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Meridian Energy result buoyed by plentiful water

Meridian Energy result buoyed by plentiful water

Heavy inflows into Meridian Energy’s storage lakes have resulted in a strong 2004 year result for the state-owned power generator and retailer.

Meridian today reported a full-year profit of $132.9 million which Chairman Francis Small says is largely due to the “very good” inflows into the company’s storage lakes during the second half of the year.

“This had us going into the winter with plenty of water - in contrast with the last two years, which saw us hard-hit by low inflows.”

The result was affected by the $31 million write-down of costs associated with Project Aqua.

Dr Small says Project Aqua has thrown into sharp focus the debate about one of New Zealand’s most precious resources – water.

“It was this issue which led to the Resource Management Act (Waitaki Catchment) Amendment Bill, which was tabled in September. Despite the widely-held view that this Bill was designed to smooth the path for Project Aqua, Meridian did not seek it, and indeed advised against it.

“The major uncertainty raised by the Bill was over our consents in the upper Waitaki Valley. This in turn created concerns about Meridian’s financial capacity to deliver Project Aqua.”

Dr Small says the relationship between inflows and financial performance over the last few years demonstrates how crucial water is to the commercial success of the company, and to the value of the assets it owns, particularly those on the Waitaki River.

He says these are the assets most at threat from competing demands for the water resource – primarily from irrigation interests.

Dr Small says with hydro playing such a key role in New Zealand’s electricity supply, any loss of water from the Waitaki chain would represent not only a threat to Meridian, but to the country’s security of electricity supply.

While the cancellation of Project Aqua had been a tough decision, Dr Small says the company has had a much more positive experience with its wind development programme.

“In the course of the year we have made rapid progress on the country’s biggest windfarm at Te Apiti. We will have this development fully commissioned before the end of this calendar year, with other developments lined up to follow in quick succession.”

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