Dry autumn helps power Genesis' $61m profit

By CHRIS DANIELS

State-owned power company Genesis Power has reaped the benefits of a cold, dry autumn and big demands on its Huntly Power Station, turning in a $61.1 million profit for the past year.

The profit jump of 27 per cent from the previous year is good news for its owner, the Government, which will be paid a $24.4 million dividend.

Another energy state-owned enterprise, Mighty River Power, last week announced it had more than doubled its annual profits, earning $113.5 million for the year to June 30. Mighty River did not have to pay a dividend, however, as the Government had allowed it to keep profits and pay down debt.

Two other state-owned power companies, Meridian and national grid owner Transpower, have yet to announce their financial results for the year, but are both likely to reveal good profits and healthy dividend payouts to the Government.

Meridian may, however, be hit by the early autumn South Island drought, which reduced inflows into its hydro storage lakes. An electricity savings campaign was begun in April and consumers were urged to cut power use by 10 per cent.

High profits and good dividends bring mixed blessings for the Government, however, as almost every power consumer is facing higher monthly power bills from these state-owned companies through the impending rundown of the Maui gasfield.

Genesis' results covered the purchase of 95,000 gas customers from NGC, and 44,000 electricity customers from Energy Online and Todd Energy. Chief executive Murray Jackson said the company was proceeding to develop the Kupe oil and gas field, which would begin producing in 2007.

This gas would, in part, fuel a 365 megawatt gas-fired power station to be built in Huntly, next to its existing 1000 megawatt plant. Jackson said this new station was due to be commissioned in the first quarter of 2006.

It was also revealed soon after the winter power crisis that Genesis had asked the Government to provide a financial underwriting for construction of this new station.

Both the Government and Genesis refused to say what sort of underwriting had been asked for, or if the request had been granted.

Genesis is planning to build a 25 megawatt windfarm on the Awhitu Peninsula, south of Auckland, and a 45 megawatt turbine at Huntly.

It is also looking at expanding its small Hau Nui windfarm in the South Wairarapa and building new co-generation plants at the plants of big industrial power users.

While its workhorse Huntly plant was the backbone of power generation during the winter, Genesis was criticised for failing to stockpile enough coal to provide for the production cuts from drought-stricken South Island hydro generators.

High-level Government pressure was eventually applied to it as well as and fellow state-owned coal company Solid Energy to conclude their stalled contract talks.

They eventually signed an $800 million, eight-year supply deal.

The contract was described by Government experts as of "vital strategic importance for the maintenance of generation capacity at Huntly in a period of minimal reserve generation capacity".

After Maui gas entitlements were cut, Genesis had been burning mostly coal at Huntly. Jackson had noted it was Genesis' job to make money, not to spend it stockpiling coal at Huntly.

He was able to share in the fruits of Genesis' success. The top salary paid out by the state-owned enterprise rose from the $420,000-$430,000 band to between $540,000 and $550,000.