Mighty River Power Quarterly Business Update

Commentary – Operating Information

Mighty River Power had gains in sales volumes and pricing in both the retail and wholesale markets over the quarter.

Electricity sales[1] for the three months ended 31 March 2012 increased 7% on the prior comparable period (pcp) to 1,106GWh. This reflected increased sales to commercial customers, which were up 14% on the pcp. Sales volumes to residential customers were the same as pcp despite aggressive market competition driving a 5% reduction in customer numbers compared to the pcp, and a reduction of 2,000 over the quarter. The average energy price earned from customers in the quarter was up 5% on pcp to $111.45/MWh, a less than 1% increase on the previous quarter.

Wholesale market prices were significantly elevated during the quarter reflecting very dry conditions in the South Island. Conversely, strong rainfall in the Waikato Hydro System catchment resulted in inflows into Lake Taupo at 38% above average, supporting higher generation and good storage levels.

As a result, total generation volumes were up 14% on pcp to 1,765GWh and Net Sell CFDs[2] were significantly increased (up 54%), driven by new short-term inter-generator contracts as competitors sought to manage their risk due to the adverse national hydrology conditions. Generation volumes were driven by increased hydro (up 16% to 1,132GWh) and gas fired generation (up 159% to 101GWh), reflecting both favourable hydrology and elevated wholesale market prices. The average generation price achieved during the quarter was $89.91/MWh up 56% on pcp.

Geothermal generation volumes were consistent with pcp at 532GWh, reflecting good availability across the four plants operated by Mighty River Power. Reported geothermal volumes will be lower by approximately 30GWh from the next quarter following the sale of a 10% interest in the Nga Awa Purua plant in April 2012.

The Company’s wholesale market net position for the quarter was long by 54GWh.

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