Meridian Energy hits at new post float low

Waitaki power station, a Meridian Energy asset. New Zealand Herald Photograph/Richard Robinson

Meridian Energy's instalment receipts traded at another post-float low today after a number of factors - including regulatory risk - combined to work against the stock.

By the close of trade the receipts were at 89.5c, down 3c from Wednesday's finish, having earlier hit 88.5c - their lowest point since listing on October 29.

Today's price compares with Meridian's issue price of $1.00 and a post-float high of $1.11, set early in November.

Matt Goodson, managing director at Salt Asset Management, said Meridian and some of the other power generators had been affected by a "confluence" events, among them being uncertainty surrounding the telecommunications networks company, Chorus.

Early in day the Government, after hearing an initial report from consultants Ernst and Young Australia, said it expected Chorus to meet "a significant part" of the shortfall from the rollout of the ultrafast broadband network throughout the country.

This followed revelations last month that the National-led Government did not have support in Parliament to introduce law that would override the Commerce Commission's recommendation to cut wholesale broadband prices.

Shares in Chorus plummeted after it became clear the National-led Government did not have support in Parliament to introduce law that would override the Commerce Commission's recommendation to cut wholesale broadband prices.

Goodson said some stocks had been affected by the amount of cash that had been drained from the market through from a series of initial public offers being undertaken in Australia.

"Secondly, I think the Chorus debacle has - regardless of which party is in power next year - led to a real mistrust regarding the rules of the game," he said.

Meridian and others were starting to price in regulatory and political uncertainty. In the power companies' case, they face the possibility of a change of government next year could mean an end to the wholesale electricity market, which the Labour and Greens parties want to replace with a centralised model.

The generators were also facing poor fundamentals - low wholesale prices and soft demand. In the bond market - a traditional alternative to high dividend-yield utilities - rising yields were also making their presence felt, he said.

Among Meridian's Peer's, shares in Origin Energy controlled Contact Energy were up 3c at $4.73 while Mighty River Power dropped 1c to $1.98. Trustpower closed steady at 6.50.

Chorus finished at $1.38, down 5.5c.