Contact Energy reported a 10 per cent fall in underlying earnings to $141 million for the year to June 30, although statutory net profit showed a $216m turnaround for the year mainly because the costs of closing its Otahuhu-B gas-fired power station washed out of the figures.

Net profit after tax was $150m, compared with a $66m statutory loss declared in the previous period.

Earnings before tax, depreciation, amortisation and changes in the value of financial instruments - another earnings measure favoured in the electricity sector to demonstrate performance shorn of one-off factors - was down 5.5 per cent at $523m.

The result showed the impact of a "sudden and significant swing in hydrology with above average hydro generation storage at the beginning of the year giving way to 80-year-low inflows into the key South Island lakes, culminating in a 'dry winter' and limiting our ability to run hydro generation," said chief executive Dennis Barnes in a statement. During the final quarter of the financial year, our gas-powered stations ran hard during the peak of winter demand."

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The company announced an unchanged final dividend of 15 cents per share, fully imputed in the hands of New Zealand shareholders, to take total distributions for the year to 132 per cent of underlying profit and that it would be moving to a new dividend policy with payouts based on 80-to-90 per cent of free cash flow once net debt falls to below 2.8 times ebitdaf.

"In FY18, Contact will target an ordinary dividend of 32 cents per share, an increase of 23 per cent on FY17," said Barnes.

Operating free cash flow of $300m for the 2016/17 financial year was "strong", reflecting reduced capital expenditure needs and despite a $38m boost to ebitdaf from a tax credit in the previous financial year relating to the closure of Otahuhu-B.