KEY POINTS:
The environment for change in the electricity industry is "very strong", Horizon Energy chairman Colin Holmes told the Whakatane-based listed company's annual meeting.
"There is growing acceptance by all participants that the regulatory regime is not working and that without significant change there will be major repercussions," he said today.
Horizon, which owns and operates the eastern Bay of Plenty's electricity network and is 77 per cent owned by the Eastern Bay Energy Trust, posted a 2 per cent fall in profit to $5.2 million for the year to March.
Mr Holmes said Horizon was making some revenue gains from within the regulatory framework it operated under but such gains were seldom large and often hard won.
The company's move into electrical contracting, branded as Horizon Energy Contracting, was aimed not only at increasing non-regulated revenue but also at ensuring a broader base of resources locally to maintain network assets, he said.
He defended the company's decision to contract out its entire physical works, when formed in 1994, as soundly based and commercially successful.
"Circumstances have changed and your board is confident this new move is well founded," Mr Holmes said.
"Other opportunities for non-regulated revenue are constantly being sought and evaluated however the market is crowded and any investment must meet the rigorous thresholds we set in terms of risk, fit and profitability."
Horizon continued to strengthen staff numbers to provide a better platform from which to explore both new opportunities, manage capital works and ensure the company was taking advantage of opportunities within the regulatory framework, he said.
"As we do this however the level of resource we are having to devote to pure compliance is increasing month by month."
Both staffing and compliance factors were contributing to increased costs.
For the current year the net profit remained unchanged at $4.3 million to $4.5m, Mr Holmes said.
Horizon Energy shares last traded yesterday at $3.40, having ranged between $3.30 and $4 in the past year.
- NZPA
