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NEWS RELEASE
Quarterly Operational Update
19 April 2022 - Attached is Mercury's Quarterly Operational Update for the 3 months ended 31 March 2022.
ENDS
Howard Thomas
General Counsel and Company Secretary Mercury NZ Limited
Mercury's mission is energy freedom. Our purpose is to inspire New Zealanders to enjoy energy in more wonderful ways and our goal is to be New Zealand's leading energy brand. We focus on our customers, our people, our partners and our country; maintain a long-term view of sustainability; and promote wonderful choices. Mercury is energy made wonderful. Visit us at:www.mercury.co.nz
QUARTERLY OPERATIONAL UPDATE
Three months ended 31 March 2022
>> QUARTERLY HIGHLIGHTS
NATIONAL INFLOWS AT 8TH PERCENTILE,
TAUPO LAKE LEVEL REMAINS
1,654GWh BELOW AVERAGE
ABOVE AVERAGE LEVELSC&I YIELDS UP 14% VERSUS PCP, PHYSICAL SALES INCREASE TO REPLACE
NORSKE SKOG CfD VOLUMES
>> COMMENTARY
HYDRO GENERATION LOWER DUE TO DRY WEATHER; LAKE TAUPO STORAGE CONSERVED LEADING INTO WINTER MONTHS
Mercury's hydro generation decreased by 57GWh versus the prior comparable period as inflows into Lake Taupo trended below average at the 19th percentile1, 175GWh below average1. During the quarter, record low inflows in January were offset by a rain event associated with Cyclone Dovi in mid-February. The Taupo lake level started and ended the last quarter above average, closing at 58% full, 66GWh above average2.
Geothermal generation remained steady at 653GWh in FY2022-Q3 (versus 658GWh in FY2021-Q3) and spot price linked wind generation, from Mercury's Turitea North wind farm, was 99GWh. Generation from PPA-linked wind farms was 226GWh.
DECLINING NATIONAL HYDRO STORAGE LIFTS SPOT PRICES
Conditions were dry across both the North and South Islands as 8th percentile1 inflows saw national hydro storage end the quarter 309GWh below average. South Island inflows were particularly affected with record low inflows in both the January and March months. This was reflected in elevated spot prices in FY2022-Q3 of $176/MWh at Otahuhu and $149/MWh at Benmore, down from $206/MWh and $203/MWh respectively in the prior comparable period but still above historical averages.
FUTURES PRICES LIFT DUE TO FUEL CONSTRAINTS; LONGER-DATED FUTURES REFLECT THERMAL FUEL COST PRESSURES
Futures prices responded strongly to dry hydrological conditions with the FY2022 price increasing at Otahuhu and Benmore from $125/MWh and $103/MWh respectively to $167/MWh and $143/MWh across the quarter. Longer-dated futures also increased with the Otahuhu FY2023 and FY2024 futures lifting by $47/MWh and $34/MWh respectively to $191/MWh and $163/MWh, reflecting increased expectations of thermal costs with carbon prices remaining at historically high levels of ~$75/NZU.
COMMERCIAL & INDUSTRIAL PHYSICAL SALES LIFT TO REPLACE VOLUME FROM NORSKE SKOG SETTLEMENT
The Commercial & Industrial segment average yield (including both physical and financial sales) increased by 14% from $94/MWh in FY2021-Q3 to $107/MWh in FY2022-Q3 due to re-contracting and the early termination of a CfD with Norske Skog Tasman. CfD sales volumes decreased by 127GWh, from 381GWh in FY2021-Q3 to 254GWh in the current quarter, but were offset by an increase in physical sales of 118GWh, from 477GWh to 595GWh.
Mercury continues to look to maintain market share, however mass market customer numbers declined in the quarter, from 327,000 to 324,000, reflected in Mass Market sales volumes decreasing from 544GWh to 528GWh. Mass market yield increased by 2%, from $141/MWh in FY2021-Q3 to $144/MWh in the most recent quarter.
IRRIGATION AND INDUSTIAL SECTORS LEAD DEMAND DOWN
Temperature-adjusted demand decreased by 0.5% (-0.7% on an unadjusted basis) led by decreases in the irrigation (-1.1%) and industrial (-0.6%) sectors. These were partially offset by increases in the urban (+0.8%), dairy (+0.2%) and rural (+0.1%) sectors.
1 For quarters ended 31 March since 1927
2 For quarters ended 31 March since 2000
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
01
>> OPERATING STATISTICS
OPERATING INFORMATION | Three months ended 31 March 2022 | Three months ended 31 March 2021 | Nine months ended 31 March 2022 | Nine months ended 31 March 2021 | ||
ELECTRICITY CUSTOMERS ('000s ICPs) North Island Customers South Island Customers Dual Fuel Customers | 324 288 36 47 | 33 293 38 45 | ||||
VWAP 1 ($/MWh)Volume (GWh) | VWAP 1 ($/MWh)Volume (GWh | VWAP 1 ($/MWh)Volume (GWh) | VWAP 1 ($/MWh)Volume (GWh) | |||
ELECTRICITY SALES | ||||||
Physical | 126.70 1,123 | 121.56 1,02 | 126.96 3,542 | 121.78 3,317 | ||
Mass Market 2 Commercial & Industrial 3 | 143.65 528 111.68 595 | 140.84 544 99.57 477 | 142.18 1,901 109.34 1,641 | 138.88 1,982 96.38 1,335 | ||
Network Losses | 52 | 48 | 165 | 157 | ||
Physical Purchases 4 | 180.02 1,175 | 220.72 | 1,068 | 135.30 3,707 | 159.29 | 3,474 |
Financial 5 | 99.21 676 | 95.83 808 | 95.82 2,255 | 89.66 2,588 | ||
End User CfDs Other Sell CfDs 6 Spot Settlement of CfDs | 96.86 254 100.62 422 168.71 | 86.56 38 104.10 427 197.47 | 92.69 97.60 126.13 816 1,439 | 86.90 1,135 91.81 1,453 144.35 | ||
Spot Customer Purchases | 174.92 30 | 215.11 | 3 | 130.63 92 | 153.42 | 135 |
ELECTRICITY GENERATION | ||||||
Physical | 160.80 1,831 | 208.04 1,568 | 121.30 5,571 | 152.58 4,889 | ||
Hydro Geothermal (consolidated) 7 Wind Spot 8 | 188.72 853 161.81 653 145.05 99 | 217.56 910 194.87 658 | 141.96 2,737 116.48 1,921 100.02 204 | 159.50 2,885 142.62 2,004 | ||
Wind PPA 9 | 59.28 226 | 60.71 709 | ||||
Financial | 101.91 323 | 92.81 | 354 | 112.65 1042 | 92.55 | 1,190 |
Buy CfDs 6 Spot Settlement of CfDs | 101.91 157.98 323 | 92.81 207.26 354 | 112.65 128.05 1042 | 92.55 144.90 1,190 | ||
10 NET POSITION | 77 | 46 | -58 | 17 |
1 VWAP is volume weighted average energy-only price sold to customers after lines, metering and fees
2 Mass market includes residential segments and non time-of-use commercial customers
3 Fixed-price, variable-volume (FPVV) sales to time-of-use commercial customers
4 Excludes spot customer purchases
5 Excludes FTR and trading ASX positions
6 Includes Virtual Asset Swap volumes of 148 GWh for the 3 months ended 31 March 2022 and 148 GWh for the 3 months ended 31 March 2021 and of 450 GWh
for the 9 months ended 31 March 2022 and 450 GWh for the 9 months ended 31 March 2021
7 Includes Mercury's 65% share of Nga Awa Purua generation
8 Includes generation from Turitea wind farm.
9 Includes generation from Tararua, Mahinerangi and Waipipi wind farms
10 Net Position is Physical and Financial Generation (excluding Wind PPA volumes) less Physical Purchases and Financial Sales
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
02
>> MARKET DATA
> ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 31 MARCH
MERCURY
CONTACT ENERGY
GENESIS ENERGY
MERIDIAN ENERGY
OTHER
TRUSTPOWERSource: Electricity AuthorityFinancial Year Q3 2022
Financial Year Q3 2021
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 31 MARCH (EXCLUDING CFDs)
MERCURYOTHERFinancial Year Q3 2022
Source: Mercury Purchases and Transpower SCADAFinancial Year Q3 2021
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
03
> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS
AVERAGE NATIONAL STORAGEFY2022 NATIONAL STORAGE
ROLLING 12 MONTH AVERAGE BEN PRICEFY2021 NATIONAL STORAGE
ROLLING 12 MONTH AVERAGE OTA PRICE
4,500
GWh
4,000 3,500 3,000 2,500
2,000
1,500 1,000
500
0
Jul
Oct
AugSepSource: NZX Hydro and NZEM Pricing Manager (NZX)
> TAUPO STORAGE
$200
$180
$160
$140
$120
$/MWh
$100
$80
$60
$40
NovDecJanFebMarAprMayJunAVERAGE SINCE 1999
FY2021
FY2022
600
GWh
400
500
300
200
100
0
Jul
Sep
Source: NZX HydroAug
OctNovDecJanFebMarAprMayJunMERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
04
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Mercury NZ Limited published this content on 18 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 April 2022 21:43:06 UTC.