Trustpower has trimmed its full-year earnings guidance by as much as $20 million, citing lower wholesale electricity prices and a reduction in expected generation from its hydro stations.

The company is expecting earnings before interest, tax, depreciation, amortisation and changes in financial instruments of $185 million to $195 million for the year ending March 31.

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That is down from the $200 million to $215 million range the firm signalled in early November. Ebitdaf last year was $222 million.

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The shares fell 2 per cent to $7.20, trimming its gain over the past 12 months to 10.3 per cent.

Trustpower is the country's fifth-largest electricity retailer and uses a string of more than 30 small hydro plants to complement supplies it buys from the wholesale market to power its customers. It also buys the output from Tilt Renewables' Tararua and Mahinerangi wind farms.

Wholesale prices collapsed late December after storms in the South Island caused widespread flooding and pushed national hydro storage to its highest level in more than 10 years.

Power prices have been higher in recent weeks, amid tight gas supplies and as upgrade work on Transpower's high-voltage link between the two islands reduced supplies, but were not as high as Trustpower had been projecting.

Trustpower had warned in November that the HVDC work and planned gas field maintenance made forecasting the March quarter difficult.

Material the company provided today showed average market prices in December were about $40 a megawatt-hour lower than the company had been expecting in November, while prices in January were about $20 lower.

Electricity futures for February and March also fell last week as more storms on the South Island again pushed storage levels in some catchments above maximum operating levels.

Trustpower said the main factor in the revised forecast was "materially lower" wholesale prices, with forward spot prices for the rest of the financial year also "significantly" lower than in November.

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"While overall generation volume is broadly in line with expectation the timing of generation, especially wind acquired under contract, occurred more in lower-priced periods than expected," Trustpower said in a statement.

"Generation for the remainder of the year is expected to be below average due primarily to low North Island inflows but also due to retaining South Island storage in response to below-average prices."

Trustpower's South Island dams typically account for almost half of its generation.

The firm's presentation showed that most of the earnings revision was due to the impact of lower generation and lower power prices.

Generation operating costs were also higher, while volatile gas prices and increased carbon costs had also reduced gross margin on the firm's gas sales.

Improved margins on electricity sales, and better than expected margins from the firm's growing internet and phone business, only slightly offset those impacts.

- BusinessDesk