High wholesale electricity prices are likely to be reflected in a much improved fourth quarter profit for energy company TrustPower.
TrustPower is this morning expected to report revenue for the three months ended March up 40% on the previous corresponding period (pcp) thanks to the high wholesale prices, Forsyth Barr broker Peter Young said.
Fourth quarter earnings before interest, tax, depreciation and amortisation (ebitda) was expected to be up 26% on the pcp, due to additional wind generation and telecommunication income.
Forsyth Barr's full-year ebitda was forecast at $206.5 million, up 5.1% on the 2007 result.
A final dividend of 15c per share was expected to take the full-year dividend to 30c, he said.
Of all the positive aspects of the company's performance, the high wholesale prices were the feature.
EnergyLink reported average wholesale prices of $116 a MWh for the quarter compared with just $41 MWh in the pcp.
The Snowtown wind farm was about six months away from completion but it was common for wind turbines to be commissioned as they were installed.
Mr Young anticipated there might be an announcement regarding the commissioning of the first few turbines.
Some of the negative aspects included how the hot, dry summer had affected both wind and hydro generation.
While forecasting improved output for the fourth quarter, that was due to the Tararua 3 wind farm becoming operational.
Hydro generation was expected to be down 7.5%, he said.
Transpower, the grid operator, said on Tuesday that southern hydro lake storage levels remained a concern for the electricity industry.
"There have been good inflows into the North Island lakes. However, there have been only small inflows to the major southern lakes, and this is where the rain is needed," the state operator said in a statement.
Mr Young also forecast an increase in TrustPower's interest costs due to increased borrowing for Tararua 3 and Snowtown capital expenditure, combined with the significant increase in interest rates.
