TrustPower Limited Market Announcement
17 June 2008
Extreme Low Hydro Inflows Reduces TrustPower's Profit Outlook
The New Zealand major hydro storage lakes have been as low as 49% and are currently 55% of average for this time of the
year and the electricity industry has commenced a nationwide power savings campaign.
TrustPower's hydro generation portfolio has been impacted by this year's nationwide drought. Wind generation has been
variable. In May the output from the Tararua Wind Farm was half of average but so far during June that output has
returned to the long-term average.
Overall production from both the hydro and wind assets for April, May and, as forecast for the remainder of June, is
nearly 25% (140 GWh) below long term average for the quarter.
TrustPower anticipates that from time to time in extreme dry conditions it will be required to make purchases from the
spot market at times when the spot market is high. By the end of the first quarter TrustPower expects to have purchased
approximately 30-40 GWh from the spot market. This outcome is within the range of expectation during a period of very
low hydrology.
Looking ahead beyond the first quarter, TrustPower expects to be reasonably balanced. An improvement to more typical
hydro inflows across the hydro generation portfolio would offer some opportunity for net sales to the spot market and
potentially some recovery of the current lower earnings.
The financial impact on TrustPower of the 2008 drought is uncertain but it could see Earnings Before Interest Tax
Depreciation, Amortisation and Fair Value Movement of Financial Instruments ("EBITDAF") fall below the Company's mean
year expectation by between $15 and 20 million.
TrustPower considers the industry campaign to encourage prudent electricity usage as an appropriate national response to
the recent period of exceptionally low rainfall to the critical large South Island storage reservoirs. Spot prices in
the market are providing good co-ordinating signals to market participants and to industry and TrustPower considers it
important that spot prices reflect market conditions. The industry campaign allows fixed priced residential and small
business customers to also contribute to sustaining the reliability of New Zealand's electricity system at the lowest
possible cost to the economy.
ends