Energy firms must adapt quickly in face of global competition, warns Genesis boss Marc England

The Huntly Power Station is Genesis Energy's biggest generating asset. Photo / Christine Cornege

Genesis Energy's chief executive Marc England says the company must adapt to the changing energy market where New Zealand firms will face competition from overseas.

England said energy management would be a be big focus for his company as energy prices remained flat, or under some scenarios, fell.

'We're preparing for a world where wholesale prices may actually fall - with solar panels and battery storage there's the biggest change to our industry since the light bulb was invented," he said.

There was a fundamental shift in the business model evolving.

"The whole industry has been built on moving power from large sources of generation down poles and wires to communities, all in one direction. As soon as you can put distributed generation in a home or business, you multiply the number of choices for consumers," said England who has been in the top job at Genesis for six months.

He has previously held senior management roles with AGL, British Gas and Ford Europe.
Genesis has 26 per cent of the market and the biggest customer base. It has around 550,000 electricity consumers plus another 90,000 with subsidiary Energy Online and about 37 per cent of the piped gas market.

"With the largest customer base we have the biggest opportunity to use it - it's ours to lose."

England said the former state owned enterprise's best future was in becoming an integrated energy management business.

"We're moving away from just being a gentailer. It doesn't matter what the fuel, we'll help you manage your needs in your home or your business - bottled gas that can tell how full, to putting solar on your roof."

He said it was not a cents per kilowatt hour future but a dollars per month management fee to make help consumers best manage their energy, and engage them.

But the energy management business would open his company and others to competition from overseas.

"We've been heavily regulated with high barriers to entry but technology is breaking down the barriers - businesses with a much bigger consumer mindset know how to attract consumers. There's the threat from Google, Apple, Australian utilities that have scale."

He also said companies shouldn't get hung up on discounts.

"One of the flaws in our model today is that we don't have enduring relationships. Consumers could switch tomorrow, they have no loyalty," said England.

"One of the problems we have is that as an industry we've become addicted to rewarding promiscuity. We reward you for switching by offering you a discount - we don't reward you for your loyalty, so we need to turn that on its head."

England said Genesis' customer churn rates were below the national average of around 21 per cent.

"I see competition as a good thing but churn is a reflection of unhappiness. We've got to be careful as an industry where too many choices have a cost."

He said customers offered deals to move by rivals were in the past offered a discount to stay but that was changing.

"Today we're much more value focused - we can look at a customer and ask, is it worth keeping them."

Last month Genesis paid $168 million to increase its stake in the Kupe gas field from 31 per cent to 46 per cent.

He said this would give the company more flexibility to fuel its Huntly power station, a bigger say in how the field was run and the opportunity to develop its bottled gas business.

Genesis estimates the acquisition will lift pretax earnings by $15 million and net profit by $2 million in the 2017 financial year - and the additional cash flow will help it to keep imputing dividends at the current 80 per cent level.