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Speaker 1: Now Meridian Energy has suffered from a drought, and then

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Speaker 1: suffered from a wind and is now suffering from no profit.

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Speaker 1: The company reported a brutal full year result, posting a

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Speaker 1: net loss of four hundred and fifty million dollars. Remember

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Speaker 1: last year was a net profit of four hundred and

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Speaker 1: thirty million dollars, So lack of when low energy yields

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Speaker 1: from hydro all been blamed. But shareholders will still get

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Speaker 1: a dividend of almost twenty one cents a share full

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Speaker 1: year dividend. Mike Rohan is Meridian CEO and with.

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Speaker 2: Us high Mike, Hey, Heather, how are you doing?

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Speaker 1: Yeah, I'm very well. That looks like a pretty stressful year,

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Speaker 1: was it?

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Speaker 2: It was tough. You know, the events like we just

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Speaker 2: saw play out don't come around that often. Fortunately, feels

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Speaker 2: a bit like we wear that a perfect storm. But

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Speaker 2: I know, if I walk away from the year with anything,

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Speaker 2: you go. We took a hat, no question about that.

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Speaker 2: But we kept the lights on so alciously flowed to

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Speaker 2: people and we managed to shield our customers from the

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Speaker 2: high prices that played out in hot So you know,

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Speaker 2: we took the brunt of the financial issues, and you know,

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Speaker 2: reality is droughts are inevitable in the country, so every

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Speaker 2: now and then we're going to face a tough year.

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Speaker 1: How much higher than normal was the three hundred million

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Speaker 1: dollars that you spent on price hedges.

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Speaker 2: A lot magnitude of at least ten is what what

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Speaker 2: we tend to do is will buy hedges as insurance products,

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Speaker 2: so you pay the insurance premium typically and that might

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Speaker 2: be in the order of, you know, twenty to thirty million.

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Speaker 2: It's when you exercise them. So when you go through

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Speaker 2: a drought like we did, that you exercise them and

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Speaker 2: that's where you bear, you know, really high costs. And

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Speaker 2: of course this last year, a couple of the insurance

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Speaker 2: products that we took out were suspended so they didn't work,

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Speaker 2: so we had to buy insurance at the time we

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Speaker 2: were going through the drought, which is that cost a

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Speaker 2: lot of money. Yeah, and you know, the it was,

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Speaker 2: as I say, it's kind of one of those years

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Speaker 2: where we had well two droughts and we lost the

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Speaker 2: gas sector as a fuel for the utricy sector. So

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Speaker 2: you know, thankfully that sort of stuff doesn't happen that often.

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Speaker 1: Right now, on the gas thing, what do we do

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Speaker 1: about this how do we fix the situation if at all?

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Speaker 2: It's tough. I don't know if I have an answer.

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Speaker 2: The what we are trying to do is we're trying

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Speaker 2: to as an electricy sector, move away from gas as

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Speaker 2: quickly as we can. So, you know, the Strategic Energy Reserve,

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Speaker 2: the agreement that we wrote with Genesis to improve the

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Speaker 2: capacity at the Humpty Power station basically was that was

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Speaker 2: the eltricy sector stepping away from gas, you know, as

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Speaker 2: a transition fuel and hopefully freeze some gas for you know,

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Speaker 2: direct gas customers, but ultimately, unless for gas set to

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Speaker 2: can find some more gas, which looks increasingly unlikely, you know,

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Speaker 2: they're going to have to step away from gas as well.

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Speaker 1: So, Mike, so you guys have faced the reality of

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Speaker 1: a declining gas situation. Do the rest of us need

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Speaker 1: to do that as well? I mean, if you if

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Speaker 1: you were a business using gas, do you need to

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Speaker 1: switch to something else like biomass or electricity. If you're

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Speaker 1: a homeowner who is still using gas, do you need

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Speaker 1: to do the same thing.

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Speaker 2: I think as a business you should be looking at it.

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Speaker 2: As you know, it's not a choice for everyone, so

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Speaker 2: not everybody can step to biomass or electricity, as you say, heither.

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Speaker 2: But for those that can, they should be looking at

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Speaker 2: the economics and the speed at which they can move.

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Speaker 2: Away from you, I mean.

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Speaker 1: Don't don't sit around waiting for more gas. A no,

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Speaker 1: what about residential customers?

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Speaker 2: So I think residential customers got a little longer. Of course,

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Speaker 2: this all comes back to economics. And you know, while

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Speaker 2: we've seen electricity prices rise, they are largely driven by

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Speaker 2: the transmission distribution price increases. Gas prices have lifted far

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Speaker 2: quicker and faster, recognizing gas is fast gear so than

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Speaker 2: we imagined. So I think residentials, residential customers will start

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Speaker 2: to see the economic impact of staying with gas, and

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Speaker 2: that'll motivate people to move all their applies.

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Speaker 1: When do we start noticing it?

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Speaker 2: I would say this winter. If my gas bill is

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Speaker 2: anything to go by, is it's a lot higher this

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Speaker 2: year than it was last year.

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Speaker 1: So okay, Now, does the government just need to come

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Speaker 1: out and say this, I mean they're dicking around with

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Speaker 1: all this, you know, like giving us the impression, certainly,

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Speaker 1: Shane Jones, is that there may be some sort of

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Speaker 1: a gas solution. Do they simply need to come out

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Speaker 1: and say, guys parties over switch to something else.

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Speaker 2: You know, it's possible they know more than I do.

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Speaker 2: You know, we renewable energy business, so we don't you know,

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Speaker 2: we don't see directly into the gas sector as they might.

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Speaker 2: But you know, from everything that we can see from

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Speaker 2: the outside, it doesn't look promising that gas has a

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Speaker 2: major role to play for the country. So I hope

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Speaker 2: I'm wrong. I don't think you are, but hope, well, hope.

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Speaker 2: You know, as I say, hope, it's not a strategy

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Speaker 2: and the you know, you've got to look at the

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Speaker 2: cost that you're facing and whether you can actually get

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Speaker 2: access to gas, and we've decided as a sector, but

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Speaker 2: that's increasingly unlikely for electricity users and it's impacting the

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Speaker 2: cost of electricity, and so we've got to move to

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Speaker 2: other fuels, and ultimately we've got to invest in more

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Speaker 2: renewable assets to move off gas entirely, reduce the amount

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Speaker 2: of coal we're using the system, and actually drop the

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Speaker 2: cost of electricity for people more generally, and drive competitive

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Speaker 2: advantage into the economy. So we've had a you know,

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Speaker 2: we've had to wake up as well, but we're moving

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Speaker 2: at pace.

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Speaker 1: Yeah, Michael listen. It's good to talk to you. I

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Speaker 1: really appreciate it. Micro own Meridian Energy CEO.

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Speaker 2: For more from Hither Duplessy Allen Drive, Listen live to

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