Mighty River reports mixed result

Mighty River's Kawerau geothermal plant

Mighty River Power is touting its latest operating result as its best ever but a big charge on interest rate contracts reduced its bottom line profit.

Its earnings before net interest expense, income tax, depreciation, amortisation and financial instruments in the six months to December 2008 rose to $234.5m from $175.1m last year.

A $121.4m charge for movements on interest rate derivatives went through the income statement and reduced the net profit after tax to $30.7m from $83m last year.

The state owned energy company pays a dividend annually.

Mighty River Power owns Mercury Energy, which attracted national publicity when south Auckland woman Folole Muliaga died after the power to her home was cut, leaving the oxygen machine she relied on inoperable.

The company said today Mercury Energy continues to grow its market share, recording a net gain of 6000 customers for the period, bringing total customers to 389,600.

It has also acquired more than 2000 customers since entering the Dunedin market in October 2008 and has seen pleasing growth in Wellington where Mercury now has nearly 9000 customers since entering that market in 2007.

Mighty River's sales were a record at $741.3m in the six month period compared to $578.4m in the same period last year.

"The impact of the company's diversified power generation strategy - particularly increased geothermal generation capacity and the flexibility of its expanded co-generation plant at Southdown - have significantly improved generation productivity and efficiency," said chief executive Doug Heffernan.

Heffernan said the electricity industry experienced extreme tests during 2008 with severe drought in the Waikato, low in-flows in the South Island, and the unexpected shutdown of part of the capacity of the Cook Strait cable, limiting the scope for electricity to be carried between the North and South Islands.

But Mighty River experienced record inflows to the Waikato hydro system in July and August 2008, resulting in higher than average hydro generation after the summer-autumn drought.

Wholesale power prices were high when Mighty River had high generation volumes.

Heffernan said the introduction of new 100MW geothermal generating power station at the end of June at Kawerau boosted the company's output from its geothermal plants.

Geothermal generation now represented 18 per cent of the company's generation portfolio.

The company is also building a 132MW Nga Awa Purua geothermal power station.

The company had total assets of $4.044 billion and net debt of $550m.

- NZPA