Mercury Energy has reported a net profit of $321 million for the year to 30 June 2026, up from just $1 million the year before, and its chief executive has told analysts the company expects residential power price rises to sit at or below inflation over the next few years.
The result, released to the NZX on Tuesday morning, was driven largely by water. Strong inflows into the Waikato catchment lifted Mercury’s hydro generation by 31 percent, and total output across its hydro, geothermal and wind fleet rose to 9,070 gigawatt hours from 7,906 the year before. Operating earnings, the measure the electricity companies prefer to be judged on, reached $1.068 billion, up 36 percent or $282 million on the previous year. Revenue fell to $3.22 billion from $3.5 billion, a reminder that a wet year lets a generator earn more while buying less power on the spot market.
Operating costs fell 6.6 percent to $370 million. Capital spending went the other way, rising 46 percent to $710 million, which is 66 percent of what the company earned. Shareholders were given a final dividend of 17 cents a share, up from 14.4 cents, taking the year’s total to 27 cents. That is the eighteenth consecutive year Mercury has lifted its ordinary dividend. The company has signalled 29 cents for the 2027 year and operating earnings of around $1.075 billion.
The Crown owns just over half of Mercury, so roughly half of that dividend flows back to the Government’s books. The rest goes to the private shareholders who bought in when the company was part floated in 2013.
Three new renewable projects started generating during the year, the expansion of the Ngā Tamariki geothermal station near Taupō and the Kaiwera Downs 2 and Kaiwaikawe wind farms. Together they represent about $1 billion of investment and 1.1 terawatt hours of extra generation each year, which Mercury says is enough for roughly 160,000 homes.
The board has also approved a $506 million wind farm, Puke Kapo Hau, on the hills west of Dunedin. It is the company’s biggest South Island commitment and it is aimed squarely at a customer that does not exist yet. Datagrid NZ is planning a very large data centre in Southland, and Mercury has put $53 million into the company. Chief executive Stew Hamilton told the market the two decisions belong together.
“Datagrid shows how long-term demand, renewable development and disciplined investment can work together,” Hamilton said. On the result as a whole he said, “We are converting strong financial performance into new generation, greater system resilience and the capacity to support New Zealand’s future economic growth.”
That framing matters, because a billion dollar profit from an electricity company lands in a country where a lot of people are struggling to pay for electricity. Consumer NZ’s most recent energy survey found a quarter of households had struggled to pay a monthly power bill and 24 percent had missed a payment. Just under 40 percent of people rated power a top household concern, nearly double the 21 percent who said the same in 2023. Consumer NZ has calculated that household electricity costs have risen 177 percent since the 1999 market reforms, close to twice the rate of general inflation over the same period.
The Electricity Authority found power bills for households and small businesses rose 6.8 percent on average in the first half of this year, after an 8 percent rise in 2025. About 22 percent of households saw no change at all between November and the end of June. For the households that did get a price change, the average increase was 8.7 percent. Small businesses that saw a change paid 7.2 percent more. Annual inflation was 4.1 percent in the June quarter, and the electricity component of the consumers price index was up 12 percent on the year.
Asked about that on the results call, Hamilton drew a line between the two halves of a power bill. The energy itself is what Mercury sells. The lines charges are set by network companies and Transpower and simply passed on.
“From an energy component, we’re typically seeing and thinking about a price rise which is less than CPI,” he told analysts, according to interest.co.nz. “So we expect that over the next few years, price rises will be at or under CPI, but we’ll still continue to pass through the lines of distribution costs.”
That distinction is the whole argument about who is responsible for what New Zealanders pay. The Electricity Authority’s own numbers show lines charges made up 54 percent of this year’s average increase. Those charges are rising because network companies are rebuilding and expanding poles, wires and substations, work that has to happen if the country is going to electrify transport and industry. A retailer can hold its own margin flat and a customer will still open a bigger bill.
Mercury has the largest retail electricity market share in the country, so the pledge covers a lot of households. It is also a pledge about the energy component only, and it comes with no fixed dates or numbers attached.
The wider picture from the result is a company spending its good year on generation rather than banking it. Two wind farms are under construction and due in the first part of the 2027 financial year, and between them Mercury says they will produce enough electricity for about 140,000 homes, which is roughly the size of Christchurch. Whether that new supply eventually shows up as lower prices for households, or simply as the electricity a Southland data centre and an electrifying dairy industry will need, is the question the next few annual results will answer.
Full coverage of the result is available from RNZ, interest.co.nz and the Otago Daily Times.
Has your power bill gone up this year, and do you believe the price rise promise? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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