Good morning, everyone, and welcome to Contact's Annual General Meeting. My name is Rob McDonald, and I'm the Chair of the Contact Board. On behalf of the Contact Board and all our people across Aotearoa, New Zealand, for which the first time includes our people from Manawa Energy, now 100% owned by Contact, I would like to welcome you to the 2025 Annual Shareholder Meeting held today at the Maritime Room in Auckland. This meeting is being webcast live for shareholders who have not been able to attend in person. I also extend a warm welcome to those who are watching online. For those guests who are here in person, in the unlikely event of an emergency, if the alarm sounds, the duty manager of the venue will announce over the PA that all guests should leave through the marked exits.
Venue staff will help to evacuate guests through the front main entrance. There is an alternative exit through the loading dock bay at the rear. The assembly point is outside the Wildfire Restaurant, which is accessed to the left of this building, or below St. Alice directly across the street, or the Viaduct Carpark, which is a five-minute walk on Lower Hobson Street, away from the wharf. As a quorum is present and due notice of this meeting has been given, I declare the meeting duly constituted and open for business. Firstly, I would like to introduce others to meet with me on the stage. To my left is our Chief Executive, Mike Fuge, and my fellow Board Directors, Deion Campbell, Rukumoana Schaafhausen , Elena Trout, David Smol, Sandra Dodds, Jon Macdonald, and David Gibson.
Other members of Contact's Senior Leadership Team are also here today, as well as representatives from our auditors for 2025, EY. As you have noted, today's meeting started with a greeting from Rukumoana, followed by Contact's Waerta, Maharangi, which is customarily sung to support the greeting. We do this because it's important we acknowledge our relationship with our iwi stakeholders and the fact we use New Zealand's natural resources to generate energy of which our iwi partners have an interest in. Today's meeting will commence with addresses from me as Chair and from the Chief Executive, Mike Fuge. We will move on to the resolutions that are outlined in the notice of meeting. We have three resolutions to put to the meeting today, and these resolutions will be decided by taking a poll.
There will be an opportunity for shareholders and proxy holders to ask questions relating to these resolutions and to raise any additional matters they may wish to discuss. EY audit partners are present at today's meeting should shareholders have any questions to put to them. Only shareholders and proxy holders can ask questions. Once the resolutions are introduced, we will invite questions. We have some microphones available. If you wish to speak, please put your hand up and wait for a microphone to be brought to you so that we can all hear your question. We have a large number of shareholders here in the room and online. Please, can I ask you to limit your questions to one or two?
Please state your name before asking a question, and it would be useful if you wish a particular person to answer your question if you could state that up front. All shareholders participating online can ask questions during this meeting, and I would encourage you to send through your questions as soon as you can. This will allow us to answer these questions at the appropriate time in the meeting. To ask a question, click on the box that says "Ask a Question" and follow the instructions on screen. Please note the questions may be moderated, or if we receive multiple questions on the same topic, they may be amalgamated together. If we can't answer the question in the meeting, we'll answer it in due course by email. I'll provide you with further instructions in relation to voting as we progress through the meeting.
For those joining online, if you encounter any issues, please telephone the helpline on 0800- 2220. Now the housekeeping is done. Let's get underway. On behalf of the Contact Energy Board of Directors, I would like to start by thanking our people, our customers, and you, our shareholders, for what has been one of the most significant years in Contact's history. We have delivered a strong performance underpinned by our long-term investment in renewable generation. As I share my reflections and insights of the past year, I want to acknowledge and talk about the challenges and opportunities in the energy sector and how Contact is focused on supporting New Zealand's economic growth aspirations. Our Contact 26 strategy is to be a leader in New Zealand's decarbonisation.
We have continued to deliver strongly against the strategy through renewable investment, growing electricity demand, continuing to decarbonise our own generation portfolio, and creating outstanding customer experiences. We are taking bold steps to support the country's energy transition to a renewable future. In the past four years, Contact has committed to more than $2.3 billion building critical energy infrastructure, and we are accelerating that investment for the long-term benefit of New Zealand. We have completed $1.2 billion of new renewable generation with Tōhāra and Tahuka 3 coming online. Together, these have brought an additional 1.0 TWh of annual generation on stream, enough energy to power the equivalent of 260,000 homes. Projects totaling another $1.1 billion are currently under construction, spanning geothermal, solar, and grid-scale batteries. These investments will extend our operations in the Wairakei Steam Field, delivering renewable power for future generations.
They bring a further 0.6 TWh of net new generation and 100 MW of new storage on stream. Our new long-term energy agreements have created new energy demand in iconic companies such as New Zealand Steel, Fonterra, and Oji Fibre Solutions, supporting their long-term future and demonstrating the part we play in the economy. It is almost a year to the day since Contact announced the proposed acquisition of Manawa Energy. Following the regulatory approvals, this transaction was completed on the 11th of July. The combination of our two companies is an important step forward in New Zealand's energy transition. It will enable a greater investment in future renewable generation, enhance market security, and ultimately contribute to reducing wholesale prices long term. I look forward to reporting on our future progress as we integrate Manawa into Contact.
We remain on target to meet our ambition to be net zero in our generation operations by 2035. In the past decade, Contact's generation emissions have reduced by 50%. With the planned closure of our Taranaki Combined Cycle Plant at the end of this year, it will increase to 75%. Our Contact 26 strategy has served us well. We are now turning to the next strategic horizon and are undertaking a review to ensure that we are well positioned for the future. Geopolitical, economic, and environmental uncertainty continues to be felt here and internationally. Yet in this is opportunity. The electricity sector has a key role to support New Zealand through these challenges and underpin a pathway to sustainable growth and energy independence. As a country, we are in the midst of a renewable investment boom.
In the past 18 months, almost 4.5 TWh of total new renewable generation has come online. To put this in context, that is more than 10% of our nation's annual generation, and there is more to come. According to Bloomberg Global Energy Data, between 2021 to 2024, New Zealand is a global leader investing $240 per person per year in renewable infrastructure, greater than the U.S., China, U.K., and Australia. Contact is leading the way. For those who say nothing has been done, this is the data. The market is not broken. Those who call the market broken fail to come with a solution. The solution to lower energy prices is more capacity, and that comes with investment. Investment is occurring at pace, insofar as we can get consents.
Notwithstanding ongoing challenges with the upstream gas market, gas will remain an important peaking fuel in the medium term and support security of supply. We have long-term gas supply contracts to support the availability of our remaining peakers, and more importantly, to ensure households and commercial gas customers have access to this energy source while we help them transition to renewable energy over time. The abrupt gas decline has hit the country faster and with more impact than could have been foreseen. What we see today is the result of a fuel supply cut. The change in government policy with the oil and gas ban led to unintended consequences. We need to be careful such mistakes do not occur and are repeated. Contact remains focused on providing competitive value and innovation while providing support for those facing energy hardship.
We recognize our role in ensuring New Zealand's electricity remains affordable, reliable, and renewable, the energy trilemma. The World Energy Council continues to rank New Zealand as one of the top 10 countries globally against these benchmarks. We are committed to playing our part to support New Zealand's security of supply. This winter, we extended the operating hours of the Taranaki Combined Cycle Plant. It will close later this year, a year later than planned. We are party to the Huntley Strategic Firming Agreement, a strategic energy reserve to be used as a buffer when required and open to all electricity market participants. Renewable generation investments deliver benefits to the community for decades. As a result, infrastructure investments always seek reasonable long-term certainty.
I acknowledge the work the government and the regulators are doing to explore ways of continually improving and evolving the electricity market as we all navigate the energy transition. However, we need policies that both encourage growth in electricity demand and support new investment in renewable energy. We welcome the government's initiatives to improve resource consenting to accelerate renewable development. However, calls for fundamental but undefined market reform and its potential impact on investment confidence are of concern. We need stable market settings that support investor confidence. Investment in renewable energy generation gives decades of benefit, a legacy for generations. Contact's investment, growth, and success would not be possible without the hard work of our CEO, Mike Fuge, and the entire Contact team. To you, I say thank you.
I also want to take this opportunity to thank my fellow directors and acknowledge in particular Elena Trout, who, after nine years of invaluable service, is stepping down from the Board. Elena has made a significant contribution not just to Contact but to the wider New Zealand energy sector. Now, as we look to the year ahead, one where Contact and Manawa Energy become one, we will continue to accelerate investment in the electrification efforts and together with all our stakeholders help build a more sustainable, thriving New Zealand for all. [Foreign language] . I'd now invite Contact's CEO, Mike Fuge, to share a few words.
[Foreign language] . It is my pleasure to be here today and to share my reflections on the past financial year, a year that has been characterized by bold aspiration, backed by hard mahi, and resulting in significant achievement. Through intensive focus and unwavering commitment to our Contact 26 strategy, we have delivered outcomes that will help shape New Zealand's energy future for generations. As Rob has outlined, we have delivered growth, invested heavily, and played our part in supporting New Zealand's economic development. Before I get into the detail, I do want to acknowledge our people and welcome our new Manawa colleagues to their first Contact Annual Shareholder Meeting. I am incredibly proud of our collective team and what they have achieved.
They are a group of high-performing professionals who come to work every single day focused on the role they have in supporting the energy transition. In the last year, Contact has delivered a very strong financial performance in the 2023 financial year. Our EBITDA of $774 million was up 17% on the previous year, and profit after tax was $261 million on an underlying basis. This result excludes the release of the Ahuroa gas storage provision of $98 million before tax, but includes the $18 million Manawa transaction and integration costs. If you adjust for these one-off Manawa-related costs, EBITDA was $792 million. Market conditions were impacted by the accelerated decline in gas availability. With two historically dry periods, as well as periods of intense hydro inflows, hydro storage was highly volatile. These conditions meant significant volatility of wholesale prices.
In this context, our financial performance reflects our resilient risk management, as well as the benefits of our $1.2 billion investment in new geothermal capacity at Tōhāra and Tahuka 3. Contact also supported the market and played our part in New Zealand's energy security. We managed through dry conditions by securing gas in the short term from Methanex. We also ran our Taranaki Combined Cycle Plant and used flexible gas storage at Ahuroa to support economic thermal generation. This was the first year our new geothermal power stations, Tōhāra and Tahuka 3, were both operational. In a challenging year, Contact's baseload geothermal generation increased to 4.5 TWh, up 34% on the previous year. It has reinforced the importance of geothermal and our commitment to delivering a secure and reliable electricity supply for New Zealand. We, as Contact, delivered the right projects at the right time.
In light of our financial results, we will pay shareholders $0.39 per share annual dividend, up 5% from the previous financial year. We are now four years into our Contact 26 strategy to grow demand, grow renewable development, decarbonise our portfolio, and create outstanding customer experiences. In this short time, we have committed more than $2 billion to build the critical energy infrastructure our country needs. Now more than ever, we must continue to play a leading role in ensuring secure, sustainable, and affordable energy for New Zealanders. The FY 2025 year saw a significant investment in growth and continued focus on project delivery, with our entire net profit and some reinvested in developing renewable energy projects.
As Rob has said, according to Bloomberg Global Energy Data, between 2021 and 2024, New Zealand has been a global leader in investing $240 per person per year in renewable infrastructure, greater than the U.S., China, U.K., and Australia. In that, Contact is leading the way. It is our profound belief that our role is to enable the electrification of the economy. We are walking alongside our commercial, industrial, and residential customers to help them in the energy transition. We will continue our orderly investment in renewable generation to support this. Rob has spoken about the combination of Contact and Manawa Energy being an important step forward in the country's energy transition. Together, we have highly complementary, geographically diverse hydro generation. Contact's hydro assets in the South Island produce more energy in the summer following the summer melt. Manawa 's sites produce more energy in the winter.
The two combined are outstanding. Our leadership team and I have spent the last two months visiting the Manawa sites and spending time with our new colleagues as we have integrated the two new businesses. We have been delighted with what we have seen. We expect to be operating as one company by Christmas this year. We were delighted last November to host alongside the Tōhāra Hapu, the Prime Minister for the opening of Tōhāra, the world's largest single-shaft geothermal power turbine. In the same month, Tahuka 3 also came online. Following behind us, our two new geothermal power stations, the Kōwhai Solar Farm and the Glenbrook- Ohūrua Grid-Scale Battery, are expected to come online next March. Our Te Mihi 2 binary plant that will partially replace the 60-year-old Wairākei plant is also well underway, with an on-stream date of mid-2027.
This level of activity is unprecedented in our history. Not only is it fulfilling an urgent need for renewable energy in New Zealand today, it is supporting the transition and creating new opportunities for the nation's economy. You only need to walk through Taupō and you witness the impact such investment is having on heartland Kiwi communities. This is partly why we were so disappointed when the Southland Wind Farm fast-track resource consent was declined in March. While we have now been accepted to lodge an application under the new fast-track legislation and have done so, the simple reality is an exorbitant amount of time and expense has been consumed with the previous planning regime, with little, or if I'm honest, no productive outcomes for society at large. We have hope that projects such as Southland Wind Farm will be built at pace for the benefit of all.
This project alone would bring more than $200 million to the Southland economy and generate more renewable energy to power the equivalent of 150,000 homes. The team have also lodged a consent application to extend the Glenbrook- Ohūrua Grid-Scale Battery to 500 MW and lodged a consent application to build an additional 500 MW Grid-Scale Battery at Stratford. We're also working on several projects to improve the efficiency, safety, and reliability of our hydro assets. This will help improve energy supply in dry years and during peak winter demand. We are acutely aware that we have a responsibility to ensure a reliable, secure energy supply for the country while we manage the energy transition. The rapid and unexpected decline in gas availability has now got to the point where some hard choices are having to be made.
That, with dry hydrological conditions, led to a short period of high spot prices last year in August 2023. Our response was swift and comprehensive. We signed gas agreements with Methanex last August and again in May this year to ensure winter periods of high demand were covered. We also extended the operation of TCC until the end of the year when it will be decommissioned. Along with the other major gentailers, we have signed the Huntly Strategic Firming Agreement to keep the lights on for the future. Contact has also recently secured a seven-year gas agreement from Greymouth Gas Limited. Contact will now be able to support hundreds more New Zealand businesses, critical gas customers such as schools, hospitals, and thousands of Kiwi households as they transition in a managed, orderly way, away from fossil fuels to a renewable energy future. Our commitment to decarbonisation remains resolute.
We have taken pragmatic steps to ensure reliability of supply as we transition, helping bridge the gap while we scale up renewable development. Turning now to the customer, home is everything. It's where life happens, connections are made, and futures are built. Our financial year finished with 650,000 customer connections across energy, broadband, and mobile, a growth of 21,000 connections from the previous year. As of this morning, we have well over 650,000 customer connections. We recognize that creating outstanding customer experiences is more than growth. This is also about fronting into the challenges ordinary New Zealanders face at a time of increasing pressure on household budgets. More than a third of our customers are now on our time-of-use plans, receiving free power in return for off-peak use. Since it was launched in August 2021, Kiwis have received more than 260 million hours of free energy.
These tools, where we engage with ordinary Kiwi households, help navigate supply challenges, help with budgets, and have transformed energy peaks, reducing the reliance on fossil fuels. In August 2024, we removed disconnection and reconnection fees for non-payment of all Contact customers, resulting in disconnection rates dropping 30% year on year. Earlier this year, the Commerce Commission reviewed lines and transmission charges. These charges are passed on to consumers, accounting for up to 40% of the average bill. We recognize that these pass-on charges have and will put pressure on consumers. Finally, to our people, I would like to thank everyone at Contact for their outstanding work and focus throughout the year. I'm proud of you all and the contribution you have made, not just to Contact, but to the difference we are creating.
I would like to also acknowledge and welcome our new Chief Retail Officer, Carolyn Lui, who joined Contact in July. Carolyn was appointed following Matt Bolton's appointment to Transition Director last year. I would also like to recognize Matthew Forbes in his appointment as CFO, and that was an internal appointment. We're delighted to welcome you both to the leadership team. Looking ahead, one thing is clear: progress will require both visionary aspiration and the ability to remain responsive to New Zealand's energy needs. We are excited about the future and the leading role that we play in New Zealand's energy transition. [Foreign language] , thank you.
Thank you, Mike. We will now move to the formal resolutions for the meeting. These are outlined in the notice of meeting sent to all shareholders in August. Voting on the resolutions will be by poll. Each resolution will be put to the meeting. For those of you here with us in Auckland, you will be able to cast your vote by filling in your voting card you received at the registration desk on the way in and which will be collected at the end of the formal part of the meeting. If you're a shareholder or proxy holder and did not register on arrival and wish to vote, please make your way to the registration desk and staff from our shared registry will assist you.
If you're both a shareholder, a proxy holder, or a shareholder company representative, or have more than one holding, you would have received a separate voting card for each holding. When you vote on the resolutions, please complete all voting cards given to you at registration. For those attending the meeting online, to vote, you will need to click "Get Voting Card" within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking "For," "Against," or "Abstain" on the voting card. Once you've made your selection, please click "Submit Vote" on the bottom of the card to lodge your vote. Please refer to the virtual meeting online portal guide or use the helpline specified if you require assistance.
Voting will remain open until five minutes after the conclusion of the meeting. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution and is such to be approved by a simple majority of the votes cast by the shareholders entitled to vote and voting on the resolution. For the information of shareholders, the proxy votes received for all three resolutions will be displayed on the screen as we discuss and then vote for each resolution. Our first resolution today relates to the election of a new director, Deion Campbell. It is my pleasure to move that Deion be elected as a non-independent director of Contact . Deion was appointed to the board in July 2025.
Under the NZX listing rules, Deion is required to retire at the first annual meeting following appointment by the board and is now standing for election by shareholders. A brief biography for Deion is set out in the notice of meeting. The board warmly and unanimously recommends that shareholders vote in favor of Deion's election. I'd now like to invite Deion to speak in support of his election.
Thank you, Rob, and good morning, everyone. I'm very happy to be here today seeking election to the Contact Energy Board. I believe that Contact has worked hard to gain the position of the best-performing company in the New Zealand energy sector. The broad and diverse asset base, combined with strong customer offering, has resulted in a resilience that is not mirrored in other key market participants. Recent transactions and project development outcomes have enhanced this position. It was therefore my pleasure to be appointed to the Contact Board in July, following the successful completion of the acquisition of Manawa Energy by Contact. Until then, I was the Chair of Manawa Energy. I believe my skills and experience will be complementary and reinforcing to the existing Contact Board.
I've spent my entire career in the electricity sector as a professional electrical engineer, including roles focused on developing, delivering, and operating large-scale renewable generation and hydropower projects, along with more than 10 years as a senior executive in publicly listed electricity companies. My most recent executive role was that of Chief Executive of Tilt Renewables, which was based in Melbourne until it sold in 2021. I therefore have a solid background in operational risk management, setting and executing strategy, public and private equity raising in M&A transactions, health and safety, global procurement, team performance, remuneration structure design, asset management, efficient capital allocation, and project delivery. I also have experience in adjacent sectors such as mining and civil construction. In addition to my role as Director of Contact, I am a Director of Origin Energy in Australia.
I'm an operating partner at Morrison, a global infrastructure manager based in New Zealand. My work at Morrison means I am Chair of Long Road Energy, a renewables developer and operator in the United States, and I'm a Director of Pastoral Partners Australia, which is focused on vegetation-based carbon sequestration. I confirm that I have the capacity to dedicate the time required to be an effective Director of Contact, and as I said earlier, I'm confident that Contact is well positioned to create shareholder value as New Zealand's energy market transitions from fossil fuels. I'm excited to join the board and work with management to make the most of the opportunities ahead. Thank you for considering my election to the board. I appreciate your support.
Thank you, Deion. Are there any questions in respect of Deion's election? Are there any questions online?
No, we have no questions online.
Okay. Given there are no questions from shareholders, please now complete your voting card beside Resolution 1. Please select any of "For," "Against," or "Abstain" in the appropriate place on the voting card. Our second resolution today relates to Directors' remuneration. I now move the proposal that the maximum aggregate annual remuneration payable by Contact to Directors be increased by $350,000 from $1.5 million per annum to $1.85 million plus GST, if any. Again, the background to this resolution is set out in the notice of meeting, but to highlight some key points. The last fee pool increase was 17 years ago in 2008. The increase is supported by independent experts, MERSA, that have benchmarked Contact against contemporaries and recommended an increase of between $1.85 million and $2 million. This proposal is an increase at the lower end of the range.
The MERSA report was referenced in the notice of meeting and is available on the Contact website. The Board considers the increase appropriate. In the past five years, Contact has increased significantly in size and complexity. Importantly, we have delivered solid returns to shareholders and have been a leader in New Zealand's decarbonisation. We want Contact to have the ability to attract strong and experienced directors from a wide pool across New Zealand and Australia, and that may mean that Contact is paying above the median peer group. We'd also like the ability to increase the number of directors on our Board from time to time to support orderly succession planning. At present, we do not have sufficient headroom in the director fee pool to pay eight directors. Contact is a large and complex organization. It operates in a highly regulated environment.
It is in the interests of shareholders to be able to attract strong directors who have a unique and broad range of skills needed. I would also highlight that it is the intention of the Board only to increase the base director fees and committee fees in line with inflation. I hope you can see such statements are not made lightly. There may be the occasion where the circumstances in the year do not warrant an increase. That will be a matter for the Board at the time. I now invite discussion on the resolution. Are there any questions that shareholders present or online would like to ask? It's just here.
Thanks. Mr. Chairman, my name's Alan Best and I'm a shareholder, but I'm also the proxy holder for the New Zealand Shareholders Association. Firstly, I'd like to say that we appreciated the chance to engage with the company over the resolution. We have decided that we must vote against it, and there are various reasons for this, but it is a marginal call. We feel that the current level of directors' fees is at the high end of the New Zealand averages that we have worked out in this industry and its associated parameters. The second thing is that we understand that the fees have not been raised for a very long time, and actually, as a policy, the New Zealand Shareholders Association likes to see regular reviews of directors' fees rather than very large reviews at the end of a long time.
We feel that the review conducted did actually emphasize the Australian comparators, and because this is a local company, Contact is a local company producing locally and selling locally. We don't think that that is particularly relevant because from the guy who signs the road signs to the chief executives of New Zealand companies, New Zealand pays less than Australia. We'd like to see it pay more, in fact, but like all New Zealanders, we have to recognize that Australia is paid well above the New Zealand averages. We're opposing the motion, but I'd like to hear what others say.
Perhaps I could just make some comments here because you did say the directors' fees, and I just again reiterate and clarify we're talking about the director fee pool. You also talked about regular increases and the fact that's what we're trying to achieve here because we're up against the cap. As I mentioned in the opening remarks to this resolution, the intention is just to move with regular increases, and that may not always occur. I do want to touch on the matter around feeling like or having a director fee that is sufficient to at least attract interest from Australia. We are a large and complex organization. We look for particular skills. Our first port of call is always New Zealand. I just make that call or make that clear.
In some occasions, and particularly if you can imagine you're trying to create a diverse board, often to get a bigger and deeper pool of talent in certain areas, we feel it's necessary to go wider.
Jenny Miller-Shea, Hondra, you mentioned in the report, your integrated report, that. Be aspirational. Is the board makeup, it's not in your skills metrics, do they actually have those skills to be benchmarked against?
Sorry, vision and aspiration.
Vision and aspiration. It's in your integrated reports.
I'm not sure a vision and aspiration is necessarily a skill as a personality behavior, but I can assure you the directors have tremendous aspiration for the success of Contact. In terms of vision, I think down to every director, they have a very clear vision of what they see Contact contributing to the New Zealand economy and the decarbonisation of New Zealand. To answer your question, yes, I believe all the directors do have both a vision for Contact and certainly aspiration for its success. Are there any questions online?
Yes, we do have one coming through. This is a question from Ross Carlson. Is the proposed increase the average rate of inflation since last done?
Significantly below the rate of inflation since. We're talking 17 years of inflation, so yes, it is definitely below the rate of inflation.
We have one more question. This is a question from Stephen Main. Which proxy advisors issued a report ahead of today's meeting, and did any of them recommend a vote against any of the items, including the proposed increase to directors' fees cap?
Glass Lewis, ISS, and PIRC all issued proxy reports. Glass Lewis and ISS have voted in favor of the resolutions. PIRC recommended opposing resolutions, three on the basis that the level of the non-audit fee raises concern about the auditor independence. EY is the auditor of the company. Non-audit fees represent 6.78% of the audit fees during the year under review and 5.62% on a three-year aggregate basis. The fees cited are by and large relating to assurance work for climate data. We just have a different view about that than PIRC, but that relates to audit fees.
are no more online questions.
Great. Thank you. Now we will turn our mind to the auditors. Please now complete your voting card beside Resolution 2. Please indicate your vote by marking any of the "For," "Against," or "Abstain" in the appropriate place on the voting card. The last resolution to be considered relates to the auditor. I now move that the directors' fees be authorized to fix the fees and expenses of the auditor. EY is Contact's auditor. This resolution proposes that the board be authorized to fix the remuneration of the auditor, which is the conventional practice of New Zealand companies. It reflects the fact that the level of the auditor's workload and therefore fee may need to change from time to time to take into account changes in a company's size or complexity or changes to the law. I now invite discussion on the resolution. Are there any questions online?
We have one online question. At last year's AGM, this is from Stephen Main, asked what would happen if shareholders voted down a strange resolution that pops up every NZX listed company to approve the authority for the Board to approve payments to the external auditor. At the time, Chair, you said that the government was looking at a review which would hopefully end this requirement. Is this still realistic?
The requirement for this resolution I describe as one of life's mysteries. Law reform does take time, and as far as we know, the Companies Act review is still on the government's agenda. EY was appointed the auditor in the financial year beginning 1st of July 2022, acknowledging that regular audit firm review is best practice. The lead audit partner retired in 2024, and obviously, that's a recent appointment, so there's no proposals to retender at this point. Please now complete your voting card beside Resolution 3. Please indicate your vote by marking any of the "For," "Against," or "Abstain" in the appropriate place on the voting card. Staff from the shared registry will now collect your voting papers. Please place your voting paper in the ballot box as they are passed around. Shareholders participating via the virtual meeting should now submit their votes online.
Voting will remain open until five minutes after the conclusion of the meeting. We'll just pause for a moment as those boxes move around. The votes will be counted and the results be announced to the NZX and ISX later this afternoon. We now move to general business. This is your opportunity to discuss anything we've not already covered or ask questions of the Board or the management team. Before I open the floor to questions from those present and online, we have one question submitted prior to this meeting. I will wait for that question to come up online, but I'll go to the floor. Are there any questions shareholders would like to ask, sir?
and over what time frame you expect to see those benefits?
Sorry, could you state your name?
Michael Bowden, our shareholder.
You indicated that you would assist householders transitioning from gas to renewables, presumably electricity. Can you outline what steps you intend to take in that way? One thing I am aware of is how costly it is for people to disconnect from gas. It can cost hundreds of dollars. Just wondering what your plans are in that respect.
Yeah, Mike particularly talked about what we have done to shore up our gas supply so we can continue to provide supply to retail and also commercial. I'll ask actually, Mike, why don't you talk in more depth about what we're doing around gas and particularly in retail?
I think it's important to recognize that, you know, a lot of Kiwi households have invested significantly in gas appliances and the like. We want those gas appliances, obviously, people would like to see them used at the end of their natural life. When people are ready to transition or when new homes are built, obviously, we have the good plans which allow people to shift their load into the free hours, which reduces the cost of the electricity. We have products like the hot water sorter, which enable load to be managed. We're looking at products like virtual power plants and the like. The idea is that you obviously help households transition. There are other products out there at the moment, like heat pump hot water cylinders, which, as we work through it.
The important thing is that particularly at this time, when households are doing it tough, that people aren't shocked into suddenly having no gas. Just easing that transition is a very important part of the transition. With the deal that we have done, we can continue to support ordinary Kiwi households for a pretty significant period to come. For gas, sorry, we have signed the gas deal up to 2032, and we expect gas supplies to go on beyond that.
Into the next decade, I think you look, what Mike's talked about is we're not running away from gas. Question online.
We have one question online. This is actually a question from Stephen Main, but it is to Elena Trout. Elena is leaving as a director. We announced it on August 18. At the time, said Elena was a resignation, but Elena, you're retiring at the end of your three-year tenure. It's always useful for shareholders to have access to some exit perspective from a long-serving independent director. In your final contribution as Contact Director, could you comment on what you see as probably the best two decisions that have been made during your time on the board?
Perhaps I'll just address the first part of that as that's the way we did it or do it in New Zealand. But Elena.
I think, Chair, I've actually got a croaky voice, so my apologies. Reflecting on my time at Contact, I think there's two standouts for me. One of them is influencing management and the Board of the importance of firming products. In the case of Contact, that was to encourage the investment of a large battery site, which will be commissioned in 2026. The other one was to reconsider the utilization of our gas facilities in Stratford and for them to remain as part of our portfolio for longer than was originally considered and not to retire them as quickly as the original plan. It provided, again, another firming product for New Zealand as it transitioned into a renewable environment, which is very reliant on the conditions of rain and sun and wind. Thank you for asking for my objection.
Okay, do we have any more questions, sir?
Thanks, Mr. Chairman, Alan Best again. I've got a pretty long-term sort of question. I've been reading about the long-term forecasts for renewable energy in the world, and the general theory is that because SWB, solar wind battery, will be quite disruptive to existing players in the industry like yourselves, because the demand for security of energy will mean that that particular type of energy is going to be produced in surplus. I note that Mike has been talking about the orderly transition, and I'm afraid markets are not orderly, nor is competition. I would expect that the cost of the production will result in quite significant surpluses, even in a country like New Zealand, which is more orderly and more government controlled than the rest.
This means that we're going to get the marginal cost of electricity pretty much dictating the play, as opposed to the cost of the last piece of generation capacity, which we've all been told is what the prices have been based on in the past. This long-term outlook is, and it's not too long-term, it's within the next 10 years. It's actually quite reasonable, medium-term. This is going to depress the price of electricity to the marginal cost of electricity, and the marginal cost will mean that producers will obviously be accelerating their capacity all the time because if you're operating on a marginal cost, you've got to increase the resource that you're managing. I wondered if you could make some comments, perhaps Mike, perhaps our new director, Deion.
Yeah, I'm sure they're very keen to make comments as I do. I think what you've raised is really a very insightful question in that what we see is more volatility going forward. That volatility comes from that growth in intermittent, and at a minute, you're largely talking about wind and solar. You see our investment in batteries, that is to capture that volatility and the value that can be created there. Elena just talked about firming. The ability to firm will become more important as we go forward with more intermittent. New Zealand has been fortunate compared to some other countries, and they're not too distant away from us, where there's been heavy, heavy subsidy into rooftop solar, which is very disruptive into the market and has caused quite a lot of volatility right through, if you look in Australia.
As a Board and a management team, we actually take time to go and study and look at those markets to understand them better. We're always looking for a lens out into the future of things that might occur. I think for us, that volatility, potentially, if we continue with building the right renewables and storage, that can be an opportunity for us going forward. We'll start with Mike. I'm sure Deion will say something as well. Yeah.
A couple of things in there. As Rob and Elena alluded to, when you're faced with volatility, the key trait is flexibility and that ability to firm. I think the more immediate challenge in New Zealand is that the transmission and consenting constraints mean it's a problem we can't even get to at the moment. We cannot build the renewable energy projects we would like to build. That flexibility, when the time comes, with the hydro assets we now have, with the investment in Manawa, with battery investments, and with demand side participation, the flexibility in the smelter, the flexibility in the New Zealand Steel deals. Look, Kiwis, when they see low-priced electricity, they won't miss an opportunity, and they will look to become flexible enough to also participate in that.
As long as the market remains free and flexible, as long as we are allowed to build through resource consenting and transmission constraints, we believe this company is very prepared for that future which you outlined, Elena. Thank you.
We've had one, two more questions come in relating to previous resolutions and comments. The first one's from Stephen Main. A 9.5% shareholding is pretty low to warrant Infratil being given a board seat. Deion, can you comment why Infratil wanted a seat? Could the Chair explain why being given 14.3% of board seats after the retirement of Elena reduces your board to just seven? Shouldn't we at least appoint two additional directors to better align Infratil's voting power on the board with its board representation?
I'll answer that question. I'll go back to when the request for a board seat for the Manawa Chairman came during negotiations. It's something we considered as a board at Contact. It wouldn't have been something we would have considered if it wasn't Deion. What we saw was, as Deion described in his address, that a deep, deep experience in renewable energy, and probably very important for us is familiarity with the Manawa assets. There's, you know, 26 diverse across the country. We felt someone on the board, that was quite attractive for us. Infratil has no right of appointment. That appointment was made as part of the transaction. It merely said we would appoint him to the board and then Deion would stand for election from all the shareholders. That has occurred. As I just reiterate, there's no right of appointment there.
We've had a question resubmitted that came in just prior to the meeting. This is from Bruce Walker. At a time of huge expense and household uncertainty, the directors' fees move as obscene. The directors are also involved with other companies and receive more than one director's fee. Being a director should be a full-time job with one company. What is your comment?
I'd beg to differ. If it's a full-time job with one company, then it's called an executive. I don't know, you probably don't have a board at that point. The one thing I would say to this observation, perhaps not a question, is the directors at Contact have deep backgrounds in their both executive experiences and professional experiences. They bring that to the board for the various things that we do to assist and support the executive as the strategy of the company goes forward. We bring challenge. I hope we bring wisdom as well, which is an often used word. Being a director is very different to being an executive.
Rob, this is a question for you from William. William Wright. You said in your speech that you will need to ensure that the mistake, in brackets, made by Jacinda's captain's call of banning any new oil and gas exploration is not repeated. How are you planning to do that, bearing in mind Labour have already stated they intend to reintroduce the ban should they be elected in the next election?
I'll give a personal view. I think that train's left the station in terms of oil and gas. I think, as Mike described it, you know, hard decisions now. I'm not convinced at all that we'll see any scale exploration going forward. New Zealand's going to have to prepare for a different world of gas and how we may go forward. My point wasn't so much about the gas ban going away or being restored and any change that would make. It was simply that any decisions regarding electricity or energy markets are well thought through and people understand the consequences, and we don't get unintended consequences.
There's just one last one around gas, and then we'll go back to the floor. What is the reason for shutting down the Taranaki Combined Cycle Plant?
There's two reasons. One, it is absolutely now at the end of its life. It would require a very substantial overhaul. It's 30 something years old now, 30 years old, which makes it very much in its twilight years. It's served us incredibly well. The bigger issue is we have no confidence in the upstream gas supply to service it from year to year. That is the reason it's closing, or two reasons it's closing.
Sure. Hello. Good modest shareholder. It's really just in-house, really. I love coming to these meetings, or shouldn't I say love, come? Because we see you personally, and I just don't understand your PR people making it so early. I know I'm getting old, but I mean, you try and get here. You yourselves most probably, you know, you most probably have a motel or hotel somewhere close and you get a taxi here.
I'm just saying, think of others because timing to get here, next time you have a meeting, maybe in about five years when you come to Auckland, I won't be around. Think of others. Now, one other thing, sorry, I know you want me to get on. Everybody's hungry. What I was going to say is you've got these big screens here. Why not utilize them for, you know, we're town people. You've got these big projects all around the country. It'd be good to see them. You know, it's, I'm a country guy and state really. I'm just saying, you've got the screens, try and make use of them with your PR people. Thank you.
Thank you for those observations and we'll certainly note the time. I love watching the videos of these, particularly the geothermal plants when they're getting built.
That's good food for thought, particularly as we're building one of those plants as we speak. Thank you for that. Any other questions? Any other questions online?
Jenny Miller again. Mr. Chair, it's a question for Jon MacDonald, who is the Chair of the HR and People's Committee. He acknowledges in the integrated report that it's slow to close the gender pay gap, and there's a few pages about it. In your words, Jon, what are the actual issues, please?
Thank you for the question, Jenny. First, I just want to clarify that when we're talking about the gender pay gap, that is not people of different genders being paid differently for the same role. We're talking about where we look in the entirety of all of the female employees and their remuneration relative to male employees. It comes down to the seniority of the different groups that we have within the different genders. In the case of Contact , that's mostly due to a large number of senior male engineers who are long tenured at Contact and have been well paid. There is also a large number of females in our customer support teams in particular, where the remuneration is less than for those engineers. That same dynamic is true a little bit in technology as well with our great number of male technologists.
When it comes to your question as to what we're doing about that, the main thing that we look to do is where we can grow people into, especially those areas where women are underrepresented. That means things like our Girls in Hivers program in Hope, where we look to bring young women into generation. Similarly, our internship programs when we look at technology with, say, Tupper Tower and with Summer of Tech. We appreciate this is a very, it's a slow dynamic and it tests all of our patience, but we do dedicate that effort to it.
Thanks, Jon.
Sorry, just a little bit more. Given that it's today a week, what are we doing for the Māori Wāhine and progressing them through?
A good amount of milk. There'll be people here also who are able to fill in more detail on that sort of question. One of the things we do, especially with our work around Tūpōr, is look to make employment opportunities available to tangata whenua there. That does include Wāhine Māori.
Mike, have you got any comments?
Yeah, look, we have a very active program across the full spectrum, as it were. We obviously have a great graduate intake, which is invariably at least 50% female and a significant number also of tangata whenua. In the Taupo region itself, we have the Kahiko program, which is directly linked to our investment in the area, which is designed around tangata whenua development in particular. It is too good an opportunity with that level of investment and that level of technology being ploughed into the Taupo region not to take our partners with us in that. We're quite proud of the progress we made. That is not to acknowledge there is more we could do, and we will continue to step into that space with pride.
OK, any other questions?
We have one last question for General Business from Stephen Main. Rob, New Zealand is regarded as a governance backwater by some Australian investors for refusing to mandate annual voting on remuneration reports, which is standard in many countries. At last year's AGM, you dismissed following the lead of Xero and voluntarily giving shareholders a non-binding vote on our remuneration policies. Is that still your position, and are you able to summarize what board discussions, if any, have occurred on the matter?
I don't agree New Zealand is a governance backwater. I think our remuneration report is fulsome and complies with New Zealand, and we get New Zealand law, and we get very good feedback from our institutional shareholders that they find that report very useful, particularly where we publish future or KPIs for the coming year. I don't see we have an issue with shareholders around the remuneration report.
That was the last online question.
Okay. If there are no further questions, I now declare the meeting closed. For those present in the room, I'd like to invite you to stay and join us for morning tea. Please feel free to talk to my fellow directors and members of Contact's senior management and wider team who will be wearing name badges and look very much look forward to the opportunity to talk to you. If you have a customer service query or would like to sign up as a customer, some members of our retail team are also here and more than happy to help. Thank you very much for your attendance and continued support of Contact. I wish you a safe journey home.