Contact Energy - CEN Chart

[Snoopy]

Mercury has already calculated how much thin air capital they have accumulated over the last few years. I think it is a fair assumption that if we take this figure for any time period, then multiply it by a factor of:

784/1083 = 0.72

then this will give us an estimate of the thin air capital accumulated, but not booked, by Contact Energy over the same period.

I have previously stated that I am not considering any thin air capital that may (or may not) arise from Contact's geothermal assets. Focussing on Contact's hydro assets only, requires us to look at what happened to the 'thin air capital' of Mercury's hydro assets only.

FY2014 was a significant year for Contact Energy, because it represented the last year in which they constructed a brand new geothermal power station, Te Mihi. Contact raised new capital for this project in FY2011, via a share issue, with a view to having the company in the right capital shape when Te Mihi construction came to an end. Contact's capital structure following that construction project can therefore be thought of as 'optimised'. It therefore makes sense to only consider the 'thin air' capital growth path from that Te Mihi construction completion date, starting with FY2015 and going forwards.

What does 'optimised capital position' mean in terms of numbers? The position at EOFY2014 was: Assets $6,183m, Shareholder Equity $3,582m

Equity Ratio as at EOFY2014 = $3,582m / $6,183m = 58%

The 'thin air' capital growth for Mercury hydro assets is shown below. Both Mercury and Contact operate in the same electricity market. That is why I consider the thin air capital accumulated by Mercury as an indicative factor to use for the thin air capital accumulated (but not recognised) by Contact management over that same period. Information in the table below is derived from posts 1349 and 1308 in the Mercury thread.

Mercury Energy	Reval. Hydro & Thermal Assets ($m)	Reval. Geothermal & Other Generation Assets ($m)	Total Revalued Generation Assets
2015	355	142	497
2016	82	55	137
2017	0	52	52
2018	0	55	55
2019	151	99	250
2020	253	43	296
Total	841

That $841m of thin air incremental capital raised was based on a total hydro generating capacity of 1059MW (Post1347, Mercury Thread). The total Contact Energy hydro electric generation capacity is 784MW (my post 1514). So I can determine my 'best guess' at the thin air capital accumulated by Contact Energy subsequent to the FY2014 balance date by ratio:

$841m x 784MW/1059MW = $623m

Debt can be borrowed against this 'thin air capital'. This means the total amount of investment capital (equity and debt) that can be utilised as a result of this 'thin air capital' is:

$623m / 0.58 = $1,074m

Now, what sort of power station could Contact build with that?

SNOOPY