Power shares

[Snoopy]

As they say , prediction is difficult.
You got every single one wrong Snoops.

Ah that may be true. But I remain a model of consistency. I do have a 100% record :-).

Not sure how this Blackrock thing is going to play out. If they now have 14% of Contact, they must be getting near that 10% shareholding cap the government allows them to hold with Meridian. There is nothing to stop Blackrock rejigging their relative ratings and going after more Contact. That would explain why Contact went down and Meridian went up yesterday!!!?! ;-P. If Blackrock want to maintain their NZ gentailer relativity within the fund, surely Mercury is the next target with the most potential. That would explain why it was the worst performer of the group in Thursday's trading ;-P. Anyway what all this proves is that I have absolutely no idea what I am talking about in the current situation.

I will continue to hold my CEN and MCY shares and hope. IIRC it was Winner who mentioned holding and hoping in the context of a share investment strategy. I will keep holding my breath and hope it works for me.

SNOOPY

[GTM 3442]

<snip>

If Blackrock want to maintain their NZ gentailer relativity within the fund, surely Mercury is the next target with the most potential.

<snip>

SNOOPY

I imagine that it's an index fund, following a specially commissioned index which can be revised to let them do whatever they feel like with a minimum of transparency.

[KJMLimited]

But aren't Blackrock just benchmarking against the S&P Global Clean Energy Index? Therefore Blackrock don't rejig, the S&P people do that.
Re thresholds, there is no 10% limit for Contact as they were sold off years ago. The upper barrier for Blackrock buying more Contact is therefore the 20% threshold at which a full takeover is triggered.

[Norwest]

As with all these deals, the devil will be in the detail, which we just don't know yet. Meridian made a pretty generous offer on energy charges (a combined multi-year $250m discount) last year that was rejected. The bit of the bill that Meridian could not control was the line charges. We have to assume that Transpower has come to the party on these. But to what extent? Whether Meridian has had to bite further into their own profit margins further is unknown.

Looks like MEL dropped their pants, as Rio Tinto are still in negotiation with Transpower:

MELBOURNE, Australia--(BUSINESS WIRE)-- Rio Tinto has reached an agreement on a new electricity agreement with Meridian Energy that allows New Zealand’s Aluminium Smelter (NZAS) to continue operating the Tiwai Point aluminium smelter until December 31, 2024. The extension provides certainty to employees, the local community and customers while providing more time for all stakeholders to plan for the future.

While discussions with the New Zealand government are progressing in relation to their commitment to address the smelter’s high transmission costs, a new agreement has been reached with Meridian Energy in relation to power prices, making the smelter economically viable and competitive over the next four years.

source: https://www.riotinto.com/news/releas...ations-to-2024

Here is my take on where I think Mr Market should take the prices of the 'Big 4' gentailers with today's announcement.

1/ Meridian Energy Given the large rise in share price of late, I expect the price of MEL to fall. Today's deal will, at best, lock in today's level's of profitability. So for Mr Market, it will be a case of 'buy the rumour' 'sell the fact'.

2/ Contact Energy This should be enough to 'green light' the new Tauhara baseload geothermal station. Good news, although with the share price having risen so much already, CEN should be flat going forwards on today's news.

3/ Mercury Energy This is great news because stable power demand in the south will mean Mercury's new Turitea windfarm will allow the increased use of Waikato River system as a 'battery' in the North. Water flow can therefore be better optimised for profit. Price to rise.

4/ Genesis Energy Possibly the end of Unit 5 at Huntly (to be replaced by Contact's Tauhara) and maybe the end of the Rankine units as well as the Waikato river becomes the North's new battery. A serious erosion in the company's generation base. Share price to fall.

SNOOPY

Brilliant summary and I agree 100%.

But aren't Blackrock just benchmarking against the S&P Global Clean Energy Index? Therefore Blackrock don't rejig, the S&P people do that.

This is wrong, Blackrock are very active managers, they own iShares e.g. they are the index.

[KJMLimited]

This is wrong, Blackrock are very active managers, they own iShares e.g. they are the index.[/QUOTE] Nope I'm correct. Have a read of Gaynor's article in Business Desk on Tuesday 12th.
https://businessdesk.co.nz/article/p...-impact-on-nzx
It might sit behind a firewall however, so you'll have to find it somehow from somewhere.

[dreamcatcher]

Contact 8m moves the needle one percent but Mel needs 24m currently holding 6.07%...

Interesting times

[Norwest]

I stand corrected, thanks for pointing that out KJM!

[Snoopy]

Re thresholds, there is no 10% limit for Contact as they were sold off years ago. The upper barrier for Blackrock buying more Contact is therefore the 20% threshold at which a full takeover is triggered.

KJM you are quite correct. Although, if you reread my post you will see I didn't say anything that contradicts what you said above. The 10% limit I mentioned relates to the state controlled gentailers, MEL, MCY and GNE only, and is a government imposed 'upper shareholding ownership limit' for any third party outside of government on 'just those three'.

SNOOPY

[KJMLimited]

KJM you are quite correct. Although, if you reread my post you will see I didn't say anything that contradicts what you said above. The 10% limit I mentioned relates to the state controlled gentailers, MEL, MCY and GNE only, and is a government imposed 'upper shareholding ownership limit' for any third party outside of government on 'just those three'.

SNOOPY

Thank you, I did know that. Just wanted to correct an assumption that Blackrock can just go and change the Index make up at their discretion.

[kiora]

Could NZ cope with this?
"The extreme, widespread cold took markets by surprise. The spikes in energy demand during the bitter winter, coupled with weak wind generation, power plant closures and liquefied natural gas tanker delays highlighted the shortcomings of global energy systems in weather conditions that are only set to get more volatile.

There could be more to come. A relatively rare weather phenomenon with the potential to disrupt the polar vortex -- the winds that usually keep cold air contained in the far north -- is threatening to send an Arctic blast across North America, Europe and Asia from late January"
LNG price going through the roof too
https://finance.yahoo.com/news/bitte...072341642.html