apr-11.pdf (2.07 MB) - Crown Ownership Monitoring Unit

OperationsMighty River Power’s primary generation capacity is based on the WaikatoRiver. Hydrological conditions in the Taupo/Waikato catchment are a keydriver of annual generation levels and Mighty River Power’s earnings.The major growth area for Mighty River Power has been geothermalgeneration, with 240 MW (205 MW equity interests) added since 2008. In2009/10 year Mighty River Power committed to the construction of a new82 MW geothermal power station on the Ngatamariki steam field near Taupo.Mighty River Power has also committed US $250 million to internationalgeothermal developments. It is the sole investor in an international geothermaldevelopment fund, the GeoGlobal Energy Fund, which has geothermalinterests in the USA, Germany, Chile and Peru. The Fund is managed byGeoGlobal Energy Limited, in which the company has a minority shareholding.Financial performanceMighty River Power reported NPAT of $127 million for 2010/11, representing a50% increase on 2009/10. EBITDAF also increased, up 35% to $443.1 million.The higher earnings were driven by an 18% increase in generation volumesto a record 6,833 GWh, primarily owing to a full-year contribution from theNga Awa Purua geothermal station and assisted by higher than average hydrogeneration.During the course of the year Standard & Poor’s reaffirmed the company’slong-term credit rating at BBB+ with a stable outlook.Performance against planMighty River Power met all financial performance targets outlined in its SCI.The company met six of its nine non-financial performance targets. Retailmarket share was 20.1% against an SCI target of 21% during a year ofhistorically high churn in the retail market, while plant availability was 89.2%against an SCI target of 91% owing to higher than expected forced outages(3.1% against an SCI target of 1.7%). The higher than forecast forced outagesrelated to unexpected outages on some hydro units. However, the inherentredundancy in the Waikato Hydro System meant that the reduced hydroavailability had minimal impact on earnings.DividendsMighty River Power paid dividends of $95 million in 2010/11.Major investmentsMighty River Power commissionedthe 140 MW Nga Awa PuruaGeothermal Power Station in2010, a joint venture with TauharaNorth No.2 Trust. The companyalso invested US $92 million in ageothermal project in Californiavia its investment in the GeoGlobalEnergy Fund. The companycommitted to the constructionof the 82 MW Ngatamarikigeothermal plant this year withan estimated cost of $466 millionincluding capitalised interest andcontingency. Ngatamariki will liftthe company’s total geothermalcapacity under its operation to over460 MW or 40% of total capacity.Other planned capital investmentincludes a major programme ofreinvestment in hydro assets,further international geothermalopportunities and completing theprogramme to replace its legacymeters with advanced meteringtechnology.Non-financial performanceMighty River Power saw its retailcustomer base fall by 20,000customers over the course of theyear to 392,000 at 30 June 2011 inline with record levels of churn in themarket. As previously noted, plantreliability fell short of target levelswith higher than planned forcedoutages affecting plant availability.Corporate social responsibilityMighty River Power continues tosupport a range of charities andnot-for-profit groups in the regionsin which it operates includingStarship Foundation and theWaikato River Trails.page | 87