Q1 turnaround in sales volumes

Media Statement 30 October 2013

Q1 turnaround in sales volumes against backdrop of challenging market conditions

Genesis Energy experienced a 2% year-on-year increase in retail electricity sales volumes in the first quarter (Q1) of the 2013/2014 financial year, despite facing pressure on customer numbers and subdued demand. The electricity market remains challenging given the abundance of water and new generation entering the market putting downward pressure on wholesale electricity prices.

Chief Executive Albert Brantley said the Company’s targeted sales programme and a successful advertising campaign during Q1 attracted new electricity and gas customers. The Company also bid successfully for a number of commercial and central government energy contracts that boosted sales volumes. However, strong hydro storage and reduced demand are putting pressures on wholesale pricing and the Company’s thermal generation plant.

As a commercial response to market conditions Genesis Energy announced on 27 September 2013 that it will be placing a second of its four older coal-fired generating units at Huntly into storage before the end of 2013. The first of the 250MW units placed into long term storage in December 2012 will now be fully decommissioned.

Competition for retail customers continued to be high in Q1. At 30 September 2013 the Company had 540,422 electricity customer accounts (27% market share), 116,097 gas accounts (44% market share) and 10,033 LPG customers. Genesis Energy’s electricity customers include 84,000 accounts in the South Island, representing 16% of the total base.

Total generation in Q1 of 1,869 GWh was down 16% compared to 2,226 GWh in the same quarter last year. Lower wholesale electricity prices in July and August led to decreased thermal generation, which was down 17% at 1,175 GWh compared to 1,426 GWh in Q1 2013. Hydro generation for the quarter was down 14% on Q1 last year despite Tekapo A and B generation being 13% higher at 294GWh.

The Kupe oil and gas field continued to produce consistent output volumes with the Company’s share of gas sales at 2.03PJ up 29% versus Q1 2013 and oil production of 159kbbl 16% higher than last year.

Genesis Energy’s diverse and flexible generation assets across New Zealand continue to provide the Company with a good base to operate in what are very competitive and operationally variable conditions.
Media Statement 30 October 2013

ENDS

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