Mighty River earnings fall after drought

Mighty River Power said the firm achieved important objectives in this financial year, both in generation capacity and retail numbers. Photo / APN

Mighty River Power's full year revenue and profit dropped after severe drought hit its Waikato hydro system when spot prices were at their highest.

For the year to the end of June, the state-owned power company reported revenue of $1.1 billion, down from $1.12 billion a year earlier, with underlying earnings down to $139.6 million from $211.7 million.

In the last financial year the company had enjoyed record inflows into the Waikato catchment at a time when electricity spot prices were high, Mighty River said yesterday.

"This equation was reversed in 2010, with the severe Waikato drought depleting hydro storage and forcing a cut to hydro production in April, when spot prices had reached their highest point over the year."

Along with the Waikato hydro system with nine power stations along the Waikato River, Mighty River also has geothermal plants in the Taupo and Bay of Plenty regions, the Southdown gas-fired station and is developing wind power.

Earnings before interest, tax, depreciation, amortisation and financial instruments were $327.8 million in the latest year, down from $447.1 million a year earlier.

Operating expenses were driven up by higher asset-maintenance costs and increased spending on getting and keeping retail customers in a competitive market, the company said.

Mighty River Power chairwoman Joan Withers said the firm achieved important growth objectives in this financial year, both in generation capacity and retail numbers.

During the year, the company opened the 140 megawatt (MW) Nga Awa Purua Geothermal Power Station, a joint venture with the Tauhara North No 2 Trust, and secured resource consents for the development of a geothermal power station of up to 110MW on the Ngatamariki field.

It also advanced the consenting process on the Turitea wind project, Withers said. Mighty River Power's customer numbers increased by 30,000 to 412,000 and market share grew to 21 per cent.

A period of slower growth amid intense competition was expected, with a continuing focus on reducing operational spending.

In May, Mighty River announced its first major international investment.

Through international partner GeoGlobal Energy, Mighty River Power invested an initial US$92 million of its US$107 million ($152 million) commitment to United States-based geothermal company EnergySource.

- NZPA