Contact Energy Limited · NZX:CEN
Contact Energy — Investor Presentation (October 2009)
25 slides from Contact Energy's investor presentation, Oct 22, 2009
Slide 1: Contact
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Slide 2: Why did profits fall last year? What is being done to grow profits?
hy did profits fall last year? : hat is being done to grow profi sf” SLT Z
Slide 3: How does the electricity industry work?
How does the electricity industry work? Wholesale Electricity Market Generation ae Geothermal Customers Residential Commercial Industrial
Slide 4: The wholesale electricity price is volatile
The wholesale electricity price is volatile Wholesale electricity price (c/kWh) June ’08 Sept ’08 Dec ’08 Due to weather, transmission constraints, power plant outages, and the like
Slide 5: Contact generates and retails energy nationwide
Contact generates and retails energy - nationwide Wholesale Electricity Market I , Generation Customers Geothermal ue Residential Market share Commercial Generation: 26% Electricity demand: 25% Natural gas demand: 35% LPG demand: 48% 4 600,000 customers industrial
Slide 6: Earnings have been relatively resilient to wholesale electricity prices
Earnings have been relatively resilient to wholesale electricity prices 600 - 120 500 100 400 H+ 80 EBITDAF sea Wholesale ($ millions) electricity price 200 4 40($/MWh) 100 - 20 0- : = : ; , : , 0 1999 2000 2001 2002 2003 2004 2005" 2006 2007 2008 2009 Financial Year eeceleeeoves CSCO OOSCCCOCOESEOE
Slide 7: Earnings growth in dry and wet years
Earnings growth in dry and wet years 400 EBITDAF , ($ millions) 200 5 100 3 04 PYYTESTTICITLTIECI TTI TILL a ke SCeeeetrteexeeeeeoooeeeoeot+eeeoreerveseoeteex«e Dry years Wet years a 1999 2000 2001 2002 2003 2004 2005" 2006 2007 2008 2009 Financial Year Wholesale electricity price 40($/MWh) 20 0 SSO
Slide 8: In FY09, the loss of portfolio flexibility coincided with extreme weather
In FYO9, the loss of portfolio flexibility coincided with extreme weather and transmission constraints 400 EBITDAF , ($ millions) 200 100 + aH 1999 2000 2001 2002 2003 2004 2005" 2006 2007 2008 2009 Financial Year | .Wholesale electricity price | 40($/MWh)
Slide 9: Breaking the year into quarters illustrates what happened in 2008/09
Breaking the year into quarters illustrates what happened in 2008/09 Net Wholesale Revenue by Quarter NZS$Millions Q1: Winter 2008 Q2: Spring 2008 Q3/4: Jan - June 2009 - South Island - Deluge - Wet conditions drought - South > North - Portfolio inflexibility - North > South transmission transmissio
Slide 10: Strategic challenges to resolve
Strategic challenges to resolve Portfolio Transmission inflexibility Fy ale constraints —
Slide 11: Strengthening the transmission grid
Strengthening the transmission grid Converter upgrades + line re-conductoring Lower North Island issues can be managed going forward for high south flow scenarios
Slide 12: Gas storage facility
oOlY fladoiity gas s tor age facility
Slide 13: Adding flexible generation
Adding flexible generation i | a, j - 200 MW Stratford Gas-Fired Peaker Project - Fast-start/ efficient gas turbines - Cost: $250 million - In operation mid-2010
Slide 14: Tauhara phase one geothermal power station
Tauhara , phase one fais geothermal power s atiob gece BE ee Re
Slide 15: Tauhara phase two geothermal power station
Tauhara phase two geothermal power station
Slide 16: Slide 16
Slide 17: Gas reserves are depleting
Gas reserves are depleting Prices have increased 300 250 is} 8 Petajoules per annum é F} 2009 2017 . . . . . . . . e . . . —_— . e a ° * "s . . . . . . . . io * . ° . s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . + * | — ok a, S - ; — ) c i. : a, ) Se ; . a | s§s:s3ss8 8 8 8 8 8 8 FE
Slide 18: The costs of new generation
The costs of new generation Cents per kWh 15-16 10-12 Geothermal Wind Gas Gas Hydro (at today’s (if NZ has to gas price) import gas) ($25/t Carbon) ($25/t Carbon) 2°
Slide 19: Components of tariff
Components of tariff 21 Retail costs (billing, metering, risk management, retail margin, etc) Cents per kWh 10-12 Transmission & distribution (incl locational losses) Energy Retail tariff © Geothermal Wind Gas Gas breakdown Hydro (at today’s (if NZ has to gas price) import gas) ($25/t Carbon) ($25/t
Slide 20: Slide 20
Slide 21: Customers are returning to Contact
Customers are returning to Contact Monthly change in customer numbers ss s & - & «& FF - SF JS
Slide 22: Slide 22
Slide 23: Slide 23
Slide 24: Conclusion
Conclusion * Achallenging year Weather extremes, transmission constraints, portfolio inflexibility * $600 million of construction underway Portfolio flexibility initiatives The first of a series of new geothermal projects - in operation in mid-2010 ¢ Well positioned for growth Excellent growth oppor
Slide 25: Contact
c& contact
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