KEY POINTS:
How would you describe 2006 for Meridian?
Meridian had an excellent year. We posted an $856 million profit, the largest in the country. We paid $1100 million of dividends to the Government. We lodged a record three consents for development. We kept our electricity price to less than the rate of inflation and our assets increased in value by $1.8 billion. On anybody's count, our financial performance has led even the listed company sector in New Zealand and is showing that SOEs can "foot it with the best".
In addition, we have started the roll-out of smart metering in this country and will make Christchurch the smartest electricity city in the world. We saw the North Otago irrigation project start supplying water to the downlands of North Otago. We acquired the Orion shareholding in WhisperGen (a Christchurch-based manufacturer of home generation systems) to give us 75 per cent. We are creating the future with a renewables-only development of around 2500MW that will involve $5 billion of investment over the next 10 to 15 years.
What was Meridian's greatest achievement?
Selling Southern Hydro for $1.6 billion, $650 million more than we paid for it, and receiving recognition by winning the most improved performance award at the Deloitte Management Magazine Top 200 awards.
Greatest disappointment? And why?
To see the charges for the Cook Strait cable allocated to South Island generators in a way that seriously disadvantages South Island development and will continually risk security of supply in the South Island.
What will be the major challenges for Meridian this year?
Redefining our relationship with our customers, rolling out 112,000 smart meters in Christchurch and obtaining consents for our portfolio of generation development options.
What do you expect from the economy and how will that affect Meridian?
We expect the economy to soften as the impacts of spending borrowed money begin to take hold and growth from consumption begins to flatten. We expect the property market to stabilise off its highs but not crash and we expect electricity growth to increase by about 2 per cent. We would not be surprised to see further major transmission failures that cause significant outages like that of June 12, 2006.
What was the most interesting business story of 2006?
The failure of Feltex and the failure of the Origin/Contact Energy merger.
Who was your mentor? What did they teach you?
I have direct contact with a network of senior business people, all of whom provide a grounding in the reality of New Zealand business in a global economy.
