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21 Apr 2018 19:42
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  •   Home > News > Business

    Better rainfall improves gentailer outlook

    Favourable rainfall across New Zealand has improved the outlook for the electricity sector according to the latest operating metrics lodged with the NZX.

    17 April 2018

    Favourable rainfall across New Zealand has improved the outlook for the electricity sector according to the latest operating metrics lodged with the NZX.

    "Hydro conditions have been pretty favourable, which has been an ongoing story for the North Island for a long time and the South Island has recovered, so that's probably the key thematic coming through, along with pretty stiff retail competition," said Forsyth Barr analyst Andrew Harvey-Green.

    Mercury New Zealand joined Contact Energy, Genesis Energy, Meridian Energy and Trustpower in lodging its latest operating metrics, lifting its annual earnings guidance for the third time as wet weather continues to benefit the electricity gentailer.

    Mercury said large inflows associated with cyclones Fehi and Gita suppressed wholesale prices and pushed national hydro storage to 114 per cent of average by the end of the quarter and the favourable hydrological conditions saw it lift its full-year hydro generation forecasts to 4,700GWh, up 150GWh due to continued wet weather in the Taupo area.

    Mercury also said, however, customer numbers decreased by 2,000 over the quarter to 391,000 due to intense retail competition with 48 retail brands now competing in the New Zealand market, up 12 from the previous year.

    Last week, Wellington-based Infratil said annual earnings were at the top end of guidance thanks to a return to normal rainfall for Trustpower's Hydro scheme. Trustpower's total overall electricity connections have dropped 1.1 per cent to 273,000 due to Trustpower losing a small number of commercial customers with a large number of connections, it said.

    Genesis' operating metrics also show it is continuing to benefit from the heavier rain on the North Island. The Tekapo lake ended the March quarter on 122 per cent average.

    For electricity generators who are more dependent on South Island rainfall, things are also improving after a dry spring and summer left hydro-lakes at below average levels.


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