Three months ended 31 December 2016
>> QUARTERLY HIGHLIGHTS
MOMENTUM
LOW CHURN
4,250GWh
STRONG MOMENTUM CONTINUES FOLLOWING MERCURY RE-BRAND
LOWEST CUSTOMER SWITCHING RATE OF THE MAJOR RETAILERS
HYDRO GENERATION FORECAST MAINTAINED FOR FY17
>> COMMENTARY MOMENTUM CONTINUED FOLLOWING RE-BRAND For the second consecutive quarter, Mercury’s continued focus on rewarding customer loyalty resulted in the Company achieving the lowest switch rate (churn) amongst the major retailers. For the quarter ending 31 December 2016, Mercury’s annualised churn was 15.9%, 3.3% below the market average of 19.2% based on publicly provided Electricity Authority data. This continued the strong momentum delivered following the Mercury re-brand in July 2016 and contributed to customer numbers increasing by 6,000 over the period. During the quarter, more than 100,000 customers were rewarded with a Free Power Day and almost 100,000 customers also registered to benefit from the Company’s new Airpoints partnership. The average energy price to customers was down 4.4% to $106.11/MWh relative to the same period last year. This reflects additional commercial and industrial sales contracted throughout the year at lower prices than achieved historically (contributing to a $5.50 reduction in the VWAP of sales to business customers) and the timing of customer loyalty product offerings. FY17 HYDRO FORECAST MAINTAINED Total hydro generation increased 205GWh on the same period last year to 1,112GWh. This reflects inflows into the Taupo catchment being 28GWh above average and storage being 134GWh above average at the start of the period. Based on the hydrological conditions observed throughout the quarter, Mercury continues to forecast midpoint FY2017 hydro generation at 4,250GWh. LWAP/GWAP remained flat with the prior comparable period last year, at 1.03. This reflects a continuation of lower wholesale price volatility driven by above average national hydro generation. National hydro storage started 246GWh above average and remained above average throughout the quarter. Reflecting the continued wet conditions, the locational wholesale price difference (basis) between Otahuhu and Benmore nodes was $8.38/MWh (or 21%). DEMAND IMPACTED BY HIGHER TEMPERATURES AND WET CONDITIONS After adjusting for temperature, national demand was down 3.2% compared to the same quarter last year. The irrigation, dairy processing and industrial sectors contributed -1.6%, -0.7%, and -0.7% respectively to the decrease in total national demand. The decrease in the agriculture sectors can be attributed to the wet conditions experienced during the last six months with significantly lower South Island irrigation requirements compared to last year along with reduced national milk collection. Mercury will release its financial results for the six months ended 31 December 2016 on 21 February 2017.
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
01
>> OPERATING STATISTICS
OPERATING INFORMATION ELECTRICITY SALES FPVV sales to customers
Three months ended 31 December 2016 VWAP 1 ($/MWh)
Volume (GWh)
106.11
1,088
FPVV sales to residential customers FPVV sales to business customers FPVV purchases from market Spot customer purchases Total NZEM Purchases
48.38
Three months ended 31 December 2015 VWAP1 ($/MWh) 110.94
Volume (GWh) 1,000
VWAP1 ($/MWh) 112.30
Six months ended 31 December 2015
Volume (GWh)
VWAP1 ($/MWh)
Volume (GWh)
2,395
115.56
2,253
554
554
1,302
1,340
534
446
1,093
913
1,150
1,056
2,529
2,380
231
233
454
520
1,381
70.23
1,289
ELECTRICITY CUSTOMERS (‘000)
387
380
North Island Customers
346
344
South Island Customers
41
36
Dual Fuel Customers
Six months ended 31 December 2016
54.83
2,983
63.27
2,900
43
41
Volume (GWh)
Volume (GWh)
Volume (GWh)
Volume (GWh)
Buy CfD
395
458
904
929
Sell CfD
905
893
1,801
1,919
346
353
673
746
510
435
897
990
CONTRACTS FOR DIFFERENCE
End User CFD Net Sell CfD
2
VWAP ($/MWh)
Volume (GWh)
VWAP ($/MWh)
49.28
1,112
69.36
907
-
-
76.74
Geothermal (consolidated) 3
42.94
657
Geothermal (equity accounted) 4
44.97
Total
46.87
ELECTRICITY GENERATION Hydro Gas
LWAP/GWAP CARBON EMISSIONS (‘000 TONNES CO2E) METRIX AMI METERS (‘000)
Volume VWAP (GWh) ($/MWh)
Volume (GWh)
VWAP ($/MWh)
Volume (GWh)
55.14
2,367
61.41
2,215
46
-
-
68.62
146
65.48
669
48.71
1,290
58.93
1,299
58
66.27
59
49.77
113
59.40
118
1,827
67.91
1,681
52.78
3,770
60.78
3,778
1.03
1.03
1.04
1.04
90
99
186
249
399
389
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 176 GWh for the 3 months ended 31 December 2016 and 176 GWh for the 3 months ended 31 December 2015 and of 352GWh for the 6 months ended 31 December 2016 and 352GWh for the 6 months ended 31 December 2015 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 DECEMBER
MERIDIAN ENERGY CONTACT ENERGY MERCURY GENESIS ENERGY TRUSTPOWER/TILT OTHER
Financial Year Q2 2016
Financial Year Q2 2017
5%
6%
5%
7%
34%
15%
34%
16%
19%
17% 21%
21%
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 31 DECEMBER
MERCURY OTHER
Financial Year Q2 2017
Financial Year Q2 2016
14%
86%
13%
87%
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
$80
4000
0.8
3500
$75
75
0.7
$70
3000
0.4
70
$65 $60
2000
$/MWh
GWh
GWh
2500
0.5
$/MWh
0.6
$55
1500 0.3 65 0.2 1000
$50
0.1
$45
500
0
0
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
$70
$77.99
$80.38
$79.59
$74.26
$59.80
$67.15
$71.49
$80
$78.15
AS AT 31 DECEMBER 2016 $77.88
AS AT 30 SEPTEMBER 2016 $80.06
AS AT 30 JUNE 2016
$80.08
$90
AS AT 31 DECEMBER 2015
$81.16
> OTAHUHU ASX FUTURES SETTLEMENT PRICE
$60
$/MWh
$50 $40 $30 $20 $10 $0 FY17
FY18 Financial Year
FY19
$70.31
$72.45
$74.79
$68.10
$72.69
$75.64 $50.78
$60
$72.75
AS AT 31 DECEMBER 2016
$60.20
$70
AS AT 30 SEPTEMBER 2016
$63.70
$80
AS AT 30 JUNE 2016
$76.05
$90
AS AT 31 DECEMBER 2015
$76.10
> BENMORE ASX FUTURES SETTLEMENT PRICE
$/MWh
$50 $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 1,367
1,231
1,269
1,252
1,265
8,199
8,363
8,299
8,550
8,609
8,257
Q2 12
Q2 13
Q2 14 Q2 15 Financial Year
Q2 16
Q2 17
1,264
GWh
8,000 6,000 4,000 2,000 -
Source: Transpower Information Exchange
> NATIONAL CLIMATE SUMMARY (ยบC) FINANCIAL YEAR
Q1
Q2
Q3
Q4
2017
12.1
16.1
-
-
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% 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