4 thoughts on “Update No. 320 – as at COB 28/02/19”
Christian says:
Thanks for the comprehensive update, as usual. I was happy to buy some units during February too. Query: You mentioned that LPE needs to financing to hookup customers. Can you please provide a bit of colour ? Is it because they need to install some kit (solar panels and “other stuff”) upfront when they acquire a strata block ? And are all residents obliged to purchase their electricity from LPE then ? Just curious as I’ve never lived in one of these. I do have a work colleague that does live in an apartment block, and he apparently can purchase his power from whoever he likes.
Thanks for the comment Christian. There’s 2 reasons LPE need capital to connect customers. The first reason is they need to put regulatory capital out as their customer base grows. The second reason is as you point out the capital cost of connections, which go into PP&E and intangibles.
Most strata communities don’t use embedded networks, so you can use any provider. Even within embedded networks, you have the option to opt-out too, though very few would as their power prices would rise – Tony
Lee says:
Hi Tony. Appreciate you going into the detail regarding some decisions that have been made. One bit that did stand out for me was SGC. Specifically the decision to not sell at least some of the holding when it got to a price for which you thought represented close to full value. You mentioned this was due to, in part, CGT considerations. To clarify when you said this was a mistake I assume you mean considering tax as part of your sell decision? Is your thinking now that if the same circumstances occurred you would not consider the tax implications?
Yes, I mean that we should have just sold or at least trimmed the position as it had gotten to the point where the expected return was below alternatives for the capital. We decided to wait in the hope that we would be able to sell once the 12 months that are required for the CGT discount to apply. We will think more about the alternative application of the capital that the tax consequences in future – Tony
Thanks for the comprehensive update, as usual. I was happy to buy some units during February too. Query: You mentioned that LPE needs to financing to hookup customers. Can you please provide a bit of colour ? Is it because they need to install some kit (solar panels and “other stuff”) upfront when they acquire a strata block ? And are all residents obliged to purchase their electricity from LPE then ? Just curious as I’ve never lived in one of these. I do have a work colleague that does live in an apartment block, and he apparently can purchase his power from whoever he likes.
Thanks for the comment Christian. There’s 2 reasons LPE need capital to connect customers. The first reason is they need to put regulatory capital out as their customer base grows. The second reason is as you point out the capital cost of connections, which go into PP&E and intangibles.
Most strata communities don’t use embedded networks, so you can use any provider. Even within embedded networks, you have the option to opt-out too, though very few would as their power prices would rise – Tony
Hi Tony. Appreciate you going into the detail regarding some decisions that have been made. One bit that did stand out for me was SGC. Specifically the decision to not sell at least some of the holding when it got to a price for which you thought represented close to full value. You mentioned this was due to, in part, CGT considerations. To clarify when you said this was a mistake I assume you mean considering tax as part of your sell decision? Is your thinking now that if the same circumstances occurred you would not consider the tax implications?
Hello Lee,
Yes, I mean that we should have just sold or at least trimmed the position as it had gotten to the point where the expected return was below alternatives for the capital. We decided to wait in the hope that we would be able to sell once the 12 months that are required for the CGT discount to apply. We will think more about the alternative application of the capital that the tax consequences in future – Tony