Southern Hydro success

Thursday, 16 March 2006

Southern Hydro success the half-year highlight for Meridian

The sale of the Southern Hydro subsidiary for A$1.46 billion, resulting in a $652.5 million profit, was the highlight of the six months to 31 December 2005 for state-owned power company Meridian Energy.

The company released its half year report today, revealing a net after-tax profit for the period of $752.9 million; or $112.7 million excluding the Southern Hydro result. This compares with $96.1 million for the same period last year.

Chief executive Keith Turner says the half-year result is very satisfactory in view of the poor hydrology conditions in the southern hydro lakes for the last six months.

“Hydro inflows on the Waitaki and at Manapouri were significantly below average for most of the half-year, and for the December 2005 quarter inflows on the Waitaki were the third-lowest on record.

“In response, spot prices rose sharply, and during this time Meridian has been purchasing energy to meet customer needs to make up for its reduced generation output.”

Meridian has also recently announced its intention to begin construction on Project White Hill, a 58MW windfarm in Southland.

Resource consent was also obtained in December for Meridian’s proposed 210MW windfarm at Makara (south coast of Wellington). This consent has been appealed and the Environment Court will hear the appeal in the middle of the year.

Meridian (and others) have also appealed a number of technical issues in the final Waitaki Water Allocation Plan.

Dr Turner says Meridian is also working closely with irrigation interests in the Waitaki region, with its shareholding in the North Otago Irrigation Company instrumental in bringing a major irrigation development into being.

A recent worrying trend, however, has been the discovery of the invasive algae didymo in waters feeding Meridian’s hydro stations.

“We are working with other stakeholders to assess the likely risks presented by didymo, and the costs of protecting our assets,” says Dr Turner.

Other issues for the next half-year included the possibility of a winter power shortage due to the continued poor hydro inflows, and the negotiations with Comalco on electricity supply to the Tiwai Point aluminium smelter beyond 2012.

ENDS

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