MRP yesterday afternoon said that a combination of wetter-than-normal winter conditions and continuing growth in demand saw its six-month net profit to December lift by 50% from by NZ$51.4 million to NZ$77.3 million.

The improved performance was driven by record hydro production, growth in residential markets, and greater commercial customer demand.

High winter power demand coupled with high hydro lake inflows led to hydro-electricity generation volumes rising from 2058 GWh to 2631GWh.

A renegotiation of gas supply contracts to MRP’s Southdown co-generation plant had created greater operational flexibility, allowing gas use to be reduced when wholesale prices were low. Managing gas costs this way contributed to a 50% rise in operating cash flows, from NZ$81.6 million to NZ$123.6 million.

MRP chair Carole Durbin said the improved earnings would be used to continue to develop new generation opportunities to help meet New Zealand's increasing energy needs.

MRP said it was developing and exploring several fuel options for new generation, including expanding capacity at existing geothermal plants, and looking for new geothermal opportunities.

In addition, MRP last month said it was moving upstream, joining forces with Swift Energy to explore for deep gas in onshore Taranaki and investigating other gas-related opportunities.

Chief executive Doug Heffernan said geothermal power in particular could make a greater contribution to MRP's generation portfolio. Capital expenditure increased by 250% to NZ45 million, largely because of greater geothermal exploration and development activity.

Major geothermal developments included additional production from the existing Rotokawa and Mokai fields, a potential development on the Kawerau field and exploratory drilling in the Mangakino area near Taupo.

Despite environmental concerns, including some Greenpeace protests, MRP was still proceeding with resource consent applications for its mothballed 320MW coal-fired Marsden B power station.

Coal was a viable medium-term option to meet potential shortfalls between supply and demand in New Zealand's electricity around the end of the decade.

"We believe coal-fired generation from this site gives an option to meet some of that shortfall, particularly if no new gas fields are found and developed quickly," said Heffernan.

"With the Maui field running out, and no new sizeable replacements immediately available, we need to be planning our options to meet that possible shortfall now.”

Marsden Pt was close to the Auckland demand centre, provided security of supply to the growing Northland region and had good available infrastructure already in place, including a deepwater port. This meant coal could be sourced domestically and/or globally as a practical and economic alternative.

Evaluating wind farm and small hydro development opportunities would require substantial ongoing expenditure, he said.

Another New Zealand government-owned power company, Meridian Energy yesterday morning announced a 43% lift in half-yearly profit to NZ$96.1 million.