Power row cuts Govt dividend

By RICHARD BRADDELL

WELLINGTON - Transpower has slashed the first-half dividend it will pay the Government as a consequence of the dispute over Cook Strait transmission costs with fellow state-owned enterprise Meridian Energy.

The $40.3 million dividend, which covers the six months ended December 1999, amounts to 75 per cent of the net surplus of $53.7 million and is down from $48.7 million in the same period of 1998 when 100 per cent of earnings. was paid.

The dispute, which flared a day after the election when Transpower launched legal proceedings, revolves around Meridian's decision to withhold transmission charges, which at December 31 amounted to $32 million.

Transpower's general manager of sales and marketing, Bill Heaps, yesterday revealed that the company had taken out similar proceedings against TransAlta three weeks ago, but for a much lesser sum of under $500,000.

Parliament's commerce select committee said this week that it saw no alternative to the dispute going to court, but was concerned that the dispute exposed taxpayers to the large legal costs that would be incurred by both companies - and to reduced dividends.

But Mr Heaps said the sums withheld by Meridian were considerable and could total around $200 million over two years. If Meridian did not pay, then other market participants would be forced to pick up the costs, in a way that was prevented by Transpower's current statement of corporate intent, which requires pricing to be economically efficient.

Meridian and TransAlta argue that they are being unfairly discriminated against by being forced to pay around four times more than rival Contact Energy.

But Mr Heaps said Contact had a fixed- term transmission agreement that had been negotiated before a change in pricing required under Transpower's statement of corporate intent.