30 Aug 2013

Genesis may buy more wholesale electricity

7:16 am on 30 August 2013

Genesis Energy may buy even more electricity off the grid this financial year to supply its retail customers if wholesale prices remain low.

Chief executive Albert Brantley said customer demand for electricity was higher than its own output in the 12 months to the end of June, for the first time ever.

This meant Genesis bought power off the wholesale market because it was cheaper than making its own.

If wholesale electricity prices remain low as forecast, Mr Brantley said the company will probably buy even more power this year.

He said there will be some pressure on the company's generation ability.

Mr Brantley said Genesis has an advantage in terms of being a significant retailer, as well as having significant generation. Any suppressed wholesale prices play to the strength of the company as a big retailer.

Mr Brantley said Genesis will try to get the balance right.

"We've always said that if we can buy off the wholesale market to serve our customer base cheaper than we can generate it ourselves, we'll actually do it that way and not worry about the generation."

Mr Brantley says the company is focussed on reducing customer churn this year, which is the key to improving its margins.

Genesis increased its annual after-tax profit by more than a fifth, making $105 million in the 12 months to June.

But operating earnings fell 13% to $336 million, because of low wholesale prices and the impact of planned maintenance work on the Tekapo canal.