Meridian Energy Limited (MEL) Earnings Call Transcript & Summary

[Presentation]

I welcome you all to Meridian Energy's 2022 Annual Shareholders Meeting. To those who are joining us in person here in Eden Park in Auckland and to those joining us online. It's certainly nice to be able to see some faces physically for a change. I also welcome Pam Thompson from our auditors, Deloitte; and Ian Beaumont from our lawyers, Russell McVay, who are here today. For those of you who are here in person at Eden Park, please note this is a nonsmoking venue. The toilets are located in both the Eastern and Western pre-function areas. In case of emergency, please leave the nearest safe exit as directed by Eden Park's staff or security and gather at the nominated assembly point over on Rimas Avenue. The alarm signal will be a long alarm. There is also a voice prompt that will ask you to evacuate the building. Your nearest safe is back down the increased stairs for Gate G that you would have entered from or gate F at the Eastern end. To help you -- help guide you, there will be a green and white exit sign located above the exit. Please stay here until you are given the all clear to return to Eden Park. Moving to today's business, I declare the 2022 Annual Shareholder Meeting open. The meeting has been duly convened, and a quorum is present. The minutes of last year's meeting have been posted on Meridian's website and are held by the Company Secretary. Today's meeting is being held both in person and online via Computershare's online meeting platform. This allows shareholders, proxies and guests who are not able to travel and attend the meeting in person, the ability to attend the meeting virtually. Online -- all online attendees can watch a live webcast of the meeting, read the company's documents associated with the meeting. And in addition, shareholders and proxies have the ability to ask questions and submit votes. For those of you attending the meeting virtually, if you have a question to submit during the meeting, please select the Q&A tab on the right half of your screen at any time, type your question into the field and press send. Your question will be immediately submitted -- should you require any assistance, you can type your query and 1 of the Computershare staff will assist with the chat function and reply to your query. Alternatively, you can call Computershare on 0800-650-034. And for those of you who are in the room and wish to answer a question, if you could please come to the central microphone and state your name. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive multiple questions on the same topic, amalgamated together. And finally, if time constraints cause us a problem and we run out of time, we may answer your questions via e-mail. Voting today will be conducted by way of poll on all items of business. In order to provide all attendees with enough time to vote, I will shortly open the online voting for all of the resolutions. At that time, if you are eligible to vote at this meeting, you will be able to cast your vote under the vote tab. Once the voting has been opened, the resolutions will allow votes to be submitted. To vote, simply select your voting direction from the options on screen. You can vote for all resolutions at once or by each resolution. Your vote will have been cast when the tick appears. To change your vote, simply select change your vote, and you have the ability to change your vote up until any time I declare voting closed. People attending the meeting who are not shareholders, proxy holders or corporate representatives of a shareholder may not vote and that includes bondholders. I now declare voting open for all items of business. The resolutions will now be open in the vote tab. Please submit your votes at any time, and I will give you a warning before I move to close the voting. Moving on to my own address. I'll begin by introducing the Meridian board and some of the members of the management team. Meridian board members present today from the right Michelle Henderson, Jan Dawson, Mark Ken, Julia Hoare, Nagaja Sanatkumar, Graham Cockroft and Tania Simpson. Company Secretary, Jason Woolley has also seated on stage with me. And of course, we have our Chief Executive, Neal Barclay. And you'll hear from Neal shortly after my address as well. Meridian's purpose of clean energy for a fairer and healthier world has become increasingly important as we take action to support the transition to a lower carbon country and become a vibrant contributor to a net 0 world. As Aotearoa, New Zealand's largest 100% renewable energy company, we are conscious we have a leading role to play in decarbonizing our economy. This means that we need to take actions that make a material difference to the climate, our economy and our customers, including delivering on our ambition to execute on our renewable development pipeline. And in the work that we do, we must move forward in a strong partnership with [indiscernible] and support our customers and the communities we serve. And where we can make a difference, we will take the action required. Whilst we're conscious that we compete fiercely with our sector peers, it is also important for the whole energy sector, its generators, retailers, distribution and transmission companies, along with regulators and government to come together and cooperate to receive -- to achieve the necessary outcomes. The challenge is significant, and none of us can achieve the outcome alone. The assets required to further electrify New Zealand, our long-life assets that take a number of years to build and consent. So it's important that we start moving with pace now. This year, we have made great strides in supporting our commercial and industrial customers to electrify, and we've provided energy solutions for our customers and invest in an infrastructure to support the growth of [indiscernible] electric vehicles. We've also made good progress in our work with Contact Energy to advance the Southern Green hydrogen project. However, we know that there is much more that we need to do to truly help combat climate change. Given our size and scale, we know we can and we must play a meaningful role in the energy transition and support New Zealand to thrive in a net 0 future. And to make sure that we are focused on what we need to achieve, we've developed and this year, published our own climate action plan by which we will hold ourselves to account. Our priority is to reduce our own emissions are focused in areas where we know we can make a meaningful difference. This includes our half by 2030 program, where we have committed to having our gross operational emissions by 2030 from a 2021 base. Where we cannot reduce our operation -- operational emissions right now, we are offsetting using gold standard verified emission reductions. Our forever Forest program, in which we've committed to planting 1.5 million trees by 2030, will act as a carbon sink for those emissions we cannot take out of our operations. This will leave a native forestry legacy, which brings broader economic -- sorry, broader environmental and biodiverse benefits. And as I mentioned earlier, we are also helping our customers transition away from fossil fuels by helping and investing with them to increase their use of renewable energy. We're also sharply focused on the significantly lay increasing amount of renewable energy and, therefore, renewable energy developments that are required to support the country to thrive in a net 0 emissions world. At Meridian, we know that if we do our share of the heavy lifting in the energy transition, we will need to build around 20 Harapaki sized wind farms of -- equivalent of around 175 megawatts each in the next 28 years. It's 20 generation facilities in 28 years. That is massive. So we need to pick up the pace and build momentum now, and we have tasked our own team with achieving an ambitious 7 new renewable projects of scale on stream in the next 7 years. We do have a range of renewable development options in front of us, including wind, solar, and grid scale batteries to help achieve our goals. Our decision during the year to sell our Australian business, Meridian Energy Australia also signaled a strategic shift to focus on future investments back in New Zealand. The growth potential in our domestic market is huge. We are pleased with the outcome of the sales process and note that this latest venture in Australia was successful for shareholders, yielding a net gain on sale of $214 million and gross proceeds of more than $750 million. These proceeds have been retained to cash and applied in the repayment of short-term debt to strengthen our balance sheet and will provide us the future capacity to further invest in New Zealand's decarbonization future. And on that point, it is worth noting that the required investment in new generation to get this country to net 0 by 2050 in today's dollars is at least $30 billion. Now that is generation alone that doesn't allow for distribution and transmission investment. So it's a sizable challenge in anyone's language. The overall capital budget for the country is huge. That investment will have to be paid for, whether by way of public or private funds. And in the end, we will all end up paying for it as consumers and taxpayers most likely. However, aside from the climate aspect, there is another price that's worth considering. Whilst the investment required is considerable, ultimately, electrification of more services, particularly personal transport is likely to end up in overall household energy bills due to transport fuel savings being a lot lower. It's also worth noting that the electricity market regulatory settings have kept us have kept New Zealand and good state to date. The facts are that after adjusting for inflation, the unit cost of electricity that Kiwi households pay today is lower than it has been in the last 10 years in real terms. Few, if any countries can say that. And so we would argue it's best to keep the market settings as close as possible to those that apply today. We remain conscious nevertheless that many of our customers are facing significant cost of living increases, making it harder to make ends meet. We continue to offer well-being support for our most vulnerable customers and level pay for those customers who want to manage their energy bills evenly throughout the year. During the year, we also commenced an energy well-being pilot. This is a program looking at reducing the impact of the 4 key drivers of energy hardship for our most vulnerable customers, that is financial housing quality, energy supply and energy efficiency. We've been pleased with the impact to date, and we're building the knowledge of in-house energy well-being specialists and partners to look at the whole picture for all individual customers. And we wish to support them in progressing up the energy well-being spectrum. Our sponsorship of KidsCan is another means for us to support people suffering financial hardship by providing Kiwi kids and poverty a leg up to support them getting an education. Two years ago, we increased the contribution we make to KidsCan to $1 million a year, and we have assisted KidsCan to electrify their vehicle fleet as well. We're proud of the difference that this funding support makes to underprivileged children. We also continue to plan for a possible exit of New Zealand aluminum smelters, or NZAS, as we call it, from Southland in 2024. Whilst we're aware that NZAS has publicly said that it is reconsidering its position, whether they stay or go remains uncertain at this time. The proposed closure of the smelter has created a generational opportunity and has seen Meridian increase momentum in terms of our development pipeline and the Southern green hydrogen project. We've done what we can to minimize the disruption to the local economy in Southland negotiating an extended exit deal that encouraged this large regional employer that smelter to stay on for 3 years longer than it had initially proposed. That deal also bought the electricity sector time to enhance the transmission network in the Lower South Island, and we're grateful to TransPower who have completed this work. The deal enabled us to explore innovative arrangements with emerging industries that will change where and how our generation capacity is utilized. It has also brought time for NZAS to work on an environmental mitigation plan and its business model if it was to stay. We were pleased to see the government largely adopting the climate change Commission's recommendations and settings in place to place the country's first emission reduction plan and announced the first 3 carbon budgets, and they go through to 2035. Globally, we see carbon prices lifting and that's no surprise. We continue to advocate for an effective and all-encompassing emissions trading scheme to support New Zealand's decarbonization journey, but we also recognize that well-targeted policy support will help build momentum. We are keenly looking forward to participating along with the rest of the sector and the public in the development of New Zealand's energy strategy knowing that the regulatory and policy environment will be a key factor in determining getting to 0 emissions in 2050. As I've mentioned, a massive amount of investment in electricity infrastructure will be required to take place in the next 30 years. In that context, it is critical that the resource management framework appropriately allows consenting authority to balance localized environmental impacts and mitigations associated with renewable energy projects with the positive climate change benefits that those projects will bring. The new framework for consenting is emerging through various consultations and we're actively engaging with relevant ministers and officials to ensure a balanced approach as part of the new resource management framework before it comes into force next year. In relation to the Board, our Board is now more diverse than it has ever been, and it has the relevant capabilities to oversee Meridian's strategy and guide the business through the decisions that lie ahead. The appointment of Tania Simpson in particular, will help us grow our EU relationships. In July of this year, we also appointed Graham Cockroft to the Board as a Non-Executive Director. Graham brings a strong finance and energy industry background to the Board and will complement this Board's skills and expertise. Graham, who will be seeking support for election later in this meeting joins us following the retirement of long-standing director, Jan Dawson, whose term will conclude at the end of this meeting. Jan has made an outstanding contribution to Meridian over the past decade right from listing. We would genuinely be sorry to see her go and retire, but nevertheless, we wish you well. Jan, thank you so much. We've also had a few changes in our executive team, and I expect that Neal will take you through some of that a bit later. I just want to finish by making some observations on the company's financial performance for the year ended 30 June 2022. We believe that the result was strong and exceeded our expectations despite challenging hydro conditions in the Waiau catchment particularly, which is Tiana and Manapouri earlier this year. The Board declared a final ordinary dividend of [ $11.50 ] a share, which was up 3% on the previous year. That means the total ordinary dividends for the year declared were $17.40 per share, again, up 3% on the previous year. We've kept the dividend reinvestment plan in place, and it remains available for those shareholders wishing to participate in that. Last week, we published our September monthly operating report. The first quarter of this financial year has seen higher generation and sales volumes than the same quarter last year. With high winter rainfall, storage in the Waiau [indiscernible] catchment was nearly 200% of average at the end of last month. As shareholders will be aware, nevertheless, our results are totally influenced by variable weather conditions, and we have a long way to go until the end of the financial year. So it's too hard to predict how the year is -- the rest of the year is going to pan out. Although the many changes ahead of us can seem daunting, New Zealand is well positioned, in fact, uniquely in global terms with a well-established renewable energy base. So the opportunity to accelerate our progress is in sight. We are up for the challenge, and it's actually a very exciting time for the sector. But our response to decarbonization must be nuanced, sensitive, intelligent and old. The needs and priorities of communities, customers, EU must all be assessed widely and our actions must work in the best interest of New Zealand and indeed the rest of the globe. Before we move on, I'd like to take this opportunity to thank you, our shareholders, your Board certainly appreciates your continued support. And I'll now ask our Chief Executive, Neal Barclay to address the meeting.

Good remark. Neal Barclay, talking. I'd like to start by introducing you to the Meridian executive team, most of whom are here today. Mark's already introduced Jason Woolley, who is our General Counsel and Company Secretary. We have Mike Roan, CFO, Guy Waipara, General Manager of Development; Chris Ewers, General Manager of Wholesale; Bharat Ratanpal, Chief Information Officer; Lisa Hannifin, Chief Customer Officer; Tania Palmer, General Manager of Generation; and Claire Shaw, General Manager of Corporate Affairs and Sustainability. Lisa -- Nic, Kennedy, sorry, a moment Nic Kennedy, our Chief Executive, Flux Federation; and Jason Stein, our Chief People Officer, are not here today, but I would have liked to have been here, obviously. Now we have a highly experienced and capable well-established executive team at Meridian, but we're always looking to evolve and I have made some changes this year that I believe strengthened the team further. Tania Palmer, shifted from Chief People Officer to Head of our generation team, who have proven sector experience, knowledge of safety systems and people leadership skills are well suited to leading that part of our business. Meanwhile, we managed to learn Jason Stein, who had been our Chief Executive of our Australian operation back to this side of the Tasman and he took over as Chief People Officer from Tania. Jason will continue to focus on enhancing our safe and inclusive culture. Finally, our long-standing Chief Information Officer, Bharat Ratanpal, has joined the executive team, and he adds invaluable technical skills to how we think about deploying technology to improve our customer propositions, our business performance as well as protecting our technology systems. It's a sign of the diversity and breadth of skills and the leadership ranks that we've been able to make all of these appointments from within our existing talent pool. Our people, their safety and their well-being will always be front of mind for me. Our reported injury rates are declining. Unfortunately, none of the injuries suffered by people working for us have had lasting impacts on their lives. But our near-miss reporting tells us that our risk exposure is still high. We see this most obviously in relation to the Harapaki construction project. Harapaki is a challenging work site and has experienced difficult construction conditions. So I want to acknowledge the massive safety focus our team has established with that site. I'd also like to call out the work we are doing, supporting our people's well-being. We have developed a care team process that wraps support around people in our business who are struggling. Our aim is to ensure that they have the time and support necessary to heal and return to work. Our Care Team program was recognized that this year's Safeguard awards is New Zealand's best well-being initiative. That's something we're very proud of. Our overall level of staff engagement did slip during the year, but we understand where and why this decline occurred, and we're working to address specific staff concerns. Meridian remains in the top 25% of large New Zealand employers from a staff engagement perspective. So that's still pretty positive. Now in August, I was pleased to announce another solid financial result for the year ended 30 June 2022, whilst EBITDA and underlying net profit after tax of $709 million and $233 million, respectively, we're only marginally ahead of the prior year. We were pleased with the outcome as the operating conditions were reasonably challenging during the year. In particular, we experienced a record setting drought in the Waiau catchment. That meant that the Manapouri power station, the largest power station in New Zealand that typically meets about 12% in New Zealand's electricity needs was barely idling through the months of March and April. That said, through the course of the whole year, we did achieve good electricity generation numbers, and we continue to grow our retail business, increasing our customer base by more than 18,000 customers on the prior year. As we've seen in previous years, all droughts eventually end, and we've had plenty of rain in our catchments over the last few months. In fact, the rainfall into our South Island hydro catchments this past winter was 18% higher than any previous winter on record. So we have a -- we are in a strong position with Waitaki storage having peaked at nearly twice its average for this time of year and that bodes well for the year to 30 June 2023. But as Mark said, we still got a long way to go, and the weather is pretty random in this country. The profit on sale of our Australian business is the result of sound deployment of core capabilities developed in New Zealand and a lot of hard work for more than a decade. I'd especially like to acknowledge the dedicated team of Ausies who work for Meridian Energy Australia and built the business into a very valuable entity. They also did an outstanding job supporting us through the sale process. And in many ways, it was quite sad for us to pass that team to the new owners. But I know they will continue to do a great job for Shell and ICG and continue to grow our successful renewable led business in Australia. Importantly, we plan to put the sale proceeds in our balance sheet to productive use and support New Zealand's imperative to achieve 0 carbon by 2050. To reinforce Mark's comments, the growth prospects for the electricity sector are huge. Over the next 30-odd years, the forecast growth in demand for electricity will require a sustained level of new renewable energy build that will outstrip anything New Zealand has managed to achieve at any other point in our country's history. We need to build momentum and capacity in our business that will allow us to take advantage of this growth. As a management team, this is our most significant strategic challenge. And we are serious about ramping up our efforts to achieve 7 renewable energy projects within the next 7 years. Now the good news is we're getting on with it. During July last year, we commenced construction of the Harapaki wind farm in Hawke's Bay. Our project team encountered very challenging record-setting wet weather conditions during spring and summer. But overall, the project remains on schedule, and that's the most important aspect. We have experienced, however, some inflationary cost pressures, and we've also had to make some changes to the roading design due to sudden ground conditions. So the forecast cost to complete have escalated by about $53 million, which is about 13% of the overall project budget. We're still very confident the project represents a sound investment for Meridian and much needed renewable energy for New Zealand as will power the equivalent of around 70,000 Kiwi homes when complete. We'll start producing that power during 2023. Our development team has also been hard at building our portfolio of future generation options, and we're increasing our investment support for that team. The Ruakaka Energy Park in Northland will be our next development. We have consent to build a grid-scale battery, and we're presently tendering contracts for that development. Now when I say grid scale, think of a battery about the size of 4 Eden Park rugby fields. That's big, and it will be the first of its kind in this country. We plan to commence the build in 2023 and complete construction during 2024. I'd love it to be sooner as the electricity system has experienced regular peak stress events during winter months, a battery of this size will help alleviate those peak stresses by storing energy during quiet periods of the day and then reinjecting it into the grid over the morning and evening peaks. This battery will enable us to power 60,000 homes for up to 2 hours. But as I'm sure you're all aware, international supply chains are stretched, and we have work to do to manage cost escalations and delivery time frames. We will, however, get it done. I'm sure of that. And we've also secured a second battery option site at Bunnythrope near Palmerston North. The Ruakaka Energy Park will also include a solar farm development and the consent application for that is expected to be launched in early 2023 with construction complete early '25. The solar farm has an expected total capacity of more than 130 megawatts, put that into normal language. That will create enough power to -- enough energy to power around 15,000 homes. Also preparing to lodge the consent application for the Mt Munro wind farm in the Wairarapa early next year, and we expect that project to follow closely on the heels of the Ruakaka developments. Beyond that, we have a more sizable pipeline of secured options and advanced prospects for multiple solar and wind sites, mostly in the North Island, but we do need more. There's no doubt about that. Alongside these developments, we've been rethinking also how we use the renewable generation assets that we have to best effect. New Zealand currently generates around 80% to 85% of its electricity from renewable sources, mostly of hydro supported by coal and gas-fired generation as needed. But as those fossil fuel generators are phased out and replaced by wind and solar and geothermal, we'll need to flex our hydro generation capability and storage differently than how we have in the past offset the intermittency inherent in wind and solar generation. It's a new way of using our resources that require us to think long and hard about the way we manage our existing hydro lakes and the timing of our maintenance schedules. Flexible demand will also become a valuable as a means of managing renewable intermittency. That's a key part of the value proposition of the large-scale green hydrogen production facility in South and the Meridian and Contact have been progressing. Producing hydrogen from electrolysis is inherently flexible. If the hydrogen producer can reduce production at times when the electricity system is stressed, for example, when there's a seasonal drought and hydro fuel availability is limited, the electricity would have consumed can effectively be reallocated to other energy consumers. We believe this creates a win-win scenario. The hydrogen producer benefits by being recompensed well for forgone production, other electricity consumers benefit from being more reliable, cost-effective supply and the environment benefits is there is this need to produce carbon emissions from coal or gas. This type of demand response is part of a wider discussion on how new and potentially existing industry can align the energy requirements with the nation's needs. If we can make such flexibility commercially viable, that will deliver a cost-efficient solution to help offset the wind and solar and intermittency in the electricity system. And overall, the Southern Green hydrogen project is full steam ahead. We're working with 2 shortlisted parties, 4 to [indiscernible] future industries and Woodside, 2 larger Australian organizations. We expect to choose 1 and agreed terms for the development stage of the project to the end of the year -- by the end of the year and reach a final investment decision in 2024 with plant commissioning probably around the 2027 time frame. The green hydrogen is a tomorrow's technology. Global growth projections are mind blowing. New Zealand's domestic projections for hydrogen demand are likely to exceed the capacity of Southern Green hydrogen by a few times. So we see the project is creating a foundation towards energy independence for our country as we wean ourselves off fossil fuels. New Zealand's transition to a more renewable system may not be entirely smooth, and the wholesale price for electricity is likely to be quite volatile at times as the demand and supply balance evolves. We have seen that in the last few years where the price for wholesale electricity has ramped up significantly from the long run average. But our view is as new renewable infrastructure gets built over the long run, we can expect prices to reduce. That's probably cold comfort for large industrial customers as the near-term challenging wholesale conditions tend to feed through to their pricing quite quickly. But importantly, electricity prices for residential and small and medium-sized business customers continue to trend below the rate of inflation. And in real terms, they've been to climbing now for more than a decade. All of the evidence tells a strong competition is working for customers in the New Zealand electricity market. The performance of our retail business suggests that we thrive in that competitive environment. Our dual brand retail growth strategy has been hugely successful. And over the last 5 years, the Meridian and Powershop brands combined have grown sales volumes by 56%. And as I mentioned earlier, we kept that momentum up this last year, adding more than 18,000 new customer accounts. Our retail growth has all come from hard on market share gains and having the best customer retention rates in the industry has helped deliver that outcome. But there is no shortage of competition. We are driven to continue to innovate and to lead. We believe there is massive scope to add value to customers and the system as a whole by providing innovative technology solutions beyond traditional electricity retailing. Accordingly, the next evolution of our customer strategy is based around providing energy solutions that support customers to reduce their total energy bill whilst also reducing their emissions. Our process heat electrification program has earmarked up to 600 gigawatt hours per annum to support customers to switch from coal or gas to electricity. In doing so, we will help those customers avoid pumping around 300,000 tonnes of CO2 into the amphosphere every year, which is the equivalent of removing around 150,000 cars off our roads. And talking about cars, we're making good progress deploying our public charging network. We currently have 73 charging stations in 34 locations, making us the second largest provider of public charging in New Zealand. And we have a further 119 charging stations committed and awaiting construction. We're also establishing EV charging products for business and residential customers to make it as simple as possible for Kiwis is to drive away from fossil fuels. In doing so, they will save big time is the average is the cost of fueling the average electric car is around 30 -- the equivalent of around $0.30 per liter. A certified renewable energy product has also enabled around 100 large business customers to purchase more than 660 gigawatt hours of renewable energy certificates this year. This enables those customers to legitimately reduce their scope 2 emissions and improve the sustainability and marketing of their products. Renewable energy certificates or particular value to customers who are engaged in the export markets as they reflect New Zealand's competitive advantage inherent in our highly renewable electricity system. Further, we've made a commitment to reinvest all of the proceeds from our renewable energy certificate sales into decarbonization projects. Half of that will go to business customers and half will go to community groups. An early example is our support for KidsCan, who will replace some of their petrol powered vehicles with EVs. In summary, by focusing our efforts in providing innovative energy solutions that support our customers to decarbonize their homes and businesses. We can also save the money and grow the value of our own business. We think that's a real win-win scenario. To finish up, I'd like to thank you all, our shareholders, for continuing to support Meridian I'd like to thank our Board for their support, challenge and clear focus on creating long-term value. And I'd like to thank my management team and the broader Meridian Farnell who are unwavering in their efforts to deliver on our company's purpose of clean energy for a fair and healthier world. We're looking forward to embracing the challenges ahead to continue to grow our business in a way that supports our country's net 0 emissions goals. Thank you.

Thank you, Neal. We've come to question time, and I'm going to address the online questions that we've received first and then I'll invite shareholders from the floor to ask questions. So if you just bear with me for a second. One of the questions we've received is from shareholder, Bruce Malpass and he asked ask where is all the money gone from the sale of our Australian hydro stations, wind farms and Powershop, in other words, Australian business? As I detailed in the presentation, Bruce, the proceeds have been retained to cash and applied to the repayment of short-term debt. in order to strengthen our balance sheet and provide us future capacity to invest in the development program that we've talked about this morning. I've also received 2 questions from Dave Leverich. He asks, firstly, why does some directors hold more than 5 directorships? Says it must be impossible to do justice to each directorship if you hold more than 5? Well, Dave, I'm absolutely satisfied that each director has the capacity to fully perform their obligations as a Director of Meridian. You've got to bear in mind that a lot of the directorships listed are not necessarily listed company directorships and so the work obligations on those companies are can be quite a bit lower than for a listed company. And the other thing that's worth bearing in mind is that most, if not all, of our directors actually work full time, but yet the work that's required for the Meridian board of itself is not. I should note also that proxy advisers, these are companies that advise institutional shareholders how they should size their votes, for example, at our meeting today. They've looked at our director workloads and are satisfied that they fit within their guidelines. Mr. Leverich's second question is on shareholder director and senior management alignment. And he makes the point that he would like to see directors and senior management being required to purchase shares within a short time of their appointment. Well, the Board certainly encourages directors to hold shares in Meridian. It's not a strict requirement. We don't consider -- and we note that the New Zealand Shareholders Association has the same view. We want -- we don't want to put a hard and fast requirements in place, particularly when we're trying to encourage younger directors with particular skill sets to join our Board. Everyone's financial situation is different and that should be borne in mind. And we certainly don't want to shut ourselves out from certain capabilities by having a strict requirement. That said, I think it's true to say that today, every director holds at least some shares, and I know that some of our younger directors are building their own portfolio. In the case of management, they could, of course, hold an equity interest in Meridian and it is significant, particularly the senior executive team and the next layer down. A portion of their salary is, in fact, made up of what we call long-term incentive, which is actually equity in the company. So they are very much aligned already, I would say. Right. I've got another one sitting here on the screen. Could you please briefly describe the progress in relation to our Ruakaka Energy Park project, which is our battery storage and solar generation project up in Northland. Well, the plan is to have that build commence in 2023 and complete construction, I think, in 2024. We -- yes, so that's basically where we are on that, but I can tell you it's definitely full steam ahead.

Before we went to 2024. I think the objective there is to have the battery available before winter 2024 because as I say, it's an important mechanism to help us get through these winters where we have very peaky loads, particularly in the early evening. So we think that battery will be critical to the system, and so that's our the timing that we're really working hard to achieve. Mike, go ahead.

Question here from Mr. [indiscernible], many of -- I assume that's retail energy providers provide an hour of free electricity at night. Why does Meridian not do this to remain competitive? Well, the answer is, I think you've picked out one particular aspect of an offer that is made by other providers. The important thing is that you've actually got to look across the whole offer in all aspects of an offer to customers. And certainly, my understanding and it must be should be clear to shareholders, we've been winning retail share. So I would say that our retail offers are pretty competitive. A question from Jillian King. I bought Meridian shares because of its 100% renewable energy playing an important part in stopping damage to the climate. This year's investment -- investor letter and website proclaims Meridian is having a 100% renewable strategy. I was sad and angry when Meridian bought a gas plant in Australia, so I was pleased when it was sold part of the sale of the Australian business. Well, actually, the fact of the matter is we've never owned any gas plants. We never had any in Australia either. So I think...

No, no. The Australian business was fully renewable. There was no gas assets involved in it. So I'm afraid, Jillian that's not quite correct.

That's not quite correct. Yes. A question from Mr. Devitt. Is Meridian going to keep the principle of a low user tariff, i.e., a low daily rates and a higher rate on power usage charges? Well, I understand that Neal would know more. The lower user tariff regulations are currently being phased out by the government. I think it's a 5-year period?

Yes, it's over 5 years, and we are phasing out in line with that. So we will not retain the low use of tariff. I mean, it created all sorts of distortions and actually created an unfair outcome for many poor households. So when you get under the covers and understand what was really happening there, it wasn't a very good regulatory intervention needed to be phased out and we're getting behind that.

Right. Jillian King again, I'm pleased to see Meridian using the global reporting initiative standards in this year's annual report. Page 37 of the annual report mentions fugitive greenhouse gas emissions are small, yet they are there. What are the sources of our fugitive emissions? Well, these are things like emissions from transformers at power stations air conditioning systems and the like, that would make the bulk of it wouldn't...

Yes, yes. Some of the transformers, some of the switch gear, we actually got a program to phase all of that equipment out over time to reduce those future emissions to as close to 0 as we possibly can. And that's part of our half by '30 initiative. But certainly, for those types of emissions, we'd expect them to be very close to 0 by 2030.

Okay. Should -- this is again a question for Mr. Devitt. Should the tariff charge to the aluminum smelter or any other business of this size be the basis for the competitive wholesale rate of power? Well, the way the wholesale market is really structured is that the future wholesale price of electricity is actually driven by the cost of building future generation. We've certainly been clear with the smelter owners that any extension of its presence in New Zealand will require a better contract price than the current exit price that they have been paying just in this last period. I think that's probably a complete answer to that. Is that it?

Any Questions from the former?

Yes, I'm coming to that. So are there any shareholders present at the meeting today that might have a question for us? Yes, sir. If you could perhaps come to the microphone in the center, please. And if you could state your name, please.

Michael Bowen, shareholder. Just wondering who you anticipate will be your major customers for hydrogen?

In the early stages, we expect a lot of the product to be exported probably up into Asia. So we're likely to export product up to Japan, that could be burnt on coal-fired plant and therefore, reduce their emissions. That will be the first and potential customer opportunity. Although we've still got to -- we're still exploring all sales revenues globally, really. Ultimately, though, we think with New Zealand's likely demand for hydrogen-based products into the future, that a good portion of the production will go into the domestic economy, but it will probably be over the 2030, 2040 time frame.

I have heard that I think it's a move trucking company there. You're investing in hydrogen powered trucks. So I guess that would be one customer.

Yes, there will be various freight providers that heavy transport providers that, in fact, I know of another one that are looking at that at the moment. And it's all at the investigator free stage at the moment. Thank you. Any other questions? Yes, please come to the microphone.

My name is Heidi Chen, I'm a shareholder. I wish that you can tell me how much to build a charging station, please, charging station -- an EV charging state in electric charging station, how much does it cost?

A public charging station?

I mean the battery recharging, the electric entry recharging station you just some on the screen.

Yes. Sure. I will hand that question to our Chief Customer Officer, who's sitting here, who probably knows intimately.