Shares in TrustPower plunged yesterday after the electricity generator and retailer warned that low hydro lake levels would hurt its profit outlook.
Its shares fell 40c, or nearly 5 per cent, to close at $8.00 after the Tauranga-based power company said the 2008 drought could see a $15to $20 million fall in the company's mean year expectation of earnings before interest, tax, depreciation, amortisation and fair value movement of financial instruments.
Overall production from both hydro and wind for April, May and the June forecast is nearly 25 per cent below the long-term average for the quarter.
Chief executive Keith Tempest said the company's hydro generation portfolio has been hard hit by the lack of rainfall, which has seen hydro storage lake levels as low as 49 per cent of the average for this time of year. Lake levels have recovered slightly to 55 per cent of the average.
Wind generation has been variable. In May the output from the Tararua wind farm was half the average but during June to date, output has returned to the long-term average.
Tempest said the company has anticipated for the need to purchase from the spot market during extreme dry conditions.
"By the end of the first quarter TrustPower expects to have purchased approximately 30 to 40GWh from the spot market. This outcome is within the range of expectation during a period of very low hydrology."
He said an improvement to more typical flows would offer some opportunity for net sales to the spot market, potentially recovering some of the current lower earnings.
Last month, the company posted an after-tax operating surplus of $98.1 million for the year ending March 31, a fall of four per cent attributed to high wholesale electricity prices and interest costs.
One of the big five electricity generators and retailers in New Zealand, TrustPower owns 34 hydropower stations and the Tararua wind farm, one of the largest in the Southern Hemisphere.
