Malcolm Johns: Genesis Energy chief executive on Huntly's power station remaining operational for the next decade

Genesis Energy and the three other big power generators have signed agreements to establish a strategic energy reserve centred on Genesis’ Huntly Power Station.

The deals - aimed at supporting national security of power supply - have been settled by Genesis, Meridian Energy, Mercury NZ and Contact Energy.

The parties intend for the agreements to take effect from January 1, 2026.

Genesis Energy chief executive Malcolm Johns says there's a clear case to keep the plant going - and Genesis couldn't do it on its own. 

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:18):
Well, yeah, Huntley's power station is going to remain operational
for the next decade. The country's big four gent tailors
have signed a deal and they're going to stockpile up
to an extra six hundred thousand tons of coal at Huntley.
They're hoping this will protect against the energy crunches in
the winter like what happened last year. The ComCom still
has to sign off on this. Malcolm John's is the
chief executive at Genesis Energy. Hey, Malcolm, good evening, How

(00:39):
are you well think you know? Why did you want
the other gent tailors to be involved with you rather
than going it alone.

Speaker 3 (00:46):
Well, in essence, the machine that we're talking about was
due to go into retirement in February next year, and
from a purely Genesis perspective that made sense. But from
a wider New Zealand perspective, there was a case to
invest in keeping that machine in play for another decade,
and so Genesis couldn't do that on its own, and
so we are entered into a discussion with the others

(01:10):
around to investment to keep that machine in play for
energy security for dry years and when the wind doesn't blow.

Speaker 2 (01:18):
So why does it make sense for you but not
for them?

Speaker 3 (01:22):
It makes sense for everybody. But effectively it's dealing with
system risk rather than genesis risk. And so we couldn't
ask our shareholders to fund that on their own because
that would be writing an insurance policy for the broader system.
And so everyone going in together means that we collectively
share the cost of providing that system wise insurance.

Speaker 2 (01:42):
Malcolm, I write, and remembering correctly that it was just
last week that you guys were saying you don't have
enough agreement, you might shut it down, and then suddenly
they've come to the party. Is that what has happened?

Speaker 3 (01:52):
I know we've been very care all the way through
that without an agreement, the machine would go into retirement
as a regional YEA.

Speaker 2 (01:58):
What I'm asking is when did you strike this agreement?

Speaker 3 (02:01):
Well, we began discussions in February. In about two months
or about six weeks ago, we announced that we'd reached
an agreement on terms and conditions, and we were documenting
the contract at that point, and so we didn't we
weren't concerned during the last six weeks in terms of
the contract, we just had to finalize it and sign it.

Speaker 2 (02:21):
Okay, I see, now how long does it? How long
do you reckon it's going to take you to get
through that six hundred thousand tons.

Speaker 3 (02:27):
Well as Huntley, like last winter, has all three ranking
units running. It burns ten thousand tons a day. And
in essence, what happened is we ran out of coal
last winter, or we came very close to running out
of coal last winter, and so the six hundred thousand
ton reserve just means that that won't happen again in
the future. And of course we bought the gas from Methinx,

(02:49):
and Methinx closed for two months and it rained two
weeks later, and so having coal is much more flexible,
and that's why the coal reserve is beneficial.

Speaker 2 (02:59):
But that's only a couple of months. If if we're
going hell for leather, it's a couple of months worth
of coal.

Speaker 3 (03:03):
A remember that it's in that six hundred thousand tons
is in addition to the normal cold spot pilot Huntley,
which is five hundred thousand tons, So it gives you
a million tons of coal effectively to run through a
dry period.

Speaker 2 (03:18):
Yeah. Do you think the Commerce Commission is going to
sign this off that haf do? I? I mean, otherwise
they'd be looking at power cups.

Speaker 3 (03:25):
Well, I would assume that they will take a normal
look at this through the Commerce Act. We believe, based
on the advice we have that it's appropriate, but it's
for them to take a look at it now and
decide whether it is or is in appropriate.

Speaker 2 (03:42):
We have spoken about in the past about shutting Huntley down,
but are we ever going to shut the old girl down?

Speaker 3 (03:49):
I think we need to talk about how we evolve Huntley.
It's the only power station that sits in between Auckland,
Hamilton and Todoer. It's New Zealand's largest power station and
it has an enormous connection to the grid. And so
the assets and fuels that Huntley will change over the
next next twenty five years. It's difficult to see it
shutting down completely.

Speaker 2 (04:10):
Yeah, brilliant, Hey, thank you, Malcolm appreciated. That's Malcolm John's
Genesis Energy chief executive. When you think about it late that,
you think, why did we ever go there? Why did
we even discuss shutting her down? If she was still
working

Speaker 1 (04:20):
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