Mike Roan: Meridian CEO on the Government's measures to tackle issues in the energy sector

The Government's opted against a significant energy shake-up -- rejecting calls to re-nationalise or split up the big gentailers.  

Instead, it'll offer the Crown-controlled companies more capital to invest in generation projects. 

It will also establish a Liquified Natural Gas import facility, give the Electricity Authority greater power, and speed up consenting renewable energy projects. 

Meridian is supportive of the announcement, calling it bold. 

CEO Mike Roan told Kerre Woodham the affordability of electricity is a challenge that’s mitigated by the investments made into new generation. 

He says the Government is trying to bolster those investments to bring stability and certainty back to the market.  

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Episode Transcript

Speaker 1 (00:06):
You're listening to the carry Wood and Morning's podcast from
News Talks, he'd be. The government revealed its measures to
tackle the energy sector isshes this morning. Believes its new
and Energy plan will keep New Zealand attractive to investors
and injury and injury and industry. It's assuring Crown controlled

(00:27):
gent Tailor's Genesis Mercury and Meridian that funding's available for
major infrastructure projects and has kicked off procurement for a
liquefied natural gas facility. Meridian is supportive of the government's announcements,
calling it bold. Meridian Energy chief executive Mike Groan joins me, now,

(00:47):
very good morning to you, Kerry. What does it mean
to a business that's struggling to keep its doors open
because it can't procure gas right now and to a
solo mum who's struggling to pay the power bill? What
do these announcements mean.

Speaker 2 (01:06):
I think anybody who's struggling right now to secure gas
and or you know, pay their electricity bills is these
changes will address longer term challenges. The you know, gas

(01:28):
supply is one of the challenges that the this is
trying to remedy, and you know, the affordability of electricity
is one that really comes about through the investments that
we're making in new generation. So you know, if you

(01:50):
jump back, the key issue that the country went through
was loss of that gas supply and the government is
trying to bolster the investments to bring stability and certainty
back to the market.

Speaker 1 (02:08):
So long term, there may be security of supply for
business and power prices might stabilize, but right now the
pain will continue for voters and consumers.

Speaker 2 (02:23):
There's a couple of things, Kerrie, is if you look at,
you know, what we do as a business, so you know,
the gentail model, and what comes through the report is
we shield customers from the wholesale prices that have emerged
in the market, and so we provide a level of

(02:44):
respite for you know, people that are struggling. We also
run you know, vulnerable programs within our business, and we
encourage people who are really struggling to talk to us
about their situation because we know, you know that not
only people are struggling with their energy bills, but there

(03:05):
are some people out there that are struggling, you know,
to pay any type of bill, and so we do
run these programs to help people through the challenges that
they're currently facing.

Speaker 1 (03:18):
How do you shield consumers? Can you just explain how
you shield them from the.

Speaker 2 (03:23):
Whole Yeah, so what yes, of course, what we do
is we provide customers with a fixed price for the
energy that they consume. They don't pay the wholesale price
of electricity, which is what has lifted materially over the
last year and a half, in particular with that loss

(03:44):
of gas. And so you know, we released our financial
result at the end of August, and you know that
set out that we lost or we we didn't capture
three hundred million dollars worth of earnings because we've bought
energy at a high wholesale price and sold it to

(04:05):
customers at a lower retail price. So we're shielding people
from the impact of those higher wholesale prices. And that's
one of the benefits of the gentile model that's been
set out in the reports that have just been released.

Speaker 1 (04:24):
When Adurn made the announcement that there would be a
ban on off short oil and gas exploration, did that
take the industry sector by surprise or had you consulted
with the relevant cabinet ministers did you warn them what

(04:44):
would happen. Faith in the industry disappeared overnight.

Speaker 2 (04:51):
Carry I don't know if we could put it down
to one thing, you know, the loss of gas supply.

Speaker 1 (04:55):
I know, it's less than the reserves are less than
we where we thought were going to be there. We
thought we'd have a bit longer to transition.

Speaker 2 (05:08):
That's that's the unfortunate reality, Kerry is there's been a
lot of investment in the gas sector who improve the
amount of energy that they can extract. But unfortunately the
drilling programs that they've entered into, they haven't yielded new

(05:28):
gas fine, and so the gas fields have deteriorated faster
than anyone would expect. And as a result of that,
you know, what we have done as an electricy sector,
because we're a big user of gas, just like the
customers we were talking about before, is we've moved away

(05:50):
from you know, gas as a transition fuel and you know,
we've stepped back to using coal to provide both security
and energy to meet customers' needs. So, you know, the
challenges in the in the gas sector are what led
to the review in the first place, and the you know,

(06:14):
the work that the government is looking to do to
both improve transparency around gas supply and look at whether
procurement of an LNG import facility would make sense for
the country are really important and good elements of the

(06:35):
package that they are presented.

Speaker 1 (06:38):
So the average consumer might be thinking ho hum, But
as far as the industry goes, how do you rate
the reforms?

Speaker 2 (06:50):
Yeah, number one, it's great to have clarity after a
huge amount of speculation. I think clarity enables the industry
to get on and do what we do, which is
invest The governments will participate in capital raisings as a
means to bring forward investment in new generation is positive.

(07:13):
I think it's really bold. It's the biggest change that
we've seen in our business. To commitments from the government
to support investment in the sector. Alan G to support
you get direct gas customers, also provide firming to the

(07:35):
electricity sector is beneficial. And then the strengthening of the
Electricity Authority in the role that it plays to both
monitor and assess levels of competition in the market. They're
all very positive.

Speaker 1 (07:53):
Thank you so much for your time. I appreciate it,
especially on the fast turnaround. Mike Groan'm already in chief
executive for more.

Speaker 2 (08:00):
From Kerry Wood and Mornings.

Speaker 1 (08:01):
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