Genesis profit soars as hydro lake levels take a dip

Albert Brantley. Photo / Sarah Ivey

South Island hydro lakes are falling to levels last seen four years ago when there were power shortages but this has helped boost Genesis Energy's profit by 125 per cent.

Genesis - which is being primed for partial sale - has been able to benefit from climbing wholesale prices in the six months to December 31 by firing up its coal-burning units at Huntly Power Station more often.

The SOE reported an after-tax profit of $38.3 million for the six months to December 31.

While the country's farmers have benefited from rain over pasture land, southern hydro catchments have been relatively dry, with lake inflows at levels heading below those of 2008 when wholesale prices soared and big users were forced to cut back.

And although Genesis now owns power stations at Tekapo, it has been able to preserve lake levels by more generation from Huntly and its North Island hydro stations where water has been plentiful over summer.

Chief executive Albert Brantley said the company was unable to run Tekapo A and B stations as hard as it might have done.

"The thing about Tekapo is that it's sitting around 70 per cent, which is higher than other South Island storage simply because we've been able to balance the need to draw on the water with our ability to supplement it with thermal generation," he said.

Water levels are well below average and Transpower and generators have already met to discuss the storage position, although the industry is in a better position to cope with shortages.

"If you get a huge rain event it could all be over or it could continue to be like it is. The signs are there, it's as bad if not worse than 2008," said Brantley.

Genesis is the biggest energy retailer and slightly increased its share of the electricity market to just under 27 per cent and its share of the gas market to just under 44 per cent.

Brantley said the company's 37 per cent growth in pre-tax earnings to $190.48 million was built on diverse generation assets and being able to retain its large customer base.

Genesis Energy's 31 per cent share of petroleum sales from the Kupe oil and gas field also made an increased contribution. Sales rose from $52.2 million to $67.1 million.

The six months were characterised by continuing intense competition for retail electricity and gas customers and a higher average wholesale price of $79.89 per megawatt hour, up 30 per cent on the same period in 2011.

Brantley said the market share gains reflected the continuing success of a campaign to recruit new customers, particularly in the South Island, where the number of Genesis customer accounts for electricity and bottled LPG had doubled to 60,714.

Brantley said Genesis remained on track to put one 250MW coal/gas fired unit at Huntly into long-term storage in November as its certification will expire the following month.

SHIPLEY SAYS SHE'S READY

Genesis Energy's chairwoman Dame Jenny Shipley says she is fully prepared for a partial sale, even though the timing remains uncertain.

"That's a matter for the ministers. We are ready though if and when the government chooses to offer part of Genesis to the market. We are definitely fully prepared," she said.

The "mixed ownership" process has hit a hurdle with the Maori Council applying to the Waitangi Tribunal to halt sales until it resolves who owns water in hydro and thermal power stations.

Shipley said the company would accommodate whatever framework the government settles on. Genesis had "a strong policy" on stakeholder relations, of which iwi was a very important group, she said.