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State power profits below budget

By Phil Boeyen, ShareChat Business News Editor

Tuesday 11th December 2001

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The government is trying to defend state-owned power companies against charges of profiteering by revealing that pre-tax profit for the winter was 38% below budget.

Minister for State Owned Enterprises, Mark Burton, has released combined estimated profit figures for the three SOEs - Genesis Power, Meridian Energy and Mighty River Power - covering three months ended September.

"At my request, the three companies were asked to supply confidential financial information, which has been analysed and collated by my officials.

"The electricity SOEs have faced repeated and unsubstantiated accusations from opposition members. The profit summary has been released today to put the record straight.

Mr Burton says the unaudited figures show the combined pre-tax profit of the three companies for the quarter was an estimated $78.4 million, compared to a budgeted profit of $126.1 million for the period.

"Unusual circumstances prevailed this winter, with a significant water shortage and wholesale spot prices reaching high levels.

"The companies responded by encouraging customers to conserve power. They are also taking steps to underpin New Zealand's future security of supply through new generation projects."

Listed power companies Natural Gas Corporation (NZSE: NCH) and TrustPower (NZSE: NCH) were hurt by the cold, dry winter as they were forced to buy power on the wholesale market at high prices to meet customer commitments.

NGC eventually sold its South Island retail power clients to Meridian and North Island clients to Genesis, taking a massive writedown of its On Energy business in its full year result.

Rain in the past weeks has since returned many of New Zealand's hydro lakes to normal levels for this time of year but power companies say its too early to forecast what supply will be like next winter.

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