Low hydro lake levels mean higher profits

Amid the bombshell news of the Origin-Contact merger, Contact also reported a big jump in profits for the past half year, with low hydro lake levels helping swell the coffers.

Higher wholesale electricity revenue came from better thermal generation levels and higher prices earned from the wholesale electricity market. These high prices were caused by low inflows in the hydro storage lakes during the last six months of 2005.

Contact generated 11 per cent more power during the six months than the year before and was paid an average price of $81.70 per megawatt hour - a jump of nearly 150 per cent from the same time in 2004.

Generating more power from a gas-fired station means spending more money on the fuel needed to keep them spinning, so Contact's gas bill went up from $58.6 million to $98.2 million in the six months.

But it was not just high wholesale prices that helped Contact's balance sheet last year. Recent price rises for retail electricity and gas helped push revenue from $626 million to $660 million.

Hydro storage lake levels have risen recently but levels in the principle reservoirs are still below the mean.