Transpower announces half-year result

25 March 2008

Media release

Transpower announces half-year result

Transpower, the owner and operator of the national electricity grid, made good progress on planning and implementing necessary investment in the grid during the six months ending 31 December 2007.

The operating surplus after tax for the six months to December 2007 was $51 million, down $23.6 million on the $74.7 million achieved in the same period last year. This result reflects in part the costs of the Market Systems Project (MSP), which are not expected to be fully recovered from the Electricity Commission. The MSP project is critical to the electricity industry as a whole as it will provide improved ability to deal with the increased complexity of load growth and increasing amounts of renewable generation.

Capital expenditure over the period was $156.0 million, an increase of $21.3 million over the corresponding period in the previous year. Operating expenses rose by 15 per cent to $125.8 million compared with $109.0 million the previous period. This increase primarily reflects increases in maintenance expenditure for the grid.

Transpower chairman Wayne Brown said it was unfortunate that the number of unplanned interruptions in the last six months exceeded targets, as limiting interruption to electricity supply is a key focus for the company.

“This result largely reflects some of the increasing challenges of operating in an environment where the system is becoming increasingly loaded, and many of the assets are aging. As the assets get older, greater maintenance is required, however finding an appropriate time to take the equipment out of service is getting harder due to high load growth.”

Proposals to upgrade the National Grid, worth around $548 million, were submitted to the Electricity Commission. $987 million was approved for planned works previously submitted.

Mr Brown said Transpower also addressed a number of trouble spots on the network in the past six months by improving voltage support, upgrading substations, building new switching stations and upgrading existing transmission lines.

“This work, combined with the investment programme underway, will help strengthen the National Grid and increase reliability and security of electricity supply to homes and businesses throughout New Zealand.”

Transpower also welcomed a number of events that will help to clarify the operating uncertainty of previous periods into the future. These included, in particular, a revised Government Policy Statement on electricity governance and the National Policy Statement on Electricity Transmission.

ENDS

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