Meridian Annual Report - Meridian Energy

2
A time of challenge
and opportunity
Chairman’s and Chief Executive’s Report
Wayne Boyd
Chairman
We anticipate that the depleted state of our storage lakes at
year end will impact our business for a further 12 to 18 months
and we have adjusted our planning and costs accordingly.
Certain risks go with a business based on rainfall and wind as fuel.
These are well known and they are managed.
Against this background Meridian Energy in the 2007/08 financial
year faced the most demanding operating environment in our nearly
ten-year history. Our profit of $128.6 million after tax for the period,
compared with $241.2 million in the 2006/07 year*, is testament to
the demands of that environment.
Further, we anticipate that the depleted state of our storage lakes
at year end will impact our business for a further 12 to 18 months
and we have adjusted our planning and costs accordingly.
Several unusual and unplanned events for the electricity industry
conspired to make this winter more difficult than the dry inflow
years of 2001, 2003 and 2005. These included:
• the sudden shutdown of Pole 1 of the HVDC link
• deferred investment in the AC grid resulting in ongoing transmission
constraints and outages impacting on market operations
• the sudden closure of the New Plymouth power station
• prolonged outages of thermal generating plant through late
summer and autumn
• the way the Government’s reserve energy plant at Whirinaki
was used in the market.
The whole industry had to dig deep as we were challenged by the
most unusual and extreme physical and financial dynamics that
were being played out. Outstanding individual company and combined
industry effort was pivotal in getting New Zealand through
a very tight energy situation.
We applaud all of that effort; including the comprehensive and
often extreme efforts of our own staff and our customers, contractors
and suppliers.
As a company we put our customers first. We paid the price to
ensure our customers could continue to enjoy a secure supply of
electricity.
We learned much that will make us even more resilient as a business
and we reached conclusions on the issues we must work with the
industry to resolve if we are to fully restore the confidence of New
Zealanders in their electricity supply.
*Previously reported profit figure for 2006/07 restated under New Zealand International Financial Reporting Standards.