Meridian Energy Ltd (NZX: MEL; ASX: MEZ) had another difficult month in February despite growing its customer base strongly, Forsyth Barr broker Damian Foster said yesterday.
The overall performance was “slightly weak” as Meridian decided to hold back water. Forsyth Barr estimated Meridian was short by about 11 GWh of generation, not much. It was not unusual for Meridian to run its book short, he said.
“Meridian has some catching up to do in the coming months to hit our 2018 financial year target.”
Forsyth Barr was forecasting an operating profit of $635 million for the full year. The second-half New Zealand energy margin was tracking about $14 M below the previous corresponding period.
March and April last year were strong months and Foster was predicting a flat second-half performance by Meridian. But with lake levels back to normal, the company was in a much better position to hit the target.
The company added nearly 1,900 customers in February. Retail sales volumes fell 13% to 438 GWh, something expected following the significant drop in irrigation load.
With low margin volumes from irrigation and corporate customers falling, the average selling price increased 3%.
The Australian business was “solid,” Foster said.
Australian retail sales increased 15% due mainly to customer growth.
Meridian chief executive Neal Barclay said in a release to the NZX that national hydro storage for the month ended March 11 increased from 92% to 107% of historical average. South Island storage sat at 100% of average and North Island storage was 158% of average on March 11.
Meridian's February monthly inflows were 148% of historical average. The Waitaki catchment storage at the end of February was 96% of historical average and the Waiau catchment storage was above average in the period.
Demand in the last 12 months was 1.1% higher than the preceding 12 months, he said.
The average load in February from New Zealand Aluminium Smelter's Bluff smelter was at the 572 GWh base quantity of the agreement.
The company's earnings fell in the final six months of 2017, largely reflecting reduced hydro generation caused by an extended period of dry weather that only broke when large rain dumps arrived in the southern lakes during ex-cyclone Fehi, which hit NZ in late January and early February.
In late January, Fehi slammed most of the country and led authorities to declare a state of emergency and ask people to avoid travelling by road in some parts of the South Island. Later that month, ex-cyclone Gita brought more rain, causing heavy flooding in some areas.
Barclay said national electricity demand in February was 2.4% lower than the same month a year earlier, with all the reduction being seen in the South Island. So far this financial year, which ends June 30, retail sales volumes are 7.1% higher than the same period last year.
In the financial year to date, Meridian's NZ generation was 15.4% lower than the same period last year, reflecting lower hydro generation and lower wind generation.
The average price Meridian received for its generation in February was more than 53% higher than the same month last year. The average price Meridian received for its generation so far this financial year was 114.4% higher than the pcp, Barclay said.
*Dene Mackenzie is business editor of the Otago Daily Times.