Quarterly

Operating

Report

Q3-22(Oct-Dec 2021)

Market guidance update

FY-22 EBITDAF​

Trustpower retains its expectation of FY-22 EBITDAF to be in the range of $210-$225 million (excluding the costs of selling the retail business of ~$9 million). This estimate is made up of ~$165 - $175 million from continuing operations, and ~$45 - $50 million from discontinued operations (the Mass Market Retail business).

The forecast is underpinned by the following assumptions:​

  • Generation volumes for FY-22 now forecasted at ~1,771 GWh (incl. KCE). ​
  • NZ Wholesale prices are in line with current forward pricing for the year.​
  • Average temperatures and average residential electricity consumption for the remainder of the year.​
  • Total average mass market customers of ~235,000, including ~116,000 telco customers.​
  • The retail business is retained for the full year. While we expect to sell the business before year-end, the exact date is currently unknown​. The sale would reduce EBITDAF by approximately $5m per month.

CAPEX​

Trustpower expects its FY-22 capex to remain in the range of $34m -$44m. Unchanged from earlier guidance.​

FY-23 Manawa Energy outlook

Trustpower has previously provided stand-alonepro-forma financial statements for Manawa Energy for FY-20 and FY-21 of $156.6m and $153.1m respectively. No guidance for FY-23 has been given at this time. If using the FY-22 expected EBITDAF from continuing operations when considering future Manawa Energy financial performance, the following factors should be considered in assessing future earnings:

  • There are some one-off gains in FY-22 that are not expected to recur (e.g., carbon revenue as noted in the FY-21half-year results $6.1m ($4.9m higher than pcp)).
  • Results from continuing operations in FY-22 are reported using an internal corporate methodology to assign corporate costs to each division while also there are some unallocated costs assigned to Corporate. This methodology has under-allocated corporate costs to our Generation division. The Manawa Energy business also expects some short-term transition/establishment costs as a result of the low-risk approach taken to separation, and some natural ongoing costs from reduction in scale particularly around access to shared resources and systems and to setup the business on a stand-alone basis.
  • Despite low production volumes in FY-22 and an expectation that FY-23 volumes will return to more normal levels, wholesale electricity prices (which impact our unhedged length) are forecasted to be lower on average in FY-23, especially in the first half of the year.

2. Quarterly Operating Report | Q3-22 (Oct-Dec2021)

Quarterly Insights

Forward wholesale pricing remains firm despite strong storage

National storage as of 31st December was 124% of the 10-year average, and 55% higher than the pcp. ASX future prices remained elevated, in line with last quarter with all three calendar year strips remaining above $100 at Benmore.

Spot prices return to more normal levels

Weekly average spot prices have returned to more normal levels since September 2021, with Q3-22 GWAP of $72 down 51% compared to the previous quarter. YTD GWAP remains 29% above the pcp.

Hydro volumes better than pcp

Hydro generation volumes were 3% higher than the pcp and are up 5% YTD compared to the same period last year.

Retail growth steady

Retail continued to show steady momentum over the quarter despite the impact of COVID-19. Mobile connections continue to grow, as does fibre uptake and speed mix. 88% of new customers joining took more than one product, and telco connections have increased 6.5% year-on-year.

Customer churn remains at normalised levels, and we have seen a convergence of energy-only and telco-bundled churn over time. This is due to the average tenure of our remaining energy- only customers.

Data usage per customer rose almost 20% compared to the pcp, and over 28% overall. More than 84% of our broadband customers are now on fibre.

3. Quarterly Operating Report | Q3-22 (Oct-Dec2021)

Wholesale electricity market

National Controlled Storage

5,000

4,000

GWh

3,000

2,000

1,000

-

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

10 year avg

2017

2018

2019

2020

2021

SOURCE: NZX Hydro

Weekly average prices - 12 months to end of Dec 2021

$500

$/MWh

$400

$200

$300

$100

$-

Jan-21Feb-21Mar-21

Apr-21May-21

Jun-21Jul-21Aug-21

Sep-21Oct-21Nov-21Dec-21

Benmore

Haywards

Benmore 10 year average

Haywards 10 year average

National Demand

4,000

3,500

GWh

3,000

2,500

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2017

2018

2019

2020

2021

SOURCE: Electricity Authority. Reconciled demand not available for December at time of release.

Benmore ASX Futures Settlement Prices

160

140

120

100

$/MWh

80

60

40

20

0

CY-22

CY-23

CY-24

31 March 2021

30 June 2021

30 September 2021

31 December 2021

4. Quarterly Operating Report | Q3-22 (Oct-Dec2021)

Generation

Monthly Generation Volumes

300

250

200

GWh

150

100

50

0

Apr-17

Apr-18

Apr-19

Apr-20

Apr-21

South Island Hydro

North Island Hydro

Q3-22

Q3-22

Q3-22 GWAP/TWAP

NI Generation

SI Generation

NI

1.09

1%

7%

SI

1.11

vs pcp

vs pcp

$76/MWh

New Zealand Load Weighted Average Price (LWAP)

$72/MWh

New Zealand Generation Weighted Average Price (GWAP)

NOTE: Q3 Prices

Percentage of Potential Revenue Achieved

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

GWAP / TWAP

140%

130%

120%

110%

100%

90%

NI GWAP/TWAP

SI GWAP/TWAP

* See glossary for definitions

5. Quarterly Operating Report | Q3-22 (Oct-Dec2021)

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Trustpower Ltd. published this content on 24 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 January 2022 01:33:00 UTC.