Okay, we're gonna get started now, everybody. May we have any more to come in? No. Okay. Kia ora koutou. To all our owners, investors, and guests, I welcome you to Mercury's Annual Shareholders' Meeting for 2023. Now, my name's Howard Thomas, and I'm our Company Secretary. It's an absolute pleasure to welcome you here today in person and online. Spring has definitely sprung, which is beautiful. I'll quickly run through some housekeeping before we get started. So this is a non-smoking, non-vaping venue. So if you'd like to do either of those, please go as far away from the building as possible in the car park. Toilets are located on this floor, so they're past the stairs where you came in just now, as well as downstairs by the Akarana Eatery.
If there's an emergency, please follow the instructions of the venue staff, who will be wearing high-vis jackets. Now, there are emergency exits on the balcony, so they're left and right of me. Left and right over there. Please exit promptly through these doors and down the external staircases. These will take you to an evacuation point, which is in the car park. So if you have any mobility issues, please just see a member of the venue staff. So following today's meeting, we hope you join us downstairs in the Akarana Eatery for afternoon tea with your directors, with management, and the rest of the wonderful Mercury team. We really do welcome these opportunities to, you know, meet up with you and speak with our shareholders and friends, so do join us there.
Now, continuous improvement is a way of life for us at Mercury, so for those of you here in person, feedback forms were placed on your seats. Please let us know what you think. Then place the form in the box, which is near the exit on your way out, or alternatively, leave them on your chairs or just hand them to one of the Mercury guys in yellow T-shirts. For those of you online, a survey link will appear on the online platform underneath the broadcast box near the end of the meeting. Now, before handing over to our chair, I'll outline a few procedural matters. For those here in person, we have roving microphones, so if you want to ask a question during Q&A, please just raise your hand, and we'll bring you a microphone.
Please state your name and whether you're a shareholder or a proxyholder. For our online attendees, you can watch a live webcast of the meeting and read digital copies of the meeting documents, and shareholders and proxies can also ask questions and vote online. So online Q&A. If you're online and have a question during the live meeting, please use the Q&A tab on the right half of your screen to submit your question. You can do that at any time. Your question will be submitted immediately once you press Send, so warning. If you need help, you can type your query, and one of the Computershare team will assist you using the chat function. Alternatively, you can call Computershare on 0800 650 034.
We do have a moderator who will do their best to faithfully represent the questions that are asked online. Now, the moderator is not gonna change any online questions except to sort of tidy up any typos or anything like that. But, if there are several questions on the same topic, those questions may be grouped together in one representative question. Now, please note that while you can submit questions from now, these will not be addressed until the relevant time in the meeting. So please, keep your questions relevant to the proceedings and make sure they're as succinct and clear as possible. So online voting. The chair will shortly open online voting for all resolutions to provide online attendees with enough time to vote.
If you're eligible to vote, you'll be able to cast your vote under the Vote tab by selecting your voting directions from the options that are shown on the tab. You can vote for all resolutions at once or by resolution. And you know that you've voted when the tick appears in the box. Now, you can change your vote up until the time we declare voting closed by selecting Change Your Vote. The directors together hold undirected proxies. So with respect to Resolution One, which is the re-election of Hannah Hamling, 468,893 shares. With respect to Resolution Two, the re-election of Scott St. John as a director, 467,023 shares.
Resolution Three, the election of Adrian Littlewood as a director, 536,287 shares. With respect to Resolution Four, the election of Mark Binns as a director, 549,161 shares. Directors intend to vote all of those shares in favor of each of the resolutions. The chair will warn you before she moves to closing for voting. Please, voting instructions for those in person will be provided when we get to that part of the meeting. I now invite our chair, Prue Flacks, to open our 2023 Annual Shareholders Meeting. Prue?
Thank you, Howard. Tēnā koutou katoa. Good afternoon, and thank you all for joining us today at this Annual Shareholders Meeting. My name is Prue Flacks, and I'm the Chair of Mercury New Zealand Limited. So on behalf of your directors, the Chief Executive, who is with us virtually. Unfortunately, Vince tested positive for COVID a couple of days ago, and so made the decision that it was better to attend virtually, but you will shortly see him on the screen. He's feeling fine, he tells me, but, he's just not physically in the room with us. But for everyone who is with us online or in Auckland on what has to be a beautiful day, you're very welcome.
I'm pleased to confirm that we have a quorum, and therefore, I declare Mercury's 2023 Annual Shareholders Meeting open, and voting is now open on all items of business. So the agenda for today: first, I will introduce our board, and all the board are here in person. I'll make a few brief comments on our financial result for FY 2023 and on the broader environment in which we're operating. Then Vince will talk to you about how Mercury is delivering on our strategy. And then this year, we had some feedback last year that you would like to hear more from some of our executives, so Stuart Hamilton and Craig Neustroski, two of our executives, are going to talk very briefly about some key business activities in their areas.
In terms of formal business, we've got 4 resolutions to put to the meeting: the re-election of Hannah Hamling and Scott St. John, and the election of 2 new directors, Adrian Littlewood and Mark Binns. After the resolutions are presented and voting is closed, we'll take general questions relating to the company, and Howard's talked about the process for that. But before I move to the introductions, I just want to acknowledge that this is the last time that I will address this meeting as Chair of Mercury. You may have seen the announcement a couple of weeks ago that I intend to retire from the board at the end of this calendar year. I've been on the Mercury board for, well, at that point, have been on the board for nearly 14 years, and the last 4 years as Chair. The board has elected Scott St.
John, sitting to my right, to succeed me as Chair. I just want to say it has been an absolute privilege to be part of the Mercury journey, from a state-owned enterprise, because I was obviously on the board before listing, to what is now a highly successful listed company, and I thank you all for your support for the board and the company, along the way. I know that under Scott's leadership, Mercury will continue to thrive and will play a leading role in the transition to a decarbonized world. Now for the introductions. We have, on this side, we have Mark Binns. If you could just maybe give a wave. Mark's probably familiar to many of you. Adrian Littlewood, Hannah Hamling. Where's James? James Miller. I'm going left to right. James chairs our Risk Assurance and Audit Committee.
Susan Peterson, down there. Scott, we've mentioned Scott. Scott currently chairs our People and Performance Committee. At the far end, Dr. Patrick Strange. Mike Taitoko, down this end, and next to Mike, we have Lorraine Witten. Now, I just want to say something about Patrick. Patrick is retiring at the conclusion of this meeting after a total of 11 years on the Mercury board. Patrick has, I think we would acknowledge, unique perspectives from nearly four decades in the New Zealand electricity industry in a range of roles. His contribution at Mercury to our strategy, to our large projects, health and safety, and the development of robust risk management strategies, have been hugely valuable, both to the board and to management. Patrick, you will be missed.
We keep telling you this, and he smiles politely and says, "I don't think so." On behalf of everyone here, I do want to thank you for your long service to Mercury. As I said, unfortunately, Vince isn't able to be here in person, but he will be presenting virtually. We do have, next to Howard, William Meek, our Chief Financial Officer, and Howard, our Company Secretary, you've already met. We also have representatives of Ernst & Young, who undertake the audit of Mercury on behalf of the Auditor General. We have representatives from Chapman Tripp, our lawyers, and we have members of Mercury's executive team down in front of me. I'll now turn to our financial result, which I think they're going to give you a slide.
So our financial result for FY 2023 reflects the benefits of the large-scale investments that we've made over the last couple of years, which we've talked about at the last couple of AGMs, and they're investments that have grown our renewable generation business and our retail business. Also impacting this year's result has been the record generation. So with our hydro generation, we've been 28% higher than average, and we've also had a 16% increase in wind generation, and those two things in particular have contributed to the good result. Net profit after tax was NZD 103 million, which was down NZD 366 million on the previous year, but you will remember that last year's result included the gain made on sale of our shareholding in Tilt Renewables.
EBITDAF was NZD 841 million, up NZD 260 million on the previous year. Our operational expenditure was NZD 346 million, which again, was up NZD 116 million on the prior year. This is reflecting the increase in scale of our business. Our total stay in business capital expenditure was NZD 119 million, which was up NZD 51 million on FY 2022. The board was pleased to declare a fully imputed final dividend of 13.1 cents per share, which was a 9.9% increase on FY 2022. This took our total FY 2023 ordinary dividend to 21.8 cents per share, and this is the 15th consecutive year of ordinary dividend growth. The total shareholder return for FY 2023 was 18.7%.
Looking forward, guidance for FY 2024 for EBITDAF has been set at NZD 835 million. Ordinary dividend guidance is NZD 0.233 per share, which again, is a 6.9% increase on this past year. But achieving these results has required a disciplined focus on the things that really matter. Mercury has faced the same headwinds as other organizations, including supply chain issues, inflation, access to skilled labor, and increasing project costs. And so on behalf of the board, I just want to acknowledge Vince and the executive team for the leadership that they have provided to the whole of the organization and all our people, to produce a result which I hope you can be as proud of as we are.
I just want to talk, make a few comments about the operating environment, and I think that the world we're now living in is more complex, and it's changing very quickly. And I see, I think we all see this in different aspects of our lives. And organizations like Mercury must deal with issues such as climate change, dramatic advances in technology, and the demand for a more inclusive and equitable society. And as a country, one of our biggest challenges, and also one of our biggest opportunities, is the transition to a decarbonized economy. And at last year's annual shareholders' meeting, I noted that together with many of our sector peers, we'd commissioned the Boston Consulting Group to provide an independent report on how best to decarbonize New Zealand's energy system.
The report that has been delivered provides a very helpful whole of system view, which shows the key challenges and how the solutions to those challenges are interrelated. Importantly, the report found a pathway to achieve a reduction in emissions, which is faster and deeper than the current government plan. Vince is going to talk about some of the actions Mercury is taking to help the country get there. But achieving Net Zero by 2050 in Āotearoa, New Zealand, will require collaboration between the public and private sectors, with a stable regulatory environment, long-term policy settings, to ensure that existing and new sector participants have the confidence to invest the significant amounts of capital required. A whole of system approach is vital to ensure the lights stay on for consumers through the transition to a more renewable future.
The BCG report suggests that keeping a small amount of gas in the electricity system could fill the gap during the droughts and demand peaks that inevitably happen and could also reduce the cost of the transition. Affordability is an important consideration, because while residential electricity prices have tracked lower than inflation over the past 10 years, significant investment is required across all parts of the sector, and we anticipate that this will see electricity prices increase in the short to medium term. This investment is critical, not only to enable the transition, but also to ensure the resilience of the network, to the more extreme weather events, for example, that we're increasingly experiencing. Over the longer term, total household energy bills are expected to reduce, and that's largely because the electrification of transport will deliver significant fuel savings for consumers.
Our sector is united on supporting consumers through this transition, and Craig Neustroski will speak to some of the actions we're taking now, which should set us up to better support our customers. As I'm sure you know, Mercury's assets have been here for more than a hundred years. We want to be here for another hundred years, so we need to continue to work hard for our communities. We take our social license very seriously. It is a critical part of our continued operation, and this needs to be reflected in who we are and how we act. So before I hand over to Vince, we're just gonna watch a short video on Mercury's new purpose. And our new purpose helps bring our people together across the business and guides how our people work together.
In this world, which, as I said at the beginning, is increasingly complex, fast-paced, it's really important that our business is unified. Ngā mihi nui, thank you very much, and we'll just watch this short video before Vince zooms in and addresses you all. Thank you.
Who are we? How are we connected? They're mighty big questions that we all ask ourselves. We're united by having something big to care about, a purpose that we share. We are Mercury, providing energy and telecommunications, life's essentials, to more Kiwis than anyone else. As a bold, future-focused organization, we're also proud to be the leading generator of wind energy in Aotearoa. Each one of you is a part of our whānau. How we work together to support our customers, be a trusted community partner, and take care of our assets today, must also look after tomorrow. The role we play in this will define what the future looks like for everybody. At the heart is our purpose: taking care of tomorrow, connecting people and place today. Tiakina te anamata, me te tūhono i ngā tāngata me ngā wāhi o te inamata.
This connects us and our company, guiding the work we do together. We take care of tomorrow in the decisions we make and the leadership we show for our sector and for our nation. We show up for others, bringing support and care to our community when it's really needed, building trust among our customers, showing commitment to our country's natural landscape, leading with renewable energy, and working towards a sustainable future, taking good care of other precious lives, and in supporting each other as one team, collaborating with care, commitment, connection, and curiosity. Our purpose pushes us to take responsibility for doing all we can to create a better future. Taking care of tomorrow and connecting people and places today.
Thank you, Chair. Kia ora koutou katoa. Welcome, everybody. Apologies for not being in the room in person. I guess it's kind of safer for everyone as I'm currently still testing positive for COVID. You've heard from Pru about the importance of having a purpose that reflects the opportunity for Mercury to make a real difference in the country's transition to a lower carbon world. The video introduced our new purpose: taking care of tomorrow, connecting people and place today. I will speak to how we will deliver on our purpose. Building on the growth that Mercury has achieved over the past few years, our 2035 long-term aspirations were updated to better reflect the business opportunities and what we aspire to achieve. These aspirations provide direction.
They revolve around the assets that we operate, the communities that we serve, the customers that we value, our people who make a difference, and our focus on sustainable commercial growth and leadership in renewable energy. Before the end of this financial year, we will also reset our objectives for FY 25 to FY 27, providing a clear medium-term ambition. One of the largest impacts Mercury can make to help take care of tomorrow is through continuing to deliver new renewable generation for New Zealand. Our Turitea Wind Farm, New Zealand's largest, is now fully operational, equivalent to 2% renewable generation to the grid. Our NZD 115 million, 43 MW Kaiwera Downs One Wind Farm near Gore is currently commissioning and remains on track to be fully operational next month. Our Kaiwera Downs Two and Kaiwaikawe wind farms are also both nearing final investment decision development stages.
Today, I'm also pleased to announce that we will be undertaking a NZD 220 million expansion of the Ngatamariki Geothermal Station. Stuart Hamilton will further talk to the expansion of Ngatamariki and how we are also ensuring the long-term performance of our existing assets. Building renewable generation is one of the key actions in our recently released Climate Transition Action Plan. This important document transparently lays out our emissions reduction targets and sets out actions we plan to take to support a net zero future. Reducing emissions at our geothermal stations is key, and we continue to trial carbon reinjection technology at our Ngatamariki station. In one year, emissions at this station have reduced by about 25%. A really pleasing result.
When we think of taking care of tomorrow, we also think of our retail business and how having scale enables us to deliver value for customers into the future. Significant progress has been made to bring Mercury and Trustpower together, following our acquisition of the Trustpower retail business 18 months ago. We'll hear more about that from Craig. To connecting people and place today, we are working to become a more adaptive organization, to enable our people to more effectively navigate new and complex challenges and opportunities that may arise. To become more adaptive in the ways we think and work, we are focusing as-- on aspects such as embracing transparency, continuous learning, and setting ourselves up to collaborate and deliver the highest value. Embracing the many backgrounds, views, and capabilities of our people makes us stronger and better as an organization.
We continue our focus on building a more diverse, equitable, and inclusive workforce. Supporting this, we have shifted our health and safety focus to be more holistic, including taking into consideration both physical and mental well-being. As Prue noted, we think deeply about the world around us in everything we do, and we enjoy any opportunity, such as today's meeting, to connect with our stakeholders and communities. Finally, I would like to acknowledge Prue and the enormous contribution she has made to Mercury's transition to one of New Zealand's largest generators and multi-product utility retailers. Prue has overseen fundamental change at Mercury. This change is helping Aotearoa, New Zealand transition to a low-carbon future through our renewable generation, our pipeline, our scale retail business, our partners, and our people. I've gained a lot working with Prue and wish her well for the future.
To you, our owners, thank you. Thank you for your ongoing support. I will now hand over to Stuart to share more about how we're taking care of tomorrow and connecting people in place today in our generation business.
Kia ora, Vince, and we wish you a speedy recovery. Kia ora tātou katoa. Ko Stu Hamilton toku ingoa. He kaiwhakahaere mā taua ahau ki te Whakahiko. I'm proud to be the General Manager for Generation for Mercury. I'm leading the team of operators, maintainers, engineers that are sustaining and enhancing our 20 assets throughout Aotearoa, New Zealand. At Mercury, we have over NZD 8 billion worth of assets spread amongst 20 locations, three fuel types, and these are carefully managed by 300 very committed people. Our people connect nature's energy of water, wind, and steam to the assets that generate the electricity and send it to our homes, our businesses, and communities. They know the operations intimately and identify how we best invest and how we operate those assets to protect them for the generations to come and enhance for the performance of today.
The team made significant progress in setting our assets up for future in FY 2023. Part of that saw us complete the rehabilitation of the first turbine and generator unit at our Karapiro Power Station. This station has operated for over 77 years, and the project underway will set that asset up to operate for 50 years and beyond. At the same time, it will also lift the output by nearly 20%. That's enough hydropower to supply an additional 17,000 homes during peak periods of power use, peaking capacity that is vital to support our transition to Net Zero. We also completed our largest, most complex and extensive geothermal station shutdown and turnaround during the year.
The investment of NZD 37 million in Kawerau to replace the turbine, the generator, and the control system, will set that station up to be resilient and to continue to supply renewable baseload electricity for many years to come. As we look forward to the needs of the future, and as Vince just mentioned, we are very pleased to announce today that we'll be expanding the Ngātamariki geothermal site. This includes the addition of a fifth generating unit at that site. It's an investment of NZD 220 million and will add an additional 46 megawatts of baseload energy generation to New Zealand's grid. That will thereby support the diversity of our pipeline of other wind projects and prospects.
Ngātamariki has operated for ten years, and we have worked closely with our iwi partners, Ngāti Tahu-Ngāti Whaoa, and our commercial partner, Tauhara North No. 2 Trust, to develop this project while ensuring we manage sustainably the reservoir and the surrounding environment. It's a very exciting project, with first power due to come on late in 2025. To further build the resilience of our Waikato River hydro scheme, we also continue to develop a rehabilitation program for our dams and our power stations. This also is now expected to include investment into the Taupō control gates, the Maraetai Power Station, and the Aratiatia Power Station over the next decade. This further shows our commitment to taking care of tomorrow and sustaining and growing value. Ngā mihi nui.
I'll now hand over to Craig to share how we are going to take care of tomorrow and connect people in place in our retail business. Craig?
Thank you, Stu. Kia ora tātou katoa. As the general manager of our commercial operations at Mercury, I'm responsible for driving the commercial strategy of our retail business, including our telecommunications and energy offerings, and the smooth running of our day-to-day commercial operations. It's been a big year for our retail business. We've made significant progress in our goal to bring Trustpower and Mercury employees, customers, brands, processes, and systems together. All Trustpower customers were welcomed onto the Mercury brand in June. This enabled them to access, access Mercury's rewards program, our new app, our refreshed website, and much to our delight, they've really embraced these, with the Mercury app rocketing to number one on the New Zealand App Store for a short period. After reaching this milestone, our focus turned to migrating all of our customers onto the refreshed technology stack.
Once this work is complete in coming months, all of our customers will be able to access all of our products, including our popular Samsung deals. While the integration of Mercury and Trustpower has been a significant focus of our time and energy, we've also continued to focus on running our core retail business in parallel. This year, we limited average electricity price increases to between 3% and 5%, in recognition of the cost pressures many households are facing. We also continued to phase out the Low Fixed Charge. Nearly 20 years ago, the Low Fixed Charge was introduced with the intention of reducing bills for households with low electricity consumption. But unfortunately, this resulted in many large, low-income households, who cannot afford energy-saving measures, subsidizing the smaller households.
So last year, the government, together with the industry, began a phase out, a five-year phase out of the low fixed charge, which is ultimately designed to ensure fairer pricing for all consumers. This means if you're on the low use plan, gradually more of your bill will come under your fixed charge. And I welcome further questions on this at afternoon tea. The industry has developed a package to support customers most affected by this change. Financial aid like this should only ever be a short-term measure. That's why we're committed to finding longer-term, holistic solutions for customers that need our support. For example, we're participating in an Electricity Retailers’ Association trial to help connect customers with poor credit ratings to post-paid power, and we're also undertaking a two-year winter energy study with Kāinga Ora – Homes and Communities.
This enables us to trial how capped bills could benefit customers over winter. Further, we've been collaborating on joint research into energy hardship with Genesis Energy and working on potential solutions with community groups. When we look into the future, we think how we can design innovative solutions to meet our customers' changing needs. And we know customers value having multiple services in one place, and we know energy needs are going to change. Some of the things we're looking at are new solutions for EV owners, smart solutions for the home, and how we can help customers become more energy efficient. We believe we can use our scale, customer insights, smart technology, including automation and AI, to deliver better outcomes for our customers and staff well into the future. Thank you. Ngā mihi nui, and I'll now hand back to Prue.
Thanks, Craig, I hope you found hearing directly from a couple of our executives more informative than hearing more from me all the time. We now move to the formal business of the day, and today's resolutions relate to director appointments. All four resolutions will be presented before we pause for questions on those resolutions. All four resolutions relate to succession planning for the board, and it is important that we effectively manage the transfer of institutional knowledge and experience, and that we look to the future, as well as providing for our immediate current governance needs. The re-election of Hannah Hamling and Scott St. John and the election of Adrian Littlewood and Mark Binns will facilitate effective transfer of knowledge, will ensure continuity and retention of key skills within the board.
All voting at today's meeting will be by way of poll, and accordingly, in my capacity as Chair, I require that a poll be held for each of the resolutions. For those here in person, shareholders, shareholders who are entitled to vote, and proxies who have discretion as to how they vote, should either have the voting form that was sent with the notice of meeting or a form given to them by Computershare when they registered upon arrival. If you completed a postal vote, you do not need to complete another voting form. If you haven't got a voting form, please go to the Computershare desk just outside this room, and the representatives there will be able to assist you. I will invite you to vote after all resolutions have been introduced to the meeting, and voting will close at the conclusion of questions.
So Resolution One relates to the re-election of Hannah Hamling as a director. Hannah was appointed as a director of Mercury in February 2020, and she's a member of the Risk Assurance and Audit Committee. Hannah has an extensive background in consulting, management, and board roles across various sectors, including electricity, construction, and water management. The board recommends Hannah to you as a Mercury director and unanimously supports her re-election. I now invite Hannah, being eligible for re-election, to address the meeting.
Thank you, Prue. You're so tall, I'm gonna have to adjust the speakers. Tēnā koutou katoa. Ko Hannah Hamling ahau. It's an honor to be given the opportunity to attend this meeting and address you all. By way of background, as Prue has said, my education is in science, and co-culminating in and achieving a Master's of Science with first-class honors at the University of Auckland. I started work at a merchant bank in the '80s. I then moved into professional services, consulting in geotechnical engineering and environmental science to both industry and local government in New Zealand, Australia, and in Southeast Asia.
I was appointed to the Global Board of Golder Associates in 2010, and remained there until till 2015, when I took up a role in the executive team as President of Asia Pacific, responsible for 900 staff and a revenue of $200 million. While at Golder, I was instrumental in developing and holding Golder's first Diversity and Inclusion Workshop, which created significant engagement and a cultural shift in the region. In 2019, under my leadership, Golder Australasia won the Best Professional Services Firm in Australasia and the Best Consulting Engineering Firm. I am a member of the New Zealand Institute of Directors.
I finished my term, first term on the board of Mercury, as Prue has pointed out, and I am also on the board of a Morgan Stanley company, which is Morgan Stanley Infrastructure Partners, Burgundy Holdco, which specializes in transport and logistics. Over the past three years on the board and the Risk Assurance and Audit Committee, I've helped to foster a culture of safety that permeates every aspect of the operation within Mercury and its contractors. And while this culture is still evolving, I am committed to continual enhancement of it. In my role of governance, one of my key contributions has been to help Mercury at a high level navigate its geothermal drilling program in order to maximize success as much success as possible, and minimize risk from failure of wells, health and safety, and achieve cost management.
Through the lens of governance, I've encouraged the executive team involved in operations to embark on a hazard and operability program, utilizing the skills of the critical risk team, and therefore amplify and find the proactive maintenance procedures, which will, in the medium term, reduce unplanned outages and reduce safety risks to our people working with our assets. Finally, and most importantly, one of my many wonderful and humbling experiences I've been fortunate to have been included in representing Mercury at numerous events and functions with our Māori JV partners, who have hunga with the Awa, Roto, and Whenua on which Mercury operates. I'm proud of Mercury's commitment and passion to decarbonize New Zealand's energy sector. We have embarked on a journey of not just increasing generation for, but generating change for our future and future generations.
I believe that New Zealand, as a result of this approach, will attract more for investment into our country and increase the wealth of New Zealanders. With my background and three years in the energy sector, I'm confident I will be able to continue to contribute to Mercury's advancement as an innovative energy company, helping Mercury's executive teams achieve its strategic objective. My focus is to help continue to grow returns to shareholders, while at the same time, maintaining Mercury's status as an environmentally sound and ethical investment for shareholders and New Zealanders. So, ladies and gentlemen, it's my honor to attend this meeting today seeking re-election as a director and as your representative on the Mercury board. I ask for your support. Thank you for your time today.
Thank you, Hannah. I now move as an ordinary resolution that Hannah be re-elected as a director. Resolution two relates to the re-election of Scott St. John as director. Scott was appointed a director of Mercury in September 2017, and is currently the Chair of the People and Performance Committee, and a member of the Nominations Committee. Scott is Chair of Fisher & Paykel Healthcare Corporation, and a director of Fonterra Co-operative Group, ANZ Bank New Zealand, and NEXT Foundation. He has an extensive background in investment advisory and capital markets. The board recommends Scott St. John to you as a Mercury director and unanimously supports his election. I invite Scott, being eligible for re-election, to address the meeting.
Thank you, Prue, and good afternoon. My name is Scott St. John. As Prue mentioned, my background is in financial services. I started as an analyst and worked my way through to running a business, now known as Jardines, for about 15 years. So for 30 years, I worked in a commercial classroom of sorts, observing businesses, markets, and practitioners, learning every day. In fact, as time has gone on, my enthusiasm for role-related learning has increased, and I spend a good part of most days, learning, and reading. During this career, I also got the opportunity to lean into a number of industry forums and regulatory enhancement situations, such as the establishment of the FMA.
I stepped down from my full-time job early in 2017, and since then I've been a full-time governance practitioner or director across a wide range of industries, which is, as Prue mentioned, includes being Chair of Fisher & Paykel Healthcare, a Director of Fonterra, and ANZ. I'm a former Chancellor of the University of Auckland, and I'm also a Director of NEXT Foundation, which is a philanthropic enterprise involved in predator eradication, and education. In my financial markets role, I was involved in the mixed ownership model program of listing New Zealand's Genesis, something that has, in my opinion, been a success for all stakeholders. The broader industry is delivering on decarbonization outcomes for New Zealand at an efficient clip, with billions of NZD of investment in wind and solar and battery scheduled.
At Mercury, we have worked hard to craft an exciting pipeline of opportunities to develop renewable assets. That said, it's not quite as simple as build them, and they will come. Committing owners' capital to such projects is a matter taken very seriously by your board in the context of our strategic plan. I believe my background serves owners well in deliberations around these capital commitments, and complements the rest of the board. I acknowledge the great responsibility that goes with being a director. I am a shareholder, so I am aligned, and I ask for your support in my candidacy.
Thank you, Scott. I now move as an ordinary resolution that Scott St. John be re-elected as a director. Resolution 3 relates to the election of Adrian Littlewood as a director. Adrian is an experienced business leader. His executive career included 12 years at Auckland International Airport, including 9 years as the Chief Executive. Adrian will bring to the Mercury board commercial business experience, extensive large organization and cultural leadership experience, and experience in major project investments and stakeholder relationships. The board recommends Adrian to you as a Mercury director, and unanimously supports his election, and I now invite Adrian, being eligible for election, to address the meeting.
Thank you, Prue. Good afternoon, Kia, and it's great to see some familiar faces in the audience here today. My name is Adrian Littlewood, and I'm pleased to be putting my name forward for election to the Board of Mercury. Because I'm new, this is my first ASM, I'll just spend a little bit more time on my background. I originally qualified many moons ago as a lawyer here in Auckland. Practiced commercial and corporate law here in Auckland and then into the UK. I then worked as a management consultant in the UK before returning to New Zealand to work for Sp- what is now Spark New Zealand, in a variety of senior management roles. From there, I joined Auckland Airport, firstly, as the executive in charge of the retail and commercial business before becoming the CEO, as Prue mentioned.
Outside of those executive roles, I've also held a range of governance roles over the past few years, including a director of North Queensland Airports in Australia. I was chair of the New Zealand Airports Association for many years, and I'm currently sitting on the Government Cyclone Recovery Taskforce, and the board of Craigs Investment Partners. My previous roles have given me a chance to work with some very talented management teams and boards, dealing with some very complex business issues, including major technology change-outs, large-scale infrastructure development, business model transformation, regulatory change. So after taking an extended break from the airport and growing a beard, as you can see, I've decided to start a career in governance. I had to think carefully about the kinds of companies that I might like to put myself forward for.
I've really had a simple criteria about which companies I'd like to work with. It went like this: that the company is important for New Zealand and our future prosperity as a country. It's a truly New Zealand company, where the decisions, the hard decisions are made here in New Zealand, not offshore. The company itself is facing some real challenges, some opportunities as well, but some challenges in the years ahead, and that I could actually offer something of use to the company. For me, Mercury easily meets that criteria. To me, there are very few things that matter more to our country's long-term success than the safe, stable provision of affordable energy.
At the same time, our industry here is going through some major changes, probably some of the most dramatic changes in the industry's history, with the decarbonization of energy generation, major asset renewal, and the electrification of just about everything, and all at the same time. And while this challenge is common around the world, I think we all recognize that every country will face that differently, and New Zealand needs its own response. And in my short time with the company so far, I can already see how this board, and Vince and the management team, are determined to be leaders of that change. And not only, not only to be leaders, but to do it really well, while taking care of Mercury's customers and, of course, you, the shareholders.
So I believe my experience for working with some of New Zealand's biggest companies on some of their most challenging issues is directly relevant and useful to, I think, the challenges and opportunities that Mercury has ahead. And I hope with your support, I can offer my experience to the team at Mercury. So it's my honor to attend my first ASM for Mercury, and I ask for your support to be elected as a director of the board. Thank you.
Thank you, Adrian. I now move as an ordinary resolution that Adrian Littlewood be appointed as a director. Resolution four relates to the election of Mark Binns as a director. Mark is an experienced business leader and director, and I'm sure he will be well known to many of you. His executive career included 5 years as chief executive of Meridian Energy and 22 years with Fletcher Building, including 15 years as CEO of the Construction and Infrastructure Division. He currently chairs Crown Infrastructure Partners and Hynds Limited, and is a director of Auckland International Airport. Mark will bring to the Mercury board strong commercial experience, including in the energy industry, wholesale markets trading experience, and obviously, experience in major project investment, which is particularly relevant as we embark on a lot of development. The board unanimously supports Mark's election as a director and recommends him to you.
I now invite Mark, being eligible for election, to address the meeting.
Thank you, Prue. Kia ora, everybody, and it is great to see so many familiar faces from Meridian a few years ago and Auckland Airport. So, I hope I'm not repeating myself. I'll try to keep it very brief. First, a brief overview of my background. I mean, as Prue mentioned, I started as a lawyer, and left that partnership in my early thirties to go to what was then Fletcher Challenge, and morphed into Fletcher Building. During that time, most of my time was spent in the construction and heavy building materials area, and I finished off as being CEO of the infrastructure division, which at the time was the largest and most profitable part of Fletcher Building.
In 2011, I went to Meridian in contemplation of the company being floated by the then National Government. That occurred in 2013, and Prue, it wasn't five years, it was six years at Meridian, and I retired in 2017. Since then, I've been involved in a number of enterprises, largely involved in governance in both private and public companies. Prue has mentioned what those company—or the major companies actually are. I believe I have got the skills and experience to add value to the Mercury board. Clearly, I've got a lot of senior management experience from my time at Fletcher Building and at Meridian.
And I have a deep understanding of the electricity industry in New Zealand, its players, and the challenges that it has from those six years at Meridian. And finally, I think my experience in construction, because I was involved in construction for a large part of those 22 years, gives me a unique contribution to make to Meridian—to Meridian, sorry, they both begin with M. I knew I was going to make the mistake, by the way. To Mercury, and when it looks at the opportunities it has in the development pipeline, because decarbonization of New Zealand is a very, very important issue for this country, and Mercury is going to play a vital role in that decarbonization.
With that, I'd like to thank you all for listening to me, and I'd ask if you could support my election to the board. Thank you very much.
Thanks, Mark. I now move as an ordinary resolution that Mark Binns be elected as a director. Voting on all resolutions will close at the conclusion of questions, so I'll now pause to allow time for any questions to be asked on the resolutions for the election or re-election of your directors. So this is. We'll save the general questions for later. So these are just questions relating to the resolutions, and we'll take questions from the floor first. There are some people with roving microphones, if required, so just raise your hand if you have a question. There don't appear to be any questions on the resolutions. Moderator, are there any questions online?
Kia ora, Prue. There are no questions online.
Thank you, moderator. That concludes our discussion on the resolutions. So for those in the room who wish to vote on these motions, please tick one box to select For, Against, or Abstain alongside each resolution in the section marked on your voting form. If you hold a proxy on behalf of a shareholder, you will need to cast that shareholder's vote in order for them to be counted. Where there are undirected proxy votes, proxy holders may vote these as they see fit by ticking the appropriate box. It is just worth clarifying that all directed votes are treated as postal votes, and proxies need not complete a voting form in respect of directed votes. Finally, in all cases, please ensure that the voting form is signed. After voting, please place your form in one of the ballot boxes, which will be passed around the room.
If anyone's unsure how to complete the voting form, or if you haven't got a form, please go to the registration desk outside the room, and somebody will be able to help you. Once all votes have been cast, they will be counted by Computershare, and the results of today's meeting will be released to the NZX and the ASX on the completion of verification of voting. Please prepare your forms and cast your votes now, and in a minute, I will close the voting system. Just please make sure that you've cast your vote on all resolutions. Still see a few people with pens. Has everyone completed? Voting is now closed, and Computershare will collect the voting papers in the room.
So at this point, we'll open the meeting to questions of general business, either from the floor or which have been submitted online during the course of the meeting. So we'll take questions from the floor first. And again, there are some people with microphones, so if you'd like to raise your hand, and please state your name and whether you're a shareholder before you ask your question. There's a gentleman here.
My name is Keith Fisher. I'm a shareholder and a loyal customer. This is the first time I've been to a meeting like this, so-
You're welcome.
Thank you. My question is to do with loyalty. Now, over the past few years, when my contract with Mercury has come to a close, the first time was when the early payment had finished, and just recently when the low. What's it? The-
Low Fixed Charge tariff?
Low Fixed Charge-
Yeah.
-had finished.
Yeah.
Now, in both cases, I had to ring up and ask Mercury what they could do for me. Now, I think that being a loyal customer, it'd be much better if you received a letter from Mercury saying, "Seeing you're a loyal customer, we can offer you this," which would mean I wouldn't have to ring up and find out what they could do for me. So that was my question.
That's a very good point you're making, but I don't actually think it's a question. So, I mean, I'm very happy to take the feedback, and in fact, you've got the executives sitting here in the front row that are hearing that. So we should try to do better because you're absolutely right. Thank you very much.
Thank you.
There's a gentleman in the front, front row. Coming this way.
Good afternoon. My wife and I, we're both individual shareholders. My question is about the wind farms. They're very capital intensive, and I would like to know what length of time before we get a return on the capital outlay. How long was it operating? Like, the substation, the coaxial cables, and the turbines before we get a return, the company gets a return on the capital?
Well, so you don't mean the life of the wind farm, you mean?
No. Well, before we start getting NZD 1 return.
Well, we start generating immediately, but I might just-- That's a, that's quite a technical question, so either. William, do you want to take that one?
Yeah, happy to take that question. So, yes, renewable generation investments are capital intensive. The Turitea Wind Farm, for example, is just over NZD 2 million a megawatt. Payback periods are probably in the sort of 15-year period. The company makes these investments on a net present value perspective, so we assess the capital cost of construction, the ongoing operating costs for the wind farm, and then its revenues through time, based on generating into, essentially, New Zealand's electricity markets. We have a pretty clear cost of capital hurdle. The wind farms exceed that. And we certainly can see that. You can see in the accounts, this year and in the previous year, as we progressively commissioned Turitea and actually uplift in asset values.
That's essentially reflecting that, the value of those assets exceeds the cost of construction. So now we're very confident that the projects we're investing into are, decarbonizing New Zealand, but at the same time, earning economic profits for shareholders.
Yeah, but we see that.
Thank you. Good question. Do we have any. Another one, gentleman in the front?
Thanks. I'm Bruce Parkes, I'm a shareholder and proxy holder for the Shareholder Association. Picking up on Mr. Neustroski's comments about customer care, the Electricity Authority is currently consulting on updating their consumer care guidelines. Is Mercury part of that conversation, and which of the options do you prefer?
Yes, the answer is Mercury is. We are compliant with the consumer care guidelines. The original report that came out suggested that we weren't, and it was incorrect, and they subsequently corrected it and apologized, I might add, which is, which was nice. We are perfectly comfortable with those guidelines being mandatory. That's our position, and we are currently working with that EA process on those guidelines.
Thank you. Secondly, the Electric Kiwi has complained to the Commerce Commission about an inability to get hedging for peak load. Is there a Mercury view on that?
Yes, there is, and you may have read comments from William in the media, and I might ask William to comment, but we absolutely refute those allegations. I mean, Mercury has a policy of providing pricing to anyone who asks, and we do provide those contracts. But William, do you want to provide just a little bit more detail on that? Because it is quite topical.
Yeah, certainly, Prue, Prue. So, the complaint made to the ComCom by Electric Kiwi is multifaceted. I'll address a couple of features of it. One, there were statements made that essentially generators weren't offering peaking products to help independent retailers cover their wholesale price exposures in their business. I was quoted and was happy to provide a response from Mercury in that respect. So while I can't talk for other generators, certainly Mercury has a process where essentially we do we accept all offers from customers, independent retailers, other generators, for pricing, and we price, and we price those hedges accordingly. So the types of products that Electric Kiwi were alleging weren't available, certainly from Mercury.
We have undertaken some of those with Electric Kiwi and with other independent retailers and customers within New Zealand. So that's the first point. Second point really just deals with the market, wholesale costs are elevated at the moment. So thermal fuel prices, which often set the marginal price for power, are still relatively expensive, particularly if you're running on coal, and add the cost of carbon on top of that. And so that is creating challenges in New Zealand for all retailers. And you'll see certainly in our segment reports that the retail businesses are finding profitability you know quite challenging. And that's that applies to ourselves as it does to the independent independent retailers. And again, that's not a feature, it's a feature that's quite common.
If you go to the UK, you've seen lots of bankruptcies. If you go to Australia, you've seen also retailers step back from the businesses. So it's not a unique feature to New Zealand, but, the energy costs are expensive, which is why, you know, we're looking to commit NZD 1 billion over FY 2024 into 3 new power stations to, bring those wholesale costs down. So that essentially, consumers in New Zealand can enjoy, affordable power.
Thank you.
Thanks, Bruce. Do we have any further questions from the floor? Yes, we have one in here.
Hello, Gordon Wallace, shareholder. Question to William Meek, Meek again, please. I'm not sure. It's really about, you're talking about wind farms. You're saying 15 years is normally the time it, you have the turnaround for. What about the, are the costs a lot higher, having wind farms, or is the. How long does a wind farm or a one last for? Because of the, of servicing it as well as, yeah, well, how long? or is this, this has to be the way we have to go now because we can't go the normal way?
Yeah, okay. I'll attempt to sort of a quick-
Threshold. You talked about threshold when you do a wind farm. It's a-
Threshold.
Yeah.
But I think you're asking two questions, Steve-
Sure
but I'm sure William can-
Before I sit down, then you, you know, go to somebody else.
We certainly are seeing inflation in terms of generating equipment. If I gave you some quick examples, sort of a rule of thumb for grid-scale solar at the moment would be about NZD 1.5 million a megawatt, recognizing that solar generates about 20% of the time. A good wind farm generates over 40% of the time. Turitea is as high as 46% of the time. That costs NZD 2 million a megawatt. So that wind farm will be better than essentially the grid-scale solar systems we're looking at. The Ngatamariki project that was announced today for NZD 220 million, including. So that's a geothermal plant, so that will generate—
We have no gas.
No, geothermal.
Yep, yep.
Yeah, geothermal. That generates 95%-97% of the time, so it's base load generation. That costs NZD 5,000 a megawatt. But again, it's got a price that's actually quite comparable to Turitea, which was essentially, we entered into contracts back in 2018 and 2019 for that. So, you know, the Ngatamariki project is a good project from a cost of energy perspective.
Happy with that?
We're very happy with all the projects that we've built, absolutely.
But you're right, they're complex investment decisions. And as we build more renewables to help New Zealand with this transition, we're constantly having to to weigh up when we'll get an investment return. Because I think we're all confident that over the period to 2050, demand will be there, but it is a question of timing as to when that demand turns up. So they're quite challenging decisions. But thank you. That's a really good question. Do we have any other questions from the floor? Moderator, do we have any questions online? Thank you, Paul.
Yeah. Hey, Prue. We have one question from Mr. Moosburger. It's a three-part question: Are Mercury's service and customer service email addresses active and monitored? If so, I challenge the team leader to send an email inquiry to see how long it is before we get a response. Second question: In this digital age of almost instant communication, what sort of timeframe can we expect? Third part: Is management considering employing AI to speed things up?
Thank you. Well, they're good questions. There are three questions in there. So I think to answer the first one, yes, both those email addresses are monitored. But our email channels aren't instant responses, and we do. Our frontline teams do their very best to answer them very quickly. But just recently, as Craig's talked about, we've been welcoming a number of new customers from Trustpower into the Mercury platform, so our frontline teams have been extremely busy. So I think the response times have been, over the last little while, slower than we would normally expect to provide. But we do have a web-based chatbot, which is, it's AI-based. It's that is an instant response on quite a wide range of matters.
And that sort of leads into the third question. Yes, we are looking very closely at AI for opportunities throughout our business, and particularly in the customer business, because it's just getting better and better. And I think we'll all find that increasingly we will turn to chatbots enhanced by AI to get instant responses which are very comprehensive. So I think that. Does that answer all three of the questions, Paul?
Yeah, that answers them, Prue. I've got one more, general business question, from Vaughan Richard Crimmins. What provision is made to recycle the blades of wind generators as they need replacing? What preventions are happening to minimize birds being hit by the windmill blades?
Well, I'll have a go at the first bit of that question. I'm not sure I might whistle up Phil on the second part, but recycling of wind turbine blades is something that we've been talking quite a lot about recently, because clearly, everyone's interested in it. So there are some schemes where blades are repurposed and the life is extended, and they are exported to countries, perhaps in Africa, to use for another 15 or 20 years. But increasingly, the turbine blade manufacturers are working on ways of actually being able to recycle significant proportions of the material, and I think 90-95%.
And I might ask, Phil Gibson in the front row, because he's going to be more technically expert than me, but this is a question I've asked myself. So going forward, we will expect that a lot of the turbine blades will be recycled into new turbine blades with processes that are currently in development by the turbine manufacturers. So, Phil, do you want to-
Hi, everybody, Phil Gibson speaking.
I'm not sure about birds.
I think that covers the recycling advances that are coming and how we will think about that for future wind farms. And then for thinking about bird strike, mostly it's a matter of where wind farms are located, how we think about the ecology and avifauna, and how we go through consenting processes or understanding the environment before we build wind farms. And then there's a number of conditions that we build into consents to monitor against our modeling expectations and make sure that we're not having effects that are worse than expected. And then we have provisions in our consents to make sure that we take action if we find that we've modeled any of those things wrong.
Thanks, Phil. Paul, do you have any further questions?
We have one further question, Pru. Why is the text in the annual report so small?
Good question. Because there's a lot of it. And I think I can say, Lucy, without giving away any secrets, that you'll notice this year that there are more pages, and to minimize the number of extra pages, probably the text has reduced. Because for the first year, we've included our carbon reporting, which we're required to do now. We are looking next year at perhaps reformatting the annual report so there's a core section that's of general interest, and then there are different sections that you can pick up and read if you want to, but you don't need to read the whole thing. But you see that I wander around with my hobby glasses because I certainly am challenged by the small font.
I do sometimes accuse management of not picking distinctive colors on charts. Those of us with slightly more aging eyesight sometimes find it difficult to differentiate between the different shades of blue or yellow on a Mercury chart. I have great sympathy for the question. That's all?
That's all, Pru.
There appear to be no further questions or matters for discussion. So I really would like to thank you all for your engagement and attention this afternoon. The opportunity to meet you and talk to you and, offer you a cup of tea is something that is greatly appreciated, by the board, and I certainly hope to, to talk to, to as many of you as I can, at the end of this meeting. But in closing, I would like to acknowledge the people of Mercury, all our partners, including iwi and Māori land trusts, our customers, and all our other stakeholders who contribute to making Mercury who it is. This brings us to the end of Mercury's 2023 annual shareholders meeting. I wish you all well, and I declare the meeting closed.