Highlights

  • Elevated hydro inflows lowered spot electricity prices and influenced quarterly market dynamics.
  • Above-average Taupō storage supported portfolio positioning entering the third quarter.
  • Ngā Tamariki OEC5 commissioning commenced, indicating potential generation variance to guidance.

Mercury (NZX:MCY) quarterly operational update for the three months ended 31 December 2025 reflects the significant impact of hydrological conditions on New Zealand’s electricity market. National hydro inflows reached the 98th percentile during the quarter, contributing to lower wholesale electricity spot prices. Average Auckland spot prices were NZD 40 per MWh, while forward prices for FY26 eased to around NZD 135 per MWh as storage levels remained above seasonal norms.

Electricity demand nationally increased by 3.1% compared with the prior corresponding period (PCP). This rise was largely linked to the New Zealand Aluminium Smelter returning to standard operating levels following earlier demand response curtailments. From a market perspective, the quarter highlighted how quickly pricing expectations can shift when supply-side conditions change materially.

Hydro and Generation Mix Developments
In the Waikato catchment, inflows measured at the 88th percentile, supporting hydro generation of 1,072 GWh for the quarter. This represented an increase of 200 GWh, or 23%, compared with PCP. Elevated inflows also resulted in hydro spill of approximately 345 GWh to manage lake levels, with Taupō storage ending the period above average.

Wind generation increased by 32 GWh, or 6%, relative to PCP, reflecting favourable conditions. In contrast, geothermal generation declined by 50 GWh, or 9%, to 539 GWh. This reduction was primarily due to a planned maintenance outage at Ngā Awa Pūrua, scheduled during a period of lower spot prices and completed on time and within budget.

Commercial Portfolio and Customer Trends
Commercial and Industrial (C&I) yields, covering both physical supply and end-user contracts for difference, declined by NZD 3.2 per MWh compared with PCP. Physical C&I yields were affected by contract repricing aligned to a lower 2026 forward curve, while end-user CfDs reflected the impact of newly signed long-term agreements.

Customer data showed an increase in bundled product adoption, with connections holding two or more products rising by 10% to 223,000. Telco and mobile connections increased by 30,000 compared with PCP, indicating continued diversification across services.

Geothermal Expansion Nears Completion
The Ngā Tamariki OEC5 geothermal expansion moved into the commissioning phase in January. Once fully commissioned, expected by the end of Q3, the project is designed to add 390 GWh of annual generation and 46 MW of net output. From an observer’s standpoint, the timing of commissioning amid lower spot prices underscores the variability inherent in aligning new capacity with market cycles.

Share Performance
MCY shares slipped 0.46% today, trading at NZD 6.47 at the time of writing on 21 January.