Genesis Energy enters into Agreement with Meridian Energy

Genesis Energy Chairman, Rt. Hon. Dame Jenny Shipley DNZM, announced today that Genesis:

Energy had entered into a long term electricity hedge arrangement with Meridian Energy. Dame Jenny said under the arrangement, coming into effect on January 1, 2011, Genesis Energy would purchase up to 450GWh from Meridian Energy in the South Island and would sell the same volume to Meridian Energy in the North Island.

“The hedge agreements (also known as virtual asset swaps) will enable Genesis Energy to further grow its South Island business in the coming years,” she said. The comment follows today’s announcement from the Ministry of Economic Development detailing the Government-mandated virtual asset swaps brought about by the passing of the Electricity Industry Act 2010.

Genesis Energy is one of three state-owned energy generators along with Meridian Energy and Mighty River Power. To date Genesis Energy and Mighty River Power have no generation in the South Island and Meridian Energy has little generation in the North Island.

A 2009 Ministerial Review of the Electricity Market found that this geographic inequality led to restrictions on retail competition in some parts of the country. Findings from the review led to the passing of the Electricity Industry Act 2010 which was passed into legislation in November this year.

“The Act also enables the purchase by Genesis Energy of two South Island hydro power stations, Tekapo A and B, presently owned by Meridian Energy. We welcome the Minister of Energy and Resources’ confirmation that the sale will be completed in the first half of 2011. “The lack of South Island generation has meant that Genesis Energy has not had the opportunity in the past to actively seek South Island customers” Dame Jenny said.

The purchase of Tekapo A and B, together with the virtual asset swap agreement entered into today, presents new growth opportunities for the company and more competitive packages for South Island customers.

“The electricity market reforms will allow Genesis Energy to compete throughout the country effectively and this in turn will lead to major benefits for our customers,” Dame Jenny said. Genesis Energy has been actively seeking business in the South Island since February 2010 with attractive electricity and LPG price offers.

ENDS

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