Ann: QUARTER: MEL: Meridian Energy Limited - Quar

• Release Date: 01/02/12 10:48
• Summary: QUARTER: MEL: Meridian Energy Limited - Quarterly operating result
• Price Sensitive: No
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MEL
01/02/2012 08:48
QUARTER

REL: 0848 HRS Meridian Energy Limited

QUARTER: MEL: Meridian Energy Limited - Quarterly operating result

Financial Results
Meridian's financial results for the six months ending 31 December 2011 will
be announced in the week commencing 13 February 2012 and our interim report
will be publicly available following tabling in Parliament in early March
2012.

Operating Commentary
Following a sustained period of below average inflows into the Waitaki
catchment during the first quarter, significant inflows through to early
November returned storage to mean levels by the end of November.  This was
followed by an extremely dry December in the lower South Island with record
low inflows recorded into Lake Manapouri and Lake Te Anau.  More prudent
management of the Waiau catchment storage has seen reduced Manapouri
generation, with Meridian drawing more production from the Waitaki hydro
system.

Waitaki catchments inflows (including Lake Tekapo) were 86% of mean during
the quarter compared with 112% in the same quarter last year.  Waitaki
storage rose 803GWh over the quarter to 1,680GWh which is 90% of the historic
mean and 1,019GWh lower than the same quarter last year.  Waiau catchment
inflows for December 2011 were 36% of historical average.  Wholesale
conditions were also influenced by a number of transmission outages
supporting Transpower's HVDC upgrade.  Further outages are planned in 2012.

Meridian's generation volumes decreased from the previous quarter, reflecting
more prudent management of storage and the 1 June 2011 sale of the Tekapo
power stations to Genesis Energy. Although average wholesale prices for
Meridian's generation fell relative to the September quarter, they remain
buoyed by conservative water management as a result of an extremely dry
December in the lower South Island.  Meridian's net contract position has
remained at 88% at the end of the quarter, largely reflecting the prevailing
dry conditions.

Retail competition remains intense, with market ICP churn in excess of 30,000
ICP's each month during the quarter.  Meridian's total ICP numbers increased
by 3,159 during the quarter, with continued growth in Powershop and Meridian
Retail North Island connections and further declines in South Island ICPs.

Further evidence of Meridian's strong customer focus was reflected in
Powershop and Meridian Retail filling the top two positions in Fair Go's
Energy Company customer satisfaction survey.  Powershop also took the number
one ranking in the 2011 Deloitte Fast 50 index, with the highest growth rate
ever recorded in the Fast 50's 11-year history.

During the quarter the first turbines were erected on Meridian's joint
venture Macarthur wind farm in Victoria, Australia, and construction
commenced on the Popua Solar Farm in Tonga.  Consents were also granted for
the Mill Creek wind farm near Wellington, as well as water consents for the
Hunter Downs Irrigation Scheme in South Canterbury.  Meridian also applied
for consents for the Amuri Hydro Project in North Canterbury.  In January
2012, Meridian announced it is withdrawing its applications before the
Environment Court for resource consents for Project Hayes, following a review
of the project.

Outlook
We start the second half of the financial year with relatively dry conditions
in our major storage catchments.  The ongoing programme of HVDC outages will
present challenging trading conditions.  Outcomes from the appeal to the
Electricity Authority's UTS decision, Genesis Energy's approach to the scope
and timing of Tekapo canal repairs and possible transmission pricing
decisions all provide uncertainty over the next year.
While we are tracking in line with our key Statement of Corporate Intent
financial targets at the half year, assuming average hydrology from this
point on, we see some risk to achieving our full year key Statement of
Corporate Intent financial targets.

Despite this, Meridian is well positioned for future growth.  Our medium term
pipeline has options well placed in the generation merit order to meet future
demand growth. Improvement in the performance of our retail business
positions Meridian more competitively in the retail electricity market.
Alleviation of transmission grid constraints through investment, such as the
HVDC upgrade, will improve Meridian's portfolio flexibility and risk
position.

The Interim Report will be available on Meridian's web site
www.meridianenergy.co.nz  immediately following the results being tabled in
Parliament.
End CA:00219061 For:MEL    Type:QUARTER    Time:2012-02-01 08:48:41