Monthly Operating Report February 2018
February overview» For the month of February 2018 Contact recorded: Electricity and gas sales of 534 GWh (February 20: 551 GWh) Netback of $82.16/MWh (February 20: $82.07/MWh) Cost of energy was $28.90/MWh (February 20: $23.05/MWh)» Otahuhu futures settlement wholesale price for the 1 st quarter of 2018 (ASX): As at 14 March 2018: $84/MWh As at 28 February 2018: $82/MWh As at 31 January 2018: $105/MWh» As at 14 March 2018, South Island controlled storage was 99% of mean (28 February 2018: 99%) and North Island controlled storage was 162% of mean (28 February 2018: 165%) As at 14 March, total Clutha scheme storage (including uncontrolled storage) was 67% of mean Inflows into Contact s Clutha catchment for February 2018 were at 119% of mean (January 2018: 44%, December 20: 50%, November 20: 69%)» New Zealand has a big opportunity to leverage its renewable electricity resources to decarbonise the economy. Contact is actively working with energyintensive business customers to help them identify opportunities to transition to flexible, efficient, low-carbon energy solutions.» Watch the first two videos in our four part series about our low-carbon future at https://www.youtube.com/user/contactenergy Operating report Contact Energy Limited 2
$/MWh GWh $/MWh Hydro storage and forward prices New Zealand controlled hydro storage against mean Otahuhu ASX futures settlement 4,000 3,500 80 60 40 3,000 2,500 2,000 1,500 20 0 CY18 CY19 CY20 CY21 30/06/20 31/01/2018 28/02/2018 Benmore ASX futures settlement 1,000 500 - Mar Apr May Jun Jul South Island Actual South Island Mean Aug Sep Oct Nov Dec Jan 18 North Island Actual National Mean Feb 18 80 60 40 20 0 CY18 CY19 CY20 CY21 30/06/20 31/01/2018 28/02/2018 Operating report Contact Energy Limited 3
% of trading periods $/MWh % of trading periods Wholesale market Wholesale electricity pricing Distribution of wholesale market price by trading periods 140 120 % 80% 60% 40% 20% Otahuhu node Feb 18 Feb Jan 18 80 60 40 % 80% 0% <$35 $36-$45 $46-$55 $56-$65 $66-$75 $76-$85 >$85 Benmore node Feb 18 Feb Jan 18 20 FY BEN FY18 BEN FY OTA FY18 OTA 60% 40% 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 20% 0% <$35 $36-$45 $46-$55 $56-$65 $66-$75 $76-$85 >$85 Operating report Contact Energy Limited 4
GWh Electricity demand» New Zealand electricity demand was down 2.6% on February 20 (down 4.9% on February 2016, which contained 29 days). Cumulative 12 months demand for March 20 to February 2018 of 41,142 GWh is 1.1% higher than the prior comparative period. Total national demand (FY16, and 18) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 - Year North Island South Island NZAS 15 16 15 16 15 16 15 16 15 16 15 16 16 18 16 18 16 16 16 16 Month Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Regional demand change (%) on February 20* 4% 2% 2% 2% (1%) 0% (5%) (15%) 1% (1%) (5%) (23%) (7%) (3%) (31%) 1% 2% (3%) Source: Contact and Electricity Authority grid demand (reconciled) http://www.emi.ea.govt.nz *Source: Contact excludes large industrial Operating report Contact Energy Limited 5
GWh $/MWh Contact s Generation business performance Generation mix and cost of energy (FY and 18) 900 800 700 Geothermal Hydro Thermal Cost of Energy 60 55 50 600 45 500 400 40 35 30 300 25 200 20 15 - Year 16 16 16 16 16 16 18 18 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 10 Operating report Contact Energy Limited 6
GWh $/MWh Contact s Customer business performance Retail sales volumes and netback (FY and 18) 900 Commercial & industrial electricity sales Mass market electricity sales 110 800 Retail gas sales Netback 105 700 600 95 500 400 90 85 80 300 75 200 70 65 0 Year 16 16 16 16 16 16 18 18 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 60 Operating report Contact Energy Limited 7
Contact s operational performance Eight months Eight months Measure The month ended The month ended The month ended ended ended February 2018 February 20 January 2018 February 2018 February 20 Customer Mass market electricity sales GWh 234 233 248 2,389 2,429 Commercial & industrial electricity sales GWh 263 288 286 2,253 2,374 Retail gas sales GWh 37 29 34 523 458 Total electricity and gas sales GWh 534 551 568 5,165 5,262 Average electricity sales price $/MWh 182.60 9.93 185.12 187.67 184.65 Electricity direct pass thru costs $/MWh (82.64) (81.50) (81.92) (83.78) (81.51) Electricity and gas cost to serve $/MWh (14.14) (13.91) (14.31) (12.51) (13.68) Netback $/MWh 82.16 82.07 85.62 85.07 84.26 Actual electricity line losses % 4% 6% 4% 6% 5% Retail gas sales PJ 0.2 0.1 0.1 1.7 1.6 LPG sales tonnes 4,4 4,535 4,551 47,346 47,323 Electricity customer numbers # 418,500 421,000 419,000 Gas customer numbers # 64,500 62,500 64,500 LPG customer numbers (includes franchises) # 85,500 77,000 85,000 Generation Thermal generation GWh 113 50 305 1,384 774 Geothermal generation GWh 245 253 257 2,229 2,087 Hydro generation GWh 267 314 191 2,093 2,743 Spot market generation GWh 625 6 753 5,706 5,603 Spot electricity purchases GWh 518 554 556 4,919 5,081 CfD sales GWh 77 97 127 353 389 Steam sales GWh 46 51 44 419 455 Commercial & industrial electricity sales GWh 8 8 10 68 70 GWAP $/MWh 66 44 118 93 46 LWAP $/MWh (71) (53) (131) (99) (53) LWAP/GWAP % 107% 119% 111% 107% 114% Gas used in internal generation PJ 1.2 0.6 2.7 13.4 8.6 Gas storage net movement PJ 0.2 0.2 (0.5) (1.1) (0.5) Unit generation cost $/MWh (33.14) (28.41) (41.19) (35.09) (30.24) Cost of Energy $/MWh (28.90) (23.05) (30.31) (30.34) (24.16) Operating report Contact Energy Limited 8
Glossary of terms Netback Measures the performance of the Customer business. This enables the performance of the retail channels to be measured without using an energy cost. The netback is meant to cover, inter alia, the net purchase cost, capital return, risk margin and a retail margin. Cost of Energy Measures the performance of the Generation business. Cost of energy reflects the total operational costs of generating and procuring electricity sold to customers. It does not include any capital return expectations. Electricity revenue from mass market and C&I customers Add: Revenue from gas sales Less: Electricity distribution network costs, meter costs and electricity levies Less: Gas distribution network costs, meter costs and gas levies Less: Operating costs to serve the customer, including head office allocation Wholesale electricity revenue from our generating assets Add: Revenue from steam sales and direct electricity sales from Te Rapa Less: Electricity purchase costs from the wholesale market to supply customers Less: Electricity transmission costs and levies Less: Gas and diesel purchase costs (excluding gas purchases for retail gas sales) Less: Gas transmission costs and levies Less: Carbon emissions costs Less: Generation operating costs and head office allocation Netback and cost of energy is divided by the total retail sales volumes (electricity and gas sales) to be expressed as $/MWh
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