MightyRiverPower reports record profit

Thursday 3rd September 2009

Everything lined up right for MightyRiverPower in its 10h year of operation, giving the state-owned electricity company a 44% increase in net profit, to a record $159.6 million in the year to June 30.

The early, on-budget addition of the 100MW Kawerau geothermal plant, favourable wholesale electricity prices and much heavier use of hydro-electric generation instead of gas-fired generation at its Southdown drove the improved result.

The company also added nearly 33,000 new customers during the year, many plucked from Contact Energy strongholds after the listed generator-retailer caused customer ire by raising tariffs and directors' fees just before the last election, as the world economy went into meltdown.

MRP will pay the Government an ordinary dividend of $79.8 million, being 50% of net profit, and a one-off special dividend of $150 million, reflecting the factors above, and proceeds from the sale of the Marsden B oil-fired reserve station.

A 36% increase from renewable generation was "the key element" in the result, with 1500 Gigawatt hours produced from MRP's Waikato river system dams and the new baseload Kawerau plant.

Kawerau took the proportion of MRP's total production from geothermal from 9% the previous year to 21% in the latest full year. Production at Southdown was down 60%, significantly reducing gas costs, and represented only 7% of MRP's total electricity production, compared with 21% a year earlier.

MRP also benefitted from constrained grid connections between the North and South Islands at times during the year, which left South Island hydro generators Contact and Meridian Energy unable to send power to the North Island because of limitations on the Cook Strait cable's capacity.

Book-keeping entries showing changes in fair value of financial instruments were $47.1 million, up from $9 million and reflecting the imposition of International Financial Reporting Standards, while impaired exploration and development write-downs totalled $45.2 million ($28.1 million).

With Kawerau completed and Marsden B sold, net debt was down at $585.7 million ($624.7 million), while shareholders' equity rose to $2.622 billion, from $2.258 billion a year earlier.

Businesswire.co.nz

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