Cost of building Otahuhu B
Quote:
Originally Posted by
Paper Tiger
Wish I could provide information with regard to construction and operational costs for different types of generation for you.
I went all the way back to my 1999 CEN annual report and saw there was $225m of work in progress on the balance sheet. I should point out that at the 1999 balance date neither Otahuhu B, nor the Te Rapa Co-generation project, a joint venture with a predecessor of Fonterra's were operational. These both came on stream during FY2000. Because of its joint venture status, I am picking that Te Rapa was not on the Contact books as an asset. It may not even be on the books at Contact today (anyone know?).
At any rate I would guess that the $225m of work in progress relates to Otahuhu B. This would be buildings and generation equipment only as Contact already owned the underlying land. What $225m would be today in inflation adjusted dollars is hard to estimate. Our NZD to Euro exchange rate has probably improved (the generation equipment Otahuhu B was supplied by Sieman's in Germany) , but the cost of materials would have gone up substantially as well.
I will stick my finger in the air and say $800m in 2013 dollars. Anyone like to agree or disagree?
SNOOPY
Actual ROA calculation for FY2012
Quote:
Originally Posted by
Snoopy
The Greens/Labour have been trumpeting excessive profits being generated by overvalued assets. But I think there is an argument that says turbines do eventually wear out. So I am of the opinion that the turbine equipment needs to be thought of as carrying it's replacement value on the books for power pricing purposes. This is necessary to ensure that when a replacement is eventually required the capital replacement budget exists that will ensure the power station can keep running.
So I would argue that even if the labour greens form the next government, the book value of Contact Energy assets will be unaffected by the new power policy. Given Contact produced an ROE of under 6% in 2012 based on book value, which translates to an ROA of some 5%.... How can that be regarded as excessive?
OK I am sticking my neck out. I don't believe a labour/green power policy if implemented will have any effect on Contact Energy.
From the Chairman's Review, underlying earnings for Contact were $176m for FY2012.
Go to the balance sheet on page 51 and I see Property Plant and Equipment valued at $5,163.6m and gas storage at $51.5m being the book value of assets that bear any generating capability.
So my ROA calculation for Contact Energy for FY2012 is as follows:
$176m / ($5,163m + $51.5m) = 3.4%
I can't see how any Labour/Green minister of energy could call that return excessive. Unless of course, they believe that those assets on the books are way overvalued. I will now have a second bite at that question.
SNOOPY
Since when has political ideology been stopped by anything
Quote:
Originally Posted by
Snoopy
...I can't see how any Labour Greens ministry could regard these values as excessive. Hence I can't see them drawing up a plan for Contact to sell their power to a new single power authority buyer at any lesser price than today's market price.
SNOOPY
If it is politically expedient for electricity prices to be excessive then they are and the numbers will prove it and many will happily believe it.
Best Wishes
Paper Tiger