Mighty River Power Quarterly Update - Ended 31 Dec 2013
Quarterly Operational Update
Three months ended 31 December 2013
• AVERAGE ENERGY PRICES paid by customers increased less than inflation
• TAUPO STORAGE increased by 88GWh
• GEOTHERMAL GENERATION made up 39% of total generation
Mighty River Power‘s average price received for its electricity sales was up just 0.6% in the three months to 31 December 2013 compared with the prior comparable period (pcp: three months to 31 Dec 2012). Customer sales volumes were down on the pcp as the Company actively managed its portfolio for value and risk in a quarter of high seasonal temperatures, high national hydro storage levels and correspondingly low wholesale prices. Base-load geothermal generation made up 39% of total production, partially compensating for lower hydro output as storage was re-built following the drought in the preceding three quarters.
SALES PRICING UP JUST 0.6%, FALL IN VOLUMES WITH FOCUS ON MEDIUM-TERM VALUE
Mighty River Power’s average sales price to residential and commercial customers for the quarter was $111.17/MWh (up 0.6%) compared with $110.52/MWh in the pcp. During the quarter the Company committed to no increase in energy prices for its residential customers until at least 1 April 2015. Overall customer sales volumes were down 9% as the Company continued to reduce sales volumes in the low-price, low-margin commercial market (down 11% on pcp). In the residential market, seasonal demand was 5% lower on a per customer basis primarily due to high seasonal temperatures. Lower South Island customer numbers (down 14%) was the result of the Company temporarily reducing acquisition and retention activity over the past year in the South Island due to the market risks prior to final commissioning of Transpower’s upgraded inter-island link.
TAUPO STORAGE INCREASED 88GWh (up 26%)
A strong increase in competitors’ hydro inflows over the quarter resulted in increased South Island storage, which peaked at 182% of average in late October, and led to significantly reduced wholesale electricity pricing. During this time, Mighty River Power used inflows to Lake Taupo to build up storage for future use. After a year of extremely low inflows, Lake Taupo storage was up 26% over the quarter from 338GWh at 30 September to 426GWh (97% of average) at 31 December.
Total generation was down 5% (94GWh) on pcp largely as a result of lower hydro generation (down 15% or 169GWh), while the average price the Company achieved for its generation, which outperformed the market for the second quarter running, was $47.67/MWh (compared with $66.25/MWh in the pcp). The lower hydro generation volume was partially offset by higher geothermal production (up 19% or 99GWh on pcp) with the additional output from the new Ngatamariki plant, completed in September last year, and increased fuel availability at Kawerau with a new larger consent secured for fuel. Generation at the Nga Awa Purua geothermal station was lower because of an unplanned outage to improve reliability, and the station currently has a reduced operating capacity (down about 10MW) until the first half of FY2016 when the turbine is scheduled to be repaired and restored to full capacity. Geothermal production for the quarter was 39% of total generation, versus 31% in the pcp. In line with the lower wholesale prices and the general industry trend of lower thermal plant utilisation, Mighty River Power decreased its generation from its Southdown gas-fired plant, with a load factor of only 5% for the quarter.
Mighty River Power will release its financial results for the six months ended 31 December 2013 on 26 February 2014.