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Under fire for its controversial steep hikes to retail tariffs, Contact Energy yesterday said "extreme weather conditions" and "systemic transmission constraints" meant its 2009 year result would only match its 2008 performance at best.
Contact, controlled by Australia's Origin Energy, reported a June 2008 full-year net profit of $237 million in August, down 1 per cent on a the previous period. At that time it said dry conditions in the South Island and transmission constraints across Cook Strait had affected its performance during the 2008 year and over the first two months of the current one.
As a result, it said, it did not expect to "significantly outperform" the 2008 financial year result.
Having told media that retail tariffs were likely to rise by about 6 per cent, within a month the company announced hikes of 10 to 12 per cent for customers in the South Island and Wellington, citing the same reasons.
Yesterday, in a presentation to investors, the company said the first quarter had seen "extreme trading conditions" with extremely low inflows at South Island hydro lakes and extremely high inflows in the North Island.
Transmission constraints across Cook Strait had again led to "inter-island wholesale price separation".
Ongoing high prices in the South Island, where Contact sells more electricity than it generates, had seen it lose $45 million in that market during August.
As a result, the company's overall first quarter performance "has been well below expectations ... due to the combination of extreme weather conditions and systemic transmission constraints".
"As such, the company does not currently expect to outperform its 2008 financial results."
"Until transmission is unconstrained, New Zealand will continue to have periods when two markets operate. Pricing is being adjusted to reflect that risk."
With the market already in retreat after another shocker on Wall St, Contact's shares closed 5c lower at $7.40.
