Power prices to stay flat says Meridian

Turbines at Meridian's Te Apiti wind farm. Photo /Tamara Eastwood.

The country's biggest power generator, Meridian Energy, says retail power prices are likely to stay flat in the next year.

Although it has put up energy charges for some North Island customers in July, overall it is following the wider industry trend and keeping a lid on prices in the intensely competitive retail market.

Chief executive Mark Binns said the retail market was tough for all power companies.

Energy prices were down 1 per cent for residential and small commercial customers in the year to June 30 and 2 per cent for corporate customers.

"We will review where we are on South Island prices but given where we are with agriculture at the moment you would have to be cautious about increasing prices. We would most certainly expect the market to stay there over the next year."

Contact Energy on Monday said it wasn't expecting retail price rises over the next year. Around 19 per cent of customers switch suppliers every year which forces companies to keep their price rises down.

However, the looming withdrawal of a large chunk of coal and gas generation could lead to power price increases in the longer term.

Contact Energy is shutting its 400MW gas fired station in Auckland later this year and Genesis plans to take its 500MW coal-fired units out of commission in 2018. But Binns said that pressure on supply could disappear quickly if the Tiwai Point aluminium smelter was closed, which could happen in 2018.

Meridian chief executive Mark Binns

"I'm pretty confident the market will sort it out and you've got to remember Tiwai has the right to give a termination notice at the state of 2017 and be gone a year later."

Earnings before interest, tax, depreciation, amortisation and fair value adjustments, rose to $618 million in the year, from $585 million a year earlier, and was 5 percent above the company's prospectus forecast. Revenue rose 16 percent to $2.9 billion, and net profit after tax gained 7.4 percent to $247 million, assisted by a $62 million tax benefit caused by not being required to pay capital gains tax previously levied in Australia and a revised treatment for depreciation on its powerhouse buildings.

The company is investigating ways to return $625 million plan to return capital to shareholders over the next five years.

See Meridian's latest financial results presentation here: