Meridian Energy Sees 11% Retail Sales Rise and Revises FY26 Capex to $280-$310 Million

Retail Demand Climbs Amidst Falling Prices

Meridian Energy (NZX:MEL) has reported a striking 11.4% increase in retail sales volumes for March 2026 compared to the same month last year, driven by surges across residential (+27.8%), agriculture (+30.7%), and large business (+14.1%) segments. This growth comes despite a 53.3% plunge in the average price paid to supply customers, highlighting a dynamic market where volume gains are offset by lower prices.

Customer connections have also expanded, with a 17.7% rise year-on-year, underscoring Meridian’s expanding footprint in New Zealand’s electricity retail market. This momentum aligns with the company’s CEO Mike Roan’s observation that demand is rising, even as power prices soften.

Hydro Storage Holds Firm with Regional Divergence

Hydro storage remains a pillar of Meridian’s operational strength. National storage levels stood at 106% of historical averages as of mid-April, down slightly from 110% in early March but still robust. Notably, the North Island’s hydro storage surged to 180% of average, a stark contrast to the South Island’s 97%. Meridian’s Waitaki catchment storage was near average at 99%, while Waiau lagged at 73%.

These figures come despite March’s total inflows being only 74% of historical averages, balanced by strong cumulative inflows for the financial year to date at 123%, the sixth highest on record. The hydrological picture remains fluid, with weather patterns including a subtropical low in late March boosting rainfall in the upper North Island.

Electricity Prices Slide Amid Renewables Expansion

ASX electricity futures prices continued their downward trajectory through the March quarter, reflecting the market’s anticipation of increased renewable generation capacity and system security agreements such as those for Huntly power station. Futures prices for 2026 delivery periods fell significantly, a trend Meridian’s CFO Mandy Simpson linked to “massive ongoing investment” in renewables driving affordability.

Generation volumes tell a mixed story: Meridian’s total generation rose 30.7% year-on-year in March, buoyed by higher hydro output though offset by lower wind generation. However, the average price received for this generation halved compared to last year, a sharp contraction that will weigh on revenue despite volume gains.

Capital Expenditure Guidance Revised Lower

In response to evolving market conditions, Meridian trimmed its FY26 capital expenditure guidance to between $280 million and $310 million, down from a previous range of $330 million to $360 million. This reduction primarily affects investment capital expenditure, while stay-in-business capex remains steady at $100 million to $110 million.

The company’s operating costs increased modestly, with total operating costs up 4.9% and capital expenditure soaring 182.6% compared to the prior quarter, reflecting ongoing investment despite the downward revision.

What Lies Ahead for Meridian and the Market?

Meridian’s report paints a picture of a company navigating a complex energy landscape: strong demand and hydro resources buttress operations even as electricity prices fall amid a renewable buildout. The significant drop in average generation prices raises questions about future profitability and contract pricing strategies, especially as the company adjusts capex plans.

Investors will be watching whether the company’s strong retail growth can offset margin pressures and how hydro inflows and weather patterns evolve through the winter months. The continuing slide in ASX futures prices also signals broader sector challenges as New Zealand’s energy transition accelerates.