Malcolm Johns: Genesis Energy CEO on what the latest operating reports mean for the winter season

The latest operating reports by New Zealand's leading power companies indicate things are looking up.

Both Contact Energy and Genesis Energy have confirmed hydro storage is up, meaning both companies are in a better position than expected 

Genesis Energy CEO Malcolm Johns explains what this development could mean for Kiwis ahead of the winter season.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Let's go to some operating reports from power companies. I
know how sexy does that sound? Don't worry. It is
been some very interesting tidbits in the latest reports from
both Contact and Genesis. First interesting thing is water hydro
storage up, meaning we've got good supply to power the grid.
Second interesting thing prices, not necessarily the retail price, but
Ford prices falling by as much as fifty percent in

(00:20):
the past two weeks. Was this mean? Malcolm John's is
Genesis Energy chief executive with me tonight, Malcolm Good evening,
Good evening.

Speaker 2 (00:28):
Operating reports are always sexy, Ryan.

Speaker 1 (00:30):
You have to say that, you have to say that, Hey,
tell us what's going so? Hydro is this? Are we
in a better position than we would normally be?

Speaker 2 (00:39):
Yes. The short answer is yes. We've had fairly consistent
rain events in the key catchments since really the end
of spring last year, and we started spilling Lake Tekapo
in November because it was it was at its maximum,
and others around the system are also in a position
now they're having to spill their lakes as well. So

(01:03):
it's a regularity of rain. Notwithstanding the rain event that's
just been through the Upper North Island. Over the last
twenty four hours or so. It's the consistency of the
rain events that have led to the position we're in.

Speaker 1 (01:14):
Does that mean that we're going to be all good
for winter?

Speaker 2 (01:18):
Look, basically, it's between six and eight weeks between a
wet and a dry sequence in New Zealand, so we
don't store an enormous amount of water. Less than five
percent of our total annual demand is stored in water,
and so it really depends on how it rains over
the next three to four months. But the key thing
is the reserve fuel positions are very healthy. Gas storage

(01:42):
is near the top of its capacity and the coalstock
pilot Huntley is sitting well over a million tons now.
So not only do we have our primary fuel in
a good position, but we have our reserve fuels and
very good positions as well.

Speaker 1 (01:55):
And the Huntley sorted for ten years right.

Speaker 2 (01:59):
Yes, the contracts that we signed with the other gen
tailors means that the investment in the ranking units to
extend their life out to twenty thirty five is now
well underway.

Speaker 1 (02:09):
Good Now, as you're talking, lots of people are texting
Malcolm Michael says Ryan. Every January, the Lakes are always
spilled in order to drive the prices high for winter. True, No,
So what's going on.

Speaker 2 (02:24):
The volume of water? We have both minimum and maximum
operating ranges for the lakes. The maximums are driven by
the hyder dams, and most engineers will tell you that
water spilling over the top of dams in an uncontrolled
way is quite dangerous for the stability of the dam,
and so the spill ways are put in place so
that when you meet reach the maximum, that you have

(02:46):
to start spilling the water. And so we didn't spill
last summer, and I don't think we spilled the summer before.
But this year we are.

Speaker 1 (02:54):
So we've got water in the lakes, we've got huntly sorted.
What's going to happen to prime spot prices this winter?

Speaker 2 (03:02):
Well, the forward curve is indicating quite a retreat from
where we've been in the last couple of winters. And
the reality of the New Zealand pricing system is that
over a short short period six to twelve months, you know,
hydrology and the amount of rain we get when we
get it as a huge driver of those those spot prices.

Speaker 1 (03:22):
Did you pay any attention Do you pay an attention
to what's happening in New South Wales. You know that
big Well, their biggest power plant, coal Find power plant
over there, they're extending the life for two years.

Speaker 2 (03:33):
We certainly do pay attention to those and we have
to remember in New Zealand that you know, we've just
extended the life of Huntley's coal generation by a decade.
And the reality is that as a small nation where
our weather is highly correlated, you know, we don't store
enough water for the lakes to be able to last

(03:54):
long periods of time without rain, and so we do
have to have a reserve generation system. Huntley's the majority
of that, it's about seventy five to eighty percent of that.

Speaker 1 (04:03):
What's the situation with gas? I mean, and everyone says
we're running out and that we might lose a field
or two in the coming year. What's the situation and
what do people need to do to prepare for it?
What are you saying?

Speaker 2 (04:16):
Well, gas plays two roles in electricity. One is baseload
or consistent generation, and the second is backup generation for
cold winter nights and dry periods and the like. And
with the amount of renewables that all the companies in
New Zealand the building base load. Gas generation is in
decline and will ultimately reach an expiring point sometime between

(04:39):
now in twenty thirty or twenty thirty two. But the
need for gas as a backup generation fuel for cold
winter nights, low wind periods, and low rain periods remains.
I think you know, the gas situation remains challenging. There's
no two ways about that. It doesn't matter whether you're
generating electricity, you're an industrial or a home user. The

(05:01):
reality is that the availability of gas is becoming less
and that's having an impact on the price of it.

Speaker 1 (05:06):
Malcolm, appreciate your time. Always good chat. Malcolm John's Genesis
Energy chief Executive with us tonight.

Speaker 2 (05:12):
For more from Heather Duplicy Allen Drive, listen live to
news Talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio.