Trustpower says dry, mild June-quarter may trim earnings

Trustpower CEO Vince Hawksworth. Photo / File

Trustpower says lower than expected power prices and weaker generation may push its full-year earnings toward the bottom of its forecast range.

The firm, which operates a string of hydro generators around the country, says June-quarter generation was 28 per cent lower than in the same period a year earlier. Average generation prices of $110 a megawatt-hour, while up from a year ago, were also lower than ASX futures were indicating at the time the forecasts were made.

While the balance of the "volatile and uncertain" winter period is yet to occur, Trustpower says the first-quarter results are below forecast and indicate that the full-year result may be towards the bottom end of the previous guidance for $205 to $225 million of earnings before interest, tax, depreciation, amortisation and changes in financial instruments.

"This change is being driven by a significant reduction in generation volume and lower wholesale prices than forecasted, as well as mild autumn conditions driving lower customer electricity volumes in some regions."

Trustpower shares fell 1.5 per cent to $7.35, trimming their gain this year to about 20 per cent.

Mild temperatures are constraining national power demand, while dry conditions on the North Island are also limiting generation supplies. Meridian Energy yesterday noted that June had been unusually dry across the country and that, even though its Waitaki hydro storage is above average, it has continued calling on its swaption with Genesis Energy this month to manage price risk.

National electricity demand in June was 1.9 per cent lower than last year, Meridian said.

Trustpower says its June-quarter generation in the North Island was 35 per cent lower than last year at 189 GWh. South Island generation was 21 per cent lower at 224 GWh.

Total retail electricity sales were down 4.7 per cent at 934 GWh, led by a 6.8 per cent decline in sales to homes and small businesses. Gas sales were 12 per cent lower at 266 terajoules.

At the end of June, Trustpower supplied 403,000 utility accounts, up from 402,000 in March and 397,000 a year earlier. Increased telecommunications customers more than offset a 4,000 decline in power accounts during the past year.