21 Feb 2020

Genesis Energy profit falls after lower hydro supply and gas shortage

12:18 pm on 21 February 2020

Power company Genesis Energy has taken a significant financial hit and lowered its guidance, because of lower hydro generation and gas shortages.

Genesis Energy's Tekapo B Power Station.

Genesis Energy's Tekapo B Power Station. Photo: Genesis Energy

Net profit for the six months ended December fell 81.4 percent to $9.2 million, from slightly lower revenue of $1.3 billion.

Lower inflows for its hydro power stations meant Genesis had to rely more on its costly coal and gas-fired Huntly Power Station and import more coal.

A month-long outage at its Kupe oil and gas field put pressure on gas supply.

"Genesis was regularly called upon to support the market with its Rankines [coal and gas-fired units] during a period that saw a 19 percent increase in fuel costs," chief executive Marc England said.

"Providing resilience during difficult market conditions reinforces our vital role as back-up thermal generator to the New Zealand electricity market, ensuring security of supply to Kiwi homes and businesses and moderating the price volatility."

Retail sales remained strong with an increase in electricity volumes and the number of customers buying more than one fuel from Genesis.

The rate at which it lost customers, called churn, fell to a record low.

Genesis expected a better second half, but trimmed its forecast by $10m to between $360m and $370m.

The company has committed to scrapping the use of coal for power except in exceptionally dry years by 2025.

It has agreed to take all the power from a wind farm in Taranaki, currently under construction, and is planning to build a solar power farm in Waikato.