Weather impacts Mercury

Mercury says the wettest July to March period ever meant hydro generation was up 367GWh, its total connections lifting to 11,000 in the three months ended March 31, 2023.

“Inflows into the Waikato catchment remained very high for the quarter on the back of Cyclone Hale and the tropical atmospheric river experienced over Auckland Anniversary weekend,” says Mercury in its quarterly operational update.

“This continued a trend of very wet conditions since the start of the financial year, with the inflow sequence since 1 July 2022 remaining the wettest on record.

“Hydro generation was 1220GWh for the three months ended 31 March 2023, up 367GWh (43%) on the prior comparable period, reflecting the high inflows.

‘Hydro spill was approximately 160GWh for the quarter and circa 850GWh since 1 July 2022 to maintain lakes within normal operating ranges.”

Mercury adds that electricity futures prices remain elevated at around $170/MWh out to CY26, mainly due to low South Island inflows.

“National inflows were below average for the quarter, driven by South Island inflows being at the lower quartile for the period.

“This reflected in electricity spot prices firming since last quarter, averaging $142/MWh and $86/MWh in Auckland for the quarter and the financial year to date respectively.

“Forward prices remain high but have moderated to around $170/MWh in Auckland for calendar years 2024 – 2026, reflecting a reduction in thermal generation costs.

February’s Cyclone Gabrielle impacted national demand.

“National demand reduced 1.1% relative to the prior comparable period and is at the lowest level for Q3 since financial year 2009,” says Mercury.

“The reduction in national demand was driven mainly by lower industrial load, partly contributed to with reduced consumption by the ex-refinery at Marsden Point.

“Cyclone Gabrielle also impacted on demand due to network outages and flooding damage, including Pan Pac and Ravensdown facilities based in Hawke’s Bay.”

The strong hydro generation for the quarter was slightly offset by geothermal unplanned outages, according to Mercury.

“Geothermal generation was 596GWh for the quarter, down 57GWh on the prior comparable period due mainly to unplanned outages at Kawerau and Rotokawa.

“Wind generation was down 0.9% for the quarter due mainly to lighter wind conditions.

“For the financial year, we are forecasting hydro generation of 5100GWh. Higher financial year 2023 hydro generation is forecast to be largely offset by impacts of the Kawerau outage with a return to service scheduled for early June.”

Mercury’s update now includes the impact of the Trustpower retail and NOW businesses resulting in higher mass market connections, volumes and prices relative to the prior comparable period.