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Power company profits line government coffers

By Ray Lilley

Friday 20th October 2000

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The three "Baby ECNZs" produced $185.8 million of profits and $94.3 million of dividends in their maiden year, giving the government a big pay rise from splitting up the former Electricity Corporation.

In its last year, 1998, ECNZ paid a $68 million dividend. It was split into three companies from April 1 last year as part of the previous government's electricity reforms.

But while dividends were up, overall profit was down. ECNZ posted a $307 million profit in 1998.

Largest power generator Meridian Energy this week turned in an annual after-tax profit of $96.3 million, 12% ahead of target and enough to pay the government shareholder a $62.3 million dividend.

Mighty River Power posted an after-tax net profit of $41.3 million after a below-target return for the year, putting a $20.6 million contribution into the government's collecting tin.

Genesis Power made a $48.2 million profit and paid a $11.4 million dividend.

National electricity grid operator Transpower chimed in an above-target performance, which yielded a net profit of $164 million and a total dividend for the year of $82.7 million.

Commenting on Meridian Energy's first full operating year, chairman Francis Small said it had exceeded generation targets in producing 11,974GWh of electricity.

The SOE had already developed a company culture "very different from that of a traditional utility."

This included outsourcing financial management to KPMG, a partnership with call centre operator TeleTech New Zealand and an alliance with Sky TV which had helped it recruit 30,000 new retail customers.

"However, this success placed the company at the cutting edge of widespread switching and billing problems which emerged throughout the industry."

Meanwhile the remnant company left of ECNZ reported a profit after tax for the year to June 30 of $8 million.

It paid a dividend to the government of $15 million, from the sale of Rutherford House and the settlement of a dispute with Comalco.

The company, which has liabilities of $824 million, will be wound down over three to four years.

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