Transpower’s annual results - 08 Oct 2007

Transpower’s annual results - 08 Oct 2007

The owner and operator of the national electricity grid, Transpower New Zealand Ltd, today released its annual financial report for the 2006/2007 year.

The surplus after tax and before revaluation for the year ended 30 June 2007 was $126.1 million compared with the 2005/2006 surplus of $96.9 million. Transmission revenue of $535 million also increased by 5.4 per cent compared to the previous financial year.

Transpower Chairman David Gascoigne said that the increases in surplus and transmission revenue can largely be attributed to increasing energy being transported by the National Grid and increased peak demand for electricity which attracts higher revenue.

“Given the need to fund the proposed levels of capital expenditure on major grid investment projects, there will also be no dividend paid to the Crown this year. The surplus will all be invested back into the Grid which helps keep the cost down for end users. The cost of operating the National Grid accounts for about 10 cents in the dollar of an average consumer power bill - this is not expected to increase more than a couple of cents in the dollar over the next five to ten years”

Operating expenditure decreased to $419 million, compared to $435 million in the 2005/2006 year. After adjusting for wholesale market activities, underlying expenses were up $7 million from the previous year. The majority of this increase is a $93 million spend in maintenance work on network assets compared with $84 million in the 2005/2006 financial year.

Mr Gascoigne said that the year was characterised by a major commitment of time and resources to progressing key regulatory issues, including progressing Transpower’s administrative settlement with the Commerce Commission and achieving approval for investment proposals with the Electricity Commission and with our wider stakeholder base.

“This year, Transpower made significance progress towards strengthening the National Grid, with a number of projects approved by the Electricity Commission.”

“Over $290 million was invested in new or upgraded lines, circuits and substations this year. This is part of an expected $3.6 billion investment over the next ten years in a major programme to upgrade the National Grid to help ensure reliability of supply and to enhance Transpower’s System Operator capabilities. Additionally, Transpower will spend around $1.4 billion on replacing, refurbishing and enhancing existing assets, and its telecommunications network, to meet growing electricity demand.”

“This programme of investment is critical to the future reliability and security of New Zealand’s electricity supply. While the National Grid has met the needs of the nation and operated reliably since major investments were made in the 1950s and 1960s, in many areas, the existing grid is now nearing its capacity. There is a pressing need for upgrades and new lines to ensure that the grid can not only meet increasing demand, but also connect renewable generation and support sustainable economic development,” he said.

• Transpower's Annual Report 2007

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