MEL - Meridian Energy

[Hoop]

meh!! I stuffed up.... I'll try again

This time I arranged the charts showing a better perspective..

[xafalcon]

In USD terms, Rio Tinto's electricity price has potentially decreased by 18% since the previous electricity contract was signed due to exchange rate movement. Any forward cover they may/may not have is a business decision and is unlikely to influence anything

And since electricity price is the main contributor to aluminium price I'm sure they are very happy with the current situation

I do not see any generator gaining a significant commercial advantage by undercutting Meridian

[IAK]

http://www.nzherald.co.nz/business/n...ectid=11466053

On the surface sounds promising...."Under the so-called "Application A" version of the proposals, the Tiwai Point smelter could expect to pay around $10 million a year in grid transmission charges instead of around $60 million at present, removing one of the sources of threat that the smelter might shut up shop in New Zealand, at major cost to the Southland economy and national exports."

[sb9]

From the Meridian Energy operating report for May 2015 - "Electricity demand 2.3% higher than preceding 12 months".

Well, it certainly seems like that if last few days in Akl are anything to go by. Freezing last night and seem same today as well. Gentailers would be hoping for more of this.

[mouse]

Well, it certainly seems like that if last few days in Akl are anything to go by. Freezing last night and seem same today as well. Gentailers would be hoping for more of this.

More arrived today, in Christchurch.
Now about selling off Manapouri to Tiwai Point. How much is it worth? Should we just get paid the proceeds as a Cash Refund?

[xafalcon]

Meridian signaled that after the Tiwai Pt supply agreement is finalised, a capital return to shareholders was expected to be anounced conditional on Rio Tinto not closing up shop and leaving in 2017

[Hoop]

Meridian signaled that after the Tiwai Pt supply agreement is finalised, a capital return to shareholders was expected to be anounced conditional on Rio Tinto not closing up shop and leaving in 2017

I normally don't get that excited with Special dividends as it sometimes shows that Management can not see additional future growth, it brings up negative thoughts of a cash cow maturing into a lost leader phase.

I'm happy though if the Management's growing strategy is unexpectedly smothered in an avalanche of profits and they have money pouring out of the doors and windows and they decide to throw some my way......or......the Company's share price is grossly undervalued due to prolonged negative sentiment..

Otherwise, I'm only happy to see it when used as a defense weapon to hostile takeovers, or as in CEN case "Use it or lose it" (excess imputation credits) before the controlling stakeholder sells out...

[PSE]

.....
Mkt hates uncertainty

Meridian could still be a loser of 172 MW if Tiwai goes to Contact for cheaper price. as it is permitted to do from July 1 (i think).

Is that feasible anyone?. Just a simplecase of another Gentailer simply supping cheaper?I have no idea.

...........

JT, an analyst report I read suggested that yes it is likely another gentailer would support the Tiwai load because it is not in the interests of the industry as a whole to lose such a large consumer.
In this scenario a CCGT would end up with it's life extended to support the smelter.

Alternatively if agreement cannot be reached we would see a CCGT shut down early to bring the system back to balance, with a few years of volatility.

I thought this a pretty well reasoned argument and either eventuality is not too catastrophic.
I am not holding the gentailers as they are too expensive, I have warned of this for a while. If the uncertainty continues there may be an attractive re-entry point.
I have no idea one way or the other.
P.S I don't think the smelter is efficient in comparison to newer plants but it produces a high purity aluminium. Like the pacific steel scrap furnace it wouldn't make sense but for some kind of crazy recipie.
Kiwi's are still very ingenious.

[Joshuatree]

Haha ; ieee what you mean Hoop.

Iak $50 mill savings for Tiwai and it looks like there is a strong push for this new Lines charge' scenario to happen

xafalcon Great points ,thanks

sb9 Is that why the Gentailers are shrinking as the temp drops(price wise. The Tiwai effect?

mouse i wish things were that simple ehh

PSE cheers for that of course ; why not

So who thinks Tiwai is going to blow; split this joint, Sayonara,Finito?
Who is getting $ together to buy Gentailers shortly/now as the price drops esp MEL BEFORE the announcement.?
Who is short of available $ atm anyway, MOI.

[PSE]

Wow, I didn't realise it was back to $2. Its not a horrible price (fair value IMO) but I have too many better options on my plate.
Outstanding assets though.