Meridian reports $67 million half-year profit

Meridian Energy reports $67 million half-year profit

State-owned electricity generator and retailer Meridian Energy has reported a first half profit of $67 million for the six months to December 31 last year.

Chairman Francis Small says the result is down on the $82 million reported at the corresponding time last year, but is well ahead of budget. It includes substantial, planned for, development costs for Project Aqua - which the company announced last week it would not be continuing with - and for proposed windfarms at Te Apiti in the Manawatu and at Wattle Point in South Australia.

“As a country, we face an increasingly tight situation matching supply and demand. Meridian’s strategies to address this situation include the development of new generation capacity, as well as initiatives for managing and reducing energy demand.

“We believe these initiatives will make a significant contribution towards improving energy supply.”

Dr Small says while the company’s half-year financial performance was solid and well ahead of plan, it did not achieve an acceptable market-related return on capital and must continue to target such a return.

Operating performance in New Zealand was ahead, with generation volumes being more than four percent above budget.

Generation towards the end of the six-month period was constrained due to lower than average hydro inflows during the spring and early summer of 2003/04 and concern over the winter risk for 2004.

In Australia, Southern Hydro performed well in the half year while Meridian’s hydro assets in New South Wales were affected by the prolonged drought and empty storage ponds.

Dr Small described the New Zealand operating environment as tough, with stiff competition among generators and retailers, a tightening of energy supply, and regulatory uncertainties.

He says the company expects electricity prices to continue rising.

“Indeed, prices must rise for New Zealand to ensure capital will flow to the investment required for additional generation.

“Meridian is encouraging public debate on fundamental issues of energy supply and demand as this country moves beyond the era of cheap Maui gas.”

Dr Small says recent hydro inflows (January, February and March 2004) have been above seasonal averages, making for a positive outlook in 2004, but “winter risk” remains a serious consideration for 2005 as electricity demand continues growing.

Meridian Energy at a glance

Meridian Energy is the largest of the three state-owned enterprises formed from the split of ECNZ on March 31 1999.

With a total New Zealand capacity of 2438 MW, it has some 30 percent of the country’s total electricity generation.

In addition to the eight hydro power stations based on the Waitaki River system, Meridian Energy owns and operates New Zealand’s largest hydro station at Manapouri, and the Wellington wind turbine.

The company supplies energy to the country’s single biggest electricity customer, the Comalco aluminium smelter at Bluff, while at the other end of the customer scale it serves householders and businesses nationwide from a purpose-built retail operations centre in downtown Christchurch.

Meridian Energy has interests in South Island hydro development opportunities, research and development investments in superconductor and fuel cell technologies and wind generation opportunities.

It employs about 200 people at offices in Christchurch, Wellington, Twizel and Sydney.

Generating Assets Waitaki River system

The Upper Waitaki system begins at Lake Tekapo, a storage lake with about 800 GWh of storage capacity, which represents about 22 percent of the country’s hydro storage.

Water passes through the Tekapo A power station and is diverted by a purpose-built hydro canal to Tekapo B station on the shores of Lake Pukaki.

Lake Pukaki has some 1600 GWh of storage capacity – about 44 percent of New Zealand’s total. Water is drawn by canal from both Lakes Pukaki and Ohau to supply Ohau A , B and C power stations, before being discharged into Lake Benmore.

After passing through the Benmore power station, the water flows down the Waitaki River through the Aviemore and Waitaki stations.

Manapouri/Te Anau system

The combined storage of Lakes Te Anau and Manapouri is 380 GWh. The Manapouri power station lies 178m underground on the western shore of Lake Manapouri, and is accessed via a 2km road tunnel.

After passing through the station the water flows into Doubtful Sound via two 10km-long tailrace tunnels.

All of the stations are designed to be remote controlled from a control centre at Twizel.

Australia

Meridian Energy Australia Ltd owns the Southern Hydro power stations in Victoria.

The ten stations have a total generating capacity of 540MW, with about 940 GWh of output.

The company also owns hydro generation facilities at five small dams in New South Wales and Victoria, generating a total of 62 MW.

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