The rating on Genesis Power Ltd. (trading as Genesis Energy) reflects our opinion of the company's position as a major integrated electricity generator and retailer in New Zealand. Genesis Energy's reasonably diversified generation portfolio and its 100% ownership by the government of New Zealand (local currency AA+/Stable/A-1+, foreign currency AA/Stable/A-1+) also support the rating. The company's weakening competitive position following the implementation of New Zealand's emissions trading scheme (ETS) since July 2010 partly offsets these strengths. However, this weakness has been relatively softened by the recent announcement to extend the ETS transitional arrangements beyond 2012. Other credit weaknesses include Genesis Energy's exposure to a volatile wholesale electricity market, and its sensitivity to oil price volatility due to its 31% equity
