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TrustPower says earnings will be hit by a lack of wind for its turbines and a lack of rain for its dams during the first part of this year.
Low hydro inflows and not enough wind meant it was pushed into buying power to supply its own customers on the spot market - where the very same climatic conditions had pushed prices sky high.
Earnings before interest, tax, depreciation, amortisation and fair value movement of financial instruments would be down by between $15 and $20 million for the first quarter, TrustPower says.
It still expects strong earnings growth for the year though, helped by a full-year contribution from stage three of its Tararua wind farm, its "Deep Stream Hydro" scheme in Otago and the Snowtown Wind Farm projects in Australia.
The Tauranga-based company is the smallest of the big five New Zealand energy companies and is controlled by the listed infrastructure investor Infratil, which owns 50.5 per cent of its shares. Another 33 per cent is owned by the Tauranga Energy Consumer Trust.
The company suffered from a combination of very low inflows into hydro catchments during April to June and very low wind production during May, which meant generation was 22 per cent lower than expected.
The company bought power from the spot market at very high prices an average of $245 per megawatt hour versus $64 for the same period last year.
The big energy companies try to integrate their generation and retail arms, so that if market prices are high, the generation arm can make good money. If market prices are low, then the retail side can do well. The better the generation side matches the retail side, the less likely they are to spend big dollars on buying electricity on the open market.
Hydro inflows returned to normal levels during late June and have continued during July. National hydro storage levels have improved from around 50 per cent of average to nearly 70 per cent.
- HERALD ONLINE/ NZPA
