Ann: ADDRESS: CEN: CEO's Address to Contact 2014 AGM

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					CEN
14/10/2014 10:05
ADDRESS

REL: 1005 HRS Contact Energy Limited

ADDRESS: CEN: CEO's Address to Contact 2014 AGM

CEO's Address to Contact Energy 2014 Annual Meeting of Shareholders

For immediate release

Tuesday 14 October 2014

T?n? koutou katoa,
Ki ? t?tou kua huihui mai i t?nei r?,
nau mai haere mai ki runga i te kaupapa -  te hui-?-tau.
Na reira t?n? koutou, t?n? koutou, t?n? koutou katoa

I am Dennis Barnes, your CEO.  I'd like to join Grant in welcoming you here
to Wellington and to this, our 16th AGM.

You heard us sing our waiata - mai i runga. We sang this as a leadership team
at a breakfast with our neighbours at Wairakei on the Te Mihi opening day and
when we signed the Ohaaki mitigation agreement. The waiata was gifted to us a
couple of years ago and us singing it is our way of showing respect.

Let me introduce you to my leadership team.

I'm pleased to say that you will recognise most of the names; although, some
of their roles may have changed:

- Seated with the Board is Paul Ridley-Smith, Contact's General Counsel. We
announced a month ago, this will be Paul's last AGM as he takes a well earned
break before moving on to new challenges. Thank you Paul for your hard work;
I know the team and I will miss your insights and challenge.
- Graham Cockroft is Contact's Chief Financial Officer.
- James Kilty is Contact's Chief Generation & Development Officer. James has
spent the past year leading the implementation of our Retail Transformation
programme.
- Nick Robinson is Contact's General Manager Corporate Affairs.
- Annika Streefland is Contact's General Manager of People and Culture.
- Mark Corbitt is our General Manager Information, Communication and
Technology
- Tania Palmer is our General Manager Health and Safety.
- I would also like to welcome Vena Crawley to our leadership team. Vena
started yesterday in the newly created role of Chief Customer Officer. The
New Zealand retail electricity market is amongst the most competitive in the
world and I am excited to have someone of Vena's calibre joining the team as
we look to continue our recent improvements and leverage the system
investments we have made.

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.

Now let's look at the year in review.

Our 2014 financial results reflect the progress we have made in all aspects
of the business. I firmly believe that we are delivering on our promise we
made to you to focus on improving our operational performance. When I look
back on the past year there have been seven key events, strengthening our
business as well as providing a more stable environment in which to operate;
1. The Pole 3 and the North Island grid upgrades allow our generation to more
readily flow to customers
2. The State Owned Generators privatisations have been completed
3. Our $905m refinancing programme completed
4. We switched on our new customer billing and service system
5. Te Mihi was commissioned
6. The National party was re-elected removing a degree of regulatory
uncertainty
7. Contact commenced a television advertising campaign for the first time in
10 years promoting our brand and customer promise

I'll touch on some of these and some others more specifically now.

Health and safety remains our top priority at Contact. I firmly believe that
the attitudes and processes that ensure everyone at Contact can return home
safely every day to their families are closely connected to a company that
performs well financially.

Our safety performance as measured by Total Recordable Injury Frequency Rate
was flat for FY14 with 17 injuries occurring across four million hours worked
on Contact Sites. It's disappointing that we did not improve on this measure
during the year but I am pleased to say we have started the current year well
with only one minor injury in the first 3 months.

Our focus for the next year is on continuing to evolve our positive safety
culture. We are once again targeting a 20 per cent improvement in our safety
performance.

We believe that New Zealand has to make a step-change in how it manages work
related hazards and safety risks and we have been vocal and supportive during
the process to revise the Health and Safety Act.

I'm pleased to say that during the year Te Mihi was completed and has been
delivering lower cost, renewable geothermal electricity to New Zealand for
five months.

Te Mihi is the newest member of our family of five geothermal power stations
that together can power about 400,000 kiwi homes. Officially opened in
August, it sits on the Wair?kei steamfield and is a state-of-the-art
geothermal power station that maximises generation efficiency and minimises
the cost of each megawatt of electricity produced.

Within Contact, the development and operation of Te Mihi has contributed to
an exponential growth in expertise. Earth scientists, chemists, operators,
managers, and engineers of every kind have contributed to the development of
Te Mihi and are now a part of our highly skilled geothermal workforce.

Flexibility is at the heart of Te Mihi's design. With two 83 MW steam
turbines, the plant has been designed to make the best use of steam and
maximise capacity. A vast network of pipes connects Te Mihi to the Wair?kei
steamfield, increasing overall efficiency and generation reliability, and
allowing maintenance to be performed without the need for a costly shut down
of the entire station.

With Te Mihi completed, geothermal generation now counts for a third of
Contact's annual average generation and brings to an end an unprecedented
period of investment.

In the last year we signed the Ohaaki Mitigation Agreement, a critical step
in developing a mutually beneficial and respectful relationship with local
hapu, Ng?ti Tahu.

After 17 years of discussion we reached an agreement and are now working
together on protecting their t?onga, or ancestral resources, while using
leased land as part of our Ohaaki power station generation activities.

Reaching agreement was critical in enabling us to reconsent the Ohaaki power
station for a further 35 years.

On the retail side of our business it's fair to say that the retail market
continues to be highly competitive and we have worked hard to retain
customers in a market defined by high levels of customer switching activity.
During the year the number of customers switching electricity providers
increased by 10 per cent. A continued focus on customer service and
competitively priced products saw Contact's retail sales increase by one per
cent.

In April we switched on our new customer billing and service system, which
marks a major milestone in a multi-year transformation programme and a
significant investment into the future of Contact.

The new system integrates and simplifies our information technology
environment, but it is also designed to improve the quality of service we
will be able to provide.

We are making good progress bedding in this new system.

The Retail Transformation programme represents an extraordinary effort by the
people of Contact. It retires 20 old IT systems into one, integrates over
2,000 business processes and has migrated hundreds of thousands of customers
data.

While the majority of customers won't have noticed our system change and have
been enjoying things such as our new bill format and online functionality,
there have been a small number who have experienced delays in receiving their
bills or faced longer wait times when trying to get in touch with our contact
centre soon after the system was switched on.  We've been working hard to
resolve these issues, ensuring no one is financially affected by any delays
on our part and supporting impacted customers.

As we do each year, we have Customer Service Representatives here today to
help with any specific queries you may have as a customer.

Our customers tell us that we need to offer simple, more transparent products
and services that are connected to their needs, and that is what we are
working towards to help our customers live more comfortably with energy.

We are well on the way to changing the way we do things, you may have seen
our new ads on TV, or online, heard them on the radio or perhaps you've
visited our new-look website. Following on from the introduction of our new
brand last year, we've been taking a different approach to how we communicate
with existing and potential customers, and this is something that will also
take further shape in the next year.

Pricing and customer disconnections are two key issues that continue to be a
focal point for the industry. Our approach involves regularly reviewing our
pricing across the country so we strike a balance between providing a fair,
reliable and competitive service, while remaining a profitable business. Part
of our new customer proposition that we are promoting is products such as pay
on pay day and smoothpay which gives customers more certainty about their
monthly bill and greater flexibility around when they pay it.

It is also important to understand that not all of the costs in a power bill
are within our control. A large part of a customer's bill is for Transmission
and Distribution services that we do not control. Our job is to pass them on
effectively and these may cause prices to change, up or down. As we committed
to last year, the part of the energy and service components of the bill that
we can control has not increased. It is likely that with the current
oversupply in the market and the continued intense competition those prices
will not rise for the foreseeable future.

As I mentioned earlier, we have created a new leadership role - 'Chief
Customer Officer' which has been filled by Vena Crawley, to further
strengthen our focus on customers, and to lead the charge in this area.

Contact prides itself on being the neighbour you'd want to have. It's a
philosophy that we put in place in 2007, and it has helped guide us in all
our community engagement and investment.

This year, we invested $700k into New Zealand communities. We have funded
groups such as 'Waicare' a community water quality monitoring and action
programme that supports the restoration of local waterways in Auckland; 'Swim
Well' in Taup?, which has provided free swimming lessons for thousands of
kids in Taup?; and events which are important to the communities themselves
such as the Epic Mountain Bike race, the Alexandra Blossom Festival and the
Contact Lake Taup? Challenge.

We have also entered into a new partnership with the ?kina Foundation,
supporting the growth and development of social enterprises. Social
enterprises are commercial businesses that aim to deliver social or
environmental impact.

We are the co-principal partner of ?kina's programme called Launchpad, which
is an intense 6 month programme that's helping eleven teams to get their
businesses off the ground. The teams have some absolutely fantastic ideas
like 'CareEd 4' who are developing alternative childcare options for working
families; or 'Ora', who are creating innovations to support workplace health
and safety measures; or 'Rate-my-flat' who are developing an online platform
to share information about the quality of their housing.

There are plenty more of these wonderful businesses involved in this
programme, and Contact are proud to be right there supporting them from the
beginning.

Now to the future.

Our priorities for the year ahead are fairly simple;

We will leveraging our existing asset base through integrating Te Mihi into
our generation portfolio and increasing the amount of energy we produce from
renewable sources.

We will improve our customers experience and reduce the cost of servicing our
customers by realising the benefits of the implementation of our new customer
billing and service system.

We will ensure that our thermal generation capacity provides security and
attracts a fair return. The addition of Te Mihi to our generation fleet has
reduced our generation costs, which combined with lower future gas
take-or-pay constraints and having New Zealand's only gas storage facility,
means our thermal power stations will only operate when we can achieve an
economic return. These factors will help to make our earnings more
predictable.

All of this work is only made possible by the energy, commitment and
discipline of our people at Contact and through your financial support, as
shareholders.

The Leadership Team and I are very proud of the Contact team and what they
have achieved this year.

I would also like to thank the Board members for their contribution. The
guidance and support they provide me remains invaluable.

We've had some major successes that stand us in good stead for the future.
Our focus now is to leverage the investments we have made in both the
generation and retail sides of our business, and to continue to position
ourselves to meet the needs of customers and the market.

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

Thank you.

T?n? koutou, t?n? koutou, t?n? koutou katoa.

ENDS
End CA:00256383 For:CEN    Type:ADDRESS    Time:2014-10-14 10:06:00