“Managing affordability will be a key challenge as the transition progresses, and Mercury will continue to work with the sector, community, Government and others on this,” he said.
For the six months ending December, Mercury said its net profit was $174 million, down $65m on the prior comparable period because of higher depreciation, interest charges and net changes in fair value.
In a conference call, Hawksworth said the April price hike would be in response to significantly higher costs faced by the company, and a sustained increase in wholesale prices.
He said the increases would differ from region to region.
“A certain number of our customers are contracted and they are quite region-specific.
“Depending on the regions, they (the increases) will be [in a typical range of] 5 to 8 per cent overall.
“It’s just reflective of the situation that the industry finds itself in, with input costs, inflation costs, and so forth,” Hawksworth said.
On Monday, Contact Energy said it was warning consumers they face significantly higher power bills from April 2025, when new regulated line charges kick in, on top of inflation-linked increases.
Mercury’s earnings (ebitdaf) came in at $434m, $17m down on the prior comparable period.
Looking ahead, Mercury raised its full year ebitdaf guidance to $880m from $835m, mostly due to better pricing in its generation and wholesale segment.
Mercury said new wind generation coming online helped boost earnings over the half year, as did higher prices.
The company’s wind generation increased more than 40 per cent to 1109 gigawatt hours, with Turitea South making a full contribution and the commissioning of the Kaiwera Downs 1 wind farm.
Operational expenditure was up $31m to $191m, mainly due to increases in employee-related expenses and maintenance expenses mostly from wind contracts.
Stay-in-business capital expenditure for the period was $60m (up $29m). Growth capital expenditure was $70m (up $26m) and largely related to construction costs incurred for the addition of a fifth unit at the Ngā Tamariki geothermal station and completion of the Kaiwera Downs 1 wind farm near Gore.
Net debt was $1983m, up $76m primarily due to higher interest and tax paid combined with a lift in capital expenditure on new generation projects and geothermal drilling.
New generation
Hawksworth said business activity over the period was focused on executing against Mercury’s commitment of up to $1 billion in investment over the financial year to generation development for the next three years.
Two of the three major projects previously signalled are expected to meet this timeframe.
“Overall, we’re pleased with progress to date. We committed $220m in September to build a fifth generating unit at our Ngā Tamariki geothermal station, which will add another net 46 megawatts [MW]. We’re also at the advanced stages of approving the development of the 155MW Kaiwera Downs 2 wind farm,” he said.
The third signalled project, the Kaiwaikawe wind farm, is experiencing delays related to procurement and construction logistics, which will likely delay construction commencement into FY25.
Following the period’s end, Mercury also asked for expressions of interest for an offtake agreement for 100MW of solar energy, commencing in 2026.
During the six months, Mercury continued its integration of Trustpower’s retail business, which it purchased in May 2022.
Mercury said it was on track to realise the integration synergies previously forecast, with the majority expected in the next financial year.
The board declared a fully imputed interim dividend of 9.3 cents per share, up almost 7 per cent on the HY23 dividend. The full-year dividend guidance is unchanged at 23.3 cents per share expected to be the 16th consecutive year of ordinary dividend growth.
- additional reporting Jamie Gray
- BusinessDesk
