TransAlta clients leaving in droves

By FIONA ROTHERHAM

Power company TransAlta lost 32,000 customers - six per cent of its total customers - in the six months ending June before it announced increases in its daily fixed line charges.

Competitors say since then thousands more small householders in Auckland, Wellington and Christchurch have switched from the majority Australian-owned company in protest at higher bills. While TransAlta said the recent loss had not been significant, it points the finger at state-owned First Electric for offering power at "commercially unsustainable" prices.

Major shareholder Australian Gas Light is lending advice on how to fix problems with TransAlta's call centre and to arrest the customer churn.

Nationwide, 200,2060, or 11.75 per cent, of consumers have changed supplier since switching began in April last year. Some 21,559 consumers switched suppliers last month.

TransAlta yesterday announced net earnings of $18.2 million for the six months to June 30, following a change in balance date from December.

This and the transformation from an integrated utility to a separate retail/generation business makes comparisons difficult, but TransAlta chairman Ian Woodward said the result showed an underlying and progressive improvement in profitability.

Natural Gas Corporation is seeking full control of TransAlta at 279c per share, up from its present 76 per cent stake. The transaction is conditional on the largest minority shareholder, Hutt Mana Energy Trust, accepting the offer.

It is hoped the $166.6 million deal will be completed by November.

NGC forecast synergy benefits from the proposed merger at $10 million to $20 million within five years.

TransAlta already acts as NGC's electricity wholesale buyer and the pair hope to complete by Christmas a feasibility study into developing a new gas-fired generation plant in the North Island.

NGC yesterday posted a $43.5 million net profit after tax for the year to June 30, in line with analysts' expectations.

The result is down from the $60.2 million in the previous year but up 32 per cent if the $27.2 million contribution from the gas loan investment sold in May last year is excluded.

Earnings per share fell over the year from 15.2c per share to 10c.

The company will pay a final dividend of 3.5c, taking total dividends for the year to 8.5c.

Inclusion of TransAlta's assets more than doubled the size of the company to $2.2 billion compared with $1 billion last year.

Both companies expect energy trading to continue to be turbulent. NGC increased customers by 2236 to 138,721 although it had a net loss of 682 electricity customers.

Chief executive Richard Bentley said load gains in the commercial market had been offset by the loss of a small number of larger customers, targeted mainly by state-owned enterprise generators who had focused on their wholesale margins at the expense of retail to gain market share.

The present shutdown for at least six months of Contact's Otahuhu B gas-fired plant will hurt NGC's transported volumes in the coming financial year. NGC expects to recover these "significant" transportation fees from either Contact or from insurance.

NGC's shares closed down 2c yesterday to 163c while TransAlta dropped 5c to 285c.