Transpower reports stable half year

Transpower says its financial results for the six months ending December 31,2024, were stable with operating revenue increasing by 2.4% to $476 million ($465 million in 2023).

Operating expenses increased by 3.2% to $192 million ($186 million in 2023), primarily due to increased staffing costs to support Transpower’s growing work programme, it says.

“Net profit after tax is $64 million, a 5.9% decrease from the previous period (2023: $68 million), primarily due to higher operating and interest expenses.

“Capital expenditure was $309 million, a 55.3% increase from the previous period (2023: $199 million), consistent with Transpower’s approved capital programme.”

Transpower’s board declared an interim dividend of four cents a share or $48 million – $4 million higher than forecast in Transpower’s 2024/25 Statement of Corporate Intent (SCI).

Transpower chair Dr Keith Turner says the board is pleased with the stable results for the first half of the 2025 financial year both in terms of performance and returns to shareholders.

“The company has maintained its financial performance despite higher supply chain, maintenance and resourcing costs,” he says.

“For 2024/25, we are on track to achieve all targets set out in the SCI other than HVAC availability, which is significantly impacted by proactive cable repairs in Auckland, a project which is not impacting electricity supply to consumers and is on track for completion in the first half of 2026.

“In 2024, we have focused on delivering the final year of our third Regulatory Control Period (RCP3) and preparing to deliver our new workplan for the next five-year Regulatory Control Period (RCP4) commencing in April.”

The Commerce Commission announced its final determination in November 2024 on Transpower’s RCP4 revenue to fund the programmes to maintain and operate the existing grid.

It confirmed that expenditure will increase to enable Transpower to replace assets built in the 1950s through to the 1970s now approaching end-of-life.

Transpower says it will also undertake significant new customer connection work and major projects required to maintain a reliable and safe network and allow the grid to play its critical role as a key enabler for New Zealand’s electrification.

“We are forecasting base capital expenditure of $2.25 billion across 2025 to 2030, up 32% from the five-year period to March 2025,” Turner says.

“We are growing to deliver the intensified replacement and refurbishment programme over the next five years, as well as additional work to harden the grid and increase its capacity to enable new generation and load.

“This work is critical to ensuring New Zealanders continue to have a safe and reliable national grid and to help us avoid more costly and pressured expenditure in the future,” he says.

:It’s also an essential foundation for future enhancements to the grid to support electrification and Aotearoa’s transition to a net zero carbon future by 2050.”

The Commerce Commission’s decision to index Transpower’s Regulated Asset Base from RCP4 will reduce Transpower’s revenue compared with the present approach, from April 1, 2025, by an estimated $130 million per annum throughout the 2025 to 2030 RCP4 period which will have immediate benefits for electricity consumers, says Turner.

“The intention of this approach is to be value neutral to Transpower over the long term,” he says.

“However, it is expected to result in lower revenues for the next 20 years.

“The combination of significant investment requirements alongside a reduction in revenue results in a constrained ability for Transpower to fund dividends in RCP4, which we have discussed with our shareholders.

“Looking further out to RCP5, from 2030 to 2035, the trend is expected to continue with a further step up in the investment necessary to accommodate anticipated growth and resilience requirements,” says Turner.

“As we enter a period of expected electricity demand growth, we are well prepared to continue as an efficient, fit-for-purpose national grid owner and system operator, focused on empowering the energy future for New Zealand.”