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Waikato drought hits Mighty River hydro generation

Friday 21st January 2011

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Hydro production was down 10% from a year earlier in the December quarter at Mighty River Power, which owns the Waikato River hydro scheme.

The state-owned company said that while total generation in the three months to the end of December was up 5% to 1674 gigawatt hours (GWh), hydro production fell to 1024GWh from 1137GWh a year earlier.

The period was characterised by rapid changes in hydrology and wholesale market conditions. Lake Taupo storage was near the top end of Mighty River's operating range at the beginning of the quarter but dropped away steadily from October.

A drought was declared in the Waikato region in mid-December, ending late in December with substantial rainfall.

Spot prices were low at the beginning of the quarter, but spiked in early December due to scheduled and unscheduled outages at other generators' plants and South Island hydro generators storing water ahead of the typically dry summer months, Mighty River said today.

In response to dry conditions and high prices, it had briefly increased production from its flexible gas-fired Southdown power station. Despite that, total Southdown volumes for the quarter were down 42% on a year earlier.

The main reason for the rise in total generation was the contribution of the Nga Awa Purua joint venture's 140 megawatt (MW) geothermal power station, commissioned last April.

That saw geothermal volumes rise 86% on a year earlier to 566GWh, calculated on an equity share basis, Mighty River said.

Its volume weighted average price for all generation production was $61/MWh over the quarter, up from $59/MWh a year earlier. The weighted average price of sales rose to $105/MWh from $98.81.

Electricity customer numbers were up 2000 from a year earlier to 402,000 at the end of December, but down from a peak of 412,000 at June 30.

The decline in numbers was due to continuing high levels of retail competition, which intensified with changes to the market resulting from the Electricity Industry Act 2010, Mighty River said.

Those changes were driving other generator/retailers to rebalance their retail customer bases between the North and South Islands.

After a period of rapid growth in customer numbers, Mighty River's retail arm Mercury Energy was focusing on maintaining a market share of around 20%, which it achieved during the quarter.



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