TrustPower: Sell-off would protect supply

Trustpower's Tararua Windfarm. Photo / Dean Purcell

TrustPower has called for the partial privatisation of state-owned power companies to improve the security of electricity supply.

Chairman Bruce Harker told shareholders at the company's annual meeting in Tauranga that 20 per cent of state-owned enterprises could be sold.

TrustPower is listed and is 50.5 per cent owned by infrastructure investor Infratil and 32 per cent owned by Tauranga Energy Consumer Trust.

The Government has said there would be no privatisation of state-owned enterprises during the current term but yesterday's call is in line with others in the private sector who say the power companies are not efficiently run and lack accountability.

Infratil last week announced the launch of a $500 million fund to invest in New Zealand infrastructure.

Harker noted that there was a ministerial review of the electricity market under way and any legislative change arising from it would be enacted by June 2010.

"TrustPower considers the New Zealand market structure to be fundamentally sound and in our experience retail competition is alive and well," he said.

But "refinements" were needed, including improved governance of the industry's market institutions.

Retail electricity companies had to be made accountable for contracting to sell more power than they had supply to cover in a dry year.

"In New Zealand, commercial accountability is also considerably blunted by the dominance of unlisted state-owned enterprises.

"Security of supply for New Zealand would be improved by partial privatisation [a 20 per cent float] of the state-owned enterprises, which would result in a permanent strengthening of commercial accountabilities," Harker said.

TrustPower is the fourth largest electricity retailer and fifth largest generator. It owns 36 small to medium-sized hydro stations and wind farms in Australia and New Zealand.

The company said that in the three months to June 30, its first quarter, it had seen lower than average wholesale electricity prices due to above average hydro storage levels in the South Island.

TrustPower's New Zealand generation production was 488GWh in the quarter, up 8 per cent on last year, but around 14 per cent below expected long-term average production.

New Zealand hydro storage levels have fallen close to the long-term average during July and wholesale spot electricity prices have begun to firm as a result.

The Snowtown Wind Farm in Australia produced 79GWh during the first quarter which was around 13 per cent below long-term expectation.

Mass market customer sales were up 2.7 per cent in the first quarter compared with the prior period.

Time of use sales were down 22 per cent due to the restructuring of a major industrial contract in June 2008.

"While it is too early to make predictions with respect to TrustPower's full-year trading result the directors are satisfied with the company's year-to-date trading performance despite lower than expected generation production during the first quarter," Harker said.

- NZPA