During the past year, Meridian Energy achieved the combined milestones of negotiating a new power supply agreement with its biggest customer and listing on the New Zealand and Australian stock exchanges.
The business says the new agreement with the Tiwai Point aluminium smelter, the country’s biggest electricity consumer, was important for the greater certainty it provided Meridian and the industry.
Negotiations were intense, and conducted amidst great media scrutiny. But Meridian says the final agreement put the company in a stronger position overall in exchange for lower contracted power prices for the smelter.
Completing the new agreement was a key element for a successful float, but Meridian says the initial public offer had its own challenges.
The instalment receipt structure had not been used in New Zealand for many years. Investors outside New Zealand also had to be educated about the special features of the firm’s entirely renewable generation portfolio and how the firm profitably manages the variability of its hydro and wind production.
Despite those complexities, the offer received high interest from retail and institutional investors, requiring scaling in both the broker firm and general public pools.
Meridian says the company had to complete those two milestone events while keeping the business on track in an environment of increased retail competition.
Ahead of forecast
As of December 2013, the company was tracking ahead of its prospectus forecast. First-half underlying net profit of $83 million was nearly 28 per cent higher than the firm’s internal half-year split on the prospectus target.
The result was assisted by high inflows, but also reflected good cost control and an increase in the firm’s retail customer book.
Customer numbers across both the Meridian brand and the firm’s online Powershop business increased by 2 per cent in the six months to December.
The company has restructured its retail team during the past year to sharpen its offering of plans and products. It is also working to help customers manage their usage and costs.
As part of that strategy, the company trialled personalised smart plans on the Orion network in Christchurch. Early results from the trial, which includes an element of online engagement, showed customer churn fell significantly compared with users on the company’s published plans.
Innovation has also continued at Powershop, which became the first energy company in the world to launch a full service smart app for mobile services.
The new service is reducing costs for users and has also lowered Powershop’s cost-to-serve and customer acquisition costs.
The new app is now also being used in Australia, where Powershop officially launched in November. It now has amassed about 10,000 customers in Victoria, who are being served from the company’s call centre in Masterton.
The Overall Energy Company of the Year category is sponsored by Port Taranaki