Mighty Rivers, the state-owned power company has announced its full-year pre-tax earning expectations. As per the data given, the rise in the earnings will be close to 20 per cent for the 2010 financial year.

Most of the calculations have been based on the mean hydrology, which is the bulk of the generation done by the company.

Talking about the same, Doug Heffernan, CEO of Mighty River said that a large may happen in the real-time figures because of the changes in the fluctuations in hydro and market conditions, it is for sure that the company will be comfortably reaching the figures that it has given.

One must remember that the figures that are expected are going to be the earnings before interest, tax, depreciation, amortisation and financial instruments (ebitdaf).

But despite this position, the planned ebitdaf is lesser than what the company was able to earn last year. In 2009, the ebitdaf was $327.8 million. This year the loss is the result of the drought in the Waikato region which has brought about reduction in hydro volumes.

As a result, while the spot price of electricity has gone up so has the operating cost.

Mighty River reported a lower-than-planned ebitdaf of $327.8m in the year to 30 June 2010. The result was driven by drought in the Waikato region, reducing hydro volumes at a time when spot prices for electricity were high, and increased operating costs.