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Speaker 1: It sounds like we may well be actually looking at

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Speaker 1: the possibility of building another coal fired power plant to

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Speaker 1: replace Huntley, because it's going to die in the next

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Speaker 1: five to ten years. Seventeen past six Michael Luke, Milford

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Speaker 1: Asset Management is with us A Michael, Michael, are you there?

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Speaker 2: Yep, hey, thanks Jane good.

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Speaker 1: Oh, I'm well, thank you and pleased to be able

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Speaker 1: to hear you now. Michael took me through this. How

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Speaker 1: the market react to the government's electricity review.

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Speaker 2: Well, the share prices of our electricity companies rerected positively today.

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Speaker 2: Meridian rose the most, up nearly five percent, while Contact

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Speaker 2: Metcrean Genesis were up about one or two percent. Now,

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Speaker 2: that reflects a bit of a relief really in my view,

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Speaker 2: where there had been a bit of uncertainly hanging over

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Speaker 2: the sector for the past six months as investors waited

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Speaker 2: for the outcome of the Frontier Report and the government review.

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Speaker 2: I think investors are broadly supportive of initiatives aimed at

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Speaker 2: increasing and speeding up investment and energy. However, there had

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Speaker 2: been a bit of concern around the risk and the

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Speaker 2: impact of a major intervention like separation, which had seen

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Speaker 2: some caution from both international and domestic investors. Meridian was

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Speaker 2: the strongest, reflecting two things in my view. Firstly, an

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Speaker 2: energy import facility could reduce altricity prices during dry years,

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Speaker 2: which did impact Meridian a lot last year. And then secondly,

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Speaker 2: as the largest electricity company, Meridian has traditionally had the

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Speaker 2: most overseas ownership, so it was likely impacted the most

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Speaker 2: by international investor concerns around the government government review, which

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Speaker 2: have now eased.

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Speaker 1: What did you make of the government allowing the gentailers

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Speaker 1: to raise capital?

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Speaker 2: Well, well, I don't think the government had ever explicitly

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Speaker 2: said they couldn't raise capital. There has definitely been a

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Speaker 2: bit of a perception in the market over the last

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Speaker 2: decade as the gentailers couldn't raise capital without a commitment

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Speaker 2: from the government, as they couldn't delete their fifty one

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Speaker 2: percent stakes. Now I'm not sure it's been a major constraint,

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Speaker 2: but it would have been our constraints because the gintailers

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Speaker 2: have to balance their development pipelines, their debt and their

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Speaker 2: dividend policies, and if you have uncertainty around the ability

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Speaker 2: to raise equity, that does mean you have to be

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Speaker 2: a bit more conservative in those other settings. I think

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Speaker 2: that was probably particularly hard to manage when there was

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Speaker 2: a risk of the TI smelter closing a few years ago,

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Speaker 2: which would have impacted the sector. And I think Contec

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Speaker 2: Energy has actually had a bit of an advantage here

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Speaker 2: where Contact is the only listed GIN tailor without government ownership.

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Speaker 2: They've been able to be a bit more aggressive maybe

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Speaker 2: in their development activity, and that included raising four hundred

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Speaker 2: mill from investors back in twenty twenty one to build

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Speaker 2: a geofirm or power station. So investors have been happy

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Speaker 2: to support raisers to fund good venewable energy projects and overall,

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Speaker 2: I think it does provide a bit of flexibility on

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Speaker 2: how these ultrusted companies fund their development pipelines going forward,

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Speaker 2: which is welcome.

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Speaker 1: Yeah. Do you think investors now have more certain.

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Speaker 2: Well, I think investors now know what to expect from

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Speaker 2: the current coalition, but that would change if there was

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Speaker 2: a change in government. There are also still questions on

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Speaker 2: how the industry solves our gas shortage as well as

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Speaker 2: dry year risk, so investors will continue to watch the

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Speaker 2: gas market and the LNG terminal procurement process. Ultimately, I

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Speaker 2: think it's fair to say there is more sendency for now,

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Speaker 2: but investors could still be cautious next year heading into

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Speaker 2: the election.

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Speaker 1: Yeah, and hey Michael, Thanks as always, Michael Luke, Wilford,

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Speaker 1: ASCIDT Management. For more from Heather Duplessy Allen Drive, listen

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