Margin pressure rising for New Zealand electricity retailers, Fitch says
Electricity retailers will experience pressure on their profit margins in 2010, thanks to higher wholesale electricity prices, transmission system upgrade costs, and investment in new generation capacity, says Fitch Ratings in its latest outlook for the New Zealand electricity sector.
"Over the longer term, Fitch expects wholesale electricity price changes to be driven by underlying increases in the capital cost of new generation and fuel costs, particularly with the depletion of the Maui gas field, offset by the downward pressure of a more efficient market as the transmission network is upgraded," the international credit rating agency says.
Fitch keeps its ratings outlook for local power companies "broadly negative" in the short term, especially for South Island generators such as Meridian Energy, Contact Energy and TrustPower, who are constrained because of weaknesses in the Cook Strait cable connecting the grid between the two islands.
Hurdles in approving new generation proposals also remained "a key issue", especially for wind and hydro projects, although Fitch believes Resource Management Act reforms should help to address the issue.
The greatest single impact for the sector is the Electricity Amendment Bill, which is not due for enactment before year's end.
As previously indicated, Fitch believes the reforms will have both positive and negative impacts for electricity producers, but that these cannot be fully judged before the reforms are in place.
Businesswire.co.nz
Comments from our readers
No comments yet Add your comment:
Related News
Stocks to watch: Burger Fuel, Fisher & Paykel, Nuplex Kiwi holds gains as US data buoys risk appetite While you were sleeping: Outlook a bit brighter Daily ShareChat: Nuplex Fairfax appoints two new directors MARKET CLOSE: NZ stocks buoyed by offshore sentiment Big Three womens' mag publishers become Big Two Pyne Gould's Perpetual unit in talks to buy Aegis WRAP platform Fonterra hires NZX to design share trading platform High Court throws out Bridgecorp chairman's appeal
|
|
Previous News
Sharemarket News By Email
Stock Quote
At a Glance
| NZX 50 Index |
3092.36 |
 |
9.90 |
| S&P/ASX 200 |
4532.70 |
 |
0.00 |
| Dow Jones Industrials |
10320.10 |
 |
50.60 |
Comment & Analysis
|
“
OK, everybody take a deep breath. Underneath all the fog of commentary and arm-waving, a fairly simple thing has happened to South Canterbury Finance today.
Its affairs are in the hands of receivers, as has happened to many a company in corporate history. What makes it special is that it has also triggered the provisions of [...]
”
Pattrick Smellie More »
|
|
|
|


NZX 15 Index
NZX Announcements
|