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Govt reaps huge dividends from four state power companies


Friday 18th October 2002

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The three state power generators together with transmission company Transpower have reaped the Government a massive $284 million in dividends in the June financial year.

The power companies deny making windfall profits from last winter's power crisis, which sent power prices soaring and certainly profits have eased back from last year's bounty.

But profits still remain strong, almost embarrassingly so for grid operator Transpower, which posted an $80.2 million profit for the June year.

Biggest dividend payer was Meridian Energy, which boosted the Government coffers by $173 million, including a $100 million special dividend which was paid to lower the Government's equity.

Transpower paid out all of its profit in dividend, while Genesis Energy, probably the biggest winner from the power crisis, paid a $19.2 million dividend for the year.

Mighty River Power did not announce a dividend so it could strictly comply with accounting standards, but is planning to pay a $12 million dividend.

Its dividend payments to the Government have been on hold until this latest half year to allow it to balance equity to debt.

The winter power crisis forced the country's largest retailer, Natural Gas Corp-owned On Energy, to its knees, and Meridian and Genesis were able to carve it up between them at a fire sale price.

Nearly all power companies hiked power prices significantly as a result of the lift in wholesale prices, but despite wholesale prices falling to below prevailing norms, power companies have held prices up.

Genesis's full year profit fell back to $48.1 million from $59.9 million last year, while Mighty River Power's profit fell to $47.1 million ($59.1 million) and Meridian dropped to $84 million, after a bumper $125.1 million.

Transpower's profit exceeded its targets set out in its Statement of Corporate Intent.

Genesis chief executive Murray Jackson said his company's full year profit was satisfactory given the high cost of taking on new business, in particular the purchase of On Energy's customer base in the North Island.

He said the $48.1 million result compared favourably with a budgeted figure of $41 million. Total revenue for the year was $1.094 billion, a 104 percent increase, reflecting the company's growth.

During the year, Genesis signed a 10-year gas supply contract with Swift Energy to receive gas from the Rimu field. The company had upped its shareholding in the Kupe oil and gas field to 70 percent and the company expected to prepare a development plan for the proven but undeveloped field over the next year.

A new 360MW combined cycle gas turbine plant was expected to be commissioned at Huntly Power Station in December 2005, Mr Jackson said.

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 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 contract obligations at $50 per MWh or lower."

Prices in recent weeks have been between $20 and $30 per MWh.

Dr Turner said the company had not met its target profit of $124 million, with inflows into the key Waitaki catchment earlier in 2001 being the lowest in 75 years.

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