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Infratil Monthly Operational Report
26 October 2010
After six months of the financial
year the first half has been notably positive. The seamless transition
of Greenstone Energy to local ownership is a credit to the management
team assembled by Mike Bennetts. It also reflects well on Shell
who spent 100 years building a successful New Zealand business.
Infratil Energy Australia's transition into an integrated nationwide
Australian energy company was covered by the
At a more business as usual level,
the accord reached between the Wellington leaders group and Air
New Zealand and Pacific Blue is positive for the Capital's airport
as is the growth in domestic air capacity signalled by Air New Zealand
and Jetstar. NZ Bus chalked up good patronage support, and progress
is being made with the development of a new national public transport
contracting regime. Snapper is now on Wellington ferries, buses,
taxis and 230 shops. TrustPower is on track with its Mahinerangi
wind farm and the Emissions Trading Scheme ("ETS") has
been introduced in New Zealand (at no cost to TrustPower which is
The goal is to convert good operating reports into good financial
outcomes and to capture further growth opportunities. Over the six
months Infratil's management team were active in reviewing investment
projects and the objective now is to ensure some come to fruition,
while keeping up the good operational performance.
Infratil's interim results will be released on 16th November.
The priority of Greenstone's first
six months was for a smooth transition to local ownership, management
and governance, with no disruption to customers. After six months
the objective was being delivered, even through events such as the
Greenstone's service levels are reflected in growing market share
in both commercial and retail fuels. In the twelve months to 30
September 2010 Greenstone's sales volumes are up 5% over the previous
year while total national sales volumes were flat.
In the short term efficient provision
of fuels largely means operating the company's infrastructure as
well as the previous owners. Over the medium term it means investing
in renewal, growth and improvements and Greenstone is developing
a capital programme to match its growth targets. Even this year
a number of investments have been undertaken; three new service
stations, a new truck stop, storage facilities for commercial customers,
a new 10 million litre storage tank at the Port of Lyttelton to
improve supply reliability for Canterbury and a new point-of-sale
system for the petrol stations and company-wide IT upgrade.
The half year also saw the introduction
of the emissions trading scheme in New Zealand. At present fuel
emission costs about 4 cents per litre which does not justify a
switch in supply from mineral to biofuels, but it is a signal of
future trends and biofuels are under review.
A relatively wet and windy winter and
weak demand has kept wholesale electricity prices down. It is possible
that total electricity consumption in 2010 will be below the level
of 2009 which would make three years of decline (over the previous
35 years electricity consumption has not declined for more than
one year). These market conditions and the SOE restructuring seem
to be driving heightened retail competition with customer churn
twice the level of two years ago.
TrustPower has maintained stable customer
numbers over the last six months, but on a five year basis its share
of the residential market has fallen to 11.5% from 12.5%. Over the
same period the other privately owned generator/retailers have gone
from 30.5% to 27.8% of the market.
At the end of October the Electricity
Commission will be replaced by the Electricity Authority. The key
difference is that the new regulatory agency has greater autonomy
from the Minister as it is an independent Crown entity.
Construction of Stage 1 of the Mahinerangi Wind Farm is progressing
to timetable, despite a period of heavy snow. The first water supplied
under contract to Rangitata Diversion Race irrigators has flowed
from the new TrustPower BCI pumping and irrigation project. Environment
Court decisions on TrustPower's proposed Arnold and Wairau hydro
generation schemes are also expected soon.
TrustPower completed a $75 million seven year bond at a yield of
7.1% per annum. The issue was led by Forsyth Barr.
Infratil Energy Australia
As highlighted in the September Update,
IEA is transitioning into a national integrated energy company and
recently launched the "Lumo" retail brand. The rationale
for this was partly for greater simplicity compared to four state
based brands, and partly it related to the intention to pursue national
marketing campaigns, often involving other Australian organisations.
National companies which operate loyalty schemes tend to seek partnerships
with other nationally recognised companies. For instance in New
Zealand Greenstone Energy partners with national supermarket chains
to offer discounts.
Retail had low levels of net growth
in September, largely as a result of higher industry churn levels.
High levels of customer churn demand greater emphasis on targeted
acquisition strategies, retention and win-back programmes. As a
result, huge effort (and expense) is required just to maintain net
customer numbers. The Lumo team are also continuing to work on ways
to better address and rectify customer complaints so as to reduce
The 120MW Kwinana Power Station was
commissioned in Western Australia and construction of the Port Stanvac
facility is on track in South Australia. IEA will own 285MW of peaking
generation capacity by the end of the year. In addition, there is
an on-going review of options for additional generation development
Over the six months wholesale electricity
and gas markets were favourable with low prices for the former and
firmer prices for the latter.
For the half year patronage growth
in the northern region was 3% and in Wellington/Hutt it was 4%.
In both regions the growth trend is upwards. Wellington growth is
encouraging after a flat period and increasing patronage is been
experienced across a number of the main routes, in particular Karori,
Island Bay, Miramar and Airport Flyer.
At least in part this is believed to
reflect the company's efforts to improve reliability and, on some
Auckland routes, frequency. In central Auckland services continue
to be disrupted by roadworks. While improved traffic flows through
Wellington are on hold as work continues on the Manners Street busway.
Wellington's previous Council are due great credit for bringing
this about despite the cost and some opposition.
The local authority elections resulted in some changes in both regions,
especially in Auckland. The new Mayor is a strong public transport
advocate and the new Auckland Council transport agency combines
functions which were once widely spread. Better public transport
is widely seen as a likely outcome of the Auckland local government
In the meantime the Ministry of Transport review of bus public transport
contracts continues to progress and the first of the new contracts
should not now be far off. Without a new contracting regime investment
and progress is difficult.
||6 months to 30 September
||12 months to 30 September
||6 months to 30 September
||12 months to 30 September
Operationally NZ Bus continues to make progress on its business performance
and agreements have been signed with most staff through to 2012.
Snapper use is now increasing at a fast
rate and people with Snapper cards are using them more often. In September
Snapper transactions were up over 40% on the same month last year.
Snapper is now used on approximately 60% of GO Wellington and Valley
Flyer bus rides and this is expected to increase with the greater
value being offered by Snapper since cash fares increased on 1 October.
135,000 Snapper cards were on issue as at 30 September, up from
120,000 at 1 April 2010.
10 million transactions over the six months, from 7 million in
the same period last year.
230 retail outlets accept Snapper, from 200 as at 31 March.
Snapper partnered with Smartpay and TaxiCharge to develop and
install a payment system on over 700 taxis in the Wellington region.
Two new cards were released, the Mini and the Sprat.
MySnapper online making the web applications accessible to all
computers and operating systems. Four Wellington area self-service
kiosks for people who prefer reloading their cards that way.
Passes for public transport.
Snapper now has 35 staff working on development and maintaining smooth
Wellington is just days away from
opening the international terminal. Since the new domestic terminal
opened in 1990 the people of Wellington have developed affection
for a gateway offering "the best of the region". Just
as the smell of fresh coffee has become an icon of Wellington -
it has become noticeable the instant passengers arrive in the terminal.
The Rock is next. No one who flies internationally out of Wellington
will have the slightest doubt as to where they are, nor that Wellington
is somewhat unique.
In the short term the main use of the new facilities will be for
Tasman services, which is consistent with the on-going integration
of the New Zealand and Australian air travel markets. Longer term
the gateway will be Wellington's link with Asia.
The integration of New Zealand and Australian air travel markets
may have taken a step forward over the month with the new proposal
of Air New Zealand and Virgin Blue to form an alliance linking their
respective domestic New Zealand and Australian services. To address
concerns about the alliance reducing competition on the Tasman,
the airlines committed to minimum levels of capacity and growth
on Wellington's three trans-Tasman routes. The Wellington stakeholder
group endorses the airlines' new proposal and hopes that if it progresses
that it will lead to a more vibrant Australasian air travel market.
While the alliance was not subject to review by the NZ competition
authorities, the Commerce Commission is continuing to develop new
rules covering airport information disclosures. Infratil supports
good, transparent disclosure, but has made a submission on the Commission's
provisional views on how airport land would be valued in disclosures.
6 months to 30 September
In the six months to 30 September 2% more passengers used Wellington
airport than the corresponding period a year prior. Regional passengers
were up 4%, trunk routes were stable and international passengers
In September domestic services had loads of 79% and international
services were 80%.
Passenger numbers were up 13% up on
the same period last year. Increased capacity on sunshine routes
continues to prove popular and airlines are achieving encouraging
load factors and forward bookings.
Freight volumes were 7% ahead of the
prior year due to growth on US services.
6 months to 30 Sept
|Total Freight Tonnes
6 months to 30 Sept
Manston (Kent International)
Freight tonnage was a third lower
than the same month last year due to the demise of MK Airlines and
the suspension of flights by Meridian. Flybe's Edinburgh passenger
service continues to grow and they also launched a Manchester service
6 months to 30 Sept
| Total Passengers
6 months to 30 Sept
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