Ann: ADDRESS: CEN: CEO's Address to CEN 2012

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CEN
17/10/2012 10:05
ADDRESS

REL: 1005 HRS Contact Energy Limited

ADDRESS: CEN: CEO's Address to CEN 2012 AGM

17 October 2012

CEO's Address to Contact Energy 2012 Annual Meeting of Shareholders

T?n? kotou, t?n? kotou, t?n? tatou katoa

I'm Dennis Barnes, your CEO. I'd like to join Grant in welcoming you to this
AGM and talking to you about the successes that Contact, your company, had in
the past Financial Year.

Firstly, let me introduce the Contact Leadership team.

o First of all, seated up here is Paul Ridley-Smith, Contact's General
Counsel.
o Graham Cockroft is Contact's Chief Financial Officer. Graham was our former
Chief Operating Officer, a role that no longer exists.
o Annika Streefland is Contact's General Manager of People and Culture.
o Ruth Bound, is Contact's General Manager of Retail, responsible for all of
Contact's retail operations and strategic marketing.
o Luc Hennekens is Contact's Chief Information Officer.

There are three new faces on the Leadership Team, many of them familiar to
Contact. I am proud of the fact that as the needs of the business have
changed we have been able to utilise the skills and knowledge of our existing
team to ensure a seamless transition to a flatter leadership structure.

o James Kilty, our new General Manager for Trading, Development and
geothermal resources
o Peter Kane, our new General Manager for Operations
o Nick Robinson, our new General Manager for Strategic Communications and
Partnerships

At the end of this meeting, I hope you will enjoy a cup of tea with us,
introduce yourself to members of the team and share with us any thoughts you
have about the company and its direction.

I have now had the privilege of spending 18 months as your CEO. Over that
time we have made significant progress in responding to market conditions by
changing the focus from a development company to one with an acute focus on
maximising operational performance and delivering cash.

Now onto the year in review.

Financial Year 2012 was a successful one for Contact. Last year, when I
addressed you, we were celebrating the completion of our Ahuroa gas storage
facility and the Stratford peakers - a year on, we are seeing the benefits of
this investment in a flexible portfolio, allowing us to generate earnings
growth in a market that is dominated by an oversupply of generation and flat
demand.

A good example of our portfolio flexibility is the last financial year we had
record (and by record I mean not seen in the past 90 years) low rain inflow
into our Clutha hydro scheme. This lack of water cost us a lot of money but
what we were able to do was run gas plants and the Ahuroa gas storage
facility to supplement and maintain our earnings.

Of course, Contact is not only a generation business, it also has a vital and
dynamic Retail business with over five hundred and sixty thousand customers
across the country - many of which I hope, are you.

Our range of products, including the introduction and enhancement of the
Online OnTime product, have seen Contact reverse a recent history of customer
losses with a net gain of 5,000 customers over the final 10 months of FY12.
This is a pleasing reversal in a market characterized by high customer
switching - the second highest in the world.

For those of you who follow Contact closely, you will be aware that over the
past few years we have been implementing SAP across our operations. Our next
important step is the implementation of SAP into our Retail operations,
upgrading the aging customer billing and service systems to enable us to
better meet the needs of customers in the future. This process is taking
longer than we originally anticipated, but it is vitally important to us that
when we implement we maintain and enhance our customers' experience, we want
to get it right.

It is here where our ties with Origin in Australia become even more valuable
as we leverage from their experience in implementing the same system earlier
this year.

We are incredibly proud of our long history in the Taupo region, particularly
of our fifty plus years operating the Wairakei Power Station.

The Wairakei Power Station is as unique as the geothermal resource that it
sits on. Technology used at the time of building, means that it takes water
directly from the Waikato River and uses it to cool the plant. During the
process, the water mixes with some of the geothermal fluid used for
generation, and this means that it picks up particular compounds in the
geothermal fluid such as Hyrdogen Sulphide. As part of our reconsenting for
the Power Station, working with the local authorities and iwi, we committed
to take out as much of the Hydrogen Sulphide as possible. We decided to build
what we call the Bioreactor.

I get in trouble with the engineers when I describe it like this, but
basically it is a 'spaghetti' of pipes buried under the ground in which
naturally occurring Hydrogen Sulphide-eating bacteria live. Cooling water
comes from the Wairakei power station into the bioreactor, where it is passed
through the pipes. The bacteria, who love darkness and the pipes, effectively
strip the Hydrogen Sulphide out of the water as it passes them by. The water
is then discharged back into the Waikato River, with over 80% of the Hydrogen
Sulphide removed. The New Zealand Herald described it as a world first in New
Zealand.

I'm sure you will agree that this is a great result, helping us to lower the
impact of the Wairakei power station on the River which is an important
resource and taonga for the communities and iwi which it winds its way
through.

We sang our Waiata at the Bioreactor opening.

Our waiata, Mai i Runga, recognises that we work with our communities to
ensure the responsible stewardship of the precious resources we use. I have
enjoyed the opportunity to learn and sing the waiata with my colleagues as I
continue to understand more about maori culture and its importance in New
Zealand's history.

We continued to make improvements in our safety performance - measured by our
Total Recordable Injury Rate, although modest compared to last year's
significant improvement.

Contact's rate this year was 5.8, a 2% improvement on 2011. What this number
doesn't show is a huge improvement in the safety performance of our
operations which came about through a team-wide concerted effort and the
support of our further strengthened systems.

We also enlisted the help of Tana Umaga to be an internal spokesperson for
our employee Safety and Well-being campaign. Tana brings great mana from his
years as All Black captain, and this is working well in communicating to our
employees that safety is about thinking ahead, using your head and looking
out for your mates. I don't know if there are many Counties Manukau
supporters in the audience, but I understand he is having great success there
too.

Returning back to our portfolio, our newest addition to our geothermal fleet
is the 166MW Te Mihi Power Station. Te Mihi is quickly rising from its site
on Poihipi Road, and 24 hours a day is a hive of activity.

Unlike the Wairakei Power Station, Te Mihi will re-inject the used geothermal
fluid back into rock deep under the ground.

The completion of Te Mihi in the middle of next year will bring to an end the
current investment programme in around 500MW of low-cost, flexible, thermal
and geothermal generation capacity, and New Zealand's first gas storage
facility.

We will update you at our half year results how both Te Mihi and SAP are
progressing.

As Grant noted in his introduction, the economic climate in NZ and the world
means that construction of any additional generation capacity in NZ will not
come for some time. This is partly why we concluded to cease development
activity of our Clutha hydro scheme this year.
Our focus, therefore, will be on optimising the value of our current
world-class assets and minimising the costs required to retain our high
quality range of development options such as the world-class geothermal
resource at Tauhara.

Our portfolio would not be complete or able to operate without the ongoing
support and involvement tangata whenua and the communities in which we
operate.

The Contact Swim Well programme in Taupo that provided over twenty five
thousand free swimming lessons to primary and intermediate students last year
is just one example of our investment in the communities that we operate.

All of this is not possible without the energy, commitment and discipline of
the people that come to work every day to work our power stations, answer the
phones or run the numbers. I know that both myself and the Leadership Team
are proud of the Contact team and of what they have achieved this year.

I would also like to thank the Board members for their contribution and
support. Their guidance and support for me, as a new CEO has been invaluable.

As you can see, Contact, your company, is in a great position able to rise to
the opportunities and challenges ahead.

Thank you

No reira, huri noa o te hui nei, t?n? t?tou katoa.

(Therefore, in conclusion, greetings to us all)

ENDS
End CA:00228540 For:CEN    Type:ADDRESS    Time:2012-10-17 10:05:04