Appeal lodged against UTS to re-establish regulatory certainty

14 July 2011

Genesis Energy yesterday lodged an appeal of the Electricity Authority’s decision to declare an Undesirable Trading Situation on 26 March 2011.

The Chairman of Genesis Energy, Rt. Hon. Dame Jenny Shipley said that the Board of Genesis Energy wanted to make it clear that its decision to lodge an appeal was based on ensuring that Genesis Energy and the wider market can have assurance about the nature and scope of the market rules going forward given the uncertainty created by the Authority’s decision. Investment and regulatory certainty was the focus rather than any desire to reset a higher price.

The Chief Executive of Genesis Energy, Albert Brantley said, "There is a clear principle at stake here. We believe the Undesirable Trading Situation decision was wrong in principle and wrong in law. The Authority’s decision alters the ground rules going forward for all market participants in a significant but uncertain way, and the decision lowers the bar for declaring a UTS.

"The UTS decision if allowed to stand would simply reward businesses who make poor commercial decisions about exposure to the wholesale spot prices, while at the same time penalising a number of supply and demand side participants who take prudent action in response to market signals to manage their commercial risks."

Although the Electricity Authority found that high prices alone are insufficient to establish a UTS (consistent with the fact that there are no price caps in the market) and that Genesis Energy had not breached any law or engaged in misleading or manipulative conduct, the Authority nonetheless found a UTS existed. Genesis Energy considers that a finding that normal and appropriate market conduct can nevertheless be considered a UTS undermines market certainty.

For more information contact:
Richard Gordon
Public Affairs Manager
Genesis Energy
P: 09 580 4782
M: 021 681 305