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Southern Hydro sale supercharges Meridian result

Media Release
For immediate release Wednesday October 11 2006

Southern Hydro sale supercharges Meridian result

State-owned power company Meridian Energy has reported a post-tax profit for the 2005-06 year of $856.8 million – thanks to its highly successful foray into Australia.

Reporting the result today Chairman Wayne Boyd says the value gained from the sale of the company’s Australian subsidiary, Southern Hydro, highlighted Meridian’s strategic capability.

“We returned the Southern Hydro sale proceeds to the shareholder via a special $800 million dividend; bringing our total contribution to the Crown through dividends to $879 million for the 05-06 year. That is an outstanding result for our shareholders, who are all the people of New Zealand.”

Chief Executive Keith Turner says the year was characterised by historically low inflows into the company’s Waitaki storage lakes, which meant that excluding the Southern Hydro gain the company’s after-tax profit stood at $243.1 million – compared with $218.2 million the previous year.

The company’s total generation was down 15 percent on the previous year, and its share of total generation slipped to 28 percent. Typically, Meridian generates about a third of the country’s electricity.

Net energy revenues declined significantly as the company bought at high spot prices on the wholesale market to cover its contracted supply position for extended periods.

“By making prudent use of the water we had, we assisted the supply situation through 2005-06. Comalco, New Zealand’s largest consumer assisted by reducing demand by 10 percent in the lead-up to winter.

“General moderation in economic activity held back demand growth for much of the year, but this was off-set by an unusually cold winter which saw consumption records being set. This, at times, fully stretched supply.”

Other highlights for the year included:
* finalisation of the Waitaki Water Allocation Plan which was achieved without disruption to existing hydro operations while preserving options for future development
* the first full year of operation of the Te Apiti wind farm with satisfactory levels of output
* start of construction of White Hill wind farm in Southland and consent for Project West Wind near Wellington

Dr Turner says the company is looking forward in the immediate future to a series of world-class wind generation developments, notably the Project Hayes development of up to 630 megawatts on the Lammamoor Range in Central Otago.

Meridian was also pursuing a number of hydro generation opportunities, particularly a tunnel-based development on the North bank of the Waitaki River which had “real potential”, Dr Turner concluded.


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