Com­pany re­port

AES Kil­root Power

Belfast Telegraph - Business Telegraph - - Analysis & Company Report -

AES Kil­root Power is the large elec­tric­ity gen­er­at­ing plant close to Car­rick­fer­gus. It is a sub­sidiary of the American-owned par­ent com­pany AES (NI) which also now owns the AES Bal­ly­lum­ford busi­ness which has an­other group of elec­tric­ity gen­er­at­ing plants in Is­land­magee.

The gen­er­at­ing plant at Kil­root was orig­i­nally de­signed to burn oil or coal to gen­er­ate elec­tric­ity. Later it was con­verted to also use, ac­cord­ing to mar­ket con­di­tions, nat­u­ral gas. In re­cent years, but sub­ject to emis­sions lim­its, there have been pe­ri­ods when lower in­ter­na­tional coal prices have seen large im­ports of coal thought to be of south American ori­gin.

The long-term fu­ture of the Kil­root plant is un­cer­tain since the agreed Eu-wide agree­ment to ob­serve tighter emis­sions con­trols would con­strain the prof­itabil­ity of op­er­a­tions within a few years.

The ac­counts for Kil­root Power re­flect a se­ries of fac­tors af­fect­ing its prof­itabil­ity. To­tal rev­enue in 2016 fell by 1% be­cause of lower whole­sale elec­tric­ity prices which emerged in the all-is­land Sin­gle Elec­tric­ity Mar­ket (SEM).

A fea­ture of the op­er­at­ing profit in each re­cent year has been the record­ing as ‘other op­er­at­ing in­come’ of a sig­nif­i­cant gain from the var­i­ous hedg­ing strate­gies af­fect­ing dif­fer­ent vari­ables, in­clud­ing fuel prices. In 2016, op­er­at­ing prof­its were in­creased by £7.2m from this source, com­pared to £10.2m the pre­vi­ous year.

A ma­jor de­ci­sion in 2015 af­fected the op­er­at­ing profit in that year. In Au­gust 2015, the SEM Com­mit­tee de­cided to re­duce the pay­ments made to gen­er­a­tors which make ca­pac­ity avail­able by about 10%. This change, along with for­eign ex­change and commodity price move­ments, had a se­ri­ous im­pact on rev­enue. This was as­sessed to rep­re­sent an in­di­ca­tor of the im­pair­ment of the as­sets of the busi­ness.

The ac­counts, there­fore, for 2015 showed an im­pair­ment loss of £24m which re­sulted in what might have been an op­er­at­ing profit of over £10m trans­lat­ing into an an­nual op­er­at­ing loss of £14.8m.

The share­hold­ing par­ent com­pany has re­ceived no div­i­dend pay­ment in the past two years af­ter a div­i­dend of over £36m in 2014.

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