2019 Annual Shareholder Meeting

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz
13 November 2019

CEO’s Address to Contact Energy 2019 Annual
Meeting of Shareholders
Introduction

Tēnā koutou katoa

Ki ā tātou kua huihui mai i tēnei rā

Nau mai, haere mai, ki runga i tēnei kaupapa – te hui-ā-tau.

Greetings to you all

To those who have gathered here today

Welcome to the subject of the day – the annual meeting.

Thank you, Rob, for your introduction and kind words.

Ladies and gentlemen, I would like to introduce my fellow Leadership Team
members with me today: Dorian, Vena, James, Catherine, and our new Chief People
Officer Jan Bibby, who joined us on Monday.

I’d also like to acknowledge Megan Curry who has been acting in Jan’s role this
year. Thank you.


Overview

As this is my last address to you, our shareholders, I’ve been thinking about the
importance of the AGM for reporting performance and for you to hold us to account.

I have welcomed the discussions we have had at each AGM, both through the formal
questions and often the more personal and detailed conversation over morning tea. I
can assure you that I have always welcomed your feedback.

As Rob mentioned, we delivered a strong financial result in Financial Year ‘19.

We have also improved capital efficiency, deployed good risk management
practices, and again proved the value of the flexibility we have built into our
diverse generation portfolio

During Financial Year ‘19, our Wholesale business successfully managed periods of
low hydro inflows and constrained gas supply, reinforcing the value of our diverse
portfolio.

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz
Our Customer business had a successful year where the Net Promoter Score, a
measure of customer advocacy, continued to increase, and our churn was
comfortably below the market average.

We continued to digitise the customer experience and build data, automation and
integration capability, while lowering operating expenses and reinvesting savings in
our brand and technology solutions.

During the year we participated constructively in the Government initiated Electricity
Pricing Review. The review highlighted that some families are struggling to pay for
their energy and that the prompt payment discounts are not always fair to customers
who are unable to pay their bills on time.

We are evolving our product set including the phasing out of our current prompt
payment discounts.

We have also made it easier for customers to connect with us online and are helping
our most vulnerable customers keep the power on with PrePay and flexible billing
options.

We have helped our customers to avoid getting into difficult credit positions, and
intervened early if they did, which delivered record low levels of outstanding debt.

In addition, we have proudly supported EnergyMate – an industry-led programme to
help families who are struggling to afford to heat their homes.

Overseen by the Electricity Retailers’ Association, the programme is a collaborative
effort between retailers, lines companies, community organisations, and the
government to provide in-home coaching initially for 150 vulnerable families in South
Auckland, Rotorua and Porirua.

Financial Year 2020

This financial year hasn’t started so well, on the things we can control we continue to
perform well but hydrology and gas availability has impacted our earnings in the first
four months of this financial year. The spring rains into our hydro catchments were a
little late in arriving but as we speak we are getting good hydro production.

Having said that we have had good cash management and although our earnings
are lower than average, we are tracking well on cash-flow.

Our dividend policy looks through these short-term variables and as Rob mentioned
we are targeting a dividend of 39 cents per share for Financial Year ‘20.

People

This year we again measured the engagement of our people with the Ask Your
Team survey.

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz
Our overall engagement score was 75%, which was well ahead of the 67%
benchmark for private companies but behind our 2018 score of 77%.

The survey results will help us keep adapting and improving to raise engagement.

We are committed to being an inclusive and diverse employer and we recently
achieved Rainbow Tick certification, recognising us as a workplace that accepts
and welcomes sexual and gender diversity. This certification sits alongside the
actions our people take every day to make Contact an inclusive place to work.


Environmental sustainability

This year, we became the first New Zealand energy company to have emission
reduction targets approved by the Science Based Targets initiative. We have
committed to emissions reduction targets to align to a 1.5 degree global warming
limit.

We engaged with the Government appointed Interim Climate Change Committee as
they developed their report into the Government’s renewable electricity aspirations. It
was pleasing to see their report to Government which the Chair mentioned. The
gains that can be made by decarbonising the transport and process heat sectors are
significant particularly when compared to the cost of 100% renewable electricity
generation.

This confirmed we are on the right track with our strategy of working with existing
and future customers to bring about increased electrification.

And we continued to work collaboratively with tangata whenua and the communities
around our sites to involve them, respect their interests, create opportunities and
give back in ways that are meaningful to them.

You may have seen that we had a landslip at one of our geothermal storage ponds
in Wairakei. Sediment and geothermal fluid went into the Waipuwerawera Stream
and Waikato River in February discolouring Huka Falls.

We are thankful that no one was hurt. However, the discharge did impact the river,
iwi and the community and we deeply regret that.

We are working with iwi and the local community to put things right and to learn from
the event. It was an important reminder that we need to keep our commitments to
environmental sustainability as more than just words on a page.

Looking forward

The exciting opportunity for Contact going forward is to decarbonise more of the
energy use in New Zealand, supplying electricity for the conversion of fossil fuel fired
boilers and for electric vehicles.

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz
Electricity is the solution to a lower carbon future for New Zealand, unlike most other
countries where it’s the problem.

There is an elephant in the room with the strategic review at the Tiwai aluminium
smelter and you will have heard and continue to hear much commentary on this as
the review progresses.

Much of this commentary is expected positioning but I can assure you that there is a
desire for a solution. If the smelter were to close Contact has an excellent team
working on other uses for the electricity including transmission grid upgrades and the
accelerated conversion of businesses to renewable electricity.

We are well progressed on helping customers reduce their energy costs and carbon
footprint and the acquisition of Simply Energy has enhanced our capability in this
regard.

We successfully piloted our demand flexibility platform, which rewards Commercial
and Industrial customers for reduced energy use at peak times, so we don’t have to
resort to fossil fuel generation to meet high demand.

In our own operations the increased price and reduced reliability of gas is
accelerating the case for replacing thermal plant with new baseload geothermal.

In this context, we took the decision to drill four appraisal wells on the Tauhara field
as part of our option to develop a new geothermal power station there.

I am convinced that Contact will continue its excellent progress in reducing its carbon
emissions, innovating to support our customers and providing excellent returns to
you, our shareholders.


Succession

Finally, I wish my successor Mike Fuge the very best and hope to have laid a good
foundation for his success.

It has been a privilege to be the Chief Executive for the past eight years.

I thank the Board and the many people I’ve worked with and wish you a prosperous
future.

Tēnā koutou, tēnā koutou, tēnā koutou katoa.

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Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz
13 November 2019

Chair’s Address to Contact Energy 2019 Annual
Meeting of Shareholders
Introduction
My address today is a deliberate forward-looking view of the business and how it will
fare in our rapidly changing world.

A particular focus is Contact’s ability to be a leader in tackling climate change with
tangible actions that drive good business outcomes.

Context and performance
New Zealand’s energy sector is rapidly changing.

We are facing increasing expectations from investors, customers and communities
and increased focus on environmental performance.

We are also facing more volatile conditions in weather and security of fuel supply.

Our people and assets have risen to these challenges and delivered strong financial
performance in the last financial year.

We delivered a full year dividend of 39 cents per share, up 21% on last year and we
are targeting a full year dividend of 39 cents per share for the current financial year.

Underpinning these results is Contact’s operational efficiencies, the quality of our
generation assets and strength of the balance sheet.

This was enhanced by completing the sale of Ahuroa Gas Storage and the Rockgas
LPG business.

With Ahuroa, we have retained long-term access to gas storage services and with
Rockgas, we have retained the ability to market LPG to our customers.

The asset sales materially improved the strength of our balance sheet and positions
us well for future investment.

A lower carbon future
The time for talking about the climate is over. It’s action that matters now.

We are continuing to make reductions in our carbon emissions and are focused on
helping our customers to do the same.

You have heard this before but I believe it is worth reminding ourselves, since 2012
we have more than halved our emission from electricity generation – it has fallen
from nearly 2.5 million tonnes of CO2 emitted per annum to under a million tonnes,

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz
and in the last financial year alone our emissions decreased by 16% on the prior
year.

It is worth noting that since 2012, Contact has done more in absolute and relative
terms to reduce direct emissions than any other major generator in New Zealand.

We didn’t just remove carbon emissions from the system.

We invested over $800m when we built the 166MW geothermal power station at Te
Mihi, developed the world first Wairakei Bioreactor and renovated the 60 year old
Wairakei steamfield.

We recently became one of the first power companies in the world to have our
carbon emissions targets verified by the Science Based Targets initiative (SBTi).

Our targets are in line with what the latest climate science says is needed to meet
the goals of the Paris Agreement - to limit global warming to well below 2°C above
pre-industrial levels.

These new targets are to reduce Scope 1 and 2 emissions by 34% from 2018 to
2026, and Scope 3 greenhouse gas emissions by 30%.

To achieve this, we are reducing our own emissions and helping our large customers
with theirs.

Investing in more renewable generation
Notwithstanding the current strategic review of the aluminium smelter at Tiwai, the
Board believes a new geothermal power station at Tauhara field remains New
Zealand’s cheapest and most attractive option for renewable baseload generation.

Adding this to our flexible portfolio of gas-fired and renewable generation assets
helps us contribute to security of supply and a lower carbon future.

We are currently drilling four appraisal wells on the Tauhara field and the Board will
make a final investment decision on Tauhara next year.

Earlier this year the Interim Climate Change Commission reported to government.
They were clear that in order to meet the government’s climate change ambition the
government should be looking at policy settings to support accelerated electrification
of the process heat and transport sectors.

That is where the big gains can be made. The government itself can and should
continue to make tangible steps to reduce its carbon footprint wherever it can from
electrification of the Government vehicle fleet to conversion of thermal heating to
electricity in the public sector.

The Commission also effectively confirmed what we have always understood: that
continued access to gas for electricity generation will ensure New Zealand maintains
the migration away from carbon intensive fossil fuels like coal and petroleum without
unduly burdening the economy and consumers.

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz

Our goal to reduce carbon emissions saw the Board support the acquisition of 49.9%
of Simply Energy – a provider of demand-side management tools to improve
efficiency and reduce emissions.

The steps we have taken this year are significant and have made a substantial and
positive impact on our business.

Tiwai Aluminium Smelter
You will have seen the news that Rio Tinto is conducting a strategic review of the
Tiwai aluminium smelter. As a consumer of 14% of New Zealand’s electricity any
closure could be impactful to our sector.

It’s too early to say what the conclusion of the review will be, but it is evident there is
a desire to find a solution to enable the smelter to keep operating.

Rio Tinto has cited the cost of electricity and transmission as reasons for the review
and we certainly share their frustration on transmission costs.

The transmission pricing methodology review has taken too long and the potential
benefit to the smelter has been reduced from more than $50 million a year in 2015 to
$11 million now, with an implementation date pushed out to 2024.

Tiwai is a producer of high-quality low carbon aluminium and supports more than
3,000 jobs in Southland. If it were to close carbon emissions would increase globally
and those jobs would be lost to New Zealand.

Carbon is a global issue and considering it from a New Zealand perspective is short
sighted. We should support and grow our low-carbon advantage and that includes
supporting businesses like the smelter.


Electricity Pricing Review
In early October, the government announced its decisions on the report of the
Electricity Price Review panel chaired by Miriam Dean.

The government acknowledged the benefits of the current competitive retail market,
but found room for improvement in energy hardship and consumer advocacy.

We agree with the decision to introduce a consumer advocacy body and we are
committed to industry funding of this initiative.

Contact is already phasing out prompt payment discounts and supports the
recommendation of the panel to remove win backs.

The market will and should evolve and the team will work with officials and regulators
as they deliver the changes that will flow from the review. The Minister has been
clear that she wants to see action and we will ensure that we are part of that
process. The goal should be enduring solutions rather than reactive or short term
solutions. History tells us that a temporary or reactive ‘fix’ can be hard to unwind

Contact Energy Limited. Level 2 Harbour City Tower, 29 Brandon St, Wellington 6011. PO Box 10742 Wellington 6143.
P: +64 4 499 4001 F: +64 4 499 4003 contactenergy.co.nz

Before I close I would like to focus on three areas of change at Contact:

Integrated Reporting <IR>
As you may have seen in our Annual Report, we have taken the decision to use the
globally recognised International Integrated Reporting framework to report the
performance of our business.

The IR framework requires us to show how we create value for all our stakeholders.
It also encourages us to think about the value we create from and for our people, our
brand, intellectual property, our assets, natural resources, and our customers,
community and relationships.

This approach is particularly pertinent in the current global context where climate
change is both a threat and an opportunity for those who can be part of the solution,
such as our business.

Governance
In FY19, the membership of your Board changed, with Sir Ralph Norris and Sue
Sheldon retiring on 31 August 2018.

We appointed three new directors – Dame Therese Walsh, David Smol and Jon
Macdonald.

Each of these directors brings valuable skills that complement the expertise of the
longer serving Board members.

The Board is focused on delivering value to you the shareholders and being a leader
in the sector and wider economy.

Succession
In September this year, the Board announced the appointment of Mike Fuge as the
new CEO. Mike will start with Contact in the first quarternext year.

Mike is currently CEO of Refining NZ prior to which he has a long history in the
energy sector, both in New Zealand and internationally.

On behalf of the Board, I thank Dennis Barnes for his substantial contribution as
Chief Executive for the past eight years.

He has led Contact to an outstanding safety culture, more highly engaged
employees, and customers advocating for it in greater numbers and delivered strong
and sustained financial performance over that period.

Finally, on behalf of the Board and Leadership team, I would like to thank all of you
for your ongoing support of Contact. I will hand over to Dennis for an overview of the
year.