Contact powers ahead despite autumn woes

By CHRIS DANIELS

Contact Energy, New Zealand's largest private-sector power company, has lifted profit 5 per cent in the first nine months of its financial year, despite the dry autumn and Government-led electricity conservation campaign.

The past nine months have been good for Contact's business, despite turmoil in the wholesale power market and renewed political intervention in the sector.

Earnings jumped 15 per cent, with revenue up 11 per cent. Customer numbers were up 14 per cent, at 612,000, from the same time last year. Because a large number of these were small and medium-sized businesses, said Contact, it meant a bigger jump in retail electricity sales, which rose 34 per cent.

When the dry autumn sent wholesale prices soaring, Contact began earning big money selling power into the wholesale electricity market.

For the nine-month period, Contact's revenue from selling wholesale electricity increased by 105 per cent. The high prices were helped by an increase in the volume of wholesale electricity sold, caused mainly by the addition of the Taranaki Combined Cycle (TCC) power station to its portfolio, which was bought from NGC this year.

However, Contact's wholesale gas revenue dropped 38 per cent in the nine-month period. This came mainly from a reduction in sales of gas to other electricity generators and the fact that gas it previously sold to Trustpower for the TCC station was now used internally.

Revenue from its retail gas business was down 7 per cent. It is losing customers to competitors in the retail gas sector, with total numbers dropping from 101,500 to 98,500.

Mercury Energy, the retail brand of state-owned rival Mighty River Power, began selling gas to its Auckland customers last year.

Chief executive Steve Barrett said the results showed the value of its "integrated business" which tried to balance the company's exposure to both the wholesale and retail side of the electricity business.

The results follow an announcement that Contact will be the builder and operator of a new power station in Hawkes Bay, that will be owned and paid for by the Government.