Mighty River Power profits up

Mighty River Power's Kawarau geothermal plant.

State-owned Mighty River Power said its diversified generation strategy has helped it post a solid half-year result.

Underlying earnings, defined as earnings before net interest expense, income tax, depreciation, amortisation and financial instruments, were $191.2 million in the six months to December 31, down from $234.5m in the same period last year.

The net profit after tax of $73.9m was up from $30.7m last year when the company had a $118.8m charge for a change in the fair value of derivative financial instruments, which mostly related to interest rates.

The company owns nine power stations on the Waikato river, geothermal plants in the North Island and the Southdown co-generation station. It owns the retail business Mercury Energy.

Revenue of $521.8m was down from $581.1m last year. The company's total generation production for the period at 2953GWh, was also down by 534GWh on the previous period due to poorer inflows into the Waikato catchment.

Mercury Energy increased its number of customers by 18,000 to 400,000 and is focusing marketing in the South Island.

"While our end-of-year result will be down on the record in full year 2009, we still anticipate a solid performance and are trading slightly above plan," the company said.

Hydro production levels were currently below plan because of a very dry summer, but favourable national storage conditions had allowed the company to buy from the wholesale market rather than use Taupo storage.

Production from the new 140MW Nga Awa Purua, a joint venture with the Tauhara North No 2 Trust, was also expected to contribute to earnings in the last quarter. The plant was now supplying electricity to the national grid and commissioning was expected to be complete this autumn.

"The six months have signalled a return to business as usual after the last year's exceptional conditions, but the company has delivered an excellent geothermal performance and there has been encouraging growth in retail despite significantly increased competition," said chairwoman Joan Withers.

Chief executive Doug Heffernan said that the company's geothermal exploration and development programme continued to grow.

The company had lodged resource consent applications for the proposed 110MW Ngatamariki Geothermal Power Station, which was expected to cost approximately $400m, and be operational before the winter of 2013.

The company's use of the thermal plant at Southdown decreased by 7 per cent, reflecting a rise in gas prices from the prior year and low wholesale electricity prices over the half year period to December 2009.

Heffernan said geothermal would remain the company's strategic focus.

- NZPA