Monday, October 8, 2007

Power profits show how the carbon cards will fall

From National Business Review (NZ):

The announcements of profits by state owned electricity generators today gave the clearest indication who will be the sector’s winners and losers from the low carbon future promised by politicians.

And juicy – albeit reduced - profits from the two renewable generators, Meridian and Mighty River Power, could stoke debate about whether the giant companies are better off in full public ownership or being partially sold down to retail investors.

Genesis Energy reported a net profit after tax of $61.3 million for the year ended 30 June 2007, down from $83.7 million over the previous period.

Meridian’s net profit from continuing activities was down from $243.1 million last year to $199 million. The higher profit last year reflected the higher price of electricity set by thermal generation, because hydro lake levels were lower.

Although Meridian was selling less electricity, it was charging more per unit, at no greater cost to itself.

These conditions will be replicated to some extent when carbon charges are added to price-setting thermal generation during the government’s emissions trading scheme, when carbon prices will increase the cost of electricity but not Meridian’s cost of production....MORE