Contact Energy Customer Base Keeps On Growing

FOR IMMEDIATE RELEASE

1 August 2002

Contact Energy Customer Base Keeps On Growing In Third Quarter

Contact Energy’s customer base again grew more strongly than projected, with a net increase of 17,000 new customers during the third quarter of the 2001/02 financial year. Retail sales volumes also recorded rapid growth, reaching 3,852 GWh for the nine months to 30 June 2002, a 20 percent increase on the equivalent period last year. This growth reflects Contact’s strong commitment to delivering the benefits of competition to the retail marketplace. The sales growth has also helped Contact to balance the impact of lower wholesale electricity revenue on the results for the first nine months of the financial year.

Contact today released its unaudited financial results for the nine months to 30 June 2002. The tax-paid surplus for the nine months to 30 June 2002 was $70.4 million, down on the $76.0 million net surplus achieved in the same period last year, during a period when wholesale “spot” market prices were rising to reflect dry hydro conditions.

Contact’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the nine months was static at $219.5 million, compared with $219.9 million for the equivalent period in 2000/01.

Wholesale electricity prices averaged $45.93/MWh for the first nine months of this financial year, compared with $61.90/MWh for the equivalent period in 2000/01.

“This difference reflects the extremely dry, cold winter experienced in 2001,” said Contact’s Chief Executive and Managing Director, Mr Stephen Barrett. “For the 2002 winter, storage levels are close to or above mean. The resulting softer wholesale electricity prices are expected to persist through to the end of the financial year.”

Wholesale electricity revenue was $293.7 million for the nine months under review, down 24 percent on the $386.0 million achieved in the same period in 2000/01.

However, strong growth in retail customer numbers and sales volumes has increased Contact’s total electricity revenue by 11 percent from $488.3 million in the nine months to June 2001 to $541.1 million in the period under review.

“A key factor in this increase has been Contact’s success in gaining 52,000 new electricity customers since June 2001, an increase of 14 percent,” said Mr Barrett. Total electricity customers now top 430,000, with significant growth in recent months in small and medium-sized enterprises.

Contact’s total gas and electricity customer base stood at a new record high of 536,000 in June 2002.

“We owe much of our recent growth to the competitive activity of our acquisition division, Empower, which has moved into several new markets, including Christchurch and Wanganui, targeting business customers as well as households,” Mr Barrett said.

In aggregate, Contact’s retail electricity sales grew by 20 percent, with sales totalling 3,852 GWh in the nine months to June 2002 (3,202 GWh in the same period for 2000/01).

This increased volume has lifted Contact’s average level of hedge cover from around 60 percent in the nine months to 30 June 2001, to approximately 77 percent in the latest period. The average level of hedging through to the end of this financial year is likely to be approximately 80 percent although this will depend on actual generation volumes as well as future growth in retail.

External revenues from Contact’s gas business for the nine months to 30 June 2002 were $205.3 million, slightly down on last year ($208.1 million), reflecting the loss of some lower margin customers. Total external sales volumes for the period were 37.4 PJ, compared with 45.6 PJ for the equivalent prior period.

Mr Barrett confirmed that Contact continued to pursue the possibility of purchasing some of the Asia-Pacific assets of NRG Inc.

Looking ahead, Mr Barrett said, “Contact remains on track to achieve the level of net surplus for 2001/02 that was forecast in the Grant Samuel Report released last November. While there are always upside and downside risks around the outlook, at this point the forecast appears attainable, unless there is some major event, such as the failure of a major generation plant.”

ENDS

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