One of the driest spells ever recorded on the West Coast and Southern Alps is responsible for a 25 per cent decrease in hydro-generation on the Clutha River.

Lack of westerly rain-producing weather had directly impacted on levels at Lake Wakatipu, Wanaka and Hawea in the Clutha Catchment area, which had resulted in less electricity being produced at Clyde and Roxburgh dams by provider Contact Energy, consultant hydrologist David Stewart of Raineffects said.

"The weather is to blame, and until the westerly comes back, the lakes will remain low."

Typically "La Nina" easterly conditions had been in force since last October, but this could soon change to an "El Nino" weather pattern which could bring much needed rain to the alps and southern lakes, Mr Stewart said.

Other electricity companies such as Meridian Energy, which operated Pukaki and Waitaki dams, and Genesis Energy at Tekapo, were experiencing the same situation, with inflows the lowest since records began in 1930. Lake Hawea was at a record low.

"The lakes are usually full by the end of March but this year they got nowhere near it."

Inflow data collected by Contact Energy at its Hawea Dam indicated that between the 1999 and 2011 financial years, storage had held steady between 550GWh and 400GWh but dropped to 350GWh by June 30 this year, which corresponded with hydro generation fluctuating between 3,500GWh and dropping below 3000GWh.

This resulted in an increase in geothermal generation of 31 per cent, Contact's 2011-12 financial year figures confirmed.

New Zealand's biggest listed electricity generator and retailer still managed to lift its annual profit by 27 per cent, a total of $508.7m, which exceeded a predicted $496.4m, by running its gas-fired generation units harder to meet national demand.

"The second half of the 2012 financial year was characterised by low hydrology and our thermal assets, including the Stratford peaker plant, were drawn on as lower hydro generation was replaced with thermal generation," Contact's chief executive Dennis Barnes said.

Completion of Te Mihi power station north of Taupo in mid 2013, which would eventually replace Wairakei, would bring the company's current investment programme to an end, communications manager Janet Carson said.

"We believe demand is not likely to warrant new generation for at least the next five years."

This also reaffirmed that the company had shelved plans to build hydro-electric dams at Luggate, Beaumont, Queensberry and Tuapeka Mouth on the Clutha River because the predicted cost of $300m to $1.5b per project was too high.

Instead, Contact was turning to geothermal projects, including Tauhara, also near Taupo, earmarked for development when market signals dictated. Geothermal would take priority over wind projects, Ms Carson said.

"We also believe geothermal provides the best and the most effective renewable generation option."

In the meantime, she said the company would still hold consents for wind farms at Te Hauauru ma Raki on the Waikato's west coast and Waitahora near Dannevirke.

- © Fairfax NZ News