Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 31 December 2018
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
RECORD QUARTERLY AVERAGE
SPOT PRICE DUE TO
HYDROLOGICAL CONDITIONS AND
THERMAL FUEL CONSTRAINTS
LOWER SALES VOLUMES;
COMMERCIAL DISCIPLINE LIFTS YIELD
FY2019 HYDRO GENERATION
FORECAST DOWN 50GWh
>> QUARTERLY HIGHLIGHTS
>$200/MWh
OTAHUHU
PRICE
VALUE
FOCUS
4,150 GWh
>> COMMENTARY
SPOT PRICES RISE DUE TO NATIONAL HYDRO CONDITIONS AND THERMAL FUEL CONSTRAINTS
Dry conditions, with national hydro inflows at 86% of average
1
, combined with limited thermal fuel availability resulted in record spot prices for
the quarter. Average spot prices reached $206/MWh at Otahuhu and $175/MWh at Benmore; an increase of $113/MWh and $85/MWh
respectively from Q2-FY2018.
GENERATION DOWN FROM RECORD LEVELS; GWAP LIFT
Mercury's hydro generation during the quarter was 1,002GWh, a 170GWh decrease from record levels in the prior comparable period,with
Waikato catchment inflows at 84% of average
1
. Mercury's full year hydro generation forecast has been reduced by50GWh to 4,150GWh.
The value of Mercury's generation improved as the LWAP/GWAP ratio moved favourably from 1.06 in Q2-FY2018 to 1.04 in this quarter due
to the timely dispatch of available generation. This was largelydriven by higher hydro generation in October, the highest-priced month in the
quarter,and illustrated through the positive movement in the hydro GWAP/TWAP ratio from 1.04 in the same quarter last year to 1.11.
Geothermal generation increasedyear-on-year as outputin the previous year was reduced bytwo-yearly maintenance outages.
WHOLESALE MARKET CONDITIONS LEAD FUTURES HIGHER; LONG-TERM PRICE EXPECTATIONS LIFTED
The elevated spot price environment led to a significant increase in short-term futures prices with the FY2019 Otahuhu futures price
increasingfrom $88/MWh to $135/MWh.Longer-term futures prices also lifted with the Otahuhu FY2020 and FY2021 prices increasingto
$95/MWh and $84/MWh respectively as market perspectives of the supply/demand balance were adjusted.
MERCURY MAINTAINSCOMMERCIAL DISCIPLINE IN COMPETITIVE RETAIL MARKET
Despite high levels of retail market activity, Mercury has maintained a disciplined approach in pursuing value over volume. Mercury's focus on
the customer rather than simply customer numbers contributed to the volume-weighted average price received for Mass Market sales
increasing from $120/MWh in the same period last year to $127/MWh. During the quarter higher levels of Commercial & Industrial sales
activity occurred on elevated futures prices, however any increase in volumes will be reflected only in future quarters.
Market churn remains high, rising from 21.1%
2
at the end of Q1-FY2019 to 21.3%
2
as at 31 December 2018. Mercury group churn increased to
20.4%
2
at the end of the quarter with churn for the Mercury brand also increasing to 17.6%
2
(from 16.8%
2
as at 30 September 2018). Group
churn was impacted by the transfer of Tiny Mighty Power customers to the main Mercury brand which was completed during the quarter.
IRRIGATION DEMAND DOWN;INDUSTRIAL DEMAND RISES ON TIWAI POTLINE STARTUP
National demand decreased by 2.9% on a temperature-adjusted basis versus the prior comparable period, primarily due to a significant
decrease in irrigation load (-1.6%) as high precipitationin irrigation areas increased soil moisture levels. Industrial demand made a positive
contribution (+0.4%) due to NZAS 4
th
potline being brought online,increasing average Tiwai load from 581MW in October to 611MW in
December. Excluding Tiwai, industrial sector demand decreased by 1.6% partly in response to high wholesale prices,and decreases were also
seen across the urban (-0.5%), rural (-0.3%) and dairy (-0.6%) sectors.
1
For quarters ended 31 December since 1927
2
12-monthly rolling average

VWAP
1
VolumeVWAP
1
VolumeVWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)(GWh)(GWh)
2
7487591,7031,734
3
319299616601
295325586642
1,1221,1182,4382,468
187227412471
1,3091,3452,8502,939
381393
338350
4343
4847
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
4
4334961,0971,193
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
1,0021,1722,4482,694
5
6806271,3571,317
6
41499696
1,7231,8483,9014,107
1.041.061.061.07
7
8486177188
416408
1
VWAP is volume weighted average energy-only price sold to customers after lines, metering and fees
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
Includes carbon emissions from Mercury gas sales, wholly owned geothermals and proportionate emissions from the Mokai and Nga Awa Purua stations
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE02
Includes Virtual Asset Swap volumes of 151 GWh for the 3 months ended 31 December 2018 and 176 GWh for the 3 months ended 31 December
2017 and of 302 GWh for the 6 months ended 31 December 2018 and 352 GWh for the 6 months ended 31 December 2017
204.2189.84
LWAP/GWAP
METRIX AMI METERS ('000)
Geothermal (equity accounted)
Total
Hydro
Geothermal (consolidated)
VWAP
($/MWh)
VWAP
($/MWh)
CARBON EMISSIONS
('000 TONNES CO2)
North Island Customers
South Island Customers
Net Sell CfD
Dual Fuel Customers
157.9689.30
87.09190.67
Total NZEM Purchases94.93211.49
FPVV purchases from market
Spot customer purchases
End User CfD
ELECTRICITY CUSTOMERS
('000)
215.2791.34
CONTRACTS FOR DIFFERENCE
ELECTRICITY GENERATION
FPVV
($/MWh)($/MWh)
ELECTRICITY SALES
Mass Market120.35126.54
Commercial & Industrial74.2572.79
Six months ended
31 December 2018
Six months ended
31 December 2017
($/MWh)($/MWh)
126.82122.14
OPERATING INFORMATION
Three months ended
31 December 2018
Three months ended
31 December 2017
146.6597.14
78.4178.43
114.0590.89
138.1590.52
VWAP
($/MWh)
VWAP
($/MWh)
140.7392.50
135.2086.43
>> 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 UPDATE03
17%
31%
22%
17%
5%
8%
Financial Year Q2 2019
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
19%
31%
20%
18%
5%
7%
Financial Year Q2 2018
14%
86%
Financial Year Q2 2019
MERCURY
OTHER
14%
86%
Financial Year Q2 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
$110
$120
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
$80.50
$79.81
$80.21
$73.91
$77.23
$75.54
$88.17
$79.89
$77.26
$134.59
$94.50
$84.25
$0
$20
$40
$60
$80
$100
$120
$140
$160
FY19FY20FY21
$/MWh
Financial Year
AS AT 31 DECEMBER 2017AS AT 30 JUNE 2018AS AT 30 SEPTEMBER 2018AS AT 31 DECEMBER 2018
$77.59
$73.65
$75.81
$66.45
$70.04$69.94
$82.93
$73.90
$73.33
$122.45
$87.44
$80.36
$0
$20
$40
$60
$80
$100
$120
$140
FY19FY20FY21
$/MWh
Financial Year
AS AT 31 DECEMBER 2017AS AT 30 JUNE 2018AS AT 30 SEPTEMBER 2018AS AT 31 DECEMBER 2018

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY ( ⁰C)
FINANCIAL YEAR
Q1Q2Q3Q4
201912.116.3--
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
8,299
8,550
8,609
8,257
8,541
8,270
1,269
1,252
1,265
1,264
1,263
1,316
0
2,000
4,000
6,000
8,000
10,000
12,000
Q2 2014Q2 2015Q2 2016Q2 2017Q2 2018Q2 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)