Mercury to hike electricity prices by almost 10%, ups payout to shareholders
Tuesday, 25 February 2025
Mercury Energy will hike its power prices for consumers by an average of 9.7% in April and has warned prices for both gas and electricity are likely to increase “across the board”.
Mercury issued the warning at the same time as announcing it would increase its half-yearly payout to shareholders to $134 million and forecasting it would up its total annual payout to shareholders for what would be the 17th consecutive year.
The dividend rise comes despite Mercury dipping into the red during the second half of last year.
The NZX-listed gentailer, which is 51% owned by the Government, said prices needed to rise because of increases in lines and transmission charges and increases in the “cost of wholesale electricity and other costs”.
Contact Energy announced in October that it was increasing its prices by an average of about $5 a week, kicking off what Octopus Energy forecast would be a broad cycle of price rises.
Mercury is the third of the big four generators to post its interim results amid an unusual summertime spike in spot market power prices and growing fears that last year’s energy crunch might repeat this winter.
Spot market power prices topped $400 a megawatt across the North Island this morning — a few times their normal average level — as problems with a cooling tower continued to constrain coal-fired generation from Genesis’ Huntly power station.
Rio Tinto announced this morning that it would delay fully restoring production at its Tiwai Point aluminium smelter until the end of August to ensure 50 megawatts of power that it would usually consume was available to other power users.
Power firms exercised a right last winter to require the smelter to free up 205MW of power, cutting the smelter’s power use by more than a third.
The smelter’s chief executive, Chris Blenkiron, said it was always a difficult decision to reduce aluminium production but one of its goals was to “work as partners in the energy system as we move ahead”.
Mercury chairperson Scott St John said it and others in the sector were “firmly focused on security of supply as the number one priority”.
The company, which is valued at $8.9 billion on the NZX, spent $139m on new generation and other new capital projects in the six months to the end of December, up from just $69m in the same period in 2023.
It reported a $67m loss for the period, down from a $174m interim profit in 2023.
Despite the loss, Mercury announced a 3% increase in its interim dividend to 9.6 cents a share, equating to a $134m payout to shareholders for the period.
The company is forecasting it will pay out a total dividend of 24c a share for the year to the end June, which would see it return $336m to shareholders for the year as a whole.
It is forecasting an operating profit of $820m for the full year, down on an $877m operating profit last year.
The company described its interim result as a “robust perform in challenging conditions”, with low hydro inflow reducing earnings.
Chief executive Stew Hamilton said households would play an increasingly important role supporting the supply and demand balance in the electricity system and Mercury was “encouraging customers to participate in the transition”.