GENERAL: NZX: Large generators back Aussie horse

3 Jun 2010 9:09 am

NZX 03/06/2010 GENERAL

REL: 0909 HRS NZX Limited

GENERAL: NZX: Large generators back Aussie horse

NZX has been informed by three SOEs (Meridian, Mighty River Power, Genesis) and Contact Energy and Trustpower that, together as EnergyHedge Limited (EHL), they have decided to sign a contract with the Australian Securities Exchange (ASX) to undertake derivative market trading activities in New Zealand.

NZX respects the right of the generators to make a decision that they consider is in their own best interests.

However, NZX believes that this decision comes at a real cost to a number of sectors in New Zealand.

An Australian-based market will present significant barriers to entry for the type of small, innovative entrant who could bring about genuine price competition in the New Zealand electricity market. This will in turn limit the benefits for New Zealand electricity users: households and industry.

The decision is also a blow for the development of New Zealand's capital markets and this country's relevance as a financial centre, which is built one product and one institution at a time.

NZX has the market infrastructure in place, and is awaiting regulatory approval to launch a Clearing House. NZX recently announced the receipt of an application from a significant offshore participant to be a General Clearing Participant.

NZX will consider its options, ensure that its robust platforms are available should they be needed, and will assess the potential for launching hedge products specifically designed for small, innovative energy market participants.

Background

NZX Energy is the central provider of infrastructure, information and rule development for the New Zealand electricity market. NZX Energy runs the infrastructure on which the national energy market operates today, and has connectivity to all market participants. NZX Energy runs the New Zealand wholesale electricity spot market, and is also the Pricing Manager, Clearing Manager, and Reconciliation Manager.

ASX launched New Zealand electricity derivatives in July 2009 on its Sydney Futures Exchange (SFE) platform. It has two contracts listed. A total of 86 contracts have traded since launch. This equates to just over two trades a week. The number of trades in the first quarter of 2010 was eight. All traded in January 2010. Few New Zealand institutions are connected to the SFE systems.

Contact: Rowan Macrae Phone 04 4962874 Mobile: 0274 727599 End CA:00195712 For:NZX Type:GENERAL Time:2010-06-03:09:09:05

More announcements for NZX