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NZ: Mighty River Power profits surge through geothermal and hydro

Alexander Richter 4 Sep 2009

New Zealand's Mighty River Power has seen a surge in profits of up to 44% mainly through higher lake levels having an impact on its hydro power plants output and new geothermal plants.

As reported by Bloomberg, New Zealand’s Mighty River Power has seen a surge in profits of up to 44% mainly through higher lake levels having an impact on its hydro power plants output and new geothermal plants.

According to the article, “Net income rose to NZ$159.6 million ($107 million) in the 12 months ended June 30 from NZ$111 million a year earlier, the government-owned utility said today. Generation rose 16 percent to 6,118 gigawatt-hours as geothermal output more than doubled and hydro-power gained 19 percent, slashing production and fuel costs at the company’s gas-fired Southdown plant.

Mighty River, based in Auckland, operates three geothermal power stations in New Zealand and is installing a NZ$430 million, 132-megawatt Sumitomo Corp. generator at a fourth site. It gained 33,000 customers from rivals including Contact Energy Ltd. the past year and is seeking steam field projects in Chile through its Denver, Colorado-based partner GeoGlobal Energy LLC.

High lake levels and the new Kawerau geothermal plant delivered “a significant win against our competitors in the market share battle for generation,” Chief Executive Officer Doug Heffernan said on a conference call.

Earnings were boosted by the early completion and better- than-expected output from the 100-megawatt Kawerau plant opened in July 2008 at Norske Skogindustrier ASA’s Tasman paper mill. Inflows to the company’s dams on the Waikato River in the first quarter of the financial year were also a record.”

Source: Bloomberg

Increased generation capacity across the industry has heightened retail competition and the company is still gaining extra customers, Heffernan said.

The new Nga Awa Purua geothermal plant will come on line mid-2010 and the company expects to seek planning approval for a 100-megawatt steam plant at Ngatamariki by year-end, he said.

The profit reported today includes a NZ$20 million gain on the sale of the company’s disused Marsden B power station north of Auckland to an Indian utility. Heffernan wouldn’t name the buyer.

The former oil-fired generator was shut in 1979 and in 2007 Mighty River ended plans for a 320-megawatt coal-fired plant on the site as geothermal and wind developments became viable.

The company will pay the government a dividend of NZ$229.8 million, including a NZ$150 million special payout reflecting the sale of the Marsden plant, and the one-off benefits from Kawerau and above-average hydro output.