Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 30 June 2019
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
ANNUAL GENERATION 6,902GWh;
HYDRO GENERATION AT
MEAN OF 4,006GWh
THERMAL FUEL CONSTRAINTS
ELEVATE SPOT PRICES;
QUARTERLY PRICES AT 90
th
PERCENTILE;
ANNUAL PRICES AT RECORD
REDUCED ACQUISITION ACTIVITY
AS RETAIL MARGINS NARROW
>> QUARTERLY HIGHLIGHTS
HYDRO
GENERATION
AT MEAN
SUSTAINED
SPOT PRICE
LIFT
VALUE
FOCUS
>> COMMENTARY
THERMAL FUEL UNCERTAINTY GAINS PROMINENCE AS DRIVER OF SPOT MARKET PRICES
Quarterly spot prices were elevated atthe 90
th
percentile
1
as thermal fuel constraints, including maintenance outages on the Pohokura gas field, offset
above-average national hydro inflows. Average spot prices for the final quarter of FY2019 were $116/MWh at Otahuhu and $95/MWh at Benmore
leading to FY2019 spot prices reaching record levels of $143/MWh at Otahuhu and $123/MWh at Benmore.
The market's view of future thermal availability also affected the long-term outlook of wholesale market prices as the Otahuhu futures price remained at
historically high levels, increasing to $114/MWh for FY2020 and to $99/MWh for FY2021 during the quarter.
HYDRO GENERATION RETURNS TO AVERAGE FOLLOWING DRY H2; HYDRO PEAKING ABILITY INCREASES GENERATION VALUE
Mercury's hydro generation was 796GWh in the most recent quarter, a decrease of 422GWh from near-record levels in the prior comparable quarter as
Waikato catchment inflows were below average at the 14
th
percentile
2
(207GWh below average) in Q4-FY2019. Despite below average inflows in the
quarter, Mercury was able to finishthe year strongly by utilising thepeaking capability of the Waikato Hydro Scheme to benefit from spot price volatility.
This resulted in the LWAP/GWAP ratio decreasing favourably from 1.05 in Q4-FY2018 to 0.99 in Q4-FY2019.
Hydrological conditions were unusuallydry in the latter half of the financial year with Waikato catchment inflows only reaching the 4
th
percentile
3
(477GWh below average) resulting in annual hydro generation falling from 4,947 in FY2018 to 4,006GWh in FY2019, close to the long-run mean of
approximately 4,000GWh. This was achieved in spite of low inflows by drawing on Lake Taupo storage which decreased from 139%ofaverage (or
107GWh above average) at the start of FY2019 to 65% of average (or 98GWh below average) at the end of FY2019.
Mercury's geothermal generation increased by 23GWh to 731GWh in Q4-FY2019 from 708GWh in the prior comparable period, which had more planned
maintenance outages, and contributed to FY2019 geothermal generation of 2,896GWh; the highest annual geothermal generation for the company.
MERCURY FOCUSESONVALUEAS REDUCED ACQUISITION ACTIVITY LEADS TO DECLINE IN CUSTOMER NUMBERS
Mercury's focus on value and existing customers resulted in reduced acquisition activity as retail margins narrowed with the continued rise in the
electricity futures curve. Mercury acquired ~4,000 fewer customers in Q4-FY2019 compared to Q4-FY2018 with the proportion of Mercury brand
customers acquired on discounted rates falling from 55% in Q4-FY2018 to 27% in Q4-FY2019. This contributed to customer numbers across all brands
decreasing by 6,000 across the quarter to 373,000.
The volume-weighted average price received for Mass Market sales in the current quarter was flat year-on-year at $128/MWh as Mercury did not increase
residential prices in FY2019. Market churn decreased from 21.1%
4
as at 31 March 2019 to 20.5%
4
as at 30 June 2019 with Mercury group churn also
falling from 20.0%
4
to 19.6%
4
over the same period.
DEMAND DOWN LED BY URBAN AND DAIRY SECTORS; INDUSTRIAL DEMAND INCREASES DESPITE SIGNS OF PRICE SENSITIVITY
National demand decreased by 1.2%in Q4-FY2019after adjustingfor temperature(1.4%on an unadjusted basis) versus Q4-FY2018 due to a decline in
urban sector demand (-0.9%) and decreased dairy sector (-0.5%) demand, reflecting reduced milk production compared to the same period last year.
These declines were partially offset by increased industrialsector demand (+0.4%) which was driven by increased Tiwai load.Non-Tiwai industrial
demand decreased by 0.2%, possibly due to spot-exposed users responding to high spot prices. Demand was flat in the irrigation (+0.0%), rural (-0.1%)
and other (-0.1%) sectors.
1
For quarters ended 30 June since 1999
2
For quarters ended 30 June since 1927
3
For 6-monthly periods ended 30 June since 1927
4
12-monthly rolling average

VWAP
1
VolumeVWAP
1
VolumeVWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)(GWh)(GWh)
2
8008553,1823,278
3
3532891,3181,200
3132881,2061,226
1,2111,2074,7304,729
180209780891
1,3911,4165,5105,620
373388
330345
4343
4748
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
4
2995161,6242,109
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
Volume
(GWh)
7961,2184,0064,947
5
6796562,6972,564
6
5252199193
1,5271,9266,9027,704
0.991.051.041.06
7
8385330341
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 End User CfD volumes. Includes Virtual Asset Swap volumes in both Buy and Sell CfD volumes of 149 GWh for the 3 months ended 30 June 2019; 149
GWh for the 3 months ended 30 June 2018; of 599 GWh for the 12 months ended 30 June 2019; and 650 GWh for the 12 months ended 30 June 2018
110.2174.40122.8983.50
138.2986.19
ELECTRICITY CUSTOMERS
('000)
124.8984.42
CONTRACTS FOR DIFFERENCE
ELECTRICITY GENERATION
VWAP
($/MWh)
VWAP
($/MWh)
North Island Customers
South Island Customers
Net Sell CfD
Dual Fuel Customers
Hydro
Total NZEM Purchases83.48116.49
FPVV purchases from market
Spot customer purchases
OPERATING INFORMATION
Three months ended
30 June 2019
Three months ended
30 June 2018
End User CfD
FPVV
($/MWh)($/MWh)
ELECTRICITY SALES
Mass Market127.61128.19
Commercial & Industrial85.9284.6781.2480.37
Twelve months ended
30 June 2019
Twelve months ended
30 June 2018
($/MWh)($/MWh)
126.78124.26
144.1991.62
VWAP
($/MWh)
VWAP
($/MWh)
142.9389.43
132.5480.1371.76108.62
Geothermal (equity accounted)
Total
Geothermal (consolidated)
CARBON EMISSIONS
('000 TONNES CO2)
117.1579.84
LWAP/GWAP
>> OPERATING STATISTICS

> ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 30 JUNE
Source: Electricity Authority
> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 30 JUNE (EXCLUDING CFDs)
Source: Mercury Purchases and Transpower SCADA
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE03
14%
35%
24%
16%
4%
7%
Financial Year Q4 2019
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
18%
33%
22%
15%
6%
6%
Financial Year Q4 2018
14%
86%
Financial Year Q4 2019
MERCURY
OTHER
14%
86%
Financial Year Q4 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
$60
$80
$100
$120
$140
$160
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
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
$73.91
$77.23
$75.54
$134.59
$94.50
$84.25
$150.30
$111.81
$92.54
$142.64
$113.71
$98.54
$0
$20
$40
$60
$80
$100
$120
$140
$160
FY19FY20FY21
$/MWh
Financial Year
AS AT 30 JUNE 2018AS AT 31 DECEMBER 2018AS AT 31 MARCH 2019AS AT 30 JUNE 2019
$66.45
$70.04
$69.94
$122.45
$87.44
$80.36
$130.11
$98.30
$83.13
$123.09
$91.00
$86.19
$0
$20
$40
$60
$80
$100
$120
$140
FY19FY20FY21
$/MWh
Financial Year
AS AT 30 JUNE 2018AS AT 31 DECEMBER 2018AS AT 31 MARCH 2019AS AT 30 JUNE 2019

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY (⁰C)
FINANCIAL YEAR
Q1Q2Q3Q4
201912.116.320.214.1
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
8,543
8,778
8,593
8,865
9,022
8,824
1,249
1,255
1,261
1,251
1,252
1,307
0
2,000
4,000
6,000
8,000
10,000
12,000
Q4 2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 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
Jan-19
% Churn
Monthly ICPs
NZ MARKET CHURN (LHS)ANNUAL NZ MARKET CHURN % (RHS)