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Govt power companies' profits ease


Friday 18th October 2002

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The Government's three state-owned power companies and the national grid operator, Transpower, reported another year of strong profits, although not as strong as last year.

Transpower has posted a June year profit of $80.2 million, slightly up on $79.1 million last year.

But Genesis Power's full year profit was $48.1 million, down from $59.9 million last year, as was Mighty River Power's profit of $47.1 million ($59.1 million)

Meridian Energy's June year profit was $84 million, after a bumper $125.1 million. All three companies were boosted last year by a winter power crisis which saw wholesale power prices rocket.

Mighty River Power, which has eight hydro stations in the Waikato, would not pay a dividend. In its six months to December it made a net profit of $14 million with no dividend.

Meridian, New Zealand's largest power generator, said it would pay the Government a $31 million dividend. It made a net profit of $29.9 million in the six months to December and paid a $31 million dividend.

Genesis, a power retailer and generator, said it would pay the Government a $19.2 million dividend. In the six months to December, it made a net profit of $42.7 million and paid a $16.2 million dividend.

Despite the higher profits last year, all the companies denied at the time that they had profiteered from the excessively dry winter of 2001.

In its report this year, Meridian said last winter and spring had left the company having to balance potentially conflicting environmental, economic and social considerations.

The low water levels meant it was unable to generate to capacity level.

"While the country as a whole got through last winter with only minimal impact, it was an expensive exercise for Meridian," Meridian's chief executive Keith Turner said.

"At times we were buying power in excess of $250 per MWh from the spot market in order to deliver on contact obligations at $50 per MWh or lower."

Dr Turner said the company had not met its target profit of $124 million.

"Inflows into the Waitaki catchment earlier in 2001 were the lowest in 75 years of data collection records, which meant we began the financial year with a severe shortage of water," Dr Turner said.

During the year Meridian settled a long-running dispute with national grid operator Transpower over charges for the use of the Cook Strait cable.

Meridian Energy, the largest of the three state-owned enterprises, was formed from the split of ECNZ in March 1999.

Mighty River Power chairman Rob Challinor said his company's 8 percent decrease in revenue was not surprising, given the low water storage position at the beginning of the financial year.

"In these circumstances, we are very satisfied with these results," he said.

"Producing positive financial outcomes from a trading year characterised by poor hydrology was one outcome of the company's capacity to quickly adjust its water resource management operations."

Catchment inflows were 17 percent lower than the long-term average and 13 percent below the previous year.

Dividends had been ploughed back into debt, strengthening the company's balance sheet, and the company's leading retail brand, Mercury Energy, had expanded growth and new services in the Auckland, Waikato, Bay of Plenty and Northland regions.

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