...We expect Genesis Energy Ltd. to remain as the country's largest electricity and gas retailer. Genesis Energy benefits from its position as one of the four large vertically integrated players in New Zealand. The company has a generation share of about 16% and retail share of about 25% in the country. That said, retail competition continues to remain high, limiting prospects for increases in retail tariffs. Volatility in hydrology conditions and global commodity prices will continue to affect Genesis Energy's earnings. Genesis Energy is somewhat different from its peers given its skew toward thermal generation, and therefore, its sensitivity to hydrology conditions. Under dry hydrology conditions, the company's portfolio would reasonably be more profitable than peers', while under wet hydro conditions, its profitability would remain depressed. However, its retail operations serve as a natural hedge to ensure that there is no significant impact under all conditions. Also, through its interest...
