Mighty River Power Quarterly Operational Update

Mighty River Power Quarterly Operational Update

Three months ended 30 June 2016

Quarterly Highlights

• Record geothermal generation for FY16, up 2% on the previous year

• Energy price down 4% in Q4, reflecting the renewal price of commercial contracts

• LWAP/GWAP of 1.03 for FY16 reflected low wholesale price volatility and locational price differences

Commentary

HIGHEST ANNUAL GEOTHERMAL PRODUCTION IN COMPANY HISTORY
Geothermal generation for FY16 was the Company’s highest ever at 2,830GWh (up 2% on FY15) due to availability of 95.5% over the year and the impact of the turbine replacement at Nga Awa Purua. For the quarter, geothermal generation was down slightly on pcp to 702GWh, due to maintenance activity at Ngatamariki.

Total hydro generation for FY16 was up 16% from FY15 to 3,866GWh – this however was below the annual average of 4,000GWh due to inflows being 34th percentile for the year. During the quarter, national storage increased to 29% above average at 30 June, which contributed towards flat wholesale prices.

The LWAP/GWAP ratio for the 12 months ended 30 June was 1.03, with lower wholesale price volatility impacting both generation prices (GWAP) and purchase prices (LWAP). The relative difference between LWAP and GWAP is also impacted by locational price differences which are not expected to return to historic levels due to recent thermal plant closures in the upper North Island.

ENERGY PRICE DOWN; COMMERCIAL VOLUMES UP

A lift in overall sales volumes reflected higher commercial contracting activity as prices temporarily improved from levels earlier in the year. However new sales contracts contributed to a fall in the average energy price to customers by 4% to $117.58/MWh as these new commercial contracts replaced those that matured. As previously communicated, a large proportion of these higher-priced contracts were signed between FY2011 and FY2013.

The Company’s focus on rewarding customer loyalty, with initiatives such as free electricity days (Good Energy Days), contributed towards higher customer satisfaction scores compared to other major retailers. The average percentage of Mercury customers rating as ‘highly satisfied’ over the last 12 months was 61%. Customer churn was favourably impacted by the proportion of Mercury residential customers on fixed price contracts increasing to 42% at year-end (up from 35% at the same time last year), as some customers took up the offer of a 2-year fixed-price offer in preference to an increase in energy pricing.

NATIONAL DEMAND FLAT ON PCP; UP YEAR ON YEAR

When adjusted for warmer temperatures, national demand for electricity was flat (-0.1%) for the quarter compared with pcp. Adjusted demand for the financial year was up 0.6% on FY15. This is the second consecutive financial year that demand has increased.

Mighty River Power will release its financial results for the 12 months ended 30 June 2016 on 23 August 2016. The analyst briefing will be held at 11am on the day – more details to come.
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