Mercury NZ Limited (MCY) Earnings Call Transcript & Summary

[Foreign Language] So that's Maori welcome to you all here today. It acknowledges the Rangatira here and welcome you to this Mercury Hui. We acknowledge all of you who have gathered here from near and far. The Maori translation is actually from the Four Winds. We acknowledge Rangitane. So that is the district of Manawatu is their Rohe. And we acknowledge the Rangatira, the leaders of this area. And we welcome you all. So welcome to this meeting today. We're actually here with our financial funnel. Many in this room are invested in this firm via equity or through debt. We have some of our other key financial stakeholders here. So it's certainly a privilege to have you here today. It's been a crazy few years. Our last Investor Day was November 2019, and now we're in March 2023. There was certainly a -- it was a pesky pandemic sitting in the middle, where I think we're suffering some of the aftereffects of that right now. It's causing quite a lot of challenges globally and certainly still here in New Zealand. But here, we're here today to actually share with you the story and the journey of Mercury and what we're working on, what our plans and aspirations are for the future, and we're really excited to do this. So I'm really excited. I think we're really looking for a 2-way discussion between yourselves and us. It will be a great opportunity for you to see the depths of talent and the capability within the firm. So a lot of you will have to make time with Vince and me. And so this is a really great opportunity for you to see some of the other leaders and key decision-makers inside Mercury and what they are working on. So those are our wonders. You may have seen our ads on TV where the crazy guy with the Ginger here running around with the big tennis ball so those are the wonders. And we've got a few slides to celebrate the wonders certainly in the -- in this welcome session. Health and safety, just to cover a few things off. So we'll just start with bathrooms. There's actually 3 seats of bathrooms in the facility. There's one just right here behind this wall. There's another near the entrance where you came in, and then there's some more in the pavilion room outside to the right. So if you need to go the bathroom, please do so, don't stay in your chair. If there's a emergency, and we need to evacuate the building, it's highly improbable, don't like fires, don't hide in the corner and start smoking. We evacuate to the car parks. If you go out the front door, follow the staff, and we're out essentially by the big trees at the back of the car park. I'm sure that will be unnecessary. This you want to notice, there's actually a driving range out there. There will be an opportunity to hit some balls that will mean several of you will be holding clubs. That is not an opportunity to hit the fund manager that you're not so friendly with to do something to an annoying banker. So no clubbing today. Obviously, we'd refer you didn't actually do your back end too. So again, just take it easy, if you haven't held or swung a club for a while, lumber up before you do so. Don't fall in the lake. All right? So stay off the grass, don't go in the lake. I'm not going to come and get you. And just for the tough guys in the room, there is a dress code for playing golf. It's no singlets. So we'll leave it at that. And now I'd like to welcome our Chair, Prue Flacks to say a few words.

[Foreign Language] That was probably one of the more entertaining health and safety briefings that we've had for a little while. And I'd hate to comment any of William's instructions. But if there's a really big fire, I'd just go outside. I wouldn't worry the front door because there seems to be a lot of open space out there. But anyway, can I just add my welcome to the welcome that William has already given you. These days are a really important part of our investor program. And as well noted, it's been a long time between drinks. And not our fault, obviously, but it's great that we can actually pick up this program again. And thank you. It's great to see so many of you actually taking the time to come to Palmerston North, which is on a day like this, a beautiful place. And as someone who lives in Wellington, I kind of hesitate to say this, but I wish it was a little bit windier at least tomorrow. So you can see how our beautiful shiny new turbines and they are shiny, perform. I'm not sure if you're going to get a chance to go up any of them, but it's quite spectacular if you do. So as William said, you hear a lot from William and Vince throughout the year. But this is an opportunity to hear from the wider executive team and also to engage with directors. And I'm really pleased. I'd like to introduce Mike Taitoko and Susan Peterson. Mike and Susan, do you want to wave? Susan's the one in pink. So you won't -- they're both here with me. And so look, I encourage you during the course of the day, if there's anything you want to talk to any of us about, please just track us down and do so. Look, it's fair to say there's a lot going on at Mercury. It's been a busy couple of years. The Board and management are very aligned on strategy and we're very supportive of Vince and his team. But I do want to take the opportunity to just highlight a few areas that are receiving a bit of board focus at the moment and things that won't necessarily get picked up over the balance of the day. So if I start, because I'm the chair with a governance topic. We are continuing to focus on Board succession. It is important that we have the right mix of skills and expertise around the table, both now and going forward. So we need diversity of perspectives. We obviously need the professional background, the engineers, people who actually have experience in all the aspects of Mercury's business. But also really importantly, and this is one of the things that I've tried to do since I became chair is, you need to have that balance between the specialist expertise we need and that core strong commercial experience, which any company like Mercury needs. And so if any of you read to Page 100, whatever of our annual report that heads the governance piece in it. Over the last couple of years, we've refreshed our skills matrix, and we've tried to make how we actually go about identifying gaps and selling them a bit more transparent because skills matrices are great, but there's a bit of a tendency to sort of go down and then say, well, maybe we need a bit more of that and a bit more of that. And actually, the way the whole Board operates together and that blend of skills is actually really important. So as part of that process, we were really pleased last year to appoint 2 experienced directors, Susan Peterson, who's here and Lorraine Witten. And look, Susan and Lorraine are already very strong contributors, neither is a shrinking valet if you know them. And so they already contribute strongly to our Board discussions. And we do have a process underway at the moment for known and potential gaps. I'm really happy to say that Mercury is continuing to attract really high-quality candidates. And we'll have a bit more to say about that in due course as the process is further advance, but it certainly it's a big focus at the moment. So just touching on strategy, and I'm not going to talk a lot about strategy because that's what you're going to hear about during the sessions today. But I just want to note that the Board has a particular focus at the moment on execution and delivery. Obviously, over the last 18 months, we've completed 2 very significant transactions. And so in addition to business as usual, we've got a generation pipeline to develop. We're integrating 2 big retail businesses. We've got a major asset refurbishment underway. And so it's critical that we remain focused on the things that really matter, including organizational capability, and that's something that may come up and [indiscernible] don't put words in your mouth do -- but as it is something that has been a focus within the organization to make sure that we have the right people here and there has been some change and it's certainly something that Vince is great at leading. But it's also important to remain alert to opportunities that might arise. So as an organization, we need to be sufficiently agile to be able to assess and look at any of those opportunities if they do come up. So just if I touch on risk, the Board sets of risk appetite, and we have a very robust framework within which we manage our strategic and operational risks. And I just want to touch on one area where we think risk is elevated at the moment. And that's not climate. And that's not because climates not important, but climate risks ain't new for Mercury. They are part of our business. Having said that, like many organizations, our approach is evolving a bit in terms of we are in the process of setting emissions reduction targets. Obviously, reporting is a live topic. And Lucy, I know, I haven't -- I know we'll speak to what we're doing there in her session. But the area that I just want to comment on briefly this morning is regulatory or you could say, political risk. And I don't think that we have seen a time when this risk is as high as it is at the moment. Mercury provides essential services, obviously, electricity and gas and telecommunications. We're in an environment where there are significant cost of living pressures. There's high wholesale prices and a whole range of uses to what's causing that. And I'm sure you'll have some interesting discussions in Phil's and if you've got the answers, I'm sure we'll be happy to hear them. But we're in an election year and for a whole range of reasons, we feel that this risk is elevated. Our view, we remain of the view that the trilemma matters, and that ultimately, that will deliver the best outcomes for New Zealand as we transition to a low-carbon economy. But there is a risk that a political response to short-term pressures will result in outcomes that aren't ideal. So we're quite alive to that. There's a lot of that, that we can't control. So we do focus on areas where we do have influence and some ability to control. And that's involved working collaboratively within our industry, with government, where we can with governmental agencies and regulators. And I guess the objective is to promote a better understanding because I think that there isn't necessarily a good understanding of all aspects of our industry. We're very solutions-focused. We made a very conscious decision that we weren't going to sit on the sidelines and throw rocks at ideas that government or other parties came up with, we wanted to be involved and contribute constructively to this. And I think the examples that you've seen over the last little while has been the work that the -- some of the industry commissioned, which resulted in the report produced by the Boston Consulting Group. It wasn't -- I mean, we paid for quite upfront about that. And obviously, we all contributed data, but it is an underpinning report, and it's a good piece of work. And another example, which said he doesn't seem to be finding favor is that industry participants did suggest a winter peak product to the electricity authority. But they don't seem to like the idea at the moment. Then the last area that I just want to touch on is stakeholders, of which we have many, including your good sales, but I don't want to talk about you this morning. I want to comment on a couple of stakeholder groups. The first one being EV. Our relationships with our EV partners are vital to the success of our business. We have many of them. They're all different, and they're all complex. But fundamentally, they're all founded on a shared commitment to the long-term health and well-being of the natural resources that we use in our business and to the communities that we operate in. So at a very high level, my thesis is that if our EV partners genuinely value the relationship they have with Mercury, and that's good for our company, and therefore, that's good for our shareholders. So the Board, in particular -- well, in fact, all 3 directors in this room, but Mark, in particular, does a lot of effort going into that aspect of our business. And then the second group is our customers who obviously are really, really important. But I just want to particularly note our customers experiencing hardship at the moment. As I said earlier, there are cost of living pressures. We've had some significant weather events. And the result of that is that many people around the country and including many of our customers are vulnerable and experiencing some sort of hardship. And our role and particularly now we are the biggest retailer in New Zealand is to understand the issues that the customers are facing and where we can to provide support. There are a range of initiatives underway. And again, we're working within the industry. We're working with other organizations, for example, Watercare with community agencies, budgeting agencies. And I'm sure in the session that Craig and Fiona and Julia will run, if they don't tell you about, well, you can ask. But there are some -- there are a number of issues -- of initiatives underway that are directed at providing support to our customers. And I hope to say I'm really proud of the way the Mercury team has stepped up in the recent flooding events in Auckland and in the cyclone events. And what we've done is we've provided tangible support to customers who've needed it. You won't see front page ads. That's not the way we've approached it. But believe you me, we have provided material support to customers who are vulnerable to the communities who are affected and obviously to our people. I mean now since the acquisition of NOW Broadband, we do have -- I think we have 80 people, Vincent will know, in Hawkes Bay permanently. So the office for a while became sort of part office part sharing telephone charging facilities for people. So it is important to acknowledge that. So I will now hand over to Vince, who will take you through the agenda for the day. [Foreign Language].

[Foreign Language] First of all, we should all get up and do a bit of a Jig and dance around. It's going to be a big day. Welcome again. We have a few Mercury people here. I mean the purpose of today is for you to get to know the team. Team I'm really proud of. So just to run through, you will be hearing sort of directly from members of the exec team. So in the retail space, from Craig Neustroski and Fiona Smith; and Julia Jack, ably supported by Nick Pudney, who's leading our integration program. So that should give you a really rounded feel of retail. You'll be hearing, as we said, from Lucy Drummond, who is our GM Sustainability about some of these big macro challenges that we're dealing with and how we're trying to work within the industry to demonstrate to New Zealand that we've got this to use a phrase that's been overused. You'll hear from Phil Gibson, who runs our portfolio business about how we think about the dispatch of our assets, how we sort of manage risk in that space, how we are thinking about our development pipeline. So that should be a great session as well. You'll hear from William again in a minute. He needs no introduction. You'll hear from Stew Hamilton, our GM of Generation, about our assets and our approach to the long-term resilience challenges that come with long-lived assets. We're not a short-term business. Often when we do business cases around things, we're talking about 20 years or 25 years and things like that. You think about our assets, they are -- should truly intergenerational. And as you go around those sessions, I really encourage you to probe into how these folks are thinking about the job they're doing because what underpins the difference, in my view about this Mercury business today is the capability in depth. And so Marlene Strawson, our people and culture GM is here, talk to Marlene about like what are some of the changes that we've experienced over the last 3 or 4 years. Other people from Mercury that are here, I'll just -- because you'll bump into them. So if you're looking for something out of William's team, Angelique McCall, one of our new appointments to William's team and the finance side of the business, Jeff Schmitz, who many of you will know, the treasury, Howard Thomas, our Company Secretary, that sort of stuff, make sure you're bump into them. Within Lucy's team, [ Jess Bevan ] who leads our sort of strategic thinking and sensing. So if you want to talk about, well, what are we observing and what do we understand? Well, have a chat with Jess. She's really smart around that stuff, how we're communicating things, how you feel about our sort of annual reports and stuff like that, well Shannon Goldstone, Katy Scoullar, you can talk to them about that. Many of you know Tim Thompson in his new role, he will be supporting feel in the discussion about portfolio, how are we thinking about integrating those assets into the Waikato hydro system. And Matt Kedian will be supporting Stew and Matt's our operational Head of Operations in Generation. But probably the 3 most important people you need to know about in the whole room are Joy, Odette and Libby, right? Because if you just want to know where to be when, how are you going to drink, where to swing a club, when dinner is or any of those things, they're far more organized than the rest of us. So look, that's the team. As has been said already, it's 3.5 years since the last one of these sessions. And I'm standing here now, having been in this job almost 3 years today or not too far away and realize that I'm to blame because what you're going to get today is all because of what we've done in the last 3 years. And we've been really busy. And I think the -- we've been busy on good stuff, but we've also been really good at seizing opportunities. Because I think if anybody have said and William's going to do a quick retro future thing in a minute, anybody said 3.5 years ago, we would own the biggest New Zealand wind portfolio or we'd be the biggest retailer. You guys have all gone off and those of you that analysts have said, Mercury is smoking something. And we weren't and we aren't and we are determined to deliver exceptional shareholder value out of the opportunities we've seized. If you think about what are the messages I want you to take away, if you can today and think about whether this is true, when you hear from the Generation business, have we got resilience? Do we understand energy and capacity? Are we determined to be long-term sustainable asset holders who are efficient? When we think about climate change and the energy transition, can we describe it really well? Are we playing our part? Is Mercury part of the solution? When you talk to our portfolio of folks about position and value, how do we create value? How do we think about that? What's the credibility of our generation development pipeline? Because there's an awful lot of vaporware out there. Have we got a leading platform for growth in multiple scenarios because it's really easy to just look at load growth scenarios that disappear into the ether. New Zealand load had been 40,000 gigawatt hours for the last decade or more. And yet somehow it's going to be 80,000 at some point. So when you're talking with our retail team, have they got their heads around this integration, I think they have. Can they deliver the business case? Will we have the platform that can create exceptional digital value for customers and shareholders? Because at the end of the day, customers that stay longer and cost less to serve by the customers, that's how you create long-term value. But ultimately, I hope by the time we're having a drink and swung a few clubs and things like that. Have we got a team that we can believe in and trust because I think we've got an exceptional team, we can believe in and trust. So I'm conscious of time. I'm going to hand straight over to William, who is going to set the scene, and then we're going to get into it and it's going to be a quick game and a fast game because that's how stuff happens.

It's not actually me, but it does look a bit like me. I think some of them in the marketing team was having me on. So as I said I do want to do a quick retro. So it's really interesting when you're preparing for a daylight today and actually go back and say, what do we actually tell? What did we tell you in 2019 and how accurate was it? Well, we telling the truth that we do what we said we would do where are we today. And Vince has already alluded to, certainly, a lot has happened over the last few years. Surprisingly, a lot has happened actually while we were in lockdown. A lot of our people were working from home. So it's amazing what you can achieve. So just the key highlights. So let's just -- we've got a snapshot there around the electricity market thesis from late in 2019 as Vince said, demand growth has been elusive. We thought we were seeing green shoots back in 2019 yet, essentially, the industrialization still weighing on demand. We're still sitting here today saying, yes, I think there are some green shoots now. We are seeing some people are building some data centers. I think possibly the scale of those might be slightly over height, but that's certainly positive. We are seeing electrification and transport. We are seeing people making decisions to move away from fossil fuels to using renewable power. So that is positive. That being said, growth still remains elusive. Spot prices are volatile, assuming I think the dialogue around spot pricing in the market is a view that it's going to be even more volatile. It certainly increased, but with the increase in particularly wind and solar coming into the market, we expect to see increasing volatility. So how our portfolio is adept to manage that volatility is going to be key. Futures prices are very high. So the full price is signaling expensive than what fuel plus carbon costs. That is triggering a pretty major response from the supply side around building new power plants to get those expensive thermal fuels out of stack with the added benefit of decarbonizing our sector. We have seen commercial industrial prices lift. So certainly, the lifts in those prices have been higher than what we're seeing in mass markets. Mass market prices are rising too but probably not at the same rate. And again, there's a balance here between a regulatory political response and what those might mean. I love this slide. The slide is just got a diagram there of the various sizes of wind turbines. We can see a lot of these just out the window here today. The Tararua 1 and 2 sites, the Tararua 3 sites to V90s, the Turitea site, the V112s, going through Waipipi, which is Siemens Gamesa 4.3 [indiscernible] turbine. And then Kaiwera still not consented tied up and consents largely around EV issues and those things are beast. The heating set the opportunity in wind, perhaps that was prophetic because most of those turbines now sit inside Mercury’'s portfolio. It probably wasn't intended at the time, but we do make our own luck and certainly the decision to take a cornerstone stake in top renewables back in 2018 enabled a wonderous transformation for Mercury and wind, which is continuing today. We sat on a journey, which we call operational excellence. It evolved to a Thrive program, and I think it's evolving further and Vince has touched on this in terms of culture. We will hear the conversation culture strategy for breakfast and certainly moving to a different way of working, more collaboration, bringing diversity of use. Some of the adaptive techniques, some of the agile techniques inside the business, I think, has seen quite a big shift. We set ourselves an ambitious target last year to deliver a $30 million uplift. And we knocked that out of the park. No doubt helped by a good trading performance, but again, embedding those different ways of working and how we do things at Mercury is key. And then the Trustpower retail business, that was transformative. That was -- it was an opportunity that we did seize. We did recognize that scale and retail does matter, and it was a unique opportunity. There could only be one large acquisition of that type, given [ ComCom ] issues in New Zealand, and we were fortunate. You make your own luck. I think we're very happy to have done that, and that we'll hear today about how we are progressing around that journey of bringing those 2 retail businesses together and the opportunity that does create. I do want to touch very briefly on just some key global transitions that are affecting the energy sectors across the planet. They do matter because regulators and politicians in New Zealand do look overseas for inspiration. Where there are issues, they will look to regulatory interventions or changes in offshore markets and see whether they are relevant here today. So the energy transition is real. Climate change is happening. And certainly, renewable energy we know has a huge role to play. The trilemma is proceed that needs to be maintained, keeping the lights on is paramount. And we're certainly very focused on that, but also delivering affordable energy and making that renewable also hugely important. Digital transformations. I mean, computers are everywhere, the Internet of Things, data, how we're managing that. That is -- it is revolutionizing our businesses and our lives. The future of work I reflect it wasn't that long ago that I actually had a desktop, and we move when we moved into our new building in Broadway, we effectively rolled out laptops everyone and Thank God that happened because COVID came along and you run was working from home. I think it would have been quite different thereafter. So they're working from home and aging population. Again, the impacts of digital transformation, AI, ChatGPT, how that will change our workforce, our employees' expectations are very important. How they show up? They really show up in 3 years in terms of what Mercury is closely involved with a low-carbon transition. I'm not going to go through all those things, but it will be familiar for you. But again, a lot of that is dealing with government policy or regulation, and there's a big raft of it. While we don't have explicit price regulation in our sector, we are a very regulated industry. The rulebook is big and it's quite easy to add more rules. If you're saying I'm going to regulate the grocery sector. It's actually very difficult. There's no framework to do that, but our sector is actually very easy. So again, managing those regulatory exposures is key. We manage the trilemma essentially you'll keep the regulatory wolf at bay. Changes in our sector. We've talked about resilience, the flexibility in the market, New Zealand battery project. There's a whole lot of factors piling in there. And then obviously, we're a pretty big player in telco now. So that also is something that's front of mind for us. So that's enough for me. If you're wondering, that's a high shot from Waipipi looking across for the mountain. So it's a beautiful shot.

[Foreign Language] Welcome, everybody. My name is Stew Hamilton. I'm the General Manager for Generation. I'm joined today with Matt, standing up on the deck there. Matt's our Head of Operations and Generation. We're excited today to talk to you about the Generation portfolio of assets that we have and the work ahead in terms of asset management. I joined Mercury about 18 months ago into a newly created role, which brings together the operations and maintenance of all of our geothermal, hydro and our wind assets under the same team. Today, I've got a number of slides to go through with Matt. We could spend ages talking about the exciting space of geothermal hydro wind assets. But please, as we go along, feel free to ask questions nothing that's going to make this as exciting as the question you ask so thank you. So coming into Mercury, 18 months ago, the strategic approach has been very much about making sure we have a resilient set of assets. Vince touched on this before, both in terms of being able to make sure have assets that are ready to start reduce the energy over the year that's required but also make sure that when we have those peaks that occur in the system that we're able to get those assets going and running to meet that market demand. So that approach has been about building a capable team of people and making sure that we then operate resilient assets that can provide the dispatch energy. To do that, we've been focused on the 4 main areas on the slide here. The first around are being better together. That's really looking at the assets that we have, which for most of our geothermal and hydro assets are pretty closely located. And it's one of the real advantages that Mercury has, is that our geo and hydro assets are all within about 1.5 hours, 2 hours' drive and been able to utilize engineers, maintainers and operators from different sites amongst the others, the massive advantage to us that we can leverage. Secondly, it's about protecting and evolving our long-lived assets where there in EMEA one of those a hydro, geothermal or wind-based space. Thirdly, Matt will then talk to the optimizing of our performance. Some of our cheapest, some of our most valuable megawatts will come from our current operating assets. Matt will touch on that. And finally, we have some very long-lived assets, including the dams on the Waikato River, and we talk about how we're going to manage that risk. To Prue's point, we've been building a pretty capable team over the last couple of years. Unfortunately, they can't all be here today. So myself, I've joined Mercury from over 2 decades of experience in mining across New Zealand, Australia and Africa. Matt, who you'll meet in the moment, he's got over 2 decades of experience across the globe in oil and gas. We have Emily who's recently joined us. Emily spent over a decade in oil and gas across Australia and Africa and also in drilling geothermal wells. Rob has been with Mercury for over a decade prior to that comes out of the renewable energy industry in the U.K. And John, who leads our asset management area comes to us again from over 20 years of experience, primarily in mining industry, but in heavy maintenance and in logistics. If you look at the total Generation team, about 1/3 of the team that exists now has only been with Generation for a year. And so we have really been injecting a lot of new skills, a lot of new experience into the team. Matt and I were at a session last week with a number of new starters in the Generation team. And as I went around the room and looked at where people are from, there's people from Scotland, Dubai, Denmark, El Salvador, Sri Lanka, it was even some from Colorado there as well. So there's a real spread of experience that we're bringing in from across not just inside our industry but outside of our industry. It's a tough environment to be in, in some of our areas at the moment, look at Taupo, where there's a lot of demand for employees. And it's really important that we don't just keep competing for the same employees in the same pool. We need to be injecting people in and developing people from with them. So it's a key focus on the first part of our strategic approach around being bedded together and leveraging that new experience that we've got. One area that that's showing up and is in health, safety and well-being. There are 3 real focus areas in that space. The first is around safety culture. Safety culture from Mercury is moving from a purely rules-based team for something called Safety 2.0 which encourages the reporting of incidents to make sure we're proactively reducing the things that could cause incidents in the future. The second area is something called critical risk management. These are the risks in our business that could seriously harm or kill a person. In our industry, there's a number of those, things like electrocution, some of our driving hazards a high, working at heights, how do we make sure we have really clear controls in place to manage those risks for our people and our contractors. The third area is process safety. Now process safety refers to the risks, particularly in the geothermal space that exists with high pressure, high temperature explosive gases that if something went wrong could cause significant asset damage or worse impact to a number of people. In 2021 -- in July 2021, we had a loss of steam, a loss of containment event with the steam at Rotokawa. That has led to work safe prosecution and it's a process which is currently continuing. Now in the meantime, we have been significantly bolstering our process safety team. In fact, 18 months ago, it was a team of 2 engineers. Now we've moved to a team of about 7 engineers and we've been injecting quite a lot of experience from the oil and gas industry, in particular, both overseas and in New Zealand. That team has taken a different approach to making sure we're looking at the hazards, the hazard operational studies. To really look at what are the critical factors, the safety critical elements that are maintaining our plant from having these significant value. So a lot of work in place to progress in that area. Second area we're focusing on is in protecting and enhancing value. I'm going to touch on 2 areas here. Again, as I go, happy to take questions. First area is really on our hydro station capacity in our refurbishment program. And the second area is around our geothermal drilling program. This table has quite a lot of detail in it. What I see is if you go down the left-hand side, these are the 9 power stations that exist on a Waikato River. All of those stations, when you combine the number of generators and turbines,, there's 39 units that exist on the river. Over the last 10 years, there's been a program in place to progress through the oldest of those assets. And you can see those showing up in the yellow bands on the left part of that chart. And so over that time, there have been 15 units, which have been refurbished over that 10-year period. At the bottom of that chart, you can see that we're kicking into Karapiro at the moment. We're actually 1/3 of the way through that program. It's progressing really very well. I'll talk about that in a moment. And then as you look out into the next 15 years, you can see a significant program ahead of us. There are another 24 turbine generating units that will be progressing with refurbishment over that time. That's a commitment of approximately $350 million to be injected into those Waikato River assets over that 15-year time frame. As we go about refurbishing our assets, we do more than just replace like-for-like. Many of these assets are decades old, and we take the opportunity to upgrade them. We're finding that as we go, we're typically getting 10% to 15% increase in capacity for those assets. Karapiro is a good example of that. So at Karapiro, we've been conducting this refurbishment over the last year. It had a bit of a delay through COVID times, but it's kicked in really nicely now. been working really well with our supplier and our contracting partner Andritz, that's now at the stage where the first unit is just about complete, and that will be commissioned through May. The project, which is investing about $80 million into that station, it will see the life of that asset being extended for another 50 years. And as we go, we'll increase the capacity of that site by about 15% to 17%. So it's a good project. It's a beautiful looking piece of kit. You can see for scale, there's a person on the top right there just in terms of the magnitude and size of the turbine, an amazing piece of work and really making sure that we manage that asset on the river as well as we can. The next area that we're focusing on is around geothermal drilling. This is about providing a long-term fuel supply to maintain the capacity of our geothermal assets over time. At the moment, we are looking at launch and we're launching into a 2-year drill campaign program that will drill 8 injection and production wells primarily at Kawerau, Rotokawa and Nga Tamariki. That program will kick off later this month and run for the next couple of years and has an investment of close to $130 million. That program is very much about building in something called N+1 redundancy into our geothermal sites. What that means is that we'll have drill well -- have wells in place so that any failure, any deterioration and any retirement of those wells, is taken care of. We'll have well -- new wells ready to go to maintain the capacity of those sites. In addition, you can see the 2 wells at Nga Tamariki. They're actually being drilled with the expectation or being ready for the potential expansion of that site with a unit called OEC5, which I'll talk to in a moment as well. Beyond that drilling campaign of 8 wells, we look out into the outer years in FY '26 FY '30. There's another 4 wells there, and that will be run another campaign. And as you average out the number of wells we drilled per year, it's roughly about 1.3. So where does that leave us from a stay-in business CapEx perspective. Summarize that, the slide shows the same business CapEx back to FY 2017. You can see there's a few things to point out on this slide. The first is you'll see the dip in FY '21 and FY '22, largely associated with COVID and a reduction in works through that time. Coming out of that and then to this year -- next year, that increases and the major causes of that increase are the black bar, which is associated with the major rehabs, and I spoke to the Karapiro rehab underway. And the second one is the blue bar on top, which is the geo steam field, and that's the drilling program, which is underway and running for the next 3 years. So a large investment in increasing the resilience of our assets for the next set of generation. There's no wind Stay in Business CapEx there. Most of the investment in the wind portfolio is an OpEx space. Moving into the OpEx spend. So the OpEx that we have in front of us also reflects the desire to improve the resilience of our assets. You'll see a couple of aspects in this. Firstly, you can see again a dip through 2021, 2022 and primarily associated with the delay of a number of shutdowns or turnaround activities at our geo sites and reduction in hydro work that picks up again this year and into next year. Actually, the last 12 months has been a significant amount of work in our geo sites, to really increase the resilience of those sites, make sure we're doing the right planned maintenance work. And you can also see the blue kicking in there, so that's the wind portfolio starting to join our Mercury operational assets, and that will grow as the number as [indiscernible] comes on stream and in color downstate. Final thing I want to touch on is probably one of the most exciting opportunities we've got inside the generation suite of assets. I mentioned some of the cheapest some of the most valuable megawatts we have are associated with the current operating assets. This is a picture of Nga Tamariki. On the right-hand side, looking down on top of it, you can see OEC 1, 2, 3 and 4. OEC stands for Ormat Energy Converter. So it's a technology from a supplier called ORMAT, basically enables you to turn the steam and brine into electricity. We have an opportunity now to build a 5th unit, which has been superimposed on the far left-hand side of that picture. OEC5, this is a unit which could add another 37 megawatts lifting the total output of that station up to 123 megawatts net. The great thing about this project is that the team that built this asset over a decade ago had fantastic foresight. They built in a number of balance of plant and ancillary services ready to go for a future expansion. So what we have here is an opportunity to expand the plant without having to do significant amount of ancillary and service works, you just have to plug in additional Ormat on site. So it's a very exciting project. It's one which we're working through final feasibility at the moment. Resource consent as well and making sure we work very closely with our new contractor in Ormat. Right, I might now hand over to Matt. Matt Kedian, our Head of Operations, Matt is going to talk to the start of our optimizing performance.

It's good to be here. I'm going to talk about what I think is the most exciting part and that the operational excellence and optimizing the assets that we have already in our hands. I think over the last few years, Mercury has done a fantastic job focusing primarily on the big stuff, right? We've done really big rehabs, like $80 million projects that's going on at Karapiro also building wind farms. We're building big units in the geo field and so done really well on the big stuff and adding megawatt. And all at the same time, keeping our OpEx for our existing station flat as Stew showed on us. So that's been a really powerful piece and excellent piece. But I think as Vince since Stew come in, there's another avenue that's open to us to really double down on and that's making the most of what we've got. That's really putting energy into generating the megawatts or extra megawatts from what we already own. And they're always invariably, the cheapest megawatts that we can find, and that's what we're focused on at the moment. So if you have a look at the slide here, you can see our hydro performance. The top right is the availability. So the proportion of time when the hydro units are available to produce, you can see that's quite a bouncy line and that's by design. And what that is for us in the summer periods where the prices are generally lower and there's less water that's when we do all our maintenance. So those numbers go down. And then the winter when the prices are high, that availability goes up and we're able to generate more. And then along the bottom, you can see our generation profile for the last 3 years. It's been really pretty flat. But in the last year, with all that water, we had a huge amount of additional generation. So 700 gigawatts ahead of our plan, some 25%. So really awesome performance, and you can see, what we've done there is we've shifted a lot of our maintenance activities out of that period and to make those units available, wind prices will be very high, and that's where you see that really good performance for that short period while we have that good opportunity. So part of optimization has been the maintenance at the right time. But I think some of the most exciting pieces are around the opportunities that come from inning a team together who's really focused on the nitty gritty. Our goal is to get a PhD understanding of exactly how our assets work and what are the ways that they can make money. And by doing detailed surveillance, building really good models, we're starting to find a bunch of opportunity and building this big funnel of things that we can start to work on whether we call it Thrive and Mercury but operational excellence are really making the most of it. And there's a couple of examples here from Maraetai and Waipapa, where a relatively simple process of doing some work, some minor changes in the plant, which allows us to lower the tail water, so the level of the water downstream of the power station. And you can imagine if you have the dam at the top of the difference between the high and the low is bigger, you can generate more electricity with the same amount of water, but also it allows you to pour water pass the station for longer at much higher rates. So it gives you the ability to deal with those big peaks that we get in the morning and the afternoon or morning and evening really or in the evening, you've got a wind portfolio and the wind dies away, you can respond really quickly with that. So that so far on an average year, it's worth about $750,000 a year and then [indiscernible] But those kind of almost 3 things that we can do that generate money when we really, really understand our -- and then we're doing some work to look at all the other services we can provide the market, whether it's frequency and voltage support and those things can be a little bit hard on the machine, but they are a better work with -- in the geothermal performance, the other big chunk of our portfolio, the same piece of work going on at the moment to look for these opportunities. I'd like to point out we -- the team built a new model for the Mokai field, which allowed us to lower the inlet pressure to one of the turbines. And so without any real additional cost that's some better control logic, we're able to improve about $1 million worth of revenue for that field. Some work going on at Nga Tamariki, OEC5, the new unit that Stew talked about. Some of the team together with Ormat have is a new mode of fluid we use pentane to generate our electricity drive our turbines in geothermal. And by changing to a new fluid cyclopentane, we were able to increase not only decrease the cost to build the unit by a few million dollars, but also able to generate more megawatts from the same amount of fluid. It will add another megawatt and a half every hour of every day that it's producing couple of million dollars, but no real incremental costs just having a really, really good understanding. And similar on the control system at Nga Tamariki, while we're learning to understand our asset. As the temperature changes through the day, the performance of the asset tends to go up and down with the temperature. And we found that there's some lag in the way the control system operates. And by speeding that up, we're able to run the plant much closer to its limit and that's added about megawatts on average at Nga Tamariki alone. Again, not a huge cost, but good understanding, some good control support and good models. I mean just talking about the availability and generation in the last couple of years. You can see availability again on the top, quite bouncy. In July, well, as of June '21, we had a Kawerau incident, where one of our turbines catastrophically failed, and that's what caused the big drop in ability -- at the moment. I mean, but generally, availability is pretty good. But in this last year, we've had a really -- we had a bit of a struggle primarily around the Rotokawa field, we did the project 18 months ago to join the 2 fields together, which will allow us to make another 6 megawatts consistent. But when we joined a very new system into a 25-year-old system, we've had quite a few issues with stability that caused that availability wobbles this year. As of a month ago, we've got all the units up and running and everything seems to be -- everything is working smoothly and we think we've understood all the problems. So that should start to come up again. So I think we're in pretty good shape. And then you can see the long-term generation profile is pretty flat. Generation tends to drift down slightly in the geothermal fields as you -- as your enthalpy declines, the amount of energy in the third over time. And so that's our job and optimization is to look for really good ways where we can help that trend or the impact that, that enthalpy decline has as well. I mean wind, our newest -- the newest member of our portfolio is really exciting. It works quite differently for us in Generation where it's -- most of the work is done by Vestas. We have a really small team who manages the O&M contract. But you can see as the availability there as Mercury has taken the assets on performance has anything gone up, primarily due to newer assets coming online and good stability. We had some issues with Tararua T11 that caused some of the drops but that units back on. And so availability is pretty good. The forecast is a little bit below plan, but that's primarily because of the lower wind this year. We have lots of beautiful days, as you can see, but if there's no wind blowing, it doesn't work. So though we've had awesome inflows on the river, we have been a little bit lower in wind, and that's low about 5%. But really exciting what wind is doing for us. We'll probably do 1,500 gigawatts or so this year and 2,000 gigawatts next year. We've got the second part of Turitea, which you'll see tomorrow coming online in the next -- between now and June. That will add another 100 megawatts to our portfolio. I think Kaiwera Downs coming here in October. Things going well, which will add another 45 megawatts. So pretty exciting time, lots going on, and this is where we're seeing a lot of growth in our Generation portfolio. And now on to the risk management part, this is such an important part of our business, especially in a business where we rely so heavily on these long, long-term methods, some of the patients like Arapuni were commissioned in '96 nearly 100 years old and just making sure that we have a really good system to understand and manage the assets so that they stay healthy and fit. Here's an example of when it doesn't go right, it's the Kawerau incident. So in 2021, we had a series of very unlikely events that all happened at the same time. We had some electrical faults which led to us to the unit, the turbine, the shiny bit at the top, stopping and turning, well, turning off, but it takes about 3 hours to slow down because it's quite a bit of steel but the oil that lubricated that stopped pumping and so it all ground to a halt almost catastrophically, a big disaster obviously. But if we hadn't had the spares sitting right there on site, ready to go, if we hadn't had the expertise to manufacture some of the parts that were damaged right there in Kawerau of all places, that unit could have been off until now in March, the new equipment will arrive, and we would have been without it for the best part -- almost $100 million a year or something of -- hadn't had a good process in place. So that for me speaks to the value of getting your processes right, making sure you have the right spares but they're not buying a whole bunch of stuff that you won't. And so this next slide on the left, clarifying, I appreciate with all the information on it, but I'll let you read that at your leisure at some other time. But the point here is that we have a really robust world-class asset management system that is well-resourced and increasingly well resourced with these new people that we're bringing in. And it's really focused on the key areas of making sure we're doing the right work with the right people at the right time. And if we get this management process right that we really understand what our key failures are, we understand how to look for them and how to predict them and that we're putting in the right measures to prevent them happening. That's how we become a world-class operator. That's the work that lowers our -- that optimizes how much we spend on maintenance but then we're only using data and science to ensure we're only maintaining the right things. We're not just cutting back to save money, but taking maintenance that's not helping out of the system, and then that lowers the cost of ownership because our system becomes more reliable, and so there's less breakdown work. And then the third key element is around managing the critical risk and really understanding what spares do I need and what inspection do I need to follow if I want to make sure those catastrophic risks never hurt me. So that all shows up. The pretty slide on the left shows up on the slide on the right, which is -- that's one of our critical pieces of equipment transform, the transformer failure can take out 100 megawatts at a time. They are big, very, very expensive pieces of equipment. So what we do is we have a health measure for every piece of critical equipment. We inspected monthly 3 monthly, and we have a roster that goes after 3 years to a whole lot of inspection and then get to understand the health of the asset that we have, and you can see as they start to move and age and move into the yellow and orange, we'll then start to do replacement and repair programs. So we've got that at Ohakuri, we're doing some replacement of transformers who are moving down into the yellow and into orange. That's how [indiscernible] having spares. The same thing happens with wells, a really, really important asset for us, $14 million a piece when it goes through well. And so we have a really extensive inspection and maintenance program where we're looking deep in the well with pools and cameras on a frequent basis, pressure testing things. And then as they age, as they all do, and start to degrade. You can see the risk profile moves down and the ones with the squares around are the wells that we're starting to work on. And that comes in combination with the work that the projects are doing to drill new ones so that we -- if one of those wells fail, it doesn't cost us megawatts. We have some backup in our back pocket already. And then finally, probably our most critical structures, right? We've got 9 dam structures down the river. Orito has one for 2 powerstations. And the Taupo gates are really important piece of infrastructure, controls all the water that comes out of the lake, fills battery levels lake Taupo. But as I mentioned before, a lot of these assets were built nearly 100 years ago before people understood seismic risks very well, before people understood what rainfall events might occur and before people really understood strength of materials very well, right? So we've got a program of people. We've got 8 people on our dam safety team that are working their way through understanding all of the risks, all of the issues that might be in there. And as we understand more about the Christchurch earthquakes [indiscernible] and events like Cyclone Gabrielle, what are the impacts on our dams and what can we do to so that these assets remain in place for at least another 100 years. What is the work we need to do. So that's really the focus here that we have on risk management. That's how we manage our assets, make sure our -- not only are they always up, but that we're not going to get by the next one. Thank you.

Great. Thanks, Matt. So that's really our generation approach to growing the resilience in the generation delivery and also the capacity of our assets through the 4 key areas on the slide below here.

I bumped into one of my really clever colleagues a couple of weeks ago. His name is Corey. He's one of the people who's working on our retail transformation. And one of the things he said to me was the biggest change happens within change. And that segment might actually seem like stating the obvious. But part of what you've already heard from Andrew is that we've had today and what you'll hear from the presentations is change is the thematic and that Mercury is shaping up, positioning for opportunities and preparing for further change. You're going to hear about internal changes, particularly from our retail team in terms of the transformation that's occurring, the generation team in terms of the changes that we're making to ensure the long-term stability of our assets and external changes, particularly how our generation portfolio is shaping up. In the presentation that we'll go through in terms of energy transition and climate, I'm going to talk through how we're working with others to make sure that we are actually as a sector changing at the pace that is required to support New Zealand's transition. I'll also talk a little bit about our work that we're doing across the business on climate change and the way that we approach relationships, as Prue mentioned in the opening this morning as being fundamental to our success for Mercury. So, I'm Lucy Drummond. I'm the General Manager of Sustainability. I've been with Mercury for just over 10 years, which feels like ages to me. And I've been in 5 different roles and every single one of our Investor Days. So you might have met me previously. The sustainability team at Mercury, some of the things we do is looking at what we're hearing from external sources and bringing that into the conversations within Mercury. So we have external communications, community engagement, government relations. We also help facilitate the strategy conversation across the business. We look at what's happening in terms of environmental planning and what's happening in the future of energy. So as was mentioned by Prue earlier on this morning, the Boston Consulting Group report the future of the electric was launched in around October last year. And the reason that we commissioned that report was because there was some really good work going on individual challenges on the energy transition. But there was no whole of system view, which brought all of the challenges together and set out a pathway for the transition for the electricity sector. So Prue mentioned that was commissioned by multiple different people across the sector, but we strove to make sure that the process for that report was really independent. So we did have a probity adviser and the feedback that we've had, particularly from government entities was that they really respect the fact that we ran a really robust process for their report. Alongside that independence, one of the key things of the report was that we all provided data and information into the BCG team. So alongside it being and underpin a perspective on the way the sector can transition, it is informed by real live data and information from the 14 different participants who provided information into the report. And what did it say? Well, it broke out the transition into 4 key challenges for New Zealand, but it also importantly identifies the best pathway for the transition, and it had an actionable roadmap off the back of it. In terms of the transition challenges, the first one was, is there going to be enough electricity? Will there be enough renewable generation? And in essence, it found yes, there will be. By combining all the information from the 14 sector participants, they found that by 2030, there's about 10.9 gigs in the pipeline compared to the 4.8 gigs that's going to be required. Now not all that 10.9 is potentially going to show up. As Vince mentioned, some of it is potentially very weird, but the difference between the 10.9 and the 4.8 gives us some reassurance that we will be able to ensure that the 4.8 is delivered by 2030. One of the key things that is potentially hindering their ability to deliver what's required is our consenting regime. So there's a lot of conversation occurring at the moment in terms of the RMA being proposed to move into the new Natural and Built Environment Act. And that's a really important part of securing this in the long term. But in this next 7 years through to 2030, what we really need to focus on is changing the current scheme. And that's why looking at what's happening in terms of the existing national policy statement on renewable generation is one of the most important conversations that we need to have as a country in terms of delivering the renewable generation that's required for New Zealand. Another of the key challenges that the report identified was whether or not we're actually going to have enough peak capacity to meet the growing levels of peak demand. And the report found that actually more is needed in this area. That's a really key challenge that's happening now and that we need to focus on further to deliver through to 2030. And this is something that you're going to hear a little bit more about from my colleagues in the portfolio presentation coming up after that. The third challenge was dry year risk. So obviously, we all know that in New Zealand, we rely significantly on whether or not it rains and more and more whether or not the wind blows. So the challenge of managing dry year risk is really topical. I mean there's lots of conversations around Onslow in the New Zealand battery project. The report found that, given the level of renewables in the pipeline that I mentioned previously in terms of the 4.8 that combined with gas and demand response, particularly TY and the new contracts of TY, we're able to manage dry-year risk through to 2030. The fourth challenge was transmission and distribution funding, and post Gabrielle, this is a really live conversation. But even putting to one side the investment that might be required and resilience missions post Gabrielle, the actual investment required in transmission and distribution for that transition is significant. And we need to have conversations relatively quickly about the funding models for transmission and distribution to ensure that the investments required are being made at the pace that we need them to be. Gabrielle also highlighted the need for us to think about these things on a system-wide basis. And that was one of the other key takeouts from the report is that managing the solutions to these challenges are interrelated. The way that we invest in the distribution network will be fundamental to enabling demand response, which is a key solution to the challenge in terms of meeting peak demand and dry year risk. With the recognition that the solutions to these challenges are interconnected, we have been continuing to have discussions from a sector participants on what's the next steps after this report. I think most of the sector participants fully recognized that no one company or one government department are going to be able to meet the challenges of this transition alone. And there is an appetite amongst sector participants to continue to look at how we can create a mechanism for collective action. We are in active discussions on what a whole of sector commitment could look like. And that's a very important piece of work that we have underway at the moment. Turning now to talk about climate change, which is a personal passion of mine. So it means that I have a tendency to jump into a little bit of detail. So excuse me, if that happens in the presentation. We're really focused on reducing our climate impact and adapting to change. And we launched our climate strategy early in FY '21. And we're in the process of updating that and Prue mentioned a couple of things that we've got on change for the updates that we're doing last year. We think about the role that we play both in terms of how we play our part and then how we also play a leading role. And part of the reason why we're doing updates this year is because we acknowledge we need to update the way that we are working on climate change to ensure that we are playing a leading role. So some of the things that we will be implementing is that we have reduced our emissions by a significant proportion since 2015. We will be in the position of identifying additional fix that we're going to be taking to reduce our own emissions, alongside implementing measures and targets. Climate disclosures are a bit of a focus, particularly for our listed entities and large companies in New Zealand because of the fact that we have the new disclosure regime coming in for FY '24. We've been making voluntary disclosures for over 5 years now, and we'll be taking the next step on that this year. One of the key impacts that Mercury has in terms of emissions reduction for New Zealand is not just on our own footprint but actually the impact that we have on New Zealand's emissions. The investment that we make in renewable generation has meant that our -- the intensity of emissions in our generation has dropped significantly since 2015, and now is about 30 kilograms per megawatt hour as compared to the grid average of 100. Our key focus will remain that continued investment in renewable generation, and that will be key to supporting the potential 70% reduction that we can contribute to into the New Zealand's emissions. So just going into a little bit more detail about our plan in terms of reducing our own emissions. Most of our emissions come from geothermal generation. So when you generate electricity from geothermal steam and fluid, there is a natural release of emissions. It's called fugitive emission release. And what we have been starting to test out is whether or not you can capture those emissions and put them back into the fluid that they came from and put them back into the ground. So the picture on this slide shows how we do that, which for most people is really uninteresting. And when I visited Nga Tamariki to go and see it with Phil Gibson, he thought I was a complete gig when I was taking just photos of pipe work. I think it's really exciting. So what you can see in this photo is literally the pipe that takes the steam of the generating unit, the emissions of the generating unit and pipes it back into the well head where the fluid is getting reinjected. So it is literally taking those gases, putting them back into the fluid that they came from and putting it back into the reservoir. This technology is still very much in an R&D phase. So we've been monitoring what the impacts have been of putting this back into the fluid. We've been looking at what impacts it has on the reservoir, what impacts it has on our surface infrastructure and our sub-surface infrastructure. And so far, over the -- just over 12 months we've been doing this, we've seen no negative impacts. And we've reinjected just -- that's only on 1 of the 4 units in Nga Tamariki at the moment. We've been able to capture 8,000 kilograms, which is a really significant. So that does some of the industrial process emission reduction instead of getting funded through the GDI program at the moment. The next step on that is further monitoring of how this is working in Nga Tamariki. And then if we continue to see positive response, we'll look to expand at this station. And then we're also starting to look at how we can apply it to our other sections. So the next section that we're looking at is Kaiwera which you can see from the chart we actually have the largest emissions from. In terms of our climate disclosures, as I mentioned, a lot of companies are focused on this at the moment, and that's because we've got the New Zealand climate standard coming in for FY '24. We have gradually been improving our climate disclosures over the past 5 years. So we feel really well placed and set up for the New Zealand climate standard. We'll be making improvements to our disclosures this year, focusing on filling some non-GAAPs that we have, refining our approach to material risks and also introducing a third scenario. One of the key risks that we've identified for Mercury are extreme weather events. And unfortunately, this year, we have had a number of extreme weather events that have been impacted a large number of New Zealanders. The chart here shows character outflows, which is one of the ways that you can understand the different flows that we're receiving through the Waikato hydro system. And this shows you the Auckland flooding event, which was a high flow management event for us, which means that the Waikato Regional Council as flood management authorities [indiscernible] and works with us to manage the flow that we have through Waikato system. So you can see that it was definitely a flooding event through our system, but not as extreme as other weather events that we've managed in the past. So while it wasn't an extreme weather event for us, what some of the weather events we've seen this year have highlighted for us is whole of system resilience. And one of the things we'll be looking at doing this year is working with others across the sector to develop climate scenarios for the whole electricity sector, which will help us identify areas of focus system-wide. Part of what Prue mentioned in her opening is the importance of relationships in terms of setting out for preparedness and success in the future. And she also mentioned that these things aren't new to us. In fact, most of the time, you'll hear internally, the way that we work on relationships as being key to the DNA at Mercury. We continue to put effort and value into working across all of these areas. So Prue has already touched on the importance, particularly in the current cost of living crisis on the way that we work with our customers, particularly those experiencing hardship. We have a whole of program approach to customer care. So in addition to the way that we work directly with our customers who might be in a set of vulnerability, we also participate in whole of sector initiatives like the Energy Meet, free home energy coaching. We work on things like power credit schemes. We also have a number of different elements of our program where we're trialing things with the likes of MSD or working with other companies to support those in vulnerability. And with our broadband and telco work, we have also been doing trials on bridging the digital divide and seeing from those trials impacts in terms of access to tertiary and online learning, and we'll be wrapping that into the whole program approach we take to customer care as well. Working with key suppliers, particularly right now, where we've got generation development technology suppliers, we have the likes of Gentrack supporting our retail integration, and Andritz in terms of the caterpillar rehab. We put a lot of focus on building culture with key contractors so that we work with them as a whole team rather than having arm's-length relationships. And we're also expanding our knowledge of our supply chain impacts. So through modern slavery, understanding workforce implications, but also understanding emissions impacts as well. And Prue has already mentioned the importance of any relationships. Last year, we had an external survey which helped us identify the health of those relationships. And this year, we have been implementing a program in response to the feedback that we received. So we have been ramping up on leadership meetings. We've been improving our staff capacity in terms of [Foreign Language] reviewing agreements and putting a lot of effort into sharing the knowledge across Mercury for the shared histories that we hold with different key iwi. And we're looking at the way we evolve how we restore natural resources, the Waikato Ecological Enhancement Trust has been in existence for over 20 years now, and that has funded different community programs that are focused on restoring the ecology of the Taupo and Waikato catchments. And if you're familiar with the task force on climate-related disclosures, the next thing that is coming from a global perspective is the task force of nature-based disclosures. So we're part of the group of New Zealand organizations who were looking at what that could mean in New Zealand, how it could help us identify our nature-based impacts, assess the risks and opportunities and then make meaningful actions and disclosures. So I think across all of those topics, again, the thematic is that change is happening. The Mercury through its work that it's doing across the sector helping to participate and how we might bring the sector together in different ways than we have in the past in order to ensure that the pace of change that we need for the energy transition is delivered that we're working across business on key work streams like how Mercury takes the opportunity and also adapts in relation to climate change and importantly, recognizing the value of relationships for our ability to deliver. That is all I wanted to cover off in my presentation.

Good afternoon, everyone. I'm Phil. Most of you I hope have seen me before. I've been with Mercury for coming up on 20 years and about half of that time in the executive here. And most of my career in the electricity sector has been in and around the wholesale market in some way, shape or form, whether at a customer to face level or running wholesale market or now more lately, just accountable for it with Tim, who has decided me here running it. So Tim, I think is familiar face to everybody here and also quite a long stand at Mercury mostly in risk analysis and more recently, Head of Investor Relations. So well-known to all of you. We're very lucky to have Tim Thompson to run the wholesale markets for us. He brings excellent knowledge, experience and understanding of the market. Great clarity of thought. And pleasingly for me, he now has to sit on this side of the fence and make decisions in real time rather than judge me for them after I've made them when he's sitting in the risk seat previously reporting to William. One other quick intro. Vince did a great job of introducing the team this morning, but Matt Tolcher is in the room with us today. Matt has been with Mercury for about 9 months, hitting up generation delivery. So Matt brings an extensive career in the infrastructure sector close to 20 years of working in major projects, and he has made a huge difference to the way we think about the opportunities in front of us, how we deliver on the projects that we're working on, and you'll see how that's turning out for us up on the hill tomorrow. And later on this afternoon, he'll give you a brief thing on the Turitea site visit that we're going to take you through tomorrow, but also just give you a sense of what we've learned on that hill and how it's tilting up in other projects that we've covered around as one we're in flight and how it turns up and the way we think about the portfolio ahead of us. So make sure you get a chance to say hello to Matt. I'm about to hand over the Tim. So Tim will kick off this presentation. The key thing I just wanted to get in mind before we start. There's 3 key takeouts that I have you -- that you get from this. One is that we take a market lead view of the environment we're in and its impact on our development thesis. So I'm very much aware of the dynamic of the market and how that turns up. We appreciate that there's a range of future scenarios that may turn it. And the third thing is our role is to make sure that whichever those scenarios turn up, we're already well positioned to win under any of those outcomes. So we'll check in at the end and see if you got that from us or if you've got more questions. Tim, can you just -- if you've got questions seeing out as we go, we're happy to take them in flow. Most of them tuned up at the end, that will also be okay. So I'll hand over to Tim.

Thanks, Phil. Good afternoon, everybody. It's good to be back here, sort of the year on from leaving Investor Relations. Good to see familiar faces and catch up today, so I really enjoyed it. Yes, I really encourage questions. I've [indiscernible] to run around to put your hand up throughout this whole presentation, and she will give you a mic and you can answer the questions as you go. I figure this is probably one of the sessions we're going to get the most questions. So just hit us as you go, please do. Look, the sort of deck is structured in a way about long-term portfolio planning in the first instance, how are we thinking about the market and how that's informing our generation development pipeline. That all starts with our current portfolio. This is probably not a new slide for a lot of you. We've rolled this out a few times over my time in IR, just showing why we think we've got a premium portfolio relative to our peers. So I'll quickly only touch on this stuff and then move on. But it's sort of a foundation for when we're looking around a long-term portfolio paying. The changes that we're going to see in the market are this further advantage of the -- portfolio is further advantaged by those changes. So things like capacity on the hydros, flexibility, storage, you're only going to get more valuable as we move forward. But quickly just going through the slide, obviously, we are advantage. We've got 100% renewable generation assets, the makeup of the portfolio, it's there on the right there, constructed by the first portfolio of geothermals baseload, sort of cheap, low-cost wind, and it's all backed up by the hydro system and its ability to [indiscernible]. Here, there's a second point is that substantial peaking capacity, a bit of [indiscernible] on the slide there. You know we like to sort of calling cards and one of them is we have the largest group of peaking stations in the North Island. So that's greatly valuable for the system in Mercury and some of the stats associated with that are shown on the right there. But probably the one that's most interesting is the last one about the flexibility to firm wind and construction. So we definitely see that the system has enough capacity on it to firm the generation development we've got and trained. So that's all of Turitea and KD1, potentially some more beyond that, we'll see. Superior asset location. So that goes in terms of the assets in the North Island, well placed, cost to load centers, and catchment is rain-fed compared to the South Island which is fed by snow. The advantage for us is that inflows are correlated with demand, and it makes it easier for us to manage. So that's an advantage that we see. And those two things I've just talked about ultimately end up with the graph we see on the right bottom there in terms of the GWAP premium or the price we get for our generation -- hydro generation compared to the other catchments. So that graph will explain it a little bit. The range is the range of all the catchments in New Zealand in terms of what they get in to the GWAP relative to the weighted-average price, and consistently Mercury, like a hydro scheme, performs the best. You can go back many years, and you'll see exactly the same thing. We performed well compared to everybody else, and that's because of the trades I just talked about. And lastly, a really experienced team. So you've got that team on display today. I've got 50-plus years here. It's probably more like 100, just with what people were talking about. Obviously, Phil has been here a long time. I've been here 17 years. Vince has been in the sector a long time, but Williams part of the finish up. But yes, that's just the 4 individuals there, but we've got a really capable team, and we think that's an advantage of ours. And we have a mindset to take advantage of that. The trading is one of those things. So you'll see consistently we performed well in that function, especially through things like ASX trading and market making. We think we have a competitive advantage there, and we've shown that through time. So just diving into the portfolio with a bit more detail. This is a slide we rolled out in 2019 at the last Investor Day. Updated. There's a lot of things that have changed since then. People have already touched on those through this morning, but I'll reiterate some of that stuff. So we've had 2 big transactions. Tilt, so you can see that coming through in the wind side of the generation bar there as well as the sales. So that acquisition 100 gigawatt hours of wind farm generation, coupled with PPAs on the sales side. And then the Trustpower retail acquisition. Obviously, that doubled our mass market business plus and that adds to that bar and sales side. But quite importantly, that came with a hedge -- with Manawa hedge that increased sales at least for the next few years. So that matures or rolls off through time from '25 through '33. And I'll sort of come back to that in a second and to some of those callouts there. Average portfolio settings despite that growth haven't changed much. So we still set up the portfolio at least before the year starts, trying to be around 550 gigs long. That's -- the reason for that is to deal with those things up on the top right there in the bullet point, primarily hydrology, plant availability and then there's some sales -- value of sales in the total of about 550 gigs long, sort of a primary mitigant in terms of hydrology and plant failure.

Yes, really came to questions. So put your hand up. Show there's some here. Some of the callouts. The Manawa hedge gives us some interesting opportunity, especially when you think around generation development, how do we replace that? So we can -- we have to develop into that, especially new wind farms, anything like that. But we also have other choices in terms of value trade-offs in terms of meeting C&I, okay, that is a choice. We can contract with a third party as well, similar to what we have with that Manawa hedge. We have some choices there, but it definitely does give us an opportunity to develop into it too. I had a couple of questions today around C&I. So we are seeing a trend in increased tenure in terms of that sales book. So obviously, with the curve -- the A6 curve being inverted, so high at the front end, lower at the back, that gives an incentive to customers to take longer tenure to average down in price in the short term, and we're definitely seeing that. So we've got a bit of a point there that we've transacted 320 gigawatt hours of 10-year contracts in the last 12 months. So that's something that we just wouldn't see historically. So last when we talked to you in 2019, we're talking about terms of 3 to 5 years. That's probably more like 5 to 7 now and some opportunity to go longer. So obviously, that presents us an opportunity to lock in long-term sales of what we think is a reasonably good price, especially when you're considering what the of new plants is what you think the price is in the future. So question?

Tim, how do you kind of struggle price those 10-year contracts like -- obviously, 6 doesn't go at 10 years, like how are you putting those later kind of years?

Yes, good question. There is definitely a bit of price discovery in that process. So having transacted that amount of contracts, we've got a reasonably got to deal where market is. But yes, you've got a pretty good view on the first 5 years and there's a little bit of an internal view of what the next 5 years is. But when you're thinking about the price of we're transacting these things out, it's somewhere in the order of about $130 that compares well to the economics of new plants and wind farms that we're looking at today. So the longer you go, the more you're thinking about things tending towards lower marginal costs and new generation right? So -- but it's differently an internal view. Then last point there is -- go, go.

The retail book is rolling off all the hedge you've got against it. And you made almost a flippant comment that you can always just cut back C&I. Everybody seems to be saying, I can just cut back C&I. So you're pushing this risk that is actually your problem, which is the capacity market, [indiscernible] C&I customer, when does that break?

Question, when does the price become intolerable for C&I customers? Or is the statement?

When is it coming tolerable able by country to have the C&I customer carrying the burden of marginal pricing for a capacity market that isn't developing?

Yes, I think you've got a question of how long before the investment in renewables brings down that marginal price for those participants and how they might work with us on longer-term arrangements that Tim was talking about, get you away from the near-term marginal price contract or something, which is either backed by physical through to co-investment or investment from Mercury or other [indiscernible]. But it is -- we said that it is a real issue. I think Prue said in the opening this morning, and our regulatory risk is high when we've seen it, and that is one of the things that is filling that.

Okay. And just to add to that with another question around your own kit. So currently, you guys firm a lot of what is the volatility in your portfolio against your load shape by running a short and long-term -- or short-term -- long and short CfD book. Is that a sustainable approach as wind becomes a much bigger part of your portfolio?

Yes. I think -- do you want to take that one?

Yes. So we typically use our CfDs in short-term hedging. So stuff like this year where we've had an extra 1,000 gigs of inflows into larger catchments, they would look at short-term hedging, and that's kind of where that comes through. But those are -- that's how the portfolio is made up now. It's not made up historically of big part CfDs. That sort of stuff is packaged into C&I. So some of the end-user CfDs is essentially in that C&I bucket there, and that's the longer-term stuff. But yes, the only part on the buy side that we've got is that Manawa hedge, and that's obviously something we consider significant how we replace that. It might have been a flipping comment around C&I rolling off, but it is actually a choice that we have. It's not the primary choice that we want to have. That's probably the last choice you want to take. You want to actually build into it and replace it and grow rather than but it is clearly a choice that we have.

Okay. So as wind continues to get bigger and bigger in your portfolio, do you think that your hydro assets ability to hit the peaks is still going to be enough in order to be a big shape of the change in how you go to market?

So we will -- I think say the 2 projects in now, we can through the Waikato. But beyond that, we need to start thinking of other choices. So whether that is selling load following -- wind following PPAs of those assets as we develop them, whether that is changing the nature of our total sales portfolio or increasingly, new tech is going to -- batteries is going to happen into the market. Something is going to have to firm if you can't get the right signal back to regulatory risk. Thank you for the right signal for gas investment, which everybody says we need, but almost prepared to build. Then it has to be batteries and the -- so how we engage with customers? We don't have that answer for you today. What we do -- when we think the right time is to invest in batteries, those are definitely part of the portfolio beyond what you see today.

I think we're going to cover some of this in the next couple of slides. But capacity products is definitely a key feature of portfolio planning now. We'll cover that, I think, yes. But I think last part on the slide, Phil sort of covered. So PPAs are a picture of our portfolio today, and we do think they're going to be a feature of portfolio in the future. So again, comes from a slight need from us in terms of capacity is valuable, and we were going to retain it for the highest value, but also customers are actually seeking these sorts of arrangements now. Typically, large commercial guys with offshore mandates regarding high sustainability policies, that sort of stuff are looking for direct attribution to projects, so you might see a little bit of that coming through. So watch that space. So now kind of getting to Grant's question a little bit in the next couple of slides what we've covered off on the first 2 slides is the current portfolio. But now we're thinking about what long-term portfolio looks like and that informing our generation development portfolio. So then starts with our conviction for the market, and that's what you see on this slide here. So starting with demand growth, I think it's probably a common view here that electricity demand must grow if we're going to meet our carbon targets. That, however, we do acknowledge that demand growth has yet to materialize and the pace and degree of that demand growth could be quite uncertain. So we need to keep that in mind when we're looking at our portfolio of options. Next point, which is the capacity point. The market is transitioning from a solely energy constrained market to increasingly capacity constrained. So you could argue this is a bit of a future today with what we saw in -- last year in '22 with peak capacity requirements through winter. But the market has had the luxury of legacy investments and some very flexible hydro assets, coupling with the biothermal plant, but that is ultimately finite, and we're seeing thermal ultimately exit the market. The capacity is going to be increasingly important to Grant's point. And just to add to that, we're seeing increased volatility going forward, given this trait in terms of the thermal capacity leaving the market and being replaced by intermittent generation, which in itself is correlated, and we've kind of highlighted that on the slide here. So by example, on the right, there is a correlation chart showing wind farms relative to each other. So what you see here typically is when one wind farm is generating, they're all generating to some degree. So location diversely makes a difference. But ultimately, it's going to be correlated to some degree. So when the wind blows, it's flowing everywhere. When the sun shine, it shines everywhere. But when you see that in the market, it's going to be cost generation hitting the stack, pulling price down during periods and the reverse happening also.

Coming in the region, potentially, what sort of GWAP ratio are you forecasting for this capacity that's coming on? I mean I think we all use a kind of 0.85 or 0.9 or something. Is that still safe to use?

Well, I don't know about that question. I think you can all come up with your own sort of assessment about what that is. We'll have our internal views that goes into our models, but it is obviously subjected, right? But the more of the stuff is in the system, the more that grades, right? I think we typically take a view through time. So rather the point is we try to model it 3x. Yes. And then finally, what does the sort of stuff mean for us and generation development pipeline? So ultimately, this means how do we maintain our banners that we currently have in our portfolio and take it forward and that starts with the market. So we believe that the market is capable of never going the transition. So we're differently in advocate to minor modifications rather than wholesale changes. And they will be vocal on that respect. But ultimately, we've talked about it before, regulatory invention is key, so we want to maintain market confidence that we can. Diversities are leading on from their price slide a bit, but going a bit broader than that. So diversity in terms of location of assets. So we talked about that. Locational diversity is important when we're looking at our pipeline. So when we're looking at wind farms, we definitely want to know how they correlate to our existing assets and how they look as a portfolio in themselves, but we're also very keen on fuel diversity for other reasons in terms of resiliency and optionality. So obviously, there's different rates of technology advancements across wind and solar on the technology. So being cognizant of that is very important. So we've added here that we want to be technology agnostic. Phil will go a little bit more into that. Obviously, that comes with a strong foundation of wind, but we're very keen on spending our portfolio into other technologies as well. And then we're making assessments of project economics. We're definitely taking in the context of the portfolio as a whole and what the implication it has on the market. And finally, flexibility is valuable. So Grant's comment again very much around -- we are going to be short -- well, capacity is going to be a challenge going forward, and it is true for the market as well as our portfolio into the future. So we'll do very much pursuing flex, so capacity options is a core feature of our pipeline going forward. And that will show up on both supply and demand side. An example of that, we actually participated in Transpower's falter support RFP for Auckland, which we would actually look to the battery for self-down. We actually looked at 130-megawatt battery self-down. Ultimately, that was unsuccessful, but we're definitely looking at those options, but it is a little bit of an insight into the relative economics of these things today. And on the supply side, obviously, on demand side, we're definitely looking at it from a customer perspective, too. We've got the largest mass market book. There's large opportunities there, and we're definitely working with our C&I customers about how we can encourage them to be able to respond to price signals and the like. And then finally, we definitely think Thermal is a key part of the transition. So we're going to be a supportive of that and we have been. So I can tell you that we participated in the image-side process with one of only a few, but we definitely think we need to play our part in that process, so we have. We participated in the process. But I'll pass it over to Phil now.

Yes, I think that's it. If you think Thermal is important and you want to support it and you actually want to support it to the extent that people build new gas peakers, which we think is important, what do you do? You can't just sit there and tell somebody else to build it. You've actually got to stand back with something. So we thought that was the right thing to do to support that product, whether we call it or not or what it's going to, who knows. But that's kind of the burden of trying to take a leadership stance in that space. So Tim's last part talked about people in pipeline. And so it's a move into now a little bit of a reminder, like we did with the portfolio settings generally about our pedigree and the thing that we think should give confidence of our ability to execute. So we've shown over time that we are a good developer of assets. Early 2000, the game was geothermal right through 2013. In that period, we were sitting on that 1 trick. We were building up a bunch of wind assets, potential projects. You'll see later Turitea sort of picked off in the mid-2000s as a project piece of work for Mercury. But the core thing is that we've gone on with building stuff and we've bottomed with preparing projects to be built. We've now sort of with the acquisition of the Tilt team. We brought some new capability into the company that gives us some enhanced confidence in our ability to develop wind projects. And you'll see that -- tomorrow, you'll see that when Matt talks later about the lessons learned from Turitea and how we're going down cover our dams. And we've also got a mindset that says we need to partner with the sector more broadly. So who are the OEMs, who are the critical contractors, who are those resources and how do we know that we can scale up or scale down through them with them in partnership to make sure we can bring projects to market swiftly if they're needed, or we can call them off without having a whole lot of latent resource standing around and so Mercury doing nothing. So we're working hard on that. And we know that some of these projects will come to market through partnership. They won't necessarily be built linearly, that come into Mercury's portfolio as we did in our GSM development days. We partnered with iwi landowners to get access to steam and bring projects to market, and we will find other partnerships, I'm sure, through time with this portfolio and Tim talked a bit about some things that might be -- you might hear about in the coming weeks where we've done that. And I think you'll continue to see us look for innovative ways to get things to market.

[indiscernible].

I think that steady person sort of including sort of a whole company, not just project staff, but also the flex that you get from partnerships. And how this stacks up with our competitors, I couldn't answer for you. You probably got a better insight to that than I do. Yes, yes. We think it's perfectly formed. And so I just wanted to sort of talk about where to from here. So as I said, we've got through the Tilt transaction. We have access to projects that capable of delivery, and we are showing that down to the bottom South Island. So when there's kind of our game at the moment, we're active as a builder of those assets, and we will continue to look to prioritize that portfolio, primarily because they're the best projects, they are the best economics there. The things that we understand we have a team to deliver, and we think they outcompete the other things on the list as you go down that list here. We're sort of -- we're seeing our competitors move into solar arrangements. We think that's interesting. We think that makes sense probably through the alliance and the decisions they're making. And we have a view that if you look forward to 2050, solar is definitely part of the mix at a New Zealand level. And so the logic would suggest that needs to be part of the mix at the portfolio level for Mercury. So the comment there is we're not standing up a solar team to go and build solar farms, but we are staying wide awake and aware of things that are happening in the solar sector. We're looking at opportunities, and we will effectively be open to partnering or potentially acquiring depending on how the landscape plays out. It's not sort of today's best choice, but it's part of the choice, and we've just got to think about how we get it into our suite of options to deliver on later. GSM, we've done -- we've done a big build phase through the 2000s, as we all know. If you think about capacity as an asset in the market and becoming increasingly valuable, it's likely in my view that at some stage in the future will come back to the geothermal development choices that we have. So brownfield options. We talked about OEC5, Nga Tamariki, that's a great looking project on its own right now. So we're pursuing that. There will be other things to consider at Kawerau and other fields where we operate. And we have 1 greenfield option that we will keep an eye on because, I think, again, it's not today's best -- those particularly greenfield, not today's best project, but over time, as capacity becomes more and more important to the build-out of renewables, GSM may get up again for another go, see how we're going. And then down the bottom there, we think batteries have got to role to play. We think they'll be sooner rather than later. We haven't managed to get that to stack up. As Tim mentioned, we went to a process where we had an additional revenue stream on a battery, and we still couldn't get it to stack up. But we'll try harder and think of other ways. And it may not be grid-scale batteries at Southdown. It may be things that we have to do in partnership with customers or distributors or other players in the sector that are trying to get the whole value stream to stack up. And I think that will increasingly be part of the and flex situation as well as we look to what are all the value streams and where do they go. Everyone tries to solve for their own outcome and it gets pretty hard. But I think if you find, well, innovation will mean the market will have to try and find ways to aggregate that value across the stack and share the investment in the benefit accordingly. But I think core thing there is we're wide open on a bunch of technologies. We don't pick one as we sort of -- we are opened to everything and the approach to getting them into our portfolio. We're open to building them, partnering for them or pick them up through M&A over time if that's how things turn out. Getting to the end of the deck. So really just here just trying to bring together, we've been -- there's not -- pretty much of this will be new to you I don't imagine. We've been busy with projects in flight. We've been busy getting new projects ready to bring to market through consenting processes. And we have a bunch of stuff that we're pursuing to get rights sorted to get access to land, to get consenting and monitoring done so that we can have a decent -- we're going to have the best portfolio pipeline in the sector ready to go. And then back to the opening, we are fully aware that we need to be able to have control of these options so that we bring them to market when the market needs them in a way that makes sense and the best projects get built over time. And increasingly, if that's happening, we want it to be us. That will leverage the diversity. So you can see there a bit of North Island and South Island spit and the way we think about our portfolio, so that's trying to get anti-correlated or as less correlated wind as possible. We will want to bring in solar, alongside wind because you get field diversity as well as geographic diversity. And that's important because it limits the amount of peaking that you need to provide reasons the burden the picking. But ultimately, you won't get away from that one either. So we've got a target there on the bottom right, the flex capacity projects that we're pursuing, and that will only have to grow over time as we build out. Quick -- I think that -- yes, obviously, our goal is to try and move as many projects from the right-hand column here to the left as we can or at least getting ready to go into the far left. And meanwhile Matt and his team and a wider portfolio team are busy trying to find more options to go in the can. So I think that wraps up the slides.

Welcome all to the Retail session. For those that don't know me, I'm Craig Neustroski, GM Commercial Operations at Mercury. Shortly, I will touch on what have we delivered over the last few months. So, I've kind of got the easy part today, and I'm talking about what we have done, not what we will do. For that, we have Nick who in leading integration program. He will be here with us shortly, what we plan to do, what we will deliver over the coming months. We've got Fiona Smith, who will share how we'll then evolve the business over the next 2 to 3 years. And Julia Jack, who will chip in at the end, we've got Q&A. We're going to give her all the more challenging questions because she's leaving us shortly. So we will have the opportunity for Q&A at the end of the presentation. But if you have any questions throughout, anything is pertinent or you want to ask if you see something on one of the slides that you think clarification at that point is helpful, then just wave out. Happy to take those questions throughout the presentations. I'm going to keep this Nick's section relatively brief because, as I said, I'm touching on what have we actually delivered. And most of this, you guys would have observed. So we're on a journey to become future ready. At its simplest, what we're doing is creating the capability we need to remain relevant to our customers well into the future. So a big focus of our retail business is building the capability and the capacity that we believe we need to continue to be relevant to our customers through time. If we're successful with that, then we minimize the risk of disruption, we mineralize the risk of something turning up that we're not able to respond to. So that's a big focus of our business. You'll hear Nick and Fiona talk today a little bit more detail. So what have we achieved so far? We've created New Zealand's largest multiproduct business, multi-utility business. We have the ability to offer our customers a range of products and services, and we've developed the scale that we need to reinvest in the business and become a desirable partner. So increasingly, scale is as important as we become much more connected as our customers' needs become more sophisticated, we need to be able to develop products and propositions that better meet those needs. Most of that's kind of emerging space. So I've got an EV by requirement of an energy retailer or is becoming more sophisticated. We need to be able to develop products propositions. Those people that organizations were going to partner with or looking to partner with organizations that can deliver them scale. New Zealand is a small market at the other end of the world. We're increasingly finding that scale is key to become attractive partner and so that we can develop products and propositions that our customers design. And we see that with the relationships we've developed with Samsung and Amazon. We've also checked off a very significant piece of work, which Nick is going to talk to, which is our integration program. No surprise, we acquired Trustpower Retail business, that's a large business, reasonably complex. We're now looking at integrating that into Mercury. We've made some significant progress. We have created a single retail leadership team. So we've gone from being 2 businesses operating side by side to a single business that's now operating multiple brands. We've optimized across the brands. So for grant that is for we've stopped doing all the dumb stuff that you might have expected or hoped we would have done. So we've stopped Trustpower from stealing Mercury customers. We've optimized how those brands operate in market and how the products and propositions we present to customers are targeted. And many of the early synergies have been delivered. So they come from the mere fact that we have combined the retail businesses under a common leadership team. Nick is going to talk to the synergy benefits that we continue to deliver over the coming months. The other thing that we've done is ensure that the customer base is stable. Most of those that follow the market will identify the churn in the market generally is relatively stable. We see that across both brands. A lot of has gone into ensuring that the churn is stable that we haven't gone -- we haven't bought a customer base and then we've lost a bunch of customers. And you also hopefully see that we're seeing modest growth across both brands. So Trustpower typically through its traditional products and propositions, looking at increasing connection numbers, but also through the Mercury brand, we've hold the decline that we've seen in terms of electricity ICPs over time through introducing new products and propositions and again, optimizing across those 2 brands. We've done some pretty cool stuff for those customers that need our help the most as well. So as Prue talked to earlier, as you would have heard, Lucy talked to with, we've really focused a lot of our efforts into supporting those customers that need our help the most developing products and propositions, working with partners and agencies to really better meet the needs of those vulnerable New Zealanders. The other thing that we've done in the last period has completed the acquisition of NOW New Zealand. For those that don't know, it's a small broadband provider -- a small telco provider based out of Navia. Prue touched on that briefly this morning. NOW was -- we acquired an interest in NOW in commercial relationship with NOW because we intended them to be a white label partner for what was the Mercury broadband. Subsequent to acquiring Trustpower, we now have a lot of our own capability. And what we've looked to do with NOW is acquire the balance of the shares. And we've pivoted that business to focus on small commercial. So it will actually be our small commercial telco brand, neither Trustpower and Mercury really is historical presence in that space. So I'm going to hand over now to Nick, who will wow and amaze you with what we're about to deliver.

Thanks, Craig, and welcome. My name is Nick Pudney. I head up the Integration at Mercury. Appreciate that I'm probably a new face to a lot of you. I have been with Mercury for almost 10 years, say almost because in about a couple of months, it will be 10 years, and I'm lining up Craig for one of those Samsung smartwatches. So we'll see how I go. Prior to Mercury, I spent 10 years in the debt capital markets in London, joined Mercury just after the IPO back in 2013, has been about 8 years working for William from my [indiscernible]. I worked alongside Tim Thompson, and you'll have seen a lot of the work that we've prepared those to all have fronted over that time. Two years ago, Trustpower came onto the -- onto the blocks was put up for sale. At the time, we were also going through the Tilt transaction, William at the time says, "Hey, can you take a look at this?" It did subsequently lock myself and a small group of people in a windowless room for about 3 or 4 months. And we popped out the other side having been successful in purchasing Trustpower. That was fantastic until Auckland went into a lockdown and Vincent called me from a cafe and [indiscernible] and said you bought it, now you integrate it. That's kind of why I'm here today. All right. Craig has mentioned, we want to create a future-ready business. We want to have the capability to deliver to our customers' needs. Question is, how do we go about doing that? Well, to have that capability, the capability is built up from people, process and systems. Or as we refer to it, an effective future capable operating model. So it's how those all play together and are all at the top of the game is how we're going to be successful. Research suggests -- there's plenty of research in the market that says actually trying to bring 2 businesses together, and I'll stop there and say it is 2 businesses. It's not 1 retail business coming into another retail business. It is just 2 retail businesses side-by-side as they come together. For mergers, the research is pretty clear. You've got 2 choices. You either go hard and fast or you take your time. Now the successful mergers are all hard and fast, get everyone onto a common model, build a common culture and you will be more successful. You say that might seem simple when you think the alternative is you can continue to run 2 cultures, 2 technology stacks, you can continue to develop in those, you'll see all of those pieces then start to diverge even more and actually bring them together becomes harder through time. That is why successful mergers are actually the ones that get everyone on to that common operating model, build that common culture as quickly as possible. And that's what we've decided to do. So a single operating model. First thing I'd say is trying to implement a single operating model is not a technical project that is a transformation project. That's not just technology. It is that people, what is the processes. This transformation project spans shared services and how we bring them together. It spans enterprise technology, how we collaborate together. It spans the retail business and how we bring those 2 businesses together and then actually touches on our business and how we transition it of its technology platform in a way that actually best serves our customers going forward. So it's not just a retail integration program, as Craig would have your belief. It is an integration program across the company. To be successful, we realized pretty early on that it was going to be about the people and the people will deliver this for us. It's not about technology choices. It's not about brand choices. It's about how our people come together and how they deliver. So what do we do? Well, first of all, we thought, well, let's actually talk to people and say, we're going to build the biggest utility -- multi-utility retailer in the country. At least we're going to do it by bringing the best of both organizations together. We realized pretty early on that just said, when you bring 2 like teams together, you're actually putting them in competition to see who's better. That wasn't going to get us to that common culture very quickly or in a very effective manner. So we realized best of both probably wasn't the best approach with people. So we came up with this idea of taking energy made wonderful and better together and making us wonderful together. We knew pretty quickly that wonderful together, while that might be where we're trying to get to, change is hard. Change is difficult for people, and it doesn't feel wonderful as you go through that process. So we thought we're okay with another quick learning. What was set alone and what has resonated with our people is Fit For Now, which is sort of what you see up here. Fit For Now allows us to compromise, allows us to be pragmatic and allows us to move forward quickly. So the question is, how do we get to this common operating model that is Fit For Now? The first thing we've undertaken is to address scope. We have chosen to move to a single brand, and that brand is yellow. We have chosen to move to a single technology stack and Gentrack and Salesforce are at the core of that stack. We've been very clear that we will use the processes supported by that technology. And the only exceptions to that where it's not fit for purpose or scalable. And we have found instances of that. We had a look pretty early on and said the bill, the trust provides its customers is not really ideal, that need us the Mercury one. So we're busy trying to actually rebuild a new bill that is better for our customers -- for purpose. Scalability. We've certainly found core technology that is not scalable to support a retail business with over 500,000 customers and over 800,000 connections. So we are having to make improvements around some of the technology to ensure that we are scalable. But that said, at the core of it, single brand, based on 1 technology with Gentrack and Saleforce is core, has allowed us to actually really clear about what we're trying to achieve with our people and therefore, the compromises that we can make to get there. The second thing is people themselves. We have chosen the best people we have in the business, and we put them on this project. They are an amazing bunch of people, and they are delivering superhuman results. The third thing is the delivery model, how we actually bring them together to actually get this work done. We have organized our work around our value streams, how we interact with our customers, whether it be propositions, whether it be the way we operate as a business and support them all in the way we engage with them from a digital perspective. As I said, we put the best people on. We've actually been implementing an adaptive delivery model of Mercury, and this is our great big experiment. So soft agile is best referred to it. We have formed cross-collaborative teams. That's not just from Mercury and Trustpower. That's from whether it be retail, whether it be technology, whether it be finance, whether it be regulatory, we've pulled them all together and we've got them working together, and we've made massive strides in that regard. We are giving them the tools we're using, project management tools like we've never used before. We're making the use of project managers and program managers like we never done before. We're using practices, ceremonies like we haven't done before. We've started at the very top end. We brought the groom planning into the organization. That goal met with a lot of skepticism. The first one we ran back in November last year, we had about 200 people in Broadway, about 80 of them had never been to Broadway before, and it was a real eye opening experience. We ran a second one last month, and they all came together about 250, 300 people of that were working on this. They all came together. And they [ renew ] each other. They are pleased to move back together, and they -- there was no sort of references to I'm from Trustpower, I'm from Mercury. It was a case of we've got a common goal now, we've got a common target, and we're working together. It was very pleasing to see. We're also -- the way we set it up, all the works were all planned out, the Sprint's operating. We have ceremonies in place, coaches. They're all up and running. They're effective. We are really clear whatever it is. We all really care about what we need to do in order to actually deliver this program. So you might ask, okay, you've got your scope, you've organized your people, you've got your practices in place, and what do we get? We get a single brand, as I said, it's Yellow. We get a single technology stack, which will be fit for purpose, it will be Fit For Now. It will enable us to move forward. That technology stack on day 1 needs to be able to support the new proposition catalog that we'll have. That brings all their propositions, all our incentives, all our loyalty and rewards together in one place. It will have a new bill. It will have a new app where people will be able to see the usage, whether it's electricity or broadband or mobile and we'll be able to actually redeem free power days from a loyalty perspective. You will be able to manage your Starship Foundation. So I'm bringing everything together, new app, new website, new check, altogether to actually support our customers. So the reason I raise is, this customers will actually get an enhancement on day 1 rather than any sort of deterioration in service. We also, as I said -- off the back of the technology, we also get that one succeeding culture. The single biggest outcome that we're probably going to get from this is actually bringing everyone together as one new culture and with our destination of trying to create one succeeding team. The execution risk on day 1 when we changed the brand, which will be around the middle of the year. We will be changing the Gentrack system, and we'll be painting in yellow. Yes, we will have a new app. Yes, we will have a new website. Yes, we'll have a new chatbot. Yes, we will have a new bill. But the systems are still there. They're still capable of billing. They already do that. We'll still be able to answer the phones. We already do that. We'll still be able to engage with our customers. We'll still be able to sell the system, does that already. So what I'm trying to highlight there is the execution risk we contest beforehand and is reasonably low from a disruption perspective. The experience for customers will be positive and the most important. We intend to pause -- intend to pause to make sure that actually everything is running well before we commence the customer migration, and that has taken customers from SAP and moving across to Gentrack. We will do that in the second half of the year with the name of completing that before the end of the year and from the majority of the customers. That means, bringing them across, we will do it in a phased way. There are market constraints, which means we can't actually go all at once. That actually suits us. It means we can test as we go. We can pause if there's any problems, but we can actually manage that process through time. Once we get to that migration complete, we will have that common operating model that is Fit For Now. It will act as a springboard for the future of our retail business and be able to move forward. Jon's going to talk a little about that in a second. But from an integration perspective, what that actually allows us to do is to then really focus on deduplication of technology and the synergy realization. Which brings us on to synergies, which is something I'm sure you all really can talk about or you hear about it. Synergies, we announced when we acquired Trustpower, we believe we could deliver $35 million of synergies. We're on track, and we have a good plan, a solution plan to deliver this. Of the $35 million, probably $5 million to $10 million will come from CapEx, I must say $5 million to $10 million. As you'll be aware, as technology changes the -- how that gets classified between OpEx and CapEx under the accounting rules is somewhat fluid at the moment. So things moving about $35 million of synergies, 5 to 10 from CapEx, the rest will be from OpEx. The majority as I said are identified. Probably half of that 35 million will come from technology. And then the other half will be split evenly between shared services and the retail business. $35 million, $10 million of which will be realized this year. The majority of that $10 million comes from shared services. The work is already complete. We actually completed the majority of that work before we even pulled the 2 organizations together and completed. It's on day 1, we had a single shared service function supporting the retail business. And we've continued to evolve that as we go. But the bulk of that is already complete. From technology, enterprise technology has been a focus as we move forward in the background with the retail. So that is actually taking out the duplication of all those enablement tools that we use across the business, from Zoom versus and Teams were down to one from Microsoft licenses, bringing all the agreements together emerging mail. So a lot of the small things that start to make the difference around enterprise technology is starting to bear fruits. And then from a retail perspective this year, as we move to a single brand, and we no longer have to support and maintain 2 brands and market, we are starting to generate synergies. So that's this year. The next 2 years, we'll see the remainder of those synergies realized. As I mentioned, the bulk of that will start to commence once we have migrated the customers across to -- onto Gentrack. At that point, we can really start to deliver around that retail business. The other piece of work that I mentioned earlier on, we need to get the Alcon business off SAP and on to Gentrack as well. So for that, the complex time of use billing, that piece of functionality was retained by Manawatu. So we are having to reinstall that and bill that for our own capability, which is why it's running behind the retail business is potentially done so, so we can focus. We will be undertaking that with a view to actually migrating the Alcon business next year. And only once that is complete, we will then be in a position to start recognizing or start really retiring the core SAP system and all the other related technologies that go with it. So from that, the bulk of those synergies will be recognized in the -- will start to be recognized in the FY '25 year. So we're well on track from an integration perspective. We're managing the execution risk. We are phasing it. We feel very comfortable. We know the work that needs to get done. We know how we can realize those synergies. So the question really is now, once we get to that common operating model, once we have that springboard to move forward, what are we going to do with it? And for that, I'm going to hand over to Fiona.

[indiscernible] We have some familiar faces in the room. But for those who don't know me, I have 27 years with Trustpower and it is a fantastic privilege to stand here because I've moved from the Trustpower's team into the Mercury and team, so it's a privilege to be able to chat to you today. So I'm going to talk about the third part of the retail trilogy, which is Future Ready. The Future Ready program really builds on the integration that Nick has talked about, and it's about investing in [ Clevertech ] automation and, of course, our people, so that we're best placed to remain customer relevant, and also Future Fit. Just a reminder, if you've got any questions during this chapter, please speak up, sing out or there's going to be a Q&A at the end. Future Ready is a 2-year transformation program, and it's focused squarely on the things we know we need to be good at. We need to ensure that we remain relevant to our customers so they bundle more and stay longer. We need to get even more efficient through digital transformation to drive our cost. And we need to reduce the risk of disruption through building deep people capability, harnessing the power of the whole. So we can pivot quickly, grade market opportunities and reduce risk. Future Ready also needs to take all of those buckets of data that we've got and turn them into customer insight. So we deliver right time propositions and retention offers, which I'm going to talk about later. There is a massive opportunity that sits right in front of us. There are 362,000 electricity-only customers crying out for a bundle. We know how to cross-sell. We know how to service telco, and we know how to digitize that provisioning journey. Using insight will ensure that we can create propositions that are going to resonate with those 362,000 customers. We also need to ensure that the pool of customers that we can pull from is as wide as it can be. The changing face of New Zealand means the traditional use of credit processes to determine what we can supply or even if we should supply can't be used on their own. And we learned that lesson the hard way. The daughter of a CEO that shall remain nameless tried to register with us, and we turned her away and she went to our competitor. That low-par led to some learnings in our customer digital model. And that is a pretty picture, names have been changed to protect the innocent of what the customer digital model does. It goes into our systems, it looks for social connections or any insight or where customers have those social connections with others. It also uses predictive modeling algorithms to tell us what the sales opportunity will be and what the lifetime value of the customer could be. Using that model, we could see very clearly that the daughter has connections with her parents through our loyalty program and an alternate phone number, and her parents have been loyal customers of Mercury for 20 years. It also told us that the address she wanted to register with us, there was a massive opportunity to bundle products and had predicted, had we registered here that her lifetime value would be high. Instead of use and credit processes if we can use our digital customer model. It shows us that those social connections, the data we hold within our own systems and others means that we can extend the pool and the pool can become wider, which means huge opportunities to grow our customer base. Data is power and clever tech will help us. The Future Ready program is really about tangible benefits from smart investments, and the digital customer model is just 1 example where insight matters. It will help us to cross-sell well. It will increase the pool of customers but also it has predictive modeling where it looks at the behavior of customers and can pinpoint those that are at risk of churn. So you're able to actually intervene when a customer has displaying those behaviors rather than waiting for the switch file to come in. The other focus as you would expect is bots and AI. The next best action bot intervenes as your customer comes into the environment. So what looks at the insight, you already hold on that customer and decides what is the best customer experience at the lowest cost that we can provide. If I can see that our customer is bringing back to provide us with information, then you send them back to the agent they just spoke to, so they don't have to tell their story again. If the insight tells you that the notes say that the customer was a bit angry, you don't send them back to that same agent, you escalate to somebody else. Or if the last 5 times that customer has called you, all they've asked for is a balance, you get a digital channel to intervene. If you can save just 60 seconds of your average handle time, looking at the interactions we've done since May 1 across all our brands, at 16,000 hours of saved staff time for one insight bot. OpenAI is another thing that we're looking at. And you've all heard about ChatGPT whether it's a friend or a foe. Regenerative AI is here to stay. And I guess what I'm more curious about is how you harness that technology by key her on brand and ensure that she tells the truth. The track is setting a high intervention threshold. So you have a box that looks at the written material, and it would only be ChatGPT intervene if that was 80% sure that it could actually answer the query. Even at a 50% bounce rate, when I look at the 50,000 e-mails, we've also answered since May 1st -- sorry, 100,000, we could balance 50,000 of those with ChatGPT. There's a lot of human effort coming out of that written responses. Digital intervention is also key. Since May 1, we looked after 4.4 million customer interactions across the brands. Now 3.4 million of those have been looked after by digital channels, no human has had to intervene. Where the gold is, is those million staffed interactions. And how we get bots, AI, ChatGPT and digital intervention to reduce those million interactions. If we do that, then we can focus more clearly on the interactions we need to have. And as Pud talked about, our vulnerable customers need that human touch. At supporting those that have budget and security to find out help to navigate out of budget and security, they become your most loyal customers, and it's better to put a bit of effort into that support because you actually reduce your risk of bad debt, so you're helping a customer but also helping the business. In the customer life cycle, you can see the beautiful starburst on the slide there. That's just a view of 1 customer. It shows the opportunities for cross-sell. It shows their preferences and predict their behavior of whether they are at risk of churning. If we can model and use the data to actually hone our propositions, we can also use it to support retention because retention is so important. And last but certainly not least, we need to build the capability of our people. It's more than just adapted delivery models, agile with a capital A or a little A, it's more than just being nimble and testing and getting to market quickly. Developing a culture where our folks and working across boundaries more easily, means we get out of our own way and we get stuff done. If we can harness the power of the whole, encourage and diverse thought are actually celebrated, then we'll problem solve more quickly. We've always done it that way. It's not the way that we work and where those sacred cows can actually be taken out into pedic and finally short. And we are a new workforce who's socially connected, deeply capable but more often they're not now working remotely. It's how we enable them to problem solve through crowdsourcing because that's what they used to do. Using the capability of the whole, not just a few, will underpin the success of our future road map. Plus, it will enable us to attract and retain New Zealand's best and brightest talent. So to recap, we kept our eye on the ball, Craig talked to that. Integration is going well and synergy delivery is well on track, as Nick described. We're going to make smart investments and there are tangible results that we can deliver. We can leverage insight, automation and clever tech, and we can ensure that our people are ready. So we're future-fit and future-ready.

Okay. Welcome, everyone. I'm Matt Tolcher. I'm the Head of Generation Delivery at Mercury. Phil, I think, introduced me in the last couple of sessions. I've been at Mercury for 9 months. I actually had a stint with Money River Power back in the day where that was over a decade ago, so it sort of doesn't count. Yes. I guess my role at Mercury is to plan, develop and deliver our pipeline and I'm leading an awesome team or working with an awesome team along the way. Really excited to talk to you about Turitea -- in sort of the front of a very large team, hundreds of people working on the project today. And we're really excited to showcase New Zealand's biggest wind farm. So I'm just going to sort of talk a little bit about the wind farm. And hopefully, this will just be useful context for tomorrow when you're looking out the window and seeing all the awesome things happening, have a bit of context about how we got there. So this is an overview of the wind farm. I'll just point out a few features. You'll be aware, it's sort of broken into the north and the south. The 33 turbines in the north, and we're busy building 27 turbines in the south. A feature that is probably a bit frustrating to some people at Mercury is there's a big road in the middle without wind turbines. That's North Ridge Road. So that connects the 2 sites. I think in some of the initial workings they were turbines through that road. And it just really demonstrates the environmental sensitivity of Turitea. And so those turbines whatever stage they got to this concept through the consenting process, there was a view that the counsel in particular wanted to view from certain parts of the city and being able to see natural register line rather than seeing a full ridge of turbines. That's the story at least. I haven't corroborated there, but that's the story. But it is a special place. You all signed health declarations as the first project I've ever been to where I had to sign a health declaration. It is a water catchment for the community. The project is very visible from town. You can see it from here. There's a lot of interesting oncology, bush, birds, bats, lizards. And so it's a special site. It's a special place and [indiscernible]. The yellow is transmission. So obviously, we connect north to south through originally funky alignment, and then we go out into the Linton substation. And one feature that we'll talk about in a bit is there were a few questions about and when comes in the family, it connects into the substation that's in the north plantation substation. So that's effectively the wind farm. In terms of the time line, Phil sort of referenced earlier. This project has been a project for 18 years. Interestingly, I learned last week at a landowners meeting, the landowners themselves actually conceived this project and took it to market. We weren't the first participants in this wind farm. Someone else was, but we picked up the rights, Mighty River back in 2004, 2005. And so we started working on the project then. The project got consented in 2011. And -- the project basically went on ice for 6, 7 years until turbine technology was suitable for the range, market developments are the factors around the same decisions we're facing now around demand, price, opportunity. We signed contracts into '19, there was a phase contract signing around north and south. We've been making power out of the North since January. And we'll actually be making power out of the south starting next week, a very tiny amount of power. We've got a bunch of old points to work through and a bunch of turbine performance testing to do. But all going well, we'll be dribbling electricity out of the wind farm sometime in the next week or so. I'm not sure I'm allowed to disclose that, but I have. Transcos forcing us to dribble. Yes. But yes, really exciting. I mean the mood on sales or some people are really proud of this project. And we're seeing the end, the substation -- all the substations are actually energized now. The Boards are already. We're just waiting on investors to get there some final testing and we're working with Transpower and progressively bringing turbines on between the next couple of weeks and into early June. So a really exciting time for the project. It's probably a great example of us being able to work projects really hard and get them ready, create options around development and then as Tim and Phil have been talking about, consider our portfolio, consider external factors and make our own decisions about when to proceed with development of projects. I got a couple of videos. These are actually available publicly. I'm not sure people have seen them, but it sort of just creates a nice story around the history of the wind farm construction. So just play one now. It's about 2 minutes. [Presentation]

Okay. First it is to remove the solar from that video. Clearly did pass the screening process. But anyway. So I'm going to talk a little bit about that -- what's that? I'll talk a little bit about the transmission project, really, sort of these projects, this transmission line is of scale and size that it's a project in its own right, and then we'll talk a little bit about the wind farm. So the transmission line was built outside of the EPC. So if everyone may return we've delivered the wind farm through an EPC contract with Vestas. The transmission line was built under a D&C with electric, so more of a hands-on projects for Mercury. The 12 kilometers, yes 220 kV, there's a few technical things here. I guess one of the points is around the 2 substations, which you'll see tomorrow when the second one we've just energized and also the future expansion, we're facilitating the development of Puketoi. So Puketoi's video showed, 40 kilometers of transmission to the east, tying into the substation at the north. They're a good connection and all those things, we're leveraging off iterate basically. I've got a cool video. Before I start, there's a slide at the end about learnings. The transmission project, we did have some really interesting learnings. There were a few issues with noise, fairly high wind environments and significant transmission infrastructure. And so we've been working with landowners, a bunch of technical advisers and things to resolve that issue, which we've successfully done. So it's a great story for us where we learned through the environment, in particular and some of the specifics about the transmission line that was built and managed a great outcome for ourselves for landowners and sort of putting what could have otherwise been a pretty significant issue for us and resolving it. There's some good engineering and science and good collaboration with partners. I got another video, which is about 1.5 minutes. Good, fun video. [Presentation]

Someone asked me, I think, at lunch about whether we ever considered using helicopters to move blades and other componentry on wind farms. And one of the things you noticed that transmission to there's no road. We spend a lot of -- you'll see through the wind farm tomorrow. We spend a lot of time and money building roads in order to deliver things, in order to build wind turbines. Luckily, with transmission, we can fly in things and save a bunch of that cost. The technology around helicopters is not quite there for 60 tonne in the sales and even heavier tower sections. So I think we'll keep building roads. I'll talk a little bit about the wind farm. I'll kind of fly through this because you're going to see a lot of this tomorrow. This is Turitea north-looking -- north actually across the other wind farms along the range. If you're not familiar, there's Turitea, there's New Zealand wind farms, [indiscernible] 1, 2 and 3, and there's also Taupo. So they're actually 4 wind farms long range. Yes. So the wind farm, New Zealand's biggest wind farm when we're done, the 840 gigawatt hour is split reasonably evenly across the North and the South. These are Vestas 112 machines. There's a few sets there on the different heights and lengths of things. I've got a few videos to show you practically what a 55-meter blade looks like and moving through town and looking through state. There's a couple of notes there, the one on the top right. We just passed 1 million hours in the south, which is quite an awesome milestone. If you're not familiar, that treasure statistic is the health and safety statistics, Stuart and Matt actually shared something on the generation side earlier. The scale is different, TRIFR on construction sites is per million hours. The TRIFR we use in the business around operations is 200,000 hours. So when you sold those way lower numbers for Mercury operations, our on-site statistics. By the way, those are all some statistics. This is a much higher number, but the scale is 5x. So for construction industry standard, we never want a serious incident on site. We have a 0 harm objective. But that number is below industry standard and benchmarks. So it's not the end for us, but it's a useful measure of health and safety performance on site. I talked a little bit about being a special environment. You'll see tomorrow, the 160 different sediment and erosion control devices. If you're not familiar with construction, those usually turn up as big ponds built in really tricky locations, generally down slope of drainage. And so it's part of the complexity of Turitea in the civil works. Part of the complexity of civil works is managing erosion and settlement control, and you'll see that as you drive around the site tomorrow. It's been very expensive and time consuming to implement this compliance around environment. I wasn't involved back in the day, but there was a lot of exciting work as part of the consenting process to monitor the different ecology on the range, lizard, bats and birds. There was extensive programs around relocations and salvaging of lizards. Luckily, birds weren't a significant issue on site, there weren't significant discoveries. And birds is a space where we're trying to think a little bit differently and get out of compliance mode around birds and actually work with Rangatane and the local counsel on changing our consent amendments around birds to actually do something meaningful around working with local stakeholders to enhance the ecology across the whole range, not just the Turitea side. The other one is the yellow and the bottom, and you'll see tomorrow, there's a big old civil project up there that took a bunch of years before we were ready to put turbines up. We're building -- we've built 25 kilometers of road, put in 42 kilometers of cable. Not that we're building the same road, but Puketoi work for this 18ks road, I think, quite a different road. But there's a lot of roading and a lot of civil work, a lot of complex civil work. You see some big cuts out there, some really steep roading, some pretty exciting if you're into dirt and moving dirt some exciting civil construction. I'm getting the sense maybe that's not everyone's thing, but it's still very impressive. Yes. So here's a little virtual bill. I'm just walking through a virtual bill. You'll see some of this on site tomorrow. So with the foundations, we start by digging a giant hole and getting the cabling in the ground before a blind layer of concrete, which just allows us to do steelwork. And we build these early bespoke foundations. Part of the middle gets imported from overseas, the bits around it just get built on site. So most fabrication offsite and then assembled on site. And then we pour a big old massive concrete. When I first got the mobile wind farms, I assume that these things had giant things that tethered this thing deep into the ground. But no, they're just big match for this gravity foundations, very, very heavy and filled with lots of steel. And then you can see the little top. You can sort of see how the turbine is going to come into play. We finish up the hard stand. You'll see tomorrow, a lot of the construction has to enable very large cranes to come in and build turbines. And the turbines, there's a little electrical box that goes on the top of that and then the tower start to feed their way in. And here's the base tower, there's been delivery. This is a giant crane, latest crane getting sell-hold set up to start lifting the next section. On top of that goes themselves, which is the sort of business end. They're part of the business in generator. And then we've got grade sitting on the hardstand [indiscernible] ready to go up and has a photo there of turbine that's built recently. And we're building a turbine. So the base tower side because that has a bit of a grouting and curing thing that happens. But once we get those in, right now, we're building a turbine half a week. So it's pretty awesome. They go up quickly. Once we're ready and the components are there, every couple of days, the new turbines up. There's another video. This 55-meter blade is just a really short video just showing you kind of how this thing navigates this way from port site. [Presentation]

So that video show blades, the blades arrived in Hastings at port. They've been stored at a facility here on Palmerston North, so sort of a double handle. And the next video shows -- so the 2 ways to get blades to site. One is on the same trailer that you saw up to the hard stand where we set them up and ready to lift them. And the other way in more challenging environments, and this was only used for a short time on Turitea when we had some slips that impacted certain access routes. And this is called the blade manipulator. And Puketoi has some features to it. There's a gorge on the way into Puketoi that will require this type of machine to move all blades into site. And there's one of these in the country. It's ideally, you don't use these because they move very slowly. It's a really slow process to load them on to this machine and then take them off the machines as there's a lot of time invested in moving them this way, but you will get a flavor for the benefit. [Presentation]

Yes. So you can kind of see there, it looks really clever and smart and it's a wonderful machine where we have tricky places, as you saw, they're really tight intersections. We seem to spend money redeveloping intersections, widening roads, taking the corners off things, sometimes it's more economic than trying to use blade manipulator say, over a very long delivery run. So yes, just the need option, I think, where we've got constraints. Yes. So I'll talk a little bit about what we've learned. I've only been involved with the project for 9 months. So really, I think potentially value of fresh set of eyes, but also lots of conversations about well and what didn't. I think one of the learnings for us for Mercury is that every project is unique. Scale, the communities that we're building in, the sensitivity of the landscapes that we're developing and the distance for transmission, the transport routes, many elements about them are different. As a matter of the only thing that's really the same is the foundation and the turbines themselves. And so I think that's been an interesting learning for us. And by being unique, they have different risks. They have different challenges. They also present different opportunities for us. And I think the learning is that, given every project is unique and that they have their own characteristics, us being expert in our own projects is really valuable to our delivery of those projects. And I think that turns up as us having the capability that we now have through and other things, but also on us spending a lot of time ourselves planning and developing in these projects. So yes, that's a big learning. These pictures are actually from Kaiwera Downs, which is our 43-megawatt project in Gore. The 1 on the left, we actually poured the second foundation today. There are 10 foundations. We poured the second 1 today. And the one on the right is just an aerial view of the wind farm. Obviously, it's about 1/4 of the size of Turitea. It's also a much more benign landscape. There's a lot less civil works and much less complex. It's also hard rock. So the whole settlement control thing is much less of an issue, but we have to blast everything. So we've had people with Dynamite on site for 4 months. They just demobilize this week actually. So those who are coming next week. Sometimes we get to see them blow things up, but we won't be able to do that next week. And I guess following on from that, in terms of every project being unique, Turitea is an EPC, I think it's certainly been a challenging project. In some ways, it's almost an ideal time frame to be delivering an EPC. We went through COVID. We went through a hyperinflationary environment. We went through probably global supply chain disruption that hasn't been seen in 50 years. And so -- for Mercury, we haven't -- the project hasn't been delivered in the initial time line. But from a budget and overall outcomes perspective, you might reflect that EPC was a useful construct given the disruption in the industry. Almost every construction project in New Zealand is late and most of them are well over budget. At least that's been the history over the last couple of years. So the other, I think, learning for us is that delivery model really matters and their options. And we need to consider those options as we go into each of our projects. I think Australia, possibly the bells moved a little bit in Australia, depending on the overall structure of deals in terms of whether they're looking at EPC or multi-contracts. We're developing as multi-contracts. So we have 4 main contracts, turbine, civil, electrical and then transmission. And we effectively have a role in managing those interfaces and some of the risks that come along with those interfaces. The project is going ultimately. It's a 13-, 14-month project. We're pretty much on program to the day. We've managed to get all the earthworks done in a single season, and we'll have turbine showing up in May and start to stand up turbine sort of end of May. So it's been actually an amazing project, culture on site is great, and the delivery, the outcomes, at least that we've seen so far, we've still got a fair way to go, have been really impressive. So yes, I think as the second key learning for us is that delivery model really matters. And we've got to have the capability and experience to deliver across multiple delivery models, and we're pretty comfortable that we do have that now, and we're retesting that now at Kaiwera Downs. So maybe before I give a little -- just a few things to note about the Turitea, maybe I'll pause there, and we can just have a bit of conversation if there are questions about anything. There'll be lots of opportunity for questions tomorrow. But happy to take them now as well. All right. Saving them for advance. Cool. So tomorrow, yes, make sure you have coverage shoes, you don't need safety boots, but please wear sturdy shoes you have with you and covered. If you're worried about the shoes you have, maybe just connect with me and we can see if there's something we can help with. There's no such thing as safety handles, yes. You just need to be covered for long, long, top and bottom. And the weather forecast actually looks pretty benign tomorrow. It's going to be more wind tomorrow than today. I think the turbines will be spinning tomorrow, which should be good. It's a good effect. But do bring an extra layer, it can get windy and can get cool. And we'll be getting up there pretty early in the morning as well. We'll provide all the PPE stuff. If you haven't already, please fill out this health declaration. I think Joy can help with that and hand them back. It's all that the local council is taking their water catchment and health seriously. So we're going to do pickups at your accommodation between 8:15 and 8:30, but we need to leave at 8:30 sharp. So if you can do your best to be ready at 8:15 low down and then we'll shoot away at 8:30. We're in sort of four vans, I think. And we've got a driver and a bit of a guide in each of those. So there will be lots of opportunity for questions. And then I think on the back of your agenda, there's a little run sheet for tomorrow, which just gives you a flavor of how the day is going to go. It's really dynamic on site. It's -- they're running a really tight program. There's a lot of big kit. We may need to be reasonably adaptable on the day. Sometimes roads get closed because deliveries are late and other things, but we'll manage all that. You all can just be happy passengers. Yes.

I think just one thing to add to what Matt said in that particular, that lasts a little bit about delivery models and stuff like that. I think a big learning for Mercury in all of this is -- as a principle, no matter what model you're using, you can't contract yourself out of the owning the risk at the end of the day. You have to be the intelligent client. You need to be engaged. And what we have got and what we've learned is now, I think, a sort of delivery team that's second to none, who can take on just about anything that's thrown at them. I'm just going to spend a couple of minutes just reflecting on some of the things that I heard and hopefully has captured some of the things that you've heard and some of the questions that you asked. So look, right from the start of the day when Prue opened up, she talked about political and regulatory risk. And I think in Lucy's session, I think there's been some good discussion about how does that risk turn up. What does it look like. What's Mercury's position. A couple of takeouts for that, that I would have is -- the electricity sector has perhaps given the most consistent response to the regulatory settings. And if you get the opportunity to talk to politicians of any color or persuasion, just point them at the fact that we have deployed as a sector, not just as Mercury, an enormous amount of capital in response to the settings that occur. If they did half as good a job on the roading, I'd be able to get to Coromandel quicker tomorrow. There is limited capital for governments to deploy. This sector stands up and delivers. And Mercury has been and continues to be a major part of the solution. The BCG report, and that process and the ongoing work wouldn't have occurred without Lucy driving that across the sector. So we are enormously proud of what we do there. Our generation business has gone through enormous change. Stew described bringing the different technologies that were organized as different business units before -- previously and bringing those together. I think what that's enabled us to do is to get really focused on continuous improvement. And you heard today some of the things that are in front of us that come as we work through that program. So whilst a couple of megawatts of capacity here and a few gigawatt hours there, hopefully are seen as small compared with some of these big projects, they are also really important in optimizing the fleet that we've got. And that fleet is going to stand us in good stead for a long period of time, and I'll touch on that again in a moment. So continuous improvement in energy and capacity are the name of the game. And again, it's the backdrop and there was a good discussion on this and certainly in the part of the program I was in about what -- how does that all turn out in sustaining business CapEx and OpEx? And I guess, in staying business CapEx, it means that if you can really, really smart when you're doing that some CapEx, you don't just end up with grandfather ace, you end up with a chainsaw, and not an axe, you end up with more power to your elbow. Look, the OpEx pressures are real. We don't escape from inflation. And that means that as we look into the future, and that was touched on as well, that idea of thriving and how we do things smarter and better is going to be really important. We are expecting to see that sort of OpEx inflation pressure continue to exist through the next couple of years or so. So we hear that. The portfolio session with Phil and Tim, look, again, a good session when I was -- when the one that I was in grants. I think for me, one of the punchiest discussions that occurred between the team and someone in the room. I try not to think of C&I customers as whipping horses grant that we dump on when all else fails. And I think that was a great question and a good debate for us to have. But again, and I've said this in many meetings, we price every C&I customer that comes to us. Get that answer from any of our competitors, and I will be surprised. So we're not dumping on them. We will price them. We think that's important. They have to be able to access those prices. And we are offering long-term deals. I would though note that in all the years I've been in this industry, I can go back to the year 2000 when a certain company called TransAlta wouldn't buy off of Genesis of $40 because they thought the price should be $35, and they went out of business when the price was sitting at $150, $200, 6 months later and wondered why they couldn't have $40 then. So some of these C&I customers over the long term have been their own worst enemies. The smart ones are talking to us, and we're doing great deals 7, 10 years. So I think that's important. Another really important thing that I think came out of that discussion was all about how you manage intermittency risk as you introduce more intermittency into your portfolio. And so for Mercury, we have win following PPAs with a lot of the wind farms we purchased. And we're happy to enter into those discussions with others. And I'd just encourage you to keep your ears open over the next little while because we believe that's a real marketplace and there are willing people talking to us. Because ultimately -- a really good question that came up is how are you going to retain portfolio firming? And that's about risk sharing with your customers in an appropriate way. We love options. And we're doing a lot of work on creating real options. So you heard today about OEC5 at Ngatamariki. When that gets this resource concerned, that's a real option. It will be a long-dated option. We can choose when to go with it. We're doing the resource consent. We've got the resource consent to the wind farms. Those are real options. Puketoi's wind farm consent has been extended to 2031. So those long-dated real options are really important. The MSO and Kmart and Guess KMart. And look, Phil, I think, quite rightly said, we're not in the carbon shaming game. We think Genesis do an awesome job. And we chose to participate in the MSO for a number of reasons, not least of which is it's no good sitting bleating about stuff when Genesis say nobody would take a product of his. And we're not in that game of bleating. I think for the sector is at its best when we manage the risks within the sector, not leave the regulator and politicians to deal with it. Solar came up. Look, I have a particular view there. I think solar is a very valid thing to be involved in. I also think if you look at the list of solar applications on the Transpower website, I suspect most of those will never see the light of day. So I'm happy to use a term of being a bottom feeder to pick up distressed projects at the right time. Retail team. Well, they sold it to me. In fact, this is the first time I've actually sat there and heard that they believe they're going to deliver on this integration in such a great way. And I -- so it's now -- I'll just put it into the KPIs. It was great. We are 10 months. We are 10 months in having those 2 businesses together. And Nick quite rightly said, mergers and acquisitions fail when you try to go slower -- too slow. Mergers and acquisitions also failed when the businesses are at war with each other because -- and when you think about this, 600 people join 850 and we are focused. And I think what I took from the retail thing is we are really focused on delivery. And the last point I want to make around that before I pass to William, who's got a couple of things to talk to very briefly. The last point I want to make about that whole retail thing is, we don't measure ourselves and will not measure ourselves against the performance of energy retail companies. That's a pretty bloody low bar to get over. We will measure ourselves against those companies that deliver the most outstanding digital customer service on a global scale because if we set a bar there, then I think we will surprise, delight and exceed customer expectations. I think we're well on the way to having the platform to do that. And hopefully, that you got out of the team. So lastly for me, part of today was about hearing from the great people we have in our team. I hope you've enjoyed that. I hope you now feel much more comfortable that there are people in Mercury that are just much smarter than William and me, not difficult, who can deliver on the promise, but it's also -- if there are questions that come up out of that, we're very happy through William and through what will be our newly minted IR manager that's going to take over William's second job in the not-too-distant future, to make people available, to help you understand what we're up to. So that's really important from our point of view. We're a team. It's not a high game. William?

Thanks. This is a fantastic wrap up for today, but we're not finished yet. We've got some more. So -- I'm just going to talk about guidance, and it was quite a hot topic as we went through interim IR, we had a cracker result. It's a record for the half, higher than the big guy. So that's always something to aim for. So I'm talking about Meridian, and they had a pretty good half too. But there's been a lot of water. And there's been a truckload of water turn up. Unfortunately, ours was in the river. Unfortunately, for others, it came out of the river, particularly into the Hawke's Bay, but also in parts of Auckland and Coromandel also. So I just want to talk to [ Auckland ] bridge. And you'll see there's some acquisitions that we're keeping stuff in our pockets. I can show you [indiscernible]. We're still at $795 million. Can we just flip to the next slide, please? I got a button here. Does this go. Yes, so you can see the yellow bar in October when we operated our guidance on the start of a pretty good quarter. And we're still at $795 million, just shy of that $800 million. So we've picked up 400 gigs of water up to the February period. We have seen a reduction in actual and full price impacts on that long generation position. That's worth about $15 million. And we have got a mismatch there in terms of the GWAPs between generation and our fixed price variable in purchases. So that's essentially physical sales to our customers. And those derivatives around 20%. So we're still largely sitting at our $795 million. So that is our guidance. Next slide. And as the bridge really just shows the difference between where we were back in October, where we are now in terms of those forecasts internally. So about almost a $30 difference in that GWAP forecast. So I will leave it at that.