Genesis Energy has lost a dispute over carbon costs, knocking its earnings by more than $50 million.
Genesis Energy's Huntly power station. Photo: Genesis Energy
The company had been at odds with Australia's Beach Energy over which company was liable for the carbon costs of gas supplied to Genesis under a long term supply deal.
The dispute went to binding arbitration, which has decided in Beach's favour, which Genesis chief executive Marc England said was "disappointing and unexpected".
"We had high confidence in a positive outcome, but the arbitrator didn't see it our way. We accept the result and will put the disappointment behind us and be even more resolute in delivering on our Future-gen strategy."
Genesis will have to meet the carbon liability for the gas supplied since 2018 and for the remainder of the agreement, which will cost it $53m for the financial year just ended.
It now expected to report operating earnings of $358m, but the reduced earnings were not expected to affect the final dividend payment.
The decision has also increased Genesis' emissions liabilities by about 530,000 NZUs (New Zealand carbon units) for each year to the end of the contract in 2025, which it said it would meet from its stockpile of NZUs.
Genesis said the outcome of the arbitration would not affect its relationship with Beach and their venture in the Kupe field, which Genesis recently confirmed it would keep after a review.
Genesis has been criticised for its increased use of coal, and the resulting emissions, to fire the Huntly power station.
Windfarm
Genesis announced today that it would be partnering with Tilt Renewables on a new wind farm in Northland.
The 19-turbine Kaiwaikawe wind farm would be built near Dargaville. It was expected to generate 230 giggawatt hours of power per year.
Tilt would own and operate the farm and Genesis would purchase all the power produced for 20 years, with the opportunity review the pricing arrangement in a decade's time.
"The Kaiwaikawe wind farm will help us deliver on both the Future-gen targets and our commitment to remove at least 1.2m tonnes of annual carbon emissions by 2025," England said.
The two companies had partnered in a similar way for the Waipipi windfarm in South Taranaki.