Highlights

  • Meridian recorded above-average hydro inflows, contributing to lower wholesale electricity prices in December.
  • Generation and retail sales volumes increased year-on-year, alongside higher customer connections.
  • MEL shares declined on the day, extending weaker performance over six and twelve months.

Meridian Energy Limited (NZX:MEL)’s monthly operating report for December 2025 highlights the impact of elevated rainfall and inflows across its hydro catchments. A wetter-than-average spring and early summer led to sustained inflows, resulting in national hydro storage remaining well above historical norms through early January 2026. By 12 January, national storage eased from 153% to 115% of average, while South Island and North Island storage stood at 113% and 126% of average, respectively.

Meridian’s total inflows for December were 123% of historical averages, with year-to-date inflows reaching 144%, marking the second-highest July-to-December inflow period on record. The Waitaki and Waiau catchments both recorded materially above-average water storage and inflows, supported by snow storage levels that also exceeded long-term norms.

Pricing pressure from excess supply
Higher inflows translated into increased generation and extended spill periods across key catchments. This contributed to lower wholesale electricity prices during December. Meridian’s average generation sales price fell to below NZD 70 per MWh for the month, while the average price for the first half of the financial year was NZD 77 per MWh, approximately half the level recorded in the comparable prior-year period.

From an analytical perspective, the data reflects how sustained hydro availability can weigh on near-term pricing, even as generation volumes rise. Futures electricity prices also declined during the second quarter, reinforcing the downward price environment.

Demand and retail activity
National electricity demand increased 4.3% year-on-year in December and 5.6% in Q2. Meridian’s generation volumes were 13% higher in the first half of the financial year compared with the prior year, while retail sales volumes increased 12% over the same period. Customer connections were 19.5% higher than in December 2024.

Segment-wise, residential sales rose sharply, influenced in part by the inclusion of former Flick customers. Small and medium business, along with large business segments, also recorded increases, while agriculture and corporate segments declined modestly.

Costs, investment, and share performance
Compared with Q2 last year, total operating costs increased 13.7%, while capital expenditure declined 26.2%. This divergence suggests a period of lower investment activity alongside higher operating intensity.

MEL closed at NZD 5.55 on 21 January, down 2.46% on the day. The stock has edged up 0.18% over the past month but remains down 3.81% over six months and 5.29% over the past year, indicating subdued market sentiment despite higher operational volumes.