Matahina Power Station. Photo: Manawa Energy / supplied
Electricity generator Manawa Energy has cut its earnings guidance after a key customer defaulted on its payment terms with the company.
Manawa said it acted as a wholesale intermediary for an unnamed electricity retailer which has not kept up with payments.
It said as a result, Manawa would set money aside for potential bad debt in its full-year results for the year ending March 2025.
It comes as wholesale electricity prices soared on the back of low hydro lake levels.
Manawa expected underlying earnings for the year to be in the range of $95 million to $115m, compared to the previous $130m to $150m.
It said about half of the change in guidance was because of the money set aside for potential bad debt.
Manawa confirmed it would also terminate the supply and services contract with the retailer on Thursday.
"This will allow Manawa to immediately initiate steps to reduce the risk of further exposure. Manawa will work to recover as much of the outstanding debt as possible," it told the share market.
The company said the arrangement was unique to Manawa, and it did not have a similar agreement with any other party.
Manawa said it was also being affected by electricity market conditions.
"In particular, the extended dry and calm sequence experienced for a number of months is having a significant impact on the generation volumes from Manawa's hydroelectricity schemes and is also reducing the electricity volumes provided to Manawa under the wind power purchase agreements," it said.
The generator said purchases of energy shortfalls to meet its supply commitments were occurring at "extremely elevated prices" compared to historic norms.
Manawa declined an interview request.
Manawa was previously known as Trustpower, until it sold its retail operations to Mercury in 2022 and rebranded under the current name.
Infrastructure investor Infratil, which owns 51 percent of Manawa Energy, has also dropped its full year underlying guidance range to between $962m and $1 billion from the earlier guidance of between $980m and $1b.