All of the listed electricity companies were offering reasonable dividend years and while the earnings outlook for the sector as a whole was muted, Forsyth Barr broker Andrew Rooney expected dividend payments to lift.
The key highlights for the sector in May were Contact deciding not to invest offshore, Trustpower's full year result, Meridian Energy's second instalment receipt coming due and heavy rain refilling lakes.
Lake levels rose from 82% of average at the start of the month and peaked at 113% of average mid month, following heavy rain, he said.
Rain filling the South Island catchments in early to mid May meant lake levels peak at 112% of average, completing a remarkable turnaround with lake levels increasing from 66% of average to 113% of average in the space of 20 days.
National hydro storage increased during May from 623 gigawatt hours to 3039GWh, or 101% of average at the end of the month. Manapouri added 302GWh in the space of a week resulting in spilling, but all catchments enjoyed reasonable inflows, Mr Rooney said.
The heavy rain proved to be a mixed blessing and contributed to the ASX futures curve falling about 8% over the month. Wholesale prices were low, averaging $45 a megawatt hour at Benmore, 46% lower than April.
The falling in the longer term ASX prices had lowered the medium term outlook for earnings and had been the primary driver of Forsyth Barr's target prices falling 3c per share for Genesis, 5cps for Mighty River Power and 10cps at Melbourne.
''Temperatures seesawed during May, with the first half of the month being remarkably warm before a cold snap towards month end ensuring demand was once again up on the previous corresponding period.''
Total generation was up 2.1% in May with increased line losses being a factor behind the high growth for the month relative to the demand growth rate, Mr Rooney said.
South Island hydro generation was the big mover, increasing generation 46% versus the previous month and producing 48% to the total.
North Island hydro generation also improved, up 21% on the previous month. Thermal generation fell to 12% of the total, the lowest share since January 2014 and the lowest on record for May. The previous low was 18% in May 2011. Wind had a better month, producing 10% more than April, he said.
''The lift in South Island Generation has seen Meridian retake its position as comfortably the largest generator, increasing its market share from 27% in April to 34% in May. Trustpower also had a good month, but all other generators' shares fell.''
Genesis had another weak month, generating 13% less electricity against the pcp.
Meridian had a strong month, with generation 37% higher than April. Hydro led the way, up 42% from April and 31% higher than the preceding five year May average.
Mighty River had a ''solid month'' although the company had been storing water given the lower wholesale electricity prices as Lake Taupo storage was well above average for this time of the year. That should position Mighty River well for the start of the 2016 financial year, Mr Rooney said.
Industry news
• Contact Energy has decided to drop plans (for now) to invest in large scale international geothermal developments. Instead, Contact is distributing $367 million to shareholders through a tax paid 50c per share dividend.
• Meridian Energy has received a five year extension to its Central Wind project until 2020. The project is between Taihape and Waioru.
• Trustpower had delayed the roll out of its smart meter programme to ensure it can deliver to expectations. More time is being spent testing and piloting the process.
