Contact Energy warns potential prices drops are 'complicated', despite record profits
The CEO says the purchase of Manawa Energy will help lower costs for businesses fairly quickly, but not automatically for residential customers.
Contact Energy's chief executive, Mike Fuge, has cautioned that potential price reductions for residential customers are complex, despite the company's record profits and increased generation. In its full-year earnings, Contact reported a net profit of $423 million, a significant increase from the previous year. While Fuge believes the acquisition of Manawa Energy and higher renewable energy generation will help lower costs for businesses, he clarified that this won't automatically lead to lower bills for residential customers.
Instead, there will be a potential flattening or reduction in the energy portion of their bills, but transmission and lines charges are expected to increase. Therefore, a delicate balancing act is anticipated over the next year.
Fuge also highlighted a new partnership with data center company CDC to build a 250-megawatt facility near Contact's recently closed Taranaki combined cycle gas power plant. This proposed development could have an IT load of 250MW, with total electricity demand potentially reaching 350MW once ancillary systems are included. New Zealand is considered highly attractive for data centers, ranking alongside Nordic countries like Norway and Sweden due to its abundance of renewable energy, excellent fibre connectivity, and skilled workforce.
Contact Energy emphasized that data centers pay the same electricity prices as other customers, engage with the community, are environmentally responsible, and contribute to grid stability. Fuge argued that if these criteria are met, data centers present a great proposition for the country. The proposal is still in its early stages and requires consents, customers, and financing before any final decisions are made.
Fuge also dismissed Finance Minister Nicola Willis's claim that what is best for gentailers (generator-retailers) in terms of commercial returns is in direct opposition to what is best for the New Zealand economy. He stressed that renewable energy is one of the country's superpowers and presents an opportunity to rebuild the grid through new development opportunities.
Fuge mentioned that the amount of renewable energy potential identified in the country could nearly double the size of the Maui gas field when it was first discovered.
Written by urgent.news from RNZ Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
