Genesis Energy Limited · NZX:GNE
Genesis Energy — genesis submission on ets auction rules
15 slides from Genesis Energy's investor presentation, Dec 19, 2019
Slide 1: Reforming the New Zealand Emissions Trading Scheme - Rules for Auctioning
Genesis Energy Limited 19 December 2019 The Genesis Energy Building 660 Great South Road PO Box 17-188 Greenlane Auckland 1051 Ministry for the Environment New Zealand PO Box 10362 T. 09 580 2094 WELLINGTON 6143 By email: etsconsultation@mfe.govt.nz Reforming the New Zealand Emissions Trading Scheme
Slide 2: Market Governance and Summary
experiences engaging with the ETS, and the primary and secondary markets for emission units; and confidence in the auction system and primary markets are established. Applying these principles to the proposal, we firmly believe, for example, that: • Auctions should be held quarterly, with consistent
Slide 3: Contact details and sign-off
Please don’t hesitate to contact me by email: warwick.williams@genesisenergy.co.nz or by phone: 09 951 9299, should you wish to discuss any of the matters in this submission further. Yours sincerely Warwick Williams Senior Regulatory Counsel | Group Insurance Manager Genesis Energy submission on ETS
Slide 4: Schedule: Response to Consultation Questions
SCHEDULE RESPONSE TO CONSULTATION QUESTIONS Question Comment 1 Do you agree that auction While we can see some advantage in shaping volume across the year to match anticipated demand volumes should be evenly particularly closer to the annual ETS surrender date, this adds considerable complexity (inc
Slide 5: Responses on unsold units and auction volumes
‒ All added to the next If the volume has not cleared, this suggests a weak market for units and the volume may not clear in auction subsequent auctions, flooding the market with volume when the market doesn’t want it, putting downward ‒ Added to subsequent pressure on price and sending the wrong pr
Slide 6: Responses on bidding window and reserve auctions
Please consider both monthly and quarterly auction scenarios. 7 Do you agree that the Yes. A morning auction window would facilitate payment processes following the auction, and minimise bidding window should be three any potential disruption to secondary markets. While this may impact international
Slide 7: Responses on reserve units and price trigger
use to meet surrender If, however, Option 2 is selected, we strongly recommend that the units are not limited for use in meeting obligations? surrender obligations or required to be surrendered by a specified deadline. This introduces a significant ‒ Yes amount of administrative and monitoring compl
Slide 8: Responses on intention to bid forms and collateral
We also agree that participants should – through the intention to bid forms – reconfirm / update the information and undertakings given at registration. In relation to the information provided, we consider that bidders specific whether they are ETS obligation or non-obligation bidders irrespective o
Slide 9: Responses on forms and timing of collateral
‒ 100 per cent of the maximum bid value ‒ A flat rate payment, please specify amount ‒ Other, please specify 16 What forms of collateral Cash should be accepted? Bank guarantee ‒ Cash Irrevocable letter of credit ‒ Bank guarantee ‒ Irrevocable letter of credit For cash collateral, this should be app
Slide 10: Responses on collateral return and lot sizes
19 Do you agree that bidders Yes, cash collateral not applied to purchase units should be automatically returned. Other forms of should be able to choose to collateral should be returned at the request of the relevant bidder. have their collateral automatically returned, released at their request, o
Slide 11: Responses on price increments and bid limits
‒ $0.05 (preferred) ‒ $0.10 ‒ Other, please specify 23 Do you think a maximum Yes, otherwise there is a risk that a bidder can corner or manipulate the market. bid limit should be set? ‒ Yes ‒ No ‒ Unsure 24 If set, should the The maximum bid limit should apply to all bids made by related participan
Slide 12: Responses on reserve price and published results
27 Do you agree that a No. technical reserve price should be set for auctions? ‒ Yes ‒ No ‒ Unsure 28 If a technical reserve Yes. price is set, do you agree that the methodology for calculating the price be kept confidential? ‒ Yes ‒ No ‒ Unsure 29 What results should the Clearing price auction oper
Slide 13: Responses on settlement and monitor reporting
‒ Total number of bidders and the number of successful bidders ‒ Number of unsold units, if any ‒ Other, please specify 30 What is the best Payment before delivery. approach for settlement of successful bids? ‒ Payment before delivery (preferred) ‒ Delivery versus payment ‒ Other, please specify 31
Slide 14: Responses on monitor report information
number of bids submitted, number of successful bids) ‒ Relevant aggregate information (eg, largest bids as percentage of total volumes sold, percent of volumes awarded to entities with mandatory obligations) ‒ Relevant distributional information (eg, number of units awarded to which winner, with bid
Slide 15: Responses on review frequency and other comments
for you with respect to commercially sensitive information. 35 How often do you think After one year initially, then every three years thereafter. For the reasons discussed earlier, it is important the auction monitor should that there are regular reviews to ensure that the auction system is able to