Selling a three-person energy trading business in Sydney helped state-owned national grid company Transpower increase its annual net profit 61 per cent to $269 million from 2012.
The high profits and the one-off gain from the sale of the Australian business meant the Crown got a super-charged $294.7m dividend from Transpower for the full year. That included a final dividend of $137m.
State-owned power companies have been cash cows for the Crown this year, with Meridian posting a $295.1m profit earlier this week. Meridian's included a $101m one-off boost from the sale of a 50 per cent stake in the Australian MacArthur wind farm in June, which allowed the Government to extract a $252m dividend, up 254.5 per cent from last year.
Combined, Meridian and Transpower have paid the Government dividends of almost $547m in the past year. Mighty River Power, due to report late this month, has forecast a profit of almost $95m.
At Transpower's annual meeting in Wellington yesterday, chairman Mark Verbiest called it an "excellent" financial result, but pointed out that about two-thirds of the $102m lift in full-year profit came from the sale of the Australian business.
He stressed that dividends paid to the Crown had no impact on their pricing.
In May, Transpower sold its Sydney offshoot d-cyphaTrade for A$55m (NZ$62.4m), which Transpower said was a "significant" return on its original investment.
Transpower bought the company 11 years ago, when it had just three staff, and it still has three. The full sale proceeds of NZ$65.7m was paid to the Crown at the end of June as a special dividend.
Transpower's transmission revenues jumped to $861m, from $725m in the previous year. That reflected the commissioning of the North Island grid upgrade in the Waikato and the inter-island link, HVDC Pole 3, project.
As Transpower brings on big new grid projects it can charge customers more, though the return on assets is regulated by the monopolies watchdog the Commerce Commission. As assets grow, so do prices.
Verbiest said increased transmission costs were having an impact on consumer power prices.
"We are conscious that this is an issue affecting many, if not all, New Zealanders," he said.
With several huge transmission projects in the last few years, Transpower's prices have risen about 10 per cent a year, which added about 1 per cent a year to home and business power bills.
There will be one more big rise by Transpower, coming into effect in April 2014, as the last of its big projects go live. Verbiest argued that the big rises seen in household power prices in the past 20 years were from the removal of the "very large cross-subsidy" from commercial and industrial consumers in favour of residential customers in the 1990s. There was also an increase in energy costs as cheap Maui gas for power stations ran out, and because of GST coming in.
Transmission price increases should start to flatten out from April 2015 he said, ‘and possibly start to drop".
It was the last annual meeting for outgoing Transpower chief executive Patrick Strange, who will leave the company early next year. A replacement is expected to be announced soon.
Strange said it was "a good profit, but we are a $4 billion business and the shareholder does expect a return."
And he stressed the Commerce Commission had to approve their spending on the grid, and "if we overspend, we eat it".
Part of the profit lift related to the gain on the sale of dcypha, and part because Transpower spent less on its big projects than the commission allowed.
"The downside, now that we have spent less, we have a five year revenue re-set coming up in 2015 . . . and our allowance will go down. We'll start at our new level and we'll have to find more savings," he said.
But in uncertain times the challenge was not spending too much on capital.
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