Solid Energy woes create out-clause for Genesis Energy coal contract

Thursday 13th August 2015

Government controlled electricity and gas supplier Genesis Energy has revealed an out-clause in its contract with struggling state-owned coal miner Solid Energy and is considering cancelling a standing order for coal that it doesn't need to buy now that it's proposing to close the coal-fired Huntly power station.

The Solid Energy board today announced it was placing the company in voluntary administration prior to a 2 1/2 year period in which it would sell the company's assets to settle debts to its lenders.

Shortly after that announcement, Genesis said in a statement it was "considering a number of available options, including stopping further coal deliveries from Solid Energy under the terms of the supply agreement."

The electricity retailer and generator has an option to exit the contract in certain circumstances, including voluntary administration, a spokesman confirmed.

Genesis intends to close the last two of four electricity generation units capable of burning both natural gas and coal by the end of 2018 and already has 700,000 tonnes of coal stockpiled on-site, and says it has "ample contracted gas supplies to support continued operation of the coal/gas-fired units during their remaining operational life."

Solid Energy's other major customer for thermal coal in the North Island is Bluescope's New Zealand Steel mill at Glenbrook.

Genesis shares fell 0.6 percent to $1.68, and have dropped 22 percent this year.

BusinessDesk.co.nz

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