Mighty River Power Quarterly Business Update up to June 2012

Mighty River Power Quarterly Business Update for the Three Months Ended 30 June 2012

Quarterly Highlights

• Retail electricity sales volumes increased on the prior comparable period (pcp), reflecting a 29% lift in commercial sales volumes
• Generation volumes fell 145GWh, reflecting 24% lower hydro generation which was partly offset by increased generation by the Southdown gas-fired station on pcp
• More than 99% availability from base-load geothermal plants over the quarter
• Significant wholesale price separation between the North and South Islands influencing higher wholesale electricity purchase prices

Commentary
Mighty River Power’s customer sales volumes were up 12% on pcp for the three months to 30 June 2012. In the year to 30 June 2012, the Company achieved a 5% increase in sales volumes, despite customer numbers falling by 6,000 over the year.

“The growth in sales volumes was driven by our continued strong sales performance – with a 29% lift in commercial sales volumes on pcp and a 14% lift over the 12 months,” said Chief Executive Doug Heffernan.

Market conditions resulted in wholesale purchase costs moving from $47.44/MWh to $113.36/MWh, whilst generation prices increased from $45.67/MWh to only $99.92/MWh. Limited transmission capacity (in advance of the HVDC upgrade), poor South Island hydrology and South Island reserve offers all contributed to greater wholesale price separation between the North and South Islands during the period.

Total generation volumes were down 8% (145GWh) on pcp, with hydro generation down by 24% (from 1,190GWh to 905GWh).

“Inflows to the Waikato River catchments were not at the extraordinary levels of Autumn/Winter 2011, which explains the large fall in volumes quarter-on-quarter following a strong first nine months,” said Dr Heffernan.

Gas-fired generation volumes were up significantly on pcp – with a more than five-fold increase for the quarter as the Company continued to use the flexibility in its Southdown gas-fired plant to take advantage of the high wholesale market prices.

“Geothermal generation was broadly flat at 556GWh with the impact of the sale of a 10% interest in the Nga Awa Purua plant in early April, mostly offset by high availability factors across geothermal stations of 99.7%.“

The Company’s wholesale market net position for the quarter was slightly short at 34GWh; with the Net Contracts for Difference (CfD) position falling by 104GWh.

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ENDS

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