Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 31 March 2018
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
1,035 GWh HYDRO GENERATION;
114% OF AVERAGE
FULL YEAR HYDRO GENERATION
FORECAST UP 150GWh
ANNUAL CHURN FOR ALL MERCURY
BRANDS UP 0.9% VERSUS PCP;
MARKET CHURN UP 1.2%
>> QUARTERLY HIGHLIGHTS
SECOND
HIGHEST Q3
GENERATION
1
4,700 GWh
RETAIL
COMPETITION
INTENSE
>> COMMENTARY
LOW STORAGE LEADS TO RECORD HIGH JANUARY PRICES; CYCLONES ARRIVE FEBRUARY-MARCH
Average wholesale prices remained elevated for the quarter ended 31 March 2018 being $85/MWh at Otahuhu and $79/MWh at Benmore,
up over $30/MWh on the prior comparable period. However prices varied significantly in the quarter with the January average price hitting
a record high due to national storage beginning the quarter at 82% of average and January national inflows being significantly below
average. This was contrasted with February and March as large inflows associated with cyclones Fehi and Gita suppressed wholesale prices
and pushed national hydro storage to 114% of average by the end of the quarter.
ABOVE AVERAGE HYDRO GENERATION OFFSETS GEOTHERMAL OUTAGE
Mercury continued to benefit from high inflows into the Waikato catchment with hydro generation in the quarter reaching 114% of average
1
.
The increased hydro contribution offset a reduction in geothermal output at Kawerau due to a planned two-yearly maintenance outage.
Favourable hydrological conditions have also lead to our full year hydro generation forecast being lifted to 4,700GWh (up 150GWhon
guidance provided with the Q2 FY2018 Operational Update).
Mercury's LWAP/GWAP ratio of 1.08, relative to 1.02 in the prior comparable period, was negatively affected by the timing of inflows and
by high prices coinciding with scheduled geothermal outages.
HIGH LEVELS OF RETAIL COMPETITION; INCREASED MARKET CHURN
Customer numbers decreased by 2,000 over the quarter to 391,000 due to intense retail competition with 48 retail brands now competing
in the New Zealand market, up 12 from the previous year. The decrease was spread across all Mercury group brands with the Mercury
brand itself experiencing its first quarterly decline following six consecutive quarters of growth.
Intense retail competition has also impacted churn levels with Mercury's annualised churn for all brands being 19.2% for the year to 28
February 2018
2
and up 0.9% compared to the same period the year prior. This remains below market with market churn also increasing
by 1.2% to 21.1%.
Mercury continues to 'Make It Easy' for our customers with 10,000 customers choosing to take up our offer to fix their prices under our
'Beat The Price Rise' campaign. The total number of customers on fixed-term contracts was more than 127,000 at the end of the quarter,
however down on the number at the start of the financial year as some customers chose not to re-fix as their fixed terms expired.
The average energy VWAP was up 3% to $113.99/MWh as average prices for both residential and commercial customers rose relative to
the prior year.
URBAN DEMAND GROWTH NEGATED BY REDUCTION IN IRRIGATION AND DAIRY LOAD
National demand was down 0.8% versus the prior comparable period after normalising for temperature (down 1.5% on an unadjusted
basis). Lower irrigation demand (-1%) was the most negatively impacted sector with lower demand also seen in the dairy (-0.2%), rural
(-0.3%) and industrial (-0.2%) sectors. The contraction in these sectors was partially offset by urban demand growth (up 1% after
adjusting for temperature).
1
For quarters ended 31 March since 1999
2
March 2018 Electricity Authority switching data was not available at the time of release

VWAP
1
VolumeVWAP
1
VolumeVWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)(GWh)(GWh)
9991,0363,3343,431
4884961,7921,798
5115401,5421,633
1,0551,0943,5223,624
211218681672
1,2661,3124,2034,296
391390
348348
4342
4844
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
4383521,1571,256
8397752,7502,576
296324938996
2
4014231,5931,320
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
1,0359543,7293,321
Geothermal (consolidated)
3
5916281,9081,918
Geothermal (equity accounted)
4
4554141168
Total1,6711,6365,7785,407
LWAP/GWAP1.081.021.071.03
6880256266
410401
1
VWAP is volume weighted 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 UPDATE02
91.0755.16
83.0148.94
86.8349.94
VWAP
($/MWh)
VWAP
($/MWh)
94.3654.48
Nine months ended
31 March 2018
Nine months ended
31 March 2017
($/MWh)($/MWh)
113.70111.82
OPERATING INFORMATION
Three months ended
31 March 2018
Three months ended
31 March 2017
($/MWh)($/MWh)
ELECTRICITY SALES
FPVV sales to customers
FPVV sales to residential customers
110.70113.99
FPVV sales to business customers
Total NZEM Purchases53.7087.92
FPVV purchases from market
Spot customer purchases
ELECTRICITY CUSTOMERS
('000)
87.3455.21
CONTRACTS FOR DIFFERENCE
ELECTRICITY GENERATION
Hydro
North Island Customers
VWAP
($/MWh)
VWAP
($/MWh)
78.2150.30
South Island Customers
Buy CfD
Net Sell CfD
49.41
Dual Fuel Customers
75.39
End User CfD
Sell CfD
Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 148 GWh for the 3 months ended 31 March 2018 and 172 GWh for the 3
months ended 31 March 2017 and of 500 GWh for the 9 months ended 31 March 2018 and 525 GWh for the 9 months ended 31 March 2017
82.8752.82
CARBON EMISSIONS
('000 TONNES CO2)
METRIX AMI METERS ('000)
88.3152.79
>> OPERATING STATISTICS

> ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 31 MARCH
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 31 MARCH (EXCLUDING CFDs)
Source: Mercury Purchases and Transpower SCADA
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE03
18%
32%
22%
17%
4%
7%
Financial Year Q3 2018
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
17%
35%
21%
15%
5%
7%
Financial Year Q3 2017
14%
86%
Financial Year Q3 2018
MERCURY
OTHER
14%
86%
Financial Year Q3 2017

> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS
> TAUPO STORAGE
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE04
$40
$45
$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
$70.18
$77.61
$78.08
$70.83
$74.70
$76.60
$96.29
$80.50
$79.81
$84.40
$73.68
$78.79
$0
$20
$40
$60
$80
$100
$120
FY18FY19FY20
$/MWh
Financial Year
AS AT 31 MARCH 2017AS AT 30 SEPTEMBER 2017AS AT 31 DECEMBER 2017AS AT 31 MARCH 2018
$64.25
$71.40
$71.93
$67.06
$71.26
$71.38
$96.04
$77.59
$73.65
$80.78
$67.53
$71.00
$0
$20
$40
$60
$80
$100
$120
FY18FY19FY20
$/MWh
Financial Year
AS AT 31 MARCH 2017AS AT 30 SEPTEMBER 2017AS AT 31 DECEMBER 2017AS AT 31 MARCH 2018

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY ( ⁰C)
FINANCIAL YEARQ1Q2Q3Q4
201812.317.220.7-
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
> TOTAL CONSUMER RETAIL SWITCHING (ICPs)
Source: Electricity Authority
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE06
7,991
8,021
8,233
8,2408,185
8,045
1,230
1,234
1,240
1,256
1,237
1,235
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Q3 2013Q3 2014Q3 2015Q3 2016Q3 2017Q3 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-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
Jan-18
% Churn
Monthly ICPs
MONTHLY NZ MARKET CHURN (LHS)ANNUAL NZ MARKET CHURN % (RHS)