Meridian Energy delivered record first-quarter generation on the back of exceptionally strong hydro inflows and storage, although abundant supply drove sharply lower realised prices. Retail volumes weakened in September, while FY27 capital expenditure guidance remained unchanged at $370 million to $410 million.
- Q1 generation up 18.9% year on year to 4,161 GWh
- Q1 inflows reached 154% of the historical average
- Average generation price fell 64.3% year on year
- September retail sales volumes declined 6.4%
- FY27 capital expenditure guidance held at $370 million to $410 million
Record generation meets a much softer price environment
Meridian Energy Limited (NZX:MEL, ASX:MEZ) generated a record 4,161 GWh in the first quarter, up 18.9% from a year earlier, as unusually strong water conditions kept its hydro fleet running hard. But the benefit came with a sharp price trade-off: the average price received for physical generation fell 64.3% year on year to $47.1/MWh.
September captured the pattern in concentrated form. Total generation rose 17.6% to 1,358 GWh, with hydro output up to 1,183 GWh from 931 GWh a year earlier, while wind generation declined. The average generation price fell 76.5% to $25.8/MWh, and the average price paid to supply retail customers dropped 69.4%.
Inflows remain elevated as national storage retreats
Meridian’s combined inflows reached 150% of the historical average in September and 154% for the quarter. Waitaki catchment storage stood at 183% of average at the end of September, while Waiau storage was 133% of average. The figures extend the run of unusually favourable hydro conditions covered in the August hydro update, when national storage had reached 155% of its historical average.
Storage has nevertheless started to come down. National hydro storage fell from 155% of average on 7 September to 121% by 12 October, with South Island storage at 133% and North Island storage at 78%. Snow storage in the Waitaki catchment was 102% of average in early October, giving the seasonal picture some support without removing the importance of future rainfall and inflows.
Retail volumes fall while customer migration passes 245,000
Retail sales volumes fell 6.4% in September compared with the same month last year. Agricultural sales dropped 21.4%, residential sales declined 9.4% and corporate sales fell 10.6%, partly offset by higher volumes in small and medium business and large business. For the quarter, retail volumes were down 3.0%, even as the average retail contracted sales price rose 1.1%.
Customer connections increased 0.03% during September, although they remained 0.9% below the level a year earlier. More than 245,000 customers have now migrated to Meridian’s Kraken platform, marking a significant implementation milestone even as the overall customer base remains under pressure.
Capital programme stays within unchanged guidance
Meridian left its FY27 total capital expenditure guidance unchanged at $370 million to $410 million. The range includes $110 million to $120 million of stay-in-business spending, $220 million to $250 million of growth expenditure and $40 million for repowering.
Quarter-one capital expenditure was $84 million, up 93.9% from the prior-year period, including $66 million of investment capital expenditure. The combination of elevated generation, lower market prices and a heavier early-year investment run makes the next operating updates important: storage levels, realised prices and expenditure pacing will determine how much of the strong hydro position translates into financial performance.
Bottom Line?
Meridian enters the rest of FY27 with plentiful water and strong generation, but the central question is whether lower wholesale prices will absorb much of that operational advantage.
Questions in the middle?
- How quickly will national storage normalise, particularly in the North Island?
- Can Meridian preserve generation margins if wholesale prices remain subdued?
- Will the higher first-quarter investment run develop into spending at the upper end of FY27 guidance?