15 Aug 2012

Contact focuses on new geothermal station

7:07 am on 15 August 2012

Contact Energy says its focus over the next year will be on completing its $750 million geothermal station and keeping customers.

The country's largest listed power made $190 million for the year to the end of June, an increase of 27% on the previous year.

Excluding unrealised accounting changes and one-off items, Contact's underlying profit rose 17% to $176 million.

Contact chief executive Dennis Barnes says the company has spent five years on extensive and substantial capital investments and it is starting to see the returns.

He says Contact's geothermal Te Mihi power station, on the Wairakei streamfield, is due to be completed next year and is expected to generate 166 megawatts of electricity.

Mr Barnes says the company will be looking at operational efficiencies, and has signalled there could be job losses.

Contact is also looking to progress its Enterprise Transformation programme which upgrades its aging customer billing system.

Mr Barnes says the project hasn't run on time or cost, but Contact wants to ensure it is installed properly.

Contact lost 4000 customers last year, and Mr Barnes expects retail demand to remain flat.

Last year's low hydro inflows that marred Meridian's result did not hinder Contact.

Contact's gas and thermal power stations made up for poor hydro generation, with the company drawing on its Ahuroa gas storage facility and Stratford peaker plant to meet demand.

Higher wholesale prices lifted income, though generating more expensive thermal power pushed up costs.

Contact says electricity customer numbers fell slightly to 443,000 while margins contracted due to discounting to keep and attract households.

Looking ahead, the company aims to lure customers in areas where it generates most of its power, 71% of which is in the North Island.