16 Mar 2009

Power companies urge investment in grid

2:15 pm on 16 March 2009

Mighty River Power chief executive Doug Heffernan says the impact of transmission constraints is not affecting its business, but he warns that Transpower needs to keep investing in the grid.

The publicly owned electricity generator and retailer saw its gross earnings rise 34% to $234.5 million in the six months to December, due to increased generation and greater hydro inflows on the Waikato River.

In contrast, earnings at Meridian and Contact Energy have suffered because of restrictions in shifting power between the South Island and North Island, which are not expected to be fixed until 2012.

Mr Heffernan says Mighty River has benefited from having its generation near its key markets, such as Auckland.

However, he says more investment is required to get supplies from future geothermal plants to the market.

Mighty River Power made underlying profits of $154 million in the six months to December. Accounting revisions cut the final profit to slightly more than $30 million.

Constraints affect Meridian

Meanwhile, transmission constraints, particularly on moving power between the South Island and North Island, continue to affect Meridian Energy's finances.

The state-owned energy company on Friday posted an underlying profit of $85 million for the six months to December, a 15% drop on the same period a year ago. That became a $20 million loss after accounting revisions.

Chief executive, Tim Lusk, says transmission constraints had a significant impact on the result, but is satisfied with the plans Transpower has in place to upgrade the network.

He says the company's generation is in the South Island and it wishes to sell a significant amount of electricity into the North Island market, so any transmission constraint is significant.

Genesis Energy, the third-biggest energy company, made a profit of $43 million in the six months to December.