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Speaker 1: Together due to see moment.

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Speaker 2: Obviously, we're trying to figure out how to fix the

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Speaker 2: electricity sector and we're getting a lot of ideas, and

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Speaker 2: one of them is from the former boss of Mercury

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Speaker 2: Energy who says that we need to drop the carbon

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Speaker 2: price that we put on coal through the ETS to

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Speaker 2: bring our power prices down. His Fraser Winner and he's

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Speaker 2: with us now high Fraser, Hi, Heather, So do you

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Speaker 2: reckon you charge coal the same as you charge gas?

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Speaker 1: Yeah?

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Speaker 3: That was one of four things that laid out in

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Speaker 3: an article I did recently because at the moment, what

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Speaker 3: we have is an unfortunate intersection between the ETS and

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Speaker 3: the spot market and the electricity and the point of

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Speaker 3: the ETS is is to then incentivize using lower greenhouse

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Speaker 3: gase alternatives. But there isn't an alternative for hydro insurance

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Speaker 3: in the electricity system for a South Island drought. So

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Speaker 3: you can only use coal now because of gas market shot.

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Speaker 3: So unfortunately, that high price of carbon then flows through

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Speaker 3: to a price of turning on the coal plant, which

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Speaker 3: then flows through to everyone's power prices when there's no

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Speaker 3: alternative to enter into.

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Speaker 2: So because we've got no one, because we're running out

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Speaker 2: of gas. We've only got coal, therefore charged coal lower.

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Speaker 2: But if we were charging so just tell me the

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Speaker 2: difference between between the two of them. What does coal

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Speaker 2: get charged at and what does gas get charged at?

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Speaker 3: Yeah, so if you're making a decision to turn on

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Speaker 3: the coal power station there one dollar a ton of

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Speaker 3: carbon equals a dollar per mega what our So carbon

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Speaker 3: is now priced about sixty five dollars, so that lifts

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Speaker 3: the price at which you'd offer that power in it

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Speaker 3: Huntly by sixty five dollars per megawa our, which is

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Speaker 3: a huge amount if you if you're running a large

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Speaker 3: gas fired power station, which is.

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Speaker 1: Not many left now, but that would be a third

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Speaker 1: of that.

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Speaker 3: So that means about forty five dollars per megawa our

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Speaker 3: is simply the insurance cost of coal. Now we don't

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Speaker 3: use much coal in New Zealand. It's down to single

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Speaker 3: digits thanks to g thermal and now wind because it's

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Speaker 3: pushed GFIM was a base load and it's just pushed

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Speaker 3: the Huntly power station off the stack from the two thousands, right,

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Speaker 3: and so now what we just need it for is

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Speaker 3: South Island hydro insurance and there is nothing else you'd

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Speaker 3: need three hundred and fifty million power walls or something

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Speaker 3: like that to be able to do the hydro insurance

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Speaker 3: in the South Island.

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Speaker 1: That's why Cole is the only one to do it.

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Speaker 2: So what would it bring our prices down by?

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Speaker 3: Well, I don't know that all will have to flow

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Speaker 3: through the market, But I've been on both sides of this.

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Speaker 3: I've run Mercury, so I've sold made built power stations

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Speaker 3: and being involved with that, and I've been the COO

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Speaker 3: of Fonterra, which was the second or fourth largest user

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Speaker 3: of electricity and a whole bunch of other energy as well.

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Speaker 1: So I've been on both sides of the market.

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Speaker 3: My view, and having looked at that spot electricity market

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Speaker 3: and rainfall patterns for twelve years when I was at Mercury,

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Speaker 3: I think it'd probably bring it down by tens of

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Speaker 3: dollars per Megawa are on that insurance cost which flows

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Speaker 3: through to the future's curve.

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Speaker 1: Everything prices off the future's curve. Right.

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Speaker 2: If this is the kind of perverse effect that the

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Speaker 2: ETS is having, then should we not just get rid

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Speaker 2: of the ETS altogether?

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Speaker 3: Well, I think the ETS has its has its own

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Speaker 3: origins in place. It's just what we've got at the

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Speaker 3: moment is an unfortunate intersection of the two.

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Speaker 1: We didn't used to.

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Speaker 3: Have this because Gas would be able to come along

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Speaker 3: and compete with Cole, but now Gas isn't able to

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Speaker 3: do that, so we've only got one one thing that

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Speaker 3: can do this, insurance, And so it's just a perverse

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Speaker 3: incentive that's come together by the E test and the

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Speaker 3: spot electricity market and intersecting here. So let's if we

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Speaker 3: just look at the unique drivers of that, then I

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Speaker 3: think we can make it work and keep both markets

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Speaker 3: intact if that's what politically people.

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Speaker 1: Want to do.

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Speaker 2: Listen, I'm sure you've been following this business, the rumors

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Speaker 2: around the Frontier report, which apparently recommends that the government

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Speaker 2: nationalizes thermal generation. Would you do that?

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Speaker 1: Yeah, I don't think that's needed.

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Speaker 3: I think the discipline I went right through six years

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Speaker 3: before Mighty River Power was listed and then where I

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Speaker 3: was running operations and sixties afterwards where our chief executive,

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Speaker 3: and I can tell you the impact of being having

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Speaker 3: the disciplines of the capital markets on performance is and

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Speaker 3: just doing good business is phenomenal.

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Speaker 1: So I think it still needs to.

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Speaker 3: It can stay in private hands, but I do think

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Speaker 3: we need to make it a bit easier for thermal

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Speaker 3: plant like that to run.

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Speaker 1: At the moment, you try building.

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Speaker 3: A coal fired POWERstation, try getting a gas, getting some

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Speaker 3: more gas, things like that. The RMA and the planning

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Speaker 3: rules make it very hard. So then what happens is

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Speaker 3: you say, why isn't the market working? Well, actually, I

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Speaker 3: think it's the beehive because you've taken away coal gas,

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Speaker 3: You've made consenting renewables and everything else extremely hard. And

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Speaker 3: we're still saying, well, why is the market struggling to

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Speaker 3: deal with the winter? Well, actually it's because of the

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Speaker 3: rules that sit around the market, not the market.

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Speaker 2: We read tape strikes again. Hey, thank you Fraser. It's

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Speaker 2: been wonderful to talk to you. I really appreciate your time.

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Speaker 2: That's Fraser Winner R, former Mercury Energy chief executive form

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Speaker 2: of fin Terror COO. And if you want to read

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Speaker 2: the piece that he wrote, it is up on the Herald.

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Speaker 2: You'll have to do a little bit of search. It

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Speaker 2: was there last week, so just go and have a

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Speaker 2: look at it and he explains everything in there.

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Speaker 3: For more from Heather Duplessy Allen Drive, listen live to

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