26 Apr 2010

Warning electricity reforms will have big implications

7:07 am on 26 April 2010

Credit rating agency Standard and Poor's is warning proposed reforms of the electricity sector will have significant business and financial implications for electricity generators and retailers.

Last year, the Government proposed a major shake-up for the industry, including Meridian transferring its two Tekapo hydro power stations to Genesis Energy and picking up the diesel-fired Whirinaki power station.

Standard and Poor's recently prepared a report examining the effects of the changes.

A director at the agency, Parvathy Iyer, says the proposed reforms will create operational and financial challenges for the companies and they will need plenty of time to change their plans and develop new contractual arrangements.

But Mrs Iyer says there is still little information about how the asset swap and recapitilisation will be handled, so the implications for credit quality remains too tough to gauge.