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Speaker 1: Now, on the subject of those mills closing this winter

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Speaker 1: and blaming electricity prices for it, it turns out they

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Speaker 1: did actually have the option to bring down their power bills.

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Speaker 1: The Electricity Authority has put out a report saying market

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Speaker 1: options were available to the big power users during this

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Speaker 1: winter's price spikes. Bridget Abinathy is the chief executive of

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Speaker 1: the Electricity Retailers Association and with US Haybridge it oh. Hi,

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Speaker 1: so are we basically calling BS on their claim that

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Speaker 1: the power was too expensive or not complete? BS?

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Speaker 2: Look, I can't comment on the commercial arrangements of the

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Speaker 2: individual companies, but I think what the report shows is

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Speaker 2: that hedging options were available to industrial and commercial customers

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Speaker 2: right through that period of high volatility, and I think

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Speaker 2: that managing risk appropriately is an important part of operating

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Speaker 2: in a highly volatile wholesale electricity market.

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Speaker 1: How much cheaper were those options than what was available

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Speaker 1: on the market.

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Speaker 2: It's sort of shown on the The EA report shows

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Speaker 2: that they offered prices that overlapped with the A Ssex curve.

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Speaker 2: What I will say is, I think we know that

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Speaker 2: the hedge prices during that period were higher than usual,

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Speaker 2: but it's important to note that it's it's like trying

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Speaker 2: to find a mortgage when interest rates are high.

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Speaker 1: Yeah, but I don't really understand what that means. So

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Speaker 1: how much cheaper would it have been if they if

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Speaker 1: they use the alternative options?

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Speaker 2: Well, I don't think I can answer that easily. It's

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Speaker 2: every every individual company would have had different arrangements. I

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Speaker 2: think what the EA is trying to show is that

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Speaker 2: the prices that were offered were reasonable given the AX curve.

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Speaker 2: I think that that's the main point. I just want

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Speaker 2: to point out that we know that those those prices

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Speaker 2: were higher than normal, but that's because the prices were okay.

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Speaker 1: So as we can take that doesn't mean necessarily, though,

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Speaker 1: that their businesses would have been viable, right if they

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Speaker 1: had taken these Because it was still high power prices.

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Speaker 1: All we can say. We can't say that it would

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Speaker 1: have saved them. We can't say that it would have

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Speaker 1: made their businesses, as I say, viable, but we just

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Speaker 1: can say it was cheaper than what they were doing.

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Speaker 2: I think, look, all industrial users in this country know

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Speaker 2: that our wholesale market is volatile because we depend upon

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Speaker 2: intermittent renewables like wind, solar, and hydro. So the prices

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Speaker 2: go up to very high levels and they go down

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Speaker 2: very low. We know from the EA report that they

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Speaker 2: got as low as one dollar a megawatt on the

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Speaker 2: first of September. So I think the point is that

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Speaker 2: catching is a really important risk management tool for industrial users.

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Speaker 2: Being underhedged can allow users to get the benefit of

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Speaker 2: lower prices, but it also carries the risk that when

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Speaker 2: those prices rise, as they did this winter, that they

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Speaker 2: are exposed to those prices too, And I think it's

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Speaker 2: really important. It's a comment that Minister Brown signaled in

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Speaker 2: his recent government policy statement that sophisticated consumers have to

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Speaker 2: manage their risk appropriately given our highly volatile market.

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Speaker 1: I mean, bridget, Look, I guess the thing is what

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Speaker 1: we're arguing about is stuff on the margins, isn't it.

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Speaker 1: The truth of the matter is that we are no

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Speaker 1: longer a country where if you want to, if you

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Speaker 1: want to manufacture cheap stuff like this, where you can

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Speaker 1: do it because we're just too expensive. Isn't that the truth?

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Speaker 2: Look? I don't think I can. I think the main

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Speaker 2: comment from my perspective is that options are available to

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Speaker 2: help manage risk, and we know our wholesale market is

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Speaker 2: volatile because we've made a choice to move toward renewable

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Speaker 2: intermittent renewables, and that just means that we have greater volatility.

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Speaker 2: I think. I look at the really good report done

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Speaker 2: by a group called m DAG that they provided to

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Speaker 2: the EA last year, and you know, it's one of

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Speaker 2: the key points in the report is we do have

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Speaker 2: that volatility and hedge hedges are a really important part

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Speaker 2: of managing that risk.

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Speaker 1: Yeah, Richard, thank you so much for talking us. I

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Speaker 1: really appreciate you. On That'sridget Abanathy, who's the chief executive

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Speaker 1: of the Electricity Retailers Association here in New Zealand. For

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Speaker 1: more from Heather Duplessy Allen Drive, listen live to news talks.

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