Quarterly Operational Update

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE 01
Three months ended 31 December 2016
MOMENTUM
LOW
CHURN
4,250GWh
MOMENTUM CONTINUED FOLLOWING RE-BRAND
For the second consecutive quarter, Mercury’s continued focus on rewarding customer loyalty resulted in the Company achieving
the lowest switch rate (churn) amongst the major retailers. For the quarter ending 31 December 2016, Mercury’s annualised churn
was 15.9%, 3.3% below the market average of 19.2% based on publicly provided Electricity Authority data. This continued the
strong momentum delivered following the Mercury re-brand in July 2016 and contributed to customer numbers increasing by
6,000 over the period.
During the quarter, more than 100,000 customers were rewarded with a Free Power Day and almost 100,000 customers also
registered to benefit from the Company’s new Airpoints partnership.
The average energy price to customers was down 4.4% to $106.11/MWh relative to the same period last year. This reflects
additional commercial and industrial sales contracted throughout the year at lower prices than achieved historically (contributing to
a $5.50 reduction in the VWAP of sales to business customers) and the timing of customer loyalty product offerings.
FY17 HYDRO FORECAST MAINTAINED
Total hydro generation increased 205GWh on the same period last year to 1,112GWh. This reflects inflows into the Taupo
catchment being 28GWh above average and storage being 134GWh above average at the start of the period.
Based on the hydrological conditions observed throughout the quarter, Mercury continues to forecast midpoint FY2017 hydro
generation at 4,250GWh.
LWAP/GWAP remained flat with the prior comparable period last year, at 1.03. This reflects a continuation of lower wholesale price
volatility driven by above average national hydro generation. National hydro storage started 246GWh above average and remained
above average throughout the quarter.
Reflecting the continued wet conditions, the locational wholesale price difference (basis) between Otahuhu and Benmore nodes
was $8.38/MWh (or 21%).
DEMAND IMPACTED BY HIGHER TEMPERATURES AND WET CONDITIONS
After adjusting for temperature, national demand was down 3.2% compared to the same quarter last year. The irrigation, dairy
processing and industrial sectors contributed -1.6%, -0.7%, and -0.7% respectively to the decrease in total national demand.
The decrease in the agriculture sectors can be attributed to the wet conditions experienced during the last six months with
significantly lower South Island irrigation requirements compared to last year along with reduced national milk collection.
Mercury will release its financial results for the six months ended 31 December 2016 on 21 February 2017.


STRONG MOMENTUM CONTINUES
FOLLOWING MERCURY RE-BRAND
LOWEST CUSTOMER SWITCHING
RATE OF THE MAJOR RETAILERS
HYDRO GENERATION FORECAST
MAINTAINED FOR FY17
>> QUARTERLY HIGHLIGHTS
>> COMMENTARY

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE 02



OPERATING INFORMATION
Three months ended
31 December 2016
Three months ended
31 December 2015
Six months ended
31 December 2016
Six months ended
31 December 2015
ELECTRICITY SALES
VWAP
1

($/MWh)
Volume
(GWh)
VWAP
1

($/MWh)
Volume
(GWh)
VWAP
1

($/MWh)
Volume
(GWh)
VWAP
1

($/MWh)
Volume
(GWh)
FPVV sales to customers 106.11 1,088 110.94 1,000 112.30 2,395 115.56 2,253
FPVV sales to residential
customers
554 554 1,302 1,340
FPVV sales to business
customers
534 446 1,093 913
FPVV purchases from market

1,150 1,056 2,529

2,380
Spot customer purchases 231 233 454 520
Total NZEM Purchases 48.38 1,381 70.23 1,289 54.83 2,983 63.27 2,900
ELECTRICITY CUSTOMERS
(‘000)
387 380
North Island Customers 346 344
South Island Customers 41 36
Dual Fuel Customers 43 41
CONTRACTS FOR DIFFERENCE Volume (GWh) Volume (GWh) Volume (GWh) Volume (GWh)
Buy CfD

395 458 904

929
Sell CfD 905 893 1,801 1,919
End User CFD 346 353 673 746
Net Sell CfD
2

510 435 897 990
ELECTRICITY GENERATION
VWAP
($/MWh)
Volume
(GWh)
VWAP
($/MWh)
Volume
(GWh)
VWAP
($/MWh)
Volume
(GWh)
VWAP
($/MWh)
Volume
(GWh)
Hydro 49.28 1,112 69.36 907 55.14 2,367 61.41 2,215
Gas - - 76.74 46 - - 68.62 146
Geothermal (consolidated)
3

42.94 657 65.48 669 48.71 1,290 58.93 1,299
Geothermal (equity accounted)
4

44.97 58 66.27 59 49.77 113 59.40 118
Total 46.87 1,827 67.91 1,681 52.78 3,770 60.78 3,778
LWAP/GWAP 1.03 1.03 1.04 1.04
CARBON EMISSIONS
(‘000 TONNES CO
2
E)
90 99 186 249
METRIX AMI METERS (‘000) 399 389






1
VWAP is volume weighed average energy only price sold to FPVV customers after lines, metering and fees
2
Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 176 GWh for the 3 months ended 31 December 2016 and 176 GWh for the 3 months ended 31
December 2015 and of 352GWh for the 6 months ended 31 December 2016 and 352GWh for the 6 months ended 31 December 2015
3
Includes Mercury’s 65% share of Nga Awa Purua generation
4
Tuaropaki Power Company (Mokai) equity share
>> OPERATING STATISTICS

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE 03


> ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 31 DECEMBER

Source: Electricity Authority

> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 31 DECEMBER


Source: Mercury Purchases and Transpower SCADA




>> MARKET DATA
34%
21%
17%
16%
5%
7%
Financial Year Q2 2016
34%
21%
19%
15%
5%
6%
Financial Year Q2 2017
MERIDIAN ENERGY
CONTACT ENERGY
MERCURY
GENESIS ENERGY
TRUSTPOWER/TILT
OTHER
13%
87%
Financial Year Q2 2016
14%
86%
Financial Year Q2 2017
MERCURY
OTHER

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE 04

> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS

> TAUPO STORAGE

60
65
70
75
80
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
00000000000000
$/MWh

GWh

#REF! #REF! #REF! #REF!
$40
$45
$50
$55
$60
$65
$70
$75
$80
0
500
1000
1500
2000
2500
3000
3500
4000
JulAugSepOctNovDecJanFebMarAprMayJun
$/MWh

GWh

AVERAGE NATIONAL STORAGE FY2016 NATIONAL STORAGE
FY2017 NATIONAL STORAGE ROLLING 12 MONTH AVERAGE OTA PRICE
ROLLING 12 MONTH AVERAGE BEN PRICE
0
100
200
300
400
500
600
JulAugSepOctNovDecJanFebMarAprMayJun
GWh

AVERAGE SINCE 1999 FY2016 FY2017

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE 05

> OTAHUHU ASX FUTURES SETTLEMENT PRICE

> BENMORE ASX FUTURES SETTLEMENT PRICE


$80.08

$80.06

$81.16

$71.49

$77.88

$79.59

$67.15

$78.15

$80.38

$59.80

$74.26

$77.99

$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
FY17FY18FY19
$/MWh

Financial Year
AS AT 31 DECEMBER 2015 AS AT 30 JUNE 2016
AS AT 30 SEPTEMBER 2016 AS AT 31 DECEMBER 2016
$76.05

$75.64

$76.10

$63.70

$72.75

$74.79

$60.20

$72.69

$72.45

$50.78

$68.10

$70.31

$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
FY17FY18FY19
$/MWh

Financial Year
AS AT 31 DECEMBER 2015 AS AT 30 JUNE 2016
AS AT 30 SEPTEMBER 2016 AS AT 31 DECEMBER 2016

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE 06

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> NATIONAL CLIMATE SUMMARY (ºC)

FINANCIAL YEAR Q1 Q2 Q3 Q4
2017
12.1 16.1 - -
2016 11.4 16.0 20.6 15.3
2015
11.9 15.9 19.9 14.3
2014
12.3 16.7 18.9 14.8
2013
12.3 16.5 19.6 14.4
Historical Average (since 1999)
11.9 16.1 19.4 14.2
Source: NIWA, Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs)
Source: Electricity Authority
8,199
8,363
8,299
8,550
8,609
8,257
1,367
1,231
1,269
1,252
1,265
1,264
-
2,000
4,000
6,000
8,000
10,000
12,000
Q2 12Q2 13Q2 14Q2 15Q2 16Q2 17
GWh

Financial Year
NATIONAL CONSUMPTION TIWAI POINT ALUMINIUM SMELTER CONSUMPTION
0%
5%
10%
15%
20%
25%
-
10,000
20,000
30,000
40,000
50,000
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
% Churn


Monthly ICPs

NZ MARKET CHURN (LHS) ANNUAL NZ MARKET CHURN % (RHS)