State owned enterprises in line for partial sale were given a mixed report card compared to already listed counterparts in measures analysed by PricewaterhouseCoopers.

Government data also shows lumpy dividend returns from the companies Mighty River Power, Meridian Energy and Genesis Energy.

In its Leading Energy report, PwC finds that across the board in the energy sector returns on equity have fallen from 6.3 per cent in 2009 to 5.2 per cent this financial year.

Genesis Energy's return on equity has fallen to 4 per cent, but listed TrustPower has maintained its return on equity at 8 per cent or more for the past three years.


"Genesis Energy's ROE fell, primarily as a result of lower underlying earnings and higher average equity due to asset revaluations and no dividends," the report by PwC partner Chris Taylor says.

Lower underlying earnings at Meridian and higher average equity resulted in a fall in its return on equity this year while at Mighty River Power, higher return was driven by an improvement in its underlying earnings for the year, albeit on a higher average level of equity.

TrustPower has maintained its returns on a consistent level of underlying earnings.

The report also analyses earnings before interest, taxation, depreciation, amortisation and fair value adjustments against megawatt hours produced. It effectively represents a measure of profitability of each business' electricity generation.

Factors that influence returns include the fuel costs and the relationship between the scale of a company's retail load compared to its generation portfolio.

"TrustPower continues to be the standout performer on this measure. This is driven by several factors, including its low level of generation production relative to its retail load and its largely renewable generation portfolio."

PwC points out that it also widely recognised across the sector that TrustPower's average costs to serve its retail customer base are lower than most of its competitors, while with a strong customer base in Tauranga, it continues to be able to charge premium prices partly because they get trust dividend cheques back.

The much larger Meridian Energy has a similar renewable generation portfolio and free fuel.


"The ebitaf/MWh earned by Meridian Energy, while lower than that of TrustPower, continues to demonstrate growth on the back of optimising assets, and an increased focus on costs," the report says.

Meridian has a long-term contract with New Zealand Aluminium Smelters to supply about 40 per cent of its generation at a discount to the market rates and, like other South Island generators, pays additional costs transporting electricity over Transpower's inter-island high voltage link.

Mighty River Power's portfolio is predominantly renewable but its geothermal activities and its Southdown thermal generation assets incur higher levels of direct operating costs than Meridian Energy and TrustPower's generation assets.

Genesis Energy, and to a lesser extent Contact Energy, have portfolios that comprise higher percentages of thermal generation and as a result the companies' ebitaf/MWh margins are hit harder by higher operating costs.

The SOEs have paid $4.65 billion to the government since they were formed. Solid Energy's predecessor CoalCorp was set up in 1987 and the power generators in the late 1990s.

Data from the Crown Ownership Monitoring Unit shows dividend yields and total shareholder returns have been volatile. Dividend yield is the cash return to the shareholder and in SOEs is calculated by taking dividends against the average commercial value of the company.


Total shareholder return is calculated using dividends paid and capital gains or losses, measured by valuation changes.

Mighty River had a dividend yield of 8.3 per cent and a total shareholder return of 7.5 per cent last year. The return was 55.2 per cent in 2009.

The company says between 2007 and 2011 total shareholder returns have grown about 86 per cent, averaging more than 15 per cent in compound growth through a combination of increases in valuation of assets and dividends paid to the government.

Meridian's dividend yield continued to be high in 2010 at 5.8 per cent while its total shareholder return was 28.2 per cent last year, up from and -0.5 per cent in 2009.

Genesis had a dividend yield of 2.6 per cent last year and a 15.6 per cent total shareholder return last year, a marked turnaround on the -15.4 per cent in 2009. Solid Energy had a dividend yield of 1.9 per cent last year, 2.2 per cent in 2009 and 0 per cent in 2008 and 2007, the monitoring unit says.

Listed companies calculate yield using dividends paid against their share price.


Contact Energy's dividend yield in 2010 was 5 per cent and in the 2011 year was expected to fall to 3.8 per cent in the 2011 year, according to its annual report. TrustPower's after-tax yield using the current share price of $7.30, and dividend of 40c was 5.4 per cent.