I think it is worth looking into the gas supply and demand situation at Genesis a little further. The following information is taken from the statements of Comprehensive Income for the respective years.
Year |
Gas Revenue |
Gas Purchases & Transmission |
2014 |
$251.3m |
($249.8m) |
2013 |
$212.5m |
($217.2m) |
2012 |
$235.8m |
($249.4m) |
2011 |
$189.9m |
($215.7m) |
2010 |
$131.6m |
($130.7m) |
The above table shows that 'Gas' when it was profitable has only been marginally profitable for Genesis. Where this gets more interesting is if you look at the segmented results. For FY2014 this is on page 43.
Now Genesis is an energy wholesaler (under the 'Energy Management' section) and an energy retailer (under the 'Customer Experience' section) and an energy producer (under the Oil and Gas section). Then we have the additional complication of Genesis selling gas both directly as gas and indirectly as electricity.
Under 'energy management' there is a further additional entry for 'fuel consumed' ($246.7m). That might be coal or gas or a combination of both. I note from the Solid Energy FY2014 annual report (page 2) that total coal sales in New Zealand by them amounted to $150m to all NZ customers. That means Genesis burned 50% more fuel that Solid Energy sold for all their New Zealand customers combined! So why is 'gas purchase' a separate expense entry?
Furthermore, how do Genesis decide to allocate the purchase and transmission costs the way they do? I presume the fuel bought for 'Energy management' goes straight to Huntly to be burned. So given this is along one big pipeline, I wonder why that (apparently?) has much larger transmission costs than transporting the gas in small pipes and trucks all around the rest of the country?
I am not sure I am asking all the right questions. But there does seem to be a lot of opportunity to manipulate the figures between the different segment categories. And this matters because with gas only marginally profitable, there is some real incentive there to manipulate the individual segment results to mask the overall bleak picture.
SNOOPY