[Foreign Language] We acknowledge the people of this land, [Foreign Language]. We acknowledge those loved ones who have passed since we were here a year ago, and we welcome you all today to this annual shareholders' meeting. [Foreign Language].
[Presentation]
[Foreign Language]. Good morning, everyone, and welcome to Contact's Annual Shareholders Meeting. My name is Rob McDonald, and I'm the Chair of the Contact Board. On behalf of the Contact Board, and all of our people across [ Tayatira ], New Zealand, I would like to welcome you to the 2023 Annual Shareholder Meeting.
This meeting is being webcast for shareholders who have not been able to attend in person. And I also welcome those who are watching online. For those guests who are here in person, in the unlikely event of an emergency, if the fire alarm sounds, please follow the instructions of the venue staff and leave down the central fire exit stairwell located opposite the conference office, to the hotel lobby and continue to the assembly point on Featherston Street. In the event of an earthquake, please drop, cover, hold and then follow the directions of the venue staff.
As a quorum is present and due notice of this meeting has been given, I declare the meeting duly constituted and open for business. I'd like to introduce others with me on the stage. To my immediate right is our Chief Executive, Mike Fuge. Next to Mike is Rukumoana Schaafhausen, Sandra Dodds, Victoria Crone, Jon Macdonald and Elena Trout. Other members of the Contact senior leadership team are also here today, as well as representatives from the auditors EY.
As you will have noted, today's meeting started with a greeting from Rukumoana, followed by Contact's [ soyata Mai Roma ], which is our customarily sung to support the greeting. We do this because it's important to acknowledge our relationship with our [ iwi ] stakeholders and the fact that we use New Zealand's natural resources to generate energy, of which our [ iwi ] partners have an interest in.
Today's meeting will commence with addresses from me as the Chair and from the Chief Executive, Mike Fuge. Following this, we will consider the financial statements and there will be an opportunity for shareholders to ask questions they may have on the financial statements. Then we move on to the resolutions that are outlined in the notice of meeting. We have 4 resolutions to put to the meeting today, and these resolutions will be decided by taking a poll. There will be an opportunity for shareholders to ask questions relating to these resolutions and to raise any additional matters that shareholders wish to discuss. Please state your name before asking a question.
All shareholders participating online can ask questions during this meeting, and I would encourage you to send through your questions as soon as you can. This will allow us to answer these questions at an appropriate time in the meeting. [Operator Instructions]. Please note, questions may be moderated, or if we receive multiple questions on the same topic, then they may be amalgamated together. If we can't answer a question in the meeting, we'll answer it in due course via e-mail. I'll provide you with further instructions in relation to voting as we progress through the meeting. If you encounter any issues, please refer to the virtual Annual Meeting portal guide or you can phone the helpline on 0800-200 220.
Let's get underway. On behalf of the Contact Energy Board of Directors I'm pleased to share reflections and observations on the past year, provide an update on our strategic ambition and our views on the path ahead, a path that provides an opportunity for Contact to play an integral [ part ] in shaping the future of a truly electrified New Zealand. In the past year -- sorry, the past year is best characterized by our ongoing investment in renewable generation. Our commitment to decarbonize our portfolio and our ongoing transformation of Contact to ensure that we are well positioned for the future.
Before I start, I want to acknowledge and thank my fellow Board members, our CEO, Mike Fuge; and the entire Contact team, who again have put in significant effort this year. It has been a year of solid financial performance achieved in an environment that has included unprecedented weather events and New Zealand and international economic headwinds. In line with guidance, the company delivered an underlying EBITDAF of $573 million, and in the 2023 financial year, delivered investors an annual dividend of $0.35 per share, in line with the 2022 financial year. Mike will take you through the financial results in more detail in his address.
As Chair, I want to reiterate the commitment and focus on delivering Contact26 strategy, to build a better New Zealand by being a leader in the country's decarbonization. We're now in the third year of Contact26 strategy. I'm pleased to say that Contact is delivering against this strategy. Our focus on execution and operational excellence supports not only our solid performance in the past year, but also sets Contact up strongly for future growth.
Highlights of the year include the $1.2 billion of renewable generation developments at Tauhara and to Te Huka 3, currently under construction. Contact's pioneering energy agreement with industrial giant New Zealand Steel, which will remove 1% of New Zealand's emissions. And we accelerated our ambition to decarbonize Contact's portfolio. We now have a clear path and are committed to net zero emissions from our generation portfolio by 2035.
We also have a significant and well-progressed pipeline of renewable development projects across geothermal, wind, solar and grid-scale batteries, which subject to final investment decisions and appropriate market conditions, we intend to progress further in the next 12 months. This month, we updated the market that the online date for Tauhara is moving from the first quarter of 2024 to the third quarter of 2024. Tauhara [ near ] Taupo is a nationally significant renewable energy project, which will have a substantial impact on the country's transition to electrification. Tauhara is an important development for both Contact and the country. Tauhara was more than a decade in the planning stages. So it stands to reason, as we work through the stages of commissioning, we take a prudent and pragmatic approach to coming online. As with all projects of this magnitude and complexity, the final stages and commissioning is complex. The Board has full trust and confidence in the team that they will deliver.
The independent Boston Consulting Group report The Future is Electric was released in 2022. We were a large part of the large stakeholder group, including gentailers and major distribution companies who commissioned this important analysis. BCG identified the significant level of investment across generation, distribution and transmission required to both decarbonize the energy sector and to support the broader decarbonization of the economy through electrification. Prudent investment and new generation requires reasonable investment certainty: certainty of government policy, and certainty the government will not crowd out private sector investment and allow for infrastructure to flow. We're optimistic, given the signals from the incoming government, that the pathways for investment and subsequent decarbonization of our economy for the good of New Zealand and the planet will be clear.
We have been concerned about the impact of the proposed battery project at Lake Onslow that was intended to address dry year risk. I am pleased that the parties involved in the incoming government have indicated they intend to shelve the ongoing work on Lake Onslow. It will be a sound decision to cancel ongoing evaluation of a speculative, risky and extremely expensive venture that continued to undermine certainty in the market, a condition necessary for accelerated investment in renewable generation by the private sector. However, as we transition to decarbonize the energy sector, the issue of dry year risk has not disappeared. There will be renewable projects in development across the industry that will materially reduce the risk over time. We remain of the view that Lake Onslow was not the solution. There is now further opportunity and a positive emphasis for the industry and government to work together to find a practical and affordable dry year risk solution for the good of the country.
The BCG report also highlighted that current regulatory settings for both transmission and lines companies may not be consistent with or appropriately support the significant investment required to transition to a renewable energy future. The incoming government will need to focus on supporting appropriate regulation for transmission and distribution to ensure that the investment is realized. The current regulatory framework is not fit for purpose. The government needs to work quickly and effectively to develop a new framework to enable investment in those areas, if we are to achieve New Zealand's carbon reduction targets in the coming decades.
Contact plays an important role in supporting New Zealand industry to decarbonize and help build and contribute to a healthier economy. The New Zealand aluminum smelter continues to indicate a desire to maintain operations at Tiwai Point beyond 2024. The smelter is valuable to our country and our economy, particularly as a significant exporter. It is also highly carbon efficient in its production of premium aluminum as well as a major contributor to the Southland economy. New Zealand Aluminum Smelter has also signaled that the smelter can play a key role in addressing dry year risk through [ demands ] response. We believe that the fundamentals for green and high-purity aluminum production at Tiwai remain strong. We have played our part in supporting an extension. It is now up to others. It would be a travesty if the parties could not reach a satisfactory agreement that gave certainty to the people of Southland and to the New Zealand economy.
Finally, I would like to finish by thanking long-serving director Vic Crone for her 8 years of service with Contact. Vic, who has also served on the Audit and Risk Committee, is retiring from Contact this month to pursue new endeavors. We appreciate the expertise and insights and guidance that Vic has shared during her time with us and wish her all the best. I'd now like to present a small gift to her, and let me just tell you what -- this is a stylized [ kanafa ] with a [ minahi ] on top. A [ minahi ] is a guardian figure linked to your future and taking the ethos from our [ panafi ] with you and guided and protected by your past name and people. The [ pananama ] is Cockapoo, a rare type of stone not often seen. It is a strong [ piece and soul you]. I'll now hand over to Mike.
[Foreign Language] Good morning. I'm Mike Fuge, the Chief Executive of Contact Energy, and you are very welcome here this morning. Today, I do want to share my reflections on the last 12 months with you. What we, as a company, have achieved, what we have learned and what we have in front of us.
We're now into the third year, as Rob said, of our Contact26 strategy with the vision to build a better [ io tiaroa ] by leading the decarbonization of our country, the place we all call home. Our strategy remains to grow demand, grow renewable development, decarbonize our portfolio and to create outstanding customer experiences. This strategy remains sound. It is delivering on our strong commitment to decarbonize, to invest, to grow and deliver shareholder value. We're now deep into execution mode in what has been a year that's been characterized by significant investment, continued transformation and demonstrable progress against that strategy. As Contact transforms and grows, we remain focused on operational excellence, using the learning from this period of change and expansion to continuously improve the execution of our strategy.
I am, as CEO, incredibly proud of the 1,200 people that work for Contact and the Contact team and what they have achieved. They are a team of dedicated professionals, who every workday come to work passionate about the part they play individually in helping us reach our goal of net zero from our generation activities from '20 -- by 2035. But more on net zero later.
In terms of business and financial performance, looking at our achievements in the last financial year, our business underlying performance has remained resilient in a volatile environment. We have delivered a solid financial performance with underlying EBITDAF growth to $573 million, a 5% increase from the previous year. Contact's profit after tax was $127 million. That's included in an onerous contract provision for the Ahuroa gas storage facility. And on an underlying basis, our profit was $211 million. This solid performance was delivered despite soft short-term wholesale market conditions, the highest hydro inflows in post-market history and the North Island's rainfall being the highest on record. For those who live in Auckland will know it well. This resulted in lower spot market prices, and saw spot prices actually separate between the North and South Islands. We responded to these conditions by reducing our thermal generation to the lowest in Contact's history. This decision bore good financial results and lowered our greenhouse carbon emissions.
We continue to carefully manage our existing operations to optimize our performance while focusing on investment in renewable generation and innovation and decarbonizing the portfolio. This includes the $1.2 billion of construction and commissioning currently underway. A very strong pipeline of potential geothermal, wind, solar and battery investments, the measured retirement of thermal generation, and investment in digital innovation and retail and the generation arms of the business. As the benefits of this investment is realized, we anticipate a sustained uplift in earnings and shareholder returns and cash flow in future years to come.
Our FY '24 normalized and expected EBITDA guidance of $600 million remains in place. In terms of growing demand, demand for our renewable energy is very strong. Our watershed moment come in May when we announced a pioneering energy agreement with the industrial giant New Zealand Steel. We will provide 30 megawatts of energy for its new $300 million electric arc furnace, in a unique arrangement that will enable this industry leader to scale down production in peak demand time or supply shortages. This flexible peak-off, peak feature is very -- also a part of a significant step towards meeting New Zealand's climate change goals.
And once in operation, this feature will remove 800,000 tons of greenhouse gas emissions annually. This is the same as taking 300,000 cars off the road permanently, or 1% of New Zealand's total emissions. It is an outstanding example of how we in industry, with smart thinking and a partnership mindset, can work together for the good of the planet and automotive. The trend continues with accelerating opportunities with other industrial companies exploring similar opportunities to decarbonize industrial heat processes and cut their fossil fuel use.
And so to Tiwai. We believe strongly that decarbonization of our economy should not mean that the industrialization of our country. As Rob has said, the New Zealand aluminum smelter at Tiwai is valuable to our economy. It is a significant exporter and a major employer and contributor to the Southland economy. Contact has provided Tiwai with commercial terms for a long-term agreement to support a tranche of its electricity requirements. Like New Zealand Steel, demand response opportunities at Tiwai offer an opportunity to support New Zealand's energy security with the ability to scale down production if required in the event of supply shortages at peak demand. It is time we all move forward from walking and got this settled.
In terms of renewable development, I do want to give you an update on our $1.2 billion of renewable generation sites currently under construction, along with an update on our pipeline of potential geothermal, wind, solar and battery investments. As we go on a journey of decarbonization and to make a real difference to the world in which we live, we're going to have some tough experiences. Being a leader is bold, and at times, you have to pause and regroup in order to move forward. As history shows, continuously, there are challenges and opportunities whenever there is a big change. Stopping or ignoring the challenges of climate change is simply not an option. To improve the outcomes for New Zealand and to play our part in the company's -- country's future electric demand requires grit, determination and focus. We play the long game in leaving our legacy for good, a legacy for future generations.
We have announced that Tauhara and Taupo is now expected to come online in quarter 3, 2024, delayed from quarter 1, 2024. Building a geothermal plant is complex. We are working through a range of commissioning issues at the development, including the remediation of underperforming steam-field valves and liquid handling systems as well as the implications of a related steam hammer event. Given the range of commissioning issues identified, some elements of the steam separation plant will require further design and modification, which are underway. It is because of this that the time line has been impacted. With the expectation to have the plant online in quarter 3, this will be at least at the initial design capacity of 152 megawatts. And we're targeting the full planned outage (sic) [ output ] of 170 megawatts by the time Tauhara's first statutory outage is planned, following further optimization and plant modifications.
This is not the outcome we were targeting when we started commissioning. The commissioning stage in any geothermal project is when unknowns such as this are brought to the fore, and we can apply mitigations. The on-site team are expert in major infrastructure in geothermal developments and are focused on minimizing this delay while ensuring the highest standards of process safety first on this asset, Tauhara, that will serve future generations. It is in the major projects team created by us to support our execution mode that we have built the in-house expertise. So we can troubleshoot these issues in real time and without delay for the best possible outcome. Tauhara remains a standout renewable energy project that will be a fantastic long-term asset for New Zealand and Contact Energy.
Contact knows the importance to New Zealand of quality infrastructure and rebuilding in this executional capability. In line with international best practice, we have stronger processes for the front-end design. We now apply modern digital design tools and have significantly bolstered our in-house capability and capacity with the setting up of the major projects division led by Jack Ariel, who himself has significant depth of developing large infrastructure programs internationally. Our second project, Te Huka 3, is now more than 66% complete.
It is ahead of schedule and with all major equipment now here in New Zealand or in transit. Te Huka 3, next to our existing Te Huka geothermal station, will be a single unit binary plant at 51.4 megawatts with carbon capture capability from the very first day. Once operational, it will produce clean renewable electricity that will operate 24/7, and in common with all geothermal generation, is not reliant on the weather. Our GeoFuture project, while subject to a final investment decision, will see us replace the original Wairakei geothermal plant commissioned in 1958 and move existing operations away from the Waikato River, increasing the efficiency and generation capacity from the Wairakei geothermal source.
After a comprehensive and long engagement with the local community in [ tangata fenua ] we received consents to operate for the next 35 years on the Wairakei steam field. As part of our commitment to reducing and mitigating the impacts on the environment, we are reducing significant our impacts on local waterways. Through GeoFuture, we will be able to stop all operational discharge of geothermal and cooling water into the Waikato River.
We are confident that we have -- of the lessons that we have learned and the changes made since we made Tauhara's final investment decision, which we have started applying with Te Huka 3, and we have very much applied for GeoFuture to ensure a much improved performance in the future. This learning will also apply to our proposed wind, solar industrial grid scale batteries. We will ensure the business cases and market conditions are absolutely right for the final investment decisions for these projects.
For our customers, we have worked hard to ensure it's good to be home for New Zealanders in our retail business. We're stepping beyond the big stuff to help everyday Kiwi homes decarbonize, and it's working. The FY '23 year saw us finish with over 589,000 customer connections with a netback growth of 11% on the previous year. Connection growth continues to increase with -- as of this month, total customer connections is just shy of 600,000. Also growing is the uptake of innovative products to help Kiwis lower their carbon emissions by making a small change to their own behavior.
More than 66,000 customers are now using either our Good Nights plan where electricity is free between 9 p.m. and midnight, or the Dream Charge plan which gives EV owners cheaper rates between 11:00 p.m. and 7:00 a.m. So far, 84 million hours of free off-peak time has been used by Kiwis choosing these products. Next month, Good Weekend launches, incentivizing our customers to use weekend off-peak energy, further reducing the need to use gas or other fossil fuels at peak times. Our brand tracking research shows that we are second equal for brand trust among New Zealand energy providers. Our Net Promoter Score, the number of customers who say they'd recommend us versus those who say they would not, increased again this year from plus 39% to plus 41%. 66% of customers say Contact is easy to deal with.
And so that turns to our legacy for good. As a company, we're an integral part of the daily life in New Zealand, and we are acutely aware that our every action, good and bad, has a marked impact on the well-being of our community, today and in the future. This was acknowledged in December '22 when we joined the Dow Jones Sustainability Asia Pacific Index, achieving the second highest ranking of any New Zealand company. We are delighted to be ranked among the best. That reflects where we are and a sense that people are appreciative of businesses that put words into actions rather than just talk about ambition. This year, we took the step of accelerating our ambitions to decarbonize our own portfolio.
We now have a clear path to achieve net zero emissions from our generation operations by 2035. The focus on an orderly transition to renewable energy generation to retire baseload gas generation and to invest and innovate to support the eventual retirement of our peaking plant, along with targeted sustainable forestry investments, has given us the confidence and a clear pathway to commit to net zero for our generation operations by 2035. It takes courage to take steps forward and to improve the outcomes for communities and for people.
As we go on our decarbonization journey and commit to making a difference, we're going to have some tough experiences, but fundamentally this is the right thing to do. Decarbonization is our legacy for good. [Foreign Language].
Thank you, Mike. We now move to a discussion on Contact's financial statements. The financial statements for Contact for the year ending 30 June 2023 were released to the market on the 14th of August and are set out in the integrated report, which is available on our website.
Yes, it's more of a general nature. Okay. Any other questions on the financial statements? Otherwise, are there any questions online? There doesn't appear to be. So if there are no more questions, we'll move to the formal resolutions of the meeting. These are outlined in the notice of meeting sent to all shareholders in October. Voting on the resolutions will be by poll. Each resolution will be put to the meeting with the proxy voting results displayed on the screens. For those of you who are here with us in Wellington, you'll be able to cast your vote by filling out the form that you brought with you or received at the registration desk on the way in, and which will be collected at the end of the formal part of the meeting.
If you're a shareholder and did not register on arrival and wish to vote, please make your way to the registration desk just outside the room and staff from Link will assist you. If you are both a shareholder and a proxy holder or a shareholder company representative, or have more than 1 holding, you would have received a separate voting card for each holding. When you vote on the resolutions, please complete all voting cards given to you at registration. For those attending the meeting online, to vote you will need to click Get Voting Card within the online meeting platform. You will be asked to enter your shareholder or proxy number to validate.
Please then mark your voting card in the way you wish to vote by clicking for, against or abstain on the voting card. Once you have made your selection, please click submit vote on the bottom of the card to lodge your vote. Please refer to the virtual meeting online portal guide or use the help line specified if you require assistance. Voting will remain open until 5 minutes after the conclusion of the meeting. Each resolution set out in the notice of meeting is to be considered as an ordinary resolution, and as such, must be approved by a simple majority of the votes cast by the shareholders entitled to vote and voting on the resolution.
Because the first resolution concerns my reelection as a director, I will vacate the chair and Sandra Dodds will assume the position of Chair of the meeting while my appointment is being considered and the resolution voted on.
Thank you, Rob. It's my pleasure to move that Robert McDonald be reelected as a Director of Contact. Rob was first appointed to the Contact Board in November 2015 and has been the Board chair since 2018, and is also a member of the People Committee. A brief biography for Rob is set out in the notice of meeting. The Board unanimously recommends that shareholders vote in favor of this reelection. I'd now like to invite Rob to speak in support of his reelection.
Thank you, Sandra. I'm honored to have this opportunity to continue my involvement with Contact Energy and stand for reelection to the Board of Directors. I'm passionate about making a contribution to one of New Zealand's most important companies and to play my part in leading the decarbonization of the sector, as well as support the broader decarbonization of the economy through electrification.
I've been a Director of Contact since 2015 and was last reelected in 2021. To me, it is clear Contact's job is an important one. The past year has been one of unprecedented investment and transformation as we remain committed and focused on Contact26 strategy. As we lead the transformation at the time of significant growth, we need leadership to continue that course. And for that, as Chair of Contact, I'm 100% committed. I bring a diverse set of skills to the Board by having held senior management positions, all of which have focused on business, finance and strategic planning. I have more than 40 years of business experience in New Zealand and overseas, including 25 years at Air New Zealand, 14 of which were as Chief Financial Officer. I have a good balance of governance roles and believe I manage that well to avoid overcommitting.
I'm a Director of Fletcher Building and Chartered Accountants, Australia and New Zealand. Upon conclusion of my term in June 2024, I'll retire from Chartered Accountants. I was very recently appointed to ASX-listed company Fleet Partners. In my mind, I see the role as providing Contact's CEO and leadership team with guidance, support and strategic advice, and the chair is a bridge between executive management and the Board. The role of the chair is also to create robust and constructive discussions and challenge between Board and leadership team to enable Contact to thrive and succeed, and most importantly, to deliver to shareholders. For the next 3 years, I want to continue building and developing to the future we have set. And to ensure when I step down, as this will be my last term, there will be a seamless transition. Thank you for your continued support.
Thank you, Rob. We are now going to open the floor for any questions. So -- no problem at all.
Are there any further questions? If not, we'll ask are there any questions from online? No, there's no further questions. I would now ask you to please complete your voting card beside Resolution 1. Please either vote for, against or abstain in the appropriate place on the voting card. Thank you.
Thank you, Sandra. Our second resolution today relates to the reelection of another existing Director. It is now my pleasure to move Rukumoana Schaafhausen be reelected as a Director of Contact. Rukumoana joined the Board in March 2021. She is a member of the Audit and Risk Committee and the Health and Safety and Environment Committee. A brief biography of Rukumoana is set out in the notice of meeting. The Board unanimously recommends that shareholders vote in favor of her reelection. We will now hear from Rukumoana.
[Foreign Language] Thank you for the opportunity to talk with you today. I am also seeking reelection as a Director of Contact Energy. I want to do all that I can to continue to serve Contact's vision to help build a better Aoteoara through leadership in New Zealand's decarbonization, as you have heard. As an organization, Contact is working hard to keep pace with the communities in which we operate. I believe Contact's vision means being a good [Foreign Language], a good steward of the environment, helping our communities to thrive by being a good neighbor and by creating collaborative, respectful partnerships with [Foreign Language]. I will continue to bring that voice to the Contact board table. My governance of more than 25 years, scans [ Iwi], public and private sector boards and continues to position me to make a strong contribution to the strategic direction of Contact as outlined in the Contact26 strategy.
The electricity sector has many complex challenges, balancing security of supply and affordability, investing in renewable energy, reducing reliance on fossil fuels, and that is just a glimpse of the intricacies of the industry. The role of leadership is more important than ever. As a Board, we must be agile, informed and open to collaboration, taking the time to understand our stakeholders. We need to co-create strategies with our stakeholders to ensure we are well equipped for the future, a future we can all thrive and flourish. Meaningful dialogue at the Board table also means looking into and examining what it takes to deliver and take action on authentic, environmental, social and governance matters. Energy companies are the social and economic heartbeat of our communities, and we must continue to give confidence to our investors and shareholders regarding sustainability, diversity and inclusion.
I am proud to have served on the Contact Board the past 2 years. And on your behalf, I look forward to contributing to the long-term vision of the organization, the sector's future and the communities in which we operate. [Foreign Language]. And perhaps if I can just respond, Mr. Duncan. Thank you for your question. It's a very important question. And I can assure you that it is this Board's commitment and our Chairman that we look after our people. As you've heard, we're not an accredited employer. However, we always aim to pay at or above the living wage. So my commitment to you today is to ensure if that ever changed, where we're not paying at or above, I will personally follow up. Thank you. [Foreign Language]
Thank you, Rukumoana. I now invite discussion on the resolution. Are there any questions that shareholders present or online would like to ask Rukumoana? There doesn't appear to be any questions. Please now complete your voting card beside Resolution 2. Please indicate your vote by marking either for, against or abstain in the appropriate place on the voting card.
Our third resolution today also relates to the reelection of an existing Director. It is my pleasure to move that David Smol is reelected -- sorry, be reelected as a Director of Contact. David joined the Board in October 2018. He is a member of the Health, Safety and Environment Committee. A brief biography for David is set out in the notice of meeting. The Board unanimously recommends that shareholders vote in favor of his reelection. Unfortunately, David has tested positive for COVID-19 and is in isolation this week, so is unable to be here in person. David has dialed in to and attend the meeting and has recorded his reelection speech via video, which we will watch now.
[Foreign Language], thank you for the opportunity to speak before you today. It is a privilege to serve you on the Board of Directors of Contact, a role to which I was first appointed in 2018. The energy sector is going through enormous change and the challenges and opportunities before us are significant for all New Zealanders. The energy sector has a central part to play in combating the effects of climate change. I'm fully committed to Contact's vision to be a leader in decarbonization, on also contributing to security of supply and to energy prices that remain affordable.
In my role as a member of the Board, I bring long experience of working in and with the energy sector and the interface between government policy and regulatory settings, and the commercial pursuit of profitable opportunities. I've worked on the design and regulation of electricity markets and on the development and evaluation of major energy sector investments. I understand infrastructure more broadly and the wider energy sector from my years working within the sector in New Zealand, the United Kingdom and across several markets in Europe. I also have extensive experience in economic and environmental policy and regulation, which continue to be significant influences on the sector.
As the founding Chief Executive of the Ministry of Business, Innovation and Employment, I led the merger of 4 organizations, building a high-performing culture and integrating the services the government provides to business. I have a long history with Contact and was part of the team that established the company in 1995 and 1996. This gives me an insight into Contact's heritage and history, our progress and our continued journey on the path to decarbonization. I would very much welcome the opportunity to be part of Contact's future as a member of the Board and to continue to build on the work we have done so far. Thank you, [Foreign Language].
Discussion on the resolution is David is unable to attend the meeting in person today. I'm happy to answer any questions on his behalf. Are there any questions that shareholders present and online would like to ask David? Thank you. Yes. No, he clearly doesn't, but we'll take that question on board. Yes, I will. Please now complete your voting card beside Resolution 3. Please indicate your vote by market either for, against or abstain in the appropriate place on the voting card.
The last resolution to be considered relates to the auditor. I now move that the directors be authorized to fix the fees and expenses of the auditor. EY is Contact's auditor. The resolution proposes that the auditor be authorized to fix the remuneration of the auditor, which is the conventional practice for New Zealand-listed companies. It reflects the fact that the next level of the auditor workload and, therefore, fee may need to change from time to time to take account of the changes in the company's size or complexity or changes in the law. I now invite discussion on the resolution.
Are there any questions? It doesn't appear any questions. Please now complete your voting card.
I'd now like to open the floor for any questions you may have specifically on Contact's annual financial statements. EY audit partners are present at the meeting should any shareholders have any questions for them. There are plenty -- there will be plenty of time later for questions that might be more of the general nature.
[Operator Instructions]
Are there any questions on Financial statements?
Alastair Duncan, shareholder and customer, not always the same thing. I have a series of questions, which I also want to foreshadow one for our Board members who are standing. So with your permission, could I foreshadow that so they can think to what [ your ] answer is. The question is, what steps will you take to enable Contact to become a living wage employer if you're reelected? I suspect you know the results of your election already. My question more generally is, however, about the human capital. And I want to congratulate those who prepared the annual report and yourself on the presentation that talked about environment.
The other measure of a business is the way it treats its people. And if you make it through to Page 65 of the annual report, there is a deeply disturbing set of data. And it's about the gender pay gap, which is appalling. It is the best part of 45%. A gap between what the notional male earns and the notional female. If I look at the annual report, it tells me that 703 of our hard-working executive and trades people earn more than $100,000. That leaves the best part of 600 people earning considerably less.
Two things. One, can we get some data on how that breaks down by gender and ethnicity. There is some ethnicity data in the report, but not related to salary. And secondly, can we reconcile the data on Page 79 that talks about the Chief Executive's remuneration as being 24x that of the notional employee. Chief Executive works hard for $1 million. The notional employee divided by 24 works hard for $44,000, hence my question in advance to those standing for the Board. The measure of businesses is increasingly human capital and the environment.
Congratulations on the foreshadowed work you do about the environment, but I would take odds with you on the long-term viability of Comelco, which we as shareholders and taxpayers have underwritten [ vastly ] for far too long. So those are my comments. But if it is possible, you've got a lot of staff here. So somebody could do some work during the course of the meeting and come back to us on the -- particularly the gender pay, but also in due course, the ethnic spread. Those are the measures of businesses that are doing the hard [ mahi ] but are also delivering.
So Mr. Duncan, we will take those questions on board now, but I think it's best we answer them actually when we come to general questions, because the questions for now relate to the financial statements.
[ the whole series amounted to half ]
Sure, but they're disclosed in other pages. So are there any questions on the financial statements?
Jeanie Miller, shareholder. I've got a question on the Tauhara project. Is it okay to raise it now?
It would be better if we raise that in general questions. So we're just at the moment, looking at the financial statements. We'll come to that shortly.
[ Paul Barry ], shareholder. Today $4 million undue contracts [ I would say contracts to rightful owner's contract is ]
Right, onerous is the word.
I can't actually put my [ hand ] on it, but I have a feeling that we've done that before. And there's been a couple of other times over the years when Contact has had to actually drop off huge amounts or write off huge amounts. And one of the things I was thinking about with regard to that is the wind farm development was going to be done at around the [ venevec ] area, which seemed a bit fraught. So is this failure of the management? Or is it just unavoidable? And can we avoid it?
I think I'd firstly say we both would like and hope we can avoid it, but inevitably, some of these things come up. The wind farm at Danica precedes my time, which is [ the right year ] so I can't answer that, but I'm assuming that would have been written off at the time. This is the first time in my memory of being at Contact we have had an onerous contract of that -- or a similar amount of this size. And it's obviously a disappointment, but -- and there's undoubtedly lessons here for us as we look to have others operate what were formerly our assets.
And that's not a criticism of how it's operated, but it simply means you're not in control. And so from that perspective, this -- the mode of operation, the things that have occurred -- and predated the sale and leaseback as well, and not known to us have meant that subsequently, it hasn't performed at the level. It's improving now, but we felt given the sort of need we have for gas going forward, particularly as TCC comes out, that it was appropriate that an onerous provision was -- contract provision was made. Mike, I'll get you just to comment more on any specifics around [ AGS ].
Yes. Look, the key in AGS was that from a perspective of technical performance the reservoir did experience some water ingress, which led to suboptimal performance. And the approach we've taken was number one, to be entirely transparent about what is happening to make sure we assemble some of the best experts in reservoir management in Australasia to understand what's happening. The joint teams had a clear way forward, but the write-off on the performance of the asset in terms of the contract was part of that process of just getting a good understanding of what's happening.
Okay. Are there any other questions? That would better.
[ about the financials ]
[ Could you ]
Could you repeat the question again?
[ Assuming you are reelected, what steps will you take to ensure that Contact becomes a pay complying employer ]
I mean we do pay the living wage.
Yes. We in terms of practical outcomes, all our staff are above the living wage. We don't commit to be a living wage employer because it's almost semantics, but we can -- all our staff here.
Could you explain -- well, since you've answered, what do you mean by semantics?
Well, in terms of the public commitment. We pay our people a market rate, they're highly skilled. We aim to retain them.
Also on your latest job advertising you're advertising customer roles at $44,000. That's less than the living wage.
We don't believe that is less than the living wage.
You're giving us an assurance now publicly that the business pays the living wage to all staff. Is that correct?
That is our understanding, yes.
[ As we ] said last year, we will review it if it's not [ sufficient ]...
Ah, so last year you did. Would you make a commitment to ensure you continue that? And would you give consideration to...
Well, we will see where we are ...
Can I finish my question, please? And will you make a commitment as a candidate seeking my vote today to consider accreditation?
That's all right. You're not...
The issue is -- I'm going to come to this -- we can talk about words or we do action. And so I'm happy...
Accreditation would be an action.
Yes, but it's in some respects it's -- I don't really want to get into an argument.
But standing for office, a yes, no answer is appropriate.
We will look at what we think is the appropriate market.
[ What weight ] you. You're the only person standing right now, what's your position, to assist us to vote?
My position is the company will look at the relevant market circumstances at the time.
At the back there. Just speak to the microphone so everyone can hear.
I noticed in your precis of the job role as Chairman of the Board, there's no way you were applying guidance to the business. As the Chairman of the Board, who represents our shareholders, surely some of your job is to actually direct the business in what sort of form it wants to go?
I think I would sort of describe -- and the comments I made at the end of my speech. Ultimately, all directors are individuals, and they come with different views to the Board. But we try to act as a team and give that guidance and sometimes direction to the Board -- sorry, to the leadership team. But ultimately, it is the leadership team that brings forward a strategy, and that's reviewed, commented on, discussed, and often views and directions given and modifications made. So it becomes -- the Board environment is a very collaborative team environment, but individuals bring their own views and thoughts. To sort of characterize the Chairman as being directive, I think, in my view, would be a wrong characterization. If on occasions, the Board gives strong views to the management, you could characterize those as directive if you wanted to, I don't see it that way. But it is very much, as I say, collaborative and a team environment.
And there's another question from the floor.
Yes. Andy, it's the shareholder customer. The notice says that you were last elected in 2020. And if I heard it right, you said 2021. So just purely a clarification, please. The notice says you were last elected in 2020. And if I heard you correctly, you said 2021. So just purely clarification, please.
It was 2020, sorry, it was 3 years ago. Yes.
Are there any further questions from the floor?
Jeanie Miller, shareholder. Last year in Auckland, Mr. McDonald, you gave me an assurance that you would not -- so honestly and integrity is part of being a director. You gave an undertaking that you would not be using auditors for other work. And you've actually gone back on that. And I'm disappointed, especially when you were so angry at me. So have you got any comments on that? Because at this stage, I want to vote against you as a director.
Yes. So firstly, I'm disappointed you thought I was angry at you. But in terms of the auditors, a couple of things here with the auditors, we transitioned -- this is EY's first year. So there's some residual from the past with EY. It's strictly speaking, the sort of key disclosure is over the financial statements assurance. What you will see at Contact and many other companies in New Zealand is that, that nonfinancial statement assurance is going to grow. And it's going to grow because we will be looking to our auditors to do more assurance as required under the climate standards that come. So there will be more assurance of nonfinancial data. I still see that very much as assurance, and they remain -- their independence remains. But the only other thing going on with, I think EY it was some salary survey data, which is sort of past history as well.
Just disappointing.
Jeanie again. With the introduction of the climate change reporting that's coming in and I know [ Neutry's ] increased the annual report significantly. What impact is it going to have? And what cost do they expect currently to bring it into the global standard?
So I mean, that's not a question on the audit fees, but I will actually answer it here. So the issue is, the New Zealand climate standards are not worldwide standards. They are standards for New Zealand, and they come in this current period. We will have a limited assurance of those as we did last year. And then ultimately, over time, they go to a full assurance of Scope 1 and 2. That will, I expect, over time, will increase both the scope but also the fee size for the assurance of the nonfinancial data.
Currently at 100,000 based on these reports in here. So do you expect it to double, or have no idea?
I don't want to do a negotiation in front of EY. So I guess it's a limited assurance. We'll have to go to a full assurance over time.
Are there any other questions? No. Good. Okay. Please now complete your voting card beside Resolution 4. Please indicate your vote by either marking for, against or abstain in the appropriate place on the voting card.
[Voting]
Have all those that wished to vote, voted? It would appear so. Link Market Services will now collect your voting papers. Please place your voting paper in the ballot boxes as they are passed around. Shareholders participating via the virtual meeting website should now submit their votes online. Meeting will remain open until 5 minutes after the conclusion of the meeting.
Sorry, I might have misheard you. I thought you said we had until 5 minutes after the conclusion of meeting to vote.
Online. It's -- yes, so if you could put your voting in now.
[ What does ] discretionary actually mean, please?
That is a good question. Sorry, that was open for the directors to vote as they saw fit. So assume that's positive. Okay. For the information of shareholders, here are the proxy votes received for the 4 resolutions. The votes will be counted and the results announced to the NZX and ASX this afternoon.
We now move to the fun part of the business, the general business. This is your opportunity to discuss anything we have not already covered or ask questions of the Board or management team. Does anyone present or online have a question? I will go straight to this issue of gender pay question. The gender pay gap is not where we want it, but it's important to understand its context. And its context is very much a function of the history of Contact. In generation, we have highly technical roles and with long-tenured employees, where we have more males than females.
Conversely, in the retail call center area, we predominantly have female employees who are on much lower salaries, and there is higher turnover than generation. The point I want to make there is I look at our Contact centers, and I think they are an important part of the company. Many companies would take their Contact centers overseas, and that would certainly solve a bit of our problem. We believe we provide [Foreign Language] an economic contribution that wouldn't otherwise be there. So it is important to understand the historical context in that.
Equally, we have spent a lot of energy and time to change the gender balance in generation, and are making good progress there and are quite pleased with the sort of talent and particularly female talent coming both into the hydro, but also particularly the geothermal. So if you go to the geothermal team in [ Taopo ] you will see some highly qualified, very specialized and very talented females, and we're very proud of that. If you look at similar role pay, and that's where we put in a grade and say, a like-for-like role, it's 98% similar. And that 2% is largely an experience thing, which is now closing. So I hope that answers that question. So let's go to the floor. Is there any general questions?
[ I've been soporing your question ] and received your information. Thank you. You've identified the jobs largely done by men are paid significantly more than jobs largely done by women. You've talked in the document about remuneration measures. Have you conducted internally a gender-neutral job evaluation so that whether it is men or women dominant in the call center, they're paid a decent salary? Because at the moment, they are not.
Well, that's your view.
And that it's 24 -- 1/24 of what we pay the Chief Executive. And when I ring someone on the phone, they are the most important to me as a customer.
Yes, sir, I appreciate that. So just so we're clear -- well, I would put to you the gender-neutral job evaluation is what I just said, the gender equity pay gap is 98%. So it is the like-for-like jobs.
That's not the legal definition. You're paying for jobs largely done by women less than jobs largely done by men. That's my question. You'll have a bunch of HR people who know exactly what I'm talking about. Could you find out and come back to me so we don't continue this back and forth.
Well, the point I'd put to you is that we are now -- there is a greater flow of women -- females into the generation area where the higher-paid jobs are. And that's something we're covering -- you can't solve the problem overnight.
You're missing the point entirely. Clearly, I'm not explaining it well. We have an act that says jobs largely done by men can be compared to jobs largely done by women to determine skill, effort, responsibility and working conditions. Those of us who have seen the work done in health, have seen nurses get significant pay rises as a result of gender equity job comparisons. Have you done one, simple question?
Everyone is clear in the room and that we don't have misleading information.
It's a back-handed slap. I object to that, and I invite you to withdraw.
No. So our jobs are sized on the role and not gender, and I have daughters, and I know the challenges we have of encouraging and retaining females in STEM-related jobs. They are, by their nature, higher paying. I have engineers on Tauhara, who in 1.5 years have got over 2 decades of experience, and we will fight to retain them. Our starting salary in the call centers is $55,000, just to be absolutely clear. We are absolutely proud of our efforts to resolve the gender gap. Our grow your [ final ] policy is absolutely top of its game in Aotearoa. So I'm not going to stand here and watch our team be accused of things, which, quite frankly, simply are not true. We're proud of the way...
Organizations have asked questions. Choose your words carefully.
We are proud of the way [Foreign Language] in this company are retained and valued, and that is the important thing to note.
Did you have a comment on my supplementary question, which was on the gender spread. And I also asked about your ethnic spread.
On the ethnic spread, we do have some stats there. The problem we have on ethnic spread is that when we -- you are actually under New Zealand law, staff are not required to state the ethnicity that they relate to, which tends to skew the data. But within the company, we do have as well as a women's network, a -- we've just recently established [ Maori Pacifica ] network, and we're very strong in the way that -- we do engage and we will engage in [Foreign Language]. .
Sure. Sure, Scott, this man that keeps on asking questions to my left by about 4 or 5. Could I please make a note of his full name. And then he's speaking in his own knowledge. So he's talked about the act. What act is he exactly talking about? And what is his background and reason for all these constant questions, when I think the Board, the Chairman -- is it Mike Fuge, have answered quite adequately. And I think it's time he, given the rule of public company meetings, you're limited to how many questions you can ask. And I think this is something new. But [ may I have them ] is the microphone -- no, I'm not interested at all.
Sorry, we will stop there, and we're going to stop on this line of questioning. I think Mike has explained and answered it very fully. So let's move on to other questions.
A shareholder. At the commission at Pearl Harbor there was a mention of the steam hammer event. Could someone please elaborate on it with what happened and what damage was caused? And were there any associated safety issues?
Okay. So right, you're going to get a process engineering lesson. What happened is that in the commissioning, we have to test our process safety systems very carefully because in the geothermal plant, as with any steam plant, what matters is how you handle the hot liquid. It's hot, it's 250 degrees Celsius, and it comes into the plant at [ 18 bar ]. What happened in this event is there was the intermediate pressure system which released some liquid into the heater, which is the emergency heater. And then the HP, the high-pressure system discharged an amount of liquid, which the moment it hit the heater became atmospheric and so it vaporized.
And so that steam went down the pipe and it picked up the liquid that was already in the pipe and threw it against 1 or 2 of the elbows. So there was absolutely no loss of containment, all the systems worked as they should, but the pipe moved in the order of 500 to 700 [ mil ] as it went through. It's a violent reaction. And so that is a steam hammer event. So the systems worked. There was no loss of containment. We were testing for a situation which should never happen in the plant life, but that's the way we do things. We're looking for those rare events. And what we saw, we thought, actually, we can do that better. So that's what we're fixing up.
Mr. Murphy struck again.
It is a corollary to Murphy's Law, you can say that, yes.
Robert Murray again. Two questions for Mike. First of all, about Tauhara. You said it's going to be up to maximum power or its expected power generation, just as it reaches its first outage? That seems a little bit of -- first planned outage. That seems a little bit unreasonable.
Look, again, it relates to process safety. So what we -- the modifications that we're putting in place as we repair the pipe from the steam will enable us to get to what we call the GMPO, generation -- gross generation power output, and that's what we're looking to achieve first and foremost. There might be a possibility it goes a bit higher. But in order to get absolute certainty on the 174 megawatts, which is what we call MCR or they will be valves wide open, is that there's a few other modifications: increase in pipe sizes, removing reducers and elbows, and things like that. And the pipe -- where the ideal thing is to actually do that on an opportunity basis. And that first statutory outage is absolutely the opportunity we say to get those [ pipefit ] modifications in. So that is -- what we don't want to do to be starting the plant up, stopping it, starting it and stopping it. So we're going to manage that shutdown and manage it well.
Okay. Regarding the decarbonization, how does replacing the broken turbine at the peaking plant contribute to decarbonization? I thought scrapping that particular turbine would have been a more sensible approach.
Look, the critical thing there is that the lights don't go off. It's one thing to add -- again, that's very much in line with our values -- our core value set is that yes, decarbonization is absolutely an objective, but we have to keep the lights on. And so firming our electricity, providing firming to the power system is a critical part of our role. And so when the wind doesn't blow or the sun doesn't shine or both those things happen, we need to ensure that, that plant is available. We're very confident that once we shut -- once TCC shuts, our carbon emissions from the 2 peakers will drop to a minimal amount and New Zealand itself will be up at sort of between 95% to 98% renewable, which is absolutely unheard of in the globe for a country this size. So keeping those peakers running for at least the next decade is a prudent thing to do.
Okay. And a quick question for the Board. I note that the dividend is less than 5% of our value of our shares. When is it going to go to 10%?
Well, rather than say when it's going to go to 10, what I would say is there are a number of things, particularly in the coming year, in respect of Tiwai. If Tiwai goes ahead and stays, we'd hope for a longer period, that brings tremendous certainty and investment certainty to the market. Tauhara coming online, we've spent a lot of money and that will have a material impact into our earnings going forward. And to Te Huka 3 coming online, that's another change. And both of those are effectively energy swaps, so going from gas to steam. Obviously, a lot of money got spent upfront to get that plant done. But with all those things coming together, that's really a good time to think about the dividend. And we'll be able to look into that next year at some point.
Sorry, I just want to make a few comments on your previous question, which was, why don't we close the peaker because it's [ threw away ]. But the Board -- I just want to stress a point because we had talked about 2035, and that was a vigorous debate and a good discussion at the Board and executive team. I'm hopeful we might do a little better than that. But the reality is, as a Board, we sit there really mindful about the trilemma. And the trilemma is affordability, reliability and sustainability. And all 3 have to be there together. And it gets harder as you get further up that curve. And we are very clear about our role in not letting the country down in terms of being able to play our part in the reliability part of the trilemma. Anyway, more questions.
[ board approval ] My second question is the untapped energy source over the forestry up in [ Tep pohara ]. Have you looked at the feasibility study for a [ tiogene ] plant for the forestry byproducts [ sitting on the sisclas ]?
I'll let Mike -- he might talk about [ Atura ] as well.
Okay. So we do from time to time, we do indeed invite the public and see our plant. The last time I think we did was Clyde where we were expecting 200, and I think the team had over 5,500 people go through that day, which -- so in terms of open days, yes, we're always open to that. And when we get the plant up and running and stable. But you've got to remember, at the moment, they are very active construction sites. And our passion remains health and safety -- the safety and well-being of our staff. So we have to balance that. That was the first part of the question. Second question was? Yes. No, that [ slash ] is actually used in Nature's Flame to create biofuel. And we provide Nature's Flame with the geothermal steam directly, which enables it to be dried. So in a roundabout way, it is being recovered and it is being used, and we are proud to be part of that.
Brian Busby, customer and shareholder. We -- you're also a gas retailer. We have a continuous flow gas heater, which we depend on for our hot water, and we also heat a large amount of our home with a gas-fired and other gas heaters. But you're talking about decarbonization, where is that going to leave us in the future?
That's a great question. And I think that's -- if you didn't get it in the way we -- both Rob and I have been talking, is we want to work with the Kiwis on that journey over the next decade and help them decarbonize their homes. We're very conscious that the transition is -- it's going to require some tough decisions in every household in New Zealand. I have gas in my home. At some point, that will come to an end. And so the intent is that we work with consumers about, when it comes time to replace those gas appliances is what they can transition to in an affordable way. But it's going to take a bit of time. And it might be 5 years, it might be 10 years, it might be 15 years. But we certainly want to walk on that journey with you.
Jeanie again. I want to talk about the directors' fees and the remuneration. I know you don't want to, but more with the management and corporate scorecard. It's a fine line between transparency, privacy and disclosure. And I note that in your annual return here report, you give a scenario breakdown for -- and whether the management has achieved or potentially achieved their bonuses. Why don't you just be honest and come out and give us a number and say, right, this is what management will get if they get Tauhara onboard or Te Huka or whatever, rather than give us some number that's partially achieved. It's not achieved. So improve that a little bit. And I understand there is privacy with regards to what management earns.
But when you're doing really well, management likes to shout out in Skypes that they've done. And you are trailblazers in some things. So why not sort of improve upon that? And moving on, next question is -- or more a comment, the director's fees haven't been increased since 2008, and Victoria is stepping down. And you've got -- you're almost at the top end of your pool of $1.5 million. So if you enhance this area of your report, there is a chance -- shareholders don't mind paying money for good directors, add -- for value that they add. And I wonder if you could improve it so that we don't feel bad when you come for the director fee increase. And it will come. Please?
Thank you for those questions. And I'm more than happy to answer them. Look, in terms of the disclosures we've made in the last year around remuneration, we've had a bit of feedback and obviously, yours adds to that. There is a new NZX guideline coming out, we expect that to be released soon, and will reflect that in a revision. But equally, we did toy about more percentages versus sort of colors and lights or things like that. There is an element of subjectiveness and judgment to some of these metrics as well. So we felt that approach was better, but we've certainly got some feedback, and it's an area that we'll put a fair bit of focus in the coming year. You are correct that the directors' fees haven't increased since 2008. And it is something as we look and in the process of recruiting more directors and think about the next couple of years of directors who may depart as well. And we feel, given all the things we're doing, we absolutely want the best quality of directors as well. So it is something where we'll put a bit of focus for the next year or 2.
Just on that question, and sorry, Victoria Crone is retiring. So what is the forward thinking of a new director in the skill set that they may require?
Yes. So the -- we are out -- we will be looking, are looking for a new director. But first, in that process as we've done a pretty deep dive into the skill base that exists on the Board and will change in the coming years, as people rotate out as they get to the end of their terms. And so when we think about the sort of people we want on, there's also an element of overlap with those skills as well. And so that's something where the Board is -- it's first on the agenda tomorrow.
[ for a ]
It might be possible. Okay. Are there any other questions? Okay. I don't believe there are any questions online. As there are no further questions, I now declare the meeting closed. For those present in the room, I'd like to invite you to stay and join us for morning tea. Please feel free to talk to my fellow directors and members of Contact's senior management team. We will be wearing badge names and very much look forward to opportunity to talk to you. If you have any customer service queries, or would like to sign up as a customer, Matt and -- Matt Bolton just here and Brian are here and more than happy to help. Thank you very much for your attendance and continued support of Contact. I wish you a safe journey home.
