Three months ended 30 June 2020
BUSINESS ACTIVITY RESUMES, REFURBISHMENT COMPLETED AT WHAKAMARU AND ARATIATIA
Mercury successfully executed a staged return to normal operations in Q4-FY2020, following the nationwide COVID-19
lockdown, with office-based staff returning and construction resuming at the Turitea wind farm. Maintenance at our
generation sites continued with major refurbishments completed at Whakamaru and at Aratiatia early in July.HYDRO GENERATION LOWER DUE TO DROUGHT; GEOTHERMAL STEADY
Mercury's hydro generation decreased from 796GWh in Q4-FY2019 to 727GWh in the most recent quarter due to exceptionally
dry hydrology with Q4-FY2020 Waikato catchment inflows at the 1st percentile1. Low rainfall in the quarter continued a
sequence of low hydrological conditions with inflows in H2-FY2020 also being at the 1st percentile2, resulting in
full-year hydro generation decreasing from 4,006GWh in FY2019 to 3,712GWh in FY2020. Lake Taupo hydro storage tracked
below-average during the quarter ending at 193GWh, 82GWh below average3.
Geothermal generation was maintained at 671GWh in Q4-FY2020 versus 679GWh in the same quarter in FY2019 seeing full year
geothermal production 3% lower than FY2019 due to major maintenance.SALES YIELDS LIFT AS MERCURY FOCUSES ON CUSTOMER VALUE
Mercury's customer value focus saw Commercial & Industrial segment sales volumes increase from 666GWh in Q4-FY2019 to 731GWh in Q4-FY2020 with the average sales yield
(including both physical and financial sales) also lifting by 8.3% (from $86/MWh to $93/MWh). The Mass Market segment
yield increased by 6.4% from $128/MWh to $136/MWh with reduced acquisition activity resulting in lower volumes.POST-LOCKDOWN SPOT PRICES REFLECT RETURN TO NORMALITY AND DECLINING NATIONAL HYDRO STORAGE
Demand in the most recent quarter decreased by 4.2% on a temperature-adjusted basis (4.8% on an unadjusted basis) due to
the COVID-19 lockdown. National demand was 14% lower than the pcp in April, when activity restrictions were most severe,
but returned to similar levels to the pcp in May and June as lockdown restrictions eased.
Spot prices in the quarter followed demand, being significantly below-average at $48/MWh at Otahuhu and $42/MWh at
Benmore in April. The easing of lockdown restrictions combined with declining national hydro storage saw spot prices
recover strongly, resulting in a quarterly average spot price of $115/MWh in Auckland, in line with the prior comparable
period.HIGH FUTURES PRICES CHECKED BY TIWAI EXIT ANNOUNCEMENT
As at 30 June, FY2022 futures were $96/MWh and $80/MWh at Otahuhu and Benmore. Following the announcement of the Tiwai
aluminium smelter exit, FY2022 futures have reduced to $79/MWh and $53/MWh respectively, severely impacting the South
Island due to known transmission constraints.
1 For quarters ended 30 June since 1927
2 For 6-monthly periods ended 30 June since 1927
3 For quarters ended 30 June since 1999