Genesis doubles interim profit

By CHRIS DANIELS energy writer

State-owned power company Genesis has turned another healthy result, doubling its interim profit to $44.2 million.

Genesis, which has 611,000 customers and owns the Huntly Power Station, increased its revenue 30 per cent to $680.9 million for the six months to December 31.

Chief executive Murray Jackson said the result was primarily due to an increase in customers. Genesis now has 644,000 electricity and gas customers. The next largest, Contact, has 615,000.

Another factor in the good result was the heavy workload of the Huntly Power Station, which generated more electricity as Contact Energy eased back on production at its gas-fired Otahuhu B and Stratford power stations.

Jackson said the high prices caused by last year's low rainfall in the South Island had not been a factor in the result.

This year Genesis will move to secure enough fuel to power the 1000-megawatt Huntly Power station, New Zealand's largest electricity generator. Huntly has spent most of its life using cheap fuel from the Maui natural gas field, which is running down.

It has lately been burning coal from the Waikato coal fields of fellow state-owned enterprise Solid Energy. Genesis has also recently signed a contract to buy 2.8 million tonnes of coal from Indonesia over the next three years.

Genesis was criticised for failing to stockpile enough coal to provide for the production cuts from drought-stricken South Island hydro generators last year. After the Government applied pressure to it and Solid Energy to conclude their stalled contract talks they signed an $800 million, eight-year supply deal.

In February it sold 50 per cent of its shareholding in the Kupe oil and gas field to Origin Energy. In May it will open a new "open cycle" gas turbine at Huntly and is still working on its new 385MW power station, also at Huntly.

It is also building a wind farm on the Awhitu Peninsula, south of Auckland.

In November Genesis raised its prices for its 97,000 domestic gas users by nearly 13 per cent, saying the wholesale costs of gas had risen.

* Contact Energy, the largest private power company, says it is raising prices to its Nelson business and residential customers by 14 per cent. Its latest quarterly profit results showed a 49 per cent increase in profits. United States energy giant Edison Mission, which owns 51 per cent of Contact, is trying to sell out of all its overseas assets.

Analyst reports suggest Australian power company AGL may be interested in buying the Edison stake. AGL already owns 66 per cent of gas transmission company NGC, which it could sell to help fund its purchase of the $1.5 billion stake in Contact.

Such a sale would see AGL gain a dominant position in the New Zealand wholesale natural gas market, attracting the ire of the Commerce Commission.

Auckland network company Vector has been tipped as a possible buyer of NGC.