Quarterly Operational Update

Quarterly Operational Update for the three months ended 31 December 2022.

QUARTERLY HIGHLIGHTS

>WET, WET, WET! - Wettest first half year ever. Q2 hydro generation up 38% on PCP

>ELECTRICITY FUTURES PRICES HIGH - Electricity spot prices collapse during Q2, but futures prices at or above $190/MWh out to CY25

>CONNECTION GROWTH ACROSS ALL PRODUCTS - 35,000 new connections in Q2. NOW Broadband acquisition lifts Telco connections by 24,000

COMMENTARY

WET WET WET
Weather patterns across the Waikato catchment were very wet, almost the wettest second quarter since records began, extending the wet trend from the start of the financial year which is now ranked as the wettest July to December period on record. This is a marked change from the prior year where inflows trended around the lower quartile. Accordingly hydro generation was 1,281GWh for the three months ended 31 December 2022, up 352GWh (or 38%) on the prior comparable period, reflecting these very wet conditions. Hydro spill was significant at 386GWh for the quarter and 675GWh over the half year to maintain lakes within operating levels.

ELECTRICITY SPOT PRICES WEAK OVER QUARTER, BUT FORWARD PRICES HIGH
National inflows for the last quarter were also wet, around the upper tercile and very wet for the first half of the financial year. This reflected in relatively low electricity spot prices over the quarter and half, averaging $47/MWh and $59/MWh in Auckland respectively. However, forward electricity prices remain high with calendar years 2023 to 2026 around or above $190/MWh in Auckland reflecting high thermal generation costs.

NATIONAL DEMAND GROWTH MODEST
National demand growth remains modest up only 0.5% on the prior comparable period but 1.2% lower than the same period 2 years ago with lower industrial demand driven mainly by reduced electricity consumption by Channel Infrastructure at Marsden Point.

GENERATION PRODUCTION LIFTS STRONGLY
As noted, hydro generation was strong due to very wet weather. Geothermal generation for the quarter of 606GWh was 61GWh lower than the prior comparable period due to significant turnarounds (maintenance outages) at Nga Awa Pūrua and Kawerau. Wind generation for the last quarter was 9% higher than the prior comparable period due mostly to commissioning of Turitea North wind farm in 2021. For the financial year, we are forecasting hydro generation of 4,700GWh with much of this additional generation being sold at lower spot prices over the quarter.

CONNECTION GROWTH CONTINUES, MERCURY ACQUIRES OUTSTANDING SHARES IN NOW NZ LIMITED
Mercury’s quarterly operational update now includes the impact of the Trustpower retail business resulting in higher mass market connections, volumes, and prices versus the prior comparable period. In December 2022, Mercury acquired the outstanding interest of 52% in the NOW broadband business with 24,000 residential and commercial broadband connections.  Mercury saw connection growth across all product lines, lifting total connections by 11,000 over the quarter (excluding NOW acquisition). Commercial & Industrial yields (physical and end-user CfDs) rose by $13/MWh to almost $107/MWh versus the prior comparable period, reflecting the rising electricity forward curve repricing contract renewals.

[For Operational Statistics and Charts, please refer to attached]

ENDS

Howard Thomas
General Counsel and Company Secretary
Mercury NZ Limited

For investor relations queries, please contact:
William Meek
Chief Financial Officer
0275 173 470
[email protected]

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Shannon Goldstone
Head of Communications
027 210 5337
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