Forum Archive Index - December 2000

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

>
> Any ideas why NCH is sitting in about $1.33, must be good buying in
> what I thought would be a safe stock?
> 
No idea, unless of course you factor in:

1/They have just bought Transalta and paid to much for the customer 
base (above fair value in the Grant Samuel report on the issue). 
2/Transalta have alienated some of their bigger customers by not 
matching the cherry picking power rates offered by their competitors.
Then after losing their bigger customers Transalta proceeded to 
alienate their smaller customers by massively increasing the fixed 
charges.  That doesn't leave too many happy customers left!
3/As a result of 2/ huge numbers of customers have been switching 
away from Transalta.   Here in Christchurch Meridian Energy,for 
instance, had a three month moratorium on new customers as they were 
getting so many requests for change they just couldn't cope.
4/ Tranalta's much touted centralizing of the call centre in 
Christchurch hasn't worked.   They haven't got the efficiency gains 
promised, with long delays (over 45 minutes on the end of the phone 
being the norm).  I believe this is fixed now though.
5/ There have been more complaints to 'Consumer' about power 
companies than any other business sector (including banks!) with 
Transalta's slow switching of customers often wrongly rubbing off as 
poor service by their competitors.  In fact the competitors are often
just waiting for information from Transalta, and this is causing the 
problems.   As a result Tranalta has possibly the worst reputation 
for customer service of any business in New Zealand.
6/ There seemed to be problems with the new 
'national' billing system.  As a personal example they told me I 
hadn't paid a bill that I had, and it took three phone calls and four 
months to sort it out.  They also alienated customers by changing 
terms of the discount for prompt payment without telling customers.
7/ They have a huge rebranding exercise to undertake as come the end 
of March they will no longer be able to use the goodwill of the 
Transalta name (sic) without paying huge royalty fees. 
8/ There is a mismatch between Transalta's generating capacity and 
and the power load generated by Transalta's generating assets.   This 
means they must rely on the notoriously fickle traders market in 
electricity to service their customer's needs.   So profitability is 
unpredictable.   The unexpectedly warm winter and full hydro lakes 
might mean that they have hedged the price they have paid for power 
too high.

But apart from that, I really have no idea. SNOOPY




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