Hydro storage is at average levels and wholesale gas prices were well below the levels seen a year ago, Jarden director of equity research Grant Swanepoel told the Herald last week. "Our work on modelling this stuff says that maybe these prices don't seem to track together."
Contact chief executive Mike Fuge said the prices for futures contracts were "very explainable" with the price of coal more than doubling on a year ago, which along with record prices for carbon, coal was now unlikely to be generated unless wholesale prices reached $180 a megawatt hour.
The electricity sector faces heightened risk of regulatory intervention amid ongoing political concern about high wholesale prices.
On the back of an Electricity Authority report that appeared to blame problems in the wholesale market on a contract between Meridian and the Tiwai Point aluminium smelter late last year, Energy Minister Megan Woods has indicated she may consider intervention.
Fuge said the current prices, a sign of thermal generation becoming more expensive, while painful for some, but were driving more investment in renewable generation.
Contact is building a major new geothermal plant at Tauhara near Taupo, had applied for contents for other geothermal upgrades and had obtained land access rights for around 600MW of wind projects across New Zealand
"We fundamentally think the market is working well, with the right price signals coming through for significant investments in renewable energy. That's a great outcome," chief executive Mike Fuge said.
"We don't want to see an own goal in terms of tipping up market settings, tipping them upside down and you completely ruin the regulatory settings. You add a whole lot to the interest rates that we pay on these projects in terms of sovereign risk.
"That would be a really unfortunate outcome. What's important is that the market responds with new investment."
Contact maintained its interim dividend of 14 cents per share which is partially imputed.
