QUARTERLY OPERATIONAL UPDATE Three months ended 30 September 2017
>> QUARTERLY HIGHLIGHTS
REWARDS
RECORD
CUSTOMERS ENJOYING AIRPOINTS TM UP 24% TO 147,000 CUSTOMERS
Q1 GENERATION OF 2,258GWh INCLUDING 1,522GWh FROM HYDRO
4,400GWh
HYDRO GENERATION FORECAST UP 250GWh FOR FY2018 ON HIGHER INFLOWS
>> COMMENTARY CONTINUED FOCUS ON REWARDING LOYALTY Mercury's focus on rewarding existing customers continued to produce below market churn. For the quarter ended 30 September 2017, Mercury's annualised trader churn for all brands of 7.9% was 1.6% below the market average of 9.5%, based on Electricity Authority data. During the quarter an additional 28,000 customers were registered to enjoy AirpointsTM as Mercury continued to deliver on our customer promises to reward, inspire and make it easy. At 30 September, 147,000 customers (approximately 40% of Mercury brand) were registered with AirpointsTM. The average energy price to customers was up (to $118.05/MWh) compared to the same period last year ($117.46/MWh). Consistent with the previous quarter, the VWAP of sales to business customers was down approximately $4/MWh. RECORD GENERATION; HYDRO GENERATION FORECAST UP During the quarter, Mercury produced a number of records across our renewable generation fleet. Total generation was a record for the quarter, up 313GWh to 2,258GWh. Hydro generation was up 266GWh to 1,522GWh, due to inflows into the Waikato catchment being the fourth highest on record. Geothermal generation was up 47GWh with 98.2% availability achieved across all stations due to the timing of planned outages. Within the quarter, records for peak output were achieved for the Waikato Hydro Scheme and at the Kawerau geothermal station. A record for peak instantaneous output of 1,063MW was achieved for hydro generation with all 39 units simultaneously generating on the Waikato River and a new daily generation record was achieved at Kawerau. These records were accomplished due to the company's ongoing hydro refurbishment programme and focus across the company on operational excellence and innovation. National storage was 66% of average at 30 June 2017 due to earlier dry conditions in the South Island. As a result, wholesale prices peaked in July and were $92.79/MWh (Otahuhu) and $95.92/MWh (Benmore) for the quarter. These prices were up $33.36/MWh and $48.62/MWh respectively on the prior year. Mercury was able to achieve record generation in the highest-priced quarter since Q3-FY2014 as a result of inflows into the Waikato catchment being uncorrelated to hydrological conditions in the South Island. With high inflows into the Waikato catchment since August, Mercury has updated our FY2018 mid-point hydro generation forecast to 4,400GWh (up 250GWh on the forecast provided with the release of our FY2017 results and 400GWh above the long-term average). UNDERLYING DEMAND GROWTH After adjusting for temperature, national demand was up 0.6% compared to the same quarter last year (or flat on an unadjusted basis). This increase in demand was attributable to growth in the urban (0.6%) and rural (0.2%) sectors, partially offset by a reduction in the industrial sector (-0.2%).
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
01
>> OPERATING STATISTICS Three months ended 30 September 2017
OPERATING INFORMATION ELECTRICITY SALES FPVV sales to customers
VWAP 1 ($/MWh)
Volume (GWh)
VWAP 1 ($/MWh)
Volume (GWh)
118.05
1,276
117.46
1,307
FPVV sales to residential customers
762
FPVV sales to business customers FPVV purchases from market
99.01
748
514
559
1,349
1,380
244
224
Spot customer purchases Total NZEM Purchases ELECTRICITY CUSTOMERS ('000) North Island Customers South Island Customers Dual Fuel Customers
Three months ended 30 September 2016
1,593
60.38
1,604
393 349 44 46 Volume (GWh)
381 341 40 42 Volume (GWh)
Buy CfD
324
509
Sell CfD
1,021
896
316
326
CONTRACTS FOR DIFFERENCE
End User CfD Net Sell CfD
2
VWAP ($/MWh)
697 Volume (GWh)
VWAP ($/MWh)
387 Volume (GWh)
93.40
1,522
60.32
1,256
-
-
-
-
Geothermal (consolidated)
3
85.83
689
54.69
634
Geothermal (equity accounted)
4
92.57
47
54.79
55
91.07
2,258
58.32
1,945
ELECTRICITY GENERATION Hydro Gas
Total LWAP/GWAP CARBON EMISSIONS ('000 TONNES CO2)
1.09
1.04
102
96
METRIX AMI METERS ('000)
406
398
1 2
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 176GWh for the 3 months ended 30 September 2017 and 176GWh for the 3 months ended 30 September 2016
3 4
Tuaropaki Power Company (Mokai) equity share
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
02
>> MARKET DATA > ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 30 SEPTEMBER Financial Year Q1 2018
MERCURY MERIDIAN ENERGY CONTACT ENERGY GENESIS ENERGY TRUSTPOWER / TILT OTHER
Financial Year Q1 2017
8% 6%
21%
6%
6%
18%
16% 19%
25%
33%
21% 21%
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 30 SEPTEMBER (EXCLUDING CFDs) MERCURY OTHER
Financial Year Q1 2018
Financial Year Q1 2017
15%
15%
85%
85%
Source: Mercury Purchases and Transpower SCADA
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
03
> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS AVERAGE NATIONAL STORAGE FY2018 NATIONAL STORAGE ROLLING 12 MONTH AVERAGE BEN PRICE
FY2017 NATIONAL STORAGE ROLLING 12 MONTH AVERAGE OTA PRICE
4500
$80
4000
$75
3500
$70 $65
2500 $60 2000
$/MWh
GWh
3000
$55
1500
$50
1000
$45
500 0
$40 Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
> TAUPO STORAGE
AVERAGE SINCE 1999
FY2017
FY2018
600
500
GWh
400
300
200
100
0 Jul
Aug
Sep
Oct
Nov
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
Dec
Jan
Feb
Mar
Apr
May
Jun
04
> OTAHUHU ASX FUTURES SETTLEMENT PRICE
$76.60
$78.08
$79.86
AS AT 30 SEPTEMBER 2017
$78.75
$74.70
$80.00
AS AT 30 JUNE 2017
$77.61
$86.35 $70.83
$80
$70.18
$90
$78.15
$100
AS AT 31 MARCH 2017
$80.38
AS AT 30 SEPTEMBER 2016
$70
$/MWh
$60 $50 $40 $30 $20 $10 $0 FY18
FY19 Financial Year
FY20
> BENMORE ASX FUTURES SETTLEMENT PRICE AS AT 30 SEPTEMBER 2016
AS AT 30 SEPTEMBER 2017
$71.38
$73.24
$71.93
$71.68
$71.26
$74.71
$71.40
$72.45
$67.06
$64.25
$70
$72.69
$90 $80
AS AT 30 JUNE 2017
$86.41
$100
AS AT 31 MARCH 2017
$/MWh
$60 $50 $40 $30 $20 $10 $0 FY18
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
FY19 Financial Year
FY20
05
> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED) NATIONAL CONSUMPTION
TIWAI POINT ALUMINIUM SMELTER CONSUMPTION
12,000 10,000
1,196
1,238
1,250
1,268
1,267
1,251
9,294
9,132
9,386
9,573
9,430
9,451
Q1 2013
Q1 2014
Q1 2015
Q1 2016
Q1 2017
Q1 2018
GWh
8,000 6,000 4,000 2,000 0
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY (⁰C) FINANCIAL YEAR 2018
Q1
Q2
Q3
12.3
-
-
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
18.8
14.8
Historical Average (since 1999)
11.9
16.1
19.4
14.1
Source: Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs) NZ MARKET CHURN (LHS)
ANNUAL NZ MARKET CHURN % (RHS)
50,000
25%
45,000 40,000
20% 15%
25,000 20,000
10%
% Churn
Monthly ICPs
35,000 30,000
15,000 10,000
5%
5,000 Jul-17
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
0% Jul-08
0
Source: Electricity Authority MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
06