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Dry year hits Meridian Energy result

Dry year hits Meridian Energy result

Autumn¹s electricity shortage has had a heavy impact on the second-half earnings of state-owned electricity generator and retailer Meridian Energy, which has announced a full-year profit of $109.3 million.

This follows a profit of $83 million for the first half year to December 2002. The result compares with a profit of $84 million for the full year to June 2002, a year which was also severely affected by low inflows into the company¹s South Island hydro storage lakes.

Chairman Francis Small says the robust financial performance of the first half was seriously eroded by the events of autumn when low inflows into hydro lakes, combined with a shortage of thermal fuel, caused wholesale electricity prices to soar.

³A key learning for the industry is that information on thermal fuel supplies is just as important as data on lake levels. Going forward, transparency of that information will be critical to every player, especially given that growth in demand is expected to continue to outstrip new supply over the next two to three years.²

The report carries a warning about what the company sees as a looming national issue over security of electricity supply.

Dr Small says population and economic growth is driving up the demand for electricity and if it continues, it will be beyond the means of the country¹s current dry-year generation capacity within a few years. He says the threat of a power shortage for the second time in three years has brought home to New Zealanders the fact that the country¹s era of relatively inexpensive electricity is coming to an end.

³Hydro electricity and Maui gas have helped New Zealand benefit from some of the cheapest electricity in the world, but as gas supplies dwindle our growing energy needs will have to be met by new generation facilities that will come at a higher cost.

³However, this has an important benefit ­ it makes renewable energy solutions that were previously uneconomic increasingly viable.

³Meridian is committed to sustainable solutions such as wind power and further hydro-electric generation, and we are doing more than any other generator to help secure New Zealand¹s future energy supply.²

The company¹s major initiatives include Project Aqua, the proposed 3000 GWh hydro development in the lower Waitaki valley, and the Te Apiti windfarm site in the Manawatu.

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