Genesis Energy delivers carbon reductions

Genesis Energy delivers carbon reductions

Profit dented by higher fuel bill and lower wholesale prices

Genesis Energy’s commitment to reducing greenhouse gas emissions from its electricity generation activities has borne fruit in the year to the end of June 2007 with a 12 per cent reduction in CO2 emissions compared to the previous year.

The reduction was achieved without reducing thermal generation output, which remained relatively stable at 6,318GWh for the year (6,394GWh in the previous year).

Genesis Energy’s total generation was 200GWh below budget and the lower output impacted revenue, which fell from $1,987 million in 2005/2006 to $1,774 million in 2006/2007. Net profit after tax fell from $83.7 million to $61.3 million over the same period.

Genesis Energy Chief Executive Murray Jackson said the profit result was impacted by a number of factors, including the cost of fuel for thermal generation. Good water inflows into hydro schemes and mild winter conditions depressed wholesale prices..

“Our fuel cost was $320 million in the past year, compared to $280 million in the previous year. The increase was largely driven by the commissioning of our new 400MW combined cycle gas turbine and its related natural gas consumption,” he said.

Construction delays of six months to the 400MW CCGT were costly to Genesis Energy which had secured gas contracts to meet an early-2007 commissioning date. The delays primarily came from factory and field welding on the Heat Recovery Steam Generator.

“As a result we burnt more expensive gas which displaced coal fired generation and reduced our carbon emissions,” Mr Jackson said.

Genesis Energy’s Retail electricity and gas business continued to grow in 2006/2007. According to figures from the Electricity Commission, Genesis Energy has the highest share of the electricity market with 29.4 per cent. Genesis Energy is also the largest supplier in the retail reticulated natural gas market with approximately 50 per cent market share.

At the end of the financial year to 30 June 2007, Genesis Energy had a total of 715,033 customer accounts. Of this total, there were 84,153 commercial electricity customers and 433,823 residential electricity customers. In addition the wholly owned subsidiary Energy Online had 58,057 customers.
Cont’…
Progress was achieved in the company’s Generation Development business with the commencement of a mini-hydro project within the Tongariro Power Scheme. The 2MW Mangaio mini hydro, which takes water from a tunnel outfall into Lake Moawhango, is an example of maximising energy opportunities within an existing scheme. Genesis Energy has identified a number of similar opportunities within its hydro assets.

Development of more domestic gas supplies is critical to the future of Genesis Energy and New Zealand’s energy market. During the year, Genesis Energy was awarded a Petroleum Exploration Permit (PEP 38 1204) for the Mangatoa prospect off the coast of northern Taranaki. Over the first three years of the permit programme, Genesis Energy will conduct various studies and acquire new seismic data ahead of potential well-drilling.

Genesis Energy is a key participant (with a 31 per cent equity share) of the Kupe Oil and Gas Project. This project was committed in late June 2006 and work is now well underway, with 85 per cent of the project committed to contract at 30 June 2007. First gas and condensate from Kupe is expected to flow in the first half of 2009.

ENDS

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