Quarterly Business Update Three months ended 30 September 2011
Commentary – Operating Information Mighty River Power achieved a 10% increase in total generation production in the first quarter (FY2012), despite weak hydro conditions in the Waikato River catchment, and the Company achieved customer sales volume growth in what is continuing to be a highly competitive retail environment. Operating results for the three months to 30 September 2011 also reflect significantly higher underlying prices in the wholesale market than the prior comparable period (pcp), largely due to the influence of below-average national hydrology and colder weather increasing demand during the period. Retail electricity sales (Fixed Price Variable Volume or FPVV) volumes were up 1% on pcp, with gains in commercial sales (up 7% to 590GWh) partially offset by a decline in residential sales (down 3% to 833GWh). The overall sales growth was driven by an increase in average consumption per customer and gains in market share outside Auckland, while customer numbers fell by 5%. The average FPVV price achieved was up 4% on the pcp. The higher wholesale electricity prices for the period lifted electricity purchase costs and generation yields by around $25-$30/MWh (50-60% increase) on pcp. Volumes of both buy and sell Contracts for Difference (CfD) were up, largely due to the start of the Virtual Asset Swap (VAS) with Meridian Energy (which took effect on 1 January 2011) and increased trading of futures through the ASX, bringing increased liquidity to that market. All generation technologies contributed to the 10% increase in total electricity output. Hydro production was up 4% on the prior comparable period, with increased rainfall in the Waikato River catchment during July offset by dry conditions in August and September. Strong inflows in October have restored Lake Taupo storage levels to above normal. While gas prices were 19% higher, gas-fired generation from Southdown was up 81% as the Company responded to higher average wholesale electricity prices. Higher Southdown volumes lifted gas usage to almost 2PJ for the quarter (up 61%). Geothermal output was up 10%, partially due to improved performance from the Kawerau plant, but primarily because the pcp was adversely impacted by maintenance outages at a number of stations. The Company’s net unadjusted wholesale market position for the quarter was net long (generation) by 23GWh, with 99% of generation production hedged on average by sales to customers or through CfDs. Just over half of Southdown’s potential to cover average market risk was utilised during the period.
Operating Information1
Retail Electricity
Three months ended 30 September 2011
Three months ended 30 September 2010
VWAP2 ($/MWh)
Volume (GWh)
VWAP ($/MWh)
Volume (GWh)
115.63
1,423
111.65
1,412
FPVV purchases from market
85.21
1,492
55.04
1,488
Spot customer purchases
81.14
499
50.61
557
FPVV sales to customers
Electricity Customers (number)
387,000
408,000
Contracts for Difference
Volume (GWh)
Volume (GWh)
Buy CfD
715
520
Sell CfD
1,167
1,080
452
560
Net Sell CfD Electricity Generation
VWAP ($/MWh)
Volume (GWh)
VWAP ($/MWh)
Volume (GWh)
Hydro
79.52
1,234
49.82
1,190
Gas
89.00
220
78.87
122
Geothermal (consolidated) 3
74.69
513
48.83
468
Geothermal (equity accounted)4
72.77
58
49.66
59
Total
79.13
2,026
51.48
1,839
$/GJ
PJ
$/GJ
PJ
Retail purchases
8.63
0.41
7.27
0.41
Generation purchases
8.63
1.95
7.27
1.21
Gas Purchases
Carbon Emissions (‘000 tonnes CO2e)
1
201
Data for prior periods may be restated to reflect current calculation methodology VWAP is volume weighted average price 3 Includes share of Nga Awa Purua generation 4 Tuaropaki Power Company (Mokai) equity share 2
154