Contact Energy's half-year profit has plunged because of lower power generation, high retail purchase costs and transmission constraints between the North and South Islands.
The country's largest listed power company made $25 million in the six months to December, down almost 80%.
When unrealised losses are stripped out, its underlying profit fell 31% to $79.8 million.
Chief executive David Baldwin says the drought in winter, a deluge in summer and transmission constraints made for an extremely challenging period.
Wholesale electricity revenue was up 21% to $372 million, but the company had to pay an extra $140 million to buy electricity on the retail market.
Mr Baldwin blames that on the loss of a pole that carries one of the HVDC electricity cables between the North Island and South Island. The result was that Contact could not get power to the South Island during the dry, cold winter and to the North Island when the lakes were full.
Ordinarily, Contact's mix of generation would have insulated it from the volatility of the weather, he says.
Closure of part of the Tiwai point aluminimum smelter also led to an excess of supply in the South Island, forcing Contact to spill large amounts of water from hydro lakes.
However, Contact remains comfortable with market forecasts that its full-year profit will be between 20% and 23% below the $237.1 million it made last year.
Early on Tuesday afternoon, Contact Energy shares were down 20 cents to $5.85.
Plan to shake up sector
Meanwhile, the Government has pledged to fix long-standing complaints over power prices, bureaucratic confusion and inadequate levels of investment in the power sector.
The basis of its work will be provided by a report commissioned by Business New Zealand and released at an energy conference on Tuesday by Energy and Resources Minister Gerry Brownlee.
Mr Brownlee told the conference in Auckland that research by a team hired by Business New Zealand would provide a "template for change".
He says the findings are impressive and he does not want to delay progress by ordering the same research again.
The Electricity Commission has welcomed the prospect of reform.
