Mercury Energy’s annual profit has rebounded into much sunnier territory after a bruising period last year.
The state-controlled power generator and retailer (gentailer) reported annual net profit after tax of $321 million for the June year on Tuesday. It's a $320 million increase from the 2025 financial year, when Mercury reported just $1 million profit due to challenging financial, hydro and gas conditions.
New renewable generation, higher hydro generation and “disciplined cost management” were cited as the reasons for the significant turnaround.
Mercury chief executive Stew Hamilton said Mercury was converting the company’s strong financial performance into “new generation, greater system resilience and the capacity to support New Zealand’s future economic growth.”
Mercury’s generation assets produce electricity from 100% renewable sources like hydro, geothermal and wind and the company is also a retailer of electricity, gas, broadband and mobile services.
Total operating earnings or EBITDAF (earnings before interest, tax, depreciation, amortisation, and fair value adjustments) came to $1.068 billion in the 2026 financial year, up 36%, or $282 million, compared to the previous year.
The company reinvested 66%, or $710 million, of its 2026 operating earnings into new and existing renewable generation assets.
Operating cashflow of $762 million helped fund this investment while maintaining a strong balance sheet and “progressive” shareholder returns, Mercury said. Operating cashflow was up 58%, or $279 million, from the previous year.
Operating expenses fell 6.6%, or $26 million, to $370 million during the 2026 financial year, while capital expenditure rose 46%, or $225 million, to $710 million.
Mercury’s board announced a total dividend of 27.0 cents per share (cps), up 3 cps from a year ago.
Mercury currently expects total operating earnings or EBITDAF to reach $1.075 billion in the 2027 financial year, alongside a total dividend of 29 cents per share.
Consumers struggling
Data from the Electricity Authority puts Mercury down as New Zealand’s largest power provider by retail market share.
In a report released in July called Power. At what cost?, Consumer NZ found a quarter of households have had trouble paying their power bills in the last year, a 5% increase from a year earlier.
Electricity prices have risen by around 177% since 1999 reforms to NZ’s electricity industry, according to the consumer advocacy group.
Consumer NZ said even when wage growth was factored in, electricity is now approximately 65% more expensive in real terms, with low-income families hit the hardest.
Renewable projects
Generation has commenced at three of Mercury’s renewable projects in 2026, with all three expected to be fully operational by the end of this calendar year. The projects are Ngā Tamariki Geothermal Station expansion near Taupō, Kaiwera Downs 2 Wind Farm near Gore, and Kaiwaikawe Wind Farm near Dargaville.
Mercury said these projects represent around $1 billion of investment and 1.1 terawatt-hours (TWh) of additional annual renewable generation. This is enough to power around 160,000 homes.
The next energy development out of Mercury will be Puke Kapo Hau, also known as the Mahinerangi Stage 2 Wind Farm, west of Dunedin. Mercury’s Board approved the $506 million project in August, with final grid connection studies being completed with Transpower.
The Mahinerangi Wind Farm (Stages 1 and 2) is expected to be New Zealand’s largest wind farm once complete, with 228 megawatts (MW) total capacity and annual generation of 646 gigawatt-hours (GWh). This is enough electricity to power roughly 80,000 to 90,000 households each year.
Mercury said Puke Kapo Hau will support South Island energy demand, including for Datagrid, the country’s first ‘AI factory’, which Mercury describes as the “most advanced large-scale data centre project” in New Zealand. Mercury announced the signing of a 140MW power purchase option agreement with Datagrid earlier this year and also acquired a 12.7% stake in the Singapore-based company for $53 million in July.
“Datagrid shows how long-term demand, renewable development and disciplined investment can work together,” Hamilton said.
Hamilton was appointed as a director of Datagrid NZ as part of the investment.
New rules for power companies, including the Government-backed ones
Just minutes before Mercury’s 2026 financial results were published on Tuesday, Energy Minister Simeon Brown announced recent changes by the Electricity Authority will now require power companies to regularly check that customers “are on the best plans for their circumstances.”
Brown said the Electricity Authority will also ban power companies from doing “big chargebacks” for power bills dating back more than six months.
“From time to time you hear horror stories of people being sent a massive bill because for one reason or another they have not been receiving accurate and timely bills. Catch-ups will be limited to six months under the new rules, reducing the risk of ‘bill shock’,” he said.
All power companies have been given a deadline of April 1, 2027 to fully comply with the new rules. Brown did not disclose in his announcement what penalties power companies would face if they failed to comply with the new rules.
The Government holds a legislated 51% majority shareholding in Mercury, Meridian Energy and Genesis Energy. Mercury, Meridian and Genesis make up three out of the four largest power generators and retailers (gentailers) in NZ, along with Contact Energy. Contact has no Government shareholding but is one of the country’s largest listed companies on the NZX.
Contact announced a reported annual net profit of $423 million last week, which was up 27.8%, or $92 million, from a year earlier.
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