Meridian Energy's December 2025 report reveals robust hydro storage and inflows driving higher generation and retail sales, while wholesale prices remain subdued. Customer connections have surged nearly 20% year-on-year, positioning the company strongly for 2026.
- Hydro inflows at 144% of historical average for financial year to date
- Generation volumes up 13% compared to last year
- Retail sales volumes increased by 12%, with customer connections growing 19.5%
- Wholesale electricity prices halved year-on-year due to abundant hydro storage
- Operating costs rose 13.7% while capital expenditure dropped 26.2%
Strong Hydrological Conditions Bolster Meridian's Output
Meridian Energy Limited has kicked off 2026 in a commanding position, buoyed by a wet spring and early summer that have significantly boosted hydro storage levels. The company’s December 2025 monthly operating report highlights total inflows at 123% of historical averages for the month, with the financial year to date inflows reaching 144%, the second highest on record for the July to December period.
These exceptional inflows have translated into elevated water storage across key catchments, with the Waitaki catchment at 138% and Waiau at 131% of historical averages by the end of December. Snowpack levels also remain well above average, further underpinning hydro generation potential.
Generation and Retail Sales Climb Amid Lower Wholesale Prices
Meridian’s generation volumes rose 13% compared to the same period last year, driven by both hydro and wind assets. Despite this increased output, the average wholesale generation price plummeted to under $7 per megawatt hour in December, roughly half the level seen in the prior year’s corresponding period. This price drop reflects the abundant supply and aligns with market expectations of a well-functioning wholesale electricity market.
On the retail front, Meridian’s sales volumes grew 12% year-on-year, supported by a 19.5% increase in customer connections. Residential segment sales surged by over 26%, partly due to the integration of former Flick customers, while small and large business segments also saw healthy gains. This growth in customer base and consumption signals strong demand fundamentals despite the lower wholesale price environment.
Operational Costs and Capital Spending Trends
While operating costs increased by 13.7%, Meridian managed to reduce capital expenditure by 26.2%, reflecting a strategic shift in investment focus. The company’s ability to control capital outlays amid rising costs will be closely watched by investors as it balances growth with financial discipline.
Market and Weather Outlook
National electricity demand rose 4.3% in December compared to the previous year, with notable increases in industrial load, including New Zealand Aluminium Smelters Ltd. The weather outlook for summer 2026 anticipates ENSO-neutral conditions, suggesting warmer temperatures and variable rainfall, particularly in the South Island. These factors will be critical in shaping hydro inflows and market dynamics in the months ahead.
Meridian’s strong operational performance, underpinned by favourable weather and growing retail demand, positions it well to navigate the evolving energy landscape. However, the interplay of weather variability, wholesale price fluctuations, and cost management will remain key areas to monitor.
Bottom Line?
Meridian’s robust hydro position and expanding customer base set the stage for a pivotal 2026, but weather and market shifts could test resilience.
Questions in the middle?
- Will Meridian sustain its retail growth momentum amid evolving market competition?
- How will ENSO-neutral conditions impact hydro inflows and generation in the coming quarters?
- Can Meridian manage rising operating costs while maintaining disciplined capital expenditure?