By Nick Stride
Friday 23rd July 2004 |
Text too small? |
News of Origin's buy of 51.2% of Contact Energy for an effective price of $5.67 a share came a week after Statistics New Zealand reported electricity prices had risen 10.4% over the year to June.
That elicited protests from the Electricity Networks Association, which said further price rises had already been either announced or flagged.
For example Meridian Energy, the largest generator-retailer, this month advised customers of price rises of 10-15%.
Fellow generator TrustPower has announced a $420 million hike in the value of its generation assets, reflecting their "higher earning potential."
"The major generators are doing extremely well from the government's regulatory fixation on the lines industry and clearly expect to continue to do so. Consumers are not so fortunate," the association said.
Data collected by the Ministry of Economic Development show that, since November 1999, the "average New Zealand consumer" (using 8000 kilowatt hours a year) has seen the annual energy bill, excluding line charges, rise by $206.
Multiplied by the 1.46 million residential accounts, that means New Zealand households' annual payments to generator-retailers has risen by around $300 million.
Explaining Contact's attraction, Origin said that, over the last three years, average retail tariffs had increased about 10% a year, "so Contact's earnings over the next few years will be driven by tariff increases already implemented."
Contact's net profit was $107.0 million in 2002 and $118.3 million last year.
ABN Amro is picking a net profit of $148.4 million this September year, $169.3 million in 2005, and $184.8 million in 2006.
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