Meridian profit lift will aid OE plan

State-owned power company Meridian's plans for a big investment in an Australian windfarm received a boost yesterday with the posting of bumper half-year profits.

Meridian saw profit jump 30 per cent to $96.1 million for the six months to December from $67 million previously.

Fellow state-owned energy company Mighty River Power and national power grid operator Transpower also reported increased profits for the half-year. Mighty River's profits jumped 50 per cent to $77.3 million and Transpower's 147 per cent to $77.3 million from $31.5 million.

Meridian, which is about to apply for resource consents in rural western Victoria for what will be the largest windfarm in Australasia, said the increase was due to better weather, which allowed it to generate more electricity.

The windfarm, which could cost up to $500 million and have up to 250 turbines, has puzzled National finance spokesman John Key.

While he was not philosophically opposed to SOEs operating in a commercial manner, he said there was clear demand for new generation in New Zealand.

Meridian appeared to be sending the message that because projects could not be approved in New Zealand, it had to either give capital back to the Crown or go elsewhere.

"On face value, it's puzzling - the only conclusion I can draw, given that New Zealand is going to need extensive new generation going forward, is that Meridian has worked out that the RMA and the planning process is so cumbersome that it's quicker to invest offshore to get a return on capital. That's a tragedy and cannot be left unchecked."

State-Owned Enterprises Minister Paul Swain said Meridian's shareholding ministers had not yet been consulted on the SOE's plans.

"I am advised that the project is in its early planning stages. I expect to be consulted when Meridian's plans are firmer."

He said such overseas investments should be considered only where they would "enhance the core business and add value".

Mighty River is developing its geothermal power generation, with exploratory drilling in the central North Island, and chief executive Doug Heffernan said geothermal power generation would increase from 5 per cent to 10 per cent by 2015.

Transpower, whose leap in profit could be partly attributed to a $34.6 million payout from a "cross-border lease transaction", said revenue from power transmission jumped $34.9 million for the six months, reflecting a strong growth in demand for electricity.