Chairman Barry Upson termed the after-tax profit, from total revenue of NZ$325 million, as “a sound audited annual result” after an operational year that chief executive Steve Boulton described as “particularly challenging”.

"Powerco had to contend with a number of business difficulties including the 2003 winter energy crisis, the rare and extreme storms that hit the North Island in February and the ongoing cost and resource drain associated with the government’s continued focus on regulation.”

Boulton estimated Powerco’s annual compliance costs had increased from about NZ$150,000 five years ago to the current NZ$5-8 million.

These included paying for the running costs of the commerce, electricity and complaints commissions, rating of lines companies’ utilities, and tree regulations - “all of these costs are beyond our control and are the results of government decisions,” railed Boulton.

However, he added: "These difficulties were balanced by good results from Powerco’s strategic growth, with improved financial performance from the integration of assets from UnitedNetworks acquired in November 2002 and the rollout of the distribution network in Tasmania."

Powerco’s focus for the next year would be on further consolidation, improving systems, productivity, and cost containment and continuing to contribute constructively on industry issues, particularly in the area of regulation.

Neither Upson nor Boulton would add anything to previously reported comments about Powerco’s possible merger talks with NGC Holdings.

The New Plymouth District Council, which holds a 38% stake in Powerco, looks likely to reaffirm its commitment to the company no matter what the outcome of the talks, with Mayor Peter Tennant saying Powerco is a “superb investment” for the council.