Profit boost for Meridian Energy

Meridian Energy has reported a nearly 40% boost in first-half profit, buoyed by improved hydro generation and sustained high prices late last year.

The company supports EVs and provides an Electric Vehicle Plan with special rates applying for residential customers who have a plug-in electric car.

New Zealand’s biggest power generator made $152 million in net profit in the six months to December 31, 2018, from $109m a year before.

Its earnings (ebitdaf) for the six months increased 18% compared to the prior corresponding period to a record $389 million, from $329 million a year earlier.

“Good hydro storage has seen our New Zealand generation volumes increase 10% on the prior period, supporting higher contracted sales,” Meridian chief executive Neal Barclay says.

The purchase of the Greenstate hydro assets in Australia led to higher generation volumes there, and United Kingdom customer sales have also increased on the corresponding period.

The board has announced an increase to the interim dividend of 6% over last year.

Meridian has also declared an interim special dividend of 2.44 cents per share ($62.5 million) under the company’s capital management programme to return $875 million to shareholders through to 2022.

About $500 million has now distributed since the capital management programme started in August 2015.
Meridian continues to experience good customer growth with connection numbers up by 14,000 and 2000 in the last year in New Zealand and Australia respectively.

The firm’s New Zealand generation volumes climbed to 6546 gigawatt-hours (gWh) in the period, with increased hydro production offsetting lower wind generation.

Australian generation volumes were 37% higher than a year earlier at 419 gWh. The firm acquired three New South Wales hydro plants from Trustpower a year ago and signed power purchase agreements with wind and solar providers Tilt Renewables, CWP Renewables and Total Eren to help supply its Australian Powershop business.

Australian ebitdaf rose 14% to $41m.

Meanwhile, Meridian says the Electricity Price Review Options Paper outlining its preliminary views released on February 20 appears balanced and well-considered.

Barclay says the company is still reviewing the paper but is pleased with a recommendation to prohibit prompt payment discounts (PPDs).

“In October last year Meridian made the decision to replace prompt payment discounts with a fairer pricing structure. We believe this change has materially helped those customers who struggle to pay their bills on time as they no longer lose their discount as a result.”

The paper also suggests electricity prices need to be fair and affordable, with consumers having a say in the industry’s direction.

Feedback is sought by March 22 before final recommendations go to energy and resources minister Megan Woods in mid-2019.