Doug Heffernan, chief executive of Mighty River Power, is recognised as an advocate for the industry, the environment and the pursuit of profit with a purpose.
Appointed to head the fledgling business in late 1998, Doug is the longest-serving chief executive of any of the state-owned enterprises. The company believes that longevity reflects the durability of the strategy he mapped out for the business in that time, and the underlying values he established.
Founder chairman Rob Challinor credits Doug with developing a culture of "integrity, openness, teamwork and aspiration that has been an on-going platform for the success of the company."
Mighty River Power has spent the past 10 years developing a portfolio of geothermal assets to complement its generation base on the Waikato River. In the past five years, total shareholder returns exceeded those of the company's listed rivals.
In the year to June 2011, earnings before interest, tax, depreciation and changes in financial instruments (EBITDAF) climbed 35 per cent to $443.1 million. The company also recognised $412 million in asset revaluations, with almost half the uplift attributable to the geothermal portfolio. Since Mighty River Power's formation revaluations have added almost $3 billion to the company's value.
Based on the company's interim result and a strong start to the second-half, Mighty River Power increased its full-year EBITDAF forecast by about $30 million to between $460 million and $475 million.
Sustainability
And that long-term financial success has been underpinned by the ethos of sustainability and long-term partnership that Doug has instilled within the company.
The company has good relations with the iwi it works with and Doug was instrumental in the establishment of the Waikato Catchment Ecological Enhancement Trust in 2003, through which the company funds enhancement and mitigation projects on the Waikato River.
In the same way, the company's $1 billion, five-year investment in geothermal was only possible by aligning the organisation's goals with the beliefs and aspirations of the landowner trusts. Doug is a director of the Tuaropaki Power Company and until recently chaired the Rotokawa and Nga Awa Purua joint ventures that Mighty River Power has with the Tauhara North No. 2 Trust.
That geothermal investment has fundamentally re-positioned Mighty River Power in the wholesale market, increasing its share of the base-load generation market in a competitive, zero demand growth environment. Completion of the 82 MW Ngatamariki plant next year will increase geothermal's contribution to generation to more than 40 per cent, further strengthening the company's earnings base and its commercial consistency.
And despite tough retail churn the past year, the company increased its retail volumes. Industrial and commercial sales increased by 18 per cent while the company also used its specialist Bosco and Tiny Mighty Power units to carve out niche markets to complement the sales of its principal brand Mercury Energy. The business has also established its GLO-BUG technology as the industry's leading prepay product, which it is now offering beyond its traditional Auckland market.
Thanks to Doug's foresight, Mighty River Power has built a powerful reputation in the exploration, and development of geothermal resources for power generation. The company ranks in the top 15 worldwide for ownership of geothermal capacity and is in the top five for plant capacity commissioned within the past 10 years.
Doug was pivotal in extending Mighty River Power's geothermal expertise offshore. He directed the investment of USD $250 million in the GeoGlobal Energy fund, which is progressing geothermal projects in the United States, Chile and Germany, and in May attended the official opening of the John L. Featherstone geothermal plant in Southern California.
The plant is the first of Mighty River Power's overseas geothermal investments to move into commercial operation and is one of many growth options for the company in a global market where geothermal capacity is projected to more than double over the next five years.
The Energy Executive of the Year Award category is sponsored by Transfield Worley.