Meridian Energy says it will keep power prices for residential and small business customers below the annual inflation rate over its current financial year, after the state-controlled energy supplier reported a record annual operating profit.
The 51% state-owned electricity generator and retailer reported its annual financial results for the year ended June on Wednesday. Meridian’s operating earnings before interest, tax, depreciation, amortisation and fair value movements, or EBITDAF (the sector’s preferred underlying operating metric), were $1.051 billion, up from $611 million in the prior year.
Meridian said this was its strongest operating cash flow result to date. Meridian’s finances in the prior financial period were severely impacted by historically low hydro inflows, droughts, extended periods of low wind and a fall in domestic gas supplies.
Net profit after tax (NPAT) rose to $130 million forin the 12 months to June, a turnaround from the net loss after tax of $452 million reported in the 2025 financial year.
Meridian’s underlying net profit jumped to $308 million, up from $56 million last year and it reported June-year operating cash flow of $810 million, up from $318 million in 2025.
Capital expenditure in the 2026 financial year was $261 million, $68 million, or 35% higher than the prior year. Meridian said this included the Harapaki wind farm’s milestone payments and the bulk of Ruakākā Energy Park’s battery energy storage system (BESS) investment.
In Meridian’s call with analysts following the results, Meridian chief executive Mike Roan pointed to company confidence and high operating cash flows being the key takeaways.
“We expect those operating cash flows to grow over time, and as a result, we expect what we've always wanted to deliver, which is ongoing lifts in underlying dividend. So I hope what you're taking from it is good confidence in our capacity to produce cash and that cash will continue to fund both dividend growth and growth programmes,” Roan said in the call.
Lower power prices with a side of regulated increases
Roan, who was appointed to the role in July 2025, said in the annual results that the company knew New Zealanders wanted to see lower power prices. He described this as a “more likely” outcome as new renewable generation continues to be built across the country.
“We're already seeing positive signs, with wholesale forward prices easing during 2026, which is enabling us to reduce prices for commercial and industrial customers as they come up for renewal,” Roan said.
“We have committed to ensuring that, for residential and small business customers, the average price increase in the energy component of the bill across all our plans will be held below the rate of inflation over the next year. Customers, though, are still facing at least three more years of regulated increases in lines and transmission charges.”
Fellow state-controlled gentailer Mercury Energy made a similar promise when it reported its annual financial results last week, with Mercury CEO Stew Hamilton noting that Mercury was looking at price rises in the 2027 financial year that are “less than CPI.”
Annual inflation, as measured by the consumers price index (CPI), is New Zealand’s official measure of household inflation. Annual inflation rose to 4.1% in the June quarter, marking the highest rate of annual inflation NZ has experienced since the CPI hit 4.7% in December 2023. Electricity prices rose 4.4% on a quarterly basis and were up 12.0% annually in the June quarter.
Some customer impacts
Meridian said its retail business continued to bring its ‘Next Gen Retail operating model’, a digital overhaul of its retail division, to market. By the end of the financial year, 175,820 retail and commercial customers had been migrated to Meridian’s Kraken platform. Kraken is a cloud-based operating system used to manage customer billing, data and daily retail operations for the Meridian Energy and Powershop brands.
The company said there had been some customer impacts associated with the transition, including longer than desired customer service wait times and challenges following the launch of the new Powershop app.
“Some customers have not had the experience they have come to expect from us, but we are focused on resolving these issues, improving customer support and developing new products that will make energy more affordable,” Roan said.
“Despite these challenges, our overall Retail performance has been very strong and the net position at the end of the year reaffirms our Retail Strategy.”
Meridian reported a 12% increase in total customers during the 2026 financial year.
Roan told analysts on Wednesday’s call that he had become a Powershop customer during the migration process to the Kraken platform.
“I switched from Meridian, partly because I wanted to experience the changes firsthand and to understand what was frustrating people. The new app experience is definitely different,” he said.
“The new platform is a big step forward from the old one, and while it always takes some adjustment, it's actually pretty straightforward to use.”
Energy margin soars, new renewable generation will make power 'more affordable'
Meridian said there was a 50%, or $489 million, increase to its energy margin during the June year, bringing it to to $1.471 billion.
Price and volume growth in mass market sales, while sustained high inflow periods saw significantly lower wholesale spot prices and a 14% increase in hydro generation volumes from the drought-impacted annual 2025 results, according to Meridian.
Meridian said one of the most significant developments during the 2026 financial year was securing resource consent for the continued operation of the Waitaki Power Scheme for the next 35 years.
Meridian has also been granted access to an additional five metres of contingent storage at Lake Pūkaki for the next three years to help manage system security while new generation is built.
The company currently has two projects under construction, including the 130 megawatt (MW) Ruakākā Solar Farm and 200MW stage 1 Te Rahui Solar Farm, a joint venture with Nova Energy. Nova Energy is responsible for the construction management of the project.
Roan said consents have been secured for the 90MW Mt Munro Wind Farm and the 120MW Bunnythorpe Solar Farm, and the company also had its proposed Waiinu Energy Park admitted to the Fast-track process.
“We are determined to maintain this momentum and in the next 12 months expect to announce final investment decisions for Mt Munro, Te Rere Hau and either stage two of Te Rahui or the integrated solar and battery Bunnythorpe Energy Park.”
Roan said building new renewable generation and firming assets were the most “important things” Meridian could do to make power more affordable for homes and businesses.
“We also continue to explore opportunities for new hydro development for long-term system firming,” he said.
Dividend rises
The Meridian Board declared a final ordinary dividend of 16.10 cents per share (cps), bringing the total ordinary dividends declared in the 2026 financial year to 22.50 cents per share, a 7.1% increase on the previous year.
Meridian is anticipating an EBITDAF of between $1.040 billion and $1.120 billion in the 2027 financial year. The company said this full-year guidance is subject to any significant hydro and wind variability, wholesale market conditions and any material events, substantial one-off costs or other unforeseeable circumstances.
The Government holds a legislated 51% majority shareholding in Meridian Energy, Mercury 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.
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