Friday 27th September 2019
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An "unacceptable disclosure regime from gas suppliers" forced electricity generator and retailer Mercury NZ to use satellite photographs to work out what might be happening in the local natural gas market, according to chief executive Fraser Whineray.
Unplanned outages at the Pohokura gas field, operated by Austrian oil and gas explorer and producer OMV, contributed to a period of "very high" wholesale electricity market spot prices in the last financial year because they coincided with a "very dry sequence" in Mercury's Waikato hydro catchment, limiting the company's ability to generate renewable electricity and forcing the whole electricity system to use more gas and coal-fired electricity.
"During this time, because of the unacceptable disclosure regime from gas suppliers, we had to look at satellite photos to see where particular ships were off the Taranaki coast, to infer what was happening there," Whineray told shareholders at today's annual meeting in Auckland. "A lack of proper disclosure will harm all energy consumers in the long-run, and the licence to operate for that part of the sector.
"We strongly encourage better proactive disclosure and we know that the government is actively working on this."
A discussion document on amendments to the Gas Act, including consideration of an improved disclosure regime and heavier financial penalties for non-disclosure, was issued earlier this year, with submissions now being analysed by officials.
Pohokura operator OMV had not taken over the field's operation at the time of the incidents in 2018, but through a spokesman said that since taking on operatorship this year, the company has "consistently acknowledged the benefits of introducing a simple regime that provides for consistent disclosure of outage information. We hope that this code will be finalised soon.
"We also observe that spot market gas prices have increased since 2018 and the best way to mitigate this is through finding and developing additional gas reserves. Unfortunately information cannot replace molecules of natural gas."
The Mercury annual meeting was the last for the chair of the past decade, Joan Withers, who described the highlight as the partial privatisation of Mercury in 2013, but said "the most powerful memories" were of opening the company's two geothermal power plants in the Waikato region, built in joint venture with the Tuaraopaki Trust, a Maori land-owning investor.
Whineray said "the geothermal renaissance in New Zealand between 2000 and 2014 has been the greatest decarbonisation achievement of the century, displacing fossil fuels" and he acknowledged the contributions of Maori land trusts and competitor Contact Energy and praised the Waikato Regional Council and Bay of Plenty Regional Council "for providing appropriate regulatory frameworks."
Withers confirmed earnings guidance for the current financial year of $485 million on an earnings before interest, tax, depreciation, amortisation and financial instrument revaluations basis, compared with $505 million in the last financial year, itself an 11 percent fall from the previous year.
The Mercury share price was last down 0.1 percent at $5.005 from its closing price yesterday, and is up 37 percent so far this year.
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