Announcement
MKTUPDTE: MCY: Quarterly Operational Update
08:30am
MCY
19/10/2021 08:30
MKTUPDTE
PRICE SENSITIVE
REL: 0830 HRS Mercury NZ Limited (NS)
MKTUPDTE: MCY: Quarterly Operational Update
Quarterly Operational Update for the three months ended 30 September 2021
>GENERATION LOWER - hydro generation down with drier weather but Taupo
storage lifts, geo impacted by Kawerau outage.
>CUSTOMER NUMBERS STEADY - customer numbers maintained at 328,000 as Mercury
holds market share.
>WIND ADDED - completed acquisition of Tilt Renewables NZ wind farms, Turitea
commissioning underway.
HYDRO GENERATION DOWN AS MERCURY REBUILDS TAUPO STORAGE; KAWERAU OUTAGE
IMPACTS GEOTHERMAL
Hydro generation in FY2022-Q1 of 953GWh was below average as Waikato
catchment inflows remained below average at the 34th percentile. Despite
this, Mercury lifted Lake Taupo hydro storage which ended the quarter at
403GWh, 45GWh above average.
Geothermal generation in the quarter decreased by 80GWh, from 687GWh in
FY2021-Q1 to 607GWh, due to a 44 day unplanned outage at the Kawerau power
station which ended on 20 July. The outage period coincided with higher
prices which saw the LWAP/GWAP ratio increase unfavourably from 1.01 in
FY2021-Q1 to 1.04 in the most recent quarter. Cover was taken to offset this
loss in production resulting in the average price for Buy CfDs increasing
from $128/MWh in FY2021-Q1 to $143/MWh in FY2022-Q1.
This quarter saw the completed acquisition of Tilt Renewables NZ wind farms
on 3 August, reflected in 220GWh of wind generation volume for the quarter.
The Turitea wind farm produced 13GWh in the quarter while undergoing
commissioning with revenue generated offsetting project capex.
SPOT PRICES REMAIN HIGH BUT EASE OVER THE QUARTER; FUTURES REFLECT IMPROVED
HYDRO STORAGE
Average spot prices in the quarter remained elevated at $149/MWh at Otahuhu
and $123/MWh at Benmore versus $136/MWh and $125/MWh respectively in
FY2021-Q1. Prices trended down within the quarter as national hydro storage
increased due to high South Island hydro inflows (at the 99th percentile),
shown through the average July price of $191/MWh and $168/MWh at Otahuhu and
Benmore easing to $97/MWh and $77/MWh in September respectively.
Improved national hydro storage (74% of maximum at the end of the quarter)
saw the FY2022 futures prices decrease from $170/MWh and $151/MWh at Otahuhu
and Benmore at the start of the quarter to $133/MWh and $110/MWh respectively
by the end of the quarter.
CUSTOMER NUMBERS MAINTAINED AS MERCURY REDUCES LOSSES; C&I PRICING LIFTS ON
RECONTRACTING
Customer numbers held steady at 328,000 over the quarter, ending a trend of
declining market share, as Mercury reduced customer losses through various
initiatives including our 'Move with Mercury' campaign.
The Commercial & Industrial sales yield (including both physical and
financial sales) increased by 11.7% from $96/MWh in FY2020-Q4 to $107/MWh in
FY2021-Q4 due to recent recontracting reflecting the higher wholesale pricing
over the last year. Sales volumes in this segment increased by 47GWh, from
801GWh in FY2021-Q1 to 848GWh in the most recent quarter, with an increase in
physical sales being partially offset by reduced CfD sales due to the early
exit of a foundation hedge with the Norske Skog Tasman mill closure.
DEMAND DOWN DUE TO INDUSTRIAL CLOSURES AND REDUCED IRRIGATION LOAD
Temperature-adjusted demand decreased in FY2022-Q1 by 0.9% with reductions in
the industrial (-0.8%), irrigation (-0.2%), and other (-0.2%) sectors being
offset by an increase in the urban (+0.3%) sector (the dairy and rural
sectors were flat). Industrial demand decreased due to the closure of the
Norske Skog Tasman mill at the start of the quarter, partially offset by an
increase in Marsden Point refinery demand due to a six-week shutdown in the
prior comparable period.
ENDS
For investor relations queries, please contact:
Tim Thompson
Head of Treasury and Investor Relations
0275 173 470
For media queries, please contact:
Shannon Goldstone
Head of Communications
Media phone: 027 210 5337
End CA:00381183 For:MCY Type:MKTUPDTE Time:2021-10-19 08:30:40
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