1 00:00:00,360 --> 00:00:02,480 Speaker 1: Now the government is facing some heat over its plans 2 00:00:02,480 --> 00:00:04,680 Speaker 1: for an allergy import terminal at a cost of more 3 00:00:04,720 --> 00:00:07,600 Speaker 1: than a billion dollars. Now, what you may not realize 4 00:00:07,640 --> 00:00:10,800 Speaker 1: is the major power retailers considered building this terminal themselves 5 00:00:10,880 --> 00:00:12,960 Speaker 1: last year and decided not to, and among them was 6 00:00:12,960 --> 00:00:15,800 Speaker 1: Mercury Energy Chief executive Steu Hamilton is with us now 7 00:00:16,160 --> 00:00:19,079 Speaker 1: to good evening, Why do you guys decide not to 8 00:00:19,120 --> 00:00:19,400 Speaker 1: do it? 9 00:00:20,680 --> 00:00:23,440 Speaker 2: For us, it's really making sure that we've got multiple 10 00:00:23,440 --> 00:00:26,080 Speaker 2: solutions in place to support the resilience of the greadful 11 00:00:26,120 --> 00:00:28,880 Speaker 2: New Zealanders. And so at the time, we were investigating 12 00:00:28,880 --> 00:00:30,920 Speaker 2: a number of those options. One of those is to 13 00:00:30,960 --> 00:00:33,120 Speaker 2: keep building power plants as fast as we can, which 14 00:00:33,120 --> 00:00:35,479 Speaker 2: we're doing. The other Oni was with the Huntley firming options. 15 00:00:35,560 --> 00:00:37,839 Speaker 2: So for us, we felt we'd explore a number of 16 00:00:37,840 --> 00:00:40,560 Speaker 2: those options and had some of them in train already. 17 00:00:40,400 --> 00:00:43,280 Speaker 1: So you guys went with the Huntly firming the coal 18 00:00:43,720 --> 00:00:45,000 Speaker 1: instead of the gas import. 19 00:00:45,920 --> 00:00:48,280 Speaker 2: Yeah, we think there's a number of options which I needed. 20 00:00:48,320 --> 00:00:50,680 Speaker 2: Hunt many firming options with coal is one of those 21 00:00:51,200 --> 00:00:54,800 Speaker 2: using demand response from other users like the to iPoint 22 00:00:54,840 --> 00:00:57,120 Speaker 2: elemensvelt Or as a key part of the solution. And 23 00:00:57,160 --> 00:00:59,360 Speaker 2: then for us, we thought that we could put our 24 00:00:59,400 --> 00:01:01,960 Speaker 2: best use our capital and place to build things like 25 00:01:02,000 --> 00:01:03,800 Speaker 2: wind farms and g thermal power stations. 26 00:01:03,920 --> 00:01:06,280 Speaker 1: And let me get this right, but the project that 27 00:01:06,319 --> 00:01:08,440 Speaker 1: you had looked at would have cost about two hundred 28 00:01:08,560 --> 00:01:10,959 Speaker 1: to five hundred million dollars, right, and you turned that 29 00:01:11,200 --> 00:01:13,920 Speaker 1: down at that cost. The government is looking at something 30 00:01:14,000 --> 00:01:15,280 Speaker 1: costing more than double that. 31 00:01:16,840 --> 00:01:19,679 Speaker 2: Yes, so it definitely no doubt that it's a tough 32 00:01:19,680 --> 00:01:21,920 Speaker 2: period for New Zealand right in terms of cost and 33 00:01:22,120 --> 00:01:25,080 Speaker 2: that shows up for households in for businesses equally. So 34 00:01:25,319 --> 00:01:27,000 Speaker 2: we need to make sure that what we're investing our 35 00:01:27,000 --> 00:01:29,840 Speaker 2: money in is best for not only our owners but 36 00:01:29,840 --> 00:01:31,560 Speaker 2: also consumers and our customers. 37 00:01:31,800 --> 00:01:34,800 Speaker 1: Why doesn't the country just go with the coal at 38 00:01:34,880 --> 00:01:35,840 Speaker 1: Huntley instead of this? 39 00:01:37,080 --> 00:01:39,640 Speaker 2: I think that what's being talked about so Huntley is 40 00:01:39,760 --> 00:01:41,640 Speaker 2: a form of a solution, but it doesn't solve the 41 00:01:41,640 --> 00:01:44,000 Speaker 2: whole problem. So when we get to dry years, because 42 00:01:44,120 --> 00:01:46,720 Speaker 2: it's really what we're looking at is the dry years 43 00:01:46,760 --> 00:01:49,240 Speaker 2: it exists with, we're missing some energy in New Zealand 44 00:01:49,280 --> 00:01:52,200 Speaker 2: and Huntley provides about half of that and at the 45 00:01:52,200 --> 00:01:54,560 Speaker 2: moment gas provides a portion of it as well, but 46 00:01:54,600 --> 00:01:56,840 Speaker 2: the sort of looking out into the long term, as 47 00:01:56,880 --> 00:01:59,560 Speaker 2: gas in New Zealand does dive away, there is a 48 00:01:59,600 --> 00:02:01,160 Speaker 2: need for other forms of solutions. 49 00:02:01,320 --> 00:02:03,720 Speaker 1: I can't this. Why can't we get Huntly to do 50 00:02:03,800 --> 00:02:04,240 Speaker 1: all of it? 51 00:02:05,680 --> 00:02:09,640 Speaker 2: Well? It potentially so coal provides Summer Huntly power, but 52 00:02:09,760 --> 00:02:13,480 Speaker 2: gas is necessary for another part of Huntley's generation. So 53 00:02:13,800 --> 00:02:16,120 Speaker 2: gas is still needed to keep Summer Huntly going. 54 00:02:16,480 --> 00:02:18,359 Speaker 1: But why don't we let Cole do all of it 55 00:02:18,440 --> 00:02:20,760 Speaker 1: instead of building a billion dollar terminal and bringing in 56 00:02:20,800 --> 00:02:22,720 Speaker 1: gas to do some of it. 57 00:02:22,720 --> 00:02:25,160 Speaker 2: It's a great question. So there is actually a number 58 00:02:25,160 --> 00:02:27,600 Speaker 2: of solutions which I need and coal is part of 59 00:02:27,600 --> 00:02:30,320 Speaker 2: that solution. But ultimately we sort of when we sat 60 00:02:30,320 --> 00:02:32,120 Speaker 2: down and looked at it, we worked out or actually, 61 00:02:32,160 --> 00:02:33,880 Speaker 2: the best thing we can do as a company for 62 00:02:34,000 --> 00:02:36,880 Speaker 2: Mercury As is to build gfm or and build wind farms, 63 00:02:36,919 --> 00:02:38,280 Speaker 2: and that's what we're doing. Stull. 64 00:02:39,200 --> 00:02:41,360 Speaker 1: Isn't the truth that New Zealand is running out of 65 00:02:41,400 --> 00:02:44,320 Speaker 1: gas and it will only be sped up when Methodex 66 00:02:44,360 --> 00:02:46,800 Speaker 1: finally closes and the drilling maintenance stops and stuff. Look, 67 00:02:46,840 --> 00:02:48,520 Speaker 1: we are going to run out of gas faster than 68 00:02:48,520 --> 00:02:50,520 Speaker 1: a lot of people realize. And actually what we need 69 00:02:50,560 --> 00:02:53,440 Speaker 1: to do is get everybody off gas. Isn't that the truth? 70 00:02:54,520 --> 00:02:56,720 Speaker 2: Yeah, we are definitely running out of gas, and it's 71 00:02:56,720 --> 00:02:58,520 Speaker 2: happening at at a rate that was faster than what 72 00:02:58,560 --> 00:03:01,080 Speaker 2: we expected, and so we need to do a few things. 73 00:03:01,080 --> 00:03:04,560 Speaker 2: One is, we need to encourage consumers and households to 74 00:03:04,600 --> 00:03:08,040 Speaker 2: get off gas. But not all forms of businesses, for example, 75 00:03:08,040 --> 00:03:10,040 Speaker 2: can get off gas, so we need to come up 76 00:03:10,040 --> 00:03:12,440 Speaker 2: with other forms of energy for them. So, yes, you're right, 77 00:03:12,680 --> 00:03:15,800 Speaker 2: we definitely need need to encourage that transition away from gas. 78 00:03:16,000 --> 00:03:18,359 Speaker 2: But equally we need to be building power stations as well. 79 00:03:18,440 --> 00:03:21,360 Speaker 1: Yeah, totally. But so if we accept that we're running 80 00:03:21,400 --> 00:03:23,639 Speaker 1: out of gas and we need to get off gas, 81 00:03:23,680 --> 00:03:27,760 Speaker 1: then this is just a really expensive way of basically 82 00:03:27,760 --> 00:03:30,040 Speaker 1: subsidizing the industries that are still on gas. Is that 83 00:03:30,080 --> 00:03:30,440 Speaker 1: not right? 84 00:03:31,040 --> 00:03:34,040 Speaker 2: It is a cost. You're right. Actually, to put this 85 00:03:34,120 --> 00:03:36,960 Speaker 2: project in place will require and Zillan to invest in this. 86 00:03:37,440 --> 00:03:41,080 Speaker 2: What is an effect in insurance. Really it's put in 87 00:03:41,120 --> 00:03:44,280 Speaker 2: place with the expectation that it's there for a dry year. 88 00:03:45,040 --> 00:03:46,960 Speaker 2: That reduces the risk, and I guess in the long 89 00:03:47,040 --> 00:03:49,440 Speaker 2: term should be looking at reducing price. But it is 90 00:03:49,880 --> 00:03:53,320 Speaker 2: a cost to invest in that plant upfront, STU, is this. 91 00:03:53,280 --> 00:03:55,200 Speaker 1: Going to bring down if this all goes to plan, 92 00:03:55,280 --> 00:03:56,800 Speaker 1: will it bring down our power prices? 93 00:03:58,360 --> 00:04:01,080 Speaker 2: I think in the short term the moment currently, most 94 00:04:01,120 --> 00:04:03,800 Speaker 2: of the price increases that households are seen actually due 95 00:04:03,840 --> 00:04:07,440 Speaker 2: to investment and power lines and transmission. So actually not 96 00:04:07,640 --> 00:04:09,880 Speaker 2: much of it is due to wholesale power prices. So 97 00:04:10,400 --> 00:04:12,640 Speaker 2: in the short term, that's where the cost is coming from. 98 00:04:12,680 --> 00:04:15,320 Speaker 2: In the medium term, as I mentioned, there's there's some 99 00:04:15,480 --> 00:04:18,480 Speaker 2: investment needed in this power plant or in this lergy 100 00:04:18,560 --> 00:04:21,599 Speaker 2: import facility. But in the long term, it should cap 101 00:04:21,920 --> 00:04:24,279 Speaker 2: the prices that New Zealander to see in dry periods. 102 00:04:24,279 --> 00:04:26,800 Speaker 2: And I guess what that means is that prices should 103 00:04:26,800 --> 00:04:28,680 Speaker 2: go up less than they will if. 104 00:04:28,560 --> 00:04:29,880 Speaker 1: They're not coming down, they're just not going to go 105 00:04:29,920 --> 00:04:32,320 Speaker 1: up as fast the levy. You're going to pass it 106 00:04:32,360 --> 00:04:33,520 Speaker 1: on to us, we are, you guys going to suck 107 00:04:33,560 --> 00:04:33,840 Speaker 1: it up. 108 00:04:35,160 --> 00:04:36,640 Speaker 2: It's a bit early for us to really work out 109 00:04:36,640 --> 00:04:39,520 Speaker 2: what the details look like. Ultimately, when you work out. 110 00:04:39,960 --> 00:04:41,800 Speaker 1: Around long enough, the way to know how it. 111 00:04:41,800 --> 00:04:44,919 Speaker 2: Works is it's a cost for New zeal right, So 112 00:04:45,040 --> 00:04:47,040 Speaker 2: somehow we need to be working out how we're going 113 00:04:47,080 --> 00:04:49,640 Speaker 2: to invest in this in this facility and how that 114 00:04:49,680 --> 00:04:51,280 Speaker 2: shows up through the consumers. 115 00:04:51,560 --> 00:04:53,680 Speaker 1: It's always lovely to have your your time. I really 116 00:04:53,720 --> 00:04:56,400 Speaker 1: appreciate it. Stew Hamilton, Mercury and a G Chief executive. 117 00:04:56,960 --> 00:05:00,159 Speaker 1: For more from Hither Duplessy Allen Drive, listen live to 118 00:05:00,240 --> 00:05:03,239 Speaker 1: news talks it'd be from four pm weekdays, or follow 119 00:05:03,279 --> 00:05:05,000 Speaker 1: the podcast on iHeartRadio.