The country's major hydro storage lakes have been as low as 49% and are currently 55% of average for this time of the year and the electricity industry has commenced a nationwide power savings campaign.
TrustPower's hydro generation portfolio has been impacted by this year's nationwide drought. Wind generation has been variable. In May the output from the Tararua Wind Farm was half of average but so far during June that output has returned to the long-term average.
Overall production from both the hydro and wind assets for April, May and, as forecast for the remainder of June, is nearly 25% (140 GWh) below long term average for the quarter.
TrustPower anticipates that from time to time in extreme dry conditions it will be required to make purchases from the spot market at times when the market is high. By the end of the first quarter TrustPower expects to have purchased approximately 30-40GWh. This outcome is within the range of expectation during a period of very low hydrology.
Looking ahead beyond the first quarter, TrustPower expects to be reasonably balanced. An improvement to more typical hydro inflows across the hydro generation portfolio would offer some opportunity for net sales to the spot market and potentially some recovery of the current lower earnings.
The financial impact on TrustPower of the 2008 drought is uncertain but it could see Earnings Before Interest Tax Depreciation, Amortisation and Fair Value Movement of Financial Instruments fall below the Company's mean year expectation by between $15-20M.
