Mercury NZ : Quarterly Operational Update

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ABOUT MERCURY NZ LIMITED

STOCK EXCHANGE LISTINGS: NEW ZEALAND (MCY) / AUSTRALIA (MCY)

NEWS RELEASE

Quarterly Operational Update

19 April 2022 - Attached is Mercury's Quarterly Operational Update for the 3 months ended 31 March 2022.

ENDS

Howard Thomas

General Counsel and Company Secretary Mercury NZ Limited

Mercury's mission is energy freedom. Our purpose is to inspire New Zealanders to enjoy energy in more wonderful ways and our goal is to be New Zealand's leading energy brand. We focus on our customers, our people, our partners and our country; maintain a long-term view of sustainability; and promote wonderful choices. Mercury is energy made wonderful. Visit us at:www.mercury.co.nz

QUARTERLY OPERATIONAL UPDATE

Three months ended 31 March 2022

>> QUARTERLY HIGHLIGHTS

NATIONAL INFLOWS AT 8TH PERCENTILE,

TAUPO LAKE LEVEL REMAINS

1,654GWh BELOW AVERAGE

ABOVE AVERAGE LEVELSC&I YIELDS UP 14% VERSUS PCP, PHYSICAL SALES INCREASE TO REPLACE

NORSKE SKOG CfD VOLUMES

>> COMMENTARY

HYDRO GENERATION LOWER DUE TO DRY WEATHER; LAKE TAUPO STORAGE CONSERVED LEADING INTO WINTER MONTHS

Mercury's hydro generation decreased by 57GWh versus the prior comparable period as inflows into Lake Taupo trended below average at the 19th percentile1, 175GWh below average1. During the quarter, record low inflows in January were offset by a rain event associated with Cyclone Dovi in mid-February. The Taupo lake level started and ended the last quarter above average, closing at 58% full, 66GWh above average2.

Geothermal generation remained steady at 653GWh in FY2022-Q3 (versus 658GWh in FY2021-Q3) and spot price linked wind generation, from Mercury's Turitea North wind farm, was 99GWh. Generation from PPA-linked wind farms was 226GWh.

DECLINING NATIONAL HYDRO STORAGE LIFTS SPOT PRICES

Conditions were dry across both the North and South Islands as 8th percentile1 inflows saw national hydro storage end the quarter 309GWh below average. South Island inflows were particularly affected with record low inflows in both the January and March months. This was reflected in elevated spot prices in FY2022-Q3 of $176/MWh at Otahuhu and $149/MWh at Benmore, down from $206/MWh and $203/MWh respectively in the prior comparable period but still above historical averages.

FUTURES PRICES LIFT DUE TO FUEL CONSTRAINTS; LONGER-DATED FUTURES REFLECT THERMAL FUEL COST PRESSURES

Futures prices responded strongly to dry hydrological conditions with the FY2022 price increasing at Otahuhu and Benmore from $125/MWh and $103/MWh respectively to $167/MWh and $143/MWh across the quarter. Longer-dated futures also increased with the Otahuhu FY2023 and FY2024 futures lifting by $47/MWh and $34/MWh respectively to $191/MWh and $163/MWh, reflecting increased expectations of thermal costs with carbon prices remaining at historically high levels of ~$75/NZU.

COMMERCIAL & INDUSTRIAL PHYSICAL SALES LIFT TO REPLACE VOLUME FROM NORSKE SKOG SETTLEMENT

The Commercial & Industrial segment average yield (including both physical and financial sales) increased by 14% from $94/MWh in FY2021-Q3 to $107/MWh in FY2022-Q3 due to re-contracting and the early termination of a CfD with Norske Skog Tasman. CfD sales volumes decreased by 127GWh, from 381GWh in FY2021-Q3 to 254GWh in the current quarter, but were offset by an increase in physical sales of 118GWh, from 477GWh to 595GWh.

Mercury continues to look to maintain market share, however mass market customer numbers declined in the quarter, from 327,000 to 324,000, reflected in Mass Market sales volumes decreasing from 544GWh to 528GWh. Mass market yield increased by 2%, from $141/MWh in FY2021-Q3 to $144/MWh in the most recent quarter.

IRRIGATION AND INDUSTIAL SECTORS LEAD DEMAND DOWN

Temperature-adjusted demand decreased by 0.5% (-0.7% on an unadjusted basis) led by decreases in the irrigation (-1.1%) and industrial (-0.6%) sectors. These were partially offset by increases in the urban (+0.8%), dairy (+0.2%) and rural (+0.1%) sectors.

• 1 For quarters ended 31 March since 1927

• 2 For quarters ended 31 March since 2000

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE

01

>> OPERATING STATISTICS

OPERATING INFORMATION	Three months ended 31 March 2022	Three months ended 31 March 2021	Nine months ended 31 March 2022	Nine months ended 31 March 2021
ELECTRICITY CUSTOMERS ('000s ICPs) North Island Customers South Island Customers Dual Fuel Customers	324 288 36 47	33 293 38 45
VWAP 1 ($/MWh)Volume (GWh)	VWAP 1 ($/MWh)Volume (GWh	VWAP 1 ($/MWh)Volume (GWh)	VWAP 1 ($/MWh)Volume (GWh)
ELECTRICITY SALES
Physical	126.70 1,123	121.56 1,02	126.96 3,542	121.78 3,317
Mass Market 2 Commercial & Industrial 3	143.65 528 111.68 595	140.84 544 99.57 477	142.18 1,901 109.34 1,641	138.88 1,982 96.38 1,335
Network Losses	52	48	165	157
Physical Purchases 4	180.02 1,175	220.72	1,068	135.30 3,707	159.29	3,474
Financial 5	99.21 676	95.83 808	95.82 2,255	89.66 2,588
End User CfDs Other Sell CfDs 6 Spot Settlement of CfDs	96.86 254 100.62 422 168.71	86.56 38 104.10 427 197.47	92.69 97.60 126.13 816 1,439	86.90 1,135 91.81 1,453 144.35
Spot Customer Purchases	174.92 30	215.11	3	130.63 92	153.42	135
ELECTRICITY GENERATION
Physical	160.80 1,831	208.04 1,568	121.30 5,571	152.58 4,889
Hydro Geothermal (consolidated) 7 Wind Spot 8	188.72 853 161.81 653 145.05 99	217.56 910 194.87 658	141.96 2,737 116.48 1,921 100.02 204	159.50 2,885 142.62 2,004
Wind PPA 9	59.28 226	60.71 709
Financial	101.91 323	92.81	354	112.65 1042	92.55	1,190
Buy CfDs 6 Spot Settlement of CfDs	101.91 157.98 323	92.81 207.26 354	112.65 128.05 1042	92.55 144.90 1,190
10 NET POSITION	77	46	-58	17

• 1 VWAP is volume weighted average energy-only price sold to customers after lines, metering and fees

• 2 Mass market includes residential segments and non time-of-use commercial customers

• 3 Fixed-price, variable-volume (FPVV) sales to time-of-use commercial customers

• 4 Excludes spot customer purchases

• 5 Excludes FTR and trading ASX positions

• 6 Includes Virtual Asset Swap volumes of 148 GWh for the 3 months ended 31 March 2022 and 148 GWh for the 3 months ended 31 March 2021 and of 450 GWh

• for the 9 months ended 31 March 2022 and 450 GWh for the 9 months ended 31 March 2021

• 7 Includes Mercury's 65% share of Nga Awa Purua generation

• 8 Includes generation from Turitea wind farm.

• 9 Includes generation from Tararua, Mahinerangi and Waipipi wind farms

• 10 Net Position is Physical and Financial Generation (excluding Wind PPA volumes) less Physical Purchases and Financial Sales

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE

02

>> MARKET DATA

> ELECTRICITY GENERATION BY COMPANY FOR THE THREE MONTHS ENDED 31 MARCH

MERCURY

CONTACT ENERGY

GENESIS ENERGY

MERIDIAN ENERGY

OTHER

TRUSTPOWERSource: Electricity AuthorityFinancial Year Q3 2022

Financial Year Q3 2021

> SHARE OF ELECTRICITY SALES (GWh) FOR THE THREE MONTHS ENDED 31 MARCH (EXCLUDING CFDs)

MERCURYOTHERFinancial Year Q3 2022

Source: Mercury Purchases and Transpower SCADAFinancial Year Q3 2021

MERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE

03

> OTAHUHU WHOLESALE PRICE AND NATIONAL HYDRO STORAGE LEVELS

AVERAGE NATIONAL STORAGEFY2022 NATIONAL STORAGE

ROLLING 12 MONTH AVERAGE BEN PRICEFY2021 NATIONAL STORAGE

ROLLING 12 MONTH AVERAGE OTA PRICE

4,500

GWh

4,000 3,500 3,000 2,500

2,000

1,500 1,000

500

0

Jul

Oct

AugSepSource: NZX Hydro and NZEM Pricing Manager (NZX)

> TAUPO STORAGE

$200

$180

$160

$140

$120

$/MWh

$100

$80

$60

$40

NovDecJanFebMarAprMayJunAVERAGE SINCE 1999

FY2021

FY2022

600

GWh

400

500

300

200

100

0

Jul

Sep

Source: NZX HydroAug

OctNovDecJanFebMarAprMayJunMERCURY NZ LIMITED QUARTERLY OPERATIONAL UPDATE

04