Forum Archive Index - June 2001

["Tony" <tony@ltdrisk.com>]

Surely Contact's retail customers are a natural hedge for them and it's only
the balance where they can make their money?
Since their operating costs are independent of the spot price they make a
bigger margin (on their exposed position) the higher the spot price.
Indeed, Meridian may control the market, but Contact get the benefit of this
.
tonyDB

disc. had CEN but sold at a loss. would buy again at around $2.35

-----Original Message-----
From: owner-sharechat@sharechat.co.nz
[mailto:owner-sharechat@sharechat.co.nz]On Behalf Of Sam McGregor
Sent: Wednesday, 13 June 2001 14:47
To: sharechat@sharechat.co.nz
Subject: [sharechat] CEN


IMHO Contact Energy will not benefit from the “high” spot prices at the
moment for two reasons: 1.  The are also an electricity retailer, so they
will have to pay the high prices at the other end 2.  Their lake and river
levels are presently low, with forecasts for them remaining so over the
entire winter.  They don’t have  a lot of the cheap hydro power/storage
anyway, most of CEN’s electricity is thermal.

Basically, IMHO Meridian Energy controls the market as they control most of
the country’s hydro storage. Spring flows can be elevated through snowmelt,
but this is a minimal gain not worth worrying about.  If it rains,
Meridian’s lakes will also rise, thereby bringing prices down.  Either way,
Contact can’t win.  Contact has never been able to produce the goods growth
or profit-wise, so I would not advise anybody to buy them at any price.

Disc:  Sold CEN recently, never to buy again

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