Three months ended 31 March 2017
>> QUARTERLY HIGHLIGHTS
LOWEST CHURN
LOWEST CUSTOMER SWITCHING RATE OF MAJOR RETAILERS
1.02
4,500GWh
LWAP/GWAP IMPROVED IN CONJUNCTION WITH A 111GWh LIFT IN HYDRO GENERATION
HYDRO GENERATION FORECAST UP 250GWh FOR FY17 ON HIGHER INFLOWS
>> COMMENTARY LOW CHURN; ENERGY PRICE UP For the third consecutive quarter, Mercury recorded the lowest switch rate (churn) among the major retailers. For the quarter ended 31 March 2017, Mercury’s annualised churn was 17.6%, well below the market average of 20.5% based on publicly available Electricity Authority data. Mercury’s loyalty initiatives continued to appeal to customers with a further 13,000 customers registering to receive AirpointsTM and customers on fixed-term contracts increasing by 6,000. Customers benefiting from each initiative increased to 110,000 and 149,000 respectively. The average energy price to customers was up marginally (to $110.70/MWh) when compared to the same period last year ($110.10/MWh). This increase is despite a continued trend of falling prices for commercial and industrial customers (with the VWAP of sales to business customers down approximately $2/MWh). LIFT IN EXPECTED ANNUAL HYDRO GENERATION Due to favourable hydrological conditions experienced since February 2017, Mercury has updated its FY2017 mid-point hydro generation forecast to 4,500GWh (up 250GWh on the forecast provided in the preceding operating statistics). Hydro generation lifted 13% relative to the prior comparable three month period, up 111GWh to 954GWh. This reflects inflows into the Waikato catchment being 170GWh above average and storage being 112GWh higher at 1 January 2017. LWAP/GWAP was 1.02, an improvement on the same period last year, of 1.03. This benefited from an improvement in hydro GWAP of 2% (to 1.09) despite the management of higher inflows. Average wholesale prices continued to be impacted by higher than average national hydro generation and averaged $53.49/MWh and $44.37/MWh at Otahuhu and Benmore respectively. This equates to a locational price difference of $9.12/MWh or 21% of the average Benmore price (continuing on from the previous quarter, being $8.38/MWh or 21%). Geothermal generation was down slightly due to planned plant outages during the period at Ngatamariki and Nga Awa Purua. Geothermal plant availability remains strong, with the quarter again exceeding 95% (relative to 98% for the same quarter last year). DEMAND SLIGHTLY LOWER After adjusting for temperature, national demand was down 0.2% compared to the same quarter last year. The reduction in demand was mostly attributable to the industrial sector (-0.5%), which was partially offset by increased demand in the dairy process sector (0.2%).
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
01
>> OPERATING STATISTICS
OPERATING INFORMATION ELECTRICITY SALES FPVV sales to customers
Three months ended 31 March 2017 VWAP 1 ($/MWh)
Volume (GWh)
110.70
1,036
FPVV sales to residential customers FPVV sales to business customers FPVV purchases from market Spot customer purchases Total NZEM Purchases
53.70
Three months ended 31 March 2016 VWAP1 ($/MWh)
Volume (GWh)
110.10
1,006
VWAP1 ($/MWh) 111.82
Nine months ended 31 March 2016
Volume (GWh)
VWAP1 ($/MWh)
Volume (GWh)
3,431
113.87
3,260
496
488
1,798
1,828
540
518
1,633
1,432
1,094
1,063
3,624
3,443
218
220
672
740
1,312
70.00
1,283
ELECTRICITY CUSTOMERS (‘000)
390
377
North Island Customers
348
340
South Island Customers
42
37
Dual Fuel Customers
Nine months ended 31 March 2017
54.48
4,296
65.34
4,183
44
41
Volume (GWh)
Volume (GWh)
Volume (GWh)
Volume (GWh)
Buy CfD
352
365
1,256
1,294
Sell CfD
775
753
2,576
2,672
324
364
996
1,110
423
388
1,320
1,378
CONTRACTS FOR DIFFERENCE
End User CFD Net Sell CfD
2
VWAP ($/MWh)
Volume (GWh)
VWAP ($/MWh)
55.21
954
70.52
843
-
-
-
Geothermal (consolidated) 3
49.41
628
Geothermal (equity accounted) 4
50.30
Total
52.82
ELECTRICITY GENERATION Hydro Gas
LWAP/GWAP
Volume VWAP (GWh) ($/MWh)
Volume (GWh)
VWAP ($/MWh)
Volume (GWh)
55.16
3,321
63.92
3,058
-
-
-
68.64
146
64.80
654
48.94
1,918
60.90
1,953
54
64.86
56
49.94
168
61.17
174
1,636
67.91
1,553
52.79
5,407
62.85
5,331
1.02
1.03
1.03
1.04
CARBON EMISSIONS (‘000 TONNES CO2E)
80
86
266
335
METRIX AMI METERS (‘000)
401
393
1
VWAP is volume weighed average energy only price sold to FPVV customers after lines, metering and fees Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 172 GWh for the 3 months ended 31 March 2017 and 174 GWh for the 3 months ended 31 March 2016 and of 525 GWh for the 9 months ended 31 March 2017 and 527 GWh for the 9 months ended 31 March 2016 3 Includes Mercury’s 65% share of Nga Awa Purua generation 4 Tuaropaki Power Company (Mokai) equity share 2
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
02
>> MARKET DATA > ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 31 MARCH
MERCURY MERIDIAN ENERGY CONTACT ENERGY GENESIS ENERGY TRUSTPOWER / TILT OTHER
Financial Year Q3 2016
Financial Year Q3 2017
5%
7%
17%
4%
15%
7%
16%
17%
35%
35%
21%
21%
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 31 MARCH
MERCURY
Financial Year Q3 2017
Financial Year Q3 2016
OTHER 14%
86%
14%
86%
Source: Mercury Purchases and Transpower SCADA
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
03
> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS AVERAGE NATIONAL STORAGE #REF! #REF! FY2017 NATIONAL STORAGE ROLLING 12 MONTH AVERAGE BEN PRICE
1
FY2016 NATIONAL STORAGE #REF! ROLLING 12 MONTH AVERAGE OTA PRICE
#REF!
80
0.9
4500
$80
0.8
4000
$75
75
0.7
3500
$70
0.6
2500
$65 $60
2000 $55
0.3
1500
65
0.2
$50
1000
0.1
$45
500
0
0
$/MWh
0.4
70
$/MWh
GWh
0.5
GWh
3000
60 0
Jul
0
Aug
0
0
Sep
0
Oct
0
Nov
0
Dec
0
0
Jan
0
Feb
0
Mar
0
Apr
0
0
May
Jun
May
Jun
$40
> TAUPO STORAGE
AVERAGE SINCE 1999
FY2016
FY2017
600
500
GWh
400
300
200
100
0 Jul
Aug
Sep
Oct
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
Nov
Dec
Jan
Feb
Mar
Apr
04
$60
$77.61
$77.99
$80.38
$70.18
$74.26
$54.28
$59.80
$70
$78.15
AS AT 31 MARCH 2017 $76.66
AS AT 31 DECEMBER 2016
$67.15
$80
AS AT 30 SEPTEMBER 2016
$74.23
$90
AS AT 31 MARCH 2016
$78.05
> OTAHUHU ASX FUTURES SETTLEMENT PRICE
$/MWh
$50 $40 $30 $20 $10 $0 FY17
FY18 Financial Year
FY19
$/MWh
$71.40
$70.31
$71.54
$50
$46.25
$60
$50.78
$70
$60.20
$80
$67.30
$90
$72.45
AS AT 31 MARCH 2017
$64.25
AS AT 31 DECEMBER 2016
$68.10
AS AT 30 SEPTEMBER 2016
$72.69
AS AT 31 MARCH 2016
$73.03
> BENMORE ASX FUTURES SETTLEMENT PRICE
$40 $30 $20 $10 $0 FY17
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
FY18 Financial Year
FY19
05
> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED) NATIONAL CONSUMPTION
TIWAI POINT ALUMINIUM SMELTER CONSUMPTION
10,000 9,000
1,303
1,230
1,234
1,240
1,256
1,237
7,946
7,991
8,021
8,233
8,240
8,185
Q3 12
Q3 13
Q3 14 Q3 15 Financial Year
Q3 16
Q3 17
8,000 7,000 GWh
6,000 5,000 4,000 3,000 2,000 1,000 -
Source: Transpower Information Exchange
> NATIONAL CLIMATE SUMMARY (ยบC) FINANCIAL YEAR
Q1
Q2
Q3
Q4
2017
12.1
16.1
19.3
-
2016
11.4
16.0
20.6
15.3
2015
11.9
15.9
19.9
14.3
2014
12.3
16.7
18.9
14.8
2013
12.3
16.5
19.6
14.4
Historical Average (since 1999)
11.9
16.1
19.4
14.2
Source: NIWA, Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs) ANNUAL NZ MARKET CHURN % (RHS)
50,000
25%
40,000
20%
30,000
15%
20,000
10%
10,000
5%
% Churn
Monthly ICPs
NZ MARKET CHURN (LHS)
0% Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
-
Source: Electricity Authority
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
06