Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 30 September 2017
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
HYDRO GENERATION FORECAST UP
250GWh FOR FY2018 ON HIGHER
INFLOWS
CUSTOMERS ENJOYING AIRPOINTS
TM
UP 24% TO 147,000 CUSTOMERS
Q1 GENERATION OF 2,258GWh
INCLUDING 1,522GWh FROM HYDRO
>> QUARTERLY HIGHLIGHTS
REWARDS
RECORD 4,400GWh
>> COMMENTARY
CONTINUED FOCUS ON REWARDING LOYALTY
Mercury's focus on rewarding existing customers continued to produce below market churn. For the quarter ended 30 September
2017, Mercury's annualised trader churn for all brands of 7.9% was 1.6% below the market average of 9.5%, based on Electricity
Authority data.
During the quarter an additional 28,000 customers were registered to enjoy Airpoints
TM
as Mercury continued to deliver on our
customer promises to reward, inspire and make it easy. At 30 September, 147,000 customers (approximately 40% of Mercury brand)
were registered with Airpoints
TM
.

The average energy price to customers was up (to $118.05/MWh) compared to the same period last year ($117.46/MWh). Consistent
with the previous quarter, the VWAP of sales to business customers was down approximately $4/MWh.
RECORD GENERATION; HYDRO GENERATION FORECAST UP
During the quarter, Mercury produced a number of records across our renewable generation fleet.
Total generation was a record for the quarter, up 313GWh to 2,258GWh. Hydro generation was up 266GWh to 1,522GWh, due to
inflows into the Waikato catchment being the fourth highest on record. Geothermal generation was up 47GWh with 98.2% availability
achieved across all stations due to the timing of planned outages.
Within the quarter, records for peak output were achieved for the Waikato Hydro Scheme and at the Kawerau geothermal station. A
record for peak instantaneous output of 1,063MW was achieved for hydro generation with all 39 units simultaneously generating on
the Waikato River and a new daily generation record was achieved at Kawerau. These records were accomplished due to the
company's ongoing hydro refurbishment programme and focus across the company on operational excellence and innovation.
National storage was 66% of average at 30 June 2017 due to earlier dry conditions in the South Island. As a result, wholesale prices
peaked in July and were $92.79/MWh (Otahuhu) and $95.92/MWh (Benmore) for the quarter. These prices were up $33.36/MWh
and $48.62/MWh respectively on the prior year. Mercury was able to achieve record generation in the highest-priced quarter since
Q3-FY2014 as a result of inflows into the Waikato catchment being uncorrelated to hydrological conditions in the South Island.
With high inflows into the Waikato catchment since August, Mercury has updated our FY2018 mid-point hydro generation forecast to
4,400GWh (up 250GWh on the forecast provided with the release of our FY2017 results and 400GWh above the long-term average).
UNDERLYING DEMAND GROWTH
After adjusting for temperature, national demand was up 0.6% compared to the same quarter last year (or flat on an unadjusted
basis). This increase in demand was attributable to growth in the urban (0.6%) and rural (0.2%) sectors, partially offset by a reduction
in the industrial sector (-0.2%).

VWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)
1,2761,307
762748
514559
1,3491,380
244224
1,5931,604
393381
349341
4440
4642
Volume
(GWh)
Volume
(GWh)
324509
1,021896
316326
2
697387
Volume
(GWh)
Volume
(GWh)
1,5221,256
--
3
689634
4
4755
2,2581,945
1.091.04
10296
406398
1
VWAP is volume weighed average energy-only price sold to FPVV customers after lines, metering and fees
2
3
4
Tuaropaki Power Company (Mokai) equity share
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE02
Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 176GWh for the 3 months ended 30 September 2017 and 176GWh for the 3
months ended 30 September 2016
92.5754.79
91.0758.32
METRIX AMI METERS ('000)
Total
LWAP/GWAP
CARBON EMISSIONS
('000 TONNES CO2)
Geothermal (equity accounted)
North Island Customers
South Island Customers
Buy CfD
Net Sell CfD
Dual Fuel Customers
Sell CfD
VWAP
($/MWh)
VWAP
($/MWh)
85.8354.69
-
End User CfD
-
Geothermal (consolidated)
Hydro
Gas
ELECTRICITY CUSTOMERS
('000)
93.4060.32
CONTRACTS FOR DIFFERENCE
ELECTRICITY GENERATION
FPVV sales to business customers
Total NZEM Purchases60.3899.01
FPVV purchases from market
Spot customer purchases
OPERATING INFORMATION
Three months ended
30 September 2017
Three months ended
30 September 2016
($/MWh)($/MWh)ELECTRICITY SALES
FPVV sales to customers
FPVV sales to residential customers
117.46118.05
>> OPERATING STATISTICS

> ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 30 SEPTEMBER
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 30 SEPTEMBER (EXCLUDING CFDs)
Source: Mercury Purchases and Transpower SCADA
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
03
21%
25%
21%
19%
6%
8%
Financial Year Q1 2018
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
18%
33%
21%
16%
6%
6%
Financial Year Q1 2017
15%
85%
Financial Year Q1 2018
MERCURY
OTHER
15%
85%
Financial Year Q1 2017

> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS
> TAUPO STORAGE
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
04
$40
$45
$50
$55
$60
$65
$70
$75
$80
0
500
1000
1500
2000
2500
3000
3500
4000
4500
JulAugSepOctNovDecJanFebMarAprMayJun
$/MWh

GWh

AVERAGE NATIONAL STORAGEFY2017 NATIONAL STORAGE
FY2018 NATIONAL STORAGEROLLING 12 MONTH AVERAGE OTA PRICE
ROLLING 12 MONTH AVERAGE BEN PRICE
0
100
200
300
400
500
600
JulAugSepOctNovDecJanFebMarAprMayJun
GWh

AVERAGE SINCE 1999FY2017FY2018

> OTAHUHU ASX FUTURES SETTLEMENT PRICE
> BENMORE ASX FUTURES SETTLEMENT PRICE
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
05
$78.15

$80.38

$78.75

$70.18

$77.61

$78.08

$86.35

$80.00

$79.86

$70.83

$74.70

$76.60

$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
FY18FY19FY20
$/MWh

Financial Year
AS AT 30 SEPTEMBER 2016AS AT 31 MARCH 2017AS AT 30 JUNE 2017AS AT 30 SEPTEMBER 2017
$72.69

$72.45

$71.68

$64.25

$71.40

$71.93

$86.41

$74.71

$73.24

$67.06

$71.26

$71.38

$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
FY18FY19FY20
$/MWh

Financial Year
AS AT 30 SEPTEMBER 2016AS AT 31 MARCH 2017AS AT 30 JUNE 2017AS AT 30 SEPTEMBER 2017

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY (⁰C)
FINANCIAL YEAR
Q1Q2Q3Q4
201812.3---
201712.116.119.314.3
201611.416.020.615.3
201511.915.919.914.3
201412.316.718.814.8
Historical Average (since 1999)11.916.119.414.1
Source: Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs)
Source: Electricity Authority
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
06
9,294
9,132
9,386
9,573
9,430
9,451
1,196
1,238
1,250
1,268
1,267
1,251
0
2,000
4,000
6,000
8,000
10,000
12,000
Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018
GWh

NATIONAL CONSUMPTIONTIWAI POINT ALUMINIUM SMELTER CONSUMPTION
0%
5%
10%
15%
20%
25%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
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
Jan-17
Jul-17
% Churn

Monthly ICPs

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