Speaker 1: You're listening to the Weekend Collective podcast from News Talks,
Speaker 1: it'd be.
Speaker 2: Don't lad when you're.
Speaker 1: Paying them more he's dragging?
Speaker 3: No, you're thinking about me when you're riding where he's drying?
Speaker 4: Now you missing mystery?
Speaker 2: Yeah?
Speaker 1: The time he close around me?
Speaker 4: Do you see when you're faith the more he's drinking.
Speaker 3: Now you thanking bout me?
Speaker 5: Coming bother?
Speaker 4: And n w's that sucking your job? Loud slaging, noise.
Speaker 3: Bosted big when you're feet his bad?
Speaker 2: Am I up in your head?
Speaker 4: Making you crazy? Tell me baby, are you.
Speaker 2: Thinking about me?
Speaker 1: Are you thinking about are you thanking bout when you
Speaker 1: say them more?
Speaker 5: He's dragging?
Speaker 1: Now?
Speaker 5: Are you thanking bound me?
Speaker 3: And welcome back to the Weekend Collective. Gosh, that was
Speaker 3: fascinating hour we just said with the health up. If
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Speaker 3: the Weekend Collective on iHeartRadio as you don't need to
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Speaker 3: the links as well. Anyway, right, it's time to move
Speaker 3: on to smart Money. We want your calls on n
Speaker 3: eighty ten eighty and text nine to nine to two,
Speaker 3: and we've got slightly different, slightly different angle on the
Speaker 3: money out today. We're joined by Andrew Baskin from Harbor
Speaker 3: Asset Management. Andrew, how are you.
Speaker 4: Going some really good wet down here today? But yeah,
Speaker 4: very wet, miserable.
Speaker 3: Yeah, But what I meant, wasn't it?
Speaker 4: It wasn't Bill great, terrific. It's got a great service
Speaker 4: to New Zealand.
Speaker 3: It is, It is impressive. Actually, in fact, I don't
Speaker 3: know if the financial I was thinking of the pharmaceutical
Speaker 3: side of things about how do you guys ever sort
Speaker 3: of is there any investment that goes on in New
Speaker 3: Zealand through the outside of the pharmaceutical companies into that
Speaker 3: sort of thing? Not at topic of conversation, but just
Speaker 3: by the way I.
Speaker 4: Thought I hit that because obviously anyone listening, you know,
Speaker 4: booked your on collogist first, not not your financial person
Speaker 4: if you've got a concern you're going cancer. But no,
Speaker 4: it's true, very true. But yes, there are two core
Speaker 4: companies that we've invested and we're still invested in Australia. Actually,
Speaker 4: one called Telix Pharmaceuticals, t e l i X go
Speaker 4: google that one, and that's a six billion dollar company.
Speaker 4: So that'd be if it was listed in New Zealand
Speaker 4: to be one of our top ten companies. And that
Speaker 4: specifically got a diagnostic a diagnostic indication for prostate cancer
Speaker 4: and kidney cancers and so hasn't yet got a fully
Speaker 4: a fully fledged therapeutical market that it's working on at
Speaker 4: stage three texts. And the other one is a coop
Speaker 4: of called mu tep im m U t e P.
Speaker 4: That's a half a billion dollar company, once again a
Speaker 4: aussy and that's working in this precision medicine are ss
Speaker 4: telics that Bill was talking about. So rather than this
Speaker 4: broad spread a chema that we're all familiar with, sadly,
Speaker 4: these companies are both working on precision medicine tillis and
Speaker 4: radio pharmaceuticals. And then you tip pretty much an area
Speaker 4: that Bill was talking about, and that's certainly where the
Speaker 4: science is going. Would all like it to go fast? Yeah, Bill,
Speaker 4: sort of right, These things take I thought.
Speaker 3: I thought from a financial point of view, it was
Speaker 3: eliminating because you know, we often hear a lot of
Speaker 3: stuff about pharmaceutical companies, but when you when you hear
Speaker 3: how much money is involved in the stage three trial.
Speaker 3: That's one hundred million bucks or something. I mean, there's
Speaker 3: it's a hell of a lot of money, isn't it. Anyway?
Speaker 4: I think has got three stage threes on it at
Speaker 4: the moment. You can only do that for your six
Speaker 4: billion dollar company, right So, and that's just a it's
Speaker 4: a very expensive thing to get involved. But new zid
Speaker 4: and scientists prominent in this area. You know, he was
Speaker 4: very modest.
Speaker 3: He was very modestically I had had to you know,
Speaker 3: he was very modest about his own achievements, of course,
Speaker 3: but you know, very generous to his colleagues who are
Speaker 3: still working. Hey, we've got a slightly I mentioned we've
Speaker 3: got a different tech not because not because we're chatting
Speaker 3: to you, but we're having a chat about the whole
Speaker 3: electricity picture with spiking costs over the last two weeks
Speaker 3: and the effect on businesses and what that means for
Speaker 3: the broader economy. And it's slightly it's potentially slightly political
Speaker 3: question too, isn't it, because of the way that electricity
Speaker 3: supply has been handled. What did you make of just
Speaker 3: first up, what did you make of these those prices
Speaker 3: and Shane Jones's comments about I think somebody there was
Speaker 3: an academic as well who said that our companies have
Speaker 3: been operating gen Taylor has been operating like a cartel.
Speaker 3: But anyway you kick.
Speaker 4: It off, Yeah, that's really I mean, if you're sitting
Speaker 4: at home, I mean, you're not going to see any
Speaker 4: change in your electricity bill, right, I mean, that's the
Speaker 4: first thing households, you know, no change in electricity bill.
Speaker 4: What we're really talking about is the wholesale market, the
Speaker 4: market for electricity between companies, large companies principally, and the
Speaker 4: Shock and Horror Show was and this is what kicked
Speaker 4: off the discussion, was that the price of wholesale interricy
Speaker 4: was around six times higher than it's been than it
Speaker 4: was last winter example, And it's like like June, July
Speaker 4: and into August, and that's when you know, the Minister
Speaker 4: sort of decided he had to say something. And I
Speaker 4: think it's really interesting because we could just simply say
Speaker 4: like it hasn't rained in the right places. We could
Speaker 4: just say that, and that's very true. I mean, our
Speaker 4: core lake levels up until Thursday or Friday might have changed.
Speaker 4: Now we're only at forty four or forty five percent
Speaker 4: of average. And this is a fun fact. I had
Speaker 4: to go, wait, look at actually our snowpack was similarly
Speaker 4: at a record low for this time of the year,
Speaker 4: a record low. Of course, the snow is the is
Speaker 4: the element that's going to create in our lakes. Later
Speaker 4: said stored energy. And the other thing that happened was
Speaker 4: we had a week here where the wind almost went
Speaker 4: to nothing as well. It's all three things combining meant
Speaker 4: that we had this shortage, this huge shortage of electricity
Speaker 4: to sort of you can't really blame it on the weather,
Speaker 4: in my opinion.
Speaker 3: It's a situation, isn't it, Because do you remember do
Speaker 3: you remember back on the I think I seem to
Speaker 3: remember that, remember when there was a problem with Auckland's
Speaker 3: levels in the dams and everything, and it led to
Speaker 3: the CEO resigning And a friend of mine said, you
Speaker 3: know what, if we'd simply had more more weather heads
Speaker 3: still have a job, so more rain. Sorry, And there's
Speaker 3: there is an element of that fickleness about it, isn't there.
Speaker 3: But of course, well then you.
Speaker 4: Asked us, why didn't we get ourselves set for this?
Speaker 4: So what I mean, that's the key question. And is
Speaker 4: it going to happen again? And I think you know,
Speaker 4: so those are the two questions you want to answer
Speaker 4: that we're all thinking of. And listeners will have their
Speaker 4: own views on this, and I'm interested in taking some notes.
Speaker 4: But look, I think this is my personal three key
Speaker 4: things that happened over the last five years that we
Speaker 4: got ourselves in a pickle. And this is controversial, but
Speaker 4: my view is that the whole discussion of project work
Speaker 4: around that huge abandoned onslow pumped hydro scheme terrific idea maybe,
Speaker 4: but the cost of its sixteen billion dollars, the fact
Speaker 4: that was going on meant that all of these big
Speaker 4: companies that generate eletricity for us said, oh no, I
Speaker 4: can't go ahead with our wind, can't go ahead of
Speaker 4: that new solar, not going to do a big battery project,
Speaker 4: not going to be more geofilmal because we're thinking about
Speaker 4: as a country putting in I think a thousand megawatts
Speaker 4: of capacity. Is it like like a twelve to fifteen
Speaker 4: percent increase in our capacity? So if that was going
Speaker 4: to happen, well we're not going to go do it.
Speaker 4: So that that's the way we approach that project I
Speaker 4: think was wrong.
Speaker 3: Actually, what we're really in it it's it does quickly
Speaker 3: end up being a political question, isn't it, Because if
Speaker 3: it went for if it went for that project dominating
Speaker 3: the landscape, would we be in the trouble that we're
Speaker 3: in because would we have managed and build the infrastructure
Speaker 3: or do you think that's I.
Speaker 4: Don't think that's the only thing that And so there's two
Speaker 4: other things that were going on at the same time.
Speaker 4: There was a shortage. There's been a shortage of gas.
Speaker 4: We all know why that happened. We stopped exploring for it,
Speaker 4: and it's another political decision we made. But that shortage
Speaker 4: of gas means that in the in a dry, cold
Speaker 4: winter where the wind doesn't blow, we just don't have
Speaker 4: enough gas to turn on those big plants that creates
Speaker 4: the electricity when there's no water.
Speaker 3: We need more gas, don't we.
Speaker 4: Well, well, well, actually this is the thing. I'll come
Speaker 4: to this. I'm not sure we do. I'll come to this.
Speaker 4: But we just didn't have any. And the third thing
Speaker 4: is we had this sword hanging over us with real
Speaker 4: tinto do they stay, do they go? And can we
Speaker 4: elicit from them a demand response if we need their
Speaker 4: electricity back again, and we sort of, oh, we want
Speaker 4: we want to sort out these things. And so these
Speaker 4: things all came together to sort of mean that we
Speaker 4: sort of stopped producing investment proposals to put in more
Speaker 4: wind more. So, I think.
Speaker 3: It does seem to me that one plus one plus one, well,
Speaker 3: I guess I say one plus one. But what you're
Speaker 3: saying is, and it's a surprisingly sort of political angle
Speaker 3: to this hour and away. But if the Labor government
Speaker 3: hadn't announced all its plans for Onslow, would we have
Speaker 3: the problems that we've got. And I know you don't
Speaker 3: like to play it politically, that that seemed to me
Speaker 3: that they ballsed it up completely.
Speaker 4: Well, the thing is, I think the way you present
Speaker 4: the idea is the first thing you know, it was
Speaker 4: always just going to be who's going to do this?
Speaker 4: Is just going to government, was going to be participation,
Speaker 4: and the size of the project was such that it
Speaker 4: was going to dominate the eletricity sector. But it wasn't
Speaker 4: the only issue. And I think by itself probably would
Speaker 4: have still seen some I think some generation put in
Speaker 4: it over time. But we had the other two factors
Speaker 4: creating a lot of uncertainty in my opinion. But there's
Speaker 4: the good news sit here now today we're sort of
Speaker 4: solved all three, have we We've solved all three well.
Speaker 4: And this is this is the really interesting thing we
Speaker 4: learned last week that I think is probably something we're
Speaker 4: just waking up to. So the good news is there's
Speaker 4: now three terror what that's like seven percent of our
Speaker 4: electricity generation being built today. That's being built so in
Speaker 4: solar wind batteries and that's happening today. So we've made
Speaker 4: our mind up where they are building. But that doesn't
Speaker 4: help today tomorrow electricity. But this is what it does.
Speaker 4: When they renegotiated that Rio Tinto contract, they are allowed
Speaker 4: the potential to pull a ripcord a few times, not
Speaker 4: not every month, but a few times, pull a ripcord
Speaker 4: and give us back four percent of New Zealand's electricity
Speaker 4: at the right price. Is it constant doing that? So
Speaker 4: we pulled the rip cord, I forget twenty days ago,
Speaker 4: and I don't think, you know, we all work up
Speaker 4: to the fact that we so that electricity now right
Speaker 4: now is beginning to come back into our grid, and
Speaker 4: it comes back for like a month or two and
Speaker 4: then gradually we'll give it back to the That's pretty good.
Speaker 4: That's that's happening. But here's the news that happened last week.
Speaker 4: The method X are plants sitting out there in Karanaki
Speaker 4: made a decision, in conjunction with Contact Energy and Genesis
Speaker 4: to shutter, not not to close permanently, but the word shutter,
Speaker 4: I think I now know what it means. It means, well,
Speaker 4: let's close this down to some maintenance and we're not
Speaker 4: going to use our gas. So the gas response now
Speaker 4: means that Contact and Genesis will be able to grab
Speaker 4: that gas and turn on their their peak of plants,
Speaker 4: their plants to that we use if it doesn't rain.
Speaker 3: There's no where who drive that decision?
Speaker 4: Well, that's very interesting. Must have happened behind behind some
Speaker 4: closed doors somewhere. I think it was probably a commercial decision.
Speaker 4: It wouldn't surprise me if just the three companies decided, well,
Speaker 4: let's let's make a commercial decision that's right for everyone,
Speaker 4: right for the clients of Contact and Genesis, right for
Speaker 4: Methodics at the right price. I mean I think there'd
Speaker 4: be money, money, money changes hands. He clearly, and it's
Speaker 4: a good commercial decision and it's actually the right thing
Speaker 4: for Contact clients Genesis in the country.
Speaker 3: All they went when I mean the critics, some of
Speaker 3: the gentailers, but they were just charging like wounded bulls,
Speaker 3: and so they were making money regardless of where they
Speaker 3: got it from. So the incentive to them to spend
Speaker 3: money give some money to methodics. What would the incentive
Speaker 3: for them have been simply restore restoration of their reputations
Speaker 3: and getting on top of the challenges they've got or what.
Speaker 4: Well, the last thing Contact and Genesis want is to
Speaker 4: have more opinion. Industrial plants closing down in New Zealand
Speaker 4: because we can't provide electricity at the right price. Don't
Speaker 4: forget that these guys are competing with each other, and
Speaker 4: they're very happy to sell electricity at one hundred and
Speaker 4: fifty one hundred and forty dollars when the cost of
Speaker 4: producing it's going to be one hundred and twenty hundred
Speaker 4: and twenty five dollars. They don't need electricity to be
Speaker 4: six hundred dollars, eight hundred dollars, and in fact, that's
Speaker 4: very harmful, very harmful for their businesses.
Speaker 3: Well, let's just talk about that in terms of what
Speaker 3: effect it really had on because, as you say, it
Speaker 3: doesn't affect the average home owner. Of course, we've all
Speaker 3: got fixed, we've got our deals with which whatever they are,
Speaker 3: impenetrable though they may be to understand. But what was
Speaker 3: the effect on the economy?
Speaker 4: Yeah, sadly, sadly. I mean there were quite a few
Speaker 4: businesses that shuttered themselves. Don't know whether they that they
Speaker 4: will see the opportunity to start up again when electricity
Speaker 4: prices come back, and by the way, they have started
Speaker 4: to come back quite sharply. And the people, of course
Speaker 4: work in those plants, and that's the demand response that occurs.
Speaker 4: And now Rio Tinto's providing that demand response. Well, hopefully
Speaker 4: that will release the electricity back to other industrial users.
Speaker 4: I mean, you sort of can't. You can't use electricity.
Speaker 4: You're not you're not making So we had to make
Speaker 4: a chure somewhere. Their households turn off their hot water
Speaker 4: or they're heating, but the school's close or hospitals close.
Speaker 4: What do you do in the country, So you need
Speaker 4: a demand response when something like this happens. The key
Speaker 4: thing for us is we don't want this to happen again,
Speaker 4: so we need to have mechanisms that think ahead with
Speaker 4: respect to snow, rain and wind.
Speaker 3: So we're still reactive, aren't we We're not. Is there
Speaker 3: a chance we're going to become more proactive?
Speaker 4: From you? We're absolutely getting there. I said before. We've
Speaker 4: got seven percent new brand new KIP going in right now,
Speaker 4: across wind, across solar, across batteries, across geo thermal. It's
Speaker 4: seven percent new kit going in, which.
Speaker 3: Is pretty that's seven sounds like a small number. See,
Speaker 3: it's actually quite.
Speaker 4: A ch This is billions of dollars of investment. This
Speaker 4: isn't like one hundred million dollars. This is billions of
Speaker 4: dollars of investments. Now. The other thing is Content Energy
Speaker 4: has just started a fire up for their Tollhard a
Speaker 4: new geo thermal plant that went on the ground to
Speaker 4: stead of four years ago. Turn the first side, and
Speaker 4: that's taken a bit longer to going. It's about seventy
Speaker 4: percent up now. That's about four percent three or four
Speaker 4: percent new electricity by itself. So that's a good that's
Speaker 4: a good story. We probably need two or three more
Speaker 4: of those, because of course it doesn't matter with your
Speaker 4: thermore if there's no water and no sunshine or no wind,
Speaker 4: the pipe stool being heated a klumbit of beneath the
Speaker 4: beneath the earth.
Speaker 3: Yeah, so what what what do you think that? What?
Speaker 3: What further investments do we do we sort of need
Speaker 3: from here so we don't see this sort of thing
Speaker 3: happening again. And what stage is that at?
Speaker 4: Yeah, there are there's another ten percent electricity potential supply
Speaker 4: on a schedule going out to twenty thirty These are
Speaker 4: projects that very again from large scale solar plus batteries
Speaker 4: attached to them, to wind plus batteries, to a significant
Speaker 4: extension of existing geothermal assets. And this excludes possibly some
Speaker 4: pumped hydro projects that aren't on the schedule at the moment.
Speaker 4: And when I'm looking at all less and if I
Speaker 4: add all that up, unless the economy here starts scaring
Speaker 4: both three or four percent, we could seriously get into
Speaker 4: the position where we have too much electricity, and you
Speaker 4: know that would be misallocation of resources. However, and this
Speaker 4: is the point I'm making regard to do any gas
Speaker 4: or not we need it now, We probably need it
Speaker 4: through to about twenty thirty five, and we probably need
Speaker 4: to learn how to store gas, you know, store gas.
Speaker 4: But yeah, No, I'm pretty optimistic that will work our
Speaker 4: way through this.
Speaker 3: So, yeah, it's because a lot of the talkers that
Speaker 3: you know, we import of this coal to burn and
Speaker 3: tough times, and you know we haven't. We're not drilling
Speaker 3: for more gas and things do you So where are
Speaker 3: you at with that in terms of what the politicians
Speaker 3: say about the need for it.
Speaker 4: Well, first of all, it's an absolutely dreadful outcome that
Speaker 4: trucks and trucks and tracks are going down the main
Speaker 4: road there to Huntly full of coal that isn't from
Speaker 4: New Zealand under Lett alone, you know, being shipped to
Speaker 4: New Zealand from sure that we just want to cease
Speaker 4: that activity as fast as possible. So it's the first thing. Secondly,
Speaker 4: gas has to be that, in my opinion, that last
Speaker 4: transition fuel at the moment, and by the last, I
Speaker 4: mean we can get ninety renewable, ninety six renewable, I
Speaker 4: think we're still going to sit on three to four percent. Yeah,
Speaker 4: sitting here.
Speaker 3: In gas, it seems that unless you're being completely idealistic,
Speaker 3: you know, naively, then ninety five percent renewable, great, but
Speaker 3: the last five percent were still going to need to
Speaker 3: have that spere well. Posie.
Speaker 4: I'm a bit more optimistic that we will find other
Speaker 4: other means of generating energy. And h I think there's
Speaker 4: probably more geothermal assets in museum we haven't fully explored.
Speaker 4: Pretty prey optimistic. We sit, unlike many countries around the world,
Speaker 4: close to the Earth's crust and that that technology is.
Speaker 4: You know, we know how to do that stuff. We've
Speaker 4: got great engineers and scientists in New Zealand who are
Speaker 4: world leading and how to extract the energy. So you know,
Speaker 4: I'm not that pessimistic about our capacity to use.
Speaker 3: We got to take some calls as well, So let's
Speaker 3: go to what's the time and tell you what. We'll
Speaker 3: take a break. We'll come back with a call from
Speaker 3: Peter in just a moment. Are you actually I think,
Speaker 3: just to sum it up, you're quite optimistic that we're
Speaker 3: not doing too badly now, despite the catastrophic sort of headlines.
Speaker 4: Andrew, I think if you understand how we got till
Speaker 4: we got to, if you want to jump in and
Speaker 4: create an intervention now, I think that could only add
Speaker 4: add to the noise and and and cease the current
Speaker 4: path we're on, which finally, I think I think we're
Speaker 4: generally speaking, on the right path, generally speaking.
Speaker 3: Okay, cool, right, we'll take a break. Come back from
Speaker 3: just a moment. Oh one eighty text nine. It's twenty
Speaker 3: seven past five News Talks. He'd be and welcome back
Speaker 3: to the Weekend collective. This is Smart Money with and
Speaker 3: My guest is Andrew bask And he's managing director of
Speaker 3: portfolio manager at harbor Asset Management. You want to check
Speaker 3: out their their work and there it's harbor Asset dot
Speaker 3: cod z. We're talking about something slightly different in terms
Speaker 3: of electricity to supply, but simply because of the effect
Speaker 3: it had on businesses around the country. And Andrew, it's
Speaker 3: fair to say, before we go to our first caller,
Speaker 3: you are reasonably optimistic that we're getting on top of
Speaker 3: this thing now despite all the political noise about NEEDA
Speaker 3: to drill more gas and all that sort of stuff.
Speaker 4: I mean, you can't, you can't overnight build a whole
Speaker 4: lot more kit. Right, We now have a possibility that
Speaker 4: within three or four years will have certainly different configuration
Speaker 4: of the kit. The key thing that's changed is this
Speaker 4: demand response from Rio tinto museum Alement themselves and methnics
Speaker 4: on the gas, and that has created a capacity to
Speaker 4: put more energy into the system.
Speaker 3: Right, let's take some calls. Peter, Hello, good morning.
Speaker 6: Andrew didn't mention how Australia intervened in their market, and
Speaker 6: it's no longer a free market as I understand where
Speaker 6: it's a New Zealand response was sort of a market response.
Speaker 6: But I just wondered, you know, where is all this
Speaker 6: guess going to come from? You know, if New Zealand
Speaker 6: does want to have guess available for four dry years.
Speaker 6: And the other question I have is how competitive are
Speaker 6: electricity prices when we look, we'll pay fifteen percent is
Speaker 6: to pay a mission trading scheme system plus you know
Speaker 6: bank charges on credit card transactions, plus on top of
Speaker 6: that line charger so. And then the other one is
Speaker 6: with these other people sort of closing down plants and stuff.
Speaker 6: That was that because they didn't take forward cover? What
Speaker 6: do you think?
Speaker 4: Andrew? Many questions there. I'll take the easiest one, my guests,
Speaker 4: My guess would be that either forward cover ran out
Speaker 4: for these major electricity users or they hadn't taken cover.
Speaker 4: That would be my guess. And I don't know these circumstances,
Speaker 4: but one or two things could have happened. They could
Speaker 4: have just run out of cover, or they just didn't
Speaker 4: take it. In terms of in terms of gas, it's
Speaker 4: really the storage of gas that's the issue. Because if
Speaker 4: we're not using gas at our Peaka plants, we actually
Speaker 4: have a capacity of putting some gas into the ground.
Speaker 4: The problem is we just don't have enough stored gas.
Speaker 4: That's as I understand it. I'm quite happy to be
Speaker 4: corrected corrected here. So it's the storage of gas, and
Speaker 4: as we move forward, we will need as the transition
Speaker 4: fuel stored gas. In times where we just once again
Speaker 4: don't have the water, the wind, or the or the
Speaker 4: solar power running to fire up our peka, our Peaka plants,
Speaker 4: we just can't take enough gas out of the pipeline
Speaker 4: at the moment to all at once. Now with meth necks, however,
Speaker 4: you know, shattering, we effectively have a short term solution.
Speaker 4: So that's you know, we we can't immediately go and
Speaker 4: rull for more gas either. So and I just don't
Speaker 4: think personally, and this once again a personal view, and
Speaker 4: I have a lot of people emailing there saying it's
Speaker 4: it's not correct, but it's a personal view. Is that
Speaker 4: I I'd rather see New Zealand invest more in in
Speaker 4: combinations of battery technologies angio thermal as the medium term
Speaker 4: answer to create a.
Speaker 3: Chriss would love you because he's talking about bipartisan support
Speaker 3: for infrastructure plan, but it can't include gas and coal,
Speaker 3: which I thought, to be honest, sounded nuts that you
Speaker 3: are going to rule something out. Well, what's your studs, Peter?
Speaker 3: Still you can chip into pore.
Speaker 4: I'm not. I'm not sure. I mean, I don't think
Speaker 4: you can rule out You definitely can't rule out rule
Speaker 4: out gas. I'm not sure you can. Unfortunately one hundred
Speaker 4: rule out coal because of a society if we're going
Speaker 4: to need to keep the lights on. I think, however,
Speaker 4: there's enough projects if you if I run through the
Speaker 4: projects of promo on the screen, but under construction, in
Speaker 4: in completion testing. At the moment, we've got a lot
Speaker 4: of electricty projects running on the How.
Speaker 3: Sort of time period are we putting on all that?
Speaker 4: The schedules of course for Tahara is that seventy seventy
Speaker 4: percent already it's already up and running. Loadstone already up
Speaker 4: and running. Loadstone tooka October twenty four solo projects January
Speaker 4: twenty five, Loadstone twenty five mak. Then we run around.
Speaker 4: There's a lot, there's just a lot coming.
Speaker 3: Seriously, good stuff, Peter, Do you have any any other supplement, mister.
Speaker 6: Speaker, Australia, Australia, with Australia in their free market, what happened?
Speaker 4: Yeah, And so that they did, and that then, in
Speaker 4: my opinion, created the situation where companies just ceased investing,
Speaker 4: that they stopped their energy transition because they didn't know
Speaker 4: what the price signal was going to be. What is
Speaker 4: the price when I mean, obviously, unless taxpayers the government
Speaker 4: is going to take the risk of investing in all
Speaker 4: these new projects, you need a clear price signal to
Speaker 4: gain a reasonable return, a return above the cost of
Speaker 4: borrowing to put in place a new kit. And so
Speaker 4: I think there's quite a great danger of jumping in
Speaker 4: and significantly creating price signals that are, you know, from
Speaker 4: a government perspective, may or may not be the price
Speaker 4: signals that will get investors to get involved. That that's
Speaker 4: that's my view anyway.
Speaker 6: And the price of New Zealand electricity with admissions trading, investing,
Speaker 6: decent cheers and all that stuff. Line charges.
Speaker 4: Well, I think the one the one point you've raised
Speaker 4: is line charges, and I think we have possibly under
Speaker 4: invested for some time and in our infrastructure here, and
Speaker 4: it's the line charges that are the one that that
Speaker 4: you know that are currently coming through on your retail
Speaker 4: retail bill at home. So that's something I think possibly
Speaker 4: we need to spend a bit more time thinking about.
Speaker 3: Okay, right, we'll take a break, we'll come back. Hamish
Speaker 3: is next to one hundred eight ten eighty. My guest
Speaker 3: is Andrew Basquan. He's managing direct to portfolio manager at
Speaker 3: Harbor Asset Management. We'll back in just a moment. This
Speaker 3: is news talks said be twenty four minutes to six.
Speaker 5: So tough, thank you, very rough, just can good enough?
Speaker 5: Just always a puff I'm not bad side, make him
Speaker 5: a sad side.
Speaker 3: Thank you and welcome back to the Weekend Collective. This
Speaker 3: is smart money. My guest is Andrew Bascan. He is
Speaker 3: managing director portfolio manager at Harbor Asset Management. You can
Speaker 3: check out their work at harbor Asset dot co dot nz.
Speaker 3: Talking about the whole power problems and how do we
Speaker 3: end up with in sufficient electricity? Is it as bad
Speaker 3: now that we've got method X who've taken a break,
Speaker 3: and Rear Tinto's put an extra four percent into electricity
Speaker 3: is as bad as you as we've been led to believe,
Speaker 3: possibly by the political discussions. Right, let's go to Hamer show.
Speaker 4: A.
Speaker 2: Sorry, sorry, who am I talking to you?
Speaker 3: You're talking to Tim? And what do you mean listening
Speaker 3: Andrew Baskuan? You just caught up randomly or something.
Speaker 2: So you know, I'm just so I'm talking to Tim, right, Yeah,
Speaker 2: So I think your analysis is second to none. It's
Speaker 2: really really good.
Speaker 3: I'm not sure I've been the one providing the analysis.
Speaker 3: Regrets Andrew's been providing the analysis. Yeah, okay, I mean
Speaker 3: I like to think I've got a few clothes, but
Speaker 3: maybe not as many as Andrew Baskuan on this issue.
Speaker 2: What what? What?
Speaker 3: What question did you have?
Speaker 4: So?
Speaker 2: Andrew, I just think your analysis is amazing. But I
Speaker 2: don't think we've had this discussion in New Zealand around many,
Speaker 2: many different things for a long time. It's been sort
Speaker 2: of like throwing under the rugue and does the spot
Speaker 2: market work? I mean, oh no, I've been in the
Speaker 2: industry for a long time.
Speaker 3: Have you which part of it? The specifically.
Speaker 2: In America, Henry abb I was a commodities trader and
Speaker 2: Henry abs.
Speaker 3: Yep, do you much do you reckon that they because
Speaker 3: it's interesting hearing Andrew's comments about and Pep's optimism about it.
Speaker 3: Do you think that that the politicians and the political
Speaker 3: discussion and there's sort of the sort of political hysteria
Speaker 3: that goes along with, you know, news about the spot
Speaker 3: pricing obscures a decent discussion on what the reality is
Speaker 3: and our electricity supplies? Is that what you're sort of getting?
Speaker 4: Henry Habit example is pretty a pretty good one because
Speaker 4: in Henry have you get these huge spikes? Henry point, well,
Speaker 4: that's where they trade their gas principally in the US.
Speaker 4: It's the US is a whole lot of pipelines of
Speaker 4: gas going everywhere. And the Henry it's a market man.
Speaker 4: Okay there, But.
Speaker 2: I've come back and working out as another trader now,
Speaker 2: uh you know so anyway, but I saw the devastation
Speaker 2: that spot markets can do. And are we on point
Speaker 2: in New Zealand with what we want to do?
Speaker 3: And do you think we're on point? Hamus mm hmm, No,
Speaker 3: I think he's disappaired.
Speaker 4: No, it a couple of points there, because I actually
Speaker 4: think we can do a couple of things, and we
Speaker 4: probably discussed and government might help out here. But the
Speaker 4: spot market's one thing for electricity, but the forward market
Speaker 4: is probably the market that needs strengthening. This is the market,
Speaker 4: the forward market my capacity to buy electricity in say
Speaker 4: March next year or match the following year, when I
Speaker 4: know I'm going to need electricity, but I don't want
Speaker 4: to be suddenly paying five hundred dollars for it when
Speaker 4: I can only afford to pay two hundred, so what
Speaker 4: I quite like. Additionally, with the last week or so,
Speaker 4: there's been a continued tender process for capacity, so we
Speaker 4: have something called the Huntly firming options to a technical
Speaker 4: but it is developing something other than the spot market.
Speaker 4: It's a strengthening the future price of electricity in your
Speaker 4: capacity gone by bioletricity going forward. And I think these
Speaker 4: wake up moments of oh, we can't afford to be
Speaker 4: on the spot market as a company, I've got to
Speaker 4: actually go and hedge my altricity. That's a sort of
Speaker 4: a normal, normal development. I mean that this isn't the
Speaker 4: first time this matter has been discussed. I mean we've
Speaker 4: had I don't know how many reviews that we had,
Speaker 4: the Commerce Commission report, the untested Authority report that a
Speaker 4: labor government won back in two thousand and eight, we
Speaker 4: had one, and I think we've survived all that. But
Speaker 4: we've got onto this problem because of those three things
Speaker 4: I mentioned. This, this worry over onslow that's pushed aside,
Speaker 4: what are we going to do with three or tinto
Speaker 4: we now know? And the ongoing issues with understanding of
Speaker 4: demand response. And I think we're getting there. We really
Speaker 4: are getting there.
Speaker 3: We've got a text here which is asking how come
Speaker 3: Andrew Baskan from how BACIC management has what triggered has
Speaker 3: deep dive into the whole electricity question because I actually
Speaker 3: cross my mind as to.
Speaker 4: Well, well, it's really really good. I've got a colleague
Speaker 4: who's an expert on this for a start, So I
Speaker 4: sit beside him and he's been he's been, he's been flat, flat,
Speaker 4: flat out for two weeks because there's been a lot
Speaker 4: of stuff going on here. We we were a really
Speaker 4: big investor instill Are in the in the contact Energy
Speaker 4: that developed that toll Harder project. I really believe in
Speaker 4: renewables and I think anything we can do to move
Speaker 4: the dial on investing in renewables for New Zealand and
Speaker 4: do it in a way that's going to work. I
Speaker 4: just think it's fantastic and work for mums and dads
Speaker 4: as well as businesses. Okay, and so I'm quite interested.
Speaker 4: I'm quite interested.
Speaker 3: So what's what's so? What the work your colleague has
Speaker 3: been doing next to you? Basically what he's been spending
Speaker 3: a couple of weeks on this. What's I don't know
Speaker 3: how to answer to ask this inception just a crude
Speaker 3: way from so what is the point for from that?
Speaker 3: From the Harberscic point of view.
Speaker 4: Well, you you, you worry when you have these really
Speaker 4: big movements in the price of anything, that someone's going
Speaker 4: to get caught out. There's going to be someone who's
Speaker 4: going to be a winner and someone's going to be
Speaker 4: a losers the big companies. And we sort of saw
Speaker 4: a little bit of that happen when one of the
Speaker 4: smaller electricity generators said that their profits are going to
Speaker 4: be down a bit. But what we're forgotten here is
Speaker 4: these big electricity generators. I meant, first of all, they're
Speaker 4: not making super normal profits. They're not gouging here they
Speaker 4: actually have a lot of fixed price, long term contracts
Speaker 4: amongst themselves. But we really wanted to understand that issue
Speaker 4: to make sure as an investor in these companies, someone
Speaker 4: wasn't going to get caught out.
Speaker 3: Okay, hey, what do you think that? Given that, I
Speaker 3: would say, for me of distilled that you have a
Speaker 3: slightly more optimistic view of where we're going. But even
Speaker 3: though we do need to we go and still need
Speaker 3: to rely on gas when we're a bit short, is
Speaker 3: there a point what is there a point where the
Speaker 3: government might have to say, look, we can't bring any
Speaker 3: more coal and from Indonesia say stuff that we're going
Speaker 3: to We're going to start digging our own coal. Will
Speaker 3: there ever be an argument for that in your view?
Speaker 4: My view is I hope not. I hope we're smart
Speaker 4: enough to be able to invest more than the combinations
Speaker 4: of wind solar, lots of battery projects, get thermal. You know,
Speaker 4: I would think more of the same, More of the
Speaker 4: same will mean the projects I'm looking at will mean
Speaker 4: we ought to be able to phase out any reliance
Speaker 4: on coal and with gas, have this demand response from
Speaker 4: the big users mainly ethnics, and put some of that
Speaker 4: gas in the literally in the ground, I mean exactly,
Speaker 4: that's what we should be doing. Store that gas, not
Speaker 4: in pipes because we can't store enough gas pipes. Store
Speaker 4: that gas in the ground so we can draw on
Speaker 4: it and not bring in cold and then eventually eventually
Speaker 4: work out how we can phase that out as well.
Speaker 3: What about what about the population? So you know, immigration
Speaker 3: stats are all over the place, but we seem to
Speaker 3: have we've got too many New Zealanders leaving, but we've
Speaker 3: got even more people coming. Here's what's the future for
Speaker 3: the demand in terms of the picture that you've looked
Speaker 3: at with regards to how that might affect our energy demand.
Speaker 4: Well, there's two things going on. First of all, we're
Speaker 4: going to use more electricity with cars and the transport system,
Speaker 4: so that's that's a demand factor. But the other factor
Speaker 4: is we're pretty inefficient in using electricity still. There's a
Speaker 4: lot of you know, there's a lot of wastage in
Speaker 4: the grid. About that before with lines, we're still as
Speaker 4: households using electricity like at peak time frames. I mean,
Speaker 4: I don't know how many people actually listening to the
Speaker 4: call put their dishwasher on it midnight. I mean, you
Speaker 4: should do because it's cheaper to put it on at midnight. Seriously,
Speaker 4: I mean yeah, and so there's a whole lot of
Speaker 4: demand demand management. I mean, how many people got their
Speaker 4: washing machine? And then we go into battery technology. So
Speaker 4: it shouldn't be too far away in the next decade
Speaker 4: or two decades that we have sitting in our garages,
Speaker 4: not just the odd one or two people, but sitting
Speaker 4: in our garages battery packs that are both taking energy
Speaker 4: from our car and then storing it again when electricity
Speaker 4: prices are low at nuttime because we don't use much
Speaker 4: altriscy at nuptime.
Speaker 3: I'd actually never thought of sticking on the dishwasher. How
Speaker 3: much does it cost to do a lot of dishwasher dishes?
Speaker 3: I guess I don't know. I think you have to
Speaker 3: answer that question. If you do, Andrew, I'm going to
Speaker 3: be really impressed.
Speaker 4: I have no idea, but I just like fifty cents
Speaker 4: or something, just a guess, I mean, what is it?
Speaker 4: What is it?
Speaker 3: I have no idea. I guess the real answers doing
Speaker 3: by hand and get the tetawel out and drive them anyway. Look,
Speaker 3: we'll take a break. We'll be back in just a
Speaker 3: moment nine and a half minutes to six. Have you
Speaker 3: got any last minute questions to jump in on there?
Speaker 3: We'd love to hear from your news talks. There'd be
Speaker 3: ten to six.
Speaker 5: Yelling cool dusty.
Speaker 3: Weather, that's welcome back to the show. This is a
Speaker 3: smart money Well, it's the end of smart Man and
Speaker 3: my guest Andrew Baskan from Harbor Asset. Andrew, just on
Speaker 3: other things anything, particularly you guys are having a bit
Speaker 3: of a deep dive into on I think you were
Speaker 3: the stuff about the volatility of the markets in the
Speaker 3: last two or three weeks, getting away from the electricity
Speaker 3: side of things, what's your where things.
Speaker 4: Are Hopefully most people listening and don't open their the
Speaker 4: key we saver Apple their investment app every day and
Speaker 4: hopefully they put it aside and look at it quarterly,
Speaker 4: which is the best advice I can give anyone. But
Speaker 4: we did have this one day when the global market
Speaker 4: it's Japan in particular, but the US really fell very sharply,
Speaker 4: and you know, we had a lot of people calling
Speaker 4: and a lot of people concerned about it all. And
Speaker 4: I think my immediate reflection on this is it's quite
Speaker 4: healthy actually have a little bit of volatility, and that
Speaker 4: can happen and it's quite normal and there is risk,
Speaker 4: but then you could ask why and what's going on here?
Speaker 4: My sense is that that we've got a situation where
Speaker 4: we're in a transition with inflation falling, interest rates now falling,
Speaker 4: and a rotation, a clear rotation of people's wealth. And
Speaker 4: that's not just tappening in New Zealand. It's a global thing.
Speaker 4: And we will get days I'm sure when markets don't
Speaker 4: go up and that's normal, and weeks when that doesn't happen.
Speaker 4: And what's happened actually really interesting. We had seven days
Speaker 4: in a row when markets have responded positively to better
Speaker 4: data and markets now higher than they were at the
Speaker 4: beginning of that. And one thing I'd leave today with is,
Speaker 4: you know, don't open your app every day and look
Speaker 4: at balances, I mean, and just focus on those long
Speaker 4: term needs. If there's one thing that's changing you might
Speaker 4: take advice on. If you've got an advisor, is you know,
Speaker 4: as interest rates are falling, ask yourself, are you in
Speaker 4: the right solution to build your wealth or to save?
Speaker 4: And our term deposits still going to generate for you
Speaker 4: as interest rates for our term deposits still going to
Speaker 4: be the place that you're going to generate the wealth
Speaker 4: you need to. That's that's the one thing that I
Speaker 4: would sort of just.
Speaker 3: Leave firm today. And amazingly we maned to talk about
Speaker 3: we mased to talk about money and issues without even
Speaker 3: touching you. I see, and we haven't even got time
Speaker 3: to find out about fifteen seconds it started.
Speaker 4: It started, it's going, it started, it's going. It's it
Speaker 4: was wealth foreshadowed and we're on their journey and that's
Speaker 4: just going to continue to work.
Speaker 3: Thanks Andrew, and if you want to share it, good
Speaker 3: on you. Harbrasset dot coda Z thanks to my producer
Speaker 3: Tyra Roberts. Check out the podcast on iHeartRadio and that'll
Speaker 3: be up pretty much almost immediately the show's finished, and
Speaker 3: we'll catch you same time next weekend.
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