So who is going to buy some shares in Mighty River Power?

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Forums › Finance and wealth management › So who is going to buy some shares in Mighty River Power?

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2886 posts

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#775832 6-Mar-2013 19:15

And the huge amount of cheap gas being found around the world through fracking, which is sending gas and coal prices for power generation through the floor, and making new thermal generating plant very feasible.

ajw

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#775839 6-Mar-2013 19:19

JimmyH: And the huge amount of cheap gas being found around the world through fracking, which is sending gas and coal prices for power generation through the floor, and making new thermal generating plant very feasible.

But no doubt the electricity retailers will come up with more unbelievable BS to maintain higher prices. Worse than listening to politicians.

mattwnz

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#775842 6-Mar-2013 19:25

ajw:
JimmyH: And the huge amount of cheap gas being found around the world through fracking, which is sending gas and coal prices for power generation through the floor, and making new thermal generating plant very feasible.

But no doubt the electricity retailers will come up with more unbelievable BS to maintain higher prices. Worse than listening to politicians.

One thing going for hydro, is that it is environemntally good, in that it doesn't create any CO2 durig generation, or any nasties created from nuclear. Plus it is safe. So it is green power. Apparently it is very undervalued as it is, and the feact is that due to the resource management act and NIMBY's, I would doubt very many new hydro stations will be allowed to be built in the future.

turnin

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#775867 6-Mar-2013 20:10

There is also a lot of development going on overseas re Thorium salt reactors,http://en.wikipedia.org/wiki/Molten_salt_reactor#Advantages nuclear yes, can burn current stocks of nuclear waste , also they are thermally stable. So they don't have the ability to run towards a melt down.
In terms of savings the supermarkets are soon to start selling LED light bulbs, many benefits of the energy savers including almost unlimited longevity

Byrned

455 posts

Ultimate Geek

#775883 6-Mar-2013 20:49

k14:
Lol, wow that is so wrong. If Tiwai shuts down then every power company in NZ will suffer. Research how the spot market works and you will know why. The wholesale market prices will hit the floor. All thermal plant will be run at a loss, if not just shut down collecting dust (MRP has one in Auckland) and the hydro/geothermal will return a lot lower revenue. That is fine if you are immune from the wholesale market (if you have the same amount of customers as generation) but no one has a perfect 1:1 match. Out of the big 4 Meridian will probably suffer the most but Genesis, Contact and Mighty River will all be in the crap too.

Also, go look at the last 3 years demand. It has actually decreased slightly. Yes recession, chch earthquake has contributed but that is not the whole story. The latest theory is that currently electricity prices in NZ are hovering around the threshold of being classed as a luxury. People are trying to cut back and shorter showers, energy efficient lightbulbs etc are easy ways to cut the $$. There are plenty of other ways to reduce demand too, adding in some PV or solar hot water all combines to a fair amount of uncertainty in the next 5-10 years.

I understand how the spot market works. Much like any any exchange. But thanks for the concern.

From what I understand (and I'm happy to be proven wrong) that their would have to be significant upgrades made by Transpower to handle any significant amounts of power coming from Manapouri. The recent upgrade to the HVDC link is fine, but you've got to get it there. Transpower don't do these upgrades for free. Someone has to pay. This was all discussed in the media, not that that is always correct!

Do you have links to the trends in demand that you discuss? From what I have seen demand slowed only slightly in 2012, but 2008-2012 did see growth. Demand in Australia continued to grow strongly. Website I like for comparing data from around the world is http://www.indexmundi.com/g/g.aspx?v=81&c=nz&l=en Oh, and anyone who thinks China is slowing down, have a look at their energy usage!

And yes, while their are ways to reduce usage with more efficient products, with a growing population, and new products, usage will grow. Heat pumps will become more and more prevalent, and with that, overall usage will grow (won't just be used for heating). Plug in hybrids will most likely become the next "it" thing in green motoring (not that I agree it is the right direction but this is a beta vs VHS argument). But the main driver for growth will be population.

Oh and get real over people suddenly taking shorter showers affecting usage. That crap only happens during downturns.

jonherries

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#775886 6-Mar-2013 20:53

turnin:
jonherries:
However as I also say this discussion is not what the thread is for, so thanks for your comments, but please no more on this.
Jon

OP : I agree with what you are saying but you started a topic, Do you just want straight Yes/No answers yet no comments as to why ? The reasoning behind a vote is often more valuable than statistical analysis. You gave a clear example as to why above

Fair point.

I suppose I see the question of whether you buy these shares as separate to the question of whether you believe in asset sales.

Of course one may inform the other, but as I stated up front I think that buying these shares isn't a straightforward question for me, for both economic and for philosophical reasons.

To me this means that a conversation full of comments saying we shouldn't sell these assets doesn't contribute to the discussion as much as discussing what you hope to achieve (maybe collectively) by buying them or not. I happen to think that buying or not buying could have some complex repercussions on the future programme of sales, with both buying and not buying contributing to scenarios where further sales of assets could be encouraged or discouraged.

An example would be:

I am buying these shares to make sure that overseas people can't/don't. Lots of people doing this could reinforce the perception that this was the right thing to do (sell assets), rather than preventing significant foreign ownership of the asset.

A counter example would be:

I am not buying these shares to make the point that I shouldn't have to. Lots of people doing this would mean significant foreign ownership of the asset, which could reinforce the perception that NZers didn't care about selling assets to foreigners potentially leading to a relaxation of rules for foreign ownership, rather than a moral stand on asset sales.

In both cases the intended message (or the rationale for purchasing) is different to what might be collectively perceived. This is what I am interested in.

Plus there have been some interesting comments about the financial returns of the electricity sector.

Jon

jonherries

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#775893 6-Mar-2013 21:04

Byrned:

I understand how the spot market works. Much like any any exchange. But thanks for the concern.

From what I understand (and I'm happy to be proven wrong) that their would have to be significant upgrades made by Transpower to handle any significant amounts of power coming from Manapouri. The recent upgrade to the HVDC link is fine, but you've got to get it there. Transpower don't do these upgrades for free. Someone has to pay. This was all discussed in the media, not that that is always correct!

Do you have links to the trends in demand that you discuss? From what I have seen demand slowed only slightly in 2012, but 2008-2012 did see growth. Demand in Australia continued to grow strongly. Website I like for comparing data from around the world is http://www.indexmundi.com/g/g.aspx?v=81&c=nz&l=en Oh, and anyone who thinks China is slowing down, have a look at their energy usage!

And yes, while their are ways to reduce usage with more efficient products, with a growing population, and new products, usage will grow. Heat pumps will become more and more prevalent, and with that, overall usage will grow (won't just be used for heating). Plug in hybrids will most likely become the next "it" thing in green motoring (not that I agree it is the right direction but this is a beta vs VHS argument). But the main driver for growth will be population.

Oh and get real over people suddenly taking shorter showers affecting usage. That crap only happens during downturns.

FYI quite an interesting graph on electricity demand from the Electricity Authority. Net result is pretty flat since 2004. There was total growth of about 3.4% (~0.5% annualised) to 2011, and then back to about the 2004 number in 2012.

Cool dataset

Jon

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jonherries

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#775902 6-Mar-2013 21:11

This one might be more telling (utilisation per capita):

http://www.indexmundi.com/g/g.aspx?v=81000&c=nz&l=en

turnin

509 posts

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#775992 7-Mar-2013 01:31

Yes, very interesting. The index Mundi site has some very revealing plots, especially poor old Afganistan using almost no electricity since the war.
For us it's no surprise the main drivers are population and one would have to say winter temperatures. Perhaps global warming in the short term may reduce winter power consumption but I'd say any extremes might counter that. Not sure if air-con is a greater factor than heating in the longer term.
One thing is certain , we've already built dams where we can and hydro has probably reached its threshold, which is a two fold issue for the warmer future. Look at our reliance/utilisation of hydro compared to other perhaps flatter countries. http://www.indexmundi.com/facts/visualizations/electricity-production/#country=au:cn:in:nz:gb:us

Byrned

455 posts

Ultimate Geek

#776086 7-Mar-2013 10:00

jonherries: This one might be more telling (utilisation per capita):

http://www.indexmundi.com/g/g.aspx?v=81000&c=nz&l=en

I hadn't looked at that one. Tends to reinforce both sides of the arguments that people are both reducing their usage, but overall consumption is staying the same either by population growth or perhaps industry usage increasing?

k14

629 posts

Ultimate Geek

#776196 7-Mar-2013 13:30

Byrned:I understand how the spot market works. Much like any any exchange. But thanks for the concern.

From what I understand (and I'm happy to be proven wrong) that their would have to be significant upgrades made by Transpower to handle any significant amounts of power coming from Manapouri. The recent upgrade to the HVDC link is fine, but you've got to get it there. Transpower don't do these upgrades for free. Someone has to pay. This was all discussed in the media, not that that is always correct!

Do you have links to the trends in demand that you discuss? From what I have seen demand slowed only slightly in 2012, but 2008-2012 did see growth. Demand in Australia continued to grow strongly. Website I like for comparing data from around the world is http://www.indexmundi.com/g/g.aspx?v=81&c=nz&l=en Oh, and anyone who thinks China is slowing down, have a look at their energy usage!

And yes, while their are ways to reduce usage with more efficient products, with a growing population, and new products, usage will grow. Heat pumps will become more and more prevalent, and with that, overall usage will grow (won't just be used for heating). Plug in hybrids will most likely become the next "it" thing in green motoring (not that I agree it is the right direction but this is a beta vs VHS argument). But the main driver for growth will be population.

Oh and get real over people suddenly taking shorter showers affecting usage. That crap only happens during downturns.

There wouldn't have to be any upgrades made for some of Manapouri's generation to get to the North Island. The main constraint is getting the power from around Roxburgh/Clyde over to the Waitaki valley. Once it is there (Benmore) then it will quite easily jump on the HVDC (Cook strait cable) and be released to the NI. Immediately you would immediately see spot prices of $0.01 in the lower South Island (Otago south) and in the upper South Island probably $0.01 in parts of the day up to $10 when the lines are constraining. Once Pole 3 is commissioned the upper South Island and the North Island would most likely be the same price. So as I said previously, the generation assets that would have the biggest devalue would be Manapouri and Clyde/Roxburgh (Contact).

But Transpower reckon that within 12-18 months they would be able to provide sufficient upgrades that the Manapouri/Clyde/Roxburgh generation could get North and then it would be a very even spread of losses over all power companies. When Transpower upgrades a line the costs of doing that are socialised across the whole country. Currently they are looking at changing it to a beneficiary pays model but that is still a long way off and may not be fully implemented.

No I cannot provide the data that I have but as someone else has already provided data from the EA it pretty much backs up my assertions. I work for one of the main power companies and am privy to a fair bit of research that goes on.

Personally me and my wife will be buying shares. My reasoning is that anyone that doesn't buy is missing out on the money that has gone to build up the infrastructure over the last 50-60 years which currently is effectively evenly distributed by the government. Personally I am opposed to the sale but more from the ideological standpoint of longing for the NZ electricity system to go back to being solely run by the government. Every day I see how inefficient the system is in its current state. From the "New Zealand Inc" standpoint the whole system is run so terribly inefficiently that it is just depressing.

jonherries

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#776236 7-Mar-2013 13:59

Hmmm, interesting comments K14, I like your thinking and agree with your sentiment.

Jon

mattwnz

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#776323 7-Mar-2013 15:52

k14:
Personally me and my wife will be buying shares. My reasoning is that anyone that doesn't buy is missing out on the money that has gone to build up the infrastructure over the last 50-60 years which currently is effectively evenly distributed by the government. Personally I am opposed to the sale but more from the ideological standpoint of longing for the NZ electricity system to go back to being solely run by the government. Every day I see how inefficient the system is in its current state. From the "New Zealand Inc" standpoint the whole system is run so terribly inefficiently that it is just depressing.

Thanks for sharing your information. That is a very good point. But I fear many people will buy and then sell for a short term profit, which will see a lot head overseas.

richms

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#776423 7-Mar-2013 19:36

Im not going to, I could easily get the cash together to get some in time, but I fear a change of govt ruining the value of it basically out of spite, and the problems that telecom saw with govt meddling in their ownership rights with LLU, if power gets much more expensive they may regulate that they have to sell it cheaper to certain sectors of the population etc. Not a sound investment with all those possible problems.

Sky tv on the other hand looks like a safe bet at least in the short term.

Richard rich.ms

nathan

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#776486 7-Mar-2013 21:27

richms: Im not going to, I could easily get the cash together to get some in time, but I fear a change of govt ruining the value of it basically out of spite, and the problems that telecom saw with govt meddling in their ownership rights with LLU, if power gets much more expensive they may regulate that they have to sell it cheaper to certain sectors of the population etc. Not a sound investment with all those possible problems.

Sky tv on the other hand looks like a safe bet at least in the short term.

Not sure how a change of Govt will ruin the value the asset out of spite. They will still own 51% so if Labour/Greens/NZ First/Maori coalition want to renationalise the asset and buy it back from those shareholders, good on them

They should come out right now and state their position rather than wasting our money like the Greens and Labour are on spent out taxpayer cash recruiting staff and paying for referendum signatures

You should ask them if they truly believe in a referendum (which is obviously non-binding) why didn't any of them not vote for the anti-smacking bill??

There was referendum of the anti-smacking bill under Labours watch, the majority of NZers opposed that, and they didn't listen to public opinion so.,..

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