1 00:00:03,840 --> 00:00:08,039 Speaker 1: Jakoto. Welcome to shared Lunch. I'm Garth Bray. Mercury Energy 2 00:00:08,160 --> 00:00:11,440 Speaker 1: is one of our largest electricity generators, just over nine 3 00:00:11,480 --> 00:00:14,680 Speaker 1: point one billion dollars by market cap. A year ago. 4 00:00:14,960 --> 00:00:18,360 Speaker 1: Mercury's board put Stu Hamilton in the top job, just 5 00:00:18,400 --> 00:00:22,200 Speaker 1: as dwindling gas supplies and lower rainfall hit generation and 6 00:00:22,320 --> 00:00:25,400 Speaker 1: retail margins pretty hard. But it's not just how you 7 00:00:25,480 --> 00:00:28,640 Speaker 1: take the hit, it's how you rise again. So how 8 00:00:28,640 --> 00:00:31,400 Speaker 1: will Mercury rise and what will the second year look 9 00:00:31,520 --> 00:00:34,280 Speaker 1: like for the new CEO? Before we head inside to 10 00:00:34,320 --> 00:00:37,360 Speaker 1: find out, it's some important information you should always consider 11 00:00:37,440 --> 00:00:38,120 Speaker 1: when investing. 12 00:00:38,400 --> 00:00:41,000 Speaker 2: Investing involves for risk you might lose the money you 13 00:00:41,040 --> 00:00:44,320 Speaker 2: start with. We recommend talking to a licensed financial advisor. 14 00:00:45,040 --> 00:00:48,880 Speaker 2: We also recommend reading product disclosure documents before deciding to invest. 15 00:00:49,159 --> 00:00:51,519 Speaker 2: Everything you're about to see and here is current at 16 00:00:51,520 --> 00:00:52,440 Speaker 2: the time of recording. 17 00:00:52,720 --> 00:00:56,480 Speaker 1: Stu Hamilton, thank you so much for making time for us. Welcome, 18 00:00:56,560 --> 00:01:00,040 Speaker 1: great happy anniversary. I understand it must be with a 19 00:01:00,120 --> 00:01:04,000 Speaker 1: few days away from your first year, right. Actually, yeah, 20 00:01:04,040 --> 00:01:06,640 Speaker 1: so you got your first result that you've put out there, 21 00:01:07,040 --> 00:01:09,480 Speaker 1: first full year result just the other day. Do you 22 00:01:09,520 --> 00:01:11,119 Speaker 1: mind sort of running us through the numbers a little 23 00:01:11,120 --> 00:01:12,120 Speaker 1: bit giving us the highlights. 24 00:01:12,160 --> 00:01:15,200 Speaker 3: Yeah, absolutely so first full year result for myself. Obviously, 25 00:01:15,200 --> 00:01:19,120 Speaker 3: it's been a really challenging twelve months for the sector 26 00:01:19,160 --> 00:01:20,920 Speaker 3: and actually New Zealand in general. And if you look 27 00:01:20,959 --> 00:01:23,880 Speaker 3: at the result, we had an even DAFH of seven 28 00:01:23,959 --> 00:01:25,160 Speaker 3: hundred and eighty six million. 29 00:01:25,560 --> 00:01:27,600 Speaker 4: It's a good number. 30 00:01:27,560 --> 00:01:30,479 Speaker 3: Considering the year that we had and the reason why 31 00:01:30,560 --> 00:01:32,840 Speaker 3: we had a challenge in year one was because it 32 00:01:32,880 --> 00:01:35,560 Speaker 3: was very very dry, one of the driest on record, 33 00:01:36,040 --> 00:01:39,679 Speaker 3: and that represents itself in the result, but equally quite 34 00:01:40,080 --> 00:01:42,520 Speaker 3: a good result in that we're actually had a very 35 00:01:42,560 --> 00:01:45,680 Speaker 3: resilient set of assets and a team which able to 36 00:01:45,720 --> 00:01:48,600 Speaker 3: perform very well during those tough conditions. I think that 37 00:01:48,600 --> 00:01:50,280 Speaker 3: a lot of our analysts and our owners were very 38 00:01:50,320 --> 00:01:52,520 Speaker 3: excited about is what we project for the next year 39 00:01:52,520 --> 00:01:56,080 Speaker 3: and beyond. And so for next year we're guiding to 40 00:01:56,160 --> 00:01:59,080 Speaker 3: one billion dollars, which is a great number for us 41 00:01:59,120 --> 00:02:00,960 Speaker 3: to be looking at on the way to a one 42 00:02:01,000 --> 00:02:03,840 Speaker 3: point one to one point two and by twenty thirty 43 00:02:03,840 --> 00:02:07,000 Speaker 3: and that's exciting. And underneath that even further is excitement 44 00:02:07,040 --> 00:02:09,639 Speaker 3: around what we're building. Over half of the money we're 45 00:02:09,639 --> 00:02:13,960 Speaker 3: making is going straight back into new projects or to 46 00:02:13,960 --> 00:02:16,920 Speaker 3: maintain our current projects. And that's exciting because we've got 47 00:02:17,280 --> 00:02:19,400 Speaker 3: a really good balance sheet puts us in a great 48 00:02:19,400 --> 00:02:24,400 Speaker 3: position to really leverage this electrification sort of movement ahead 49 00:02:24,400 --> 00:02:26,680 Speaker 3: of us maintain maintenance. 50 00:02:26,680 --> 00:02:29,600 Speaker 1: Who spends money on maintenance in New Zealand just wait 51 00:02:29,639 --> 00:02:31,200 Speaker 1: till it breaks and then fix it kind. 52 00:02:31,040 --> 00:02:34,639 Speaker 3: Of thing, And that's a really good thing from our industry. Actually, 53 00:02:34,720 --> 00:02:38,360 Speaker 3: look at we actually got got a lot of really 54 00:02:38,400 --> 00:02:40,520 Speaker 3: amazing assets that are up to one hundred years old. 55 00:02:40,639 --> 00:02:43,040 Speaker 3: We have these amazing hydra assets that have been built. 56 00:02:43,280 --> 00:02:44,440 Speaker 4: Now's our time. 57 00:02:44,240 --> 00:02:46,880 Speaker 3: To actually reinvest into them, so they've got another hundred 58 00:02:46,919 --> 00:02:47,840 Speaker 3: years to go in more. 59 00:02:48,840 --> 00:02:50,880 Speaker 1: Can you give me a sense of how you can 60 00:02:50,919 --> 00:02:54,040 Speaker 1: be so confident in a business where basically, if it rains, 61 00:02:54,040 --> 00:02:56,400 Speaker 1: you make money. How can you be so confident with 62 00:02:56,480 --> 00:02:59,320 Speaker 1: that forward guidance that people seem. 63 00:02:59,120 --> 00:03:02,200 Speaker 3: To have business where we make money when there is fuel, 64 00:03:02,400 --> 00:03:06,800 Speaker 3: whether that's water or wind or sun. They're our renewable 65 00:03:06,800 --> 00:03:10,800 Speaker 3: fuels produce electricity. One of the things we have that's 66 00:03:11,160 --> 00:03:14,000 Speaker 3: very useful and a unique to Mercury is a diversity 67 00:03:14,160 --> 00:03:17,760 Speaker 3: of our assets or our power stations. Diversity in terms 68 00:03:17,800 --> 00:03:20,160 Speaker 3: of the types of renewable fuels they use, and also 69 00:03:20,680 --> 00:03:24,119 Speaker 3: diverse in terms of the geographic location. So we have 70 00:03:24,480 --> 00:03:28,040 Speaker 3: hydro just water, we have wind, and we have gef thermal. 71 00:03:28,440 --> 00:03:30,840 Speaker 3: The great thing about gef thermal is that whether it's 72 00:03:31,160 --> 00:03:34,399 Speaker 3: blowing or raining or shining, it keeps producing energy. Where 73 00:03:34,440 --> 00:03:37,960 Speaker 3: we draw this hot liquid out of the ground, extract 74 00:03:38,040 --> 00:03:40,760 Speaker 3: eltricity and then we reinject that liquid back into the ground, 75 00:03:41,440 --> 00:03:45,480 Speaker 3: so base load really really nice. Then with wind we 76 00:03:45,560 --> 00:03:48,120 Speaker 3: actually spread it around the country. So from the far north, 77 00:03:48,160 --> 00:03:50,440 Speaker 3: which we're building a wind farle at the moment near 78 00:03:50,520 --> 00:03:54,080 Speaker 3: Dargable called Cola Koa, to the deep south another project 79 00:03:54,080 --> 00:03:56,800 Speaker 3: of ours called Cora downs too. And you tend to 80 00:03:56,800 --> 00:03:59,160 Speaker 3: find in New Zealand that when the wind's not blowing 81 00:03:59,160 --> 00:04:01,360 Speaker 3: in the north, it's actually the south and vice versas. 82 00:04:01,400 --> 00:04:05,600 Speaker 3: So having that diversity of location is really good. Diversity 83 00:04:05,640 --> 00:04:07,200 Speaker 3: of fuel is really good. So if we do have 84 00:04:07,240 --> 00:04:10,560 Speaker 3: a dryer year, we're better able to manage that risk. Now, 85 00:04:10,600 --> 00:04:13,360 Speaker 3: it does have an impact, but we pride ourselves and 86 00:04:13,400 --> 00:04:16,240 Speaker 3: being able to limit that impact as much as we can. 87 00:04:16,440 --> 00:04:18,400 Speaker 1: The geo thermal stuff, and I know you're an engineer 88 00:04:18,480 --> 00:04:20,920 Speaker 1: by training, so you'll probably be happy to nerd out 89 00:04:20,920 --> 00:04:23,200 Speaker 1: on these things through a bit. But it's not a 90 00:04:23,240 --> 00:04:26,080 Speaker 1: completely carbon neutral process, isn't it. You do get a 91 00:04:26,080 --> 00:04:28,560 Speaker 1: little bit of caress CO two and other gases coming out, 92 00:04:28,560 --> 00:04:31,560 Speaker 1: so it's not a completely net zero. Is there any 93 00:04:31,600 --> 00:04:33,599 Speaker 1: technology that you guys are working on or working with 94 00:04:33,680 --> 00:04:36,200 Speaker 1: others to turn that around or to capture more out 95 00:04:36,200 --> 00:04:37,880 Speaker 1: of that energy stream? 96 00:04:37,960 --> 00:04:41,000 Speaker 3: Yeah, absolutely right, So definitely from a from a geo 97 00:04:41,120 --> 00:04:45,919 Speaker 3: thermal perspective. Firstly, awesome power source, nice space load that 98 00:04:46,080 --> 00:04:49,400 Speaker 3: operates when you do extract the Brian hot Brian out 99 00:04:49,400 --> 00:04:52,200 Speaker 3: of the ground does have some dissolved carbon dioxide in 100 00:04:52,240 --> 00:04:55,200 Speaker 3: it and that gets released to the atmosphere. We have 101 00:04:56,000 --> 00:04:59,279 Speaker 3: both ourselves and others industry looking at how we can 102 00:04:59,279 --> 00:05:02,599 Speaker 3: capture that CO two and then reinjected back into the 103 00:05:02,600 --> 00:05:05,440 Speaker 3: ground so basically becomes a closed loop. And we've been 104 00:05:05,480 --> 00:05:07,520 Speaker 3: pretty successful at one of our sites that we've been 105 00:05:07,520 --> 00:05:10,440 Speaker 3: trialing at the moment, capturing over fifty percent of the 106 00:05:10,480 --> 00:05:12,920 Speaker 3: CO two and reinjecting it into the ground and really 107 00:05:12,920 --> 00:05:15,120 Speaker 3: looking at rolling out to other sites. It's it's a 108 00:05:15,120 --> 00:05:17,200 Speaker 3: little bit like the old soda stream and sodas stream 109 00:05:17,200 --> 00:05:19,000 Speaker 3: bottles and you kind of pressed the button and inject 110 00:05:19,040 --> 00:05:21,560 Speaker 3: the CO two into your soda stream bottle. 111 00:05:21,640 --> 00:05:22,240 Speaker 4: It's the same thing. 112 00:05:22,279 --> 00:05:24,839 Speaker 3: We're kind of injecting that CO two back into the 113 00:05:24,839 --> 00:05:27,440 Speaker 3: liquid stream, so it's captured and sequested underground. 114 00:05:27,640 --> 00:05:30,280 Speaker 1: Great, and that's is it Morkinmaki or one of his 115 00:05:30,480 --> 00:05:32,839 Speaker 1: Somki is the main site we're doing at the moment, 116 00:05:32,880 --> 00:05:36,800 Speaker 1: and that that's sort of close to topol and then 117 00:05:36,839 --> 00:05:39,000 Speaker 1: looking at doing a similar thing for our sites from 118 00:05:39,279 --> 00:05:43,320 Speaker 1: Marcai to Cowado and na Alparua. A lot of those 119 00:05:43,320 --> 00:05:46,680 Speaker 1: fields if I understand, they were drilled and tested and 120 00:05:46,760 --> 00:05:49,640 Speaker 1: explored like in the eighties. Yeah, but it's only in 121 00:05:49,680 --> 00:05:54,000 Speaker 1: the last ten maybe twenty years that there's been construction 122 00:05:54,080 --> 00:05:57,200 Speaker 1: there to actually capture Have we left it a little 123 00:05:57,200 --> 00:05:59,160 Speaker 1: bit late? Should we have been doing much more and 124 00:05:59,279 --> 00:06:02,039 Speaker 1: much sooner geo thermal and why not? 125 00:06:02,320 --> 00:06:03,440 Speaker 4: Yeah? You're right. 126 00:06:03,440 --> 00:06:05,880 Speaker 3: Really, New Zealand is actually world leading in geo thermal 127 00:06:06,000 --> 00:06:09,039 Speaker 3: and New Zealand's electricity grid is twenty percent close to 128 00:06:09,080 --> 00:06:11,560 Speaker 3: twenty percent GEOFRM. With that that's on a global scale, 129 00:06:11,600 --> 00:06:14,160 Speaker 3: pretty amazing. It is off the back of work that 130 00:06:14,279 --> 00:06:18,240 Speaker 3: was done through the nineteen sixties, seventies, eighties to drill 131 00:06:18,480 --> 00:06:20,960 Speaker 3: to find not only the hot zones, but the hot 132 00:06:21,080 --> 00:06:23,480 Speaker 3: zones that have the water that you can actually extract 133 00:06:23,720 --> 00:06:27,120 Speaker 3: and then reinject back in. So we're really New Zealand 134 00:06:27,120 --> 00:06:30,640 Speaker 3: built its geo thermal fleet through largely the nineteen nineties 135 00:06:30,640 --> 00:06:33,920 Speaker 3: to the two thousands on the basis of all that drilling. Now, 136 00:06:33,960 --> 00:06:36,240 Speaker 3: then what happened in New Zealand was that demand for 137 00:06:36,279 --> 00:06:38,719 Speaker 3: electricity was very, very flat for the sort of twenty 138 00:06:38,760 --> 00:06:42,200 Speaker 3: year period. So without that demand, we largely sort of said, well, 139 00:06:42,440 --> 00:06:45,320 Speaker 3: there's nothing to keep building into. We'll keep operating those 140 00:06:45,360 --> 00:06:48,600 Speaker 3: power stations very well. What that means now that we 141 00:06:48,600 --> 00:06:50,640 Speaker 3: can see the demand going off, we're kind of just 142 00:06:51,160 --> 00:06:55,200 Speaker 3: getting re against match fit teaching ourselves what does it 143 00:06:55,200 --> 00:06:57,159 Speaker 3: mean to develop geo thermal And that's one of the 144 00:06:57,200 --> 00:07:01,719 Speaker 3: really exciting things out of our Natzamriiki obviously five unit 145 00:07:01,800 --> 00:07:04,159 Speaker 3: we're just expanding at the moment, is that we've built 146 00:07:04,160 --> 00:07:06,919 Speaker 3: this muscle again, We've learned how to develop power stations 147 00:07:06,920 --> 00:07:09,960 Speaker 3: and it's almost like a renaissance period of geo thermal 148 00:07:10,000 --> 00:07:12,360 Speaker 3: four for us in the industry, because I think it's 149 00:07:12,360 --> 00:07:14,760 Speaker 3: got a massive role to play in the future of 150 00:07:14,800 --> 00:07:16,520 Speaker 3: New Zealand's electrification journey. 151 00:07:17,200 --> 00:07:19,640 Speaker 1: If you think about that period where there wasn't that 152 00:07:19,760 --> 00:07:22,840 Speaker 1: much demand, you say, and therefore there was much incentive 153 00:07:22,880 --> 00:07:25,000 Speaker 1: to try and build more. What was behind that do 154 00:07:25,040 --> 00:07:27,280 Speaker 1: you think? I mean, some people would say it's we 155 00:07:27,440 --> 00:07:29,400 Speaker 1: just got more efficient so we didn't need as much 156 00:07:29,680 --> 00:07:32,320 Speaker 1: to do more. Other people might say we were actually losing, 157 00:07:32,400 --> 00:07:35,120 Speaker 1: we were deindustrializing, we were losing businesses at quite a 158 00:07:35,160 --> 00:07:37,160 Speaker 1: high scale that nobody really kind of. 159 00:07:37,080 --> 00:07:37,600 Speaker 4: Picked up on. 160 00:07:37,800 --> 00:07:40,560 Speaker 3: Yeah, I'd say the first point is absolutely right. What's 161 00:07:40,640 --> 00:07:43,480 Speaker 3: tended to happen is people are using more appliances electrically, 162 00:07:43,720 --> 00:07:46,720 Speaker 3: but they're more efficient, So definitely see that the consumption 163 00:07:46,840 --> 00:07:50,240 Speaker 3: of electricity has stayed about flat from a retail from 164 00:07:50,240 --> 00:07:55,200 Speaker 3: a household perspective, From an industrial perspective, it's New Zealand's 165 00:07:55,600 --> 00:07:57,480 Speaker 3: last one hundred years has been off the back of 166 00:07:57,680 --> 00:08:00,360 Speaker 3: our great resources and energy and that has been led 167 00:08:00,400 --> 00:08:03,559 Speaker 3: to some pretty significant global companies coming to New Zealand, 168 00:08:03,560 --> 00:08:05,680 Speaker 3: one of which I used to work at the Too 169 00:08:05,760 --> 00:08:08,840 Speaker 3: Point Elements Smelter, New Zealand Steel. Some of those big 170 00:08:08,880 --> 00:08:12,080 Speaker 3: companies are still doing very strong in New Zealand. Sort 171 00:08:12,120 --> 00:08:14,400 Speaker 3: of over the last twenty years it has been that 172 00:08:14,720 --> 00:08:16,520 Speaker 3: not much growth. But the other thing that's been sort 173 00:08:16,560 --> 00:08:19,240 Speaker 3: of sitting there has been the risk of some companies leaving, 174 00:08:19,520 --> 00:08:22,080 Speaker 3: like Too Point. Now, if Too Point was to leave, 175 00:08:22,120 --> 00:08:25,040 Speaker 3: that's fifteen percent of New Zealand's power. So when you 176 00:08:25,080 --> 00:08:28,040 Speaker 3: have that risk there, there's a risk that fifteen percent 177 00:08:28,120 --> 00:08:30,320 Speaker 3: is going to drop out, you can understand why it 178 00:08:30,400 --> 00:08:32,600 Speaker 3: might be a little bit cautious about what you build 179 00:08:32,640 --> 00:08:35,920 Speaker 3: because you could build and then that low drops, price 180 00:08:36,000 --> 00:08:38,080 Speaker 3: crashes and your left not being able to recover your 181 00:08:38,080 --> 00:08:40,840 Speaker 3: return on those assets. So that's been a big part 182 00:08:40,880 --> 00:08:43,000 Speaker 3: of it. And then the other really interesting thing over 183 00:08:43,040 --> 00:08:44,880 Speaker 3: the last couple of years has been that the sun 184 00:08:45,000 --> 00:08:47,840 Speaker 3: and drop off and gas, and that has been really 185 00:08:47,880 --> 00:08:51,040 Speaker 3: challenging because typically we've relied on gas to support us 186 00:08:51,120 --> 00:08:53,800 Speaker 3: during the dry years because we are dominated by hydro 187 00:08:53,840 --> 00:08:54,440 Speaker 3: in New Zealand. 188 00:08:54,640 --> 00:08:55,800 Speaker 4: Now without those couple. 189 00:08:55,640 --> 00:08:58,080 Speaker 3: Of things there, it's meant that we've almost have been 190 00:08:58,080 --> 00:09:00,360 Speaker 3: a little bit late to actually picking up the rate 191 00:09:00,400 --> 00:09:02,560 Speaker 3: that we build and now we are a. 192 00:09:02,440 --> 00:09:04,480 Speaker 1: Lot of people would say the gas thing though, was 193 00:09:04,720 --> 00:09:09,280 Speaker 1: a little bit for seeable, because we know from overseas 194 00:09:09,320 --> 00:09:12,120 Speaker 1: that a lot of gas fields they get old, they 195 00:09:12,160 --> 00:09:14,600 Speaker 1: stop producing there's only so much you can do. I 196 00:09:14,600 --> 00:09:16,320 Speaker 1: think in the North Sea there's some talk that they 197 00:09:16,400 --> 00:09:19,160 Speaker 1: were able to find technologies to ring a little bit 198 00:09:19,200 --> 00:09:21,960 Speaker 1: more out of there. We're not probably seeing that happening 199 00:09:21,960 --> 00:09:23,480 Speaker 1: at this stage, are we now. 200 00:09:23,679 --> 00:09:25,600 Speaker 3: I think you could foresee that it was going to 201 00:09:25,640 --> 00:09:27,959 Speaker 3: drop off, but just not at the rate that it's happened. 202 00:09:27,960 --> 00:09:31,240 Speaker 3: Because the gas industry has continued to keep drilling on 203 00:09:31,280 --> 00:09:34,679 Speaker 3: the current fields, it just hasn't been able to find 204 00:09:35,480 --> 00:09:38,680 Speaker 3: or increase the production from those fields and what was 205 00:09:38,720 --> 00:09:41,080 Speaker 3: expected to happen. So it has caught us a little 206 00:09:41,120 --> 00:09:43,960 Speaker 3: bit by surprise, just the rate and the quantity that 207 00:09:43,960 --> 00:09:44,800 Speaker 3: it's dropped off at. 208 00:09:45,440 --> 00:09:49,880 Speaker 1: How did that specifically affect mercury? Then, because you're, as 209 00:09:49,880 --> 00:09:52,200 Speaker 1: you say, you're mostly in those renewables, how much of 210 00:09:52,280 --> 00:09:56,000 Speaker 1: that is contracted from fields you're an owner of any 211 00:09:56,000 --> 00:09:56,160 Speaker 1: of those? 212 00:09:56,400 --> 00:09:56,720 Speaker 4: That's right. 213 00:09:57,360 --> 00:10:01,720 Speaker 3: All of our electricity comes from renewable renewable sources and 214 00:10:01,720 --> 00:10:05,840 Speaker 3: renewal electricity assets. We do for our household customers who 215 00:10:05,880 --> 00:10:08,720 Speaker 3: provide eltricity from us, we do provide gas for them, 216 00:10:08,960 --> 00:10:10,720 Speaker 3: so we do have to go and buy that gas 217 00:10:10,760 --> 00:10:12,000 Speaker 3: from someone to provide it. 218 00:10:12,240 --> 00:10:13,199 Speaker 4: That's an impact on. 219 00:10:13,240 --> 00:10:16,360 Speaker 3: Us The other thing though, is gas is important from 220 00:10:16,400 --> 00:10:19,960 Speaker 3: the whole the eltricity sector. So while we're producing eltricty 221 00:10:20,000 --> 00:10:24,679 Speaker 3: from hydro and from wind and from geo thermal at 222 00:10:24,760 --> 00:10:27,640 Speaker 3: various times, it's very useful for the whole of the 223 00:10:27,679 --> 00:10:29,439 Speaker 3: grid to have a little bit of gas there so 224 00:10:29,640 --> 00:10:31,920 Speaker 3: when there's a little less rain, it can actually come 225 00:10:31,960 --> 00:10:35,679 Speaker 3: into the ultricty grid and keep the stability there so 226 00:10:35,679 --> 00:10:37,800 Speaker 3: that ultimately in New Zealand can keep turning the lights 227 00:10:37,800 --> 00:10:40,760 Speaker 3: on and have power flowing through our businesses. 228 00:10:40,840 --> 00:10:45,040 Speaker 1: Back on that idea about the pipeline for new generation 229 00:10:45,160 --> 00:10:47,840 Speaker 1: and so on and how we're now catching up, I mean, 230 00:10:48,200 --> 00:10:50,400 Speaker 1: I get the risk part, but some people would also 231 00:10:50,480 --> 00:10:53,160 Speaker 1: say there was a sort of an incentive in there 232 00:10:53,480 --> 00:10:57,080 Speaker 1: not to overbuild, not to take the risk, because obviously 233 00:10:57,240 --> 00:10:59,199 Speaker 1: you're trying to make a return for showers and so on. 234 00:11:00,080 --> 00:11:02,600 Speaker 1: That put us in a worse position. 235 00:11:02,720 --> 00:11:05,760 Speaker 3: Now, I'd say there are incentives. 236 00:11:06,800 --> 00:11:08,120 Speaker 4: There have been incentives to build. 237 00:11:08,440 --> 00:11:10,960 Speaker 3: It's just making sure that you are building the right 238 00:11:11,000 --> 00:11:13,040 Speaker 3: type of assets in the right place at the right time. 239 00:11:13,440 --> 00:11:15,120 Speaker 3: And so if you look at the last year when 240 00:11:15,200 --> 00:11:18,360 Speaker 3: we didn't have the rain that was there, prices went 241 00:11:18,440 --> 00:11:21,560 Speaker 3: up and that has a massive impact on particularly those 242 00:11:21,559 --> 00:11:25,320 Speaker 3: businesses that don't have long term heages in place. Ultimately 243 00:11:25,360 --> 00:11:28,360 Speaker 3: it does flow through to household prices, but it's pretty 244 00:11:28,440 --> 00:11:33,360 Speaker 3: pretty slow. But the big issue with not having that 245 00:11:33,720 --> 00:11:38,439 Speaker 3: energy there is that ultimately we are having to ourselves 246 00:11:39,200 --> 00:11:41,559 Speaker 3: purchase power from somewhere else to. 247 00:11:41,520 --> 00:11:42,600 Speaker 4: Provide to our customers. 248 00:11:42,640 --> 00:11:44,800 Speaker 3: So last year, when we didn't have so much water 249 00:11:44,840 --> 00:11:46,640 Speaker 3: in our lakes, we had to go and purchase that 250 00:11:46,800 --> 00:11:49,360 Speaker 3: power from others and the price was quite high. And 251 00:11:49,400 --> 00:11:53,040 Speaker 3: that's the main reason why our deft performance. The amount 252 00:11:53,040 --> 00:11:55,240 Speaker 3: of money we earned last year was down by about 253 00:11:55,320 --> 00:11:56,160 Speaker 3: nineteen million dollars. 254 00:11:56,200 --> 00:11:59,120 Speaker 1: And you've now baked that and along with the other 255 00:11:59,440 --> 00:12:01,760 Speaker 1: sort of two of your major competitors by sort of 256 00:12:01,800 --> 00:12:06,079 Speaker 1: buying some firming capacity from Huntley from Genesis. 257 00:12:06,160 --> 00:12:06,760 Speaker 4: Right correct. 258 00:12:07,040 --> 00:12:10,280 Speaker 3: There's a big part of the risk mitigation or process 259 00:12:10,280 --> 00:12:12,560 Speaker 3: we have in place now, and it's really really important 260 00:12:12,559 --> 00:12:14,240 Speaker 3: because the other thing it does is it gives us 261 00:12:14,280 --> 00:12:17,479 Speaker 3: the confidence to keep building intimate renewables. 262 00:12:18,440 --> 00:12:22,240 Speaker 1: Are you do you think you're a completely relaxed that say, 263 00:12:22,240 --> 00:12:23,920 Speaker 1: the Communce Commission when they take a look at that, 264 00:12:24,000 --> 00:12:26,600 Speaker 1: aren't going to say, oh, cracky, this is just four 265 00:12:26,600 --> 00:12:31,520 Speaker 1: big players getting together and funding an asset and not 266 00:12:31,559 --> 00:12:36,640 Speaker 1: necessarily involving others. What gives you confidence that that's. 267 00:12:35,480 --> 00:12:37,199 Speaker 4: Not going to be the case? Absolutely? Right? 268 00:12:37,400 --> 00:12:40,800 Speaker 3: Commerce commissions still have to sign off on this deal 269 00:12:40,880 --> 00:12:44,680 Speaker 3: between four competitors, and it's been two key things that 270 00:12:44,720 --> 00:12:47,360 Speaker 3: have happened on the way. Firstly, we've had an independent 271 00:12:47,520 --> 00:12:50,319 Speaker 3: company look across it to make sure that it's. 272 00:12:50,160 --> 00:12:51,120 Speaker 4: Fair and reasonable. 273 00:12:51,559 --> 00:12:54,320 Speaker 3: The second thing is that it's actually a product that 274 00:12:54,360 --> 00:12:57,319 Speaker 3: it's now available to others as well, so it's not exclusive. 275 00:12:57,520 --> 00:13:00,960 Speaker 3: It's been negotiated between the four big gentile and yet 276 00:13:00,960 --> 00:13:03,960 Speaker 3: it's also there available for anybody else at very similar 277 00:13:04,040 --> 00:13:07,680 Speaker 3: terms and conditions, very similar. It'll be slightly different depending 278 00:13:07,679 --> 00:13:10,920 Speaker 3: on we want fifty megawats, you might be slightly smaller. 279 00:13:10,920 --> 00:13:13,160 Speaker 3: You might only want one or two megawats, so it'll 280 00:13:13,160 --> 00:13:15,920 Speaker 3: be different in terms of what you require, but the 281 00:13:16,000 --> 00:13:19,680 Speaker 3: terms and conditions in terms of price are very very similar. 282 00:13:19,800 --> 00:13:23,000 Speaker 1: Because there's that word cartel, which is it's very easy 283 00:13:23,440 --> 00:13:25,240 Speaker 1: to prove a cartel, isn't it a lot easier than 284 00:13:25,240 --> 00:13:26,920 Speaker 1: it is to prove that there's a monopoly going on? 285 00:13:27,400 --> 00:13:30,040 Speaker 3: Yeah, And it's tough for because there is New Zealand 286 00:13:30,080 --> 00:13:33,800 Speaker 3: does have some great gen tailors and I can absolutely 287 00:13:33,840 --> 00:13:36,880 Speaker 3: understand what the ComCom the Comms Commissioner are doing in 288 00:13:36,920 --> 00:13:39,319 Speaker 3: Eltricity Authority. They're trying to make sure that there's a 289 00:13:39,360 --> 00:13:43,439 Speaker 3: competition in the market, primarily because they want affordable electricity 290 00:13:43,440 --> 00:13:46,800 Speaker 3: prices for New Zealand. Perfect absolutely the right thing to 291 00:13:46,840 --> 00:13:49,960 Speaker 3: be doing. Now, we think that the market is really strong. 292 00:13:50,440 --> 00:13:52,280 Speaker 3: There are a lot of retailers out there and there's 293 00:13:52,320 --> 00:13:54,679 Speaker 3: a lot of there's twenty percent churn happening each year, 294 00:13:54,720 --> 00:13:57,920 Speaker 3: so that shows that twenty percent of customers move every years. 295 00:13:58,040 --> 00:14:01,280 Speaker 3: That's a pretty healthy measure of competition going on. 296 00:14:01,520 --> 00:14:03,920 Speaker 1: They're mostly moving between the majors right and you are 297 00:14:04,000 --> 00:14:07,520 Speaker 1: seeing consolidation and so on. You know, TrustPower might have 298 00:14:07,600 --> 00:14:10,600 Speaker 1: come on board, and what tends to happen is a 299 00:14:10,640 --> 00:14:13,719 Speaker 1: smaller retailer winds up being brought out by a bigger one. 300 00:14:13,800 --> 00:14:15,160 Speaker 4: Yeah, it can happen. You're right. 301 00:14:15,360 --> 00:14:19,120 Speaker 3: There's actually about fifty roughly fifty independent retailers in New 302 00:14:19,200 --> 00:14:21,800 Speaker 3: Zealand compared to a place like the UK where it 303 00:14:21,840 --> 00:14:24,960 Speaker 3: is about twenty. So there's a lot of independence in 304 00:14:25,000 --> 00:14:28,960 Speaker 3: New Zealand. It's how do we help transparency of prices 305 00:14:29,000 --> 00:14:32,480 Speaker 3: so that people can be confident that the prices are 306 00:14:32,520 --> 00:14:33,640 Speaker 3: competitive and affordable. 307 00:14:33,840 --> 00:14:36,800 Speaker 1: So I think the Electricity Authority was talking about making 308 00:14:36,840 --> 00:14:40,120 Speaker 1: some part of that market kind of compulsory for you 309 00:14:40,160 --> 00:14:42,760 Speaker 1: and your three major competitors to kind of contribute to 310 00:14:42,920 --> 00:14:45,480 Speaker 1: you already playing in that. This is the shaped hedges, 311 00:14:45,520 --> 00:14:48,560 Speaker 1: which has got nothing to do with with topieri or 312 00:14:48,640 --> 00:14:50,520 Speaker 1: mazes or whatever. It's got to do with, you know, 313 00:14:50,680 --> 00:14:52,200 Speaker 1: creating a product through the day. 314 00:14:52,440 --> 00:14:56,280 Speaker 3: Yeah, we rank in the top ten best markets globally 315 00:14:56,320 --> 00:15:00,640 Speaker 3: from an euctricity perspective, whether that's affordability, sustainability. 316 00:15:00,160 --> 00:15:00,720 Speaker 4: Or security. 317 00:15:00,760 --> 00:15:02,200 Speaker 3: So we do have a market that's very good, but 318 00:15:02,280 --> 00:15:05,240 Speaker 3: can it be better? Absolutely it can be. And what 319 00:15:05,320 --> 00:15:07,240 Speaker 3: the ComCom and the EA are trying to do is 320 00:15:07,400 --> 00:15:08,520 Speaker 3: create transparency. 321 00:15:09,200 --> 00:15:11,160 Speaker 4: That's part of that is shape hedges, so that. 322 00:15:12,120 --> 00:15:15,320 Speaker 3: Everybody, whether you're independent retailer or someone who's actually looking 323 00:15:15,360 --> 00:15:18,240 Speaker 3: at bringing on a new project, you can see what 324 00:15:18,760 --> 00:15:21,040 Speaker 3: a megawatt or a killer what is worth. And that 325 00:15:21,120 --> 00:15:23,640 Speaker 3: gives you the confidence to be able to buy or 326 00:15:23,680 --> 00:15:26,760 Speaker 3: to sell the electricity very supportable. That One of the 327 00:15:26,800 --> 00:15:28,760 Speaker 3: things I've been looking at is something called the level 328 00:15:28,800 --> 00:15:32,600 Speaker 3: playing field provision. Now it's early and it's not a 329 00:15:32,600 --> 00:15:35,000 Speaker 3: lot of detail associated with that yet, so we're a 330 00:15:35,000 --> 00:15:36,240 Speaker 3: little bit cautious to see. 331 00:15:36,040 --> 00:15:39,680 Speaker 4: What comes out of it. Again, understand that it's trying. 332 00:15:39,400 --> 00:15:43,440 Speaker 3: To create a better transparency and ultimately make sure we 333 00:15:43,520 --> 00:15:47,400 Speaker 3: have affordable prices, just not highly sure that this is 334 00:15:47,440 --> 00:15:49,080 Speaker 3: the right way to do it. Because if you look 335 00:15:49,080 --> 00:15:52,080 Speaker 3: at a household bill that you and I get at 336 00:15:52,080 --> 00:15:54,800 Speaker 3: our houses, only about ten or eleven percent of that 337 00:15:54,960 --> 00:15:57,640 Speaker 3: is from retail costs. So we can do some work 338 00:15:57,680 --> 00:16:00,920 Speaker 3: to make sure that retailer is competitive, but it's only 339 00:16:01,040 --> 00:16:03,720 Speaker 3: eleven percent of the bill. We believe that actually the 340 00:16:03,720 --> 00:16:05,960 Speaker 3: bigger parts of the bill, which is about forty percent 341 00:16:06,000 --> 00:16:09,480 Speaker 3: associative with generation and about maybe thirty percent associator with 342 00:16:09,680 --> 00:16:12,880 Speaker 3: the lines and transmission, they are things that actually we 343 00:16:12,920 --> 00:16:15,080 Speaker 3: could do a lot more on. And the things that 344 00:16:15,120 --> 00:16:17,560 Speaker 3: Mercury can control is around generation, and the best that 345 00:16:17,640 --> 00:16:20,520 Speaker 3: we can do in that space is to build more projects. 346 00:16:20,240 --> 00:16:23,840 Speaker 1: And that would be your profit solution than regulating the 347 00:16:23,880 --> 00:16:25,560 Speaker 1: market or creating a split or. 348 00:16:25,560 --> 00:16:26,080 Speaker 4: Anything like that. 349 00:16:26,520 --> 00:16:28,160 Speaker 1: Many of you modeled that, have you looked at whether 350 00:16:28,440 --> 00:16:32,240 Speaker 1: what sort of impact yeap, you know, breaking the business 351 00:16:32,280 --> 00:16:32,760 Speaker 1: up might have. 352 00:16:32,920 --> 00:16:35,680 Speaker 3: Yeah, so you talked about basically in New Zealand where 353 00:16:35,680 --> 00:16:38,320 Speaker 3: we have the generators and the retailers connected together so 354 00:16:38,480 --> 00:16:43,200 Speaker 3: Gen Taylors, and they're called vertically integrated. We believe that 355 00:16:43,600 --> 00:16:44,920 Speaker 3: they're not just in New Zealand. We've had a lot 356 00:16:44,920 --> 00:16:46,880 Speaker 3: of lookers cross the world. It's actually a lot of 357 00:16:46,880 --> 00:16:49,880 Speaker 3: benefit in doing that. A lot of synergies that ultimately 358 00:16:50,360 --> 00:16:52,520 Speaker 3: some of the studies show do get passed on to 359 00:16:52,600 --> 00:16:53,280 Speaker 3: customers in. 360 00:16:53,280 --> 00:16:55,440 Speaker 4: Terms of what that connection creates. 361 00:16:55,600 --> 00:16:58,800 Speaker 1: So by the same token, unwinding those synergies, what have 362 00:16:58,880 --> 00:17:00,840 Speaker 1: you looked at what that could do for the business? 363 00:17:00,920 --> 00:17:03,680 Speaker 3: Yes, again, and it does create things that lead to 364 00:17:03,720 --> 00:17:06,679 Speaker 3: inefficiencies in the way that the companies work. If they 365 00:17:06,680 --> 00:17:09,439 Speaker 3: were separated, creates risk that won't be it wouldn't have 366 00:17:09,440 --> 00:17:11,960 Speaker 3: been there previously. So our belief is that the split 367 00:17:12,160 --> 00:17:16,480 Speaker 3: will not add additional value either to customers, to New Zealanders. 368 00:17:16,080 --> 00:17:17,400 Speaker 4: Or to the owners of those companies. 369 00:17:17,520 --> 00:17:20,120 Speaker 1: People said the same thing about Telecom when they broke 370 00:17:20,160 --> 00:17:22,520 Speaker 1: it off and said, hey, here's Chorus and here's Telecom 371 00:17:22,560 --> 00:17:24,760 Speaker 1: over here. Will make it spark and then you know 372 00:17:24,840 --> 00:17:27,680 Speaker 1: whatever it is. Fifteen twenty years later, we've got too well, 373 00:17:28,480 --> 00:17:32,000 Speaker 1: one pretty successful company and another one that's had had 374 00:17:32,040 --> 00:17:34,919 Speaker 1: some rough times, but come along and certainly had an 375 00:17:34,920 --> 00:17:37,119 Speaker 1: interesting journey. If you're talking about Spark, so I mean 376 00:17:37,440 --> 00:17:40,720 Speaker 1: it's not like a fat company that cutting something in half. 377 00:17:41,280 --> 00:17:43,400 Speaker 3: No, even in the electricity industry, the same. 378 00:17:43,200 --> 00:17:45,280 Speaker 1: Thing from an investment point of view, I suppose, or 379 00:17:45,320 --> 00:17:46,320 Speaker 1: for an investor's point of. 380 00:17:46,320 --> 00:17:48,840 Speaker 3: View, correct, and even from that in the electricity sector, 381 00:17:48,880 --> 00:17:51,600 Speaker 3: we do have this split there already. So yes, Spark 382 00:17:51,640 --> 00:17:54,800 Speaker 3: and Chorus is split. You look at the electricity industry transpower, 383 00:17:54,840 --> 00:17:57,880 Speaker 3: which looks after the transmition lines, that is separate from 384 00:17:57,920 --> 00:18:00,920 Speaker 3: the gent tailors, that is separate from the distributed distribution 385 00:18:01,040 --> 00:18:04,040 Speaker 3: companies as well the EEDB. So there is actually an 386 00:18:04,040 --> 00:18:08,320 Speaker 3: element of disegregation that occurs already, which is trying to 387 00:18:08,359 --> 00:18:11,639 Speaker 3: separate some of their more infrastructure nature to some of 388 00:18:11,640 --> 00:18:13,560 Speaker 3: the more development and retail side. 389 00:18:13,359 --> 00:18:14,080 Speaker 4: Of the businesses. 390 00:18:14,600 --> 00:18:17,480 Speaker 3: So that split is there and has been useful just 391 00:18:17,480 --> 00:18:20,240 Speaker 3: trying to find the right synergies and model that actually 392 00:18:20,280 --> 00:18:24,920 Speaker 3: ultimately results in lowest cost to customers and ultimately. 393 00:18:24,520 --> 00:18:25,800 Speaker 4: Good value for its owners. 394 00:18:26,920 --> 00:18:29,320 Speaker 1: We're a year out more or less, maybe fourteen months 395 00:18:29,359 --> 00:18:31,600 Speaker 1: from an election. Are you worried at all that the 396 00:18:31,640 --> 00:18:34,440 Speaker 1: politicians are just maybe going, yeah, that's fine, you that's fine, 397 00:18:34,440 --> 00:18:38,440 Speaker 1: But we need some wins and this is an easy one. Potentially. 398 00:18:39,800 --> 00:18:41,800 Speaker 3: The reason why I'm worried is because the Zealander is 399 00:18:41,840 --> 00:18:44,520 Speaker 3: facing costs lit in crisis still, right, and it has 400 00:18:44,560 --> 00:18:46,760 Speaker 3: been going on for a while, and I think we'll 401 00:18:46,760 --> 00:18:50,679 Speaker 3: continue for a while. And that doesn't just apply to energy. 402 00:18:50,680 --> 00:18:53,840 Speaker 3: It applies to food, it applies to access to money 403 00:18:53,880 --> 00:18:56,879 Speaker 3: through banks, and so it's part of a broader concern 404 00:18:56,920 --> 00:18:59,720 Speaker 3: that exists for New Zealanders and energy has a big 405 00:18:59,760 --> 00:19:00,560 Speaker 3: part to plan that. 406 00:19:00,640 --> 00:19:03,000 Speaker 4: So yes, it definitely has an impact. 407 00:19:03,040 --> 00:19:05,040 Speaker 3: And so we are working as well as we can 408 00:19:05,160 --> 00:19:08,440 Speaker 3: to try and address the problem of getting affordable energy 409 00:19:08,600 --> 00:19:11,120 Speaker 3: as well as we can and make sure it's sustainable. 410 00:19:11,400 --> 00:19:14,359 Speaker 3: That's a really complicated problem to solve in a small 411 00:19:14,359 --> 00:19:17,760 Speaker 3: period of time, and it's whether or not we actually 412 00:19:17,800 --> 00:19:20,320 Speaker 3: have the time to do that and demonstrate that we're 413 00:19:20,359 --> 00:19:22,720 Speaker 3: on the right path before someone says, you know, going 414 00:19:22,760 --> 00:19:25,320 Speaker 3: fast enough, we'll do something different. A lot of people say, oh, 415 00:19:25,320 --> 00:19:28,080 Speaker 3: the government owns you, there must be must be. 416 00:19:28,280 --> 00:19:30,720 Speaker 1: Well, there's an intentive there, or certainly there's a mixed 417 00:19:30,960 --> 00:19:33,520 Speaker 1: mixed incentive, right, there's a shareholding minister on one hand 418 00:19:33,520 --> 00:19:35,960 Speaker 1: of saying, hey, we need to pay for hospitals, schools, 419 00:19:35,960 --> 00:19:37,480 Speaker 1: everything else. And this is part of how we do 420 00:19:37,520 --> 00:19:40,520 Speaker 1: that in this country without taxing people versus we want 421 00:19:40,560 --> 00:19:43,360 Speaker 1: to try and deliver energy at lowest possible cost. 422 00:19:43,880 --> 00:19:47,320 Speaker 3: So that they regres regulating and a concern for New 423 00:19:47,400 --> 00:19:50,359 Speaker 3: Zealanders from a customer perspective. And at the same time, 424 00:19:50,680 --> 00:19:54,119 Speaker 3: government receives dividends from us and taxes from us. So 425 00:19:54,280 --> 00:19:56,439 Speaker 3: if you look at the money which we made in 426 00:19:56,480 --> 00:19:59,280 Speaker 3: the last year, about a third of that goes to 427 00:19:59,320 --> 00:20:01,760 Speaker 3: the government some way, whether it's through dividends because they 428 00:20:01,800 --> 00:20:04,199 Speaker 3: are our owner, or through taxes, and so that's a 429 00:20:04,200 --> 00:20:07,760 Speaker 3: great revenue stream that the government can use for hospitals 430 00:20:07,800 --> 00:20:11,600 Speaker 3: and schools, roads equally, want to make sure that we're 431 00:20:11,600 --> 00:20:15,080 Speaker 3: doing that a way which is globally competitive and affordable. 432 00:20:15,080 --> 00:20:17,479 Speaker 3: And that's really the other conversation we have with the government. 433 00:20:18,080 --> 00:20:21,280 Speaker 1: How different is it being on the other side of 434 00:20:21,280 --> 00:20:23,640 Speaker 1: the table from where you were before because you ran 435 00:20:23,760 --> 00:20:28,280 Speaker 1: the t why point aluminium smell exactly right? It's huge, 436 00:20:28,280 --> 00:20:32,120 Speaker 1: as you said, massive electricity user. Who's got the power there? 437 00:20:32,280 --> 00:20:35,080 Speaker 1: The person that's like the government owned company that's selling 438 00:20:35,119 --> 00:20:40,440 Speaker 1: electricity or this very large, ultimately multinationally owned company that's saying, hey, 439 00:20:40,480 --> 00:20:44,479 Speaker 1: we represent thousands of jobs and export earnings for this country. 440 00:20:44,640 --> 00:20:47,680 Speaker 3: First, So I say there's more similarities than differences. Both 441 00:20:47,920 --> 00:20:50,760 Speaker 3: if you look at electricity industry large and a large 442 00:20:50,800 --> 00:20:54,359 Speaker 3: sort of aluminium industry, both employing lots of people and 443 00:20:54,400 --> 00:20:56,040 Speaker 3: also having massive impact on community. 444 00:20:56,080 --> 00:20:58,000 Speaker 4: So lots of similarities. 445 00:20:58,320 --> 00:21:01,400 Speaker 3: And actually, if you look at the connection, they are 446 00:21:01,680 --> 00:21:05,040 Speaker 3: so connected that they need each other. If you look 447 00:21:05,040 --> 00:21:09,600 Speaker 3: at two point element smelter that was built because parody 448 00:21:09,600 --> 00:21:12,960 Speaker 3: of power station was built, and Amnto POWERstation was built 449 00:21:13,080 --> 00:21:16,000 Speaker 3: because the Ti smelter was there, So they are kind 450 00:21:16,040 --> 00:21:18,960 Speaker 3: of yin and yang, necessary for each other to exist, 451 00:21:19,160 --> 00:21:22,640 Speaker 3: and that creates this interesting dynamic between both talking about 452 00:21:22,720 --> 00:21:26,720 Speaker 3: power prices, and yet you can imagine that from time 453 00:21:26,760 --> 00:21:29,560 Speaker 3: to time the power balance might move between the two parties, 454 00:21:29,560 --> 00:21:32,280 Speaker 3: but they're just so intricately linked that they actually do 455 00:21:32,640 --> 00:21:35,040 Speaker 3: need to come to a common deal to actually make 456 00:21:35,080 --> 00:21:38,040 Speaker 3: sure that together they can exist and not sort of 457 00:21:38,040 --> 00:21:40,480 Speaker 3: almost look at it as there's a pie of value 458 00:21:40,560 --> 00:21:42,720 Speaker 3: that has to be split between the two. How do 459 00:21:42,720 --> 00:21:45,080 Speaker 3: you ultimately sort grow that pie in a way that 460 00:21:45,160 --> 00:21:46,359 Speaker 3: leads to value for both. 461 00:21:46,880 --> 00:21:48,840 Speaker 1: We'll probably do it by trying to strike the cheapest 462 00:21:48,840 --> 00:21:51,320 Speaker 1: price you possibly can for your electricity. 463 00:21:51,359 --> 00:21:52,280 Speaker 4: Is that about right? 464 00:21:52,400 --> 00:21:55,159 Speaker 3: Having affordable electricity is really important, but equally having the 465 00:21:55,200 --> 00:21:58,000 Speaker 3: ability to flick. So one of the reasons why the 466 00:21:58,080 --> 00:22:01,960 Speaker 3: industry got through Winter of last was that ty was 467 00:22:02,000 --> 00:22:04,720 Speaker 3: able to work out how it can actually drop its 468 00:22:04,800 --> 00:22:05,800 Speaker 3: load through times. 469 00:22:05,800 --> 00:22:06,920 Speaker 4: WI power prices is high. 470 00:22:06,960 --> 00:22:10,920 Speaker 3: Now that's value adding to the sector because they can 471 00:22:11,040 --> 00:22:14,160 Speaker 3: use their electricity to get elsewhere, and ultimately tea wise 472 00:22:14,200 --> 00:22:17,320 Speaker 3: also is paid and compensated for that as well. And 473 00:22:17,359 --> 00:22:20,399 Speaker 3: so trying to find those things where the user of 474 00:22:20,440 --> 00:22:23,280 Speaker 3: eletricity knows how they can best optimize their process but 475 00:22:23,680 --> 00:22:25,840 Speaker 3: don't really know what the value of that is from 476 00:22:25,880 --> 00:22:29,359 Speaker 3: a power perspective, and the generator knows what the value 477 00:22:29,359 --> 00:22:31,200 Speaker 3: of that is but doesn't know how it could be done. 478 00:22:31,359 --> 00:22:33,359 Speaker 3: So that's where you can come together to work out 479 00:22:33,440 --> 00:22:36,000 Speaker 3: how you might actually grow the size of the value together. 480 00:22:37,560 --> 00:22:39,800 Speaker 1: Is that making a virtue out of a fault because 481 00:22:39,840 --> 00:22:42,040 Speaker 1: we're basically saying, in order to keep this country running, 482 00:22:42,080 --> 00:22:44,520 Speaker 1: we have to ask businesses to shut down. That doesn't 483 00:22:44,520 --> 00:22:46,720 Speaker 1: sound like a great situation to be in the first place. 484 00:22:46,880 --> 00:22:47,600 Speaker 4: Awesome questions. 485 00:22:47,760 --> 00:22:49,159 Speaker 3: I get that a lot people saying that it's a 486 00:22:49,200 --> 00:22:53,720 Speaker 3: form of de industrialization, this is value destruction. I actually 487 00:22:53,720 --> 00:22:56,639 Speaker 3: see it another way. I see it that we have 488 00:22:56,680 --> 00:22:59,120 Speaker 3: a choice. We could go out there and spend billions 489 00:22:59,160 --> 00:23:03,160 Speaker 3: and billions and billions dollars overbuilding lots of projects. From 490 00:23:03,160 --> 00:23:05,639 Speaker 3: a powerspective, all we could spend a little bit of 491 00:23:05,680 --> 00:23:08,920 Speaker 3: money engaging with the customer and utilize them as a 492 00:23:08,960 --> 00:23:12,359 Speaker 3: bit of a battery, and they actually get compensated for 493 00:23:12,440 --> 00:23:15,760 Speaker 3: doing it. So it's actually commercially beneficial for that for 494 00:23:16,520 --> 00:23:19,359 Speaker 3: the power user, and it's better for New Zealand because 495 00:23:19,359 --> 00:23:21,560 Speaker 3: we don't actually have to overbuild and spend a whole 496 00:23:21,600 --> 00:23:24,560 Speaker 3: lot of money that might not get the return. So yes, 497 00:23:24,880 --> 00:23:27,720 Speaker 3: does have an impact on that customer. Ultimately they get 498 00:23:27,760 --> 00:23:30,480 Speaker 3: compensated for it and still make money. And ultimately for 499 00:23:30,560 --> 00:23:33,040 Speaker 3: New Zealand, it's actually good because it puts out grid 500 00:23:33,080 --> 00:23:35,679 Speaker 3: in a much like it is more resilient place. 501 00:23:36,080 --> 00:23:38,200 Speaker 1: I think it's even better maybe if it's a very 502 00:23:38,240 --> 00:23:40,359 Speaker 1: open system so over and can see what those deals 503 00:23:40,359 --> 00:23:43,000 Speaker 1: are rather than the necessarily being one to one. 504 00:23:42,880 --> 00:23:43,520 Speaker 4: Spot on yeh. 505 00:23:43,520 --> 00:23:45,479 Speaker 3: So that's that's very much that the work that's been 506 00:23:45,520 --> 00:23:48,280 Speaker 3: done to give some transparency to what those prices are. 507 00:23:48,359 --> 00:23:52,520 Speaker 3: So rather than bilateral engagement where you and I can 508 00:23:52,600 --> 00:23:54,240 Speaker 3: sort of work together on what the prices are, we 509 00:23:54,280 --> 00:23:59,680 Speaker 3: actually between us know what a fair and a reasonable 510 00:23:59,760 --> 00:24:02,679 Speaker 3: price for that will be because it's traded, and that's 511 00:24:02,720 --> 00:24:05,080 Speaker 3: something which the electricity authority in the ComCom I'm looking 512 00:24:05,119 --> 00:24:06,600 Speaker 3: at and we're very supportive for that. 513 00:24:06,920 --> 00:24:08,480 Speaker 1: It's probably a hard question I'm going to ask you 514 00:24:08,520 --> 00:24:10,560 Speaker 1: now because you're only a year in, but I mean, 515 00:24:10,800 --> 00:24:13,359 Speaker 1: we've got twenty five years to work out how in 516 00:24:13,359 --> 00:24:15,960 Speaker 1: this country we're going to be at net zero. Presumably 517 00:24:16,000 --> 00:24:17,800 Speaker 1: you've got all sorts of plans for how that's going 518 00:24:17,880 --> 00:24:20,119 Speaker 1: to work. Do you, I mean, do you actually have 519 00:24:20,160 --> 00:24:22,159 Speaker 1: a clear idea of what this place will look like 520 00:24:22,160 --> 00:24:23,880 Speaker 1: in twenty five years and what Mercury. 521 00:24:23,520 --> 00:24:26,640 Speaker 3: Will look like that We believe that eltricity and electrification 522 00:24:27,000 --> 00:24:29,080 Speaker 3: has a huge role to play. A lot of the 523 00:24:29,080 --> 00:24:32,720 Speaker 3: times people look at what percentage is our electricity gred renewable, 524 00:24:32,880 --> 00:24:35,359 Speaker 3: and at the moment it's hovering around high eighty percent 525 00:24:35,760 --> 00:24:38,600 Speaker 3: to about ninety percent, and people talk about trying to 526 00:24:38,600 --> 00:24:41,040 Speaker 3: get to it to one hundred percent. Our view is 527 00:24:41,080 --> 00:24:44,440 Speaker 3: that should get to maybe mid nineties and we will easily 528 00:24:44,440 --> 00:24:46,960 Speaker 3: get that, and we've got many projects and training to 529 00:24:47,000 --> 00:24:49,280 Speaker 3: get there. And then what you do is actually, rather 530 00:24:49,320 --> 00:24:52,280 Speaker 3: than focusing on electricity grid, then you turn a focus 531 00:24:52,320 --> 00:24:54,960 Speaker 3: on the other forms of fossil fuel usage. In New Zealand, 532 00:24:55,520 --> 00:24:59,960 Speaker 3: cars transportation is about twenty percent of New Zealand's carbon footprint. 533 00:25:01,240 --> 00:25:05,040 Speaker 3: Many industries contribute to carbon as well, So the electrification 534 00:25:05,160 --> 00:25:08,520 Speaker 3: of those industries away from fossil fuels, vehicles away from 535 00:25:08,520 --> 00:25:12,720 Speaker 3: fossil fuels, that's got massive potential and that's a big 536 00:25:12,720 --> 00:25:14,440 Speaker 3: part of what mercury is good at and that's where 537 00:25:14,560 --> 00:25:17,960 Speaker 3: where we can absolutely support. And then the other part 538 00:25:18,000 --> 00:25:20,760 Speaker 3: of it is actually looking at what New Zealand's actually 539 00:25:20,760 --> 00:25:21,800 Speaker 3: economies should look. 540 00:25:21,640 --> 00:25:23,320 Speaker 4: Like over the next ten to twenty years. 541 00:25:23,359 --> 00:25:25,960 Speaker 3: And there's a big part to play in different types 542 00:25:26,000 --> 00:25:29,399 Speaker 3: of industry. So you'll see the load potentially move away 543 00:25:29,440 --> 00:25:33,840 Speaker 3: from more heavy industry and they'll still have the load, 544 00:25:33,920 --> 00:25:36,480 Speaker 3: but the percentage will grow more towards other things like 545 00:25:36,600 --> 00:25:40,520 Speaker 3: data centers and other forms of electricity which actually create 546 00:25:40,560 --> 00:25:42,040 Speaker 3: a normost potential for us as well. 547 00:25:42,200 --> 00:25:43,640 Speaker 1: Yeah, I'm just waiting for the day that they build 548 00:25:43,680 --> 00:25:45,120 Speaker 1: a massive data center in Coodo. 549 00:25:46,520 --> 00:25:49,560 Speaker 3: Actually data centers often people think they should be close 550 00:25:49,640 --> 00:25:52,280 Speaker 3: to where people are using the data, so build them 551 00:25:52,280 --> 00:25:54,720 Speaker 3: in the US where there's lots of use for data. 552 00:25:54,800 --> 00:25:57,600 Speaker 3: And yet there's a big part that New Zealand could 553 00:25:57,600 --> 00:26:02,560 Speaker 3: play because data centers that therefore artificial intelligence need to 554 00:26:02,560 --> 00:26:06,320 Speaker 3: be trained. I need to have kindergartens for artificial intelligence 555 00:26:06,600 --> 00:26:08,399 Speaker 3: and so that doesn't actually need to be close to 556 00:26:08,440 --> 00:26:10,480 Speaker 3: the load. So there's potential for New Zealand to get 557 00:26:10,600 --> 00:26:15,200 Speaker 3: very good at artividual artificial intelligence. Kindergarten centers, training centers, 558 00:26:15,359 --> 00:26:17,040 Speaker 3: and they can be a long way away from the US. 559 00:26:17,119 --> 00:26:19,360 Speaker 3: So that's when New Zealand can actually be very strong. 560 00:26:20,280 --> 00:26:23,920 Speaker 1: Kindergarten for AI artifices, what a great place to raise 561 00:26:24,000 --> 00:26:28,399 Speaker 1: children and large language models correctastic It seems like a 562 00:26:28,400 --> 00:26:31,280 Speaker 1: long way from running a gold mine in Tanzania, an 563 00:26:31,320 --> 00:26:35,159 Speaker 1: extractive industry in a developing part of the world, and 564 00:26:35,320 --> 00:26:37,399 Speaker 1: must have brought with that. What on earth took you 565 00:26:37,440 --> 00:26:37,880 Speaker 1: over there? 566 00:26:38,280 --> 00:26:38,440 Speaker 3: Yeah? 567 00:26:38,440 --> 00:26:39,439 Speaker 4: When did I go? Kind of? 568 00:26:39,600 --> 00:26:41,879 Speaker 3: I spent a career in New Zealand and Australia for 569 00:26:41,880 --> 00:26:46,239 Speaker 3: twenty years in engineering and largely in aluminum, and I 570 00:26:46,240 --> 00:26:50,239 Speaker 3: had this really interesting discussion with my boss's boss and 571 00:26:50,280 --> 00:26:52,840 Speaker 3: they said, Jude, you're doing an amazing job, but you've 572 00:26:52,840 --> 00:26:55,200 Speaker 3: been in New Zealand all your life. If you've stuck 573 00:26:55,240 --> 00:26:57,960 Speaker 3: to the same company and you've stuck to you probably. 574 00:26:57,680 --> 00:26:59,320 Speaker 4: Need to get out and learn a bit about the world. 575 00:26:59,359 --> 00:27:02,639 Speaker 3: So I actually did my MBA and I met some 576 00:27:02,960 --> 00:27:05,680 Speaker 3: cool people there, and then through this process said, ah, 577 00:27:05,760 --> 00:27:08,120 Speaker 3: I've been suggested I should do something different, and that 578 00:27:08,200 --> 00:27:11,360 Speaker 3: person was going to Tanzania and said us to come. 579 00:27:11,200 --> 00:27:12,440 Speaker 4: Over to work for us. 580 00:27:12,640 --> 00:27:14,480 Speaker 3: So I went back to my boss's boss and said, 581 00:27:14,520 --> 00:27:17,399 Speaker 3: thank you very much. I appreciate your support of me 582 00:27:17,440 --> 00:27:19,960 Speaker 3: and my career, but I'm going gold mining in Tanzania. 583 00:27:20,880 --> 00:27:24,000 Speaker 3: And so I went over there was very fortunate to 584 00:27:24,080 --> 00:27:27,680 Speaker 3: be a general manager of a large gold mining operation 585 00:27:27,800 --> 00:27:31,399 Speaker 3: with about twelve hundred people in the middle of community 586 00:27:31,960 --> 00:27:39,520 Speaker 3: in northwest Tanzania, and it was fantastic experience, just recognizing 587 00:27:39,600 --> 00:27:42,000 Speaker 3: again the big thing I took away from that was 588 00:27:42,080 --> 00:27:45,000 Speaker 3: the value that an organization can have on the community 589 00:27:45,040 --> 00:27:49,560 Speaker 3: in a country, and you just don't want to take 590 00:27:49,560 --> 00:27:53,159 Speaker 3: that for granted. And part of the situation there that 591 00:27:53,160 --> 00:27:57,720 Speaker 3: we actually fell into was the company was ultimately held 592 00:27:57,760 --> 00:27:59,800 Speaker 3: to account by the government because they didn't feel like 593 00:27:59,840 --> 00:28:02,680 Speaker 3: the company was sharing fairly the value of the gold 594 00:28:02,720 --> 00:28:05,680 Speaker 3: mine with the company, with the country. And that's something 595 00:28:06,119 --> 00:28:07,960 Speaker 3: something I take on board coming back to New Zealand 596 00:28:08,080 --> 00:28:12,280 Speaker 3: is how do we make sure that these amazing assets 597 00:28:12,320 --> 00:28:15,240 Speaker 3: that New Zealand has and that Mercury has been shared 598 00:28:15,320 --> 00:28:19,800 Speaker 3: fairly in terms of our owners, in terms of our community, 599 00:28:20,040 --> 00:28:21,200 Speaker 3: terms of EWI. 600 00:28:21,040 --> 00:28:23,280 Speaker 4: And in terms of ultimately customers in New Zealand. 601 00:28:23,520 --> 00:28:24,679 Speaker 1: So social license and. 602 00:28:24,960 --> 00:28:25,679 Speaker 4: Afraid spot on. 603 00:28:25,880 --> 00:28:29,600 Speaker 1: Yeah, yeah, and you think you're handling that pretty well here. 604 00:28:29,920 --> 00:28:31,880 Speaker 3: I think Mercury does it pretty well. Can it be better? 605 00:28:32,160 --> 00:28:35,160 Speaker 4: It absolutely can be. But I'm very proud well. 606 00:28:35,280 --> 00:28:36,960 Speaker 3: I think if you look at the kind of the 607 00:28:37,080 --> 00:28:41,760 Speaker 3: role that Mercury plays across all people, we're very good 608 00:28:41,800 --> 00:28:45,880 Speaker 3: at supporting customers and hardship. We're very good at supporting 609 00:28:45,920 --> 00:28:49,160 Speaker 3: customers who like to have a bundled product. Can we 610 00:28:49,160 --> 00:28:50,800 Speaker 3: do better in terms of some communities, I think we 611 00:28:50,840 --> 00:28:54,560 Speaker 3: possibly can be. We have some really strong relationships with EWI. 612 00:28:54,720 --> 00:28:57,880 Speaker 3: Actually we have some commercial joint ventures with EWE and 613 00:28:58,280 --> 00:29:01,800 Speaker 3: or Trust, which is fantastic. I still think part of 614 00:29:01,840 --> 00:29:04,920 Speaker 3: what happened over a few years ago when TrustPower and 615 00:29:05,000 --> 00:29:08,560 Speaker 3: Mercury merged is. We have brought ourselves together to be 616 00:29:08,840 --> 00:29:11,520 Speaker 3: one company, and yet how we show up in some 617 00:29:11,560 --> 00:29:14,080 Speaker 3: communities can be a little bit different to other communities, 618 00:29:14,080 --> 00:29:15,680 Speaker 3: and I'd like to make sure we're a bit more 619 00:29:15,720 --> 00:29:19,200 Speaker 3: consistent than who Mercury is and therefore, how do we 620 00:29:19,200 --> 00:29:24,800 Speaker 3: show up in Amoru versus Totong versus other parts. 621 00:29:24,560 --> 00:29:25,120 Speaker 4: In His Zealand. 622 00:29:26,240 --> 00:29:27,320 Speaker 1: It's been a busy year. 623 00:29:27,200 --> 00:29:29,400 Speaker 4: Then it has, yeah, but this is a lot to come. 624 00:29:29,640 --> 00:29:31,880 Speaker 1: It was the most surprising thing. You think that you 625 00:29:32,040 --> 00:29:35,040 Speaker 1: didn't realize you'd need to do better, or didn't didn't 626 00:29:35,120 --> 00:29:42,080 Speaker 1: realize was so important thing for me. 627 00:29:42,160 --> 00:29:44,760 Speaker 3: Actually last week was really really amazing because it was 628 00:29:44,760 --> 00:29:47,000 Speaker 3: the first chance to really talk with a lot of 629 00:29:47,000 --> 00:29:49,800 Speaker 3: the analysts and a lot of our investors. And it 630 00:29:49,880 --> 00:29:51,960 Speaker 3: went into there thinking, oh, this will be this will 631 00:29:52,000 --> 00:29:55,240 Speaker 3: be tough, and it was challenging at times, and yet 632 00:29:55,440 --> 00:29:58,200 Speaker 3: it which is really nice to see a really good 633 00:29:58,200 --> 00:30:00,680 Speaker 3: recognition of the work that we've done over the last year. 634 00:30:01,080 --> 00:30:03,680 Speaker 3: I've done a lot of work to simplify our strategy, 635 00:30:03,760 --> 00:30:06,000 Speaker 3: refresh it so it's really really clear on how we 636 00:30:06,040 --> 00:30:09,520 Speaker 3: add value and communicate that to our owners and our analysts, 637 00:30:09,720 --> 00:30:12,760 Speaker 3: and they really really like that. It's really clear. We 638 00:30:12,800 --> 00:30:16,480 Speaker 3: can see what you're doing as a company. You're focusing 639 00:30:16,480 --> 00:30:19,760 Speaker 3: on efficiencies in your business. You've got a great pipeline, 640 00:30:20,000 --> 00:30:23,120 Speaker 3: particularly excited about gfm or, which is awesome. You've got 641 00:30:23,120 --> 00:30:26,040 Speaker 3: a really strong balance sheet, gives your options to go ahead, 642 00:30:26,200 --> 00:30:28,160 Speaker 3: and we like what we can see in terms of 643 00:30:28,280 --> 00:30:30,400 Speaker 3: what you're saying you're going to deliver and then how 644 00:30:30,480 --> 00:30:32,760 Speaker 3: you're going to I guess return that value back to 645 00:30:32,840 --> 00:30:33,440 Speaker 3: our owners. 646 00:30:33,800 --> 00:30:36,480 Speaker 4: Now we just need to get on and deliver. STU. 647 00:30:36,600 --> 00:30:38,959 Speaker 1: Thank you very much for your time, and thank you 648 00:30:39,000 --> 00:30:42,000 Speaker 1: as well for watching, for listening wherever you're picking this up, 649 00:30:42,000 --> 00:30:45,360 Speaker 1: whether it's on iHeart or on Apple podcasts or straight 650 00:30:45,400 --> 00:30:48,080 Speaker 1: off the Shares's app. Let us know what you thought, 651 00:30:48,360 --> 00:30:50,520 Speaker 1: let us know what we should be taking a look at, 652 00:30:50,600 --> 00:30:52,200 Speaker 1: and we'll be back next time. 653 00:30:52,280 --> 00:30:52,760 Speaker 4: Quimbitu. 654 00:30:52,880 --> 00:30:53,640 Speaker 1: That's us for now.