Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 30 September 2018
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
HYDRO GENERATION 1,446GWh
AT 84TH PERCENTILE;
255GWh ABOVE AVERAGE
MARKET CHURN AT 21.1%
MERCURY BRAND CHURN AT 16.8%
NO CHANGE TO HYDRO
GENERATION FORECAST
>> QUARTERLY HIGHLIGHTS
STRONG
HYDR0
GENERATION
COMPETITIVE
RETAIL
MARKET
4,200 GWh
>> COMMENTARY
GENERATION ABOVE-AVERAGE; HYDRO GWAP IMPROVES WITH INCREASED HYDRO FLEXIBILITY
Mercury's strong starting storage position enabled hydro generation of 1,446GWh during the quarter. This fell from record quarterly
generation in the prior comparable period but remained at the 84
th
percentile
1
, contributing to total generation of 2,179GWh including
stable geothermal output.
Mercury's LWAP/GWAP ratio moved favourably to 1.07 versus 1.09 in the same quarter last year as the timing of inflows enabled
Mercury to utilise its hydro asset flexibility, shown through the increase in the relative value of our hydro generation with hydro
GWAP/TWAP being 1.09 versus 1.07.
Average wholesale prices for the quarter were $87/MWh at Otahuhu and $77/MWh at Benmore, decreasing by $6/MWh and
$19/MWh respectively from Q1-FY2018 (which was affected by dry hydrological conditions). Prices increased over the quarter as
national hydro storage declined from 103% to 85% of average. Wholesale market conditions were further impacted by an ongoing
Pohokura gas outage commencing in September which is expected to last till late November.
Short-term futures prices responded strongly to the changes in wholesale market conditions with the FY2019 Otahuhu price lifting
more than $14/MWh from $73.91/MWh at the start of the quarter to $88.17/MWh by the end of the quarter (with a further increase
to $141.38/MWh as at 15 October 2018). Longer-term futures prices remained largely unchanged despite the tightening supply and
demand dynamic and the increased volatility observed in wholesale prices.
SUSTAINED HIGH COMPETITION INCREASES CHURN
Strong competition, especially in the North Island, resulted in Mercury's customer numbers across all brands decreasing by 2,000 to
386,000 at the end of the quarter. As at 30 September 2018, Mercury group churn increased to 20.0%
2
which remains below
market churn at 21.1%
2
; churn for the Mercury brand also increased to 16.8%
2
(from 14.7%
2
as at 30 September 2017). Mercury churn
levels for the quarter were impacted by the transfer of customers from Tiny Mighty Power to the main Mercury brand (which will also
impact churn in the following quarter).
Mass Market electricity sales VWAP was higher at $127.04/MWh. IFRS changes relating to the treatment of customer credit
acquisition costs have reduced this yield by $1.41/MWh compared to the previous standard with the Commercial & Industrial segment
VWAP being unaffected.
URBAN AND RURAL SECTORS LEAD UNDERLYING DEMAND GROWTH
National demand continues to grow despite warmer than average temperatures, increasing by 1.4% on a temperature-adjusted basis
(+1.1% on an unadjusted basis) versus the prior comparable period. This increase was primarily driven by the urban (+0.5%) and rural
(+0.5%) sectors with the dairy sector (+0.2%) also contributing.
1
For quarters ended 30 September since 1999
2
12-monthly rolling average

VWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)
2
955975
3
297302
291316
1,3161,349
225244
1,5411,593
386393
343349
4344
4846
Volume
(GWh)
Volume
(GWh)
4
664697
Volume
(GWh)
Volume
(GWh)
1,4461,522
5
678689
6
5547
2,1792,258
1.071.09
7
93102
415406
1
2
Mass market includes residential segments and non time-of-use commercial customers
3
Fixed-price, variable-volume (FPVV) sales to time-of-use commercial customers
4
5
Includes Mercury's 65% share of Nga Awa Purua generation
6
Tuaropaki Power Company (Mokai) equity share
7
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE02
METRIX AMI METERS ('000)
Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 151 GWh for the 3 months ended 30 September 2018 and 176 GWh
for the 3 months ended 30 September 2017. Includes End User CfD volumes.
85.9091.07
LWAP/GWAP
VWAP is volume weighted average energy-only price sold to customers after lines, metering and fees. Mass Market VWAP is higher than C&I
due to the additional cost to serve, losses, location and usage profile associated with the Mass Market segment
VWAP
($/MWh)
VWAP
($/MWh)
CARBON EMISSIONS
('000 TONNES CO2)
ELECTRICITY CUSTOMERS
('000)
89.0793.40
CONTRACTS FOR DIFFERENCE
ELECTRICITY GENERATION
North Island Customers
Net Sell CfD
Dual Fuel Customers
Total NZEM Purchases99.0191.53
FPVV purchases from market
Spot customer purchases
South Island Customers
OPERATING INFORMATION
Three months ended
30 September 2018
Three months ended
30 September 2017
End User CfD
FPVV
($/MWh)($/MWh)
ELECTRICITY SALES
Mass Market123.53127.04
Commercial & Industrial82.7684.14
Includes carbon emissions from Mercury gas sales, wholly owned geothermals and proportionate emissions from the Mokai and Nga Awa
Purua stations
80.5192.57
85.8379.59
Geothermal (equity accounted)
Total
Hydro
Geothermal (consolidated)
>> OPERATING STATISTICS
Statistics have been modified to separately disclose Mass Market and C&I sales segments with restatement of prior years on page 7

> 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 UPDATE03
20%
32%
22%
16%
4%
6%
Financial Year Q1 2019
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
21%
25%
21%
19%
6%
8%
Financial Year Q1 2018
14%
86%
Financial Year Q1 2019
MERCURY
OTHER
15%
85%
Financial Year Q1 2018

> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS
Source: NZX Hydro and NZEM Pricing Manager (NZX)
> TAUPO STORAGE
Source: NZX Hydro
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE04
$40
$50
$60
$70
$80
$90
$100
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
JulAugSepOctNovDecJanFebMarAprMayJun
$/MWh
GWh
AVERAGE NATIONAL STORAGEFY2018 NATIONAL STORAGE
FY2019 NATIONAL STORAGEROLLING 12 MONTH AVERAGE OTA PRICE
ROLLING 12 MONTH AVERAGE BEN PRICE
0
100
200
300
400
500
600
JulAugSepOctNovDecJanFebMarAprMayJun
GWh
AVERAGE SINCE 1999FY2018FY2019

> OTAHUHU ASX FUTURES SETTLEMENT PRICE
Source: ASX
> BENMORE ASX FUTURES SETTLEMENT PRICE
Source: ASX
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE05
$74.70
$76.60
$74.43
$73.68
$78.79
$78.83
$73.91
$77.23
$75.54
$88.17
$79.89
$77.26
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
FY19FY20FY21
$/MWh
Financial Year
AS AT 30 SEPTEMBER 2017AS AT 31 MARCH 2018AS AT 30 JUNE 2018AS AT 30 SEPTEMBER 2018
$71.26
$71.38
$68.70
$67.53
$71.00
$70.94
$66.45
$70.04
$69.94
$82.93
$73.90
$73.33
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
FY19FY20FY21
$/MWh
Financial Year
AS AT 30 SEPTEMBER 2017AS AT 31 MARCH 2018AS AT 30 JUNE 2018AS AT 30 SEPTEMBER 2018

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY (⁰C)
FINANCIAL YEARQ1Q2Q3Q4
201912.1---
201812.317.220.714.3
201712.116.119.314.3
201611.416.020.615.3
201511.915.919.914.3
Historical Average (since 1999)11.916.219.314.2
Source: Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs)
Source: Electricity Authority
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE06
9,132
9,386
9,573
9,430
9,451
9,554
1,238
1,250
1,268
1,267
1,251
1,263
0
2,000
4,000
6,000
8,000
10,000
12,000
Q1 2014Q1 2015Q1 2016Q1 2017Q1 2018Q1 2019
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-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
Jan-18
Jul-18
% Churn
Monthly ICPs
NZ MARKET CHURN (LHS)ANNUAL NZ MARKET CHURN % (RHS)

VWAP
Volume
VWAP
Volume
VWAP
Volume
VWAP
Volume
VWAP
Vo
lume
VWAP
Volume
VWAP
Volume
VWAP
Volume
VWAP
Volume
(GWh)
(GWh)
(GWh)
(GWh)
(GWh)
(GWh)
(GWh)
(GWh)
(GWh)
955
855
689
759
975
851
711
773
973
297
289
310
299
302
325
325
316
333
291
288
296
325
316
331
324
346
326
1,316
1,207
1,055
1,118
1,349
1,241
1,094
1,150
1,380
225
209
211
227
244
226
218
231
224
1,541
1,416
1,266
1,345
1,593
1,467
1,312
1,381
1,604
386
388
391
393
393
392
390
387
381
343
345
348
350
349
349
348
346
341
43
43
43
43
44
43
42
41
40
48
48
48
47
46
45
44
43
42
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
664
516
401
496
697
639
423
510
387
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
1,446
1,218
1,035
1,172
1,522
1,402
954
1,112
1,256
678
656
591
627
689
668
628
657
634
55
52
45
49
47
55
54
58
55
2,179
1,926
1,671
1,848
2,258
2,125
1,636
1,827
1,945
1.07
1.05
1.08
1.06
1.09
1.13
1.02
1.03
1.04
93
85
68
86
102
93
80
90
96
415
413
410
408
406
403
401
399
398
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE
07
Mass Market
127.04
127.61
125.44
Commercial & Industrial
82.76
84.67
80.27
OPERATING INFORMATION
Three months ended
30 September 2018
Three months ended
30 June 2018
Three months ended
31 March 2018
ELECTRICITY SALES
($/MWh)
($/MWh)
($/MWh)
FPVV purchases from marketSpot customer purchases FPVV End User CfDNorth Island CustomersSouth Island CustomersTotal NZEM Purchases
91.53
83.48
87.92
ELECTRICITY CUSTOMERS('000)
Net Sell CfD
ELECTRICITY GENERATION
VWAP
($/MWh)
VWAP
($/MWh)
VWAP
($/MWh)
Dual Fuel Customers
CONTRACTS FOR DIFFERENCE
85.90
79.84
82.87
Hydro
89.07
84.42
87.34
Geothermal (consolidated)
79.59
71.76
75.39
120.35
72.79
94.93
METRIX AMI METERS ('000)LWAP/GWAPCARBON EMISSIONS('000 TONNES CO2)
Geothermal (equity accounted)
80.51
74.40
78.21
Total
Three months ended
30 September 2017
($/MWh)
123.53
84.14
VWAP
($/MWh)
91.34
87.09
89.3089.84
Three months ended
31 December 2017
($/MWh)
Three months ended
30 June 2017
($/MWh)
124.49
86.25
VWAP
($/MWh)
93.40
85.83
92.57
91.07
99.01
68.02
71.00
Three months ended
31 March 2017
($/MWh)
121.34
78.94
VWAP
($/MWh)
72.50
53.70
49.41
50.30
52.82
($/MWh)
117.18
74.54
VWAP
($/MWh)
48.38
68.98
80.23
44.97
46.87
VWAP
($/MWh)
55.21
49.28
42.94
Three months ended
31 December 2016
VWAP
($/MWh)
60.32
54.69
54.79
58.32
Three months ended
30 September 2016
($/MWh)
122.04
87.82
60.38
>> TWO YEAR HISTORY OF
OPERATING STATISTICS
Statistics are presented in the
same form as those on page 2