Cold winter saw state power companies profits soar

By NZPA

Thursday 22nd March 2007

Power consumers facing ever-increasing bills may not be mollified by announcements today that state-owned power companies are reaping ever-increasing profits.

The three state generators together with grid operator Transpower delivered over $300 million in net profits in the half year to December, up 14% on the same period last year.

Mighty River Power said net profit rose 38% to $74.6m; Genesis Energy's half-year rose 26% to $60m; Meridian Energy's net profit fell 8%, but remained a healthy $104.5m; and Transpower's profit rose 29% to $61.5m.

The companies do not pay interim dividends but the Government is likely to add to its burgeoning surplus at year-end, having reaped around $1.2 billion last year, including $1.1b from Meridian.

Genesis said it benefited from the cold winter with its 1040MW coal and gas-fired station at Huntly pumping out power and greenhouse gases at near capacity.

Its renewable energy stations only produced a third of the power Huntly generated.

Genesis' revenue actually fell -- from $969m to $945m -- as an abundance of water in the second quarter depressed wholesale electricity prices.

Some 1.15m tonnes of coal was consumed at Huntly in the six-month period before demand settled in early summer.

Chief executive Murray Jackson said Genesis was aware of the impact of coal-fired generation on the climate and was trying to reduce dependence on coal.

It was building a 385MW combined cycle gas turbine at Huntly and planned a similar plant north of Auckland. It was also looking at wind farms.

Meridian chief executive Keith Turner said Meridian's profit fell mainly because of higher depreciation charges.

Net energy revenue rose 8.5% to $345m and earnings before interest, tax, depreciation and amortisation rose 8.5% to $247.1m.

Turner said the strong performance reflected "positive conditions" for hydro-generation between July and December 2006, and relatively low wholesale electricity prices.

Meridian said it kept energy price increases to 3.25% -- below the annual rate of inflation.

Meridian had several wind and hydro projects in construction or planning that all up would generate more than 1000MW of power.

Mighty River Power (MRP) said its result was assisted by "favourable operating conditions".

Strong hydro inflows and flexible gas contracts allowed it to reduce production at its Southdown co-generation power station by 276GWh, yielding a gas cost saving of $10.6m.

Record geothermal production helped operating surplus before interest and taxation lift to $136.2m from $106.8m.

Chair Carole Durbin said MRP was pursuing a strategy of developing greater generation capacity across a range of complementary fuel sources, including wind and gas, but with particular emphasis on geothermal energy.

MRP began construction of its 90MW, $275m geothermal station in Kawerau -- in the Bay of Plenty -- in late 2006 and planned to develop around 400MW of geothermal energy in the next five to 10 years -- enough power for around 400,000 homes.

MRP this month scrapped plans to fire up the mothballed Marsden B plant with coal.

Transpower said the cold winter drove peak demands above previous levels, resulting in higher payments. Revenue rose 4.1% to $316.5m.

Capital spending rose $59m to $131m while expenses rose 1.4% to $199.3m.

Transpower chairman David Gascoigne said the availability of both its High Voltage Alternating Current (HVAC) network and the High Voltage Direct Current (HVDC) link between the South and North Island was on track to meet the full-year targets.

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