild Pigs in the Firms Time. So Whitey went with them.
He got to the top of the pylon, onto the arm. Then froze. Could not move. So they tied him onto the cross arm and sent for the Fire Service to rescue him. They used a very long rope. The Rope Went to the ground. A few chaps down below were holding the rope.
The frozen chap relaxed a bit. Help was on its way.
My Maori Mate then,

Pushed Whitey off the arm. He dropped say 5 metres and he was then lowered to the ground.
What could the Fire Service Do?

Today, of course, we would need Health & Safety to advise.
I have now bought another lot of MRP to balance my power stations. Two thirds North Island, one third South Island.

Enjoy the Week-end. Mouse.

[troyvdh]

mmm....probably a stupid question...why does the Direct broking site display transactions at 3.50 ..yes I should know...

[mouse]

Accidently I now have 3.600 shares in MRP at a price of $8,400 and 3,600 shares in Meridian for $3,600 down and $1,800 in the future. So 3,600 shares in Meridian for $5,400. The question now is which will make more cash, which will perform better. I think dividends received have to be included so I will try to update this every six months.
MY VIEW is that MRP is a better long term investment than Meridian.

[PartyPooper]

I'm in the same boat currently holding 3000 MRP shares. 2000 from IPO(2.50) and 1000 at 2.16. 3000 shares at 7160.00.
4750 MELCA shares 4750 with 2375 due in 18 months total 7125.00.

Weather experts think its going to be pretty dry in the south this summer. However Lakes are pretty full at the moment, might be an opportunity to top up MELCA if it stays dry. I think any hope of MRP going further down is over thanks to the buy back.

Although I really don't care about weather right down. What I care most about is that the w**ker Cunliffe doesn't get in Government.

[mouse]

I'm in the same boat currently holding 3000 MRP shares. 2000 from IPO(2.50) and 1000 at 2.16. 3000 shares at 7160.00.
4750 MELCA shares 4750 with 2375 due in 18 months total 7125.00.

Weather experts think its going to be pretty dry in the south this summer. However Lakes are pretty full at the moment, might be an opportunity to top up MELCA if it stays dry. I think any hope of MRP going further down is over thanks to the buy back.

Although I really don't care about weather right down. What I care most about is that the w**ker Cunliffe doesn't get in Government.
Your figures for dollars invested are far better than mine to compare profitability. I am sure that all investors have to have cash in the power generators. Plus that we need to have both South Island and North Island companies.
I THINK that it is better to have more invested in the North Island. The reason for this is,
1/. Meridian have to maintain their canal systems but MRP have the Waikato River maintained mainly free of charge.
2/. MRP are much closer to their customers than Meridian, who have to get their electricity across the Cook Strait. Which all adds hazards and costs.
3/. I THINK, without any coherent reason, that Geothermal generators will have a longer life and less trouble than windmills. BUT, it should be remembered that MRP are using their Geothermal as 'base load', in other words generating with them 24/7, whilst Meridian hope the wind blows!
4/. The point about the Geothermal generators is they are working 24/7. Thus they are earning their keep. The Meridian windmills may never earn their keep. They seem to lose cash overseas. But we might be windier in NZ. Mighty River seem to have made a good choice about investing in base-load generators.

[Master98]

Although I really don't care about weather right down. What I care most about is that the w**ker Cunliffe doesn't get in Government.

Don't vote Labour/green for next year election. My family has fairly large holding both in MRP and MELCA, quite sure will only vote NATS.

[PartyPooper]

Your figures for dollars invested are far better than mine to compare profitability. I am sure that all investors have to have cash in the power generators. Plus that we need to have both South Island and North Island companies.
I THINK that it is better to have more invested in the North Island. The reason for this is,
1/. Meridian have to maintain their canal systems but MRP have the Waikato River maintained mainly free of charge.
2/. MRP are much closer to their customers than Meridian, who have to get their electricity across the Cook Strait. Which all adds hazards and costs.

I agree with your points and if MRP was still around 2.15 I'd be very happy to top up. But with the political risk at the moment not so much.

[GR8DAY]

......MIGHTY RIVER HAS TO BE THE SAFER "BET" AT THE MOMENT (price underpinned by the Share Buy-Back Scheme)

[mouse]

Weeellll! Mighty River still way below issue price. Meridian given away, but only a small upwards move of ten cents.
So where are we?
Plus Where is Govt., who propose to sell Genesis Energy. Which Rod Oram said this morning, on the National Programme, is now unsellable. Who will buy? Plus we have the problem of threatened political interferance.
The other factor is that Genesis has some? coal fired power stations. How do you abandon them? I live in Christchurch and thankfully have not seen a coal fired power station in years. Rod Oram suggested that Meridian could buy-back the Twizel dam which Genesis own.
But Genesis? We wait for John Key. Electricity shares could take a year at least to settle into a predictable price range. I cannot hazard a guess.

[percy]

MRP are down 12% since listing,while MELCA are up 11%.
I would be selling my loser, and be buying more of my winner if I held both.
[As you would expect I only hold MELCA].lol.

[CJ]

MRP are down 12% since listing,while MELCA are up 11%.
I would be selling my loser, and be buying more of my winner if I held both.
[As you would expect I only hold MELCA].lol.MRP are down 7.6%. There has been a dividend in the mean time worth 4%.

[percy]

MRP are down 7.6%. There has been a dividend in the mean time worth 4%.

My mistake.
So we have one company down 7.6% while the other is up 11%,
Yes, still one is a loser,while the other is a winner.!! [with fat divie to come].lol.

[JimHickey]

My mistake.
So we have one company down 7.6% while the other is up 11%,
Yes, still one is a loser,while the other is a winner.!! [with fat divie to come].lol.Why?
The price you paid is irrelevant to how the stock is going to perform going forward. Cant change what has happened.

[percy]

The share price is telling me that MRP are in the wrong part of the country to supply the huge increase in power usage that irrigators in Canterbury,South Canterbury ,North and South Otago, The Mackenzie Basin,and other parts of the South Island,will place on Meridian.

[BWH]

I often wonder if the Govt will abandon further sales, seeing as things haven't exactly gone smoothly to date. The upcoming referendum and its predictable showing of public opinion could be the easy out that they need.

[percy]

I often wonder if the Govt will abandon further sales, seeing as things haven't exactly gone smoothly to date. The upcoming referendum and its predictable showing of public opinion could be the easy out that they need.

I think the Govt will find it near impossible to float Genisis while they have the ex Mainziel chair person as chair.

[CJ]

I think the Govt will find it near impossible to float Genisis while they have the ex Mainziel chair person as chair.I still think they will carve it up. Huntly is worthless.

[Wolf]

I have them at being $10,977,530.01 through their buy back so fair way yet.

The announcement on the 29th of October said that:

"The Crown, which holds 51.76% of Mighty RIver Power's shares, has advised the Company that it does not wish to participate as a seller into the share buyback."
https://www.nzx.com/companies/MRP/announcements/243006

Was the crown selling shares to the MRP buy back before this date??
It say's the buyback is at 8.30am so are they off market trades? and if so from who?

[mouse]

I still think they will carve it up. Huntly is worthless.

The demand for electricity is in the North Island. Which is where MRP is located. 40% of their output is Geothermal, the base load. Hydro is switched 'on' and 'off' as required. It deals with peak periods.
Huntly is worse than useless to my mind, it is a liability. How much I do not know. They firstly have to mothball it, then they have to demolish it and maybe even clean up the site? How much that lot will cost is pure guess-work.
The best thing Govt can do is sell off the bits of Genisis. Meridian would then buy Twizel and reduce their dividends for a few years.

[mouse]

The Phillipine Typhoon, winds of 200 mph, demonstrates that our power lines are a bit of a problem in a blow. Hence it is better to have short lines to the major customers. My experience was of Typhoons in HK. For six years. They could be severe.

[percy]

The Phillipine Typhoon, winds of 200 mph, demonstrates that our power lines are a bit of a problem in a blow. Hence it is better to have short lines to the major customers. My experience was of Typhoons in HK. For six years. They could be severe.

No typhoons in South Island,and Meridian are nice and close to supply huge irrigator's power demand.

[mouse]

No typhoons in South Island,and Meridian are nice and close to supply huge irrigator's power demand.

But the huge irrigator's power demand cannot equal 30% of the NZ electricity consumption. Which Meridian produces.
I do agree we should disconnect from the North Island asap.
Which would unfortunately destroy the share price of Meridian.

[percy]

With the huge growth in the number of irrigators they are doing their best.!!
As will a rebuilt Christchurch.
A very positive out look for Meridian,being at the right place at the right time.

[mouse]

With the huge growth in the number of irrigators they are doing their best.!!
As will a rebuilt Christchurch.
A very positive out look for Meridian,being at the right place at the right time.

For info., Percy has no MRP shares at present. But it was astute buying by Percy to only get Meridian on the IPO.

[percy]

For info., Percy has no MRP shares at present. But it was astute buying by Percy to only get Meridian on the IPO.

Also changed my power supplier from Genisis to Meridian
Feel I am "well positioned." lol.

[mouse]

Also changed my power supplier from Genisis to Meridian
Feel I am "well positioned." lol.

Details please on Meridian pricing, is it cheaper than Genesis? For Christchurch.

[percy]

Details please on Meridian pricing, is it cheaper than Genesis? For Christchurch.

Contact them direct as they have different plans .
I went for 3 years fixed.
Also was given a nice incentive to change.

[mouse]

Contact them direct as they have different plans .
I went for 3 years fixed.
Also was given a nice incentive to change.
Many thanks.

[Bobcat.]

Many thanks.

You should also consider Powershop. By purchasing smart (e.g. their monthly specials available first week of every month) I average out at about 23c/kWh. Why pay more?

[PartyPooper]

I've been surprised to see MRP sink back down to the 2.16/2.17 range. Seems this afternoon buyers were pilling in trying to get some at 2.165. Got a small parcel at that price. Hopefully over time the buy back will push the price to 2.25+ for some gains.

[Bobcat.]

I'm waiting for the DJIA/S&P500 to suffer a sharp correction before coming in on bluechip utilities like MRP. I like the stock and the buyback will no doubt lift the shareprice at some point, but Equity markets have had such a climb lately, they are looking easily spooked. Note this week's impact of the DJIA and S&P 500 running out of steam on the ASX, and that's with a falling Aussie $.

I'll be buying when global market sentiment takes MRP below $2.

[Joshuatree]

They're both heading that way . Who needs a pesky tenant when you can sit back and watch the River go By (not dry):)

[Wolf]

Why the sudden price weakness in MRP and MELCA??

[silu]

Why the sudden price weakness in MRP and MELCA??

Can't be political because the Nats increased its vote in the last poll.

http://www.roymorgan.com/findings/5299-new-zealand-voting-intention-november-14-201311140325

[silu]

And MRP is the biggest loss maker in my NZ portfolio. I'm a pretty upset citizen and shareholder.

[Joshuatree]

I think its uncertainty, part political. Other polls suggest Labour Could be a threat. I know sophs who have sold and are putting their money into Aus whilst exchange rate is good. Instos could be doing the same.

[mouse]

|How to value a power company is the problem. Is it what they can charge the customer?
Or is it the replacement value of the complete generating system, including canals, dams and generating plant.
Or is it the actual cost of building the plant 30 years ago, plus running costs.

People were caught over exactly this issue with Telecom. Who thought they had some Divine Right to print money. Govt then changed the rules and the share price collapsed.
One thing is certain, both MRP and Meridian are long term holds and will pay good dividends for years to come. Sit tight and collect the dividends.
I of course agree with Belgarion.

[Harvey Specter]

|How to value a power company is the problem. Is it what they can charge the customer?
Or is it the replacement value of the complete generating system, including canals, dams and generating plant.
Or is it the actual cost of building the plant 30 years ago, plus running costs.
Depends on what you are valuing it for. For operating business, always value cash flow as cost (original or replacement) is irrelevant.

Comcom shouldn't get involved since not a monopoly.

Regulated industries you need to consider the RAB (regulated asset base) and regulated return.

[macduffy]

Comcom shouldn't get involved since not a monopoly.


We can love them or hate them but the fact remains that the Commerce Commission has a statutory role to oversee competition in regulated industries - of which the electricity industry is one of the major ones. Investors in this industry - that includes me - should do so with their eyes wide open!

[Harvey Specter]

We can love them or hate them but the fact remains that the Commerce Commission has a statutory role to oversee competition in regulated industries - of which the electricity industry is one of the major ones. Investors in this industry - that includes me - should do so with their eyes wide open!
True but hard to argue no competition. Every company has different prices and different suppliers are cheaper in different areas. Not an oligopoly like the oil/petrol industry.

[mouse]

True but hard to argue no competition. Every company has different prices and different suppliers are cheaper in different areas. Not an oligopoly like the oil/petrol industry.
The simple facts are that if power prices are 'regulated' then the power companies can switch off their highest priced generators. As has happened, where Govt had to pay to install a gas fired emergency generating set some years ago. So eyes wide open, but every developed country has to have a very reliable electricity supply.
To achieve this Electricity Generation should probably be run by the State. With our private enterprise model, a profit squeeze will lead to a systematic reduction of generating capacity.

[janner]

The simple facts are that if power prices are 'regulated' then the power companies can switch off their highest priced generators. As has happened, where Govt had to pay to install a gas fired emergency generating set some years ago. So eyes wide open, but every developed country has to have a very reliable electricity supply.
To achieve this Electricity Generation should probably be run by the State. With our private enterprise model, a profit squeeze will lead to a systematic reduction of generating capacity.


In other words mouse .. You are saying that Private Enterprise does not take into account the future !!..

This can only be done by Government !!..

Pass the Tui !!..

[mouse]

In other words mouse .. You are saying that Private Enterprise does not take into account the future !!..

This can only be done by Government !!..

Pass the Tui !!..
No. Not saying that at all. The Regulator has to be very careful because if demand is depressed today, and the Regulator holds prices down, then generation plant will be closed down. Shut. Dismantled. The Government will then have to pick up the pieces and provide State Subsidies. So, Regulation can only be very light, or possible disaster follows. With all the various electricity generators there should be sufficient competition to make prices reasonable. Eyes Wide Open, but in my opinion situation is not a problem at all. Also remember electricity prices can track up, but also track down. As can share prices. Supply and Demand.

[Bobcat.]

Looking at the charts, both MRP and TPW look to be priced more for a Buy than for a Sell, but I've been working other sectors for a while and admit that I'm out of touch with this one.

Apart from the increasing threats of a Labour/Green shift in policy and impact on company profitability, does anyone have a DCV or other comparison of the value of investing in these two companies?

TPW vs MRP.

Edit: Nevermind, I've found some good work by Snoopy and others in the Trustpower thread:
http://www.sharetrader.co.nz/showthread.php?1363-TRUST-POWER/page10&highlight=TPW

[Vaygor1]

If anyone knows MRP's position better than anyone, it is MRP's own Board of Directors.

They have decided there is no greater return (given a corresponding risk profile) they can achieve for their business (and shareholders) than buying their own shares back. Obviously because they consider them as cheap.

They announced they would buy up to 25 million shares or up to NZ$50 million worth and commenced 15-Oct-2013 to be complete by 14-Oct-2014.

Friday close just gone completed 1 month of buying back and I have been tracking it.

So, in round figures, at close of trading Friday 15 Nov 2013:
Amount of shares bought back: 6.84 million
Amount spent in doing so: NZ$15 million
Average $/share bought back: $2.19

If they do buy back all they have declared, they will likely reach the NZ$50 million mark well before 25 million share mark as I cannot see the shares dropping below NZ$2 and if so then not for long.

This means that after 1 month MRP are 30% of the way through the buy back process. Given the daily volumes traded on the market, MRP's buying has not been very aggressive to-date in my view, but so long as the shares stay around this price or lower and they maintain their current buying rate, they will complete the process before 31-Jan-2014. Nine months ahead of the deadline.

Draw your own conclusions, but if the board think the current price is a bargain, then it probably is.

[Vaygor1]

My conclusion is the whole buy back is politically motivated - consequently I don't believe any conclusion that MRP is great value can be sustained by what the board is doing.

A view you are well entitled to Belgarion. I am a self-confessed conspiracy theorist but don't think govt politics have too much part to play in MEL's buy-back decision, at least on this occasion.... Mind you, I haven't put my money where my mouth is and bought under $2.23 .... yet. :-)

[Tyro]

My conclusion is the whole buy back is politically motivated - consequently I don't believe any conclusion that MRP is great value can be sustained by what the board is doing.

The political return on capital has been much lower since the MELCA float. Any news on Genesis?

[warthog]

The hog suggests posters here consider the electricity market in California, as a data-point in the context of energy markets, free markets, and state intervention.

Also, if anybody here does not understand the concept of Moral Hazard, then they would, respectfully, be well-served to look it up and give it some consideration, but it is not straight forward. Ask BenB.

Politics and economy is not, as some would have everyone believe, a simple issue, but it *is* often boiled down in the media so even the most simple of people can think themselves informed, and even on occasion, an expert (which leads them to sometimes start posting here!).

[mouse]

The hog suggests posters here consider the electricity market in California, as a data-point in the context of energy markets, free markets, and state intervention.

Also, if anybody here does not understand the concept of Moral Hazard, then they would, respectfully, be well-served to look it up and give it some consideration, but it is not straight forward. Ask BenB.

Politics and economy is not, as some would have everyone believe, a simple issue, but it *is* often boiled down in the media so even the most simple of people can think themselves informed, and even on occasion, an expert (which leads them to sometimes start posting here!).
Depends on what morals have moral hazard!
Politics and economy are easily understood. When short of a bob or two, mint a few more. For banknotes, run the printing press. If things really get tough, sell the Country bit by bit. Tell the electorate you are spending the cash on Schools and Hospitals. Avoid telling the electors how you intend to pay to staff and run places. Economics is really simple, Get a Good Bubble Going.

[Wolf]

Has anyone got a valuation on MRP?
I had a go at finding the eps growth

EPS-
2010- 6.04c
2011- 9.08c
2012- 4.84c
2013- 8.19c
2014 forecast- 11.46c
Average EPS growth- 26.38%
Or if I ignore 2010/2011- 54.57%


I must have done something wrong? EPS doesn't seem to be a relevant way of finding a value for MRP. Neither does Dividend yield. 26 is also a bloody high PE.

[peat]

Wolf, I threw a few numbers around in the pre-float thread.
http://www.sharetrader.co.nz/showthread.php?8622-Who-s-in-for-the-Mighty-River-Power-float/page86

post #90 and #95 on 23/7/12 not an actual val, just some historical trends . Conclusion was ROE trending down, revenue static . There is more data available now of course

[Wolf]

Cheers peat. Anyone know a broker firm that has done some forecasts? I don't really know much about the energy industry and have come to the conclusion that i cant create an accurate forecast. (yea i know stick with what you know) but i've got them so i'm trying to get my head around a fair price.

What is interesting is tangible book value:
From the 2013 annual report after taking away intangible assets i get net assets of:

Total Assets- Intangible assets- liabilities
5802055 - 52045 - 2620307 = 3,129,703

Can't find units anywhere so assuming this is in Millions.

Total shares 1.4b

3.1b / 1.4b = $2.21

At a close of $2.18 it is trading below that...


Have i made a mistake somewhere?

Disc: New to value investing, figures may be incorrect.

[bryndlefly]

on the ASB securities site the top volumes list shows $9,536,132.62 turnover today, but on the details tab for MRP it says $49,153,643 turnover. Am i reading something wrong? Either way a pretty high turnover, i can't find any announcement about it.

[winner69]

It was $49 million

A lot of things happened at the end of the day .... including index changes

[Xerof]

wots your P&F chart showing now winner? must have turned bullish?

[winner69]

wots your P&F chart showing now winner? must have turned bullish?

That was for MELCA ... and that even has a green X after today

I dial MRP up on the Clever Point and Figure Charts on the iPad latter to have a look

[Xerof]

Oh yeah, sorry, so it was

[Harvey Specter]

I agree. Boards should not treat holders as moron and should fully reason using any and all maths as to why they consider it better than other options. This would also give us some assurances that boards actually know what they're talking about and can do the jobs holders appointed them to do.I am sure their number one reason is:

"The current share price is depressed due to the absolutely ridiculous proposal set out by Green/Labour which we do not beleive will be implemented even if the general population are stupid enough to vote them into power in 2014"

However, if they had said that, the buyback would have been labeled "political" more than it already was.

[Vaygor1]

I am sure their number one reason is:

"The current share price is depressed due to the absolutely ridiculous proposal set out by Green/Labour which we do not beleive will be implemented even if the general population are stupid enough to vote them into power in 2014"

However, if they had said that, the buyback would have been labeled "political" more than it already was.

Here here HS. Very funny and sadly, very true. I think there are more reasons than just the Labour/Green policy, but it must be a contributing factor to the depressed share price imho.

If by some tear in the fabric of space-time continuum they are voted in then I doubt they will implement...... But if they did, I would see it as an opportunity.

History demonstrates that in any given year that the government tinkers with the power sector, market fear drives (in this case MRP's) share price through the floor; ie time to buy. What happens next is that the generating companies and lines companies make an absolute fortune during the transition period of switching from the old to the new mechanism/pricing model. At the end of that period, following announcement, the share price will go gang-busters; ie time to sell.

[warthog]

Short memory HS. The current National Govt took the punter's money and then set the price knowing full well that what the opposition's policy would be.

Exactly, Belgarion.

Ditto Meridian.

Contact - x punters
Mighty River - x/2 punters
Meridian - x/4 punters

Where punters, as a decreasingly significant grouping in the electorate, can be dismissed (by the government and others) as short-term speculators under water because of greed.

[Harvey Specter]

Short memory HS. The current National Govt took the punter's money and then set the price knowing full well that what the opposition's policy would be.the IPO price us irrelevant as MRP aren't paying that. Are you saying there is no discount in the CURRENT price for Greens/Labour policy?

[Harvey Specter]

Sorry, I don't understand this. Could you elaborate?MRP did not do the IPO (ie. No new shares), it was their 100% shareholder.

The buy back is therefore independant to the IPO and the BoD only decisions are whether the current SP is undervalued and whether a share buyback is the best use of surplus cash. They have answered inthe affirmative, but haven't given a detailed explain action of why and in particular how the impact of the Greens/Labour policy effects that first decision. If implement in full ASAP, the current SP is overvalued and they would have done their remaining shareholders a disservice.

[mouse]

Another Disaster!!!!!!!!!!! Today!!!!!!!!!!!!!
How will Govt get Mum and Dad investors to queue up for Genesis Shares, when cash is lost on both Mighty River AND Meridian? Both below IPO price. With MRP well below IPO price. Where will it end? What is happening to the World?

[Bobcat.]

I'm left wondering if Key's nod of approval to Orion's price hike confirmes his preference that Christchurch City fund more of their rebuild, and therefore central government (NZ taxpayers) less of it (?).

I bet other power companies would now love to follow suit.

[Vaygor1]

Posted18-November-2013
.... after 1 month MRP are 30% of the way through the buy back process. Given the daily volumes traded on the market, MRP's buying has not been very aggressive to-date in my view, but so long as the shares stay around this price or lower and they maintain their current buying rate, they will complete the process before 31-Jan-2014. Nine months ahead of the deadline.

Well yesterday's announcement put the kibosh on that... I should have envisaged that a black-out period of MRP's buy-back would come into play at some stage.

MRP's share price will likely drop further as a result of them ceasing their buyback for 3 months, which will in theory have been artificially proping up the price since mid October. Perhaps down to $2:00 or less?

https://www.nzx.com/companies/MRP/announcements/244547

[mouse]

Well yesterday's announcement put the kibosh on that... I should have envisaged that a black-out period of MRP's buy-back would come into play at some stage.

MRP's share price will likely drop further as a result of them ceasing their buyback for 3 months, which will in theory have been artificially proping up the price since mid October. Perhaps down to $2:00 or less?

https://www.nzx.com/companies/MRP/announcements/244547

Oh, No! Just when I thought that MRP would buy the abandoned shares, they stop. For Three Months, or thereabouts. And they have already spent half the $25 million.
But think. Where the 'regulator' struck was in monopolies. Like Orion and the likes. We cannot expect power prices to be 'regulated' since they are not monopolies. In fact, I have an offer today from Meridian to supply me power. I shall ring Genesis on Monday to find their reaction. I suspect the selling of power company shares in NZ is coming from overseas. Take Courage!

[CAM]

Well yesterday's announcement put the kibosh on that... I should have envisaged that a black-out period of MRP's buy-back would come into play at some stage.

MRP's share price will likely drop further as a result of them ceasing their buyback for 3 months, which will in theory have been artificially proping up the price since mid October. Perhaps down to $2:00 or less?

https://www.nzx.com/companies/MRP/announcements/244547

So a buying opportunity when the price drops and a selling opportunity when the buy back resumes?? Or a chance to short the shares now?

[Vaygor1]

Oh, No! Just when I thought that MRP would buy the abandoned shares, they stop. For Three Months, or thereabouts. And they have already spent half the $25 million.
But think. Where the 'regulator' struck was in monopolies. Like Orion and the likes. We cannot expect power prices to be 'regulated' since they are not monopolies. In fact, I have an offer today from Meridian to supply me power. I shall ring Genesis on Monday to find their reaction. I suspect the selling of power company shares in NZ is coming from overseas. Take Courage!

Oh I have no problem in the price dropping. The more they drop, the more I will buy! Did this with RYM from Sept 2007 to Nov 2008. Also did the same for PWC back when they were on the market. If these shares had not dropped (thus causing me to buy more than I ever imagined), then I would still be doing okay, but would be nowhere near the position I am in now.

[Vaygor1]

Well yesterday's announcement put the kibosh on that... I should have envisaged that a black-out period of MRP's buy-back would come into play at some stage.

MRP's share price will likely drop further as a result of them ceasing their buyback for 3 months, which will in theory have been artificially proping up the price since mid October. Perhaps down to $2:00 or less?
https://www.nzx.com/companies/MRP/announcements/244547
So a buying opportunity when the price drops and a selling opportunity when the buy back resumes?? Or a chance to short the shares now?

Buying more when/if the price drops? YES. I never went into the IPO and have bought cheap. Happy with the price I have bought. Happy to buy cheaper.

Selling when the buy back resumes? NO. Keep for divvy's or maybe sell around $3.00 which will occur in the next 18 months. Equals 50% return + divvys in 1.5 years. Not bad (if you think I'm right). I will even hazard a guess and say Feb 2015... 15 months from now.

Shorting now? NO. Too risky and too short term a strategy for me. Although propping up the price a bit, MRP's buyback wouldn't have that much of an impact on the share price if you look at average daily trading volumes. Market sentiment hearing about the buyback on hold for 3 months will drop the price more than the immediate effect of the buyback suspension itself imho.

[Wolf]

Geothermal power station down... Dam. Tossing up between putting them in the bottom draw for a year or so or throwing them out.

[Harvey Specter]

Wolf - yes, they will be relying on their Dams while the plant is down. Only two weeks during a low demand period so not a major.

[Wolf]

GENERAL: MRP: Joint venture power station temporarily withdrawn

Please note the following news release from the Nga Awa Purua Joint Venture
relating to maintenance at the Nga Awa Purua Geothermal Power Station:

Nga Awa Purua Joint Venture has temporarily withdrawn its geothermal power
station from the market to carry out repairs on the steam turbine, and is
scheduled to have the station near Taupo operating again within 1-2 weeks.

Joint Venture Chair, William Meek, said that during a planned outage for
routine maintenance, inspections found that the turbine blades were being
affected by geothermal fluids used to power the plant. The turbine was
modified to allow ongoing operation, reducing operating capacity to about
95%.

"This shut means we can open up the turbine so that we can properly assess
the issue to increase reliability of the plant through until permanent
repairs can be made in about 15-18 months."

He said the maintenance outage would not have a material financial impact,
with revenue losses mitigated by current wholesale market conditions. The
current estimated repair and turbine blade replacement cost to the joint
venture is expected to be about $15 million in FY2015.

About Nga Awa Purua:

- Nga Awa Purua station commissioned March 2010, with rating of 138MW (above
original design by 8MW)
- Jointly owned: Mighty River Power 65% / Tauhara North No.2 Trust 35%
- Plant availability since commissioning 96%, well above international
benchmarks.

I dont see why they are going to do a permanent in 15-18 months, how about they do it now while "He said the maintenance outage would not have a material financial impact,
with revenue losses mitigated by current wholesale market conditions."

[MAC]

Geothermal power station down... Dam. Tossing up between putting them in the bottom draw for a year or so or throwing them out.

These things are transitory Wolf and will happen from time to time. Geothermal turbines can be prone to chemistry issues and all turbines have their issues, cavitation with hydro, burners with gas turbines.

The secret to staying in the power business is diversification and MRP have a big fleet, if one unit requires major maintenance it's not a big issue, would be different for a startup company with only one power station.

[Harvey Specter]

These things are transitory Wolf and will happen from time to time. Exactly - these guys have revenue close to $2B a year from a range of different generators and a big retail base.

Dont sweat the small stuff. The market isn't, its up.

[couta1]

MRP under $2 oh dear for us holders

[silu]

MRP under $2 oh dear for us holders

I want to average down for ages but the trend is still going south.

[rbel038]

The turbine they could just be pulling out damaged blades at this time to get the thing back up and running reliably. Perhaps going back to the designers to redesign and manufacture and install in the future as the "permenant solution"

Of course pulling blades however lowers the efficiency of the turbine in the meantime

[Vaygor1]

"...the maintenance outage would not have a material financial impact, with revenue losses mitigated by current wholesale market conditions. The current estimated repair and turbine blade replacement cost to the joint venture is expected to be about $15 million in FY2015."

MRP own 65% of the asset, so cost to MRP is 0.65 x $15M = $9.75M
This paltry sum together with the statement '...would not have a material financial impact' means I am astonished they even announced it.
This type of issue/event is just business as usual for power stations, refineries, and petrochemical plants throughout NZ and the world.

Have bought more at $2.00 today.

[GR8DAY]

........bought more at $2.01, gotta be a healthy dividend return on that?? (anyone worked it out?)

[Vaygor1]

........bought more at $2.01, gotta be a healthy dividend return on that?? (anyone worked it out?)

I make it out as a 50% ROI over a 15 month period (equals approx 40%/annum) plus dividends. This is based on MRP = $3/share buy Feb 2015 which I think will occur.

Edit.. sorry GR8DAY, my response above is on Capital Gain not Dividend Return. Can look this up later in the week.

[blackcap]

........bought more at $2.01, gotta be a healthy dividend return on that?? (anyone worked it out?)

Dividend might be cut.... very likely if profit targets are not met due to decreasing demand...

[J R Ewing]

Here's a question for you. If Cunliffe and Norman actually DID commit to buying back these shares, would you vote for them as a means of recouping some of your losses?

[silu]

Realised I had a big order in there for $1.99. Luckily was able to remove that just in time.

[Vaygor1]

Here's a question for you. If Cunliffe and Norman actually DID commit to buying back these shares, would you vote for them as a means of recouping some of your losses?

I am not sure to what losses you refer. No one loses a cent until they sell, meanwhile the dividends roll in. If an MRP shareholder does sell then he/she is out, and MRP is removed from their voting criterion. MRP are buying back shares anyway thus increasing my ownership for free. Current price presents an opportunity.

Best ask again in 3 years time when the chance of Labour getting in is minuscule instead of zero, and MRP have had 3 years of results behind them to establish the beginnings of a medium term trend.

[Bobcat.]

I was more interested in MRP than Meridian but have you seen today's price of MELCA?

Now that's getting very tempting. Perhaps on Monday which is normally more of a buyers' market...

BC

[Vaygor1]

........bought more at $2.01, gotta be a healthy dividend return on that?? (anyone worked it out?)
i make it out as a 50% roi over a 15 month period (equals approx 40%/annum) plus dividends. This is based on mrp = $3/share buy feb 2015 which i think will occur.

Edit.. Sorry gr8day, my response above is on capital gain not dividend return. Can look this up later in the week.

Okay, here is the calc on Divvy returns.

Last year Dividend was 12c/share (4.8c before the IPO, and 7.2c after).
The 7.2c/share fully imputed was paid out on 13-Sept-2013

Using by Mum's (bless her heart) token purchase by way of example:

She bought 1600 Shares at IPO price of $2.50
She received $107.20 in the bank, plus she got $44.80 in Imputation Credits. WHT was $8.00
Gross Dividend of $160 minus WHT of $8.00 minus $44.80 ImpCred = her $107.20 received.
$160 out of 1600 parcel = exactly 10 cents per share or 4% return on the IPO price of $2.50


The MRP literature informs me that next year's dividend will be 13c/share fully imputed and if buying at NZ$2.00/share instead of $2.50/share and MRP has completed buying back 2% of the dividend-paying stock and for simplicity, assume the whole dividend payment is paid in mid Sept 2014:

4.000% x (13/7.2) = 7.222% to cover the increase in dividend aspect.
7.222% x ($2.50/$2.00) = 9.0278% to cover the buying at $2.00 instead of $2.50 aspect.
9.0278% x 1.02 = 9.208% to cover the 2% reduction in shares eligible for dividend.
9.208% x 12/9 = 12.2777% to cover only 9 months until payment.


So buying at $2.00/share now equates to a Gross Dividend return of 12.28%

So at $2.00/share now, the market is saying investing in MRP has over 350% the risk profile of government stock.

I am also confident that the Labour/Green electricity bulk-buying policy (If they even form a government and subsequently implement the policy) will have zero impact on MRP's profits except to allow them to make a killing in the year the transition from the old pricing model to the new one occurs.

[Harvey Specter]

9.0278% x 1.02 = 9.208% to cover the 2% reduction in shares eligible for dividend.
9.208% x 12/9 = 12.2777% to cover only 9 months until payment.

I dont agree with these two.

- The div will still be 13c per share. it does mean they will retain some cash they would have otherwise paid but then they bought shares so far in excess of that amount.
- Yield is an annualised number so you cant use part periods. I also assume they will pay an interim and final dividend.

[Vaygor1]

I dont agree with these two.

- The div will still be 13c per share. it does mean they will retain some cash they would have otherwise paid but then they bought shares so far in excess of that amount.
- Yield is an annualised number so you cant use part periods. I also assume they will pay an interim and final dividend.

The 1.02 is in fact 1/0.98 = 1.0204 but you are right, it will add to retained earnings instead of dividends.
The 12/9 is correct from the view that you will get this return in 9 months, but I understand your point. I also qualified the interim dividend out in my post. At least the basis is there for you to tweak to your needs.

[Harvey Specter]

One quite big assumption there ...



That was then ... this is now ... the board (in their infinite wisdom) can find all sorts of very good reasons why the 13c could be come 12c, or 11c, or even less.
The 51% shareholder has that in their budget so they will require it to be made unless something major happens.

[Snoopy]

I am also confident that the Labour/Green electricity bulk-buying policy (If they even form a government and subsequently implement the policy) will have zero impact on MRP's profits except to allow them to make a killing in the year the transition from the old pricing model to the new one occurs.


Interested to hear why you feel that Vaygor.

MRP has made no secret of regularly valuing their hydro assets upwards as power prices overall increase. If these asset revaluations are reversed to some historic norm, then the price of power that a single state buying agency will be prepared to pay to MRP will be rather lower than today, based on whatever reasonable 'return on asset' formula is used.

Other power companies have not regularly increased the value of their hydro assets like MRP has. IMO of all the power companies listed, MRP has by far the biggest downside risk from a Labour/Greens energy policy. And it will hit them from day 1 like a sledgehammer.

Of course if a National lead government is returned, MRP is likely to emerge out of the current flat power pricing into the future scenario better than the other electricity generators. This is because of the balance they have achieved between hydro and geothermal generation and their proximity to the largest power market (Auckland).

SNOOPY

discl: hold MRP

[Vaygor1]

One quite big assumption there ...

...The MRP literature informs me that next year's dividend will be 13c/share fully imputed...
That was then ... this is now ... the board (in their infinite wisdom) can find all sorts of very good reasons why the 13c could be come 12c, or 11c, or even less.
The 51% shareholder has that in their budget so they will require it to be made unless something major happens.

I would go so far to say that I think 13c/share fully imputed dividend can almost be deemed to be government guaranteed.

[Vaygor1]

I am also confident that the Labour/Green electricity bulk-buying policy (If they even form a government and subsequently implement the policy) will have zero impact on MRP's profits except to allow them to make a killing in the year the transition from the old pricing model to the new one occurs.
Interested to hear why you feel that Vaygor.

MRP has made no secret of regularly valuing their hydro assets upwards as power prices overall increase. If these asset revaluations are reversed to some historic norm, then the price of power that a single state buying agency will be prepared to pay to MRP will be rather lower than today, based on whatever reasonable 'return on asset' formula is used.

Other power companies have not regularly increased the value of their hydro assets like MRP has. IMO of all the power companies listed, MRP has by far the biggest downside risk from a Labour/Greens energy policy. And it will hit them from day 1 like a sledgehammer.

Of course if a National lead government is returned, MRP is likely to emerge out of the current flat power pricing into the future scenario better than the other electricity generators. This is because of the balance they have achieved between hydro and geothermal generation and their proximity to the largest power market (Auckland).

SNOOPY

discl: hold MRP

Hi Snoopy.

5168

Regarding the picture above, and before reading on, refer to my post at http://www.sharetrader.co.nz/showthread.php?8622-Who-s-in-for-the-Mighty-River-Power-float&p=394567&highlight=#post394567

The problem the govt has always had with NZ's electricity business has been with the transmission side of the business where each lines company owns a monopoly... you don't see two sets of power poles going down each street, each owned by a different lines company. It is here that asset valuation vs profit controls are required, as is already the case. These businesses are valued under ODV (Optimal Deprival Value) and regulated already.

MRP already compete with every other generating company today. Under any model/mechanism that a greens/labour coalition might introduce, that won't change. MRP would be supported by the Greens more than its competitors due to their (MRP's) geothermal/hydro generation capability. If there is any control to be exerted by bulk-buying, it would affect the retail side of the gen-talier companies and MRP would remain essentially untouched imho. Asset valuation for MRP (whether overstated or not and I doubt it is too overstated... it is audited) has more to do with calculating NTA from an investors viewpoint more than its 'allowed' profit levels.

If in the event, market sentiment hit them like a sledgehammer as you say, then I will just buy more. The real risk in investing in MRP is set out in the post I refer to above.

[Snoopy]

The problem the govt has always had with NZ's electricity business has been with the transmission side of the business where each lines company owns a monopoly... you don't see two sets of power poles going down each street, each owned by a different lines company. It is here that asset valuation vs profit controls are required, as is already the case. These businesses are valued under ODV (Optimal Deprival Value) and regulated already.


I agree with this.



MRP already compete with every other generating company today. Under any model/mechanism that a greens/labour coalition might introduce, that won't change.


Quoting from your referenced post Vaygor

"Generating involves owning and operating power stations and feeding the national grid and GETTING PAID for doing so.
Retailing involves marketing, getting customers (by promising to deliver electricity at a $/unit volume), reading meters, invoicing, chasing bad debts, and PAYING the Generators for the electricity it has promised to deliver."

My understanding of the proposed 'Kiwipower' model differs from yours.

Under the 'single buyer' ('Kiwipower') model there will only be one energy price for consumers. A Labour/Green government will tell us that this is the lowest price possible, obtained by turning the screws on all those greedy generators by legislating that they must sell the energy they generate to 'Kiwipower' on an historical cost generated basis. Competition will remain for generating incremental new power. Kiwipower will call tenders from the big 5 and accept any new incremental power project at today's cost. When selling this new power however, it will just go into the overall soup of energy inputs already contracted, and all power will be sold at a new national average cost.

So whereas MRP will 'compete' in the future, it will IMO only compete at the incremental new power generation wholesale level. The retail price will be calculated by 'Kiwipower' for all small power consumers, so no real competition there any more.



MRP would be supported by the Greens more than its competitors due to their (MRP's) geothermal/hydro generation capability.


It will be a Labour/Green power policy, not a Green power policy. There is no need to 'support' MRP because their hydro and geothermal generation already exist. What Labour/Greens support is lower power prices for consumers. The MRP geothermal stations should be OK because they are reasonably modern and have not been comprehensively revalued over the years. Some of the hydro assets are more than 50 years old and so are ripe for a balance sheet revision - downwards. Once the dam valuations are reduced to historical levels, the price of power bought by Kiwipower from MRP will also fall to historic levels. That will hurt MRP shareholders big time.



If there is any control to be exerted by bulk-buying, it would affect the retail side of the gen-talier companies and MRP would remain essentially untouched imho.


But MRP is a retailer as well as a generator. So if retail prices charged are affected, how can you claim that MRP will not be affected?



Asset valuation for MRP (whether overstated or not and I doubt it is too overstated... it is audited) has more to do with calculating NTA from an investors viewpoint more than its 'allowed' profit levels.


I think that statement is entirely wrong. The revaluation in asset values upwards (particularly hydro dams) is entirely due to those assets becoming ever relatively cheaper generating units. Under the current model power prices are set at the generation price of the newest station in the network. However the cost of power generation at the old stations does not go up. The profit margin does, which is why those old hydro stations have incrementally become so valuable over the years. Conversely if the wholesale price of power were to fall, then the value of those power stations would fall too.

SNOOPY

[MAC]

Any price fixing here by Labour should work just as well as it did in Queensland.

http://www.brisbanetimes.com.au/quee...531-2ng00.html (http://www.brisbanetimes.com.au/queensland/queensland-electricity-prices-to-rise-20130531-2ng00.html)

[Snoopy]

Any price fixing here by Labour should work just as well as it did in Queensland.

http://www.brisbanetimes.com.au/quee...531-2ng00.html (http://www.brisbanetimes.com.au/queensland/queensland-electricity-prices-to-rise-20130531-2ng00.html)

The Queensland situation parallels NZ in that the incremental costs of the lines companies are will also be responsible for increasing power prices in NZ. This will not change with the proposed Labour/Green 'Kiwipower' policy.

But Queensland is very different in that it appears they have an increasing demand for electric energy. That doesn't appear to be the case in NZ, so the comparison is not valid in that sense.

SNOOPY

[Vaygor1]

But MRP is a retailer as well as a generator. So if retail prices charged are affected, how can you claim that MRP will not be affected?

MRP is not a retailer, it is is a generator. It sells onto the grid at the wholesale spot price, a contract that lasts 30 minutes that is renewed every 1/2 hour, around the clock. Generators make offers to supply electricity at 59 grid injection points (GIPs), while retailers (i.e. Mercury Energy) and major users make bids to buy electricity at 226 grid exit points (GXPs) on the national grid owned and controlled by Transpower. All electricity generated is required to be traded through the central pool, with the exception of small generating stations of less than 10MW. MRP, as with all generators, will have no idea who the electricity it produces is going to. http://en.wikipedia.org/wiki/New_Zealand_electricity_market#Wholesale_Spot_Mark et

So if the generation and retail sides of the business are kept so separate via this bidding system (administered by Transpower) then of what benefit is MRP's 'retail arm' Mercury Energy to MRP? The answer is that outside of all this wholesale spot market process, they have an arrangement to protect each other. If Spot prices are high, it hurts Mercury Energy a lot but while they make a loss, MRP has a bonanza; visa versa when the spot price is low. So long as Mercury Energy's electricity contracts are matched with MRP's generation capacity then they intrinsically end up protecting one another and as such have a swap/derivative setup with each other in order to achieve this.

What Labour is proposing to do is introduce "... a new agency called NZ Power that will act as a single buyer of wholesale [domestic] electricity".

It believes that it "...will do a similar job to Pharmac - using bulk prices to keep prices low."

Refer http://www.labour.org.nz/nz-power

The Pharmac model is a fantastic one. The international drug companies hate us for it (As an aside, Pharmac is under threat as a potential concession to get the Trans-Tasman FTA with the U.S.... a concession we must never make). But to suggest that national electricity production, transportation, and consumption can be modelled against an international industry consisting of pills, potions, and inhalers? The issue with power is that you can't store it once the lake/dam is full. We can't ship it off to Russia during their cold snap.... and when lake levels are low, the historical (and present) value of the generation asset becomes irrelevant. If supply is scarce then people will have to pay (and will be glad to pay) to get it.

Given a potential scenario of NZ Power replacing the existing domestic retailers and bulk-buying all the required power to feed the domestic nation without the ability to generate the electricity themselves then, for the reasons above, they will be taking an unthinkable risk. Refer to my post with what happened to Australian Gas Light (AGL) when they went retail with comparatively little generation. http://www.sharetrader.co.nz/showthread.php?8622-Who-s-in-for-the-Mighty-River-Power-float&p=394573&highlight=AGL#post394573

The only possible way this could work if NZ Power insert themselves as bulk-buying middle-men into the spot price process, thus creating another layer of contracts and administration and another entity to clip the ticket on the electricity throughput, perhaps enough to more than negate the very reason behind their existence. But whatever happens, the price submitted for grid injection by the generators will reflect the risks they calculate and perceive given the market set-up. Whatever uncertainties are introduced with the 'benefit' of having NZ Power in the system will be looked after by an increase in sell-price from the generation side.

So you may be right Snoopy, generators will be affected, but I believe in a manner that their shareholders will enjoy.

[Harvey Specter]

Vaygor - I don't think that is quite right If your generation and retail is perfectly balanced, then spit rates are irrelevant as they cancel out, all that matters is generation cost vs retail price.

For those gentailers not perfectly balanced, they normally have long term swap contracts to make the spit irrelevant.

[Vaygor1]

Vaygor - I don't think that is quite right If your generation and retail is perfectly balanced, then spit rates are irrelevant as they cancel out, all that matters is generation cost vs retail price.

For those gentailers not perfectly balanced, they normally have long term swap contracts to make the spit irrelevant.

Correct. The swap arrangements mean the retail and generation sides don't have to be perfectly matched. But it all has the potential to go very pear shaped if the retail delivery obligations are too much more than generation capacity. There is a grey area, but take the extreme of 100% retail and 0% generation... no swap arrangement can work. A gentalier's best position is to generate more than it needs to deliver because its swap arrangements keep it safe while providing healthy margins on the spot price side to those who are short on generation capacity.

[Harvey Specter]

A gentalier's best position is to generate more than it needs to deliver because its swap arrangements keep it safe while providing healthy margins on the spot price side to those who are short on generation capacity.In one of the MEL/MRP prospectus' it said they were deliberately short generation as they though there would be pressure on the spot rates (ie. they though they would get better returns via the spot market than with Swaps). could be wrong - I only skimmed many months ago.

[Vaygor1]

Good post Vaygor1. Just one issue ...



We can store it ... and NZ is ideally placed to do it too ... But we don't! See: http://en.wikipedia.org/wiki/Pumped-storage_hydroelectricity

With NZ's current model of smallish, semi-private generators they have to band together to fund such a scheme ... And them darned greens would need to pull their horns in for once!

The energy used to pump it up is 10%-30% more than the energy gathered when it comes back down, so this is a concept I struggle with as it just such a waste with the only benefit coming from commercial variations due to supply and demand. ie Pump it up when the spot prices (and demand) are low, let it go when the spot price is high. Given that 30% is already gone ,the commercial difference between peak and non-peak spot price would need to be significant, but I guess this is what the research is all about. I will read up more on it. Thanks for the post.

[Harvey Specter]

The energy used to pump it up is 10%-30% more than the energy gathered when it comes back down, so this is a concept I struggle with as it just such a waste with the only benefit coming from commercial variations due to supply and demand. ie Pump it up when the spot prices (and demand) are low, let it go when the spot price is high.This really only works where you cant turn off the power generation to match supply. Geothermal is continuous and wind blows when it blows but other thermal and hydro can be shut down, eliminating the need to store that power.

[Snoopy]

Before reading on, refer to my post at
http://www.sharetrader.co.nz/showthread.php?8622-Who-s-in-for-the-Mighty-River-Power-float&p=394567&highlight=#post394567


Quoting from your above reference post Vaygor:

"The companies with the correct fundamentals to go for are those that can produce (ie generate) enough electricity to feed their own customers."

"Why? Because these companies are not exposed to having to buy electricity off the others. They can look after themselves. They are safe. Conversely those who are able generate more than they retail can make a fortune at times when selling to those who can't."

Isn't the above only true in a growing market with a constrained generation supply? Indications are that over the next 5-10 years the demand for electricity will not grow and there is lots of low cost renewable power generation coming on stream.

Under the "shrinking demand plentiful generation" scenario, I would argue the best strategy would to have less generation capacity than your customers demand. I am using your same principle of 'balance' of generation and demand. But what as a power company executive I would be looking to do is balance forecast power generation capacity and customer demand. If I was CEO of MRP, I would put on standby all my gas power stations (to protect against spikes in power prices) while bolstering the power stations where I don't fuel. Oh wait, CEO Doug Heffernan has already done that. Then I would wait for periods of high wind so that I could buy power off other peoples wind farms when they are forced to sell it cheaply, while occurring no associated capital expenditure. Oh hang on, DH is doing that already too.

From where I sit, MRP are doing exactly the right thing by underutilising their generation plants and buying cheap power from their competitors to close the supply/demand gap.

SNOOPY

[fish]

Quoting from your above reference post Vaygor:

"The companies with the correct fundamentals to go for are those that can produce (ie generate) enough electricity to feed their own customers."

"Why? Because these companies are not exposed to having to buy electricity off the others. They can look after themselves. They are safe. Conversely those who are able generate more than they retail can make a fortune at times when selling to those who can't."

Isn't the above only true in a growing market with a constrained generation supply? Indications are that over the next 5-10 years the demand for electricity will not grow and there is lots of low cost renewable power generation coming on stream.

Under the "shrinking demand plentiful generation" scenario, I would argue the best strategy would to have less generation capacity than your customers demand. I am using your same principle of 'balance' of generation and demand. But what as a power company executive I would be looking to do is balance forecast power generation capacity and customer demand. If I was CEO of MRP, I would put on standby all my gas power stations (to protect against spikes in power prices) while bolstering the power stations where I don't fuel. Oh wait, CEO Doug Heffernan has already done that. Then I would wait for periods of high wind so that I could buy power off other peoples wind farms when they are forced to sell it cheaply, while occurring no associated capital expenditure. Oh hang on, DH is doing that already too.

From where I sit, MRP are doing exactly the right thing by underutilising their generation plants and buying cheap power from their competitors to close the sully/demand gap.

SNOOPY
Dont rely on predictions snoopy-another very possible scenario is that demand grows as population grows and building activity increases . Airconditioning and even transport will eventually add-i will be buying an electic bike soon and i have a house with 4 heatpumps and would not be without-they are on almost continually-sleep better,work better .

[Snoopy]

NZ Power insert themselves as bulk-buying middle-men into the spot price process, thus creating another layer of contracts and administration and another entity to clip the ticket on the electricity throughput, perhaps enough to more than negate the very reason behind their existence. But whatever happens, the price submitted for grid injection by the generators will reflect the risks they calculate and perceive given the market set-up. Whatever uncertainties are introduced with the 'benefit' of having NZ Power in the system will be looked after by an increase in sell-price from the generation side.


"price submitted for grid injection by the generators"? This is contrary to what I understand how NZ Power will operate.

The generators (including MRP) will be told the price they will be paid for the energy from each of their power stations and that rate will certainly be different between hydro stations and geothermal stations. And because power generators can't up sticks their power stations elsewhere, these generators will obey and be allocated money at exactly the dollar per Megajoule level NZ Power dictates!

"Prices submitted" by generators will only apply to new generation projects, and there may not be any for ten years.

SNOOPY

[Snoopy]

Dont rely on predictions snoopy-another very possible scenario is that demand grows as population grows and building activity increases . Airconditioning and even transport will eventually add-i will be buying an electic bike soon and i have a house with 4 heatpumps and would not be without-they are on almost continually-sleep better,work better .

I am basing my predictions on peak demand fish. Your electric bike can be charged overnight, off peak. Are you projecting air conditioning demand over summer will be a higher spike than heating over winter? Maybe with more global warming it will, but not in the next ten years I would pick.

My lower power use scenario is based on the large reduction in industrial demand through a scaling back at Tiwai point and Kawarau Pulp and Paper. I agree with you that consumer power will probably steadily increase.

SNOOPY

[Harvey Specter]

Snoopy - I think they will also be told what has to produce power and when - that is they could force you to use your cheaper Hydro even though you disagree with their weather forecasts and believe the water should be stored.

Re price submitters, Kiwipower would determine a plant needs to be build. Then similar to a PPP, you will submit your proposed plant and the price you will charge your power at. If your project is choosen (not necessarily the cheapest - ie an expensive wind may be chosen over cheap thermal, or peak load over base load), then you are locked into the price forever and a day (inflation adjusted one assumes).

[Vaygor1]

Quoting from your above reference post Vaygor:

"The companies with the correct fundamentals to go for are those that can produce (ie generate) enough electricity to feed their own customers."

"Why? Because these companies are not exposed to having to buy electricity off the others. They can look after themselves. They are safe. Conversely those who are able generate more than they retail can make a fortune at times when selling to those who can't."

Isn't the above only true in a growing market with a constrained generation supply? Indications are that over the next 5-10 years the demand for electricity will not grow and there is lots of low cost renewable power generation coming on stream.SNOOPY

It is not true. There is constrained electricity supply for a number of other reasons. These include:


Sudden demand from big industry
Not so sudden but long term demand from big industry
Unexpected national demand during a cold snap
Low lake levels
Power stations taken offline for maintenance
Unexpected shutdowns and trips


On many occasions in the last 12 months, power prices to retailers have spiked to over 300% of the 'norm'. Spot prices have sent NZ retailers with little generation broke in the past.


Under the "shrinking demand plentiful generation" scenario, I would argue the best strategy would to have less generation capacity than your customers demand. I am using your same principle of 'balance' of generation and demand. But what as a power company executive I would be looking to do is balance forecast power generation capacity and customer demand.

Believe me, MRP do not in any way wish to produce less power than their retail arm has promised to supply.


If I was CEO of MRP, I would put on standby all my gas power stations (to protect against spikes in power prices) while bolstering the power stations where I don't fuel. Oh wait, CEO Doug Heffernan has already done that. Then I would wait for periods of high wind so that I could buy power off other peoples wind farms when they are forced to sell it cheaply, while occurring no associated capital expenditure. Oh hang on, DH is doing that already too.

You can't put a gas fired power station on 'standby'.It takes far too long to bring up to temperature and put online. These units are put online really only to cover for a forecast extended shortage of power in the country due to prolonged periods of predicted cold weather and/or low lake levels. The stress and wear and tear on the units each time they are taken on and offline is significant and costly in the long term and the decision to fire one up is a significant one. There is no crystal ball when it comes to forecasting; the variables are many and anything can happen. They can only do their best. Your assertions about what Doug Heffernan is up to are in my view unfounded and untrue.



From where I sit, MRP are doing exactly the right thing by underutilising their generation plants and buying cheap power from their competitors to close the sully/demand gap.

I don't believe they are doing that at all. MRP want to buy as little power as possible off anyone. They would dearly love to generate more than they have promised to supply.

[Vaygor1]

"price submitted for grid injection by the generators"? This is contrary to what I understand how NZ Power will operate.

The generators (including MRP) will be told the price they will be paid for the energy from each of their power stations and that rate will certainly be different between hydro stations and geothermal stations. And because power generators can't up sticks their power stations elsewhere, these generators will obey and be allocated money at exactly the dollar per Megajoule level NZ Power dictates!

"Prices submitted" by generators will only apply to new generation projects, and there may not be any for ten years.

SNOOPY

This is where in my view you have led yourself astray a bit Snoopy. NZ Power want to use bulk-buying like some of the big industries are able to do, and like Pharmac do for drugs. Your view on NZ Power dictating sell prices cannot work on so many fronts both technically and commercially imho.

[Harvey Specter]

Your view on NZ Power dictating sell prices cannot work on so many fronts both technically and commercially imho.correct. Unfortunately Snoopy is right.

NZPower would be the only buyer in the market. Basically you sell at the price they determine, or you close down (and I am not sure the latter is an option) :ohmy:

[robbo24]

correct. Unfortunately Snoopy is right.

NZPower would be the only buyer in the market. Basically you sell at the price they determine, or you close down (and I am not sure the latter is an option) :ohmy:

Let the shareholder activism begin

[Vaygor1]

correct. Unfortunately Snoopy is right.

NZPower would be the only buyer in the market. Basically you sell at the price they determine, or you close down (and I am not sure the latter is an option) :ohmy:

That is not the case. There are many non-domestic buyers. NZ Power offer a buy price along with anyone else. If their buy bid is low, then they wont get much, and joe average can start lighting candles and taking cold showers. If NZ Power were to offer to buy all of RYM for $0.50... guess how many shares they receive? Zero.... well it is not quite like that but you get my point. You and Snoppy need to understand how the bidding process work. Labour sure as hell doesn't.

Please quote to me any credible source from where you have heard that NZ Power can demand a sell price, which I doubt it is achievable legally.

Closing down is always an option.

[Harvey Specter]

That is not the case. There are many non-domestic buyers. Buyer of power, not shares. Shipping power overseas is a bit problematic (except in the form of aluminium).

[Snoopy]

This is where in my view you have led yourself astray a bit Snoopy. NZ Power want to use bulk-buying like some of the big industries are able to do, and like Pharmac do for drugs.


You imply that NZ Power will get a better deal by buying more energy units. With the single power buyer, all of the power stations will remain the same. There will be no more power available to suddenly flood the market with energy. I don't believe this phrase 'bulk buying' has left you with the right impression in the context of generating power.

The Pharmac case is is quite different. By negotiating a lower price, Pharmac can buy more of a particular class of drug with a constant dollar budget.



Your view on NZ Power dictating sell prices cannot work on so many fronts both technically and commercially imho.


Yes I agree the single power buyer model would be difficult to implement. If they are going to charge different amounts of power for a hydro station and a geothermal station, they would have to have meters measuring the power output of each station at source connected to some central buying control room. Or maybe they could look at MRPs portfolio and say 60% hydro, 40% geothermal and charge MRP an average power rate based on that. But that wouldn't work because geothermal is base-load and hydro is dependent on the rain (so the generation proportions would change). So lots of potential problems when you try to 'simplify' things! I agree that such a system would be a pig to instigate, and it would cost. But I nevertheless do believe that this is what is proposed.

SNOOPY

[Snoopy]

You can't put a gas fired power station on 'standby'. It takes far too long to bring up to temperature and put online. These units are put online really only to cover for a forecast extended shortage of power in the country due to prolonged periods of predicted cold weather and/or low lake levels. The stress and wear and tear on the units each time they are taken on and offline is significant and costly in the long term and the decision to fire one up is a significant one. There is no crystal ball when it comes to forecasting; the variables are many and anything can happen. They can only do their best. Your assertions about what Doug Heffernan is up to are in my view unfounded and untrue.


Vaygor, I quote from the MRP prospectus on p45.

"The gas fired power station at Southdown following the 10% acquisition by by Mighty River Power in 2002 has moved from base load generation to peak load generation (in response to changes in wholesale spot market prices) or firming load generation in response to hydro generation."

"This operational flexibility means that if wholesale electricity prices are sufficiently high , generation through the hydro system or Southdown can easily be increased to cover sales commitments and to sell additional generation into the wholesale spot market. Conversely if prices are low , generation form the hydro system or Southdown can be reduced with any residual sales being covered by purchases from the wholesale spot market."

While I accept your wear and tear argument re stopping and starting, MRP is on record that they do exactly that with their gas fired power station. Consequently then I would reject your assertion that a turbine takes too long to bring up to temperature to feed the spot market. In fact, similar to an aircraft jet turbine motor, a turbine can be brought up to speed in just a few minutes at most.

SNOOPY

[Snoopy]

Please quote to me any credible source from where you have heard that NZ Power can demand a sell price, which I doubt it is achievable legally.


Anything is achievable legally, if you become the government.

From: http://www.labour.org.nz/nz-power

------

"Hydroelectric power makes up almost two-thirds of our electricity, and it costs next to nothing to generate because it uses free water and dams that were paid off years ago. But when this electricity is sold on the market, the companies get paid the same amount as other generators using more expensive methods, like gas."

"Labour’s Solution

Labour will create a new agency called NZ Power will act as a single buyer of wholesale electricity. It will also have the power to set prices."

-----

SNOOPY

[Vaygor1]

Snoppy and Harvey Spector.

All my posts are backed up by links and facts.
I have not seen anything from both of you except your perception.
So instead of me providing all the evidence:

Snoppy, please provide a link that explains the details if the bidding process and how a new buy/sell price is arrived at every 30 minute. In doing so, please explain how this mechanism will totally dictate the generators' sell price with NZ Power as one of the buyers.

Harvey Spector, please quote to me any credible source from where you have heard that NZ Power can demand a sell price

Edit. The above was writen and posted coincidentally at the same time as Snoopy provided me with a reference from the prospectus. Good to see.

[Vaygor1]

Anything is achievable legally, if you become the government.

From: http://www.labour.org.nz/nz-power

------

"Hydroelectric power makes up almost two-thirds of our electricity, and it costs next to nothing to generate because it uses free water and dams that were paid off years ago. But when this electricity is sold on the market, the companies get paid the same amount as other generators using more expensive methods, like gas."

"Labour’s Solution

Labour will create a new agency called NZ Power will act as a single buyer of wholesale electricity. It will also have the power to set prices."

-----

SNOOPY

I provided you with this link. It is nothing but spin and presents untruths and assumptions as fact. Read MRP's latest announcement for their spin, biased on the other side if course.

https://www.nzx.com/companies/MRP/announcements/245002

[Harvey Specter]

Harvey Spector, please quote to me any credible source from where you have heard that NZ Power can demand a sell price
It's hard to quote anything because it is a half arsed policy. Refer to Snoopys link to labours policy saying they can set price.

Can you provide a link to labours made up policy to prove your points?

[Vaygor1]

Vaygor, I quote from the MRP prospectus on p45.

"The gas fired power station at Southdown following the 10% acquisition by by Mighty River Power in 2002 has moved from base load generation to peak load generation..."

And this runs contrary to what you state that MRP are doing. MRP in their prospectus are saying that they will only run the gas fired power station when they have to... during peak loading (which does cause greater wear and tear) and not at base load. From what you are saying in this thread to-date one would think the prospectus would have said "The gas fired power station at Southdown following the 10% acquisition by by Mighty River Power in 2002 has moved from from peak load generation to base load generation..." in other words MRP will run the gas fired units all the time and use cheap hydro only when they have to.


While I accept your wear and tear argument re stopping and starting, MRP is on record that they do exactly that with their gas fired power station. Consequently then I would reject your assertion that a turbine takes too long to bring up to temperature to feed the spot market. In fact, similar to an aircraft jet turbine motor, a turbine can be brought up to speed in just a few minutes at most.SNOOPY

There are two main types of gas fired power stations. The ones that use gas to heat boilers to generate steam to turn turbines. These take hours if not days (for the big ones) to get up and running and are the expensive ones in terms of wea an tear. Coal uses the same method as gas by generating steam. Some boilers can take coal and gas. The other main type is gas fired power stations useing gas turbines. These can be bought up to speed very quickly compared to a gas fired boiler, and can be used to meet relatively short term peak demand, only taking about 100 to 1000 times longer, depending on size, to get up to speed compared to opening a sluice gate.

[Vaygor1]

[QUOTE=Vaygor1;449134]Harvey Spector, please quote to me any credible source from where you have heard that NZ Power can demand a sell priceQUOTE]

It's hard to quote anything because it is a half arsed policy. Refer to Snoopys link to labours policy saying they can set price.

Can you provide a link to labours made up policy to prove your points?

Well I rest my case. If there is nothing there, Labour haven't tried (obviously) to figured this out yet... they haven't thought about it. At the same time you and Snoopy are holding viewpoints that comes from well... nowhere really. I like the debate (refer my signature below.. yes I am an Engineer) but I like to see the basis and I like to see the origins that form some of these opinions.

As for providing links, I have provided them. Refer post referring to where they state they will bulk-buy.

http://www.sharetrader.co.nz/showthread.php?9357-MRP-Mighty-River-Power&p=448743&viewfull=1#post448743

I have provided links on how the spot market works. I have provided links on Trustpower's generation vs retailing arm. I have provided an overview with diagrams of the NZ electricty structure. I am not sure how much better I could have done on this front.

[Harvey Specter]

I know how the spot market works - that is what Labour hates (everyone getting the margin cost of generation). Labour didn't say they would change this, they said they would replace it with a single user model where they set the price based on the original cost of plant.

In the end, I think this argument is wasted as I don't believe they will implement as they originally proposed. I believe it will be watered down considerably to be tweeks to the spot model. No facts to back this up but is the basis on which I continue to hold power companies.

[Vaygor1]

I know how the spot market works - that is what Labour hates (everyone getting the margin cost of generation). Labour didn't say they would change this, they said they would replace it with a single user model where they set the price based on the original cost of plant.Where have they said this? I am not doubting you have seen it or think you have seen it. I would just like to know where.
In the end, I think this argument is wasted as I don't believe they will implement as they originally proposed. I believe it will be watered down considerably to be tweeks to the spot model. No facts to back this up but is the basis on which I continue to hold power companies.I agree too except instead of being watered down, I think it will simply not achieve its objectives.

[Snoopy]

I provided you with this link. It is nothing but spin and presents untruths and assumptions as fact.


Labours NZ Power is policy Vaygor, supported by the Greens who may very well be in a position to see it implemented. There is no propaganda in there.

SNOOPY

[Snoopy]

Snoopy, please provide a link that explains the details if the bidding process and how a new buy/sell price is arrived at every 30 minute. In doing so, please explain how this mechanism will totally dictate the generators' sell price with NZ Power as one of the buyers.


Here is how it would all work Vaygor. Just don't tell the Labour team I leaked it. This is just a private little exchange between you and I, OK?

-----

Each generators individual power stations are allocated ‘call prices’ (using NZ Power predetermined fixed rate pricing) and minimum annual energy production targets (made up of smaller ‘call units’) under a Wholesale Information and Trading System (WITS). Individual power station profiles make up a total ‘NZ Power’ ‘national supply map’. If a particular generating plant does not meet a minimum energy generation target summed over a whole calendar year, then the owner of that generating plant will be fined. Discretion is allowed for hydro dams in years of drought: any shortfall can be carried over to be made up in higher rainfall years.

A ‘call unit’ can be summoned by NZ Power from any of the big five power generators for any future half-hour period (called a trading period). This ‘call’ is to generate a specified quantity at that time in return for an ‘NZ power’ prenominated price. More than one generator may be and is likely to be called upon for any one period. Each generator has three ‘rights of refusal’ per calendar month to turn down a call. If all power generators refuse individually for a particular period, then they will be commanded by NZ Power to supply the power on an equal share basis collectively. This clause will ensure some co-operation between rival power generators.

The System Operator ‘NZ Power’ (via Transpower) uses a scheduling, pricing and dispatch (SPD) system to rank ‘call units’, registered through WITS, in order of ‘deemed price’ and selects the lowest-cost combination of registered ‘call units’ to satisfy demand. The total domestic demand base case is set by using the five year average of all previous domestic demand plus 1%. Large energy users are added to this domestic demand profile. Large energy users must pre submit an ‘energy profile’ so that any large forecast spikes in demand can be planned for.

All ‘call units’ offered by a generator required to meet demand for a given half-hour are summed up and the weighted average cost sets the spot price for that trading period for all customers.

Electricity spot prices can vary significantly across trading periods. This reflects factors such as changing demand (e.g. lower prices in summer when demand is subdued, because only low cost energy is required to meet demand). Also changing supply (e.g. higher prices when hydro generation plants have already supplied their annual quota for the year and other more expensive power generation methods are substituted) will result in changing seasonal prices..

Spot prices can also vary significantly across locations, reflecting electrical losses and constraints on the transmission system (e.g. higher prices in locations further from generating stations).

Trade matching takes place at approximately 285 nodes (grid injection points and grid exit points) across New Zealand every half-hour. Generators are ordered to release ‘call units’ to supply electricity at 59 grid injection points (GIPs) at power stations. The call units will be requested by ‘NZ Power’ on the basis that total energy cost is minimized. Retailers and major users are then allocated the power at particular low price as calculated by NZ Power at each of the 226 grid exit points (GXPs) on the national grid.

Final prices at each node, taking account of grid losses and constraints, are processed and are confirmed the following day.

----

SNOOPY

PS Aw heck sent it to the forum instead of as PM to you Vaygor! Don't tell anyone else about this will you?

[Vaygor1]

Labours NZ Power is policy Vaygor, supported by the Greens who may very well be in a position to see it implemented. There is no propaganda in there.

SNOOPY

The article to which you refer http://www.labour.org.nz/nz-power is not policy. It is spin; it is the normal one-eyed biased approach that any political party comes out with to besmirch their competitors. Policy is generally a few sentences of carefully worded official (signed) high level principals. I trust Labour has that somewhere. I haven't seen it, but what I am interested in is a lot more detail regarding the how.

[Vaygor1]

Here is how it would all work Vaygor. Just don't tell the Labour team I leaked it. This is just a private little exchange between you and I, OK?

-----

Each generators individual power stations are allocated ‘call prices’ (using NZ Power predetermined fixed rate pricing) and minimum annual energy production targets (made up of smaller ‘call units’) under a Wholesale Information and Trading System (WITS). Individual power station profiles make up a total ‘NZ Power’ ‘national supply map’. If a particular generating plant does not meet a minimum energy generation target summed over a whole calendar year, then the owner of that generating plant will be fined. Discretion is allowed for hydro dams in years of drought: any shortfall can be carried over to be made up in higher rainfall years.

A ‘call unit’ can be summoned by NZ Power from any of the big five power generators for any future half-hour period (called a trading period). This ‘call’ is to generate a specified quantity at that time in return for an ‘NZ power’ prenominated price. More than one generator may be and is likely to be called upon for any one period. Each generator has three ‘rights of refusal’ per calendar month to turn down a call. If all power generators refuse individually for a particular period, then they will be commanded by NZ Power to supply the power on an equal share basis collectively. This clause will ensure some co-operation between rival power generators.

The System Operator ‘NZ Power’ (via Transpower) uses a scheduling, pricing and dispatch (SPD) system to rank ‘call units’, registered through WITS, in order of ‘deemed price’ and selects the lowest-cost combination of registered ‘call units’ to satisfy demand. The total domestic demand base case is set by using the five year average of all previous domestic demand plus 1%. Large energy users are added to this domestic demand profile. Large energy users must pre submit an ‘energy profile’ so that any large forecast spikes in demand can be planned for.

All ‘call units’ offered by a generator required to meet demand for a given half-hour are summed up and the weighted average cost sets the spot price for that trading period for all customers.

Electricity spot prices can vary significantly across trading periods. This reflects factors such as changing demand (e.g. lower prices in summer when demand is subdued, because only low cost energy is required to meet demand). Also changing supply (e.g. higher prices when hydro generation plants have already supplied their annual quota for the year and other more expensive power generation methods are substituted) will result in changing seasonal prices..

Spot prices can also vary significantly across locations, reflecting electrical losses and constraints on the transmission system (e.g. higher prices in locations further from generating stations).

Trade matching takes place at approximately 285 nodes (grid injection points and grid exit points) across New Zealand every half-hour. Generators are ordered to release ‘call units’ to supply electricity at 59 grid injection points (GIPs) at power stations. The call units will be requested by ‘NZ Power’ on the basis that total energy cost is minimized. Retailers and major users are then allocated the power at particular low price as calculated by NZ Power at each of the 226 grid exit points (GXPs) on the national grid.

Final prices at each node, taking account of grid losses and constraints, are processed and are confirmed the following day.

----

SNOOPY

PS Aw heck sent it to the forum instead of as PM to you Vaygor! Don't tell anyone else about this will you?

Thanks Snoopy and I love the cynical secret slant you styled your post in.
I am after the methodology though and how this 1/2 hour pricing algorithm and bidding process works between sellers and buyers to arrive at the buy and sell price for each 1/2 hour period. Both now, and with the introduction of NZ Power in the loop. For instance on opening the ASX each day, the system works is explained in https://web.archive.org/web/20130127102638/http://www.asx.com.au/products/calculate-open-close-prices.htm
A 'call unit' whatever that it is for a future 1/2 hour period can be turned down only 3 times a month? The number of 1/2 hour periods per month is approx 1440. Why bother allowing any of them to be turned down at all?
"Discretion is allowed for hydro dams in years of drought" is vague and grey.
Who decides and dictates the seasonal pricing variation?
I could go on but what you have presented above is ill defined and I believe fatally flawed. Can you please provide the source of it so I can gauge the credibility of where the info came from. I have yet to see any official credible information regarding NZ Power dictating a sell price. Can you please direct me to something?.. Anything?

[Daytr]

A much better turn out for the referendum than I certainly anticipated. The government has been sent a resounding NO! Key better start listening to the electorate or he is going to be turfed out at the next election. There is no way they should raced to float these with this sort of uncertainty surrounding them. They have now damaged NZ's reputation for investment as it is likely these sales will be reversed. They thought they had a mandate to do this, clearly they didn't! http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11172228

[Snoopy]

Thanks Snoopy and I love the cynical secret slant you styled your post in.
I am after the methodology though and how this 1/2 hour pricing algorithm and bidding process works between sellers and buyers to arrive at the buy and sell price for each 1/2 hour period. Both now, and with the introduction of NZ Power in the loop. For instance on opening the ASX each day, the system works is explained in https://web.archive.org/web/20130127102638/http://www.asx.com.au/products/calculate-open-close-prices.htm


Vaygor, your comparative ASX example is made subject to the assumption the generators can negotiate the price at which they sell their power generated to NZ Power. Price is no longer negotiable in this single buyer model. Price is predetermined at the start of the seasonal selling period for each power station. Under the single buyer model, only volume of power generated is negotiable. And even that is subject to an annual overall target volume.



A 'call unit' whatever that it is for a future 1/2 hour period can be turned down only 3 times a month? The number of 1/2 hour periods per month is approx 1440. Why bother allowing any of them to be turned down at all?


I agree you might have to tweak the system a bit. If a 'call unit' is turned down by the generator because of sudden unexpected failure, for example, you could hardly expect that to be fixed in just half an hour. So a call unit could perhaps be rolled over for a period of say 3 continuous months, until the faulty part was fixed. All that would still count as a single 'call rejection'.

Only allowing three turn downs a month is low, yes. But this is to encourage seamless system use. Allowing no 'call unit rejections' at all would be going too far the other way.



"Discretion is allowed for hydro dams in years of drought" is vague and grey.


Drawing the line between what is a drought and what is vague and grey. The drought rules have to reflect this reality



Who decides and dictates the seasonal pricing variation?


Base case seasonal price variation will be based on historical records averaged over the last five years, from the current bid ask system.



I could go on but what you have presented above is ill defined and I believe fatally flawed. Can you please provide the source of it so I can gauge the credibility of where the info came from. I have yet to see any official credible information regarding NZ Power dictating a sell price. Can you please direct me to something?.. Anything?

Vaygor, you know I would never give away my source. The journalistic ethic would not allow it.

SNOOPY

[Vaygor1]

Vaygor, your comparative ASX example is made subject to the assumption the generators can negotiate the price at which they sell their power generated to NZ Power. Price is no longer negotiable in this single buyer model. Price is predetermined at the start of the seasonal selling period for each power station. Under the single buyer model, only volume of power generated is negotiable. And even that is subject to an annual overall target volume.



I agree you might have to tweak the system a bit. If a 'call unit' is turned down by the generator because of sudden unexpected failure, for example, you could hardly expect that to be fixed in just half an hour. So a call unit could perhaps be rolled over for a period of say 3 continuous months, until the faulty part was fixed. All that would still count as a single 'call rejection'.

Only allowing three turn downs a month is low, yes. But this is to encourage seamless system use. Allowing no 'call unit rejections' at all would be going too far the other way.



Drawing the line between what is a drought and what is vague and grey. The drought rules have to reflect this reality



Base case seasonal price variation will be based on historical records averaged over the last five years, from the current bid ask system.



Vaygor, you know I would never give away my source. The journalistic ethic would not allow it.

SNOOPY

Without quoting the above source, I can't gauge the credibility of its originator, and it follows that I cannot therefore gauge the credibility of the content.

This article http://www.3news.co.nz/Labours-power-plan-political-posturing--Govt/tabid/1607/articleID/294364/Default.aspx published in mid April is on the mark. In the article, David Shearer is quoted as saying "I'm not going to talk about the policy at all...I'm not going to give an explanation of the policy. We are working...according to our own timetable."
and I have not seen a shred of clarification from Labour since on how they might do this. Until they come out with something, Labour's 'policy' cannot be deemed to be any more than empty political posturing.

Given the variables of weather, seasons, demand, outages, and growth, dictating electricity grid injection prices by way of any mechanism other than natural competition and supply-demand forces utterly defies logic... well, unless we resort (by definition) to a dictatorship/communist regime.

A wealth of information and data on the existing system and set-up can be found at http://www.electricityinfo.co.nz/comitFta/ftaPage.main
This link should provide some insight into the complexities of the issues and what is currently involved. On top of this the site says it is only a subset of WITS (Wholesale Information and Trading System) and that it only provides a "small taste of what is available to our subscribing WITS clients".

Further to this, WITS is only one segment under the Electricity Authority. Refer https://www.ea.govt.nz/about-us/ which is another good source of information about the structure of Nw Zealand's electricity industry.

When I think about the Labour/Greens sitting around trying to reach agreement with each other and nut this 'policy' out in the event they are voted in, I laugh so hard as to nearly wet myself.

[Snoopy]

Without quoting the above source, I can't gauge the credibility of its originator, and it follows that I cannot therefore gauge the credibility of the content.


Translation: I don't like the message even though I can't see anything obviously wrong with it. Therefore please provide me the name of the messenger that I don't like so that I can shoot him.

SNOOPY

[Snoopy]

This article http://www.3news.co.nz/Labours-power-plan-political-posturing--Govt/tabid/1607/articleID/294364/Default.aspx published in mid April is on the mark. In the article, David Shearer is quoted as saying "I'm not going to talk about the policy at all...I'm not going to give an explanation of the policy. We are working...according to our own timetable."
and I have not seen a shred of clarification from Labour since on how they might do this. Until they come out with something, Labour's 'policy' cannot be deemed to be any more than empty political posturing.


You well know that the finer details of substantial policy changes such as this will be legislated after the election. There will be time for submissions from affected parties and all this will have to go to the select committee stages before finally something workable is drawn up.
To expect all this finer detail to be drawn up before an election is unreasonable and it never happens.

What you do have in the public domain now is a 'theme' of lower power prices for voters, as a promise by Labour/Greens (The actual detail does not matter, from a political perspective). I was going to say lower power prices for everybody. But if you are an industrial or commercial consumer the power reforms have already delivered lower prices. It is only the poor old private consumer that has missed out.

With Labour/Greens in government, they will certainly have the power (sic) to push through whatever changes they need do to achieve their objective. Of course it will be difficult, and tweaking will be required. But to say that you can't see how it will be done so therefore it can't work is the head in the sand position from my perspective.

SNOOPY

[Snoopy]

Given the variables of weather, seasons, demand, outages, and growth, dictating electricity grid injection prices by way of any mechanism other than natural competition and supply-demand forces utterly defies logic... well, unless we resort (by definition) to a dictatorship/communist regime.


The old Electricorp managed to do it, and it wasn't aligned to the communist party as I recall. One thing Electricrop didn't do so well was build a robust enough grid of new power stations to avoid the odd official power cut. I believe that a new central authority like NZ Power may have the same problem. But not for a while, maybe not for ten years. The Labour Green coalition will be out by then and will no doubt blame such future 'NZ Power' failures on National Party lead mismanagement.

SNOOPY

[Snoopy]

When I think about the Labour/Greens sitting around trying to reach agreement with each other and nut this 'policy' out in the event they are voted in, I laugh so hard as to nearly wet myself.



Labour/Greens have already agreed on the 'NZ Power' policy. Russell Norman will be writing it for the Labour party. So no laughing will be required.

SNOOPY

[Vaygor1]

Labour/Greens have already agreed on the 'NZ Power' policy. Russell Norman will be writing it for the Labour party. So no laughing will be required.

SNOOPY

I have seen no official policy, and neither has anyone else I know with perhaps the exception of yourself, and assuming it exists, you won't direct me to it. If it is not written up yet, as you state, then it cannot yet be agreed.

[warthog]

The old Electricorp managed to do it

And the NZED before them.

[Vaygor1]

Without quoting the above source, I can't gauge the credibility of its originator, and it follows that I cannot therefore gauge the credibility of the content.
Translation: I don't like the message even though I can't see anything obviously wrong with it. Therefore please provide me the name of the messenger that I don't like so that I can shoot him.
SNOOPY

My statement is a logical argument based on the common desire of most people in the world to not want to waste their time analysing hearsay. Without knowing the origin, I can't determine the accuracy of the information.

[Vaygor1]

You well know that the finer details of substantial policy changes such as this will be legislated after the election. There will be time for submissions from affected parties and all this will have to go to the select committee stages before finally something workable is drawn up.
To expect all this finer detail to be drawn up before an election is unreasonable and it never happens.

What you do have in the public domain now is a 'theme' of lower power prices for voters, as a promise by Labour/Greens (The actual detail does not matter, from a political perspective). I was going to say lower power prices for everybody. But if you are an industrial or commercial consumer the power reforms have already delivered lower prices. It is only the poor old private consumer that has missed out.

With Labour/Greens in government, they will certainly have the power (sic) to push through whatever changes they need do to achieve their objective. Of course it will be difficult, and tweaking will be required. But to say that you can't see how it will be done so therefore it can't work is the head in the sand position from my perspective.

SNOOPY

You are correct in saying the devil is in the detail and Labour/Greens announced their policy driven by a timetable coinciding with the same day that the MRP shares went on sale, and without giving themselves enough time to think through the 'how'. Without the 'how' the Labour/Greens have opened themselves up to wide criticism and are now in a position they will find it difficult to move away from if they are elected.

The main point of difference between you and I is that you state that Electricity injection prices will be dictated with NZ Power in the loop and I have never heard anything from Labour/Greens about this and you won't provide the source. Labour/Greens have only ever referred to bulk-buying (not forced-selling) with NZ Power becoming one of the many non-residential bulk-buyers, so competition would still exist.

That aside, either NZ Power insert themselves as middle men thus adding to the contracting complexity and cost of the whole set-up which already includes Transpower and the Lines Companies in addition to Generators and Retailers, or NZ Power replaces the retailers thus removing Generator-Retailer swaps and adding huge risk to both themselves and the Generators, and both will need to price in this risk accordingly. My view is that economically, either approach is self-defeating.

[Vaygor1]

The old Electricorp managed to do it, and it wasn't aligned to the communist party as I recall. One thing Electricrop didn't do so well was build a robust enough grid of new power stations to avoid the odd official power cut. I believe that a new central authority like NZ Power may have the same problem. But not for a while, maybe not for ten years. The Labour Green coalition will be out by then and will no doubt blame such future 'NZ Power' failures on National Party lead mismanagement. SNOOPY
And the NZED before them.

Neither of those models were sustainable. That is why they don't exist anymore.

[GTM 3442]

Neither of those models were sustainable. That is why they don't exist anymore.

Not quite. Those models don't exist because of conscious policy decisions.

Just as "Kiwipower" is a conscious policy decision.

[Vaygor1]

Not quite. Those models don't exist because of conscious policy decisions.

Just as "Kiwipower" is a conscious policy decision.

The reasons for Electrocorp's and NZED's non-sustainability can be subjective. Policy for the sake of it is not normally the root cause of a policy change. Policy Change is something us humans do in our efforts to try and improve something, or to try and stop an untoward occurrence from repeating itself.

Whether the non-existence of the old Electrocorp or NZED was due to any cause or combination relating to commercial reality, system integrity, reliability, technical constraints, inefficiencies, contractual/accountability issues, legal enforcement etc is wide open to debate.

Us humans are all too quick in identifying a problem and then implementing a solution to it without knowing or being aware of the new (sets of) problems we will be introducing by doing so, and I believe, as many do, that this is the case with the bulk-buying concept.

Either way, the upshot is that Electrocorp and NZED were not sustainable or else they would still be with us today. If government dictatorship of electricity prices wasn't sustainable then, then why will it be sustainable now? The natural laws of supply and demand haven't changed since NZED ended have they?

[Snoopy]

You are correct in saying the devil is in the detail and Labour/Greens announced their policy driven by a timetable coinciding with the same day that the MRP shares went on sale, and without giving themselves enough time to think through the 'how'. Without the 'how' the Labour/Greens have opened themselves up to wide criticism and are now in a position they will find it difficult to move away from if they are elected.


Labour/Greens have not publicly announced the detail of their policy Vaygor, because that detail will be developed with consultation.



The main point of difference between you and I is that you state that Electricity injection prices will be dictated with NZ Power in the loop and I have never heard anything from Labour/Greens about this


If you look at the Labour website:

http://www.labour.org.nz/nz-power

"Labour will fix this problem by introducing a new agency, NZ Power, to act as a single buyer of power for households."

Now you might think this allows other buyer seller relationships to exist outside of Government/Households. However if you keep on reading you will find this:

"Labour will create a new agency called NZ Power will act as a single buyer of wholesale electricity."

That means the single buyer will act for households, industry, government services and everything. The policy could not be expressed more clearly and succinctly than that



and you won't provide the source. Labour/Greens have only ever referred to bulk-buying (not forced-selling) with NZ Power becoming one of the many non-residential bulk-buyers, so competition would still exist.


See above. No other non-residential bulk buyers - eventually. There may be a phasing in period where existing non-residential bulk buying contracts are honoured. If you have a single bulk buying authority you have the mechanics for government mandated price control (forced selling) if necessary.



That aside, either NZ Power insert themselves as middle men thus adding to the contracting complexity and cost of the whole set-up which already includes Transpower and the Lines Companies in addition to Generators and Retailers,


Correct. This solution will create another layer of bureaucracy and cost. That might mean it shouldn't be done. But it doesn't mean it can't be done.



or NZ Power replaces the retailers thus removing Generator-Retailer swaps and adding huge risk to both themselves and the Generators, and both will need to price in this risk accordingly.


A single NZ Power can still control and match quantities in terms of demand and supply as seen by the grid nodes. At the household day to day level demand for power is not related to price. Households do not receive signals as to what the half hourly contract prices are at the wholesale level. So households cannot respond to pricing signals.



My view is that economically, either approach is self-defeating.


There will be consequences for sure, but there are consequences now. Much higher power prices for voters compared to big industrial companies that do not get a vote.

SNOOPY

[Snoopy]

Neither of those models were sustainable. That is why they don't exist anymore.


NZED and Electricorp operated under roughly the same operational model. Contact Energy was split off from Electicorp ostensibly to provide competition. In reality it was to get a rag tag of potentially troublesome assets off the government books IMO. Contact has since proved everyone wrong and has emerged as arguably the best run power company in New Zealand.

Neither NZED or Electricorp were broken in the sense that change was required. The further splitting of Electricorp into three state owned enterprises: Meridian, Mighty River Power and Genesis Energy, was an alternative model of the day. The John Key lead partial privatization of these three is another alternative model. Just because something is changed, does not mean that what was there before was broken.

SNOOPY

[Vaygor1]

The main point of difference between you and I is that you state that Electricity injection prices will be dictated with NZ Power in the loop and I have never heard anything from Labour/Greens about this and you won't provide the source. Labour/Greens have only ever referred to bulk-buying (not forced-selling) with NZ Power becoming one of the many non-residential bulk-buyers, so competition would still exist.
If you look at the Labour website:

http://www.labour.org.nz/nz-power

"Labour will fix this problem by introducing a new agency, NZ Power, to act as a single buyer of power for households."

Now you might think this allows other buyer seller relationships to exist outside of Government/Households. However if you keep on reading you will find this:

"Labour will create a new agency called NZ Power will act as a single buyer of wholesale electricity."

That means the single buyer will act for households, industry, government services and everything. The policy could not be expressed more clearly and succinctly than that. SNOOPY

Hi Snoopy.

The link http://www.labour.org.nz/nz-power which I provided you with is propaganda, and not policy. As you state in a previous post in this thread on 15-12-2013, 10:21 AM, it is a 'theme'.

In the exact same webpage this Labour theme also states "Labour will fix this problem by introducing a new agency, NZ Power,to act as a single buyer of power for households."

So this theme, or 'policy' as you put it is clear? A web search shows that Labour contradicts itself on this issue time and time again. When are they going to make up their mind?

On the same webpage, this 'policy' states it "will do a similar job to Pharmac - use bulk buying to keep prices low". Refer to http://www.stuff.co.nz/dominion-post/comment/8836651/Single-buyer-generates-instability for why this comparison is tenuous at best.

[Vaygor1]

At the heart of the Labour-Greens policy/theme is a man named Frank.A.Wolak from Stanford University. http://www.stanford.edu/group/fwolak/cgi-bin/

Labour quote him time and time again on what is wrong with the current system. They have continually cited a report he did in 2009 that said the energy generators were making “super profits”. So bear in mind this is a professor whose work stands at the heart of Labour Greens case for change.

Refer to this article that originally came from BusinessDesk on 2nd August this year:
http://www.scoop.co.nz/stories/BU1308/S00083/labour-greens-power-policy-is-bass-ackwards-wolak-says.htm

So the guy whose work has been used by Labour and Greens to justify their nationalisation policy has said their policy is a “sham”.

[Vaygor1]

This issue of Labour/Green policy could be viewed now as a deviation from MRP. But in my view it is the most fundamental factor affecting MRP's share price at the moment Also, to clarify I declare I am in no way a labour or national or greens or nz first, or act, or anything supporter/member/affiliate. Good things can be gained from all of these crowds, the extent of which depends on who is leading the show for each party at the time.

There is an ongoing healthy debate in this thread between Snoopy and myself about whether the labour/green 'policy' is in fact one. Or is it just a theme, or an idea, or a proposal? The following, which highlights the importance of this issue, apparently occurred in July this year when Gareth Hughes went into a prominent share-broking firm to tell the staff there how the Greens’ single-buyer policy was going to work.

A few unkind (but terribly polite) people with grey matter attending asked him some well thought through questions.

His answers were not so well thought through.

Then he got a bit flustered.

Then he said, “Well it’s just a proposal, and we’re always happy to receive your input.”

At which point one of the directors thought it best to tell him there’s a difference between a proposal and a policy, and he’d better learn to live with his policy.

[Snoopy]

If you look at the Labour website:

http://www.labour.org.nz/nz-power

"Labour will fix this problem by introducing a new agency, NZ Power, to act as a single buyer of power for households."

Now you might think this allows other buyer seller relationships to exist outside of Government/Households. However if you keep on reading you will find this:

"Labour will create a new agency called NZ Power will act as a single buyer of wholesale electricity."


Vaygor I think if you look at things with a different perspective you will see no contradiction. A single wholesale buyer for everyone is also a single wholesale buyer for households. Once you accept the two quoted statements are not contradictory, then the ability to dictate price follows too. And also all of your theoretical market concerns disappear as the 'contestable market' as you know it ceases to exist.

SNOOPY

[Snoopy]

On the same webpage, this 'policy' states it "will do a similar job to Pharmac - use bulk buying to keep prices low". Refer to http://www.stuff.co.nz/dominion-post/comment/8836651/Single-buyer-generates-instability for why this comparison is tenuous at best.


I agree with this article in that the building of new power stations will become a tenuous business prospect. But if no new power stations are needed for ten years, I can see the single buyer model working very well for ten years.

SNOOPY

[Vaygor1]

I agree with this article in that the building of new power stations will become a tenuous business prospect. But if no new power stations are needed for ten years, I can see the single buyer model working very well for ten years. SNOOPY
Not so. They can sign contracts to buy once the new station comes online. Nothing new there.
I dont understand your sentence Belgarion. You can't bring a station online until it is built, and by introducing a another monopoly called NZ Power into the system, who will attempt to become their own beast of super-profit ticket clippers just like Transpower is, no one is going to build one.

[macduffy]

Yes, the electricity market has certainly changed in recent times. Until a few years ago, there was a place for a, possibly state owned, peaking power station that could have been onsold to the highest bidder as its output was absorbed by a growing market and replaced with a further station. Gas-fired probably, as that was the obvious fuel for its purpose. But market conditions have changed considerably as new wind and geothermal plants have been built and demand has stagnated.

[Vaygor1]

NZED and Electricorp operated under roughly the same operational model. Contact Energy was split off from Electicorp ostensibly to provide competition. In reality it was to get a rag tag of potentially troublesome assets off the government books IMO. Contact has since proved everyone wrong and has emerged as arguably the best run power company in New Zealand.

Neither NZED or Electricorp were broken in the sense that change was required. The further splitting of Electricorp into three state owned enterprises: Meridian, Mighty River Power and Genesis Energy, was an alternative model of the day. The John Key lead partial privatization of these three is another alternative model. Just because something is changed, does not mean that what was there before was broken.

SNOOPY

They were broken alright.

Following is an excerpt from a paper from the New Zealand Institute for the Study of Competition and Regulation (ISCR)
http://www.iscr.org.nz/f310,14092/Chapter_5_New_Zealand_s_Electricity_Reform_History .pdf

In 1985 it was apparent that in terms of generation, at least, the electricity industry was not performing well. As noted in the Ministry of Energy's review in 1984, the Electricity Division's performance measurement was complicated by electricity pricing being set externally, it paid no tax, it required considerable capital, and its "essential nature" and "monopoly role" made it a target for industrial action. The review further noted that because the Division was an essential part of the country's infrastructure, it could influence the scale and direction of economic development, thus attracting political and economic attention.

A 1985 Treasury review of electricity planning and electricity generation costs made especially sober reading. Noting the significant share of the country's total investments represented by the electricity sector, the report found that prevailing arrangements were failing to deliver electricity to New Zealand at lowest practicable cost - the driving policy of the day. Over-investment in generation arose from systematic and gross over-estimates of demand growth, ranging from 33% to 51% for the periods considered. Projects were characterised by commissioning delays, large cost over-runs and electricity production costs well in excess of those predicted (at times up to 100% higher). It even found that generation investments were not undertaken on a cheapest-first basis, whether using simple or more refined investment selection rules. Aside from the general need to reform New Zealand's state trading enterprises, electricity was especially in need of change.

Similar concerns were highlighted in a 1987 Audit Office report, which noted delicately that "one could conclude that money committed [to new hydro generation projects 1977-1984] may have been better utilised elsewhere for the benefit of the nation". The report also noted that the economic criterion for construction of new generation was not adjusted downwards despite major reductions in electricity demand growth forecasts - in other words investment was made in projects that were uneconomic even given available revised forecasts. It further criticised governance arrangements surrounding loans for these schemes, where the Crown offered Supplementary Operating Loans to Electricity Supply Authorities, thus assuming all financial risks with the individual schemes despite there being no financial or time limits placed on availability of these loans.

It can only be surmised whether similar inefficiencies occurred at the distribution and retailing level, as scant operational data for this period are available, commercial performance standards were not mandated or utilised, and performance appraisals were not apparently required. The electricity system of the time would appear to have been driven by political (central and local government), engineering and labour imperatives as much as by the interests of taxpayers and electricity consumers.

[Snoopy]

They were broken alright.

Following is an excerpt from a paper from the New Zealand Institute for the Study of Competition and Regulation (ISCR)
http://www.iscr.org.nz/f310,14092/Chapter_5_New_Zealand_s_Electricity_Reform_History .pdf

In 1985 it was apparent that in terms of generation, at least, the electricity industry was not performing well. As noted in the Ministry of Energy's review in 1984, the Electricity Division's performance measurement was complicated by electricity pricing being set externally, it paid no tax, it required considerable capital, and its "essential nature" and "monopoly role" made it a target for industrial action. .

Vaygor, what is the difference between paying no tax and being a 100% government owned state enterprise and paying tax? I put it to you that the net cashflow to the government is fundamentally the same in each case.

All the hydro dams were built by the government because no private company would put up the money to do it. The fact that decades down the track this is no longer the case doesn't mean you can criticise the historic model based on today's market conditions.

You could equally well have the country held to ransom with five big players in competition, if all of those power company workers were in the same union. The breaking up of Electricorp on its own was not sufficient to remove the threat of strikes by power workers.

With no electricity market, of course the price of electricity had to be set by someone.

All these 'broken features' are based on the underlying theme that the market always knows best. If there is no market set up, then the non-existent market can't do anything for anyone.

SNOOPY

[Snoopy]

A 1985 Treasury review of electricity planning and electricity generation costs made especially sober reading. Noting the significant share of the country's total investments represented by the electricity sector, the report found that prevailing arrangements were failing to deliver electricity to New Zealand at lowest practicable cost - the driving policy of the day. Over-investment in generation arose from systematic and gross over-estimates of demand growth, ranging from 33% to 51% for the periods considered. Projects were characterised by commissioning delays, large cost over-runs and electricity production costs well in excess of those predicted (at times up to 100% higher).


Do not be deceived that the treasury view was the only view of history at the time Vaygor.

The Manapouri power station was built for Tiwai point. It was not a question of demand first and build the power station later. It was a supply driven project.

I think by the time the Clyde dam came along, the driver was more 'security of supply', not 'electricity at the lowest practicable cost' in the face of dramatically increasing oil prices from the middle east. I will bet too that the 100% cost overrun refers to the Clyde dam and was because of all the extra associated earthquake earthworks. Not really a fair comparison stick for measuring the construction costings of all dams.

As for energy cost, this can be adjusted by changing depreciation rates and the period over which costs are amortised. I could decree that the life of a dam was 1000 years not 100 and the cost of hydro-power would instantly fall to one tenth of what is was before. Likewise I could decrease the financial viability of any power project by increasing the expected long run capital market interest rate profile. In the 1980s this was certainly higher than today. So with hindsight you could argue that the treasury power costings of the day were incorrect, when taken over the life of a dam.

The non-treasury way of looking at this is to say that once the hydro dam is built the cost of generating that power is almost zero. Beat that!



It even found that generation investments were not undertaken on a cheapest-first basis, whether using simple or more refined investment selection rules. Aside from the general need to reform New Zealand's state trading enterprises, electricity was especially in need of change.


If the selection of hydro-power projects was so wrong then, why are they all still going now?



The electricity system of the time would appear to have been driven by political (central and local government), engineering and labour imperatives as much as by the interests of taxpayers and electricity consumers.


Those early power stations were big construction projects and when one was finished the trained workforce moved onto the next one without much consideration of whether that was the next most economic project to undertake. But imagine if one dam had been built on the Waitaki by what would become MRP then no more for 30 years because oil was so cheap. All that expertise building the first dam would be lost artificially increasing the cost of future dams (when the price of oil did rise) because of the need to recruit and train the engineers needed to build them. In fact this is where we find ourselves today. NZ no longer has the engineering expertise to build a large scale hydro dam. So new big scale hydro will forever be uneconomic.

SNOOPY

[Vaygor1]

I could decree that the life of a dam was 1000 years not 100 and the cost of hydro-power would instantly fall to one tenth of what is was before. Likewise I could decrease the financial viability of any power project by increasing the expected long run capital market interest rate profile. In the 1980s this was certainly higher than today. So with hindsight you could argue that the treasury power costings of the day were incorrect, when taken over the life of a dam. The non-treasury way of looking at this is to say that once the hydro dam is built the cost of generating that power is almost zero.

You could also decree that the sun won't rise, that the earth is flat, and that gravity is a myth. Then use this as a basis to get your view across, arguably with a greater chance of success.

[Snoopy]

You could also decree that the sun won't rise, that the earth is flat, and that gravity is a myth. Then use this as a basis to get your view across, arguably with a greater chance of success.

Two questions to ask here:

1/ How long do you think these hydro-dam structures will last Vaygor? The pyramids are up to 4000 years now, albeit built on more stable ground than the Shakey Isles, although without the benefit of 20th century civil engineering knowledge. I think 1000 years might be conservative, and certainly a more realistic guess than 100 years. Who selected the accounting standard 100 year life anyway? This is just an example of how accounting assumptions can drastically influence the 'cost' of power.

2/ Up until the GFC, for years NZ had interest rates hanging around the 7-8% mark. Who believes that is a long term sustainable interest rate level now? High interest rates can increase the discount factor on future returns, and so reduce the present day value of future income streams. This will reduce the viability of long term investment projects like hydro dams at the planning stage. If we applied pre GFC interest rates to many infrastructure projects today, they would not get of the ground. I am not arguing that treasury projections on the viability of big power stations were wrong at the time. But don't you think it is odd to take high interest rates over a fifteen year period and use those rates to cost the power from a future project that even in conservative treasury terms has a 100 year life?

SNOOPY

[Vaygor1]

Two questions to ask here:

1/ How long do you think these hydro-dam structures will last Vaygor? The pyramids are up to 4000 years now, albeit built on more stable ground than the Shakey Isles, although without the benefit of 20th century civil engineering knowledge. I think 1000 years might be conservative, and certainly a more realistic guess than 100 years. Who selected the accounting standard 100 year life anyway? This is just an example of how accounting assumptions can drastically influence the 'cost' of power.

2/ Up until the GFC, for years NZ had interest rates hanging around the 7-8% mark. Who believes that is a long term sustainable interest rate level now? High interest rates can increase the discount factor on future returns, and so reduce the present day value of future income streams. This will reduce the viability of long term investment projects like hydro dams at the planning stage. If we applied pre GFC interest rates to many infrastructure projects today, they would not get of the ground. I am not arguing that treasury projections on the viability of big power stations were wrong at the time. But don't you think it is odd to take high interest rates over a fifteen year period and use those rates to cost the power from a future project that even in conservative treasury terms has a 100 year life?

SNOOPY

I do not believe there is a lot of merit in comparing an electricity hydro scheme to a pile of rocks in a waterless desert. Mount Everest has been around for a few million years longer than the pyramids. Perhaps we could use that as the basis. At least there's water there.

The treasury paper to which you refer is only one reference quoted not directly by me but quoted inside one of the many references I have provided. You have only provided unqualified opinion bar one reference to a webpage that Labour wrote on NZ Power; a link that I initially provided to you. Further to this you have refused to name your sources when asked.

Let's not forget that the American Professor whose work is the very foundation of Labour's electricity 'policy' (conveniently announced on the same day as MRP's IPO) has since publicly stated their policy is a sham.

http://www.stuff.co.nz/business/opinion-analysis/8989538/Labour-Green-electricity-poster-child-won-t-play-ball
http://www.scoop.co.nz/stories/BU1308/S00083/labour-greens-power-policy-is-bass-ackwards-wolak-says.htm

[Snoopy]

I do not believe there is a lot of merit in comparing an electricity hydro scheme to a pile of rocks in a waterless desert. Mount Everest has been around for a few million years longer than the pyramids. Perhaps we could use that as the basis. At least there's water there.


An earth dam is literally a pile of rocks reshaped, so you may have a point!



The treasury paper to which you refer is only one reference quoted not directly by me but quoted inside one of the many references I have provided. You have only provided unqualified opinion bar one reference to a webpage that Labour wrote on NZ Power; a link that I initially provided to you. Further to this you have refused to name your sources when asked.


Vaygor, your position on MRP is perfectly aligned with the treasury position. Even referencing ten other papers that support the treasury position does not broaden your argument. I am not saying all treasury positions are 100% wrong. I am saying there are other ways of costing power that are also valid which are in conflict with the treasury papers of the time. Locking yourself into an historical treasury viewpoint from the 1980s explains why you cannot adapt your views regarding the power markets going forwards.

Exhuming Rod Deane and rerunning the exact policy views of the 1980s will certainly result in a confused outlook in 2014 and beyond, as you are finding.

SNOOPY

[Snoopy]

Let's not forget that the American Professor whose work is the very foundation of Labour's electricity 'policy' (conveniently announced on the same day as MRP's IPO) has since publicly stated their policy is a sham.

http://www.stuff.co.nz/business/opinion-analysis/8989538/Labour-Green-electricity-poster-child-won-t-play-ball
http://www.scoop.co.nz/stories/BU1308/S00083/labour-greens-power-policy-is-bass-ackwards-wolak-says.htm


Despite your selective quoting from the Scoop article in particular, Professor Wolak does support the separation of the gentailers into generators and retailers. He also supports more control of the prices charged by retailers and the local electricity networks. A single wholesale buyer system will achieve both of these things by stealth IMO.

SNOOPY

[Hoop]

Micro generation is the future...
http://phys.org/news/2013-12-expensive-solar-panels.html

[Hoop]

Quote from Market Watch article (http://blogs.marketwatch.com/energy-ticker/2013/12/26/under-solar-heat-utilities-put-up-a-fight/)"......In the last decade, energy efficiency initiatives such as energy-efficient compact fluorescent light bulbs and rooftop solar “have fundamentally broken the historical link between electric load demand and economic growth,” the UBS analysts said.

The saving grace for Utilities atm is the poor electrical storage abilitity ....Battery technology break through, I think, will be a major factor affecting Power Companies share price in the future...

Disc hold some MELCA...MRP on my watchlist

[fish]

The future for energy demand has so many variables and i dont share the ubs view-they could be misinterpreting recent drops in demand as a blueprint for future demand and useage .
World population is increasing by 200,000 per day.
NZ is now the golden country to live in .
Our population is growing.
World financial crisis has had a bigger effect in my opinion on demand than energy efficiency.
As money flows again we will start using more power e.g air-conditioning and consumer items .
Making milk powder in the current quantities demanded will mean a lot more power useage than making butter/cheese.
I see dairy farmers can now buy driers for $30,000 that turn colostrum and waste milk into forms of profitable milk powder
?effect Electric cars/induction technology etc reducing the need for more battery.
Sure we might be painting our houses with solar cell paint but we will still need a more reliable source of power .

[Tyro]

Please does any know how much dividend to expect, and when?

[Harvey Specter]

I find it funny Labour reiterates its plan to destroy the public energy companies and no mention of it on any of the four threads. No one cares or no one holds?

[Harvey Specter]

Everyone is tired of the same old s***, knows it's not going to happen and that they don't jave any electable policies so won't get in!
Don't underestimate the general populations desire to vote in promises of free ________ & ________. Cheap electricity is just the start.

[Bjauck]

I find it funny Labour reiterates its plan to destroy the public energy companies and no mention of it on any of the four threads. No one cares or no one holds?
Are you referring to: http://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&cad=rja&ved=0CCgQqQIoADAA&url=http%3A%2F%2Fwww.3news.co.nz%2FLabour-reaffirms-change-in-power-policy%2Ftabid%2F423%2FarticleID%2F328705%2FDefaul t.aspx&ei=yATaUoOAGYyukgWX54GADg&usg=AFQjCNE49_BymJSkOLz1Wpl4IgmmYJNARA&sig2=81VE-WyqAVzoGDyLFC0-nA&bvm=bv.59568121,d.dGI

I don't see any mention of Labour wishing to "destroy" the "public energy companies". The Labour Party is just reinforcing their plans to introduce - if elected - pricing model changes. Their Finance Spokesman already concedes that the markets are already pricing in what may happen if Labour are elected. So it is not really new news.
Disc. MRP shareholder

[robbo24]

Don't underestimate the general populations desire to vote in promises of free ________ & ________. Cheap electricity is just the start.

I'm glad they've started using the term "super profits" again - they obviously have a very low threshold for what they consider to be "super profits".

I recall David Cunliffe threatened a violent, bloody revolution if he didn't get his own way - just remember that on voting day.

[Harvey Specter]

Are you referring to: http://www.google.co.nz/url?sa=t&rct=j&q=&esrc=s&source=newssearch&cd=1&cad=rja&ved=0CCgQqQIoADAA&url=http%3A%2F%2Fwww.3news.co.nz%2FLabour-reaffirms-change-in-power-policy%2Ftabid%2F423%2FarticleID%2F328705%2FDefaul t.aspx&ei=yATaUoOAGYyukgWX54GADg&usg=AFQjCNE49_BymJSkOLz1Wpl4IgmmYJNARA&sig2=81VE-WyqAVzoGDyLFC0-nA&bvm=bv.59568121,d.dGI

I don't see any mention of Labour wishing to "destroy" the "public energy companies". The Labour Party is just reinforcing their plans to introduce - if elected - pricing model changes. Their Finance Spokesman already concedes that the markets are already pricing in what may happen if Labour are elected. So it is not really new news.
Disc. MRP shareholderI don't believe it is fully priced in. To be fully price in would assume the market expects labour to win - it is only a 50:50 chance.

Destroy may have been a bit strong but there is a least a billion to still be wiped of (based on my interpretation of what the greens said when launched).

I note the Stanford professor they are relying on has fully discredited their plan so who knows what will eventuate should they get in.

[blocker3]

Question please to whoever can answer it. Where to from here for MRP, up or down for the share price in the future . If it is down or flat I will cut my losses and walk away. If it is upwards I will hold. Open to any comments +/-.This share has red ink all over my portfolio . Cheers

[couta1]

Question please to whoever can answer it. Where to from here for MRP, up or down for the share price in the future . If it is down or flat I will cut my losses and walk away. If it is upwards I will hold. Open to any comments +/-.This share has red ink all over my portfolio . Cheers
Know the feeling this things like a leaking tap but if you wait a couple of year your get some bonus washers to fix it after that if it still leaks toss it out:(

[PartyPooper]

Question please to whoever can answer it. Where to from here for MRP, up or down for the share price in the future . If it is down or flat I will cut my losses and walk away. If it is upwards I will hold. Open to any comments +/-.This share has red ink all over my portfolio . Cheers

I wouldn't be surprised to see it fall below $2 again everyone is pumping their money into growth stocks like moosie and others have mentioned. I'm not one to analyze stocks with numbers but I think the buy back will slowly put the stock towards 2.20 again and hopefully people pilling in for the divi could push it to 2.25-2.30. The election will also be a big factor but I doubt we will ever see 2.50 for a year or two.

I've been tossing up over the past week whether to sell MRP and put it all into more SUM or RYM but because the divi is getting close and same for MELCA, i'm going to hold I think.

[axe]

Please does any know how much dividend to expect, and when?

Not sure how much and I think it's in march,

[Bjauck]

I don't believe it is fully priced in. To be fully price in would assume the market expects labour to win - it is only a 50:50 chance.

Destroy may have been a bit strong but there is a least a billion to still be wiped of (based on my interpretation of what the greens said when launched).

I note the Stanford professor they are relying on has fully discredited their plan so who knows what will eventuate should they get in.
I agree...I do not think the full unabated Green plan/threat is priced in. However, it may be a 50/50 chance for having a new Labour led Administration and on top of that it may be a 50/50 chance that they will put in place a full strength New Pricing model. If they do, they would then probably have to wait until their second term...so another very approximate 50/50 probability that would occur. So many if's but's and maybe's.

I do think if people are blindly doctrinaire they will rely on whichever research they claim supports their position, whether it is applicable or not.

[blocker3]

I wouldn't be surprised to see it fall below $2 again everyone is pumping their money into growth stocks like moosie and others have mentioned. I'm not one to analyze stocks with numbers but I think the buy back will slowly put the stock towards 2.20 again and hopefully people pilling in for the divi could push it to 2.25-2.30. The election will also be a big factor but I doubt we will ever see 2.50 for a year or two.

I've been tossing up over the past week whether to sell MRP and put it all into more SUM or RYM but because the divi is getting close and same for MELCA, i'm going to hold I think.

Thanks for that PartyPooper and Couta1. My plan of attack will be.....

Either wait to $ 2.25 and "I'm out of here" or "Sell in May and go away" Whatever comes first.

Thanks for that.

Cheers

[GR8DAY]

......CAN ANYONE TELL ME WHEN MRP GOES X next dividend.........and if so, what is the dividend likely to be? cheers.

[Master98]

......CAN ANYONE TELL ME WHEN MRP GOES X next dividend.........and if so, what is the dividend likely to be? cheers.

Mighty River Power is forecasting an interim dividend of $72.8 million which equates to 5.2 cents per share to be paid in March 2014.

[Master98]

so first half earnings 123.5m, thats 8.9cps, projected full year earnings 18cps, current PE 11.5($2.07), it is cheap, isn't it?

[bryndlefly]

shareprice looks like its finally crossed the resistance trendline and broken out of the downtrend... or is that just wishful thinking? ha ha

[robbo24]

shareprice looks like its finally crossed the resistance trend line broken the downtrend... or is that just wishful thinking? ha ha

I hope the shareprice does not increase.

As a happy long term holder, I note that the resumption of the buyback begins tomorrow. There is plenty more in the kitty.

[Master98]

with over 13m shares remaining need to buy back will start tomorrow until October, I think share price will be push back to $2.3-$2.4 range.

[robbo24]

Do the bought back shares pick up the bonus shares? ... (sorry, question behalf of another)

No. But if eligible holders sell their entitlement then the resulting shares or cash will either go to MRP or the government. Which is a good question.

[Harvey Specter]

No. But if eligible holders sell their entitlement then the resulting shares or cash will either go to MRP or the government. Which is a good question.It will be a saving to the government. the listing of the shares was (in theory) nothing to do with the company.

[Xerof]

No. But if eligible holders sell their entitlement then the resulting shares or cash will either go to MRP or the government. Which is a good question.



With MRP, only people still holding their original allotment will get the bonus shares. So Belg, in my mind, it matters not who is BUYER, the fact is the original entitled holder has SOLD, thereby extinguishing the liability of the Crown to issue the bonus shares.

Each original owner who has sold, has effectively left the shares they were going to get from the Crown, with the Crown. robbo24, so it is therefore the Crown who picks up the 'benefit' (by not having to eventually issue the bonus shares) They will end up with a higher % holding of MRP

[robbo24]

With MRP, only people still holding their original allotment will getnus shares. So Belg, in my mind, it matters not who is BUYER, the fact is the original entitled holder has SOLD, thereby extinguishing the liability of the Crown to issue the bonus shares.

Each original owner who has sold, has effectively left the shares they were going to get from the Crown, with the Crown. robbo24, so it is therefore the Crown who picks up the 'benefit' (by not having to eventually issue the bonus shares) They will end up with a higher % holding of MRP

Pro-rated treasury stock/Crown holding of unclaimed bonus shares...... Who is with me??? If only.

[Snow Leopard]

shareprice looks like its finally crossed the resistance trendline and broken out of the downtrend... or is that just wishful thinking? ha ha

Here is a little chart of closing prices for MRP from listing till close yesterday, today looks like it is down day :(.

5552

You may be a little premature in assessing the downtrend as broken.

Best Wishes
Paper Tiger

[Snow Leopard]

I have only done a quick run over the HY results but I have normalized the EPS to 7.4cps would consider doubling that up to 14.8cps for the full year but no higher than that.

I see that MRP talk about an adjusted net profit and dividend payout of 13cps for full year.

So perhaps not such a bargain at all?

I notice the last bout of buyback did not stop the share price declining.

But one day the downtrend will end and then I will read the accounts again and you never know, even buy some.

Best Wishes
Paper Tiger

[robbo24]

I have only done a quick run over the HY results but I have normalized the EPS to 7.4cps would consider doubling that up to 14.8cps for the full year but no higher than that.

I see that MRP talk about an adjusted net profit and dividend payout of 13cps for full year.

So perhaps not such a bargain at all?

I notice the last bout of buyback did not stop the share price declining.

But one day the downtrend will end and then I will read the accounts again and you never know, even buy some.

Best Wishes
Paper Tiger

Settle down Tig.

Let's all just calm down... MRP's 65%fy/35%hy divvy policy means that even this 35% round of fully imputed divvies is pretty mint... Divvviessss brahhhhhhh.

The real benefit of the buyback in my eyes is the fact that it's held as treasury stock - which means, you guessed it, divvvvviiieessssss brahhhhhhhh!!!

[Tyro]

so first half earnings 123.5m, thats 8.9cps, projected full year earnings 18cps, current PE 11.5($2.07), it is cheap, isn't it?


Cheap yes. And with better quality earnings than Genesis, and lower transmission costs & transmission risk than Meridian. But markets are rational in the long-term, if at all.

[mouse]

Cheap yes. And with better quality earnings than Genesis, and lower transmission costs & transmission risk than Meridian. But markets are rational in the long-term, if at all.

The hydro system runs on the river. No canals to maintain. Plus close to the market, no problem with the Cook Straight cable system. Nor long transmission losses. I think that investors should have cash in both Mighty River and Meridian.

[Airw0lf]

The hydro system runs on the river. No canals to maintain. Plus close to the market, no problem with the Cook Straight cable system. Nor long transmission losses. I think that investors should have cash in both Mighty River and Meridian.

Also MRP have a lot of geothermal generation so they are far less exposed to lack of rainfall as compared to Meridian.

[mouse]

Also MRP have a lot of geothermal generation so they are far less exposed to lack of rainfall as compared to Meridian.

Cost of Generation. Cheapest is Hydro. Geothermal is probably next cheapest. We then get into big bucks with Coal probably cheaper, and more reliable, than windfarms. (Coal has the problem of cleaning up the site after use). But Fonterra use coal for milk powder processing. They even have their own coal mine!

[Snow Leopard]

I have only done a quick run over the HY results but I have normalized the EPS to 7.4cps would consider doubling that up to 14.8cps for the full year but no higher than that.

I see that MRP talk about an adjusted net profit and dividend payout of 13cps for full year.

So perhaps not such a bargain at all?

I notice the last bout of buyback did not stop the share price declining.

But one day the downtrend will end and then I will read the accounts again and you never know, even buy some.

Best Wishes
Paper Tiger

Well much to my surprise I have a few MRP shares sitting in the shoe box in the corner looking a little unloved.
If I ever come up with a good reason for why they are here (short term rising price and volume probably) I will let you know.
If they resume their decline I will shoo them out.

Best Wishes
Paper Tiger

[robbo24]

Well much to my surprise I have a few MRP shares sitting in the shoe box in the corner looking a little unloved.
If I ever come up with a good reason for why they are here (short term rising price and volume probably) I will let you know.
If they resume their decline I will shoo them out.

Best Wishes
Paper Tiger

Shine on you crazy diamond

[Master98]

Well much to my surprise I have a few MRP shares sitting in the shoe box in the corner looking a little unloved.
If I ever come up with a good reason for why they are here (short term rising price and volume probably) I will let you know.
If they resume their decline I will shoo them out.

Best Wishes
Paper Tiger

PT You sell and me buy, already doubled my holding, average price well below $2.20 plus div $0.124, noticed from ASB site MRP NTA $4.1, is it right?

[Snow Leopard]

PT You sell and me buy, already doubled my holding, average price well below $2.20 plus div $0.124, noticed from ASB site MRP NTA $4.1, is it right?

You may wish to re-read my last two or three posts, then you may see that I bought some in the last few days and that they are on notice to not test their recent lows.

NTA should read about $2.26.
A figure of $4.10 equates to the total assets (including intangibles!) and ignores the liabilities.

Best Wishes
Paper Tiger

[Master98]

I have only done a quick run over the HY results but I have normalized the EPS to 7.4cps would consider doubling that up to 14.8cps for the full year but no higher than that.

I see that MRP talk about an adjusted net profit and dividend payout of 13cps for full year.

So perhaps not such a bargain at all?

I notice the last bout of buyback did not stop the share price declining.

But one day the downtrend will end and then I will read the accounts again and you never know, even buy some.

Best Wishes
Paper Tiger

Currently CEN trade at PE 17.26, don't you think it is reasonably to assume MRP should trade at this level, if so even use your EPS 14.8cps, then MRP should trade at $2.55.

[Snow Leopard]

Currently CEN trade at PE 17.26, don't you think it is reasonably to assume MRP should trade at this level, if so even use your EPS 14.8cps, then MRP should trade at $2.55.

Or CEN is even more overpriced.


I abandoned giving any relevance to PE ratios a long time ago.

CEN is CEN and MRP isn't

Best Wishes
Paper Tiger

[Bjauck]

Never say never! More than other "developed" countries most NZers have tunnel vision in relation to investment. Its Property and you borrow to get into the most expensive you can get money for! Baby boomer parents were stung by 1987 and took fright of shares. This generation were being welcomed back by John Key...into MRP and others...and got stung by politics.

[biker]

Many unplanned children happen moosie(remember the bird and bee's chat your parents gave you)so unless you have had the snip or this is your way of telling us you are attracted to the same sex you cant be to sure on the no children.lol:p

Ahhhh snapiti, ever the pragmatist :-)

[skid]

My partner is most definitely female ;)

I'm pretty 100% sure I'm never having kids as well. Not posting up why here :p

if I set up a fund will you contribute? We could bookmark this thread as Financial Markets, IPO's and Politics 101!

you can speculate on that 2nd line on the off market discussions folks:):)

[Bjauck]

Many unplanned children happen moosie(remember the bird and bee's chat your parents gave you)so unless you have had the snip or this is your way of telling us you are attracted to the same sex you cant be to sure on the no children.lol:p
Being in a same sex realtionships need not stop the sound of little feet, plus infertility does not stop adoptions....

[skid]

Is anyone else wondering about these price rises and the fact that they are coming off the back of significant selling of electric co by the Govt.---And then they get all concerned and say they will look into it---Not looking good for the average Kiwi