Quarterly Operational Update

QUARTERLY OPERATIONAL UPDATE
Three months ended 31 December 2019
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE01
PRUDENT PORTFOLIO MANAGEMENT
IN LEAD-UP TO Q3
FOCUS ON CUSTOMER VALUE
AND LOYALTY LIFTS YIELDS
GEOTHERMAL GENERATION DOWN DUE TO
TWO-YEARLY MAINTENANCE OUTAGES
>> QUARTERLY HIGHLIGHTS
PORTFOLIO
MANAGEMENT
COMMERCIAL
YIELDS
INCREASE
GEOTHERMAL
OUTAGES
COMPLETED
>> COMMENTARY
PORTFOLIO POSITION STRONG AS APPROACHING LOW INFLOW QUARTER COINCIDES WITH TRANSMISSION, THERMAL FUEL OUTAGES
Mercury maintained a prudentapproach to risk management in Q2-FY2020, decreasing hydro generation by 74GWhcompared to the same
quarter last year resulting in a strong hydro storage position in the approach to the third quarter; historically the lowest inflow quarter for the
Waikato catchment. Forecast low inflows in Q3-FY2020 were also expected to coincide with an increased likelihood of high spot prices, indicated
by a $158/MWh Otahuhu futures price for Q3-FY2020 as at 1 October 2019, impacted by planned transmission and thermal fuel supplyoutages.
Lower hydro generation during the quarter lifted hydro storage in Lake Taupo to 85GWh above average
1
by the end of the quarter. Low spill and
high efficiency offset below-average inflows leading to Mercury's full-year hydro generation forecast being materially unchangedat 4,070GWh.
Mercury's geothermal generation also decreased by 84GWh compared to Q2-FY2019 due to two-yearly maintenance outages at Nga Awa Purua,
Kawerau and Ngatamariki stations.
WHOLESALE MARKET PRICES DAMPENED BY HIGH SOUTH ISLAND HYDRO INFLOWS BUT REMAIN HISTORICALLY HIGH
Spot prices in the most recent quarter started strongly but declined following very high South Island hydro inflows (at the 99
th
percentile
2
or
3,308GWh above average
2
). The average spot price for the quarter decreased from $206/MWh at Otahuhu and $175/MWh at Benmore in the
prior comparable period, when dry hydrological conditions and thermal fuel supply outages led to record prices, to $102/MWh and $87/MWh
respectively but remained elevated at the 95
th
percentile
1
.
High South Island inflows also coincided with the low demand holiday period leading to national hydro storage increasing across the quarter from
354GWh below average to 1,060GWh above average
2
. This surfeit of hydro storage has lowered spot price expectations for FY2020 with futures
prices easing from $139/MWh to $123/MWh at Otahuhu and from $121/MWh to $96/MWh at Benmore across the quarter.
COMMERCIAL YIELDS LIFT THROUGH FOCUS ON CUSTOMER VALUE ANDRE-ALIGNMENT WITH WHOLESALE MARKET PRICES
The Commercial & Industrial average sales yield (from bothphysical and financial sales) increased by 6.7% from $74/MWh to $79/MWh due to the
impact of contract renewals at current wholesale market levels. Mercury's focuson loyalty and higher-value customers resulted in the average yield
received for Mass Market sales increasing by 2.3% from $127/MWh in Q2-FY2019 to $129/MWh in the current quarter.
Customer numbers were 356,000 at the end of Q2-FY2020, a net decrease of 5,000 over the quarter and of 25,000 from the end of Q2-FY2019.
This includes a reduction of around 8,000 connections from Mercury's exit of lower-yielding Farm Source contracts as part of itsportfolio
management strategy.
IRRIGATION LOAD UP AS AGRICULTURAL REGIONS REMAIN DRY; INDUSTRIAL LOAD DECLINE CONTINUES
Temperature adjusted demand increased by 1.7% (2.1% on an unadjusted basis) primarily due to increased irrigation demand (+1.2%)as heavy
South Island rainfall was limited to hydro catchment regions. The urban (+0.5%), rural (+0.1%) and dairy (+0.2%) sectors also made positive
contributions to total demand. Industrial demand remains subdued, contributing -0.3% of the change in total demand as large consumers
responded to high spot prices; demonstrated by Tiwai holding their consumption below peak load at an average 593MW across thequarter.
1
For quarters ended 31 December since 1999
2
For quarters ended 31 December since 1927
Statistics on page 2 have been modified to providemore information on financial derivatives. The 2-year operating statistics history in the new format
is available on the Mercury website. (www.mercury.co.nz/investors/results-reports/operating-information)

356381
314338
4243
4748
VWAP
1
VolumeVWAP
1
VolumeVWAP
1
VolumeVWAP
1
Volume
(GWh)(GWh)(GWh)(GWh)
1,0021,0672,2412,319
2
6637481,5551,703
3
339319686616
4955110119
4
1,0501,1222,3512,438
5
8337691,7031,716
313295636586
6
5204741,0671,130
181187379412
1,5241,6823,4283,805
9281,0022,1422,448
7
5966801,2861,357
5
391381690665
6
391381690665
8
1.031.031.031.03
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
Excludes spot customer purchases
5
Excludes FTR and trading ASX positions (including positions held to maturity which were previously disclosed in CfD volumes)
6
7
Includes Mercury's 65% share of Nga Awa Purua generation
8
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE02
ELECTRICITY SALES
North Island Customers
Commercial & Industrial
Network Losses
74.74
126.54
79.86
Physical112.65111.06
Mass Market129.41
OPERATING INFORMATION
Three months ended
31 December 2019
Three months ended
31 December 2018
($/MWh)
Dual Fuel Customers
($/MWh)
South Island Customers
ELECTRICITY CUSTOMERS
('000s ICPs)
109.48213.04
79.2383.97
201.4197.96
78.55
Other Sell CfDs
99.30202.22
Physical Purchases
Financial
Spot Settlement of CfDs
End User CfDs73.71
79.64
Spot Customer Purchases
90.36
ELECTRICITY GENERATION
Physical
101.9584.31 Buy CfDs
93.46190.67
84.31101.95Financial
109.96215.27
205.32103.50
Hydro
($/MWh)($/MWh)
116.64115.11
Six months ended
31 December 2019
Six months ended
31 December 2018
120.39148.14
80.7279.84
78.7173.86
129.08126.82
88.4882.75
114.41138.76
119.62140.73
81.9182.94
109.06136.77
110.53137.85
Includes all physical and financial buys and sells except spot customer purchases. To illustrate, for the three months ended 31 December 2019 LWAP is
calculated as {($109.48 x 1,050GWh + $97.96 x 833GWh) / (1,050GWh + 833GWh)} and GWAP is calculated as {($103.50 x 1,524GWh + $93.97 x 391GWh) /
(1,524GWh + 391GWh)}
103.67142.50
105.74135.20
83.0690.55
83.0690.55
Spot Settlement of CfDs
PORTFOLIO LWAP/GWAP
189.4293.97
Geothermal (consolidated)
Includes Virtual Asset Swap volumes of 151 GWh for the 3 months ended 31 December 2019 and 151 GWh for the 3 months ended 31 December 2018 and of 302
GWh for the 6 months ended 31 December 2019 and 302 GWh for the 6 months ended 31 December 2018
>> OPERATING STATISTICS
Statistics have beenmodified to separate physical and financial sales and generation and disclose Buy and Sell CfD prices and volumes.

> 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
16%
36%
20%
16%
4%
8%
Financial Year Q2 2020
MERCURY
MERIDIAN ENERGY
CONTACT ENERGY
GENESIS ENERGY
TRUSTPOWER / TILT
OTHER
>> MARKET DATA
18%
31%
22%
17%
5%
7%
Financial Year Q2 2019
13%
87%
Financial Year Q2 2020
MERCURY
OTHER
14%
86%
Financial Year Q2 2019

> 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
1,000
2,000
3,000
4,000
5,000
6,000
JulAugSepOctNovDecJanFebMarAprMayJun
$/MWh
GWh
AVERAGE NATIONAL STORAGEFY2019 NATIONAL STORAGE
FY2020 NATIONAL STORAGEROLLING 12 MONTH AVERAGE OTA PRICE
ROLLING 12 MONTH AVERAGE BEN PRICE
0
100
200
300
400
500
600
JulAugSepOctNovDecJanFebMarAprMayJun
GWh
AVERAGE SINCE 1999FY2019FY2020

> OTAHUHU ASX FUTURES SETTLEMENT PRICE
Source: ASX
> BENMORE ASX FUTURES SETTLEMENT PRICE
Source: ASX
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE05
$94.50
$84.25
$83.25
$113.71
$98.54
$94.79
$139.10
$111.93
$102.79
$122.57
$110.25
$95.68
$0
$20
$40
$60
$80
$100
$120
$140
$160
FY20FY21FY22
$/MWh
Financial Year
AS AT 31 DECEMBER 2018AS AT 30 JUNE 2019AS AT 30 SEPTEMBER 2019AS AT 31 DECEMBER 2019
$87.44
$80.36
$79.05
$91.00
$86.19
$85.16
$121.22
$98.96
$91.80
$95.96
$97.29
$85.11
$0
$20
$40
$60
$80
$100
$120
$140
FY20FY21FY22
$/MWh
Financial Year
AS AT 31 DECEMBER 2018AS AT 30 JUNE 2019AS AT 30 SEPTEMBER 2019AS AT 31 DECEMBER 2019

> NATIONAL CONSUMPTION (NON-TEMPERATURE ADJUSTED)
Source: Transpower Information Exchange
> AUCKLAND CLIMATE SUMMARY ( ⁰C)
FINANCIAL YEAR
Q1Q2Q3Q4
202012.316.7--
201912.116.320.214.1
201812.317.220.714.3
201712.116.119.314.3
201611.416.020.615.3
Historical Average (since 1999)11.916.119.414.2
Source: Met Service
> MONTHLY TOTAL CONSUMER RETAIL SWITCHING (ICPs)
Source: Electricity Authority
MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE06
8,550
8,609
8,257
8,541
8,270
8,481
1,252
1,265
1,264
1,263
1,316
1,310
0
2,000
4,000
6,000
8,000
10,000
12,000
Q2 2015Q2 2016Q2 2017Q2 2018Q2 2019Q2 2020
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-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
Jul-18
Jan-19
Jul-19
% Churn
Monthly ICPs
NZ MARKET CHURN (LHS)
ANNUAL NZ MARKET CHURN % (RHS)