The head of Genesis Energy says he cannot yet tell Kiwis how much a new billion-dollar liquefied natural gas (LNG) import terminal will add to their power bills, but suggested households will ultimately play a part in paying for it.
The Government wants to sign a contract for the terminal – a facility which can receive, store, and regasify liquefied natural gas to be 'sent out' into the transmission network – before the end of this parliamentary term, funded through a user-pays model.
Speaking to Q+A, chief executive Malcolm Johns was asked repeatedly how much bills would rise once the terminal was built and Genesis was buying LNG.
"It's not an answer I can give you right now," Johns said, asked about a specific price rise.
"Ultimately, that procurement process belongs to the Government, and you really need to be speaking to them about that procurement process."
But he suggested the costs would effectively flow through to his customer base if Genesis bought LNG through the Government's proposed user pays model.
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"Just like power line charges, obviously we have to recover them. We can't absorb them," he said, adding that cost recovery had to come "through revenues that companies earn".
"We sell electricity to households, to small businesses, to large businesses right across New Zealand."
The comments come as Genesis reports a 14% increase in operating earnings while retail power bills for households have risen again this year despite wholesale prices falling.
The gentailers – firms that both generate and sell power – are under pressure from at least two parties, NZ First and the Greens, who want them broken up.
Johns was asked what he believed a forced split of Genesis's generation and retail arms would entail. He said 10 independent reviews over two decades had found no evidence that structural separation would lower prices.
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"We smooth prices out over the long term, and electricity is a weather-driven energy system. So when it rains, when it blows, and when the sun's out, is largely determined by the weather. That makes electricity a very volatile energy system," he said.
"The vertically integrated model holds the risk of that at the back of the system and away from consumers and businesses.
"In 2024, when we had the gas shortage and we had the dry year and we had low wind periods, you saw the gentailers lose hundreds of millions of dollars.
"That was because we were managing that risk in the back of the of the system.
"If you structurally separate that system in order to attract investors into investing in generation assets, you have to push that risk to the front of the system, so that means energy bills will become more volatile."
For the full interview, watch the video above
Q+A with Jack Tame is made with the support of New Zealand On Air
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