KEY POINTS:
State-owned Meridian Energy says its dividend payments to the Government have now topped $2 billion since it was formed nine years ago.
But as it released its half-year profit result yesterday, the electricity generator warned that infrastructure issues would push up winter prices for consumers.
Net profit at
Meridian for the six months ending December 31 was $93.7 million compared with $116.6 million the previous year.
The board of the country's biggest electricity generator approved an interim dividend of $60.9 million and a special dividend of $175 million.
The latest approved payments would take the total dividend paid to the Government since Meridian was created in 1999 to $2.1 billion.
However, chief executive Keith Turner - who steps down at the end of this month - said the sudden and unexpected closure of the Pole 1 link across the Cook Strait was likely to have a major impact on prices during the winter.
"Peak capacity constraints for power sent north will push up North Island prices over time while constraints for power sent south will reduce the dry-year reserve cover for the South Island, and also push up prices," Turner said.
"To help mitigate this, Meridian has accelerated the Benmore transformer upgrade which will help reduce output constraints as a result of the Pole 1 closure."
Grid operator Transpower was given approval by insurers this month to restore part of the inter-island link before winter, with half of Pole 1 available if needed for peak demand but with power only running northwards.
Transpower has said a $650 million to $700 million replacement was the best long-term solution, with installation of new equipment expected to take at least four years.
An economic analysis on market benefits of the Pole 1 replacement was expected to be submitted to the Electricity Commission for approval in May.
Operating surplus after tax for the period at Transpower was $51 million, compared with $74.7 million the previous year, while capital expenditure was up $21.3 million at $156 million.
Transpower chairman Wayne Brown said it was unfortunate that the number of unplanned interruptions in the last six months exceeded targets.
"This result largely reflects some of the increasing challenges of operating in an environment where the system is becoming increasingly loaded and many of the assets are ageing.
"As the assets get older, greater maintenance is required, however finding an appropriate time to take the equipment out of service is getting harder due to high load growth."
Other state-owned enterprises reporting for the same half-year period included Genesis Energy and Mighty River Power, with net profit of $31.4 million and $83 million respectively.
Meridian Energy's earnings before interest, tax, depreciation, amortisation and financial instruments was $253.7 million compared with $245.7 million the previous year.
Turner said the revaluation of generation assets from $4.83 billion to $6.47 billion had pushed up the depreciation cost and impacted on the bottom-line result.
"Hydro inflows were near average but, as the period started with lower-than-average lake storage levels, lower levels were carried through to December."
Meridian delivered 30 per cent of the country's electricity during the period, while demand was about 1.5 per cent higher than in the previous year.
"Although generation was lower than planned, electricity revenues were maintained, at least in part by higher prices as a result of the lower lake levels," Turner said.
The Manapouri hydro station had been upgraded from 585MW to 730MW, with technical capacity for 900MW, as part of a five-year programme.
The company gained resource consents, although appeals had been lodged, for the 176 turbine and up to 630MW Project Hayes wind farm planned for Central Otago.
"One major generation project milestone during the period was the turning of the first sod for Project West Wind, which we believe may become one of the most productive wind farms in the world with a load factor approaching 48 per cent."
