Meridian Energy’s February 2026 report reveals below-average hydro inflows but robust water storage and growing retail customer base, highlighting resilience amid weather challenges and market fluctuations.
- February inflows at 72% of historical average, first below-average month in six
- National hydro storage remains strong at 110% of average
- Retail customer connections up 2.1% month-on-month, nearly 20% year-on-year
- Generation increased 5.2% year-on-year, driven by hydro and wind
- Retail sales volume down 2.7% year-on-year with mixed segment performance
Hydro Inflows and Storage Levels
Meridian Energy’s latest monthly operating report for February 2026 paints a nuanced picture of New Zealand’s electricity landscape. While the company recorded its first below-average hydro inflows in six months, 72% of the historical average, overall water storage remains robust at 110% of the long-term average. This strong storage position, particularly with the North Island at 169% of average, provides a buffer heading into the autumn months, despite the South Island’s storage dipping closer to average levels.
Weather Impact and Operational Challenges
The month was marked by the "Valentine’s Storm," a deep low-pressure system that brought widespread rainfall across much of the country, although inland South Island areas remained notably drier. February 2026 was also the coolest February since 2012, factors that influenced both inflows and electricity demand. Compounding operational challenges, outages on the HVDC link between 15 February and 2 March limited inter-island electricity transfers, potentially affecting supply dynamics.
Retail Growth Amid Mixed Sales Volumes
Despite a 2.7% decline in retail sales volume compared to February 2025, Meridian’s retail business continues to gain momentum. Customer connections increased by 2.1% during the month, pushing year-on-year growth close to 20%. Segment analysis reveals strong gains in residential (+27.9%), small-medium business (+9.2%), and large business (+17.6%) sales, while agricultural sales fell sharply by 36.6%, and corporate sales dipped slightly by 3.6%. This divergence suggests shifting demand patterns across sectors.
Generation and Pricing Trends
Generation volumes rose 5.2% year-on-year, boosted by both hydro and wind output. However, average prices received for generation and paid for supply plunged by over 80% compared to the same month last year, reflecting broader market price adjustments. National electricity demand was marginally lower than the previous year, down 0.5%, while New Zealand Aluminium Smelters Ltd increased its average load to 576MW, up from 545MW a year ago.
Financial and Operational Outlook
Meridian’s report also details capital expenditure and hedging activities, underscoring ongoing investments and risk management amid volatile market conditions. While the company’s strong water storage and retail growth provide a solid foundation, the impact of HVDC outages and sector-specific sales declines warrant close monitoring as the year progresses.
Bottom Line?
Meridian’s solid storage and retail gains cushion near-term challenges, but sector shifts and infrastructure issues loom.
Questions in the middle?
- What are the underlying causes of the sharp decline in agricultural retail sales?
- How will HVDC link outages affect Meridian’s supply reliability and financial performance going forward?
- Can Meridian sustain retail growth amid falling sales volumes and volatile market prices?