Electricity company Trustpower's operating earnings for 2013 are expected to remain flat for the first time in more than 10 years due to the drought and falling customer numbers.
Forsyth Barr is forecasting that the publicly listed company's operational profit for the year to March to fall 2.6% to $292 million compared with the previous year.
Trustpower's electricity source is mostly hydro, and in the past six months generation has dropped by about 10% because of the long, dry summer.
Forsyth Barr senior equity analyst Andrew Harvey-Green says a drop in customers due to intense retail competition has also potentially contributed to a fall in profit, but it is not a cause for concern.
"For Trustpower I guess, it's more a reflection of what's going on in the electricity market in terms of the level of competition that is there.
"In the last year they haven't actually completed any new generation, so they haven't had that advantage coming through.
"You would expect profit levels to be reasonably stable in those sorts of conditions - it's only 2.5% down, which isn't significant in the scheme of things.
"Looking ahead, Trustpower's got some fairly good projects in New Zealand but, more importantly, overseas. In Australia, they've got some good irrigation opportunities."
Mr Harvey-Green says it will be another two to three years before Trustpower's profits grow again.
Trustpower has about 220,000 customers, making it the country's fifth largest retailer.
Mr Harvey-Green says customer numbers have probably now bottomed out and should start slowly picking again.
Meanwhile, a Forsyth Barr electricity market update shows the Labour and Green parties' announcement to introduce a single electricity buyer reduced Contact Energy's and Trust Power's market value by $415 million collectively.
It also says the sector is going through a soft patch with weak demand and new generation built in the past five years creating over-supply.
