BUSINESSDESK: MightyRiverPower continues to lose retail customers but has gained large extra volumes of commercial electricity sales in the year before its intended partial privatisation, figures released to the NZX show.
The state-owned power company issued its final quarterly update for the financial year to June 30, showing it shed 6000 retail customers in the year to June 2012, down from 392,000 a year earlier to 386,000.
The update will be the last before the company makes its scheduled announcement of full-year profit on August 28, which is the earliest date by which a prospectus for the MRP part-sale can be issued, given legal restraints that prevent a prospectus being issued within the so-called "window" ahead of official results announcements.
The government has announced a timetable to sell up to 49% of MRP by the end of the third quarter of this calendar year, although the timing looks likely to drift because of Maori challenges on water rights.
The offer's timing also remains subject to favourable market conditions.
Prime Minister John Key announced further details of the float at his National Party's annual conference in Auckland at the weekend, including provisions intended to improve uptake by small-scale New Zealand investors.
These include a minimum parcel of $1000 of shares, no scaling back for any retail investor seeking up to $2000 worth and the promise of an additional share issue for long-term holders, with a likely three-year threshold to qualify.
The update figures show sales to businesses and industry rose 29% to 679 Gigawatt hours in the three months to June, compared with the same period a year earlier, and were up 13.5% for the full year at 2412 GWh.
Residential sales at 2609GWh were down 1.6% for the year, although the average price of electricity sold to customers on fixed price, variable volume contracts rose to $115.48 a Megawatt hour, up 4.6% on the 2010-11 financial year.
MRP has been willing to lose retail customers in recent times after mopping up more of the residential market than intended during aggressive marketing campaigns in 2009 and 2010, including significant new customer bases in the South Island, where it was traditionally inactive because it has no generation capacity there.
The latest update highlighted "significant price separation between the North and South Islands influencing higher wholesale electricity purchase prices", as low hydro inflows to South Island lakes pushed up prices in the south.
Constrained capacity on the Cook Strait cable capacity made this worse by limiting total volumes of electricity capable of being sent from the North to the South Island to compensate.
That saw wholesale electricity purchase costs rise 58.2% from $47.44 a MWh on average in 2010-11 to $113.36 in 2011-12.
Total generation volumes for the year were 7068GWh, up from 6833GWh the previous year, although generation in the quarter under review was down 1640GWh, reflecting high inflows to MRP's Waikato catchments the previous winter.
As a result, MRP used its Southdown gas-fired plant in Auckland more heavily in the latest quarter, producing 179MWh of electricity compared with 33GWh in the same quarter a year earlier.
Geothermal production was flat at 556GWh, partially reflecting the impact of MRP selling a further 10% stake in its Nga Awa Purua geothermal power station to its Maori joint venture partner.
The company's wholesale market position for the quarter was "slightly short" at 34GWh, the company said.
Meanwhile, Green Party leader Russel Norman attacked Mr Key's bonus share proposal, suggesting that rewarding loyal local shareholders for holding on to their shares could cost taxpayers $200 million.
“If only a third of the shares were bought by retail investors and there was one free share for every 10 bought, then that’s a $200 million liability for the taxpayer … to the roughly 5% of the population that the government expects to buy shares directly."
Labour's state-owned enterprises spokesman Clayton Cosgrove said the proposal was akin to a "Ponzi scheme", leading Mr Key to label Cosgrove "an idiot" in a Radio New Zealand interview.