Announcement
MKTUPDTE: MCY: Quarterly Operational Update
08:31am
MCY
22/01/2021 08:31
MKTUPDTE
PRICE SENSITIVE
REL: 0831 HRS Mercury NZ Limited (NS)
MKTUPDTE: MCY: Quarterly Operational Update
Quarterly Operational Update for the three months ended 31 December 2020
>3,900GWh - FY2021 hydro generation forecast increased by 200GWh.
>ELEVATED PRICES PERSIST - prices elevated due to low South Island inflows
and thermal constraints.
>TIWAI SMELTER CONTRACT EXTENDED - contract securing Tiwai Smelter operations
extended to end of 2024.
HYDRO GENERATION FLAT, LAKE TAUPO STORAGE LIFTED PRIOR TO SEASONALLY LOW
INFLOW PERIOD
Mercury's hydro generation for the quarter was flat versus the prior
comparable period as Mercury lifted hydro storage leading into the
historically dry January quarter. Storage in Lake Taupo increased during the
quarter from 254GWh to 456GWh at the end of the quarter, 21GWh above average.
Higher than expected inflows also saw Mercury's FY2021 hydro generation
forecast increase by 200GWh to 3,900GWh.
Geothermal generation in FY2021-Q2 of 659GWh was 63GWh higher than the prior
comparable period which was affected by several maintenance outages.
SPOT PRICES REMAIN ELEVATED DUE TO LOW SOUTH ISLAND INFLOWS AND THERMAL FUEL
CONSTRAINTS
South Island hydrological inflows were below-average for the quarter
resulting in decreasing national hydro storage, which ended the quarter
639GWh below average. This combined with thermal fuel constraints saw prices
increase from $102/MWh at Otahuhu and $87/MWh at Benmore in FY2020-Q2 to
$117/MWh and $103/MWh respectively in the most recent quarter.
FUTURES LIFT REFLECTS HYDROLOGY, THERMAL FUEL CONSTRAINTS AND TIWAI SMELTER
CONTRACT EXTENSION
Dry hydrology and thermal fuel concerns saw the FY2021 futures price increase
from $122/MWh at Otahuhu and $111/MWh at Benmore at the start of the quarter
to $136/MWh and $121/MWh respectively. Longer-dated futures also increased
with the FY2022 futures price lifting from $100/MWh to $119/MWh at Otahuhu
and from $85/MWh to $101/MWh at Benmore.
Following the quarter, it was announced that the electricity contract behind
the Tiwai Point aluminium smelter would be extended to the end of 2024,
securing smelter operations. This saw a further lift in FY2022 futures
prices which were $130/MWh at Otahuhu and $115/MWh at Benmore as at 20
January 2021.
SALES VOLUMES AND YIELDS LIFT AS MERCURY MAINTAINS FOCUS ON CUSTOMER VALUE
Physical sales volumes increased from 1,002GWh in FY2020-Q2 to 1,039GWh in
the most recent quarter. Commercial and Industrial sales volumes increased
by 94GWh to 433GWh but were partially offset by Mass Market sales volumes
which decreased by 57GWh to 606GWh.
Mercury's focus on customer value saw sales yields in the Mass Market segment
increase by 7.7% from $129/MWh to $139/MWh and in the Commercial and
Industrial segment by 9.1% from $79/MWh to $86/MWh. Customer connections
decreased by 6,000 to 336,000 across the quarter, 20,000 lower compared to
the end of FY2020-Q2.
BROAD LIFT IN ADJUSTED DEMAND WITH WEAKER INDUSTRIAL SECTOR LOAD THE
EXCEPTION
National demand increased by 0.3% on a temperature-adjusted basis (down -0.4%
on an unadjusted basis) with positive contributions from the urban (+0.3%),
rural (+0.1%), dairy (+0.2%), irrigation (+0.5%) and other (+0.2%) sectors.
Industrial demand decreased (-1.0%) due to reduced load at the Tiwai Point
aluminium smelter and other major industrial users.
ENDS
For further information:
Investors - Tim Thompson 0275 173 470
Media - Craig Dowling 0272 105 337
End CA:00366552 For:MCY Type:MKTUPDTE Time:2021-01-22 08:31:12
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