One-off transaction boosts half-yearly result

31 March 2005

One-off transaction boosts half-yearly result

A one-off benefit from a cross-border lease transaction has boosted Transpower’s half-yearly surplus, chairman David Gascoigne announced today.

For the six months ended 31 December 2004 Transpower achieved a surplus after tax of $77.3 million, compared with $31.5 million in the same period a year ago.

This includes a one-off $34.6 million benefit from a cross border lease transaction over the majority of South Island High Voltage Alternating Current (HVAC) assets. Most of the tax and costs involved in this transaction were met by Transpower in 2003/04. (Similar cross-border lease agreements were signed in 1996 for the Cook Strait cables and the High Voltage Direct Current (HVDC) converter stations).

With continued strong growth in the demand for electricity, transmission revenue of $255.3 million was $34.9 million higher than for the previous period. In December 2004 Transpower announced that overall transmission charges for the new pricing year effective 1 April 2005 would be maintained at the existing level.

David Gascoigne said that operationally the national grid continued to perform well in spite of a number of weather-related challenges. “The HVAC grid met its availability target as set out in the Statement of Corporate Intent. The availability of the HVDC link between the South and North Islands was less satisfactory, with a fault occurring in one of the three cables under Cook Strait in October 2004. A $12 million repair job has just been completed with the cable returning to service last week.”

“A key focus during the six month period was progressing plans for new investment in the national grid to ensure it meets New Zealand’s needs into the future”, said David Gascoigne.

“In October 2004 public consultation began on two route options for a proposed 400 kV transmission line in the upper North Island. The consultation process will continue until June 2005, at which point Transpower intends to make a decision on a preferred route. During this period Transpower is also intending to seek approval from the Electricity Commission.

“The process to date has highlighted the difficulties of balancing national need against local impacts. There is a real challenge to get the balance right, so that necessary investment takes place, while respecting the rights of landowners and the interests of communities.

“Transpower must continue with its programme of significant grid investment, because New Zealand’s future economic prosperity relies heavily on having a secure, reliable supply of electricity,” David Gascoigne said.

ENDS

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