Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 31 December 2017
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
1,848 GWh GENERATED
INCLUDING 1,172 GWh FROM HYDRO
HIGHEST Q2 WHOLESALE PRICE SINCE
FY2006
FULL YEAR HYDRO GENERATION
FORECAST UP 150GWh
>> QUARTERLY HIGHLIGHTS
RECORD Q2
GENERATION
WHOLESALE
PRICES
RISING
4,550 GWh
>> COMMENTARY
ELEVATED WHOLESALE PRICES; RECORD GENERATION; HYDRO GENERATION FORECAST UP
Wholesale prices for the quarter ending 31 December 2017, of $93/MWh at Otahuhu and $90/MWh at Benmore, almost reached the
record highs set in FY2006. These prices were up significantly on the prior comparable period by $45/MWh and $50/MWh
respectively.
South Island inflows were 68% of average (or almost 1,800 GWh below average) contributing to wholesale prices increasing from
$59/MWh at Otahuhu and $53/MWh at Benmore in October to be $121/MWh and $122/MWh respectively in December. Low inflows
into the South Island hydro catchments resulted in total South Island hydro storage falling from 120% of average at the start of the
quarter to end at 77%
1
(or almost 600 GWh below average).
In contrast to the South Island, hydro inflows into the Waikato Hydro Catchment were near normal contributing to the second
consecutive quarter of record output from our renewable generation fleet of 1,848 GWh. Mercury utilised storage within Lake Taupo to
generate 1,172 GWh from the Waikato Hydro Scheme, optimising generation with risingwholesale prices. Lake Taupo storage fell from
130% of average to 85% at the end of the quarter
1
(or 70 GWh below average). Geothermal generation was down 39 GWh to 676
GWh as scheduled maintenance outages were completed at the Nga Awa Purua and Mokai power stations.
The quarter illustrated the value to Mercury of the low level of correlation between wholesale prices and inflows into the Waikato Hydro
Catchment. Mercury was able to benefit from the coincidence of high hydro generation and high wholesale prices (unlike what is
typical for South Island hydro operators).
With higher than average inflows into the Waikato Hydro Catchment since 31 December 2017, Mercury has updated its FY2018 mid-
point hydro generation forecast to 4,550GWh (up 150GWh on the forecast provided with the previous Quarterly Operational Update).
CONTINUED BELOW MARKET CHURN; MODERATE END-USER PRICE GROWTH
Mercury's rate of customer churn was again below market average as the company continues to focus on rewarding, inspiring and
making it easy for our customers. For the quarter, Mercury's annualised churn for all brands of 19.4% was 1.2% below the market
average of 20.6%. Trader churn for all Mercury brands for the quarter increased to market levels.
The company's churn advantage over the twelve months to 31 December 2017 contributed in customer numbers increasing by 6,000
to 393,000 as fewer customers switched from Mercury. The company experienced customer growth in both the North (+4,000) and
South Islands (+2,000) and for dual fuel customers (+4,000).
The average energy price to customers was up (to $108.20/MWh) compared to the same period last year ($106.11/MWh). This
increase partially reflects loyalty offerings redeemed in the prior period associated with the Mercury brand launch.
UNDERLYING DEMAND GROWTH
After adjusting for temperature, national demand was up 3.7% compared to the same quarter last year (or up 3.0% on an unadjusted
basis). This increase in demand was impacted by a normalisation of irrigation and dairy load due to wet conditions in the prior period
(1.8%). Positive signs of underlying demand growth were again observed with continued growth in the urban (0.8%) and rural (0.7%)
sectors.
1
Average since 1999

VWAP
1
VolumeVWAP
1
VolumeVWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)(GWh)(GWh)
1,0581,0882,3352,395
5415541,3041,302
5175341,0311,093
1,1181,1502,4682,529
227231471454
1,3451,3812,9392,983
393387
350346
4341
4743
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
394395718904
8909051,9111,801
325346642673
2
4965101,193897
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
1,1721,1122,6942,367
3
6276571,3171,290
4
495896113
1,8481,8274,1073,770
1.061.031.071.04
8690188186
408399
1
VWAP is volume weighed average energy only price sold to FPVV customers after lines, metering and fees
2
3
Includes Mercury’s 65% share of Nga Awa Purua generation
4
Tuaropaki Power Company (Mokai) equity share
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
02
92.5055.14
86.4348.71
VWAP
($/MWh)
VWAP
($/MWh)
97.1454.83
Six months ended
31 December 2017
Six months ended
31 December 2016
($/MWh)($/MWh)
113.58112.3
OPERATING INFORMATION
Three months ended
31 December 2017
Three months ended
31 December 2016
($/MWh)($/MWh)
ELECTRICITY SALES
FPVV sales to customers
FPVV sales to residential customers
106.11108.2
FPVV sales to business customers
Total NZEM Purchases48.3894.93
FPVV purchases from market
Spot customer purchases
Sell CfD
ELECTRICITY CUSTOMERS
('000)
91.3449.28
CONTRACTS FOR DIFFERENCE
ELECTRICITY GENERATION
Geothermal (consolidated)
Geothermal (equity accounted)
Hydro
North Island Customers
VWAP
($/MWh)
VWAP
($/MWh)
87.0942.94
South Island Customers
Buy CfD
Net Sell CfD
Dual Fuel Customers
End User CfD
Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 176 GWh for the 3 months ended 31 December 2017 and 176 GWh for the 3
months ended 31 December 2016 and of 352 GWh for the 6 months ended 31 December 2017 and 352 GWh for the 6 months ended 31 December
2016
89.3044.97
89.8446.87
METRIX AMI METERS ('000)
Total
LWAP/GWAP
CARBON EMISSIONS
('000 TONNES CO2)
90.8949.77
90.5252.78
>> OPERATING STATISTICS

> 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 (EXCLUDING CFDs)
Source: Mercury Purchases and Transpower SCADA
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
03
19%
31%
20%
18%
5%
7%
Financial Year Q2 2018
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
19%
34%
21%
14%
5%
7%
Financial Year Q2 2017
14%
86%
Financial Year Q2 2018
MERCURY
OTHER
15%
85%
Financial Year Q2 2017

> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS
> TAUPO STORAGE
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE04
$50
$55
$60
$65
$70
$75
$80
$85
$90
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 UPDATE05
$74.26
$77.99
$77.35
$86.35
$80.00
$79.86
$70.83
$74.70
$76.60
$96.29
$80.50
$79.81
$0
$20
$40
$60
$80
$100
$120
FY18FY19FY20
$/MWh
Financial Year
AS AT 31 DECEMBER 2016AS AT 30 JUNE 2017AS AT 30 SEPTEMBER 2017AS AT 31 DECEMBER 2017
$68.10
$70.31
$70.06
$86.41
$74.71
$73.24
$67.06
$71.26
$71.38
$96.04
$77.59
$73.65
$0
$20
$40
$60
$80
$100
$120
FY18FY19FY20
$/MWh
Financial Year
AS AT 31 DECEMBER 2016AS AT 30 JUNE 2017AS AT 30 SEPTEMBER 2017AS AT 31 DECEMBER 2017

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY (⁰C)
FINANCIAL YEAR
Q1Q2Q3Q4
201812.317.2--
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 UPDATE06
8,363
8,299
8,550
8,609
8,257
8,541
1,231
1,269
1,252
1,265
1,264
1,263
0
2,000
4,000
6,000
8,000
10,000
12,000
Q2 2013Q2 2014Q2 2015Q2 2016Q2 2017Q2 2018
GWh
NATIONAL CONSUMPTIONTIWAI POINT ALUMINIUM SMELTER CONSUMPTION
0%
5%
10%
15%
20%
25%
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10Jan-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)