Genesis Energy responds to Electricity Authority final UTS decision
15 June 2011
Genesis Energy today expressed disappointment with the Electricity Authority’s decision to declare an Undesirable Trading Situation for certain trading periods on 26 March 2011.
Although welcoming the confirmation that Genesis Energy had not breached any law or engaged in misleading or manipulative conduct, the Company is concerned that the Authority’s decision rewards businesses who made poor commercial decisions about exposure to the wholesale spot prices, while at the same time penalising a number of supply and demand side participants who took action during the event to manage their risk.
Genesis Energy Chief Executive Albert Brantley said that the adverse consequences for future market behaviour are potentially significant.
"This decision tells wholesale market participants and contracted parties to take risks without facing the consequences of their actions. We are concerned that the decision is fundamentally at odds with the Government’s stated goal to improve liquidity in the hedge market. However, we will continue to work with the Authority and other market participants to improve liquidity," he said.
Mr Brantley reassured the Company’s retail customers that at no time did the events of 26 March 2011 impact on the prices they faced. Genesis Energy prudently managed this risk on their behalf and will continue to do so.
"As a responsible retailer, Genesis Energy has long discouraged consumers from accepting spot price exposure unless they are certain that they understand the associated risks. There have been claims made that allowing the prices established on 26 March 2011 to stand would inevitably lead to an increase in retail prices. It is important to us that our customers understand that this is not the case."
Genesis Energy will now consider the impact of the decision on its future commercial decisions for the dual coal and gas fired units at Huntly. It is clear to the Company that while many continue to ask that Genesis Energy maintain the availability of Units 1 to 4 for security of supply purposes, the market has signalled its unwillingness to meet the costs to maintain the units.
The Company is presently reviewing the Authority decision in detail to determine its next course of action.
For more information contact:
Public Affairs Manager
Mob 021 681 305