Power to people but no dividend

Mighty River Power chief executive Doug Heffernan. Photo / Dean Purcell

Mighty River Power says there is no way the $150 million bonus dividend it is paying to the Government could or should be paid to consumers, some of whom are struggling to pay their bills.

The company which owns Mercury Energy says the Government's warning on performance by state-owned companies had no bearing on the windfall dividend it is providing.

Mighty River Power reported a record annual profit of $159 million due mainly to a boost in revenue from hydro and geothermal generation and partly from picking up 33,000 extra customers. An ordinary dividend of $79.8 million would also be paid to the Government.

Mighty River chief executive Doug Heffernan said the big profit could not be returned to Mercury customers because power companies in competitive markets don't run that way.

"We didn't ask customers to top up profit when it was down in previous years. It doesn't run as a co-operative."

Some lines companies, such as Vector, are largely owned by consumer trusts and they do return a share of profits to consumers in their area.

The special dividend came from gains on completing the Kawerau geothermal power station under budget, significant earnings from unprecedented hydro generation in winter 2008, and the sale of Marsden B oil-fired power station for $20.4 million.

All SOEs were given the message on lifting their game at a Beehive meeting before Easter but Mighty River's chairwoman Carole Durbin said the three power companies had not been targeted. "They [shareholding ministers] made it clear they want better performance across all their SOEs. From our perspective what we've done is no more than what is entirely appropriate."

She said the Mighty River bonus would be welcomed. "I'm quite sure the Government has some very important uses for that money."

In 2006 Meridian Energy paid the Government a special dividend of $800 million after windfall gains on the sale of a power project in Australia.

Dr Heffernan said he was not sure where prices would go after a 12-month tariff freeze for Mercury's 382,000 customers finished in March. Unprecedented competition between electricity retailers in cities was keeping a lid on prices but the underlying trend was for tariffs to rise to pay for new power stations and gas price increases.

He said Contact Energy's attempt to double the pool of directors' fees while putting up power prices last October had resulted in thousands of customers switching to Mercury.