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Speaker 1: It's now been a bit of a tough year for

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Speaker 1: Mercury Energy. The company has released its full year result

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Speaker 1: today and its operating profit was seven hundred and eighty

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Speaker 1: six million dollars, which is down ninety one million from

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Speaker 1: the previous year, but that pretty upbeat for the near future,

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Speaker 1: predicting a billion dollar operating profit for the current financial year.

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Speaker 1: Ste Hamilton is the chief executive and with us now,

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Speaker 1: hey Stu, hey, Heather, how are you well? Thanks very much.

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Speaker 1: Why the drop in profitability.

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Speaker 2: It's been a really tough last twelve months, really, particularly

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Speaker 2: because it's been the driest on record for us. So

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Speaker 2: when you look at a lot of our eletricity generation

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Speaker 2: comes out of hydro off the Waykatta River. When we

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Speaker 2: have a very dry period, it means that it's really

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Speaker 2: tough for us to produce electricity and that obviously has

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Speaker 2: an impact all the way through to customers, both large

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Speaker 2: businesses and New Zealand households. And so we're working pretty

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Speaker 2: hard to try and improve and build that confidence.

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Speaker 1: And so why so confident that it's going to improve

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Speaker 1: in this financial year.

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Speaker 2: So we're investing heavily and new power plants, so about

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Speaker 2: one billion dollars in new power plants at the moment.

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Speaker 2: That's from the top of the North to the bottom

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Speaker 2: of the South and wind farms and also GF therm

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Speaker 2: or so we see the significant pace of build coming

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Speaker 2: on stream and that's going to be good for New

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Speaker 2: Zealand in terms of providing an affordable and secure gred

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Speaker 2: as we go forward.

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Speaker 1: How much new generation are you building at the moment?

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Speaker 2: It's about one tier. What hour which to convert that,

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Speaker 2: it's about one hundred and fifty thousand homes equivalent. It's

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Speaker 2: about two percent of New Zealand's grid.

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Speaker 1: Okay, now, how do you feel about these new rules

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Speaker 1: we got from the Electricity Authority today?

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Speaker 2: Yeah, there are some components of it which are we're

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Speaker 2: supportive of. We certainly support having more transparency in the prices.

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Speaker 2: But it's also important to understand that the market that

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Speaker 2: we have is actually globally very competitive. We're consistently in

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Speaker 2: the top five to seven in the world and we

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Speaker 2: have about fifty retail brands and so that's double what

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Speaker 2: you see in the UK. So our take on it

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Speaker 2: is that there is good retail competition. Can it be better?

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Speaker 2: Yes it can, and we're keen to support the work

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Speaker 2: that the common doing.

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Speaker 1: Do you think that it's actually going to drive down

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Speaker 1: the price of electricity or drive it up? Because I

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Speaker 1: mean it seems to me if gentailers are having to

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Speaker 1: sell their power at a higher rate to themselves, then

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Speaker 1: it should actually push the electricity price up, shouldn't it.

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Speaker 2: Yeah. Our take on it is that the integrated nature

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Speaker 2: of our businesses actually create quite a lot of synergies

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Speaker 2: that support things like the build rate, and so we

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Speaker 2: need to come back to work out what's the problem

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Speaker 2: we're actually trying to solve. For when news yonder, the

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Speaker 2: problem is we just don't have enough energy at the moment,

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Speaker 2: so we need to build more power plants, and the

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Speaker 2: best way to do that is to use the generators

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Speaker 2: that we have to actually make sure we're building at

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Speaker 2: pace so we can actually ultimately bring those prices down.

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Speaker 1: Is it possible that the government is dithering on this

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Speaker 1: in order to give you guys the opportunity to get

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Speaker 1: that building going so that they don't actually have to intervene.

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Speaker 1: I guess.

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Speaker 2: I mean there's different perspectives on this, right, But what

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Speaker 2: we can control is the rate that we're building at,

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Speaker 2: so we're building at pace, and the other thing that

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Speaker 2: we're doing is working across the sector to look at.

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Speaker 2: One thing is to make sure we've got the power.

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Speaker 2: The other is to have it when you need it.

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Speaker 2: And that's the work which we've actually been doing with

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Speaker 2: the likes of Huntly over the last few months to

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Speaker 2: actually work out how we provide this form of firming

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Speaker 2: so that when the rain's not falling and the wind's

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Speaker 2: not blowing, that we actually have some form of power

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Speaker 2: there to provide it through to households into businesses.

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Speaker 1: What's your advice to residential gas customers? I mean, if

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Speaker 1: somebody is on gas at the minute, because you're an

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Speaker 1: expert on it, basically you're involved in it. If somebody

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Speaker 1: is on gas, if they're running their heater through gas,

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Speaker 1: should they be thinking about with the government talking about

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Speaker 1: potentially ration and gas, should we be thinking about switching

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Speaker 1: to electricity?

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Speaker 2: Yes, definitely, But the issue is whether people can afford

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Speaker 2: to do that. So there's definitely a strong drive at

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Speaker 2: the moment. Prices of gas are likely to keep going

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Speaker 2: up as the supply comes down, and so fundamentally the

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Speaker 2: right thing to be doing is to be switching to

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Speaker 2: electricity or away from fossil fuels in general. That the

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Speaker 2: challenge for many is how we actually go about supporting

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Speaker 2: that transition to electrification. That's easiest when new houses are

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Speaker 2: being built, but certainly something we're looking at to support

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Speaker 2: those that need to transition for houses that are currently there.

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Speaker 1: Interesting stuff. Hey, thanks to you, stew Hamilton, Mercury Energy

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Speaker 1: Chief executive. For more from Hither Duplessy Allen Drive, listen

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