The electricity generator and retailer announced a full-year profit of $NZ109.3 million, compared with $NZ84 million for the June 2002 year, a year which was also severely affected by low inflows into the company's South Island hydro storage lakes.

Chairman Francis Small said the robust financial performance of the first half-year was seriously eroded by the events of autumn when low inflows into hydro lakes, combined with a shortage of thermal fuel, caused wholesale electricity prices to soar.

"A key learning for the industry is that information on thermal fuel supplies is just as important as data on lake levels. Going forward, transparency of that information will be critical to every player, especially given that growth in demand is expected to continue to outstrip new supply over the next two to three years."

Continuing population and economic growth could drive electricity demand above the country's current dry-year generation capacity within a few years. "The country's era of relatively inexpensive electricity is coming to an end."

He also warned that delays in gaining resource consents for Project Aqua put the 3000GWh hydro development at risk. "Key to its progress now is securing consent."

The Ministry for the Environment recently "called in" key consents for the project - as it did for the gas-fired Taranaki Combined Cycle power station in the mid-190s - while it formulates a water allocation plan for the Waitaki catchment.

Small said Meridian did not believe hydro and irrigation had to be mutually exclusive and the two uses of water could be managed in a mutually beneficial way.

But irrigation had to be weighed against the critical role electricity played and its central contribution to New Zealand's health, education, welfare and economic growth.