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Genesis Power cranks out bumper profit

By Phil Boeyen, ShareChat Business News Editor

Thursday 21st March 2002

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Electricity generator and retailer Genesis Power has posted huge gains in revenue and net profit for the six months ended December but other state-owned power companies have seen their profits cut.

Genesis has reported a net surplus after tax of $42.7 million for the first half of its financial year, almost double the $22.2 million from the year before. Revenue jumped to $555.7 million compared to $223.9 million previously.

Despite the large increases the company has only increased its interim dividend to $8 million compared to $7.7 million last year.

Other state-owned electricity companies returned lower interim results with profit at Mighty River Power dropping to $14 million from $30.4 million previously while Meridian's profit fell by half to $30 million.

Minister for State Owned Enterprises, Mark Burton, says the low lake levels last winter meant that Meridian and Mighty River generated less electricity, while Genesis' thermal generation plant at Huntly operated at near capacity.

Genesis chief, Murray Jackson, says the company had achieved a realistic result considering the six months under review included the acquisition of an additional 288,000 residential and 3,000 commercial customers from Natural Gas Corporation (NZSE: NCH).

Details of the deal were published in September last year with Genesis paying $109.7 million to NGC for the customers, business records and hedge arrangements while NGC paid $44 million for electricity meters and meter relays.

"Our retail acquisition, coupled with the positive impact of the unexpected exposure of generation output to the spot market in July, prior to the NGC acquisition, has enabled Genesis to post a satisfactory result," says Mr Jackson.

Mr Jackson says national hydro inflows during the 2001 winter period were the lowest in 71 years of records and put extreme pressure on the company's 1000MW gas fired power station at Huntly.

"Huntly's exceptionally high reliability levels during this period ensured that the national electricity supply remained uninterrupted during a very difficult time.

"Whilst other thermal supply was affected by outages and transmission constraints within the national grid, Huntly was able to maintain generation at very high levels."

Chairman Brian Corban says he is pleased with the results but cautions that as New Zealand's largest electricity company, the company faces new challenges in an extremely competitive retail market.

"The company has now entered into a period of consolidation and will concentrate its efforts on customer service and customer satisfaction," he said.

Mr Jackson says planning remains on track for the construction of a new 400MW combined cycle gas fired generating plant at Huntly, to be commissioned in 2004.

Genesis is also continuing to explore alternative, renewable energy generation including expanding the existing Hau Nui windfarm in the Wairarapa, developing biomass opportunities and developing small hydro plants.

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