Latest / Best of Business / Malcolm Johns: Genesis Energy chief executive on Huntly's power station remaining operational for the next decade

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Malcolm Johns: Genesis Energy chief executive on Huntly's power station remaining operational for the next decade · Best of Business

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  Speaker 1: iHeartRadio Coal Watch.
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  Speaker 2: Well, yeah, Huntley's power station is going to remain operational
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  Speaker 2: for the next decade. The country's big four gent tailors
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  Speaker 2: have signed a deal and they're going to stockpile up
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  Speaker 2: to an extra six hundred thousand tons of coal at Huntley.
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  Speaker 2: They're hoping this will protect against the energy crunches in
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  Speaker 2: the winter like what happened last year. The ComCom still
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  Speaker 2: has to sign off on this. Malcolm John's is the
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  Speaker 2: chief executive at Genesis Energy. Hey, Malcolm, good evening, How
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  Speaker 2: are you well think you know? Why did you want
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  Speaker 2: the other gent tailors to be involved with you rather
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  Speaker 2: than going it alone.
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  Speaker 3: Well, in essence, the machine that we're talking about was
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  Speaker 3: due to go into retirement in February next year, and
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  Speaker 3: from a purely Genesis perspective that made sense. But from
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  Speaker 3: a wider New Zealand perspective, there was a case to
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  Speaker 3: invest in keeping that machine in play for another decade,
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  Speaker 3: and so Genesis couldn't do that on its own, and
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  Speaker 3: so we are entered into a discussion with the others
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  Speaker 3: around to investment to keep that machine in play for
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  Speaker 3: energy security for dry years and when the wind doesn't blow.
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  Speaker 2: So why does it make sense for you but not
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  Speaker 2: for them?
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  Speaker 3: It makes sense for everybody. But effectively it's dealing with
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  Speaker 3: system risk rather than genesis risk. And so we couldn't
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  Speaker 3: ask our shareholders to fund that on their own because
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  Speaker 3: that would be writing an insurance policy for the broader system.
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  Speaker 3: And so everyone going in together means that we collectively
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  Speaker 3: share the cost of providing that system wise insurance.
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  Speaker 2: Malcolm, I write, and remembering correctly that it was just
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  Speaker 2: last week that you guys were saying you don't have
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  Speaker 2: enough agreement, you might shut it down, and then suddenly
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  Speaker 2: they've come to the party. Is that what has happened?
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  Speaker 3: I know we've been very care all the way through
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  Speaker 3: that without an agreement, the machine would go into retirement
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  Speaker 3: as a regional YEA.
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  Speaker 2: What I'm asking is when did you strike this agreement?
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  Speaker 3: Well, we began discussions in February. In about two months
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  Speaker 3: or about six weeks ago, we announced that we'd reached
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  Speaker 3: an agreement on terms and conditions, and we were documenting
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  Speaker 3: the contract at that point, and so we didn't we
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  Speaker 3: weren't concerned during the last six weeks in terms of
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  Speaker 3: the contract, we just had to finalize it and sign it.
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  Speaker 2: Okay, I see, now how long does it? How long
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  Speaker 2: do you reckon it's going to take you to get
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  Speaker 2: through that six hundred thousand tons.
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  Speaker 3: Well as Huntley, like last winter, has all three ranking
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  Speaker 3: units running. It burns ten thousand tons a day. And
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  Speaker 3: in essence, what happened is we ran out of coal
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  Speaker 3: last winter, or we came very close to running out
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  Speaker 3: of coal last winter, and so the six hundred thousand
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  Speaker 3: ton reserve just means that that won't happen again in
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  Speaker 3: the future. And of course we bought the gas from Methinx,
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  Speaker 3: and Methinx closed for two months and it rained two
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  Speaker 3: weeks later, and so having coal is much more flexible,
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  Speaker 3: and that's why the coal reserve is beneficial.
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  Speaker 2: But that's only a couple of months. If if we're
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  Speaker 2: going hell for leather, it's a couple of months worth
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  Speaker 2: of coal.
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  Speaker 3: A remember that it's in that six hundred thousand tons
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  Speaker 3: is in addition to the normal cold spot pilot Huntley,
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  Speaker 3: which is five hundred thousand tons, So it gives you
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  Speaker 3: a million tons of coal effectively to run through a
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  Speaker 3: dry period.
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  Speaker 2: Yeah. Do you think the Commerce Commission is going to
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  Speaker 2: sign this off that haf do? I? I mean, otherwise
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  Speaker 2: they'd be looking at power cups.
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  Speaker 3: Well, I would assume that they will take a normal
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  Speaker 3: look at this through the Commerce Act. We believe, based
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  Speaker 3: on the advice we have that it's appropriate, but it's
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  Speaker 3: for them to take a look at it now and
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  Speaker 3: decide whether it is or is in appropriate.
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  Speaker 2: We have spoken about in the past about shutting Huntley down,
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  Speaker 2: but are we ever going to shut the old girl down?
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  Speaker 3: I think we need to talk about how we evolve Huntley.
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  Speaker 3: It's the only power station that sits in between Auckland,
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  Speaker 3: Hamilton and Todoer. It's New Zealand's largest power station and
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  Speaker 3: it has an enormous connection to the grid. And so
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  Speaker 3: the assets and fuels that Huntley will change over the
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  Speaker 3: next next twenty five years. It's difficult to see it
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  Speaker 3: shutting down completely.
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  Speaker 2: Yeah, brilliant, Hey, thank you, Malcolm appreciated. That's Malcolm John's
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  Speaker 2: Genesis Energy chief executive. When you think about it late that,
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  Speaker 2: you think, why did we ever go there? Why did
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  Speaker 2: we even discuss shutting her down? If she was still
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  Speaker 2: working
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