Really the facts are:
1. They have no plants in Victoria. They have a JV share in WA and one in QLD. These plants run under 10% of the time - peak power response and are extremely efficient at getting going - gas fired.
2. ERM are not nor have the capacity to become a base load supplier nor is there a need for more base load production.
3. As efficiency in the usage of electricity has increased and has seen demand reduce. The advent of Heatpumps and even variable speed motors plus a more efficient conversion has reduced the usage of electricity. Add to that solar at the retail level and the growth will not be there for years.
http://www.smh.com.au/business/carb...surplus-across-australia-20140807-101g8r.html
4. CCS is a way to mitigate the carbon but also costs more to retrofit. However I dont see coal fired power stopping at all in fact its use will probably remain flat as China and India are still building capacity so capacity taken out at end of plant life is going to be replaced elsewhere.
5. ERM are reaching its natural market share ceiling - The renewal ratio is 71% and the new business capture is 23%. In the past they had a much higher renewal rate. This was acknowledged by them : "ERM Power CEO Jon Stretch said the strategy responded to changes in the industry and recognised growth streams beyond the Australian retailing business which was approaching its natural market share ceiling."
I really think that we need to keep the debate simple - The growth forecast is lower , the price competition is higher they dont have a retail market segment to prop it up and clearly from their numbers the SME acquisition of customers is slowing as well. Really its not about their electricity production although that profit dropped its mostly about their wholesaler status and margin.
