Contact sells more power on retail market but profits dip

By CHRIS DANIELS energy writer

Contact Energy, the country's largest privately owned power company, has announced a nine-month profit of $70.4 million, down from $76 million in the equivalent period last year.

This came despite less-than-ideal conditions for Contact, which prefers cold, dry conditions so it can make money from its thermal power stations, while its hydro-heavy competitors conserve precious water.

The amount of power sold at a retail level - to Contact's business and residential customers - increased 20 per cent.

But total earnings were almost unchanged for the nine months.

Chief executive Stephen Barrett said the growth in the number of its new customers had helped to offset the impact of lower income from selling wholesale electricity.

The company said the average wholesale electricity price during the nine months was 4.6c a kilowatt hour, compared with 6.2c in the equivalent nine-month period in 2000/2001.

Income from the sale of electricity into the wholesale market was down 24 per cent, bringing in $294 million for the nine months.

Contact's total electricity revenue went up by 11 per cent to $541.1 million.

Barrett said Contact had been able to get 52,000 new customers since June last year, a 14 per cent increase.

Revenues from Contact's gas business dropped slightly to $205 million, due to what the company described as "the loss of some lower-margin customers".

These low-margin customers used a lot of gas, as shown by a 21 per cent drop in the volume of gas sold during the nine months.

On Sunday, national water storage in the hydro lakes was 2675 gigawatt hours, 112 per cent of the average for this time of the year.

National inflows into New Zealand's hydro storage lakes were 95 per cent of the average.

In announcing the results yesterday, Barrett said the company was still looking into the "possibility of buying some of the Asia-Pacific assets of NRG Inc".

This is a reference to Contact's likely intention of buying a coal-fired station at Flinders, South Australia.

US company NRG currently owns the asset.

Contact already has one Australian investment. It owns 25 per cent of a coal-fired power station near Oakey, west of Brisbane.