Meridian grows Powershop customer base in Australia, laments policy

New Zealand gen-tailer Meridian Energy continues to grow its presence in Australia, taking its electricity and gas customer base to well over 110,000 via its retail arm, Powershop, and boosting generation from its Australian fleet of wind farms and hydro power stations.

In its half-year results announcement on Wednesday, Meridian said Powershop had grown its electricity retail customer base in Australia to a total of nearly 99,400 in December 2018 – about 2,000 more than in December 2017, and a 2 per cent rise since June 2018.

Powershop’s retail reach in Australia was bolstered by the business in Victoria, where the introduction of a gas offer in that state reportedly helped lift contracted sales by 15 per cent and notched up 12,500 new (gas) customers by the end of 2018.

And while retail sales in Australia were down by around 3 per cent for the half-year, Meridian’s generation of electricity for sale into the National Electricity Market was up.

The company said generation volumes from its two wind farms and three hydro stations in Australia were 37 per cent higher than a year earlier at 419 GWh.

Meridian beefed up its renewables presence in Australia in January last year, with the acquisition of three New South Wales hydro plants from Trustpower, and via power purchase agreements with wind and solar providers Tilt Renewables, CWP Renewables and Total Eren.

The results report said that the Australian energy margin was $66 million in 1H FY2019, $9 million (16%) higher than the same period last year.

“With the inclusion of seasonal generation from hydro stations and despite lower wind generation, total generation in Australia was 37 per cent higher than last year, albeit at lower average prices due to falling large-scale generation certificate prices,” the report said.

Australian earnings before interest, tax, depreciation and amortisation rose 14 per cent to $41 million, the company said.

In a results announcement and press conference on Wednesday, Meridian CEO Neal Barlcay referred appeared reluctant to comment in detail on any new renewable development plans, but referred to a “number of moving parts” in the company’s Australian business.

Earlier this month, Meridian – which is no stranger to Australia’s fickle energy policy environment – hit out at the federal Coalition’s threat to force divestment in the energy market, as well as confusing new rules about contracting.

“This is totally unworkable,” the company said in a submission. “The only prudent response that an investor can take to this increased uncertainty is to increase the required return from any such investment with this leading to higher prices and or delayed investment, placing reliability at risk.

“Already the mere threat of this legislation has made us question whether we should hold back on, or require greater returns from, investments which we are currently contemplating to increase reliability and security of supply.”

In the half-year report update on Australian policy and regulation, Meridian noted that the federal government’s NEG had been dumped, and that the proposed divestment legislation had been “widely criticised.”

Back in 2014, Meridian dumped plans to develop a 37MW hydro project in Northern Queensland, due to “the federal government’s protracted efforts to reduce the Renewable Energy Target.”

A year later, the company said it was not interested in investing in new wind farms in Australia as long as it was run by a government which did not like renewable energy.

Meridian’s fortunes in Australia looked up in 2018, however, thanks to the “stunning” low prices uncovered by Powershop after it went to market for renewable energy procurement proposals in 2017.

In comments at the results briefing, Meridian CFO Paul Chambers said the market was “still fiercely competitive” and that the company was “still winning business” in Australia.