Mixed ownership means more disclosure from power firms, says CEO

Vince Hawksworth. Photo / Supplied

TrustPower's chief executive says he welcomes the prospect of partially privatised state-owned energy companies, partly because they will have to disclose more about their operations.

This week's Budget is likely to include further details on mixed ownership of the companies - Meridian Energy, Genesis Energy, Mighty River Power and Solid Energy - that the Government will campaign on in November's election.

While the Government would retain majority ownership, selling off part of the companies is seen as a way of paying off debt and also exposing them to the more rigorous scrutiny other sharemarket-listed companies are exposed to.

In spite of a Government requirement to disclose more information about their businesses, most of the state-owned enterprises fall short of the two listed power companies, TrustPower and Contact Energy.

TrustPower's chief executive, Vince Hawksworth, said his company saw the plans as positive, especially as information from SOEs tended to be "opaque".

"TrustPower is not concerned about competition as long as it is based around rational commercial behaviour. We would expect that mixed ownership would lead to much more focus on commercial outcomes in those businesses."

Investments by the SOEs had been less than optimal, he said.

"We already have a listed competitor - we're quite prepared for people to become more efficient and that's got to be good for the market and good for customers as well," he said.

"I don't know if it's going to make a huge difference of our understanding but clearly it will give us a better view of the total landscape. It's healthy overall for New Zealand."

TrustPower on Friday reported a $112.4 million profit after tax for the year ended March 31, down 6 per cent on last year. The profit last year had a $12.4 million accounting item relating to gains on financial instruments.

Hawksworth said electricity prices would remain volatile this year.

Although TrustPower was not caught out in March by an extreme price spike when spot prices for Genesis power jumped to $20,000 per megawatt hour (MWh) in the upper North Island during a transmission shutdown, Hawksworth said price caps should be introduced for such cases.

"This market has no cap. We were not caught but we would say we're concerned [about] those sort of prices which were damaging and that was not good for the sustainability of the market."

The Electricity Authority is considering submissions on a draft ruling that called for greatly reduced charges.

Hawksworth said Australia had lost load caps of A$12,500 a MWh.

"Because of that it allows people to manage their risk. We advocate a similar sort of regime in New Zealand."

TrustPower's biggest shareholders are Infratil and the Tauranga Energy Consumer Trust.

Its earnings before tax were $116.5 million, little changed from $116.8 million last year.

Earnings before interest, tax, depreciation, amortisation, fair value movements of financial instruments and asset impairments were $274.4 million from $273.9 million last year.

TrustPower said the current New Zealand hydro storage position should ensure a comfortable level of electricity supply to meet demand over winter.

Its overall New Zealand generation production of 2286 GWh was up 269 GWh, or 13 per cent, on the previous year and slightly above the expected long-term average. Total hydro production was up 301 GWh (21 per cent) on the previous year and 6 per cent above the expected long-term average, due to above-average inflows over the course of the year into North and South Island catchments.

Wind production was down 32 GWh (5 per cent) on the previous year and down 11 per cent on the expected long-term average.

Wind production from the Snowtown Wind Farm in South Australia was 328 GWh, which was 45 GWh (12 per cent) lower than the previous year and 16 per cent lower than the expected long-term average.

The company said its review of wind data did not indicate a long-term reduction in the resource.