Mercury Quarterly Operational Update, Ending 30 June 2017
Mercury Quarterly Operational Update - Three months ended 30 June 2017
• Loyalty: Lower than market churn of 19.7% vs 21.8% annualised
• Record: Annual generation of 7,533GWh with hydro generation 724GWh above average
• +1%: Underlying demand up for the quarter due to growth in urban, rural and dairy sectors
LOYALTY DELIVERING LOWER CHURN
Mercury’s focus on rewarding its existing customers again resulted in lower than market churn. For the quarter ended 30 June 2017, Mercury’s annualised premise churn across all brands was 19.7%, below the market average of 21.8%, based on publicly available Electricity Authority data.
In the period, Mercury celebrated Shortland Street’s 25th anniversary with a Free Power Day taken up by more than 50,000 customers online. In addition, the number of customers earning Airpoints™ through Mercury’s relationship with Air New Zealand increased to nearly 120,000.
The average energy price to all customers was up 0.8% for the quarter (to $118.47/MWh) when compared to the same period last year ($117.58/MWh).
RECORD GENERATION; SOUTH ISLAND STORAGE LEVELS FALL
FY2017 was a record generation year for Mercury, with the company generating 7,533GWh from 100% renewable sources.
For the quarter, hydro generation was up 593GWh to 1,402GWh due to high rainfall during the period. Hydro generation for the financial year was 4,724GWh, above expected annual generation of 4,000GWh. This was the highest full year of hydro generation from the Waikato Hydro Scheme under Mercury’s management (since 1999).
Geothermal generation was up slightly (21GWh to 723GWh) on the same quarter last year with 98.6% availability achieved across all stations. Annual generation was 2,809GWh, slightly down (21GWh) on a record year in FY2016.
Persistently dry conditions in the South Island contributed to national hydro storage ending the quarter at 66% of average. As a result, reduced South Island hydro generation contributed to wholesale prices increasing to $110.82/MWh (Otahuhu) and $117.77/MWh (Benmore) for June, and $73.11/MWh and $74.95/MWh respectively for the quarter.
Quarterly LWAP/GWAP of 1.13 was negatively impacted by the relative difference of wholesale prices between the North and South Islands, with the cost of physical sales to our South Island customers increasing by more than the revenue from our solely North Island generation. This negative movement is partly mitigated by non-physical contracts such as the Virtual Asset Swap (VAS) with Meridian.
UNDERLYING DEMAND GROWTH
The quarter experienced the highest level of national demand for that period on record. After adjusting for temperature, national demand was up 1.0% compared to the same quarter last year. This increase in demand was attributable to the dairy (0.5%), rural (0.5%) and urban (0.3%) sectors. This was partially offset by a reduction in the industrial sector (-0.4%).