Mercury NZ trimmed its full-year earnings guidance for a second time in two months, citing declining hydro-electric water storage in the North Island and demand reductions due to covid-19.
The electricity generator and retailer said it expects full-year earnings of about $490 million before interest, tax, depreciation, amortisation and changes in financial instruments.
That is $10 million less than forecast in February and assumes hydro generation of about 3,800 gigawatt-hours of electricity in the year ending June 30, 100 GWh less than the earlier forecast.
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Mercury said the revised forecast also reflects a "preliminary assessment" of the covid-19 impact, which has reduced national electricity demand by about 15 percent since the March 26 lockdown.
"Mercury remains alert to possible financial impacts that may arise from covid-19 and continues to closely monitor key indicators including changes in customer consumption, debtor payments and our ability to progress suspended works such as our Turitea wind farm development."
The company's shares rose 1.8 per cent to $4.48, trimming their loss so far this year to 11 per cent.
While generation and retailing are essential services, work on the company's $464 million Turitea wind farm near Palmerston North has been halted, as has drilling at the Rotokawa geothermal field.
The country's third-largest electricity retailer typically generates two-thirds of its power at nine power stations on the Waikato River and benefited from record inflows in 2017 and 2018.
Storage in Lake Taupo, at the head of that generation chain, started 2020 near a three-year high but has fallen sharply during the past three months. It is at its lowest since July and in line with where it was this time last year.
Mercury noted that the high storage at the start of the year enabled it to lift its March-quarter hydrogeneration to 839 GWh, 10 percent more than a year earlier. Geothermal generation was barely changed at 658 GWh.
But above-average storage on the South Island throughout the quarter capped wholesale power prices, despite constraints on the high-voltage transmission link between the two islands and restricted gas supplies.
Mercury's power stations earned an average $86.99 per megawatt-hour in the quarter, down from a record $160.83/MWh a year earlier.
Despite the hydro boost in the quarter, the firm's total generation volume for the nine months ended March was down almost 6 percent at 4,926 GWh, while its average generation price was 27 percent lower at $106.08/MWh.
Mercury supplied about 353,000 customers at March 31, down from 379,000 a year earlier.
Mass-market volumes were 11 per cent lower at 602 GWh in the quarter, but the firm received $128.54/MWh on those sales, 3 per cent more than a year earlier.
Sales to commercial customers and industrial sites increased 17 per cent to 409 GWh, with those customers on average paying $97.92/MWh, 14 per cent more than a year earlier.