Spark Infrastructure has reported a 9.1 per cent drop in first-half profit to $52.8 million and is urging the electricity regulator to reassess how much revenue networks are allowed to recover from customers.
Spark, which part-owns power networks in Victoria, SA and NSW, on Tuesday said total income for the six months to June 30 fell 9.5 per cent to $146.5 million while capital expenditure for the same period rose 11 per cent.
Managing director and chief executive Rick Francis said Spark supported the drive towards more renewable energy and urged the Australian Energy Regulator to amend the rate of return guideline (RORG) finalised just eight months ago to help spending on connecting new projects to the grid.
“There is a pressing need to revisit the new RORG, which has already become outdated in a very short space of time due to the current uncertainty and volatility in the markets,” Mr Francis said.
“What we can’t afford to have happen is for inflexible regulatory processes to stymie building of these investments which are urgently needed in the grid.”
Spark reactivated its dividend reinvestment program and trimmed its interim distribution by half a cent to 7.5 cents.
It said it would pay the same or more with its full-year results.
Royal Bank of Canada analyst James Nevin said the result was solid but he would remain cautious unless Spark could lower operating costs or invest in renewable generation at attractive rates.
“Upcoming headwinds on lower allowed rate of return, lower interest rates and the escalating cash tax paying position … (we think) mean SKI needs to cut distributions again from FY21,” he wrote.
SPARK’S H1 RESULTS
* Total income down 9.5pct to $146.5m
* Net profit down 9.1pct to $52.8m
* Interim distribution down 0.5 cents to 7.5 cents.
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