Meridian boss: let us lower the lake levels

Wednesday, 26 February 2025

Meridian’s boss says it has been as tough a time as he can remember.

Meridian Energy’s outgoing chief executive has called for power companies to be allowed to lower hydro lakes to levels that would currently breach their resource consents.

The country’s largest power firm said it took a “hit for New Zealand” to keep the power flowing last year, after posting a $121 million net loss for the six months to the end of December.

Despite the loss, Meridian maintained its interim dividend at 6.15 cents a share, meaning it will still pay out $160m to shareholders for the trading period.

The company wrote to system operator Transpower in November arguing that it should as a matter of course be allowed to draw down lakes to levels that are sometimes approved by Transpower as a “contingency” when power is in short supply.

However, it appeared to face push back from Transpower which questioned the need for an immediate change to its existing approvals regime.

Transpower acting chief executive John Clarke told Meridian in December “such significant and permanent changes to an existing policy with multiple and enduring impacts on stakeholders requires thorough and transparent consultation with affected parties”.

Neal Barclay will step down as chief executive of Meridian Energy in June.

On a conference call with analysts, Meridian chief executive Neal Barclay appeared to call for hydro operators to be allowed to lower lake levels even further.

“I do think we need to seriously amp up our enthusiasm for enhancing the hydro generation available, even within the existing hydro schemes, and even beyond ‘the contingent storage’,” Barclay said.

“To do so will lower emissions and deliver lower energy costs and it will do all of that for little or no additional environmental cost.”

The reality was, though, that the Resource Management Act, as it currently worked in New Zealand, would “stop hydro enhancements dead in their tracks”, he said.

Energy Minister Simon Watts has been approached for comment.

Meridian’s chief financial officer and CEO-in-waiting, Mike Roan, told The Post that it looked less likely that importing liquefied natural gas to plug any energy shortage would stack up.

Resources Minister Shane Jones announced last year that the Government planned to help facilitate the importation of LNG.

It now looks unlikely that LNG will be riding to the rescue.

Roan said it would be too definitive to say importing LNG was off the table, but it was “looking less likely”.

“It's looking more expensive than the alternates” — those being hydro storage and coal, he said.

Barclay, who will step down in June, said low hydro inflows, low wind and gas shortages made the second half of last year as tough a time “as I can recall experiencing”.

Meridian told investors it spent $200m “to sure up security of supply for Kiwi homes and businesses”.

“We took a hit for New Zealand,” Barclay said.

Mercury Energy announced yesterday that it would increase its power prices by almost 10% from April despite increasing its pay-out to shareholders.

Contact Energy pushed through a similar price rise late last year.

Meridian said it had started communicating price rises to consumers in the past few days.

A spokesperson for Genesis said no decisions had yet been made on pricing for its customers.

If customers received letters notifying them of higher prices that would be because they were rolling off old plans, he said.