Strong Kiwi blessing for TrustPower wind farm

The strong New Zealand dollar against the euro has encouraged TrustPower to push ahead with the first stage of its South Island wind farm.

TrustPower, which yesterday reported a 14 per cent rise in full-year after-tax profit, is buying European machinery and some components from the United States for its Mahinerangi Wind Farm near Dunedin.

Chief executive Vince Hawksworth said the "stars aligned" for stage one of the project, 12 turbines capable of generating 36MW. The company has permission to build a wind farm with capacity of 214MW.

Construction is scheduled to finish by April next year and output will be sold locally. This will allow high-voltage link costs to be avoided and underpinned the project's expected return on investment.

For the year ended March 31, after-tax profit rose 14 per cent to $119.4 million, despite a 3 per cent fall in revenue. Operating revenue fell 3 per cent to $759.3 million as a result of lower energy prices charged to those customers paying spot market prices.

Operating expenses including energy and line costs fell 7 per cent on the previous year, primarily driven by lower wholesale electricity costs and a fall in network distribution costs.

Customer numbers decreased by 2000 to 225,000 which Hawksworth said could be attributed to high rates of retail switching or churn felt throughout the industry.

This was due to sharp pricing offers and also jockeying ahead of the looming shakeup of state owned enterprise assets as part of electricity reforms.

Hawksworth said strong competitive pressure will help keep tariff increases below steep rises of the past few years but price rises above inflation were still likely for a period, as retail pricing aligns with the increasing long run marginal cost of new generation.

Australian wind production from the first full year of operation at the Snowtown Wind Farm in South Australia was 373 GWh which was 4 per cent lower than the expected long term average.

TrustPower incurred a $6.2 million impairment charge on its customer information system and is actively considering two options.

The company, half-owned by Infratil, will pay a final dividend of 19 cents per share, partially imputed to 13 cents per share, which, together with an interim dividend of 19 cents per share, provides a total payout of 38 cents per share for the year.