MCY Mercury NZ ( MRP Mighty River Power)

[ratkin]

the threat of tiwai point shutting down is put to bed at least for a little while.

The threat is still there, 2017 not far away

[xafalcon]

The threat is still there, 2017 not far away

But I believe the playing field has tipped heavily towards the generators - demand is growing, concurrently capacity is being retired, and transpower will likely be charging differently, meanwhile Tiwai is still for sale with a huge associated remediation cost

If I was a generator (esp Meridian) I would be playing Rio Tinto at their own game, and bully them into a long term contract at better rates on the threat of walking away

There is no better time for this than when potential new generation capacity is needed to be built = about 2017/2018

So I say the "threat" has actually switched onto Rio - do they want a huge clean-up bill when their commodities are priced so low?

[airedale]

Could Rio even sell Tiwai and who else would be interested in buying it? Lack of buyers?? big remediation costs?? Low aluminium prices. Any talk of selling by Rio sounds like posturing for political purposes.

[trader_jackson]

Could Pacific Aluminium be floated? (if they really really wanted an exit...)

Extremely 'out there' and incredibly difficult to 'sell' in these times... but desperate times (if they are as 'desperate' as Rio is making it sound) call for desperate measures (assuming they did not want to shut it down)

[xafalcon]

I do not see a Tiwai Pt shut-down currently being acceptable to Rio Tinto shareholders. It would be a direct loss of any residual plant value (probably zero from an accounting perspective, but there would be some real value in the plant) and would also invoke a clean-up bill rumored to be around $500M. With low commodity prices, dividends will already be skinny and a $500M hit would come straight out of the dividend. Much easier to sell this to shareholders when making loads of money - the next boom cycle I reckon

[mouse]

I'm not sure about the answers to your questions, but the Energy companies haven't been quite the safe-haven that I expected in the current down-turn. I sold out of MRP some time ago at a nice profit and out of MEL recently as well at a very nice profit. There's no telling imo what this Bear / correction will turn up, better I think to be on the sidelines and buy weakness as it emerges, or if necessary wait to buy back in on a confirmed reversal to an uptrend.

Jmho, dyodd.
BAA

I managed to sell out of MRP, kept a few, but most sold. Managed a good profit, but I am still concerned about their share price. It seems quite ridiculous. I am still holding Meridian as I am a great fan of Hydro generation. I look at wind power, plus geothermal, and wonder how much life the machines have, plus maintenance costs. Maintenance is not cheap, but it is essential. I suspect MRP contract out their maintenance. As everyone associated with maintenance knows, you make profit on what you do not do, not what you do, do. An essential and vital difference. The result is equipment becomes very poorly maintained since forms in triplicate are needed to tighten a nut. AND It takes three months to get it tightened!

[Hoop]

Could Rio even sell Tiwai and who else would be interested in buying it? Lack of buyers?? big remediation costs?? Low aluminium prices. Any talk of selling by Rio sounds like posturing for political purposes.

[horus1]

The question is how much can the generators get for there product. At the moment they charge Tiwai 4-5 c/kwhr , commercials 7c/kwhr , and domestic 20-25c/Kwhr. with new technology , solar , batteries , and IT giving better control domestic consumers have choice coming at well below 20-25 c/Kwhr so the prices will have to drop or people will leave the networks more and more . Overseas that I what is happening and it will happen here. Read the PWC report out last week. Thus the present share prices are not sustainable as the revenue streams will drop for all of the generator / retailers.

[xafalcon]

Generators do not charge domestic users 20-25c/kWhr, retailers do. This includes transmission costs that are paid on behalf of consumers to transpower & local lines companies, and the electricity cost includes an element of price averaging and hedging. Then GST is added on top of everything.

In commercial power sales all this is separated out and charged individually at time of use (for the large manufacturing company I work for).

Batteries are years away from having a material effect on retail pricing. Solar is fringe, and the significantly lower NZD has made it 20% more expensive. Both are only an option for those people who can afford to invest thousands of dollars and who plan to stay in their current home for at least 5-10 years and who want to have panels installed on their roof

I do not see the generators revenue stream under any threat, especially with demand growing

[stoploss]

Generators do not charge domestic users 20-25c/kWhr, retailers do. This includes transmission costs that are paid on behalf of consumers to transpower & local lines companies, and the electricity cost includes an element of price averaging and hedging. Then GST is added on top of everything.

In commercial power sales all this is separated out and charged individually at time of use (for the large manufacturing company I work for).

Batteries are years away from having a material effect on retail pricing. Solar is fringe, and the significantly lower NZD has made it 20% more expensive. Both are only an option for those people who can afford to invest thousands of dollars and who plan to stay in their current home for at least 5-10 years and who want to have panels installed on their roof

I do not see the generators revenue stream under any threat, especially with demand growing

demand growing but our friendly generators have shut a few plants recently .... Doesn't make sense , apart from trying to keep pumping prices up , way faster than inflation .....
Is Electricity the only commodity that keeps going up in price .....?