MRP rejects carbon farmer's carbon unit top-up claim 26 Nov 2014
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- Actions For Young Driver Safety Get Green Light News
- NZ economy expands at fastest pace in two years Business
MRP rejects carbon farmer's carbon unit top-up claim, court hears
By Fiona Rotherham
Nov. 26 (BusinessDesk) - MightyRiverPower has claimed in the High Court it shouldn’t have to pay for carbon units issued for years prior to the start of its contract with New Zealand Carbon Farming in 2013, which it entered as part of its effort to offset emissions from electricity generation.
New Zealand Carbon Farming, the country’s largest supplier of post-1989 bulk carbon credits, began a case in the High Court in Auckland on Monday, suing MRP for $34.7 million over liability for carbon credits the listed energy company was contracted to buy.
The 15-year contract for carbon units from NZCF’s Hawarden forest in North Canterbury ran from 2013 to 2027 and is one of 10 long-term agreements in which MRP has to meet its surrender obligations under the emissions trading scheme (ETS).
Minimum and maximum volumes for the contract were worked out under the 'Look Up Tables methodology' in force when the contract was signed in January 2012. But new methodology the government later introduced – the 'Field Measurement Approach' (FMA) – had a significant financial impact, potentially near doubling the cost of the 15-year contract from $36.6 million to $71.27 million – a difference of $34.67 million.
MRP is contesting the claim which would mean it would have to buy significantly more carbon units from the supplier than was originally forecast, because the contract included a pro-rata scale-up-or-down clause if the amount of carbon sinks produced by the forest was altered under new methodology.
Pleadings just released by the parties after volumes and prices per unit were kept confidential show NZCF received a number of wash-up credits when it filed a mandatory emissions return in 2013 as required every five years under the ETS.
While both parties knew and had modelled estimates on the carbon units likely from the forest under the new methodology, MRP told the court it was only required to purchase units transferred to NZCF for the calendar year preceding the March 1, 2013, delivery date, and was not required to purchase additional wash up units for other years. It’s understood NZCF’s standard carbon supply contracts don’t include that clause.
Phil Gibson, MRP’s GM hydro wholesale responsible for its carbon emissions obligations, told the court today he would not have recommended the energy company sign the contract on the basis now being claimed.
“MRP doesn’t need the extra units and had sufficient security if prices rose as expected at the time of signing,” he said.
But NZCF’s scale-up clause states the contractual volume change occurs “for and from the calendar year in which such amendment takes effect,” it said in its written pleading.
MRP paid the bill in March 2013 for the contract without realising it included what it called “stale units” unrelated to the actual forest carbon units for 2012.
Once it learnt mid-year of NZCF’s intention to also invoke the scale-up clause, things turned sour. MRP then set off the disputed $425,000 from NZCF’s March 1, 2014, bill, and is contesting a further $6.3 million invoice NZCF wants to charge for the top-up under the scale.
Professor Bruce Manly, an expert on forest measurement from the University of Canterbury, told the court there had been general understanding from 2010 of what the new FMA methodology would be and he staged workshops nationwide in 2010 and 2011 on what to expect.
He said that the expert NZCF used for its estimates on the forests had made a mistake at one point in mid-2012 that set the amount of likely carbon units too high and created unreal expectations over what it could deliver. These were later reduced.
MPR had done its own modelling estimates in order to have some comfort over the ranges included in the contract.
The case is continuing.
Shares of MRP fell 1.7 percent to $2.92.
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more