Three months ended 30 June 2017
>> QUARTERLY HIGHLIGHTS
LOYALTY
LOWER THAN MARKET CHURN OF 19.7% VS. 21.8% ANNUALISED
RECORD
ANNUAL GENERATION OF 7,533GWh WITH HYDRO GENERATION 724GWh ABOVE AVERAGE
+1%
UNDERLYING DEMAND UP FOR THE QUARTER DUE TO GROWTH IN URBAN, RURAL AND DAIRY SECTORS
>> COMMENTARY LOYALTY DELIVERING LOWER CHURN Mercury’s focus on rewarding its existing customers again resulted in lower than market churn. For the quarter ended 30 June 2017, Mercury’s annualised premise churn across all brands was 19.7%, below the market average of 21.8%, based on publicly available Electricity Authority data. In the period, Mercury celebrated Shortland Street’s 25th anniversary with a Free Power Day taken up by more than 50,000 customers online. In addition, the number of customers earning AirpointsTM through Mercury’s relationship with Air New Zealand increased to nearly 120,000. The average energy price to all customers was up 0.8% for the quarter (to $118.47/MWh) when compared to the same period last year ($117.58/MWh). RECORD GENERATION; SOUTH ISLAND STORAGE LEVELS FALL FY2017 was a record generation year for Mercury, with the company generating 7,533GWh from 100% renewable sources. For the quarter, hydro generation was up 593GWh to 1,402GWh due to high rainfall during the period. Hydro generation for the financial year was 4,724GWh, above expected annual generation of 4,000GWh. This was the highest full year of hydro generation from the Waikato Hydro Scheme under Mercury’s management (since 1999). Geothermal generation was up slightly (21GWh to 723GWh) on the same quarter last year with 98.6% availability achieved across all stations. Annual generation was 2,809GWh, slightly down (21GWh) on a record year in FY2016. Persistently dry conditions in the South Island contributed to national hydro storage ending the quarter at 66% of average. As a result, reduced South Island hydro generation contributed to wholesale prices increasing to $110.82/MWh (Otahuhu) and $117.77/MWh (Benmore) for June, and $73.11/MWh and $74.95/MWh respectively for the quarter. Quarterly LWAP/GWAP of 1.13 was negatively impacted by the relative difference of wholesale prices between the North and South Islands, with the cost of physical sales to our South Island customers increasing by more than the revenue from our solely North Island generation. This negative movement is partly mitigated by non-physical contracts such as the Virtual Asset Swap (VAS) with Meridian. UNDERLYING DEMAND GROWTH The quarter experienced the highest level of national demand for that period on record. After adjusting for temperature, national demand was up 1.0% compared to the same quarter last year. This increase in demand was attributable to the dairy (0.5%), rural (0.5%) and urban (0.3%) sectors. This was partially offset by a reduction in the industrial sector (-0.4%).
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
01
>> OPERATING STATISTICS
OPERATING INFORMATION ELECTRICITY SALES FPVV sales to customers
Three months ended 30 June 2017 VWAP 1 ($/MWh)
Volume (GWh)
118.47
1,175
FPVV sales to residential customers FPVV sales to business customers
Three months ended 30 June 2016 VWAP1 ($/MWh)
Volume (GWh)
117.58
1,137
Twelve months ended 30 June 2017 VWAP1 ($/MWh) 113.51
Twelve months ended 30 June 2016
Volume (GWh)
VWAP1 ($/MWh)
Volume (GWh)
4,606
114.83
4,397
660
610
2,458
2,438
515
527
2,148
1,959
FPVV purchases from market
1,241
1,200
4,865
4,643
Spot customer purchases
226
210
899
950
Total NZEM Purchases
80.23
1,467
65.61
1,410
ELECTRICITY CUSTOMERS (‘000)
392
376
North Island Customers
349
339
South Island Customers
43
37
Dual Fuel Customers
61.04
5,764
65.41
5,593
45
41
Volume (GWh)
Volume (GWh)
Volume (GWh)
Volume (GWh)
Buy CfD
372
447
1,628
1,741
Sell CfD
1,011
735
3,586
3,408
331
339
1,325
1,448
639
288
1,958
1,667
CONTRACTS FOR DIFFERENCE
End User CFD Net Sell CfD
2
VWAP ($/MWh)
Volume (GWh)
VWAP ($/MWh)
72.50
1,402
68.33
809
-
-
-
Geothermal (consolidated) 3
68.02
668
Geothermal (equity accounted) 4
68.98
Total
71.00
ELECTRICITY GENERATION Hydro Gas
LWAP/GWAP CARBON EMISSIONS (‘000 TONNES CO2E) METRIX AMI METERS (‘000)
Volume VWAP (GWh) ($/MWh)
Volume (GWh)
VWAP ($/MWh)
Volume (GWh)
60.31
4,724
64.84
3,866
-
-
-
68.64
146
60.67
642
53.87
2,586
60.84
2,596
55
61.54
60
54.66
223
61.44
234
2,125
64.81
1,511
57.93
7,533
63.29
6,842
1.13
1.01
1.05
1.03
93
92
359
428
403
396
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 174 GWh GWh for the 3 months ended 30 June 2017 and 174 GWh for the 3 months ended 30 June 2016 and of 699 GWh for the 12 months ended 30 June 2017 and 701 GWh for the 12 months ended 30 June 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 30 JUNE
MERCURY MERIDIAN ENERGY CONTACT ENERGY GENESIS ENERGY TRUSTPOWER / TILT OTHER
Financial Year Q4 2016
Financial Year Q4 2017
5%
7%
4%
21%
7%
15%
17%
18%
34%
28% 23%
21%
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 30 JUNE (EXCLUDING CFDs)
MERCURY
Financial Year Q4 2017
Financial Year Q4 2016
OTHER 15%
85%
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
> OTAHUHU ASX FUTURES SETTLEMENT PRICE
$77.61
$70.18
$74.26
$77.88
$60
$58.55
$70
$54.28
$80
$59.80
$90
$71.49
$100
$80.00
AS AT 30 JUNE 2017
$77.99
AS AT 31 MARCH 2017
$79.59
AS AT 31 DECEMBER 2016
$86.35
AS AT 30 JUNE 2016
$/MWh
$50 $40 $30 $20 $10 $0 FY17
FY18 Financial Year
FY19
> BENMORE ASX FUTURES SETTLEMENT PRICE
AS AT 31 DECEMBER 2016
AS AT 31 MARCH 2017
$/MWh
$74.71
$71.40
$70.31
$74.79
$64.25
$68.10
$51.61
$46.25
$50
$50.78
$60
$63.70
$70
$72.75
$90 $80
AS AT 30 JUNE 2017 $86.41
AS AT 30 JUNE 2016
$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
12,000 10,000
1,204
1,196
1,235
1,255
1,261
1,251
8,834
8,665
8,458
8,778
8,593
8,865
Q4 12
Q4 13
Q4 14 Q4 15 Financial Year
Q4 16
Q4 17
GWh
8,000 6,000 4,000 2,000 -
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY (ยบC) FINANCIAL YEAR
Q1
Q2
Q3
Q4
2017
12.1
16.1
19.3
14.3
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: Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs)
Jan-17
Jul-16
Jan-16
Jul-15
Jan-15
Jul-14
Jan-14
Jul-13
Jan-13
0% Jul-12
0 Jan-12
5%
Jul-11
10000
Jan-11
10%
Jul-10
20000
Jan-10
15%
Jul-09
30000
Jan-09
20%
Jul-08
40000
Jan-08
25%
% Churn
ANNUAL NZ MARKET CHURN % (RHS)
50000
Jul-07
Monthly ICPs
NZ MARKET CHURN (LHS)
Source: Electricity Authority
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
06