Genesis cuts guidance on lower production
AUCKLAND: Genesis Energy has trimmed its fullyear earnings guidance by $5 million, citing lowerthanexpected production from its Tekapo and Waikaremoana hydroelectric schemes.
Drought in the North Island has reduced generation inflows this year, prompting an earlier downgrade by Genesis in February and by rival Mercury NZ this week.
Yesterday, Genesis said it now expected Juneyear earnings before interest, tax, depreciation, amortisation and changes in financial instruments of $355 million to $365 million, down from its February forecast of $360 million to $370 million.
At the start of the year the range had been as high as $380 million.
Genesis is the country’s biggest energy retailer and the biggest producer of electricity from gas and coal.
It also operates the Tongariro and Waikaremoana hydro schemes in the North Island and the Tekapo scheme in the South Island.
Storage at Waikaremoana, inland from Wairoa in Hawke’s Bay, has been below average for about 10 of the past 12 months. Inflows there in February were down more than 80% and were about half the average over the March quarter as a whole, Genesis said.
That, and a twoweek delay bringing the Tekapo B station back from planned maintenance, resulted in the firm’s hydro production for the quarter falling to 419 gigawatthours, 13% less than the year before.
Hydro production for the nine months came to 1871GWh, 14% less than a year earlier.
Reduced hydro production resulted in the company’s total generation for the quarter falling 8%, while the overall fuel cost across its generation portfolio increased 6.7% to $61 per megawatt hour.
The firm received an average $87/MWh for its generation, down from $162/MWh a year earlier.
Production from the Kupe gas field Genesis partowns was reduced by well workovers in February, which have since lifted production.
The ‘‘significant’’ decline in Brent oil prices this year resulted in the firm’s realised price on its oil production from the field dropping almost 16% to $69 a barrel.
Genesis noted that 63% of its oil production for the coming year was hedged at $US58 ($NZ97) a barrel.
Brent crude was recently trading at about $US20.70.
While the firm’s generation and gas production were down in the quarter, its retail electricity and LPG volumes were 7% and 10% higher respectively. Gas volumes were unchanged, while the firm’s cost to serve each account holder continued to edge lower.
National electricity demand has fallen about 15% since the national Covid19 lockdown on March 26.
Genesis said demand across its portfolio was down 8%10% and it had not seen any change in bad debts.
Residential demand was up 10%15%, and that could increase significantly if restrictive lockdowns continued into the winter months, the company said.
Demand from small businesses was down about 45% and industrial usage was down about 25%. — BusinessDesk