Contact Energy Limited · NZX:CEN
Contact Energy — Non-Deal Roadshow (January 2008)
24 slides from Contact Energy's roadshow presentation, Jan 29, 2008
Slide 1: ASX cover note: Contact Energy investor presentation
For personal use only To Company Announcements Office Facsimile 1900 999 279 Company Australian Stock Exchange Limited Date 29 January 2008 From Bill Hundy Pages 24 Subject CONTACT ENERGY INVESTOR PRESENTATION Attached herewith is a copy of an announcement released to the NZX by Contact Energy today
Slide 2: New Zealand's leading integrated energy company
For personal use only New Zealand’s leading integrated energy company Presentation to Asian Investors 29 January 2008
Slide 3: Disclaimer
Disclaimer For personal use only This presentation may contain projections or forward looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in an
Slide 4: Snapshot of Contact Energy
Snapshot of Contact Energy For personal use only • 630,000 customers (electricity, gas, LPG) • 28% of NZ’s generation from 9 power stations – 51% natural gas – 34% hydro – 15% geothermal • 27% share of the electricity retail market • 40% of the gas retail market • 50% of the LPG market Contact Reven
Slide 5: Recent Strategic Initiatives
Recent Strategic Initiatives For personal use only • Recent activity has positioned Contact well for the next few years: – The introduction of the New Zealand Energy Strategy and climate change policy have placed renewable generation at centre stage – Contact has a unique set of options which can be
Slide 6: The sector is dominated by integrated generator / retailers
The sector is dominated by integrated generator / retailers Rio Tinto supply For personal use only • A high level of integration between generation and retail customer bases • Three of Contact’s competitors are state owned • Contact is the only generator/retailer with access to LPG as well as natura
Slide 7: The NZ Energy Strategy
The NZ Energy Strategy For personal use only • The New Zealand Energy Strategy is focussed on lowering emissions from generation • Generation emissions in 2005 were around 11% New Zealand’s total emissions • Contact’s emissions are projected to fall due to the introduction of new renewable generatio
Slide 8: Energy and climate change policy
Energy and climate change policy For personal use only • The Government has announced its intention to introduce an Emissions Trading Scheme progressively covering all gases and major emitters • Electricity is covered from 1 January 2010 • Legislation is expected to be passed in calendar 2008 • The
Slide 9: Electricity demand
Electricity demand For personal use only • Electricity demand has been growing at ~ 2% p.a. over the last 10 years • Residential demand has grown despite price increases which have averaged 4.5% p.a. over the last 10 years • Demand side is expected to absorb the moderate effects of carbon pricing wi
Slide 10: Electricity supply
Electricity supply For personal use only • Wind generation, although well suited to NZ conditions, has execution risks (public opposition, Maori interests, capital cost pressures) • However, additional wind will be built over the next 5 years which will increase volatility • Contact’s wind generatio
Slide 11: Drivers of the long-run price path
Drivers of the long-run price path For personal use only • Over the longer term prices will trend towards the LRMC of the next most economic source of new generation • Prices are forecast to rise to $75-$80/MWh and trend towards a wind LRMC of $85-$100/MWh to support new generation required at the b
Slide 12: Gas supply and demand
Gas supply and demand For personal use only • Over the next 3 years, the gas market may see periods of over supply with limited paths to market for excess gas • Methanex is the major source of incremental demand in the New Zealand market and its Waitara plant is fully contracted to April 2008 with s
Slide 13: Gas supply is increasingly inflexible
Gas supply is increasingly inflexible For personal use only • Contact‘s average gas cost including transmission has risen from $3.70/GJ in FY 03 to around $5.02/GJ in FY 07 (an average of 9% p.a.) • Gas prices per GJ are expected to increase about 20% per annum over the next couple of years • Medium
Slide 14: Future gas supply
Future gas supply For personal use only • It seems likely that gas can be secured at least to 2015 • Contact is currently considering its strategy for securing further supply. Key factors in determining the optimal timing will be: – Assessing the impact on gas demand of alternative generation source
Slide 15: Long-term gas supply
Long-term gas supply For personal use only • Given the domestic position seems assured only till 2015 at the most, it remains prudent to maintain an LNG backstop • Should LNG be required over the longer term Contact’s ability to manage the supply logistics will be enhanced by the availability of gas
Slide 16: Contact's strategic focus
Contact’s strategic focus For personal use only • Government policy supports the development of renewables and Contact’s recently granted call-in for Te Mihi increases confidence that new renewables can be delivered to the market • Gas and generation market conditions through to the end of the decad
Slide 17: New generation - geothermal
New generation - geothermal For personal use only • Geothermal production and capacity are forecast to double over the next 5-7 years as exploration and reservoir management capabilities continue to deepen Geothermal Capacity (MW net) 2006 2014 Wairakei Station 157 - Wairakei Binary 14.5 14.5 Poihip
Slide 18: Update on geothermal projects
Update on geothermal projects For personal use only • Consents have been lodged for the Te Mihi power station – the Government has announced its intention to “call-in” the project. The resource consent hearing will take place during 2008 • Consents for the Tauhara station are expected to be filed du
Slide 19: Wind Projects
Wind Projects For personal use only • A significant wind project in Waikato has been announced: • Hauāuru ma raki (North-west wind) • up to 550 MW • consultation has commenced and consents are expected to be filed in the next 2 months • Four further wind options being developed
Slide 20: Hydro generation options
Hydro generation options For personal use only • Hawea Gates – Contact is developing a 16.4 MW, NZ$43m, hydro facility at the existing Hawea control gates which utilises consented Hawea River flows – Commissioning expected to be 2011 – although turbine delivery times are increasing – Consents have n
Slide 21: Stratford Peaker
Stratford Peaker For personal use only • Contact intends to redevelop the old site TCC once occupied by the Stratford Power power Station to build a peaker plant (up to station 300MW) • The first phase (100-200 MW) is expected to be commissioned early in 2010 Proposed • Given the expected increase i
Slide 22: Capital expenditure is dominated by generation initiatives
Capital expenditure is dominated by generation initiatives For personal use only • The future capex profile now includes about $2bn in renewable investment as well as about $150m in gas peaking capacity and the investment in gas storage
Slide 23: Outlook
Outlook For personal use only • Contact operates a successful integrated business model from fuel source through to the customer • The New Zealand government has strongly signalled its intent to promote the development of renewables and the reduction of greenhouse emissions • Contact is well positio
Slide 24: For personal use only
For personal use only