KEY POINTS:
Power company TrustPower is warning its profit outlook is being hurt by low hydro lake levels.
The company said today that overall production from its hydro and wind assets for April, May and, as forecast for the remainder of June, was nearly 25 per cent, or 140 gigawatt
hours (GWh), below the long term average for the quarter.
The financial impact of the 2008 drought was uncertain, TrustPower chief executive Keith Tempest said.
It could see "earnings before interest tax depreciation, amortisation and fair value movement of financial instruments" (ebitdaf) fall below the company's mean year expectation by between $15 million and $20 million.
Tempest also said that TrustPower anticipated that from time to time in extreme dry conditions it would need to buy from the spot market at times when the spot market was high.
By the end of the first quarter it expected to have bought about 30-40 GWh from the spot market, which was within the range of expectation during a period of very low hydrology, Tempest said.
New Zealand's major hydro storage lakes had been as low as 49 per cent and were now 55 per cent of average for this time of the year and the electricity industry had started a nationwide power savings campaign.
At the same time wind generation had been variable. In May the output from the Tararua Wind Farm was half of average but so far during June that output has returned to the long-term average, he said.
Looking ahead beyond the first quarter, TrustPower said it expected to be "reasonably balanced".
An improvement to more typical hydro inflows across the hydro generation portfolio would offer some opportunity for net sales to the spot market and potentially some recovery of the current lower earnings.
Spot prices in the market were providing good co-ordinating signals to market participants and to industry, and it was important those prices reflected market conditions.
TrustPower shares closed at $8.40 yesterday, having ranged between $9.50 and $6.95 in the past year.
The company is 50.5 per cent owned by listed infrastructure investor Infratil, with another 33 per cent owned by the Tauranga Energy Consumer Turst.
With its headquarters in Tauranga, Trustpower owns 34 smaller sized hydropower stations across New Zealand and the Tararua wind farm near Palmerston North.
- NZPA
