NZX gets high profile backing

The New Zealand Exchange has won a key ally in its bid to run the country's $NZ2 billion wholesale electricity market.
NZX gets high profile backing NZX gets high profile backing NZX gets high profile backing NZX gets high profile backing NZX gets high profile backing

TrustPower chief executive Keith Tempest is reported as saying that the exchange's contacts and experience in financial markets put it in a better position than incumbent operator M-Co to develop the market.

Most in the industry, including Tempest, want the market operator to offer futures contracts, which would allow businesses to offset the financial risk of the sometimes wild fluctuations in wholesale spot power prices. M-Co currently is not involved in financial markets.

M-Co, which is backing a rival share exchange known as Unlisted, has declined to comment. Unlisted, which is owned by South Africa's Rand Merchant Bank, generates an estimated $14 million in annual sales from its Kiwi electricity operations.

NZX confirmed its bid for the NZ market last Thursday, claiming it could save big generators and power supply companies as much as $NZ4 million a year.

It has told the Electricity Commission, which is discussing whether to renew M-Co's contract or not, that it wants to take over in the New Year. Commission chairman Roy Hemmingway has promised NZX will get a fair hearing, but says the commission already faces a tight timetable establishing new market rules without having to factor in a new system operator.

Hemmingway is reported as saying the newly-established commission wanted the flexibility to change service providers quickly and efficiently and to ensure that in the long-term the market functioned properly.