TrustPower proves less really does mean more

TrustPower sold less power to fewer customers, generated less electricity but managed to increase half-year profits by 26 per cent.

The smallest of the five big power generator-retailers' shares closed up 17c, or nearly 4 per cent, on news of the profit and dividend yesterday, finishing the day at $5.57.

For the first half of the financial year, lower-than-average hydro lake storage levels and water inflows meant spot prices on the wholesale market were up - which means more money for TrustPower's generation arm.

With TrustPower's own lake levels at "satisfactory levels" and enough deals to buy power in place, the company told the exchange yesterday it was "adequately positioned to meet customer demand over the remainder of the 2006 financial year".

Customer numbers buying power from TrustPower's retail arm fell 2000 to 222,000 during the six months and the total amount of power sold fell from 3009 gigawatt hours (GWh) to 2453 GWh.

Most of this drop in power sales was due to one large industrial customer, paper-maker Norske Skog, deciding to buy its electricity straight from the national grid, rather than through Trustpower.

Listed infrastructure investment company Infratil owns 35.2 per cent of TrustPower, US company Alliant Energy has 23.8 per cent and the Tauranga Energy Consumer Trust holds a 28.6 per cent stake.

Alliant and Infratil have a close relationship, with a "co-investment agreement" covering their respective shareholdings in TrustPower. Alliant NZ is also a 5.02 per cent shareholder in Infratil.

Based in Tauranga, TrustPower has a range of small hydro-electric stations across New Zealand and a windfarm on the Tararua Ranges near Palmerston North where it is to install another 31 turbines, more than doubling generation at the site.

The cost of this expansion is $180 million, with full commissioning due just before winter 2007. Construction will be paid from the company's existing debt facilities.

Once this expansion is complete, the Tararua farm will produce more than 25 per cent of TrustPower's total generation.

Wind is not proving so profitable in Australia though, where TrustPower is reviewing its investments after new technical conditions were imposed on any plans to build windfarms in South Australia.

Shareholders have been told financial prospects for the full year are good though.

"The first-half result is pleasing and reflects TrustPower's ability to manage wholesale market risks in high and low price periods. At this stage, the directors are confident that another good financial outcome for the full year is achievable."