Oh, but it's for the social good you know! Next we'll be imposing similar regulation on supermarkets and other "essential services".
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Dear horus....thanks for your posts....much appreciated...folks opinions here will differ ..that is the nature of the beast..consumers vs investors...you obviously have some insight that most of us do not have.I probably as most posters have to ST have are biased towards favouring the power companies because they are profitable...et al....it would be great to see what we are paying for power in say 5-10 years time.......any guess's....cheers
Thanks , troyvdh. I have been around the electricity Industry for a long time. Technology is hitting the industry badly overseas with generation values declining substantially. The cost of solar is coming down fast as are battery costs . The NZ market was not recommended in the 1990's by the Mclay committee but the politicians reworked it and a market was finally recommended. Domestic consumers have been badly ripped of . The overheads in the present industry are much higher than those in non market countries. There is a split between countries with a market system and those with a central supplier, for the consumers the central supplier model is better it is better for the country to. One of the factors behind industry leaving NZ is the volatile , high, electricity prices. When the market was introduced an option was progressive pricing which is what we should have adopted but it would have been better to leave it together as in ECNZ days.That was the time when the most benefit was delivered to NZ from this industry.
The sale of the Generators has been a disaster for this country.
Interesting balance of views here
horus1..my personal view is that NZ will eventually go the same way as overseas with declining values of generation...This will be passed on to the customer given time due to micro-generation competition via household/commercial photovoltaic self sufficiency...We are seeing the costs of solar photoelectric technology in a exponential decline thanks to nanotechnology and we are reaching a cost effective trigger point with silicone solar panels .. Technogy Revolution does not stop here as there's talk that not in the too far in the future newly built houses may come equiped with photovoltaic roof products which contain bedded inks or paint which may see silicone solar panels become an expensive outdated alternative...Other technology advances such as LED street lighting, low voltage appliances etc all going to point to electrical oversupply at some point in time..
I think the Opposition regulation of power pricing is 40 years too late ...this ongoing Technological Revolution is going to create a deflationary effect in this sector anyway and Labgreen regulation although very honorable may be less needed now than it ever was...it may even turn out be counterproductive as regulations tends to slow progress..
horus1 your expert views on this scenario???
Disc,,,have shares in GNE MELCA
My understanding was that solar PV as a distributed national grid is going to have some serious frequency keeping problems. Generators output at pretty much 50hz, which is what our electronic devices depend on, each station has its own model that trans power as the system operator use to balance the grid.
with PV I don't see how the generators are going to lose out. I would foresee them providing more and more of a frequency keeping role to the grid, which the regulator is currently trying to establish a separate market for.
long term I ponder what will happen first. The prevalence of electric vehicles on our roads requiring substantial daily generation, or a rapid increase in solar PV. The Gentailers do substantially better in one of those cases.
I agree with you Hoop . The values are going to come down quickly and it will be customer choice not the need for connection. Batteries are coming as are fuel cells . It is not a good industry to be invested in on the retail side
Are you sure, horus? Just inspire us - how much does it cost to generate a kWh with a large hydro generator ... and how much do you need to invest per kWh over the average lifetime of a private small solar system with battery backup? Last time I looked the solar system was still orders of magnitude more expensive. Not to forget all the heavy metals you first need to mine and afterwards to dispose for the solar / battery system. and don't tell the Greenies :scared:; Remember - not all of them are stupid!
If oil becomes more scarce and expensive we might have a few more electric cars to push up demand. I guess maybe not in my lifetime. I don't like the Labour/Greens proposal as I own power company shares and like the idea of having solid investment alternatives to housing. Obviously if I didn't hold shares I would be more than happy to have lower power prices. Disclaimer hold MRP and sorry I chickened out on MELCA
Cheap Dino oil and CO2 pseudoscience will determine what happens here. If vehicles tend towards electric power the demand for power will eclipse our house drawn requirements hugely. Indeed if the climate soothsayers convince policymakers, vehicles will far surpass house consumption.Making some rough assumptions like a car needs 10KwH per day to drive to work and back I can only see consumption skyrocket and unless efficiency of solar panels gets past 30-50% (currently 13-16% ), a roof worth of solar panels aint gonna power your home and two cars! The battery tech I see as being more important than the solar development here as transport will consume bucketloads compared to house lighting and pushing refrigerant round pipes. China is subsidising their solar panel production to push economic development for many reasons...it will be interesting to see in ten or 15 years how many electric cars are on the road here. Indeed within a generation, dino juice sippers may be all but an expensive boys toy to annoy your neighbours with...let alone the CO2 tax bill that you have to stump up with at the pump to fill the tank. just my 2c and im a holder...how long till we get the bonus shares :)
May 2015 when the bonus shares are issued - if you held for 2 years??
Is the price likely to drop when issued barring everything else being equal, then hopefully climb back again - otherwise sort of negates the bonus issue - except of course the bigger dividend on the increased number of shares you now have.
Solar and electric cars aren't the perfect match because most cars are away from home while the sun shines. The car therefore can be used as solar storage.
Huge generalisation I know - esp since my wife is a stay at home mum and toy (gas guzzler) is parked at home 99% of the time since I bus to work.
Not sure, whether I expect any impact on the share market when the bonus shares are distributed. Remember - these are not new shares (i.e. no dilution), but existing shares currently hold by the crown. Moving them to another owner shouldn't impact on the SP (unless everybody would try to sell them on the first day), it just moves some more future divvies from the crown to private owners.
Possible weakness after the bonus shares allocated as holders can now sell without losing their 'bonus'. Should only be minor.
There will be a bigger impact with MEL as holders need to access cash to pay for the balance of the installment receipts.
As I understand it, electric cars will be used as a giant energy storage system. So they are all plugged in for a charge, but are also available for 'top up' to the power grid from the vehicle batteries. So producing a situation where 'cheap' electricity can be stored at no cost to the electricity generators. This situation will of course require a very large take-up of battery powered vehicles.
The point then being that low cost hydro will be very profitable.
Perhaps with demand based pricing, you could conceivably charge your car when KWh rates are low, and use any surplus charge left in the vehicle to offset higher KWh pricing during periods of peak demand. Taking this further, with micro generation you could conceivably generate power off your PV/wind turbine etc. off peak, store that energy in the vehicle, and then sell it back onto the network.
It could work - get home from work and you house drains the remains of your battery during the peak evening period and then recharges it overnight during the off peak period (using base load hydro and geothermal). The issue what if you want to use your car that night? Do you have to push a button each night to opt into it being drained (or opt out should you want to use it)? OK for plug in hybrids (which have an petrol engine back up) but not for full EV's. The fact is that most will be programmed to charge as fast as possible as soon as plugged in as that is the requirement to ease range anxiety.
Yes, agree. But i'm not the only MEL holder probably to have provided ab initio for the cash call next year. For such holders the income impact just substitutes the then dividend for the relevant fixed bank rate. I expect a small uplift in income, but haven't considered tax adjustments.
The more important reasons to then reconsider investments across the Natsis flogged off group {MRP, MEL, GNE} and others such as VCT, TPW, IFT etc, remain much the same as originally, )& including the best proportionality to hold), imho.
Obviously political considerations come increasingly to require attention this month, and we need some inspired guesswork. A large issue close in time must be the proposal (LabGreen etc) to interpolate a state electricity sole-purchase & redistributing agency (which might also have price regulatory functions). Contrary to predictable political hysteria from some quarters, it seems many people, some fairly knowledgeable, think such ideas could, or might be, be good. Some current holders will most likely sell out or at least reduce holdings to avoid sp falls from such policies. I favour the view of others who believe that even if the govt changes after Sept 20th, any new govt would require time, probably several years, to establish such a new regime, & therefore it would be a mistake to rush any disinvestment decisions. During such an extended interval the other interesting developments with wind, photovoltaic and battery or distributed network technologies discussed in the intriguing posts above may instead come to the fore, as they are all progressing much more rapidly than most people think.
So it seems currently rational to hold, maybe for another year or two, as long as we are alert for any reductions in currently projected or anticipated dividend yields.
But with our NZ political system, i imagine there might be other ways in which a determined government, new or old, could possibly regulate to get consumer bills reduced; so it might also be rational to fear the possibility of another Chorus-type interference somewhere over the horizon...
[Disc. hold interests in all the companies mentioned]
Closed at $2.43 today. Almost to issue price. I am now in profit with both MRP and Meridian. And this with the election less than 2 weeks away. What situation After the election should National again be Govt?
I would expect +10% within 60 trading days
Capex is tapering off as the last of the stations are built until demand picks up. MRP now moves into purely asset management, which in my opinion should provide returns for shareholders for the next 2 to 3 years if NZPower does not come into effect.
a lot of the recent adverts for personnel seem to suggest more of a focus on asset management. Together with the new structure it looks like leaner engineering resources now that the focus is shifting away from development
Goodbye NZ Power.
Goodbye that particular element of risk.
Yes robbo24. Couldn't agree more. Goodbye and good riddance to NZ Power.
A 'policy' slammed by the Stanford University Professor that Labour stole (and misinterpreted) the idea off and used as their #1 piece of evidence in their election campaign energy policy to justify introducing an extra monopoly called a 'single buyer' into the loop.
Three fascinating articles to back this up:
http://www.kiwiblog.co.nz/2013/08/wo...mpetition.html
http://www.stuff.co.nz/business/opin...on-t-play-ball
http://www.scoop.co.nz/stories/BU130...wolak-says.htm
And well done Harvey Spector for this post 10 months ago:
http://www.sharetrader.co.nz/showthr...l=1#post444956
I will be surprised if MRP's share price closes under $2.50 on Monday. Maybe even reach $2.60 or higher during intraday trading? I think NZX market in general will react very favourably this week coming due to the election result.
As a Labour party member I have to agree. I was absolutely gobsmacked at the Labour reaction to the MRP profit result, which had nothing to do with the power price, but included more one off gains. The trouble with Labour, is that they went left, with targeted policies such as parental leave, but left the ordinary single worker up the creek without a paddle . They don't realise that the proletariat in New Zealand doesn't exist like it once did in the past.
Most people are -in the words of Karl Marx- "bourgeoisie"ie.middle class battlers and small business owners, but this group, which pays most of the taxes, was largely ignored by Labour, at their peril!
There's still the wider industry risk, tied in part to aluminum prices and Rio Tinto.
However, my interpretation of trading over the last few weeks is good dividend announcement and high national polling. Then it started to tick down as nervous nellies got out just in case all that twatwaffle with Nicki Hager did anything to the results.
My guess is that larger investors will adjust their risk profile and buy accordingly.
2.50 tommorrow for MRP, 1.50 for MELCA and 2.00 for GNE are my guesses. The clear cut election result removes a lot of risk. The NZ Power policy will be dead for good as the Nats will probably win again in 2017.
Both GNE and MELCA price rised over 25% issure price, I expect MRP price will be between 2.7 and 3.0(PE17.5~19.5) in coming week, let's see.
Rabbi...very well said indeed.Yes it is truly shamefull that the nats do not have a credible opposition.Honestly its embarrassing...personal political debate is ...well quite worthless and quite inane..quite devoid of reality.....and yes this is probably the wrong forum to debate this.Cheers anyway.
TaDaaaaaa...
Attachment 6278
MRP Friday 19-Sept-2014 pre-election close $2.41
MRP Monday 22-Sept-2014 post-election close $2.59 (up 18 cents)
Intraday trading peak $2.63
:D
As Arbroath pointed out over the weekend, I expect MRP's Share Price to continue trending up for some time too.
MRP's $20 million share buyback ending around April 2014 averaging approx $2.13 per share is just another excellent board decision. 20% gain on $20 million in well under one year is pretty handy.
Got paid the divvy this morning thro' direct credit, very happy holder :)
Lol why are people hating on MRP today?
Is this naive people selling after dividend payment, thinking they would otherwise not receive their dividend?
Or have I missed something?
Motley Fool likes the look of MRP, despite the lack of tax benefits for Aussie investors.
http://www.theage.com.au/business/mo...08-10rwt3.html
A bit of a "once over lightly" analysis but may strike a chord with its readers.
The author also mentions something important which is that the forward focused statements on international geothermal seem to have all but gone since Doug H. stepped down as CEO. I agree with the view that they wont be able to compete against the big japanese investment houses like Sumitomo or Ormat in the international market. You would expect the allocated CAPEX for international development to then go elsewhere.. Maybe upping the divie?
And MRP keeps on moving up. Time for the knockers to get on the bus.
80,000 Aucklands would argue there has been no gold plating of the electricity network.
On a more serious note, the ComCom appears to be much stricter that their Australian counterparty. And remember this does not apply to Gentailers, only network companies so MRP etc not effected.
I worked in the Australian energy sector for five years KW, albeit in the private generation sector, my dealings with Powerlink and Energex left me with an impression that from a new asset build perspective they invest with a reasonably well balanced level of engineering ‘plating’, similar to Transpower here.
I would be quite supportive actually if the operation of the grid in NZ was privatised or contracted but the asset and infrastructure decisions need to be made in the national interest and are best IMO centrally managed and should be publically owned just for that reason.
Commercially though there are all sorts of games played;
Did you know that Transpower don’t own billions of dollar’s worth of NZ transmission assets, they were sold abroad in 2003 and are cross leased back specifically for the purposes of tax avoidance.
In no way, shape or form is this tax avoidance.
Their job is to run the company (SOE) as effectively as possible, if leasing assets provides better deductibility and tax position for them then it is the right move. Their job isn't to line the IRD's pocket, it is to perform their duty of energy infrastructure to the est of the ability. Its practiced daily in the private sector, why shouldn't the public sector be able to do it - its not against their mandate.
Transpower has never avoided the NZ tax only overseas taxes. Leaseing is a legitimate method of ownership and is used for aircraft and a number of other assets.
I dont know the specifics of the deal so cant comment, though I do know some of those who were involved and they are very clever so assume it was all above board.
However, when you own an asset, lease it to someone else based in a tax haven and then reacquire it at a later point in time, my guess is the financial return is based around tax and one of the purposes of the transaction was therefore to avoid tax. However, my understanding it was US tax that was being avoided.
Quick google came up with this which I haven't read: http://www.nbr.co.nz/article/transpo...operty-leasing
This has no relevant to MRP so I will bow out.
Quote from the above article:
-------------
In delving into how power companies calculate their costs, the terms of reference reflect the concerns of Sydney University professor of finance David Johnstone aired in Fairfax newspapers last month.
Johnstone revealed how the industry players ran rings around the regulators when it came to seeking approval for their high returns. Specifically, he exposed the DORC (depreciated optimised replacement cost) formula for valuing assets. DORC allows energy companies to value assets at "replacement cost" rather than at their actual cost. The upshot for customers is that they are effectively, in many cases, being billed again for something the public has paid for.
Thanks to DORC, a company is entitled to claim for assets whose costs already have been sunk. A gas pipeline for instance, decades old and already paid for, can be valued at the cost it might take to replace it – a cost David Johnstone says is "imaginary". Further, the number is arrived at with the help of consultants in whose interests it is to come up with a high figure.
---------
The above is exactly what MRP has done with all their hydro dams. It was exactly this kind of thing that the Labour/Green 'Kiwipower' policy was designed to unwind. Given the state of the combined Labour/Green vote, the 'jig' is set to continue.
SNOOPY
Certainly the way assets have been valued in NZ has historically been dubious at times too though, the worst I saw was the sale of the Clyde power project, it cost $1,4B to build, if I recall it was re-valued and flogged just a few years later at $540M, 40% to Edison and the rest in a public offering.
Then there were the annual ECNZ asset revaluations, always upward, and seemingly were set to match proposed asset group profit margins. Not sure the age of SOE’s was much better, MRP and MEL in particular having the older assets, especially after seeing what a spanking new hydro like Clyde was really worth at sale on market.
As the Gentailers aren't regulated, what asset values they have is irrelevant. They dont have to justify their asset values to anyone. Whether the assets are valued at $1, Market value or $10m is irrelevant.
The only people they need to justify their prices to are customers and if they are too high, they will change to another retailer.
Just a question on bonus share, was this for buyers who were in IPO or for those who bought in the market on the first day as well.
$2.75, Wow!!! big movement today...
...just thinking...I would love to have a beer with the bloke et al who bought 400000 shares today.
Thanks Harvey....I wonder how many he bought at say 1.90.....no doubt the bloke is/was highly educated with all the right degrees etc....
Would the said Kiwi saver be interested in the yield or capital growth.....still thinking....
suggest you buy that $6500 bottle of whisky at Duty free ,as a beer wouldnt just wouldnt cut it:)
Sorry troy forgot the smiley face.
gee mate me thinks you've forgotten more than the smiley face...go well mate...
Mighty River Power shares have had a strong run up to $2.80, triggering a "reduce" recommendation from share analysts at Morningstar.
http://www.stuff.co.nz/business/money/10667291/Morningstar-issues-reduce-recommendation-on-Mighty-River-shares
Morningstar... Lol. Such a good contrarian indicator.
MRP maybe an addition to an MSCI index? Ho ho ho. $3+ activated????
http://home.nzcity.co.nz/news/article.aspx?id=196223
and today's good news - a 5cps special dividend, with more updates on capital management due tomorrow at the ASM
******
MRP announces special dividend for shareholders
Mighty River Power today announced a fully imputed special dividend of 5 cents per share to be paid to the Company’s more than 102,000 shareholders on 11 December 2014. Chair, Joan Withers, said the Board was pleased to declare a fully imputed special dividend worth approximately $70 million, which was confirmed as part of Mighty River Power’s ongoing capital management review at its Board meeting today.
“The positive outcomes we achieved in FY2014, along with our decisions around capital structure – including a successful $300 million Capital Bond offer – have given us some flexibility and options that have allowed us to pay this special dividend to our shareholders.”
Mrs Withers said the Company would be providing an update on capital management initiatives and Dividend Policy at the Mighty River Power Annual Shareholders’ Meeting tomorrow (6 November 2014).
ENDS
Notes:
- The fully imputed special dividend of 5.0 NZ cents per share will be paid on 11 December 2014 to all Mighty River Power shareholders who are on the Company’s share register at 5pm on the record date of 20 November 2014.
- The dividend will be fully imputed which amounts to an imputation credit of 0.019444 NZ cents per share.
- The Company will also pay a supplementary dividend of 0.008824 NZ cents per share to non-resident shareholders. The Company will receive from the IRD a tax credit equivalent to the supplementary dividend.
Congrats to all shareholders holding through thick and thin (and buying more near $2.00!). Benjamin Graham would be proud of all of ya!
When you take the bonus shares, and the dividends into account, the paper loss was never that bad. Bunter 'fair value' is 3.21 FWIW, assuming 7.5% long term growth.
Think that's why Contact has firmed of late, very likely to also pay special dividend.
With Meridian and Contact reducing the solar buyback rates, it now seems far more sensible to invest in the power companies and use the dividends to subsidise the power bills.
Apart from demand being greater than supply, does anyone know what is going on today? They have just hit $3.15
I think M/fool... aussies buying up large.
....and it's a bullish market overall.
http://www.nzherald.co.nz/business/n...ectid=11356672
I don't understand why the power companies would want to antagonize comcom like this. Very shortsighted action, in my view because they are almost forcing the governments hand on energy, warming etc.
Imagine you're commenting on the solar power price cuts. I don't see why the power companies should have to pay anything - if a residential user wants solar then go for it but what right does anyone have to force a power company supplier to buy their power. It has to go back across lines on the grid and be redistributed. If Meridian etc want to pay for it on a commercial basis then fair enough but how does one persons choice to go solar equate to a right to force a company to buy your surplus energy. I can't make a supermarket buy my extra tomatoes from the back garden just because they sell a shed load of tomatoes to everyone.
And before people have a crack we've looked a t putting in solar a couple of times and I'm all for it once the economics stack up but I wouldn't factor in anything for forcing surplus power back onto the grid...
they are now paying the average wholesale rate rather than more than they could buy it for on the wholesale market. Everyone who is complaining, including that little Sh!t Hughes knows this but is deliberately misleading the public. They want the solar feed in rate to be subsidised to encourage uptake. But a subsidy is making everyone else paying for you investment.
That ignores the fact that by redistributing locally the big retailers avoid transmission fees. With costs reducing for solar and batteries fast and energy from other sources going up the way of the future is with the customer not the retailers.
True it does avoid transmission fees but not distribution fees. But that is irrelevant as Transmission is a pass through cost. Anyway, surely this just means you should be calculating based on the average spot rate at the closest GXP? Complicated area (so I probably have it wrong) - keep it simple - if you are buying power generation the same costs should apply whether it is from a large hydrodam, windfarm, gas generator or a small solar, wind turbine. That price is the spot wholesale rate.
There is also additional metering costs (a second meter is needed - it doesn't run backwards), admin costs (an invoice must be created and posted/emailed), and profit (nothing is free).
Great run on the stock recently grats to all the winners.
Transmission is a cost to get the remote generators power to market. It should not be charged to local generation. As batteries arrive more and more of the transmission will be redundant. at present the changes by the retailers will only drive a negative attitude to the electricity industry by the public and later many will leave it , 2-3 years.
Negative attitudes probably don't drive consumer electricity choices. There is unlikely to ever be significant govt subsidy for residential solar power in NZ as we already generate most of our power with renewables. Without subsidy, home PV is unlikely to compete with large scale generation in the foreseeable future.
And it isn't. Those with Grid tied solar only pay transmission and distribution charged on electricity they consume from the network. They dont get charged transmission/distribution charged on power they sell back to the network.
Are you saying that the retailer should give a rebate for 'avoided transmission costs' as they can sell your power to your next door neighbour? Again, if they use the spot rate at the closest GXP, then they should be using the right rate?
I was at the front of the theory of transmission pricing . The fallacy is that the consumer not the supplier should pay for it. It would and is better to have local generation distributed, look overseas.Local generation is competing with remote generation now.At 30c/kwhr it is cheaper to do your own , that is why loads are declining when GDP is increasing.Have a look at the p/e's on these electricity cos , they are exorbitant.
Can you answer this then. Networks have to be built for peak demand. To the extent a solar user is using the network during peak, but not during mid peak, aren't the freeloading a bit? (I realise it is similar to someone who is only home during night hours only but aren't the making it worse by having negative demand during the day, as oppose to minimal demand).
I agree that solar is very close to being economic, and as batteries become cheaper, the peak shaving ability will have real network benefits.
One difference is we have relatively low cost generation due to the old dams don't we?
Re Gentailers, they are in a competitive market - similar to petrol stations ;)
I agree about the peak BUT the trouble is that the gen/retailers are overcharging the small customers as they have little competition on them. the marginal station is thermal or geothermal and that is what they all get paid for.In the finish it will come down to customer choice and a lot of customers will elect to go independent or in small local groups. Batteries change the whole nature of the electricity industry. these are my thoughts and they may be wrong , it will probably take 3 years before the affects start to show. I haven't bought any of the SOE,s and have been wrong so far.
Seems unlikely to me that any significant number of customers would choose to "go independent or in small local groups". Personally, I'd happily pay extra to a large gentailer just to avoid horror of having to deal with a small local group or some kind of independent supply and I'd guess that would be true for most people.
I think we're perhaps getting to hung up on using solar to generate electricity.
For many folk a huge amount of power is used to heat water.
Put in a solar system to heat your water and you will enjoy large power savings without needing to engage the power companies.
We have one, it works a treat.
Cheers
RTM.
I've previously had solar hot water and it was great. Solar hot water has been cost effective for years. How many people have these installed even in new houses? Neither solar hot water or home PV will be disruptive technology for power generators because people will not install them in significant numbers.
If todays downtrend continues and MRP closes lower then a covered spinning top (denoting indecision in the market) reversal has been confirmed. Looks overbought near-term, time for a breather imho. Index inclusion may give it another leg up in weeks to come. Still a great hold for those who bought nice and low or before /after elections! :)
Always nice getting a special divvie! It looks like the run up is over but I would be surprised if she went below $3.00 again with index inclusion and that divvie up soon. Follows the US markets with investors seeking div yields and returns over growth.
Here's an Aussie who's keen on MRP!
http://www.thebull.com.au/premium/a/...for-yield.html
sold 50% of my MRP today at $3.08 - I love how bulled up the bull is above $3. Was a pretty weak buy recommendation they had in March - "slightly undervalued" - up 40% since then...but fair cop to them, at least they had a weak buy rather being scardy cats like a lot were to see them fall under $2. My personal electricity pick is GNE as the gas lasts much longer than a conservative prospectus will ever recommend.
Not long until 25 November, when MRP is added to the MSCI global standard index... http://www.msci.com/eqb/gimi/stdinde...PublicList.pdf
:D
27th November our time, its effect 26th US time
morningstar has lift MRP fair value to $2.9.