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Offshore income 10pc of Meridian's total

NZN 21/02/2017 Pattrick Smellie

Meridian Energy's revenues from offshore activities are closing in on 10 per cent of total income, with political uncertainty in Australia about the use of renewable energy offering both opportunities and risks for the Wellington-based renewable electricity generator and retailer.

In the six months to December 31, international income totalled $104 million, all but $2m of which was earned in Australia from a combination of wind farm operations and the growth of its Powershop retail brand, which has most recently launched in the state of Queensland and boasts 91,000 customers across the ditch.

For the half-year, the company reported earnings before interest, tax, depreciation, amortisation and changes in the value of financial instruments of $352m, up 6 per cent, despite a slight fall in total income for the period of $1.13b, from $1.21b in the previous comparable period.

Trading conditions in New Zealand were relatively flat during the half-year, with demand and wholesale electricity prices suppressed by a combination of mild winter weather, reduced irrigation demand because of a wet spring, and some loss of load caused by contracts with major industrial customers coming to an end and being only partially offset by new signings from small and medium-sized customers.

In Australia, however, total generation volumes rose by 19 per cent and the company's international segment produced an 88 per cent uplift in ebitdaf over the same period a year earlier.

Powershop retail sales of 78 gigawatt hours were up 48 per cent as the brand expanded its footprint into Queensland and was nominated 'greenest' Australian energy supplier by the environmental lobby group Greenpeace for the second year in a row.

Meanwhile, Meridian believes its largest customer - the Rio Tinto-controlled aluminium smelter near Bluff - "remains cash positive at current prices and exchange rates".

Since January 1, the smelter has been paying a new, higher price for electricity, but is also now able to announce termination of supply at any time under complex renegotiations that occurred before Meridian's partial privatisation in October 2013.

The smelter consumes about 12 per cent of all electricity generated in New Zealand.

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