Power shares

[Jantar]

Youve been missed on these threads Jantar, welcome back. Any thoughts on the loomimg late Tiwai decision and the effects on our power companies.Im betting on Tiwai staying myself.

I won't comment on Tiwai as I was privy to some inside information on that in early March.

I have been very quiet on here for the past 3 months as I was working up to my retirement. I retired a touch earlier than I intended, just before the lockdown. Still keeping track of what's happening though.

[Joshuatree]

Congrats and join the club. Are you a holder of any power shares?.Im holding MEL my biggest and a few CEN, our Estate plenty of MEL and GNS.Not many reliable divvy payers left.Heres hoping these stay reliable income payers.

[blackcap]

Yes, and those buying would love it if the wholesale price ends up higher than the ASX contracts, while those selling would love it if the price was lower. As you say, many millions on the line, yet the whole thing about futures trading is that it both a gamble and a form of insurance.

Agree it is both. But those setting the price are obviously insiders and have a stake in the game. So those prices to me are still the best indicator out there of future wholesale prices. Of course they are never correct because there are so many variables, weather being one of the larger ones. But I see the futures prices are coming down so there must be an expectation of lower demand all other things held constant. (or some very long term weather forecaster is predicting more rain next year

[Jantar]

Congrats and join the club. Are you a holder of any power shares?.Im holding MEL my biggest and a few CEN, our Estate plenty of MEL and GNS.Not many reliable divvy payers left.Heres hoping these stay reliable income payers.

Thanks for that. Yes, I hold a few of all the big four. But up till now I have not really been free to buy or sell Contact shares except during a few very brief windows.

[Joshuatree]

Cheers Jantar. Rio Tinto will be carbon neutral by 2050. heres a snippet from their climate and water seminar about new tech that could be retrofitted to Tiwai.

"The ELYSIS technology uses what are known as ‘inert anodes’ – replacing the traditional carbon anodes in the smelting process with proprietary materials.Currently when a carbon anode is consumed in the process of electrolysing alumina to aluminium, it releases greenhouse gases along with other by-products such as perfluorocarbons, carbon monoxide, sulphur dioxide and nitrogen oxides.
Using an ‘inert anode’ separates alumina into its two elements: aluminium and pure oxygen without the release of any greenhouse gasses in the smelting process
Due to the design of the anode, and the fact that it is not being consumed, this technology has the potential to reduce the operating costs of aluminium plants while increasing their production capacity.



Climate and water seminar – Script
21 April 2020 Page 19 of 28
The technology has been producing metal at research scale since 2009 and as Peter said the first batch of ELYSIS aluminium was purchased recently by Apple.
ELYSIS is now working to further develop and scale up the technology, so that it can be retrofitted into existing smelters or used for new ones."
Climate and Water Seminar 2020 - Speechpdf, 359.51 KB

[fish]

Cheers Jantar. Rio Tinto will be carbon neutral by 2050. heres a snippet from their climate and water seminar about new tech that could be retrofitted to Tiwai.

"The ELYSIS technology uses what are known as ‘inert anodes’ – replacing the traditional carbon anodes in the smelting process with proprietary materials.Currently when a carbon anode is consumed in the process of electrolysing alumina to aluminium, it releases greenhouse gases along with other by-products such as perfluorocarbons, carbon monoxide, sulphur dioxide and nitrogen oxides.
Using an ‘inert anode’ separates alumina into its two elements: aluminium and pure oxygen without the release of any greenhouse gasses in the smelting process
Due to the design of the anode, and the fact that it is not being consumed, this technology has the potential to reduce the operating costs of aluminium plants while increasing their production capacity.



Climate and water seminar – Script
21 April 2020 Page 19 of 28
The technology has been producing metal at research scale since 2009 and as Peter said the first batch of ELYSIS aluminium was purchased recently by Apple.
ELYSIS is now working to further develop and scale up the technology, so that it can be retrofitted into existing smelters or used for new ones."
Climate and Water Seminar 2020 - Speechpdf, 359.51 KB

ELYSIS aluminium with no production of greenhouse gases looks as if it will be in demand ,sell at premium prices and be approved by the greens(those with an element of commonsense).
I just hope this factor has entered into the negotiations about Tiwai transmission costs just as I hope visual impairment,destruction of habitat etc that alternative power lines are factored into the equation.
With Covid -19 and the need for employment it would be the ultimate folly to lose Tiwai.

[trader_jackson]

I would have thought this would have a big impact on dividends... especially, as I've already touched on earlier, almost all of them pay out around 90% of free cash flow in dividends... with the whole idea of paying huge premiums for these power co's being that they can grow their dividend at above the rate of inflation annually, year after year, it would be bad news if one was to come out with no dividend increase (Cents per share) on last year, and the really bad news would be if one was to come out with even just a slightly reduced dividend on the prior financial year, which I would imagine would send people running for the high hills, instead of paying near ridiculous valuations to get what is really a return not that much higher than a term deposit.

Downgrades coming thick and fast now from this sector - Genesis the latest to announce a downgrade... share prices still seem to be valuing the sector like they can continue to pay ever increasing dividends

[Jantar]

In all cases retail sales are up. But the lockdown is extremely hard on industrial and commercial sales. These should pick up somewhat as we go into Level 3, and a lot more in Level 2. Overall, Q4 will likely see the biggest hit to all companies.

Meridian are likely to weather it the best, with Contact close behind. Genesis is likely to be the one to struggle the most.

[trader_jackson]

In all cases retail sales are up. But the lockdown is extremely hard on industrial and commercial sales. These should pick up somewhat as we go into Level 3, and a lot more in Level 2. Overall, Q4 will likely see the biggest hit to all companies.

Meridian are likely to weather it the best, with Contact close behind. Genesis is likely to be the one to struggle the most.

Agreed - and how any of them will manage to maintain their dividends (market still valuing them as if they will increase dividend cents per share in my view), given the cash flow crunch coming (lasting several months before energy use is back to anything close to before), is beyond me.

[macduffy]

Agreed - and how any of them will manage to maintain their dividends (market still valuing them as if they will increase dividend cents per share in my view), given the cash flow crunch coming (lasting several months before energy use is back to anything close to before), is beyond me.

Is it that, or is it that the market is saying that other sectors will be hit even harder?