Latest figures appear to support warnings that price rises and a debacle over directors' fees would turn customers off Contact Energy but broker indications suggest it may be an opportune time for potential investors.
In its quarterly figures, Contact said it had 487,000 electricity customers at the end of March.
That is down 2.4% from 499,000 at the end of December and down 5.8% on the 517,000 at the end of March last year.
Last October, sharebroking firm Forsyth Barr said a consumer backlash against rising prices and an attempt to almost double directors' fees had prompted thousands of householders to inquire about switching suppliers.
Politicians also criticised Contact's plans to increase the fees.
In the end, the company passed a resolution to nearly double the fees pool to $1.5 million with a 79% shareholder vote in favour.
The company's image was also hurt by the news in late September that customers in Wellington and Dunedin were to have power price rises of at least 10% from last November.
Forsyth Barr broker Suzanne Kinnaird said customer numbers for both electricity and gas continued to decline, with retail gas customer numbers dropping off at a faster rate - down 9.5% on the corresponding time last year, compared to a 5.8% drop for electricity.
"The rate of customer decline is slowing but not as quickly as Contact would like.
That said, Contact has only just restarted its marketing efforts and we expect the number of customers leaving Contact to decline at a faster rate."
However, Forsyth Barr had reduced its year-end customer forecasts further from 486,200 to 481,000 for electricity and from 69,000 to 65,250 for gas.
The other significant change made to the forecasts was to lower the 2009 wholesale price forecast from $64.29 MWh to $61.44 as wholesale prices continued to trade at very low levels, Ms Kinnaird said.
The key question for the remainder of the year was whether the Tiwai Point aluminium smelter returned to full production and, if so, what impact that would have on wholesale prices.
Contact's medium-term capital expenditure programme had increased by 35% on a year ago to $2.7 billion, the main driver of the rising cost being the fall in the New Zealand dollar, she said.
While the projects were still good value for Contact, the increase in costs had been a major factor in Forsyth Barr's valuation falling from above $11 a year ago to $8.67.
At a glance
• Contact generates about 27% of New Zealand's electricity and supplies electricity, gas and lpg to about 600,000 customers.
• Its generation portfolio consists of gas, hydro and geothermal facilities that produce about 11,000 KWh of electricity a year.
• In addition, Contact provides wholesale and retail gas services and lpg services through is Rockgas subsidiary.
• Contact recently started public consultation on four generation options on the Clutha River - two upstream of the Clyde dam and two downstream of Roxburgh.
