Latest / Best of Business / Mike Roan: Meridian Energy CEO on the company delivering a higher than expected net profit

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Mike Roan: Meridian Energy CEO on the company delivering a higher than expected net profit · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks'd be follow
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  Speaker 2: A big turnaround for one of our gent tailor's Meridians
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  Speaker 2: posted a first half net profit of two hundred and
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  Speaker 2: twenty seven million dollars. That's compared with one hundred and
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  Speaker 2: twenty one million dollar loss in the corresponding period last year.
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  Speaker 2: Mike Grohan is the chief executive Home.
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  Speaker 3: Mike, Hey, Emo, this is.
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  Speaker 2: Basically this massive turnarounds basically down to rain, isn't it.
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  Speaker 3: It's certainly a strong result, and it helps when you've
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  Speaker 3: got support of environmental conditions. Mother nature has certainly come
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  Speaker 3: to party. Yeah.
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  Speaker 2: Does it worry you that that things can turn, can
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  Speaker 2: swing so wildly from one side to the other, just
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  Speaker 2: based on rain for your business?
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  Speaker 3: Oh, the events we saw last year are really unusual,
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  Speaker 3: you know, the combination of a drought with unexpected loss
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  Speaker 3: of gas supply. You know, the events this year certainly
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  Speaker 3: more rain that we expect, but on average, you know,
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  Speaker 3: we tend to have plenty of rain and wind power
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  Speaker 3: electricity system. So you know, I would expect more results
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  Speaker 3: like you've seen this year than you know, the one
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  Speaker 3: that you saw last year.
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  Speaker 2: Well, I mean the loss of gas is obviously going
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  Speaker 2: to be the future for us. So is this what
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  Speaker 2: it looks like? Is last year what it looks like
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  Speaker 2: every time we have a drought year for you?
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  Speaker 3: No, So what we did after the drought is we
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  Speaker 3: went out and looked at how we both stabilized security
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  Speaker 3: and manage affordability while risk for shareholders, and we completed
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  Speaker 3: the Strategic Energy Reserve Huntley and that transaction allows us
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  Speaker 3: to shore up the business during drought materially.
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  Speaker 2: Now, what's the plan with hydro development?
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  Speaker 3: Well, really early days. You know, I'm pretty excited bout it.
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  Speaker 3: First time in thirty years that we've looked at hydro development.
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  Speaker 3: But the reason I'm like cited is if we can
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  Speaker 3: find a way to store more water, then you know,
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  Speaker 3: we can generate more of the electricity from hydro, which
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  Speaker 3: will bring the average price of energy down. The challenges
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  Speaker 3: It'll take us time to get there, and you know,
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  Speaker 3: we're in early days now looking at what we can do.
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  Speaker 2: I mean, you're not talking about building a new damn,
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  Speaker 2: are you? You're talking about lifting a lake level?
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  Speaker 3: That's exactly right. We're looking at Pukaki dam, and we're
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  Speaker 3: looking at what we might be able to do to
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  Speaker 3: lift that damn while engineering wise, you know that can
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  Speaker 3: all be done. So there's no question that the engineering
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  Speaker 3: can be done. The question that I've asked the team
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  Speaker 3: is is it economic to do it? So? Does it
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  Speaker 3: actually make financial sense to expand the amount of hydro
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  Speaker 3: storage that we've got within the company. And you know
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  Speaker 3: that the country would have to manage the swings and roundabouts?
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  Speaker 3: So the weather, what is it?
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  Speaker 2: What are you weighing up there? Are you weighing up
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  Speaker 2: the cost of doing this?
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  Speaker 3: Yes, that's exactly right.
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  Speaker 2: Tell me if I'm wrong here. But my understanding of
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  Speaker 2: this is like, you know, a normal punter like me
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  Speaker 2: would think, oh the sweet as you just lift the level,
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  Speaker 2: you just hold more. But it's not as simple as that,
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  Speaker 2: is it. Like there's a significant amount of construction that
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  Speaker 2: you would need.
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  Speaker 3: Yeah, you need so there is a little more water
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  Speaker 3: that we could store, and we're looking carefully at that
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  Speaker 3: without expanding the dam structure, but to store the amount
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  Speaker 3: of water that the country really would need to both
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  Speaker 3: help electrify and manage you know, a dry yer in
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  Speaker 3: future is you know you're talking a lift in that
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  Speaker 3: dam of I'll say between five and fifteen meters, so
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  Speaker 3: it's quite a substantial effort in a rebuild of that
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  Speaker 3: dam structure. So you know, you're probably talking billions of
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  Speaker 3: dollars to do that.
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  Speaker 2: Would you be prepared to fund it yourself as a company?
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  Speaker 3: Oh yeah, you know, like if we can see the
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  Speaker 3: economic opportunity, then you know, I doubt we'll have any
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  Speaker 3: problem funding it.
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  Speaker 2: What about I mean, is this going to flip the
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  Speaker 2: greenees out?
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  Speaker 3: Now? The beauty with Pookaki is it's a modified hydro
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  Speaker 3: attatchment and there are very few people that live around it.
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  Speaker 3: And so when I say modifate.
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  Speaker 2: Sales, though, Mike, have we got snails or skinks of
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  Speaker 2: stuff like that?
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  Speaker 3: We don't, you know. That's yeah, that's when I say
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  Speaker 3: modified hydro attachment, I really mean that the environmental impact
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  Speaker 3: of both raising and lowering that lake is really limited
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  Speaker 3: because it's already got a fourteen meter operating range, so
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  Speaker 3: there's not a massive environmental impact and you're not impacting
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  Speaker 3: people who would otherwise live around the facility. The real
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  Speaker 3: question is can we make the economics back up? And
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  Speaker 3: I don't have the answer to that. So at the moment.
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  Speaker 3: It's a bit of a dream, but it's one worth
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  Speaker 3: pursuing because if we can deliver it, then you know,
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  Speaker 3: we drive a structural advantage for the New Zealand economy
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  Speaker 3: visa the Australia or the US, or Europe or Asia
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  Speaker 3: because they don't have access to water like we do,
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  Speaker 3: and we can have a lower price for energy or
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  Speaker 3: electricity than they would ever hope to experience, which helps
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  Speaker 3: her exporters.
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  Speaker 2: Yeah, I'm really interested to see how this goes, Mike,
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  Speaker 2: Thanks for talking us through at Mike Rohan, Meridian Chief Executive.
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