Chief executive Steve Barrett said the result was a pleasing improvement on the previous year's $NZ107.0 million profit. "Contact Energy reached a new maturity in the 2003 financial year, and the result reflects a quite different company than in previous years.
"We are now demonstrating the value of our strategy of integrated growth of our generation and retail businesses to establish a new platform for stability of earnings going forward."
However, total gas revenue was down by 20% to $NZ217.6 million, largely due to a 31% reduction in wholesale gas sales and an 8% reduction in retail gas sales.
Reduced revenue from wholesale gas sales was largely due to fact that, following the acquisition of the Taranaki Combined Cycle station from NGC last March, use of gas for TCC had now been reclassified as internal instead of reported in wholesale sales (TCC used 9.7PJ since acquisition).
Contact sold more gas than expected to Genesis Power, though, for use at its Huntly power station, including approximately 4.6PJ of gas for delivery to Genesis in future years. Also, Contact made available up to 40TJ of gas per day, which was supplied from Contact's future gas entitlements, on a day-to-day basis until TCC returned to normal operation following its scheduled May shutdown.
As well, the TCC purchase, which increased Contact's total generation capacity by around 20%, underpinned an annual 24% retail electricity sales growt h.
Contact added 135,000 new retail electricity customers and increased retail electricity sales volumes by almost 60%, which consolidated Contact's position as New Zealand's largest energy retailer, with total customers numbering 620,000 (522,000 electricity and 97,500 gas) as September 30.
TCC also enabled Contact to better balance generation capability with electricity sales, with around 90% of its generation committed to servicing retail customers or to long-term contracts on fixed prices. "This provided certainty of earnings and left the company less exposed to the price volatility of the wholesale electricity market," Barrett said.
Contact purchased 71.6PJ of gas for internal use and external sales, compared with 78.6PJ the previous year, principally due to Contact's reduced contractual entitlements under the Maui gas contract.
He said discussions to agree to reduced gas offtake profiles, in the light of reduced Maui recoverable reserves, were proving difficult "given the complexity of the issues and the underlying contractual arrangements". However, talks between the Maui partners, the government and Contact, NGC and Methanex were continuing
Barrett warned, as have many other commentators recently, of considerably more expensive fuels to replace the rapidly dwindling Maui gas field and said Contact might need new gas as early as 2005, before the Pohokura field comes onstream.
"Any replacement fuel sources will be considerably more expensive and this will be reflected in electricity prices. That is the reality of the post Maui era."
Contact remained disappointed with delays in developing and marketing new gas supplies, and intended participating in tenders for Pohokura gas which were expected next year.
Contact was also urging the Kupe partners to develop that offshore south Taranaki field, as it would be interested in that gas also.
Regimes for open access to pipelines and for gas balancing were essential to encourage new investment in gas exploration.
Early indications from the joint Contact Energy-Genesis Power LNG feasibility study were that LNG would be no more expensive than other competing fuel sources, including renewable energy sources such as new hydro or wind power, at around $NZ7-8 per GJ.
Contact was also pursing a range of other alternatives for future fuel supply beyond the identified sources, added Barrett.
