Changing Step.
Together.
Meridian Energy Limited. Integrated Report 2022.
We’ve made good progress.
But frankly, the pace must quicken, actions
must intensify and we need to make more
of the partnerships we have in place to
make decarbonisation happen.
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Introduction – Changing Step. Together.
Stepping forward
Influencing the future
What drives us
Key changes this year
Chief Executive and Chair report
There’s a powerful future ahead
Our natural impacts
Changing conditions apply
A hot, dry Southland summer
Keeping a close eye on water
Managing biodiversity
No compliance breaches
Energetically pursuing emission reductions
Planting out a better future
Disclosing openly
Supporting kākāpō through sponsorship
Adding to public policy discussions
Our technology impacts
Enabling a new energy future
Demand for Flux continues to increase
All on the same platform (nearly)
Challenges for our Generation teams
Transforming our thinking
Exciting options emerge
Harapaki wind farm progressing well
A good year for developments
Decarbonising Aotearoa
Upgrading Scada
Cyber defence in depth
COVER: Planting the next phase of coastal forest on the Kaitoke Peninsula with Raglan Area School.
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Our human impacts
Doing right by people
Energised by great people
The future of work
Welcoming new perspectives
Taking care of our people’s safety and wellbeing
Belonging is crucial
Taking a position on gender injustice
Being good humans
Relationships in the community
Partnerships can change the world
Encouraging energy wellbeing
Our commercial impacts
Real momentum for action
Extremes: from one half to the other
Wholesale markets reflect long-term concerns
Exiting Australia
Dividend for this year
Retail pricing under pressure
Our retail brands made substantial gains
Nature makes her presence felt
Better futures
Our remuneration
Our approach to remunerating our people
Preparing this report
Directors’ statement
Further disclosures
Our financial performance
Group financial statements
Independent auditor’s report
Independent accountant’s assurance report
GRI standards content index
Directory
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MERIDIAN INTEGRATED REPORT 2022 This will
change...
2
Planting of native trees as part of our Forever Forests programme, West Wind farm, Mākara, Te Whanganui-a-Tara Wellington.
CHANGING STEP. TOGETHER.MERIDIAN INTEGRATED REPORT 2022 if we
take
the right
steps.
Our commitment to climate change progress
includes what we are doing for ourselves
and what we are doing with others.
3
CHANGING STEP. TOGETHER.MERIDIAN INTEGRATED REPORT 2022 This won’t
change...
4
Traffic congestion in Tāmaki Makaurau Auckland.
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. if we
don’t
move fast
enough.
A key barrier to real progress has been a lack of
urgency. Through initiatives like Zero, we’re making
it possible for people to make real changes.
5
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. Powerful
collaborations...
6
Meadow Mushrooms, Ōtautahi Christchurch.
CHANGING STEP. TOGETHER.MERIDIAN INTEGRATED REPORT 2022 will unlock
a clean
energy
future.
We’re working with our commercial and
industrial customers to electrify their heating
systems, decarbonising industrial processes.
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CHANGING STEP. TOGETHER.MERIDIAN INTEGRATED REPORT 2022 2
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Collecting tūna (native eels) in the Ahuriri Valley for our Trap and Transfer programme.
will drive
actions
that
matter.
We’re focused on outcomes rather than rhetoric.
Partnerships and coordination will transform
intentions into meaningful actions.
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MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. Stepping forward
The time for talk is over. The world
doesn’t need more plans and intentions.
We need consents, agreed goals and
work plans. We need an electrifying
industrial sector based on a visible
decline in the use of fossil fuels.
We need zero-emission vehicle fleets.
We need a renewable generation
network that continues to expand
as we clean up our legacy.
As Aotearoa’s largest renewable electricity generator,
our goal is to help New Zealand become a vibrant
contributor to a net-zero world. Our contribution will
be our scale and the resources to deliver affordable,
clean, renewable power to households, businesses
and industries. But we won’t get there alone. We
need the energy, experience and influence of
others for transformative things to happen.
A dry period in our Waiau catchment reinforced the
importance of robust risk management. Selling our
presence in Australia has shown us – in more ways than
one – that our efforts to fix what’s going wrong with
the world must focus on where we can have an impact.
Renewable development, industrial and transport
electrification, and diversification into emerging
industries are the keys for us: here in New Zealand with
projects like Harapaki wind farm and Ruakākā Energy
Park; through our Process Heat Electrification Programme
and initiatives like our Zero EV charging network; and
potentially with prospects for green hydrogen.
Meaningful and effective partnerships are the
bridge to step changes.
1 0
West Wind farm, Mākara, Te Whanganui-a-Tara Wellington.
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. Only by working together will we make the strides needed to deliver what we all want:
Clean energy for a fairer and healthier world.
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MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. Influencing
the future
We are one of
Aotearoa New Zealand’s
largest organisations.
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Our Ōtautahi Christchurch office
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. NET
ASSETS
FY22
REVENUE
$5.5bUp $4bDown
TOTAL MARKET
CAPITALISATION
Down
$13b
FY22
EBITDAF*
$709mUp
100% RENEWABLE ENERGY GENERATOR – FROM WIND, WATER AND SUN
KIWI
MAJORITY OWNED BY
THE NZ GOVERNMENT
LISTED ON BOTH THE
NZX + ASX
10%LEGISLATED MAXIMUM
NON-CROWN OWNERSHIP
* EBITDAF is a non-GAAP financial measure of earnings before interest, tax, depreciation, amortisation, changes in fair value of hedges, impairment and gains or losses on sales of assets.
1 3
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. What drives us
To deliver on our purpose of clean
energy for a fairer and healthier world,
we’ve focused on areas where we can
make a meaningful difference, and
that align with our values and goals
of climate action.
We do this by putting our customers
first, and being a great place to work
and through our role as a responsible
generator. We value ‘being gutsy’,
working together by ‘being in the
waka’ and doing the right thing by
‘being a good human’ to deliver
positive outcomes for New Zealand
and our shareholders.
D e l
i v e r i ng on our purpose
n : C o m p e t i t i v e markets, Sustainability, Climate actio
O u r behaviours
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a m p i o
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C
Be gutsy
O u
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v a l ues and goals
C li m a t e action SDG13*
Our purpose:
Clean energy
for a fairer and
healthier world.
Decent Wo r k a n d
Economic Gro w t h S D G 8
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Be a goo
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* See page 110 for detail on SDGs.
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER.
Meridian Aotearoa
GENERATION
OPERATIONS
7 Hydro stations
5 Wind farms
5 Offices 1,007 Employees
(92 at our power stations)
CUSTOMERS
365K
Customer connections
Retailing as Meridian Energy & Powershop
~30% national electricity generation
~15% national retail volume*
* Excludes Tīwai Point aluminium smelter
FLUX Remote-first workforce
3 Countries 125 Employees
Licensing the Flux platform
1 5
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER.
Key changes
this year
Nature
• We’re carbon neutral across our
operational emissions
• Refreshed our Climate Action Plan
which includes our roadmap to halve
our operational emissions by 2030
• 85,000 stems planted to date under
our Forever Forests Programme
• Meridian’s 61 EV chargers installed
through Zero programme
• Released our commitment to
biodiversity and deforestation
• Over 80 customers have purchased 660GWh
of our Renewable Energy Certificates
1 6
Commercial
• 2.5% increase in EBITDAF
• 6% customer sales volume growth
• $214M gain on sale of Australian business
• 3% increase in ordinary dividend
• 7% increase in operating cash flows
• BBB+/Stable credit rating maintained
MERIDIAN INTEGRATED REPORT 2022CHANGING STEP. TOGETHER. 2
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People
• Energy wellbeing pilot programme launched
• New Zealand top 25% staff engagement
• New learning management system
launched (People Manager)
• Healthy Minds programme wins
Best Wellbeing initiative
Looking ahead
•
1.1 GW of secured development options
• A further 1.2 GW of advanced
development prospects
• Advancing our green hydrogen project
• Doubling the size of our Process Heat
Electrification Programme
• Harapaki wind farm on schedule
for first power in 2023
• A new Energy Solutions team will build
options for distributed generation (solar
and batteries) and demand response
into commercial and residential
customer offerings
CHANGING STEP. TOGETHER.
Chief
Executive
& Chair
report
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Re-orienting our
strategy has brought
to light opportunities
we literally hadn’t
thought possible.
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There’s a powerful
future ahead
The 2021/2022 financial year was challenging, but one that
proved successful in positioning us for growth. We continued
to make good progress in supporting decarbonisation
and doing all we can to bring new reliability and capacity
to the electricity sector as a whole. A prolonged drought,
particularly around Lakes Te Anau and Manapōuri, was a
clear reminder that the ongoing vagaries of the weather
will only become more volatile – and that our response
must blend significant climate action with active and
agile risk management and mitigation.
2 0
Tūī Corridor native planting at Christchurch Adventure Park, Ōtautahi.
We have pushed ahead with our transition to a
more sustainable energy sector, deepening our
partnerships, building our development pipeline,
supporting our commercial and industrial customers
to electrify and making good progress with alternative
use of our Southland resources, particularly in the
area of hydrogen where interest has really gathered
pace in the past year.
A generational opportunity
We continue to plan for an exit of New Zealand’s
Aluminium Smelter (NZAS) from Southland in 2024.
While we note that NZAS has said publicly that it is
reassessing its position in light of stronger aluminium
prices globally, the eventual outcome remains
uncertain. Importantly, the proposed closure of the
smelter created a generational opportunity, in both
senses of the term, to re-energise Aotearoa/New
Zealand and decarbonise our economy. We’ve done
what we can to minimise the disruption to the local
economy, negotiating an ‘extended exit’ deal that
encouraged this large regional employer to stay on
for three years longer than it had proposed. That deal
bought the electricity sector time to enhance the
transmission network in the lower South Island and
enabled us to explore innovative arrangements with
emerging industries that will change where and how
our generation capacity is utilised. It also bought time
for NZAS to work on an environmental mitigation plan
and business model that may see it continue to operate
in New Zealand beyond 2024.
Irrespective of whether a new contract is entered
into with NZAS, re-orienting our strategy in response
to its original exit decision has brought to light
opportunities we literally hadn’t thought possible
just a short time earlier. The feasibility of a large-
scale green hydrogen plant in Southland has
evolved into an opportunity that could well redefine
New Zealand’s energy independence and position
New Zealand as a leader at the heart of an exciting
new global industry. Our goal for FY23 is to choose
the right partner for this hydrogen opportunity and
advance the project to the development stage.
At the same time, we’ve progressed our Process
Heat Electrification Programme and we’re making
a real difference supporting industrial customers
to convert their fossil-fuel-based processes to
electricity. Again, this is an opportunity that was
not even on our radar 18 months ago, and one that
we believe will only gain greater traction given
the recent increase in Government Investment in
Decarbonising Industry (GIDI) Fund support.
Strong customer gains
We continued to make excellent progress in growing
our customer base this year, with both Powershop and
Meridian adding strong sales volumes and, in the case
of Meridian, maintaining the best customer retention
rate of all electricity retailers in New Zealand. The
distinctive nature of our dual-brand strategy enables
us to meet our customers’ quite different needs by
offering them tailored products and services that
resonate and that represent attractive value to them.
Powershop once again proved to be a real winner
with consumers who enjoy the ability to buy their
power, their way, from a retailer with an attractive
personality. At the same time, Meridian’s appeal to
environmentally conscious customers saw another
uplift in customer numbers this year.
We’re well advanced in the digitalisation journey
for most of our customers, which means that all our
household and small business customers are being
served from our Flux customer care and billing
platform. This world-class, integrated platform has
lifted the experiences we can offer New Zealanders
and made it simpler than ever before for us to be
responsive in market. The migration of our more
complex commercial and industrial customers is
2 1
CHIEF EXECUTIVE & CHAIR REPORTMERIDIAN INTEGRATED REPORT 2022 taking a bit longer, but we’re confident
that we’ll have all customers on
the Flux platform by the end of the
calendar year.
Some larger organisations and those
that have exposure to spot market
prices are being affected by continued,
historically high, wholesale electricity
prices. The increased cost of thermal,
including carbon, and some gas
deliverability issues, have been the key
factors driving prices in recent years.
While international energy markets
are experiencing high levels of
volatility, investment in the domestic
upstream gas capacity and the planning
and delivery of further renewable
generation projects will ensure
greater supply is made available.
On that basis, we expect wholesale
prices to trend down over the long
term and we’re doing what we can
to mitigate the near-term effects,
particularly for our commercial and
industrial customers, by encouraging
them to take longer-term contracts.
We remain conscious too that many
customers are facing significant cost-
of-living increases, making it even
harder to make ends meet. While
cost pressures meant we had to raise
residential prices this year, we managed
to keep the average price increase
to around half that of the consumers
price index increase across the whole
economy. And we continue to offer
energy wellbeing support for our most
vulnerable customers and Level Pay for
those wishing to manage their energy
bills evenly throughout the year. This
year we also commenced an Energy
Wellbeing pilot. More details are on
page 74.
Our sponsorship of the amazing work
done by KidsCan now includes both
a cash contribution to its running
costs and direct assistance with its
fundraising activities. Two years ago
we increased the contribution we
make to KidsCan to $1 million per year.
We’re proud of the difference that
this funding support makes to under-
privileged children in Aotearoa.
2 2
Tamariki wearing jackets and shoes provided through KidsCan.
CHIEF EXECUTIVE & CHAIR REPORTMERIDIAN INTEGRATED REPORT 2022 Successful sale in Australia
Advancing decarbonisation
We successfully completed the sale
of our business in Australia this year
after 10 years building that business.
The original intention was to continue
investing there until at least FY25, but
the market itself has become a lot more
volatile in recent years and our sense
was that our risks there were increasing.
With that in mind, we began looking at
our options mid-2021.
The sale of Meridian Energy Australia
to a consortium of Shell Energy
Operations Pty Ltd and Infrastructure
Capital Group delivered a healthy gain
on sale as well as a sizeable amount of
cash to reinvest in renewable energy
and, potentially, technologies like
hydrogen in New Zealand. Our balance
sheet is healthy and will ensure our
ongoing participation in New Zealand’s
decarbonisation efforts.
We were pleased to see the
Government largely adopting the
Climate Change Commission’s
recommendations and setting in
place the country’s first Emissions
Reduction Plan with the first three
carbon budgets. This plan clarifies
the extent of the challenge. Now the
real work must be done. Globally
we see carbon prices lifting and the
expectations of fund managers and
investors changing the business case
for proactive change. We continue
to advocate for an effective and
all-encompassing emissions trading
scheme to support New Zealand’s
decarbonisation journey, but we
also recognise well targeted policy
support will help build momentum.
The 10-fold lift in the GIDI Fund to
$650 million is a powerful catalyst
and a clear signal to the market of
Government endorsement for
industrial decarbonisation. The Clean
Car Discount also seems an effective
policy lever. Early signs are it is driving
consumer behaviour to go electric far
more rapidly than expected.
Clearly, electrification is the key
enabler of a net-zero-carbon economy
in New Zealand. A massive amount of
investment in electricity infrastructure
will need to take place in the next
30 years to support the country
in meeting its climate goals. In that
context, it’s critical that the resource
management framework in Aotearoa
appropriately allows consenting
authorities to balance localised
environmental impacts and mitigations
associated with renewable electricity
projects with the positive climate
benefits those projects bring. We’re not
looking for a free ride for renewable
projects. Responsible developers
must take account of the views of
the communities they affect and also
appropriately mitigate the environmental
impacts they may cause. But balance
is key, and we believe the current
direction of travel for the resource
management reform process may cause
many renewable projects to run into
environmental ‘bottom lines’ that will
materially slow or halt developments.
Renewable developers are presenting
a united view of the issues we see
emerging through that process to
Ministers and Government officials.
We have identified and put forward
pragmatic suggestions that will provide
balance and allow for appropriate trade-
off discussions to occur.
All that said, we’re getting on with it.
Progress in building the Harapaki wind
farm has been very challenging given
the record-setting wet weather the
project team has encountered during
the first year of construction, but overall
the project remains on schedule. We
have experienced some inflationary
cost pressures and have had to make
some changes to the roading design
due to sodden ground conditions,
so the forecast cost to complete has
escalated by $53 million (13%). We still
believe the project represents a sound
investment for Meridian and much-
needed renewable generation for New
Zealand as it will power the equivalent
of 70,000 Kiwi homes when complete.
We’ll start producing that power from
as soon as 2023.
Harapaki is one of a number of
renewables projects started by major
energy companies in the past two
years, as the New Zealand electricity
sector continues to phase out existing
fossil-fuel-based power stations. Again,
we welcome this. We are adamant that
the step changes needed will only be
achieved through engaged parties
acting creatively and together.
2 3
CHIEF EXECUTIVE & CHAIR REPORTMERIDIAN INTEGRATED REPORT 2022 Alongside these new developments,
we’ve been rethinking how we use our
renewable generation assets to best
effect. Aotearoa currently generates
around 80–85% of its electricity from
renewable sources (mostly hydro),
supported by coal- and gas-fired
generation as needed. But as those
fossil-fuel generators are phased
out and replaced by wind, solar and
geothermal we’ll need to flex our
hydro generation capability and
storage differently from how we have
in the past to offset the intermittency
inherent in wind and solar generation.
It’s a new way of using our resources
that requires us to think long and hard
about the way we manage the existing
hydro lakes and the timing of our
maintenance schedules.
Flexible demand will also become
more valuable as a means of managing
renewable intermittency. That’s a key
part of the value proposition of a large-
scale hydrogen production facility in
Southland. Producing hydrogen from
electrolysis is inherently flexible,
and if the hydrogen producer can
reduce production at times when the
electricity system is stressed, ie during
a calm winter evening when demand
peaks or a seasonal drought, when
hydro fuel availability is limited – the
electricity it would have consumed
can effectively be reallocated to other
energy consumers. We believe this
creates a win-win scenario. The
hydrogen producer benefits by being
recompensed for forgone production,
other electricity consumers benefit
from more reliable, cost-effective
supply, and the environment benefits
as there is less need to produce
carbon emissions from coal or gas.
This type of demand response is part
of wider discussions on how new, and
potentially existing, industry can align
their energy requirements with the
nation’s needs. If we can make such
flexibility commercially viable, that will
deliver a very cost-efficient solution
to renewable intermittency in the
electricity system.
During FY22 we developed a refreshed
Climate Action Plan. The Plan sets out
a roadmap for delivering our Half by 30
and Forever Forests programmes. It
also accounts for the work we’re doing
to support our customers in their
decarbonisation efforts.
Our Half by 30 target means we plan to
halve gross scope 1, 2 and 3 emissions
by FY30 on an FY21 baseline. We were
pleased to recently get approval from
the Science Based Targets initiative
(SBTi) that our near-term emission-
reduction targets are science-aligned1.
So far we’ve electrified all our light
passenger vehicles and made good
progress with the rest of our fleet.
There’s still a lot of work to do given
that the majority of the emissions
happen in our supply chain.
We also continue to make good
progress with our Forever Forests
initiative, and are on track to sequester
enough carbon to cover our remaining
gross operational emissions by 2030.
Between our Half by 2030 and Forever
Forests initiatives our overall aim is
to manage the relationship between
Meridian’s operations and climate
change directly and ensure that
Meridian is net zero by 2030.
From a customer perspective, our
Process Heat Electrification Programme
is targeting 600 gigawatt hours (GWh)
of industrial heat. We’re building
our own public electric vehicle (EV)
charging network, with 61 chargers
now installed, as well as establishing
EV charging products for business
and residential customers to make
it as simple as possible for New
Zealanders to drive away from fossil
fuels. Our Certified Renewable Energy
product has also enabled more than
80 customers to purchase more
than 660GWh of Renewable Energy
Certificates this year. Further, we have
made a commitment to reinvest all
the Renewable Energy Certificates
into decarbonisation projects.
2 4
1
The SBTi has approved that Meridian’s underlying target to reduce absolute scope 1 and 2 GHG emissions by 50% by FY30 from a FY21 base year is in line with a 1.5°C trajectory, with our further commitment noted to also
reduce absolute scope 3 GHG emissions by 50% within the same timeframe (excluding all one-time construction emissions from major projects and all activities that are capitalised as part of renewable energy projects).
CHIEF EXECUTIVE & CHAIR REPORTMERIDIAN INTEGRATED REPORT 2022 Partnerships are vital
The many changes ahead of us can
seem daunting. New Zealand’s response
to decarbonisation must be nuanced,
sensitive, intelligent and bold. The
needs and priorities of many different
stakeholders must be assessed wisely,
and decisions made that work in the
best interests of the country and the
world collectively. We don’t presume
to tackle such challenges alone.
And we’re determined that our
partnership and stakeholder
relationships will be robust and as
effective as possible. Our approach
stems from a key word in our purpose
– fair. As we work with all stakeholders
around consents for natural resources,
and in particular iwi, we aim to improve
the economic, cultural and biodiversity
impacts of our business. Our overriding
goal is to create fair outcomes for
all. That’s an expectation we have of
ourselves, and that our shareholders
are now demanding of companies
generally.
Our working style
continues to evolve
Our people have continued to
deliver great work. Their responses
to COVID-19 restrictions have helped
reshape how we think about our
working styles, and as a result we’ve
developed a framework for flexible
working that we believe works for
individuals and the company.
We’ve all found that some tasks can
best be done away from the office,
but also teams feel the power of
being in the same space and working
collaboratively to solve issues.
Accordingly we are investing in our
work environments to ensure that
they facilitate the types of work we
do there and we make the most of
the spontaneity and energy that
comes when people gather together.
Flexible working arrangements are a
core part of our strategy to support
diversity and inclusion in our teams,
but it is clear that the stresses and
strains on many of our people living
in this changing world are becoming
more significant, not less. That’s why
we’ve put considerable effort into
supporting our people’s general
wellness and, in particular, their mental
wellbeing. It was pleasing to see our
efforts recognised at the Safeguard
Awards (New Zealand Workplace
Health and Safety Awards), where
Meridian won the Wellbeing award
for our ‘Care Team’ process. Our Care
Teams take a structured approach to
wrapping support around people
who need time to heal and help to
return to work.
We have a comprehensive safety-
improvement plan in play across the
business, and our key lagging safety
measure of total recordable injury
frequency improved this year. More
importantly, we’re confident that our
staff and contractors are as actively
engaged in safety as ever, evidenced
by a noticeable lift in positive safety
observation and incident reporting
in the past year. The Board and
Management recognise that building
a strong and positive safety culture
must continue to be our number one
priority, and we intend to intensify our
focus on keeping our people safe from
harm, particularly as we embark on
more construction projects as part of
our development programme.
We’re emerging from a unique period
in time, and with borders opening
up and the costs of living climbing,
competition to retain and attract
talent is only likely to increase. We
have noted an overall dip in our staff
engagement scores this year, so we
have more work to do. The Board
and Management are committed to
supporting our people and ensuring
our overall employee proposition
remains strong and keeps pace with
market developments. As such our
remuneration-review process this
year was costed to keep pace with
the cost of living. We were pleased
to award to staff an across the board,
special bonus of $1,000 after tax.
2 5
CHIEF EXECUTIVE & CHAIR REPORTMERIDIAN INTEGRATED REPORT 2022 Changes at Executive
Team and Board level
Our Board is now more diverse than
it has ever been and has the relevant
capabilities to oversee Meridian’s
strategy and guide the business
through the decisions that lie ahead.
The appointment of Tania Simpson
in particular will help us grow our iwi
relationships.
Graham Cockroft was appointed as
Non-Executive Director on 26 July
2022. Graham brings a strong finance
and energy industry background to the
Board and will add to the Board’s skills
and expertise following the retirement
of longstanding Director Jan Dawson,
whose term will conclude at our next
Annual Shareholders’ Meeting.
This year has also seen important
changes in our Executive Team. Tania
Palmer shifted from Chief People
Officer to head up our Generation
team. Her proven sector experience and
people-leadership skills are well suited
to leading that part of the business and
making strong changes that will future-
proof the business. Meanwhile Jason
Stein, who had been Chief Executive
of our Australian operations, took over
the Chief People Officer role, in which
he will continue to focus on enhancing
our safe and inclusive culture. Finally,
our long-time Chief Information Officer
(CIO) Bharat Ratanpal has joined the
Executive Team, adding his invaluable
technical skills to how we think about
deploying technology to improve our
customer propositions and our business
performance as well as protecting our
technology systems. It’s a sign of the
diversity and breadth of skills in our
leadership ranks that we have been
able to make all these key appointments
from within our existing talent pool.
A strong financial result
Despite challenging hydro conditions in
the Waiau catchment, this year’s financial
result was still strong and exceeded our
expectations. The result was once again
powered by good generation numbers
and a surge in retail sales volumes, with
our customer base up by more than
18,000 on the prior year.
The sale of our Australian operations
bolstered our balance sheet and gave
us the cash to push forward confidently
with our development options. With
Harapaki due to be completed in the
next year, developments like the Ruakākā
Energy Park and Mt Munro wind farm
are well advanced and the prospects
for hydrogen are looking encouraging.
The Board and Management believe
that Meridian is well placed to
make a sizeable contribution to the
decarbonisation of New Zealand.
Meridian has reported $664 million of
net profit after tax for the year ended
30 June 2022, including the benefit
of $214 million gain on the sale of its
Australian business and $281 million
of positive non-cash movements in
the value of hedge instruments.
Meridian has EBITDAF of $709 million,
up $17 million or 2.5% on the prior year
and a reported underlying net profit
after tax for the Group of $233 million,
a slight increase on the prior year.
The Board has declared a final ordinary
dividend of 11.55 cents per share, up 3%
from the previous year. This brings the
total ordinary dividends declared in FY22
to 17.40 cents per share, up 3% from the
previous year. The Dividend Reinvestment
Plan remains available for those investors
wishing to take advantage of it.
S&P Global Ratings has recently
reaffirmed Meridian Energy’s corporate
credit rating as ‘BBB+’/Stable/A-2.
Operating cash flow
700
600
500
400
300
200
100
0
$M
635
604
427
461
431
2018
2019
2020
2021
2022
26
CHIEF EXECUTIVE & CHAIR REPORTMERIDIAN INTEGRATED REPORT 2022 Underlying net profit after tax reconciliation ($M)
Financial year ended 30 June
Net profit after tax
Underlying adjustments
Discontinued operations
Hedging instruments
Net change in fair value of electricity and other hedges
Net change in fair value of treasury instruments
Premiums paid on electricity options net of interest
Assets
(Gain)/loss on sale of assets
Impairment of assets
Total adjustments before tax
Taxation
Tax effect of above adjustments
Underlying net profit after tax
Developing a better
future, together
FY22
FY21
664
428
(213)
(13)
(145)
(136)
(20)
–
2
(157)
(79)
(20)
–
–
(512)
(269)
81
233
72
231
Our momentum to contribute to
decarbonising the economy continued
to grow this year as we looked forward
to an exciting future. Building our
partnerships is part of forging a
strong, shared pathway for the future
along with an active development
programme. We’re working with our
customers to make it possible for them
to evolve to a renewable future as well.
The strength of our brands and the
resilience of our people remain key
advantages in our bid to do right by
New Zealand and continue to
deliver value for all our stakeholders.
On behalf of the Board and the
Executive Team, we would like to
thank our customers, our partners,
our investors and everyone in our
teams for your commitment to cleaner
energy for a fairer and healthier world.
2
2
0
2
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Solar installation at Lincoln University, Ōtautahi, Christchurch.
2 7
Our
natural
impacts
2 8
Mill Creek wind farm, Ohariu Valley, Te Whanganui-a-Tara, Wellington.
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Our goal is to help
meet Aotearoa’s
decarbonisation
and Net Zero by
2050 targets.
2 9
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Changing
conditions apply
A changing world demands responses on a range of fronts.
Through our business and with our partners we’re looking
to influence positive change, to protect environments, to
influence industry thinking and to find new uses for valuable
but discarded materials.
In this section:
• Drought conditions
• Water
• Biodiversity
• Breaches
• Half by 2030
• Forever Forests
• Climate-related disclosures
• Our kākāpō sponsorship
• Submissions this year
• Recycling hydraulic hoses
3 0
Benmore Hydro Power Station, Otematata.
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 A hot, dry Southland summer
Keeping a close eye on water
Relentlessly dry conditions in our Waiau catchment
from December 2021 through to the end of April 2022
produced the longest sequence of dry months on
record. While we expect volatility around water
levels, and we are well prepared operationally for
significant droughts, this was the second year in a
row with higher temperatures, drier conditions and
significantly reduced inflows in Southland.
Despite the frequency of dry events recently, our
climate data shows that we’ll experience wetter
seasons overall in the longer term.
Such volatility is a reminder both of the urgency to
think through and respond to the immediate and
upcoming challenges of climate change, and also
that risk containment and the ongoing development
of a diversified energy portfolio are key realities.
The completion of the Clutha Upper Waitaki Lines
Project will give us more flexibility in how and
where the energy we generate is used, and our
development programme bodes well for increasing
and diversifying our capacity in the years ahead.
Water use in New Zealand continues to be a highly
emotive issue for government, iwi, communities,
businesses and individuals, particularly around
quality and access matters. Water and waterways
are fundamental to what we do, which is why we
continue to work with as many parties as we can
to collaborate on and reach agreements around
water access and purity and water rights.
Hydro generation itself does not change the
chemical composition of water – certainly not
to the extent that land use can. However, we’re
committed to maintaining existing water quality
and to ensuring that standards in our catchments
are defined and adhered to.
Algal growth and weeds in particular can affect
water quality on the Waiau and Waitaki river systems.
We would prefer the waterways to be as clean as
possible, so we regularly release water into these
systems to dilute the potential effects of contaminants
if weed growth becomes problematic. We’ve had
these arrangements for a number of years, but they
are dependent on water availability, and the very
weeds and pests we are looking to minimise are
often associated with drought. This creates tensions.
That said, we’re looking for ways to increase these
flushing flows. Consenting discussions with
stakeholders are currently being planned.
Water use and impacts are managed in accordance
with our existing resource consent conditions, which
outline our ongoing monitoring and reporting
requirements. The overall framework is reviewed in
public resource management planning processes
run by regional councils. Any potential impacts on
freshwater quality that our activities could have are
managed through our resource consent conditions
and stakeholder agreements. We do discharge
fresh water from our Manapōuri Power Station
into Deep Cove, but we do so in accordance with
resource consent conditions and with annual marine
environment monitoring and reporting. We also
manage and report on the quality of the water
entering the lake, including the potential risk of
sediment-laden and turbid water, and report
annually on this to Environment Southland.
31
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Generation (GWh)
Capacity (MW)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
203
525
1,244
12,326
113
528
1,465
12,758
Z
N
o
r
d
y
H
Z
N
d
n
W
i
U
A
d
n
W
i
U
A
o
r
d
y
H
1,285
12,271
236
502
1,395
11,297
3,500
3,000
2,500
2,000
1,500
1,000
500
0
92.4
201
416
2,353
92.4
201
416
2,353
99.2
201
416
2,353
Z
N
o
r
d
y
H
Z
N
d
n
W
i
U
A
d
n
W
i
U
A
o
r
d
y
H
416
2,353
FY19*
FY19*
FY20*
FY20*
FY21*
FY21*
FY22**
FY22**
FY19*
FY20*
FY21*
FY22**
* Waitaki Power Station total generation capacity updated following restoration.
** Excludes Meridian Energy Australia, sold on 31 January 2022.
* Waitaki Power Station total generation capacity updated following restoration.
** Excludes Meridian Energy Australia, sold on 31 January 2022.
on
3 2
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022
on
Water consumption*
Mm3
New Zealand
FY18
FY19
FY20 FY21***
FY22
Fresh surface water (lakes, rivers)
65,562
74,183
85,339
66,659
76,523
Water returned to the source of
extraction at similar quality
53,823
61,832
72,994
54,994
65,535
Total net freshwater consumption**
11,739
12,351
12,345
11,665
10,988
Australia
Fresh surface water (lakes, rivers)
3,696
2,574
3,832
Water returned to the source of
extraction at similar quality
3,696
2,574
3,832
* Municipal water consumption not reported as minimal and not metered. While in New Zealand we have
no exposure to water-stressed areas, in Australia our power stations are operating in areas that can suffer
from drought. Note that we only hold the right to generate electricity from water passing through the
dams associated with our Australian hydro power stations; we do not hold the water rights themselves.
** Fresh water taken from Lake Manapōuri is released into Doubtful Sound, a marine environment, and is
not altered in terms of water quality.
*** Restated to include Lower Waiau flow data for Q4 in FY21, omitted in error. Additional 225 to both Fresh
surface water and Water returned to the source of extraction. Total net freshwater consumption not affected.
Plant availability
%
FY18
FY19
FY20
FY21
FY22
Hydro New Zealand
90.4
91.6
88.9
91.1
88.9
Wind New Zealand
83.9
83.3
89.8
89.0
86.3
Wind Australia*
Hydro Australia*
93.4
88.6
89.0
92.2
85.8
80.1
68.0
70.9
–
–
* Australia was divested in January 2022.
Outages for FY22 – Hydro: planned 9,217 hours, maintenance 15,128 hours, forced 15,404 hours;
Wind: planned (including maintenance)19,565 hours, forced 2,020 hours.
All the fiords in Fiordland have a
low salinity layer, a function of the
shape of the landscape and very high
rainfall levels. The ecology of all the
fiords is unique due to the naturally
low salinity layer and is one of the
reasons why black coral grows at
shallower depths here than is
common in other marine settings.
We also work closely with regional
government to monitor the potential
for erosion in the Lower Waiau and
Lower Waitaki Rivers, to review our
operations in the event of unexpected
impacts and to minimise the risks of any
contaminants from our stations entering
waterways. While there are no defined
water-quality standards for Manapōuri,
and the setting of standards and water-
quality impacts for Waiau hasn’t been
resolved, this is a developing issue for
local government, with changes to the
Resource Management Act 1991 and the
development of new water quality plans
that need to be lodged with the Chief
Freshwater Commissioner by 2024.
Maintaining biodiversity
Aotearoa New Zealand’s unique
biodiversity is nationally and globally
significant. Our goal to increase
renewable energy generation capacity
to meet Aotearoa’s decarbonisation and
Net Zero by 2050 targets means that
we operate and develop renewable
generation in natural environments that
contain or are in ‘close proximity’ to
‘critical biodiversity’ or ‘critical habitats’.
In order to minimise any negative
impacts that our operations have
on biodiversity, we comply with all
environmental legislation, including
resource consent conditions across
our assets. Recognising that potential
impacts extend beyond Meridian’s
own operations, our Supplier Code
of Conduct sets out our expectation
that our suppliers will also comply
with national and international
environmental policy and legislation.
This year we released our commitment
to biodiversity and deforestation,
which outlines our wider biodiversity
commitments and initiatives.
Our co-funding of Project River
Recovery is Aotearoa’s longest-running
conservation/business partnership
and a key part of our long-term goal
of minimising our impacts on water
and biodiversity in our catchments.
3 3
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 For more than 30 years, Project River
Recovery, a partnership with the
Department of Conservation, has
been preserving and restoring braided
river habitats in the upper Waitaki
catchment through predator and weed
eradication. This work has helped to
protect the endangered black-fronted
tern/tarapirohe and black stilt/kakī
colonies and increase their populations,
as well as increase wetland areas.
In our Waiau catchment we continue to
work closely with the Waiau Fisheries
and Wildlife Habitat Enhancement Trust
(the Waiau Trust) to enhance stream
and wetland habitats for fisheries and
wildlife. For example, the Trust has
restored and enhanced wetlands at
Rakatu and wetlands on land owned
by Meridian adjacent to the lagoon
at Te Waewae Bay. The Waiau Trust also
funds landowners in the area to fence
and protect waterways and riparian
margins on their land.
Ongoing ‘trap and transfer’ programmes
in both our hydro catchments minimise
our impacts on native fish such as
tuna (eels). We support and fund the
transportation of as many elvers and
migrant eels as possible across the
dam structures every year. Te Waiau
Mahika Kai Trust owns a property
at Te Kōawa Tūroa o Takitimu that is
being restored to provide mahika kai
resources. The Trust also owns a lodge
and accommodation on the site that is
leased and managed by local rūnanga
Oraka Aparima. The Trust has recently
developed a new restoration plan for
the property, working with all four
rūnanga in the area.
Part of the new multi-decadal vision
for Te Kōawa Tūroa o Takitimu involves
developing a carbon forest, and
Meridian is partnering with the Trust to
deliver carbon sequestration. Together,
we made our first application for carbon
credits from existing native regeneration
this year, with new planting planned to
start next year.
A small area of wetlands at our Harapaki
wind farm site was affected due to
the road construction required. We
have offset these impacts by enlarging
and enhancing other wetlands on site
through resource consents obtained
under the new National Policy
Statement for Freshwater Management.
No compliance breaches
There were no significant instances
of non-compliance with laws and
regulations and no fines were paid
during the reporting period. We
determined no significant instances
of non-compliance with reference
to the severity of impact and from
sectoral benchmarks.
3 4
Releasing tūna (native eels) as part of our Trap and Transfer programme.
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Energetically pursuing
emission reductions
The significant take-out from the
Intergovernmental Panel on Climate
Change’s latest report is the need for
action and tangible deliverables. Our
biggest challenges are embedding
climate-action thinking into our
business-as-usual activities, and
increasing accountability, resourcing
and education. We employ or contract
more than 1,000 people.
In FY22 our operational emissions
were 32,708 tCO2eq (including
7 months of Meridian Energy
Australia emissions). Our direct
scope 1 emissions are primarily
driven by combustion emissions
from our Manapōuri ferry and barge
(transporting staff and equipment
to the power station) and vehicle
travel from our own fleet and rented
vehicles. Adopting the market-based
approach for electricity consumption
and scope 2 emissions, our reported
emissions are zero as we have matched
our consumption to renewable energy
production attributes from Meridian’s
assets using Renewable Energy
Certificates issued by the New Zealand
Energy Certificate System (NZ ECS).
Over 95% of our emissions are scope 3
emissions that occur in our supply chain,
predominantly from goods and services
we purchase and emissions associated
with sub-leased farms on our assets.
Local and global suppliers provide our
generation business with the parts and
components to build and maintain our
generation assets. We also work with
general engineering consumable and
specialist parts’ suppliers, and service
providers including ICT and facilities’
management providers. In our retail
business we have a very short supply
chain because the physical assets used
to distribute electricity and meter
its use are managed by national and
local lines and metering companies.
Our retail operation and corporate
requirements include physical facilities
and ICT, sales and marketing, billing
and governance functions.
Half by 30 is our target to halve gross
scope 1, 2 and 3 emissions by FY30 on
an FY21 baseline. We were pleased to
recently receive vapproval from the
Science Based Targets initiative (SBTi)
that our near-term emission-reduction
targets are science-aligned2. In support
of our SBTi application, we restated
our baseline year from FY19 to FY21
(Meridian Energy Australia emissions
excluded), to ensure a most recent
GHG inventory was used – this has not
decreased the emissions abatement
effort required from here. We look
forward to submitting our net-zero long-
term target to the SBTi for approval soon.
Historically, we’ve focused our
emissions-reduction efforts on
reducing our light vehicle fleet and
electrifying the balance. We now have
a 100% light vehicle fleet and are
making good progress towards our
2025 goal of completely replacing the
internal-combustion-engine utility
vehicles used by our hydro and wind
asset maintenance teams. That in
itself won’t be enough. Achieving Half
by 30 will require a deliberate and
significant effort across the Group,
and in particular through our supply
chain, where more than 95% of our
operational emissions lie.
Two years ago, we started engaging
with our suppliers through a plan
that built on our Supplier Code of
Conduct. The goal was to examine
how our suppliers could undertake
climate actions that would work for their
businesses and enable us to achieve a
net-zero-carbon Aotearoa in 2050. As
a result, specific contracts now include
clear and agreed key performance
indicators (KPIs) for reporting emissions.
2
The SBTi has approved that Meridian’s underlying target to reduce absolute scope 1 and 2 GHG emissions by 50% by FY30 from a FY21 base year is in line with a 1.5°C trajectory, with our
further commitment noted to also reduce absolute scope 3 GHG emissions by 50% within the same timeframe (excluding all one-time construction emissions from major projects and all
activities that are capitalised as part of renewable energy projects). A methodology to classify scope 3 targets is under development by the SBTi.
3 5
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 This year we developed a Group Half by
30 roadmap that is now embedded in
our Climate Action Plan. The roadmap
includes six areas of focus, all three
scopes of activity and three horizons,
with targets that together form our
plan to deliver on our Half by 30
commitment. Furthermore, we have
committed to the establishment of an
internal decarbonisation fund, funded
by a voluntary annual contribution
linked to our scope 2 electricity
consumption. In essence, we have
committed to ‘charge ourselves’ the
equivalent net revenue received per
Renewable Energy Certificate that
our customers purchase, for the total
number of Certificates we utilise
annually. This aligns with the intent of
our Certified Renewable Energy offer
to customers3, where we reinvest net
proceeds into decarbonisation projects.
To kick-start our efforts, we have
backdated this funding allocation to
when we first used Renewable Energy
Certificates for our scope 2 consumption
in FY20. The purpose of this fund will be
to advance decarbonisation and energy
efficiency projects in our business that
might not have occurred yet. We look
forward to sharing more on our funding
deliverables and, importantly, wider
emission reduction initiatives in FY23.
Further to the emissions within our
operational emissions boundary, we
also account for emissions associated
with the major maintenance and
one-time construction of renewable
generation assets. During FY22 these
emissions were 8,243 tCO2eq and were
largely driven by the construction of
the Harapaki wind farm. We exclude
these one-time emissions from our
Half by 30 boundary because our
emission reduction and minimisation
efforts are different and targeted to
each project’s unique challenges.
These emissions are managed and
minimised through project-specific
focus areas and metrics, as we believe
this enables us to focus our efforts
on the most material sources of
emissions that will be unique to a
large development project. For
example, the Harapaki wind farm
includes a Sustainability Management
Plan with KPIs. All suppliers are required
to report on emissions and have
KPIs on the adoption of continuous
improvement initiatives. Sustainability
audits and regular meetings with
suppliers occur to ensure mutual
learning and the follow-through of
improvement actions. The project
team holds a register of sustainability
initiatives to capture ideas and track
those that have been implemented.
For full detail on our FY22 GHG
inventory including data sources and
quantification methodology, please
refer to our GHG Inventory4, which
has been independently assured
to a reasonable level against the
requirements of ISO 14064-1:2018,
the GHG Protocol, and the Corporate
Value Chain Standard.
There is plenty for us to build on.
Our renewable development pipeline,
the land we are acquiring for new
projects, construction at Harapaki
and the advances we are making
industrially with process heat all point
to solid momentum. The significant
increases in GIDI funding will also
form a solid investment basis for
encouraging commercial and industrial
customers to move away from fossil
fuels and for us to deliver additional
renewable capacity.
The take-up of our Certified Renewable
Energy product strongly suggests
that businesses have an appetite
for change. This year, 81 customers
signed up to purchase 662GWh of
Renewable Energy Certificates to
align their electricity consumption
with renewable energy generation
attributes. The net proceeds from
the purchase of these products
have been invested into social and
decarbonisation projects, helping
KidsCan to electrify its fleet and
funding a solar installation for
Rowing NZ.
3 6
3
4
meridianenergy.co.nz/business/sustainable-options/certified-renewable-energy
meridianenergy.co.nz/about-us/investors/sustainability/greenhouse-gas-emissions
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 \
Progress against our Half by 2030 goal (tCO2e*)
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8
2
Y
F
9
2
Y
F
0
3
Y
F
* Excludes Meridian Australia emissions.
tCO2e
Scope 1
Scope 2
FY20
1,177
17
FY21
1,376
14
FY22***
792
35
Scope 3 operational
42,250
31,085
31,881
Total Group operational emissions*
43,444
32,475
32,708
Scope 3 energy purchased and onsold**
New Zealand electricity
0
0
0
Australian electricity and gas
813,054
881,461
521,642
Scope 3 one-time construction and upgrades
32
285
8,243
Total Group value chain emissions
856,530
914,221
562,593
* Emissions from our electricity purchased and onsold are calculated using market-based methodologies.
In New Zealand we use the annual netting off methodology. In Australia we used the National Carbon Offset
Standard (NCOS) administered by the Australian Government.
** Group operational emissions are offset using Gold Standard Voluntary Emission Reductions and credits
purchased by Powershop Australia as part of the NCOS, and taking into account credits cancelled by suppliers
against their own emissions.
*** Meridian Australia was sold in January 2022. Emissions for Australia are included to 31 January 2022 (7 months only).
Meridian does not track a GHG emissions-intensity metric. As a generator of 100% renewable energy, the fuel source
for the electricity generated has no emissions. Therefore, GHG emissions intensity is not the most relevant metric for
Meridian to adopt to track emission reductions.
Total operational
GHG by scope (tCO2e)
Scope 1: 792 (2%)
Scope 2 (market based): 35 (0.1%)
Scope 3: 31,881 (98%)
37
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022
Planting out a better future
For some years, Meridian has achieved
carbon neutrality for its operational
emissions by purchasing and
surrendering Gold Standard Verified
Emission Reductions. Over the course
of this decade we’ll look to displace
these Verified Emission Reductions by
creating our own carbon sink through
our Forever Forests programme.
Meridian committed to Forever Forests
in 2019, investing in permanent forests
in Aotearoa that also offer broader
biodiversity and social benefits. A
mixed model of exotics and natives,
planted predominantly on our own
land, will transition to 100% natives
over time. The emission removals from
our Forever Forests are sized to align
with our residual operational emissions
in FY30, after achieving our Half by 30
gross emission-reduction target.
Highlights this year have included:
• securing over 55% of the
land required
• 85,000 trees planted, with a
further 600,000 ordered to
plant in the coming FY23 season
•
•
receiving a first tranche of credits
for our first planting projects from
2020, with other planting projects
now registered
involving our people and
communities in the plantings.
We have undertaken six native-
only plantings involving Meridian
staff so far, with more to come
including the Tūī Corridor project
in Christchurch. Alongside our
partnership with The Christchurch
Foundation for our Christchurch
plantings, three partnerships are
also in place with private landowners
near our wind farms and with iwi-
based trusts.
We’re glad that we chose to pre-order
hundreds of thousands of seedlings
in 2020 – in advance of land being
available – because the market has
rapidly developed since then and
exotic and native suppliers are now
under tremendous demand pressure.
3 8
Tūī Corridor planting, Christchurch Adventure Park, Ōtautahi.
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Disclosing openly
It’s good to see pressure building on
listed companies to publicly disclose
their climate-related issues. Mandatory
climate-related financial disclosure
legislation was passed this year,
making such reporting compulsory
from CY23. We see reporting as a key
part of holding ourselves responsible
and answerable to stakeholders, and
on that basis have been preparing
climate-related disclosures since
2019 (aligned with the Task Force on
Climate-related Financial Disclosures
framework) that address governance,
risk management, strategy and our
climate-related metrics and targets.
We look forward to ensuring alignment
of our FY23 climate-related disclosures
with the incoming Aotearoa New
Zealand Climate Standard 1: Climate-
related Disclosures requirements.
Supporting kākāpō
through sponsorship
In keeping with our philosophy that
actions matter most when it comes
to environmental and conservation
efforts, we have continued our
successful partnership with the
Department of Conservation and
Ngāi Tahu to support the Kākāpō
Recovery Programme, which aims to
get kākāpō off the endangered list
and back to their former natural range.
As things stand, the kākāpō is an
endangered national treasure, with
the current population sitting at fewer
than 200 birds. Our involvement
helps fund research and initiatives
relating to genetics, nutrition, disease
management and finding new
sites, and raising awareness of
this delightful native parrot.
It’s great to be able to report that
the 2022 breeding season has been
successful, with 57 chicks hatched.
We look forward to extending our
involvement with this programme
when arrangements are renewed
next year.
3 9
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Adding to public policy discussions
As an engaged and publicly listed
company, we continue to actively
contribute perspectives and ideas to
public policy, legislative and regulatory
developments. We do so to ensure that
decision-makers are fully informed
of the implications of what’s being
mooted, and that decisions are made
in the best interests of our customers
and all New Zealanders. This year
we provided submissions to a wide
range of organisations, including
the Electricity Authority (EA), the
Ministry of Business, Innovation
and Employment, the Commerce
Commission and Transpower.
As we observed last year, the New
Zealand electricity market continues
to incentivise the construction of
new renewable electricity generation
and works well because successive
governments and regulators have
supported and encouraged its
operation. It’s vital for the country
that current and future governments
continue to deliver policy stability,
transparency and continuity on
climate change.
The long-running project of the EA
to reform the Transmission Pricing
Methodology (TPM) has concluded
with the Authority deciding in April
2022 to adopt a new TPM that is
expected to be in place from 1 April
2023. This new TPM is expected to
deliver benefits to New Zealanders
of approximately $1.8 billion over the
next 28 years, to encourage more
efficient use of the grid and more
efficient investment in transmission and
generation assets. It is anticipated that it
will reduce the cost of electricity at peak
times and over time lead to lower prices
for all consumers. Meridian supported
the Authority in successfully opposing a
High Court challenge to the new TPM.
Climate policy also directly affects us,
which is why we monitor it closely. As
part of the Emissions Reduction Plan,
the Government has signalled that it
has allocated $350 million for industrial
decarbonisation and vehicle scrapping.
The Plan has the potential to generate
greater electricity demand and, we
believe, will be another incentive to
invest in generation. The Government
also expanded the GIDI fund to $650
million over four years (from $69 million
to date) to provide funding for high-
impact process heat decarbonisation,
network connections and network
upgrades to enable electrification and
committed $220 million to the State
Sector Decarbonisation Fund.
The Emissions Trading Scheme with its
recent improvements will play a critical
role in the transition to a low-emissions
future. It now provides a sinking cap
on total emissions and price signals to
ensure businesses are incentivised to
make the transition to a low-emissions
future successfully. Complementary
policies may be needed, and for
us priority actions would include
increasing the number of EVs on our
roads and increasing total renewable
energy use, particularly in heating for
industrial processes. The Government
has taken some important steps in the
right direction with the expansion of
the GIDI fund, the clean car discount
scheme, the EV exemption from Road
User Charges and the Low Emissions
Transport Fund. It‘s also important that
the transition happens in an equitable
and inclusive way.
There is ongoing uncertainty around
the proposed Government investment
in the Onslow Manorburn pumped
hydro project. Such a development
would influence investment decisions
going forward, but it will also take
time to implement, and with that
in mind we’re monitoring decision-
making in that space.
The outcomes of the regulator’s
review of competition in the whole-
sale market were published during
the year. The initial paper looked
at indicators across the wholesale
market. Generally, the review found
that pricing accurately reflects the
wholesale market situation, but the
EA has said there are some things it
will continue to monitor. Wholesale
electricity prices in New Zealand
remain higher than historical averages
primarily because of ongoing concerns
about gas availability and global
events (which have affected energy
prices more broadly). We recognise
these prices are challenging for larger
consumers with direct exposure to
the wholesale market, but they reflect
supply and demand and encourage
further investment in renewable
electricity generation.
In August, the Authority created an
‘urgent code amendment’ temporarily
for 9 months, while it consults on
whether these new rules should be a
permanent feature for the market. The
amendment puts in place some new
rules on industrial electricity contracts
of 150MWs or more. Meridian will
submit on the consultation detail, but
it’s clear Meridian’s current contracts
comply and we will work with the
Authority to ensure all future
contracts also comply.
This year we made submissions
on a range of topics including the
Emissions Reduction Plan, the review
of wholesale market competition, the
electricity industry reform bill and
climate-related disclosures. You’ll
find copies of these submissions
on our website at.meridianenergy.
co.nz/about-us/investors/reports/
submissions
4 0
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Our impacts anchored on the natural world
A summary of our nature-based impacts outlined in this section is provided below, including our associated commitments and goals where relevant.
Impact
Description
Commitments and policies (including mitigation and remediation actions)
Diversion and
reduced river
flows and water
quality issues
Harm to
biodiversity
in water
Our structures and water management can directly affect the health
of river systems, which can become obstructed and have reduced
river flows due to hydro dams and generation activities. Some of these
impacts occur in conjunction with impacts caused by others.
We have a direct effect on the health of aquatic biodiversity
(particularly native fish species) affected by hydro dams and
restricted river flows.
Adverse effects
of generation assets
and activities on
cultural values
Our presence directly affects the cultural values of iwi relating
to land, waterways and biodiversity because they are affected
by our operational presence and use of our generation assets.
This creates a negative impact on iwi and their relationships with
the land, water and other taonga.
Improving
biodiversity
on land
We contribute to enhancing natural ecosystems on Meridian-
owned/managed land as well as non-Meridian-owned land by
supporting planting and biodiversity protection programmes.
Disposal of
waste and
other emissions
We cause waste-to-landfill and harmful gaseous emissions
from our corporate and generation activities.
We collaborate with organisations like Guardians of the Lake and fund Project River Recovery5 to ensure stakeholder
feedback is heard and quality mitigation and management measures are in place. Lake Te Anau water levels are regarded as
well managed. Our biodiversity and deforestation commitments6 outline wider commitments and initiatives.
We’re committed to the Elver Trap and Transfer Programme7. An opportunity exists to create greater awareness of this in
local communities. Our biodiversity and deforestation commitments8 outline wider commitments and initiatives.
Our Group Code of Conduct requires genuine engagement with key relationships and a consideration of impacts,
including on iwi, as a result of business decision-making. We are committed to authentic engagement with iwi and
showing genuine respect for the Waitaki and Manapōuri catchments. We’ve committed to supporting the Te Waiau
Mahika Kai Trust.
We are committed to Forever Forests – an emission-removal commitment with biodiversity and social benefits based on
adopting a mixed exotic/native forest model, transitioning to 100% natives over time. A joint venture with Te Waiau Mahika
Kai Trust for a carbon forest will result in tree planting starting in July 2022. We also have related biodiversity investments
and partnerships such as the Kākāpō Recovery Programme9 and achieve impacts with the Tūī corridor10. Our biodiversity and
deforestation commitments11 outline wider commitments and initiatives.
Our Half by 30 commitment is is to halve operational emissions (including waste) by FY30 and against a FY21 baseline.
We publicly disclose on progress annually via the Annual Report, GHG inventory and most recently a new Climate Action
Plan with initiatives and targets by focus area12. We are proud to have achieved approval from the Science Based Targets
initiative (SBTi) that our near-term emission reduction targets are science aligned. Outside the Half by 30 boundary, our
Supplier Code of Conduct13 outlines requirements for suppliers to measure and disclose emissions. Major projects and
developments at Meridian include additional, targeted sustainability KPIs – for example, KPIs for Project Harapaki (wind
farm construction) include waste and emission.
Policy change that
enables the rapid
transition to a low-
carbon-energy future
We contribute to public policy, legislative and regulatory
developments by advocating for, and supporting, a policy
framework that fosters effective action on climate change.
We actively and regularly provide thought leadership, backed by evidence and data where practical, to inform policy change
that enables rapid decarbonisation. Meridian makes submissions to organisations such as the Climate Change Commission,
Ministry for the Environment, Infrastructure Commission, Ministry for Business, Innovation and Employment and more. Our
publicly available submissions are available at meridianenergy.co.nz/about-us/investors/reports/submissions.
Leading and
influencing change
and progress on
sustainability issues
Through our leadership and influence, we can contribute
to ambitious commitments and action in collaboration with
other companies and organisations on social and environmental
issues that are most relevant to the business.
Our pace, scale, level of ambition and the partnership approach we adopt to drive progress on sustainability issues is
what defines success in this impact area. Importantly, delivering results and impact is key. Recent success have included:
•
•
•
the electrification of boilers with customers such as ANZCO
the Southern Green Hydrogen project
a commitment to move early on committing to and establishing due diligence processes on issues such as Modern
Slavery risk and Climate-related disclosures
in FY22 we also played a leadership role in informing the development of the refreshed NZ Climate Leaders Coalition
pledge announced in June 2022, with the contribution of case studies to support technical guidance developed.
•
There is an opportunity for us to provide even greater leadership, influence and transparency on our sustainability
commitments and views on how to advance greater impacts collectively.
5
6
7
8
9
10
11
12
13
meridianenergy.co.nz/power-stations/hydro/project-river-recovery
meridian-production-media.s3.ap-southeast-2.amazonaws.com/public/Investors/Governance/Policies/2022/MER0189-Biodiversity-Commitment.pdf
meridianenergy.co.nz/power-stations/hydro/elver-trap-and-transfer
meridian-preprod-media.s3.ap-southeast-2.amazonaws.com/public/Investors/Governance/Policies/2022/MER0189-Biodiversity-Commitment.pdf
meridianenergy.co.nz/community-support/kakapo-recovery-programme
meridianenergy.co.nz/community-support/tui-corridor
meridian-preprod-media.s3.ap-southeast-2.amazonaws.com/public/Investors/Governance/Policies/2022/MER0189-Biodiversity-Commitment.pdf
meridianenergy.co.nz/about-us/investors/sustainability
meridianenergy.co.nz/assets/Investors/Governance/Policies/Supplier-Code-of-Conduct.pdf
41
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 “They then worked out how
to separate out the rubber
and steel to enable them
to be sustainably reused.”
4 2
4 2
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Shredding the impact
of hydraulic hoses
Hydraulic hoses, made of
fluoropolymers and silicone,
elastomers, metal and
thermoplastics, are used
extensively in the energy
sector. Designed to move
liquids at high pressure and
with very high reliability,
they are complex to make,
expensive to buy and difficult
to dispose of once they reach
end-of-life because they
don’t decompose in a landfill.
Each of the Siemens 2.3 megawatt
(mw) wind turbines at West Wind farm
has approximately 50 of these hoses –
which amount to 3,162 hoses (weighing
4,278 kilograms) at this site alone. All
are approaching the end of their life
expectancies. Additionally, our Te Āpiti,
Te Uku and White Hill wind farms have
a number of hoses in a similar situation.
When we started exploring recycling
solutions for these used hoses, it soon
became evident that there was no
way to do this in New Zealand. We
contacted Macaulay Metals, a local
scrap metal recycler in Wellington,
and they agreed to work with us
towards finding an environmentally
friendly way to dispose of the hoses.
Macaulay Metals subsequently
invested in an Italian rasper machine
that cut the hoses into manageable
lengths before grinding them into tiny
pieces. They then worked out how to
separate out the rubber and steel to
enable them to be sustainably reused.
Since then, Macaulay Metals has
arranged for the rubber granules to be
re-manufactured into rubber matting
for playgrounds in New Zealand, and
for the steel to be reused by Hyundai
steel in Korea.
Two years on, we have an innovative
way of recycling hydraulic hoses in
New Zealand. This is a positive step
not only for Meridian’s work towards
sustainability, but for other companies
that previously had no way of recycling
their used hydraulic hoses.
4 3
OUR NATURAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Our
technology
impacts
4 4
Electric Air plane flying over Te Whanganui-a-tara Wellington.
OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 EV charging headlines
our contribution to
transport electrification.
4 5
OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 2
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Enabling a new
energy future
Our ability to respond meaningfully to the requirements
of future energy demands lies in our ability to responsibly
evolve the underlying infrastructure. This year we continued
to upgrade and develop our own assets at the same time as
we worked with our customers to future-proof theirs.
In this section:
• Flux
• Project Momentum
• Generation
• Transformation
• Our development programme
• Transport electrification
• Process heat electrification
• Distributed energy
• Scada
• Cyber security
• Turbine technology and grid scale battery
Demand for Flux continues to increase
Flux’s flexible, innovative software helps energy
retailers in New Zealand, Australia and the UK to
achieve best practice, operational improvements,
cost savings, risk reductions, digital transformations
and change management, and data insights. The
products, which include an industry-leading complex
billing engine, enable energy retailers to offer more
pricing options and integrate with a wide range of
chosen partners. Indeed, the Flux platform underpins
our own Group activities, enabling us to continue
to grow customer numbers using a scalable and
modern platform.
This year, Flux has focused on developing a
commercial and industrial product that will enable
retailers working with enterprise-level clients to
offer flexible services and bring responsive products
to market. It hasn’t been easy. Many retailers have
difficult and complex underlying systems that have
evolved over many years. What’s more, the segment
itself is grossly under-served by quality software.
Flux sees real opportunities here to assist retailers
that are under significant pressure from shifts in
wholesale markets and the pressures of increasing
regulation. The goal is to provide them with quality
technology solutions that are flexible and that enable
them to take up decarbonising opportunities such as
virtual power plants and power purchase agreements.
A healthy sales pipeline clearly signals the need.
Flux’s focus now is on choosing the right customers
going forward – retailers who are ambitious, growing,
ready to make a difference in the world and insistent
on new things.
Finding and securing the talented people needed
to make this happen remains the greatest challenge.
A global shortage of tech talent has seen salaries rise
exponentially. Fortunately, the people we’re looking
for are attracted to Flux’s pioneering remote-first way
of working, which continues to evolve.
All on the same platform (nearly)
Our three-year Project Momentum has involved
migrating our previously diverse customer bases to
the Flux platform. We have now successfully moved
90% of our customers, including all our residential
customers. Currently, we’re migrating our most
complex customers – our commercial and industrial
clients – and we expect that to be complete in the
first quarter of the new financial year. While on
the face of it Project Momentum may look like a
technology change, it has in fact been a business-led
project that had people, process and platform impacts.
The project itself is already delivering significant
benefits. Customer orientation across our culture has
improved for all segments, leveraging the strengths
of our multi-brand strategy. We’ve adopted more
agile, self-determined ways of working. We’ve
achieved significant growth throughout the project
period despite the major business change, and
this has given the business confidence that it can
continue to scale as required. Finally, we now have
one platform for both our brands, and this has
increased speed to competency, raising service
levels and lowering costs, because we now require
fewer resources to provide better customer service.
47
OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 Challenges for
our Generation teams
Omicron brought more than its
fair share of disruptions and work-
rounds to a busy maintenance and
upgrade programme this year for
our Generation teams and contractor
partners. Despite significant challenges
around staffing and capacity, scheduled
works were completed without any
major impacts on production. Ageing
turbines at our White Hill wind farm
near Mossburn in Southland will
mean that asset will need a major
refurbishment during the next year.
Our ongoing challenge is finding
experienced people with the technical
skills we need. Historically, we’ve always
been able to rely on sourcing such
talent from within New Zealand and
overseas (where wind technology is
well established), but with very low
unemployment in New Zealand, along
with immigration constraints (those
people have not been coming here
because of COVID-19), we’ve found it
harder to source talent than previously.
Domestic and global competition for
such skills is now intense.
Transforming our thinking
Our Asset Management excellence
approach to our Generation business
has proven robust. For many years, it
has enabled us to develop systematic
ways of working that manage risks
very well. New considerations are
emerging that will require us to re-
examine how that approach will work
in the future. Extreme weather events
are becoming more frequent because
of climate change, and they can affect
our ability to produce megawatts at our
wind farms and hydro assets. We plan
for these risks so we’re able to continue
to produce the power our customers
need – through actions like arranging
cover from other generators or buying
power on the spot market. These
alternatives can become expensive
because of wholesale price volatility,
so, as we’re a virtually integrated
company, it makes sense that we
try to generate as much as we can
of the power our customers need.
At the same time, as weather
patterns are changing, demand on
plant availability is rising, and it will
increase in the longer term as we
shift to fully renewable generation
nationally. A lesser reliance on thermal
will mean New Zealand becomes
more dependent on solar and wind.
But because neither wind nor solar is
storable, we need flexible and highly
reliable hydro generation. The challenge
we have set ourselves, as more of our
wind and solar assets come online, is
to shift our emphasis to wind and solar
first, backed by hydro – rather than
the other way round.
That shift will see us steadily run
hydro, but more flexibly than we do
right now. Such a shift will have big
implications. For example, it could
mean that it becomes harder for us
to get access to plant for projects
and maintenance and this will require
a rethink of our maintenance and
replacement programmes. Technology
and data will play a key role in our
future decision-making, and we’re
introducing a dedicated team to
accelerate that.
The transformation programme that
we have underway in Generation
right now is about encouraging our
people to take up these challenges.
A new structure will also help us to
move more quickly towards where
we need to be: more data driven with
more emphasis on different time
horizons; scoping projects earlier than
we do now; resourcing our pipeline
of activities in new ways based on a
new approach; and really looking at
how we can achieve our Half by 2030
objectives within the Generation part
of the business. Key for us is removing
complexity and duplication, increasing
speed to execution and increasing the
visibility of the changes underway.
4 8
OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 Exciting options emerge
NZAS consumes the equivalent of
around 40% of Meridian’s generation
output, and 12% of the national load,
at its aluminium smelter at Tīwai Point.
Its contract with Meridian expires at
the end of 2024. The expiry of that
contract and the potential exit of NZAS
from New Zealand could enable us to
rethink how we utilise that load.
With aluminium prices currently
higher than they have been, and NZAS’s
major shareholder Rio Tinto indicating
that, globally, it’s on a journey to low
carbon and net zero, a lasting presence
at Tīwai for NZAS is no longer off the
table, however, as we have publicly
stated, we would only be interested in
signing a new contract with NZAS if:
•
•
•
•
it addressed with key stakeholders
the need for environmental
remediation of the Tīwai site
it made a long-term commitment
to New Zealand
it committed to paying a sustainable
price for the electricity it consumes
it was prepared to reduce its
consumption in dry years for the
benefit of the wider electricity system
and other consumers of electricity.
In recent years we’ve been working
closely with Transpower on the
Clutha Upper Waitaki Lines Project.
The completion of this project ahead
of schedule has greatly improved
Meridian’s options for redistributing
5,000GWh currently consumed by
the smelter to other uses in or beyond
Southland. For example, we could
shift the electricity load used to better
address national and even international
decarbonisation via green hydrogen,
or large-scale data centres. We could
also allocate the power to our drive
for net carbon-zero through a scaled
electrification of process heat.
A lot can happen in 12 months –
and while long-term certainty on
any future NZAS contract remains
desirable, it’s fair to say we have a
new mix of options to consider as we
power up our development pipeline
and look for ways to allocate load
that will deliver the best returns for
investors and for the country.
The development of green hydrogen
has the potential to significantly
decarbonise global industries like steel
manufacturing, fertiliser manufacturing
and heavy transport (trucks, trains and
shipping). Our green hydrogen plans
have attracted a lot of interest globally.
We have opened discussions with four
providers and have since short-listed
two developers, Woodside Energy
Group and Fortescue Future Industries.
A year ago, when we first suggested
hydrogen production as a meaningful
way forward, some thought our plans
ambitious. Since then, and particularly
in this calendar year, interest in green
alternatives has taken off as the search
for energy security accelerates in
Europe and beyond. Take-up at all
levels of the value chain can only work
to our benefit, so we welcome the
increasing interest domestically and
internationally in what we’re planning.
One of the advantages of hydrogen
is that it could add another option
in the event of dry-year challenges.
It could provide a large amount of
New Zealand’s dry-year reserve at a
fraction of the cost of building new
power stations. Having a large amount
of demand with the flexibility to
turn it down or off during a dry year
could really benefit New Zealand in
managing the security of our energy
supply at much less cost than other
dry-year options currently being
considered.
Green data projects are also in the
pipeline, but progress here is slower
and steadier and on a smaller scale.
While we still regard green data as a
potential step-change in connectivity
for New Zealand, Australia and
South East Asia, where New Zealand
continues to enjoy an advantage away
from geo-political hotspots, there’s
more work needed.
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OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 S
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Construction underway at Harapaki wind farm, northern Te Matau-a-Māui, Hawke’s Bay.
MERIDIAN INTEGRATED REPORT 2022
Harapaki wind farm
progressing well
Construction is underway and
we’re making good progress at our
Harapaki site in Hawke’s Bay, despite
the complexities of building our
sixth wind farm at elevation, bitter
easterlies, cyclones and the challenges
of COVID-19. Once completed, New
Zealand’s second-largest wind farm
will have 41 turbines generating up
to 176MW of renewable energy and
will increase our wind assets by 40%.
It’s been a pleasure to work with local
iwi Maungaharuru Tangitū and Ngāti
Hineuru, who, among other things,
have been helping us with cultural
monitoring on site.
A good year for developments
New Zealand’s long-term challenge
is the sheer rate of decarbonisation
required. By 2050 it is expected that
New Zealand needed to have created
at least 20,000 GWh and potentially
as much as 60,000 GWh of new
generation. This equates to between
$14 billion and $44 billion in today’s
costs, though technological advances
are expected to bring those costs down.
For the market as a whole, this implies
an average run-rate of building the
equivalent of between 1 to 4 medium
sized wind farms every year for the
next 29 years. The speed at which new
generation needs to be delivered will
depend on the shape New Zealand’s
decarbonisation trajectory.
For Meridian, this could mean the
equivalent of a new $400 million
wind farm every three years through
to 2050. Our current development
pipeline amounts to 2.3 gigawatts
(GW) (5,500GWh), (made up of
secured options of 1.1GW and advanced
prospecting of 1.2GW), which means
we’re having to work hard to find,
develop, consent, build and generate
the energy needed to keep up with
projected demand.
While we continue to look for new
wind and solar sites, there are
additional uncertainties. New resource-
management legislation is proposed
to be more restrictive because of the
requirements for environmental bottom
lines, and with transmission load and
connections growing, more capacity
will be needed. Talk of 100% renewable
energy nationally is also optimistic,
because although there will be no new
gas baseload, gas still has a role to
play in keeping peak load running as a
firming agent for some time yet.
In addition: we’re progressing studies
for a potential wind farm at Mt Munro
in Wairarapa, where we’re looking to
consent a 90MW site; we’ve secured an
additional battery site at Bunnythorpe,
near Palmerston North; we’ve secured
land for a potential wind and solar farm
in Taranaki; and we’re prospecting for
solar and wind sites in the North Island
and targeted South Island locations.
This has, however, been a good year
for developments, with options secured
for future development across wind,
solar and batteries. At Ruakākā Energy
Park, we’re currently tendering for a
Stage 1 100/200MW battery energy
storage system. This system will increase
South-North Island power transfer,
support grid stability and supply
electricity regionally and nationally.
At Ruakākā, we have engaged with
local iwi Patuharakeke and look
forward to involving them as an
important partner. Our hope is that
we can establish a partnership like the
one we have at Harapaki, where local
iwi have acted as cultural monitors
during the development phase,
and pursue other opportunities for
collaboration and mutual benefit.
We’re also planning a 75MW solar
farm that will be connected to
the national grid and also supply
electricity regionally and nationally.
Both projects will improve Northland’s
energy security.
We expect to have consents approved
for the battery by the end of September
2022, with construction expected to
start in 2023 and be complete late 2024.
Consents for solar will be lodged in early
2023, with construction anticipated early
in 2024 and completion by early 2025.
A key consideration for us at
Ruakākā Energy Park is that shipping
and material costs are rising, meaning
we’ll need to look carefully at costs
and timelines as we push the project
forward. Lithium costs, for example,
have risen 400–450% in the past year.
We’re also committed to engaging with
suppliers to ensure that sustainability
goals are enshrined in how they work
and that they’re meeting anti-modern
slavery considerations.
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OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 Decarbonising Aotearoa
As climate change awareness increases,
the ways customers want to use energy
are changing. In addition to seeking
out new generation opportunities
and getting smarter with our existing
assets, we’re investing in changes at
both commercial and industrial levels
and at the household level that will
support decarbonisation of the New
Zealand energy system and protect
and grow value for Meridian.
EV charging headlines our contribution
to transport electrification. We’re
continuing to roll this out nationally
with our new Zero network, which
will offer comprehensive access to
public chargers, fleet charging and
home charging through the Zero app
to support the network. To date we
have over 180 chargers contracted
for installation.
We were selected by the Energy
Efficiency and Conservation Authority
to expand the public fast-charging
network in the South Island with 10
new DC fast chargers. The chargers
will use technology never used before
in Aotearoa to transform access for
EV owners. A battery energy storage
system will use recycled batteries from
EVs to charge batteries overnight and
supply energy to the chargers during
the day. Solar panels will be added
later to increase capacity.
We’ll also install chargers at Kohatu,
Haast, Hari Hari and St Arnaud, largely
completing the task of providing public
fast charging every 75km along our
country’s State Highways.
Meanwhile, we’ve partnered with
Hutt and Wellington City Councils on
New Zealand’s largest public charging
partnership, to deliver 80+ chargers
for the region.
We’ve seen good progress with our
commercial solar business this year,
having signed contracts that will more
than double our installed capacity from
750 kilowatts peak to more than 1.8MW.
Our Certified Renewable Energy
product allows our corporate
customers to match the amount of
electricity they use on an annual basis
with an equivalent amount of electricity
from one of our hydro stations or wind
farms – which have been certified as
producing 100% renewable energy.
It also means that customers who are
part of the Electric Island initiative no
longer have to pay to offset their
scope 2 electricity emissions.
Process heat accounts for 34% of
New Zealand’s total energy consumption
and generates 8.5 million tonnes of
carbon emissions every year, making
it the second-largest source of energy-
related GHG emissions.
5 2
ANZCO Foods, Ōtautahi, Christchurch.
OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 We’re working with South Island
industrial customers to decarbonise
and electrify their industrial plant. Our
Process Heat Electrification Programme
offers companies 10-year contracts,
highly competitive electricity pricing
and a capital contribution towards
conversion costs. We’re currently
supporting fuel-switching projects
that will reduce carbon emissions
by over 100,000 tonnes each year
in sectors like food manufacturing,
dairy and wool processing.
Among our success stories:
• we’ve partnered with Meadow
Mushrooms to decommission an
existing diesel-fired boiler and
replace it with an electric boiler – a
project that will reduce its carbon
emissions by 1,300 tonnes per year
• we’ve been working with ANZCO
Foods Canterbury to reduce its coal
use by reinstating electric boilers
at its Ashburton facility that had
previously been retired
• we’re working with Alliance Group
to support the decommissioning of
a coal-fired boiler at its Lorneville
plant, near Invercargill
• we’re working with Mataura Valley
Milk to support the decommissioning
of a coal-fired boiler
• we’re working with Woolworks
in Timaru to replace its coal-fired
boiler with an electric boiler.
We’ve also been working with all of
these industrial customers to explore
how they can sell any surplus energy
back to the grid. Demand flexibility is
the flipside of decarbonising transport
and process heat, enabling more
companies to participate in ongoing
electrification and in doing so helping
our energy systems to evolve. The
flexibility to do this is something
we’ve been working with customers
to develop.
We’ve also been investigating a
new future for our retail business
incorporating demand flexibility. Our
goal is to see energy retailing move
from a one-way supply arrangement
to a fully flexible ecosystem in which
our customers participate, rather than
just being energy receivers.
Our significant customer base, and
the volumes of energy we generate
and retail, mean we’re in a strong
position to contribute to demand
flexibility – helping our customers
to get the most out of their energy
consumption and generation capacity
while providing relief to the grid.
5 3
OUR TECHNOLOGY IMPACTSMERIDIAN INTEGRATED REPORT 2022 Upgrading Scada
Cyber defence in depth
We use SCADA (System Control and
Data Acquisition) software to run and
control our generation network. Our
existing SCADA is nearing the end of
its life, so we’re looking at options for a
new system with modern architecture
and upgraded capabilities, including
more advanced security.
We also want the new system to be
flexible enough to work with our
emerging solar, battery and other
assets as well as for distributed energy
arrangements. This will be a significant,
multi-year upgrade. We’ve started
the tendering process and expect
to complete that by June 2023.
Increasing digitisation is key to the
profitable and personalised operation
of our business and our relationships.
But that reliance on ICT systems requires
protecting our technology systems,
information and people from cyber
threats that could have adverse impacts
on our company and our customers.
This year we progressed our network
segmentation project that enables us to
segregate sites if they’re compromised
and contain intrusions. This reduces
opportunities for enterprise-wide
compromises and minimises the
chances of further transmission
and damage.
Across the business, we apply a range
of measures to manage our cyber risk,
including policies and procedures,
cybersecurity capabilities, continuous
threat monitoring and event-detection
capabilities. To equip our people with
the knowledge and skills to combat
cyber threats, we’ve developed a
security training and awareness
programme covering topics such as
phishing, incident reporting, passwords
and keeping information and devices
safe. We also conduct regular exercises
to test our cyber resilience and
business continuity processes.
We’ve also introduced active 24/7
monitoring of our network by PwC to
check behaviours, traffic and security
alerts. This world-class monitoring
system, which has recently gone live,
will provide us with the intelligence
to know what to act on.
Together, network segmentation,
active monitoring and our other
cybersecurity controls amount to
‘defence in depth’. They ensure we
don’t need to rely on only one control;
rather we have a series of controls
available in case one is breached.
This year we’ve also accelerated our
use of data to make better business
decisions. We’ve been doing this to
enhance predictive maintenance
on our wind assets, and we’re now
expanding that to include our hydro
assets. Elsewhere in the business, we’ve
automated our trading reports and our
performance reporting to give people
direct access to the data they need for
granular investigations. These changes
mean more people have simpler and
faster access to meaningful data to
support decisions.
5 4
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Our generation control centre, Te Whanganui-a-Tara Wellington.
5 5
A summary of our impacts anchored on technology
A summary of our technology-related impacts outlined in this section is provided below, including our associated commitments and goals where relevant.
Impact
Description
Commitments and policies (including mitigation and remediation actions)
100% renewable energy generation We generate 100% renewable energy from our
generation assets, representing approximately
30% of Aotearoa’s total electricity.
We operate and maintain hydro and wind farm electricity generation and are committed
to 100% renewable energy generation for any relevant future investments.
Reducing the emissions of others
We can contribute to decarbonising commercial
and residential energy use by increasing the use
of electricity to replace fossil fuels and through
better energy efficiency.
We have a range of commitments and active work programmes to achieve decarbonisation beyond
renewable energy generation, including:
• the electrification of industrial plant through a process heat electrification offer14
• the development of green hydrogen for global industries like steel manufacturing,
fertiliser manufacturing and heavy vehicles14
• engaging with developers on a green data hub in Southland
• promoting and supporting a shift to EVs through an EV pricing offer, a commitment
to installing EV chargers across Aotearoa and more15
• supporting the Mevo car-sharing scheme15
• encouraging reduced energy use in homes15
• providing a certified Renewable Energy offer to customers with an associated decarbonisation fund15
• commercial-scale solar power.15
The majority of these commitments include targets and good results being achieved.
For more details, refer to the Metrics and targets section of our FY22 Climate-related disclosure15.
Increasing the supply
of renewable energy
We can increase the amount of renewable energy
available in Aotearoa having a clear development
pathways for investments in new sources of renewable
generation that aligns with future demand projections
and includes securing land, consents, financing and
appropriate connections to the grid.
We established a Renewable Development team in late 2019, which has continued to grow to align with
a target of securing three buildable options by 2024.
Associated commitments include:
• a commitment to invest in a 100MW/200MWh battery and a 75MW+ solar farm announced during FY22
• wind farm development ~60MW (Mt Munro) in planning to consent
• further development projects under evaluation – 950MW of secured options and 1,305MW of
Emissions from products sold
Meridian sells a portion of non-renewable grid energy
in Aotearoa.
opportunities being investigated.
There are opportunities to communicate more widely about our investments in further renewable generation.
For more details, refer to the Metrics and targets section of our FY22 Climate-related disclosure15.
Meridian established a Certified Renewable Energy product to match renewable energy generation
attributes to electricity consumption for customers. In FY22 a new Certified Renewable Energy
decarbonisation fund was launched to reinvest all net proceeds into a mix of business- and community-
related decarbonisation projects. Meridian’s commitment to the delivery of new renewable energy
generation also serves to contribute to a further decarbonisation of Aotearoa’s grid energy mix. For
more details, refer to the Metrics and targets section of Meridian’s FY22 Climate-related disclosure15.
Maximising the potential of
distributed generation and storage
We can contribute to increasing renewable energy use by
identifying and responding to the risks and opportunities that
distributed generation (rooftop and small-scale solar), storage
(batteries) and EVs will have in the electricity system, and market.
In FY22 we established a new Energy Solutions team to advance options for distributed generation and
demand response. We have made a commitment to complete a pilot of demand response through the
use of EVs, This will build on existing commitments to support the delivery of commercial-scale solar16
and residential solar16 offers.
5 6
14 southerngreenhydrogen.co.nz
15 meridianenergy.co.nz/about-us/investors/sustainability/climate-disclosures
16 meridianenergy.co.nz/power-stations/solar
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Machine hall floor, Benmore Hydro Power Station, Otematata.
Our
human
impacts
5 8
Our team at Benmore Hydro Power Station, Otematata.
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 Diversified teams
perform well when
everyone feels
included, welcomed
and valued.
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Doing right
by people
Human effort underpins our ability to move forward cohesively
and constructively. A cleaner world must also be a fairer world.
This year we continued to address the impacts on our people
at the same time as we sought to work with others to ensure
energy acts as a force for good in our communities.
In this section:
• Energised by great people
• The future of work programme
• Succession planning
• Safety and wellbeing
• Belonging
• Gender
• Human rights and anti-modern slavery
• Our KidsCan sponsorship
• Power Up
• Key stakeholder relationships
• Energy wellbeing
• Creating employment opportunities for youth
6 0
Our team representing Meridian at a Pride Parade in Te Whanganui-a-Tara Wellington.
Energised by great people
The future of work
Finding, acquiring and retaining highly talented
people remains central to our ability to succeed.
Closed borders and increasing competition for
great contributors have brought new urgency to
our bid to have an engaged culture, one that
welcomes people and offers them rewarding
opportunities and meaningful career pathways.
Recognising that our future plans depend on a
reliable, future-focused workforce, we continue to
plan for and develop a workplace that is stimulating,
inclusive, balanced, fair and values based.
Getting different expectations right across
different generations requires really thinking
through how skilled people will best work together,
and embracing hybrid ways of working.
We continue to redefine ways of work for people
post-pandemic, a number of factors inform
this. The recent decision that our Wellington
corporate building was not safe for use because
of its earthquake rating was a direct challenge
to returning to a set place of work, of course, but
the considerations went well beyond that. When
planning our ways of working, we did so recognising
that work at a large gentailer would not revert to
what was once considered business as usual.
About 650 of our people have now amended their
employment agreements to work at least one day
a week at home. So, we’ve been experimenting
with how different working arrangements benefit
our business, people and teams. Our lessons will
no doubt influence how we operate going forward.
The days of concentrating on the office have given
way to thinking laterally about the total employee
experience and actively looking for ways to maintain
and grow the next generations of corporate culture.
We definitely want to be at the forefront of that.
We have been making sure our leaders are prepared
to support their people in an ever-changing world
by upskilling and offering tailored support when
needed. A focus on growth and open mindsets is
our foundation for maintaining the workforce stability
needed to balancing short- and long-term needs.
We are encouraging collaboration no matter where
people are based on any given day and factoring in
a plethora of shifting factors such as psychological
safety, new technology and ongoing digitisation and
automation. Accurately tracking and adjusting how
people perform is critical to doing right by them.
Our new learning management system (People Hub),
established this year, has enabled us to put everything
to do with learning and development in one place,
meaning we can directly and easily access and align
learning content and records.
Our team representing Meridian at a Pride Parade in Te Whanganui-a-Tara Wellington.
61
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 v
Meridian Group Workforce
Permanent employees
Female
Male
Total
New Zealand**
Permanent full time*
Permanent part time
Temp/fixed-term employees***
Temp/fixed-term full time
Temp/fixed-term part time
426
28
17
8
499
3
14
12
925
31
31
20
Total
479
528
1,007
3 of these employees are based in the UK (all male).
*
** 125 of these employees work for Flux Federation New Zealand.
*** Temp/Fixed Term includes casual employees.
Generation and Wholesale staff turning age 65
In five years
In 10 years
FY18
FY19
FY20
FY21
FY22
9.1%
10.9%
12.5%
13.3%
15.3%
20.3%
22.5%
23.9%
24.3%
28.7%
The common retirement age in New Zealand is 65. In both tables, the region is defined as New Zealand.
Generation and Wholesale staff turning 65 by role
Admin / Support
Analyst / Planning
Engineer
GC / Traders
Health & Safety / Environment
Maintenance / Operator
Manager
Project Management
62
The region is defined as New Zealand.
5 years
10 years
2%
19%
23%
5%
7%
33%
12%
–
11%
11%
16%
5%
5%
29%
13%
11%
Welcoming new perspectives
Another vital aspect of future-
proofing is succession planning.
This takes place throughout our
organisation. This year several of
our long-serving Board members
exited and new people with new
skills have taken their place. There
has also been significant movement
within our Executive Team, with
Tania Palmer taking over as General
Manager Generation, Jason Stein
shifting from Chief Executive of
Meridian Australia and Powershop
Australia to Chief People Officer,
and CIO Bharat Ratanpal joining
the Team, adding his invaluable
technical skills to how we think
about deploying technology.
In the context of wider workplace
changes and the onus on us to lead
significant changes in climate thinking,
having the right people available
today and tomorrow to make the step
changes needed is critical. So we have
been reinvigorating our approach to
leadership development to ready the
next wave of executives.
We also continue to plan for changes
in our Generation and Wholesale
teams as experienced staff get closer
to retirement age. Their skills and
knowledge are invaluable assets,
which is why we’re encouraging young
professionals to join our business and
offering opportunities for people to
complete their trade apprenticeships
with us. Our goal is to support those
who do choose to retire to transition
smoothly out of their current work
arrangements at the same time as
we ensure there are clear succession
plans for their areas of expertise.
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 Taking care of our people’s
safety and wellbeing
Safety remains our strongest priority.
Our environments include sizeable
electrical and mechanical assets that
are technically challenging, and our
people work in locations that range
from working at home to underground,
inside large structures, on tall wind
and hydro structures and close to large
volumes of water. Our risks range from
slips and trips around the home to a
suite of critical risks such as working
at height, lifting and loading etc, and
include a broad range of psychosocial
risks with mental wellbeing impacts. In
addition, with construction underway at
Harapaki, there are now significant civil
construction safety issues to include in
evolving our health and safety culture,
keeping our people as safe as possible
and managing wellbeing.
Our comprehensive Safety and
Wellbeing Management System,
which is accredited NZS 7901 to meet
the requirements of the Electricity Act,
ensures a layered response to these
changing safety needs with a particular
focus on the management of critical
risks. The response includes carefully
structured health and safety training
plans that are role specific and delivered
where possible within the New Zealand
Qualifications Authority framework, site-
specific Health and Safety Committees
to ensure two-way dialogue, daily
prestart meetings in all operational
areas and comprehensive work-
control procedures to ensure hazard
identification processes are thorough.
We have embedded the Learning Team
process to help us understand how to
improve when things don’t go so well.
As the name suggests, the focus of this
process is on learning and improving,
not blaming and punishing. By involving
those doing the work in understanding
how issues occur and developing
safety improvements we’ve created an
environment where reporting is a safe
and natural process and participation
is part of our culture. In all cases our
contractors are integrated with our
safety programmes.
Our site committees meet every month
to identify hazards and review incidents.
Committee representatives are
elected by their colleagues and receive
regular training in risk identification
and controls. They are supported by
dedicated business unit safety specialists
who provide extensive technical
expertise and support. Any incidents
and near misses are logged directly
into our Safety Manager system. We’re
also an active member of StayLive, an
electricity industry forum focusing on
working together across the sector to
improve safety. You’ll find more detail
on how we organise ourselves to
stay safe at meridianenergy.co.nz/
investors/governance/policies.
We take high consequence, low
probability hazards seriously, for
example structural asset failures, high
voltage electricity incidents, or exposure
to hazardous materials. All have controls
and procedures in place to reduce the
likelihood of such events occurring,
and to mitigate their consequences
should they occur. For example, our
Dam Safety Assurance Programme
(DSAP), is enabled by our in-house
Dam Safety and Civil Team (supported
by Dam Safety Intelligence for dam
condition monitoring services) and is
recognised as best practice in Dam
Safety Management, in New Zealand.
Should a significant Dam Safety
event occur, our emergency response
planning and processes ensure we
identify and respond appropriately
to the developing event. If necessary,
we work closely with Civil Defence
and Emergency Response to mitigate
hazards to downstream communities.
Every 5 years, independent expert
reviews are completed for each asset
structure and its associated DSAP.
We’re focused on developing and
maintaining an empathetic, caring
culture overall, putting less emphasis on
prescription and encouraging instead
working environments where employees
choose to proactively engage with our
systems and own their own safety. The
culture of caring is also well supported
by our approach to wellbeing. We’ve
implemented a number of initiatives
in the past year to support both the
physical and mental wellbeing of
our people throughout their time at
Meridian. These have included the
engagement of WOHC, an occupational
health provider, to deliver all aspects of
our occupational health programme,
including pre-employment medical
assessments, ergonomic assessments
and occupational health monitoring,
as well as pastoral care and health
education. In the area of mental health,
we’ve built on our pioneering Healthy
Minds programme, which provides
support, guidance and understanding
so that conversations about mental
wellbeing are normalised, and have
implemented a Care Team approach
for people who need assistance before
they enter a crisis. The Care Team was
co-designed with our people and
leaders to ensure the best possible
outcomes for our people and their
wider whānau during times when they
are struggling. Since we implemented
this concept in July 2021 we have
supported a number of people through
periods of poor mental wellbeing and
6 3
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 We saw a reduction in our reportable
injuries this year, with fewer injuries
overall and less time off work due
to injuries recorded. In FY22, our
calculated total recordable injury
frequency rate for employees and
contractors per 200,000 hours
worked (TRIFR) was 1.01 (compared
with 2.80 in FY21), with 13 people hurt
(six contractors and seven employees).
The main types of injury were once
again sprains, strains and superficial
injuries. There were no serious injuries
reported; however, we’re still not
comfortable with the number of
incidents within our activities.
We have a comprehensive
programme of work in place for FY23
to deliver improvements in critical risk
management, safety leadership and
system simplification while building on
our key foundations of engagement
with and caring for our people.
helped others incapacitated by physical
injury or illness. The programme itself
won the Best Wellbeing Initiative
section of the 2022 Safeguard
Workplace Health and Safety Awards.
Our Wellbeing Business Partner, Trish
Allen, was a finalist for the Mental
Health Champion category.
Flux17 also has a strong health and
safety and wellbeing programme,
driven by a core set of principles and
legal responsibilities. The information
and policies are available for all staff
to access at any time. All aspects of
health and safety are managed by
the Flux people team, with a clearly
defined escalation process if required.
Flux is a remote first organisation
where staff predominantly work from
home reducing our overall health and
safety risk profile. We have mitigations
in place for an ergonomic hazard.
While Flux also has a team of trained
Mental Health first aiders, access
is available to EAP services to all
permanent employees. Information
and how to access these services is
provided in on boarding activities
and available in the Flux wiki.
6 4
17 Flux permanent employees and contractors are fully covered by Flux’s health and safety management system.
Planting the next phase of coastal forest on the Kaitoke Peninsula with Raglan Area School.
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Lost time injury frequency rate (LTIFR*)
7.0
6.0
5.0
4.0
3.0
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1
7
.
4
6
6
2
.
1
4
2
.
4
9
.
2
3
2
.
1
3
0
.
1
8
5
.
1
1
0
.
1
.
0
5
1
2
4
.
16
14
12
10
8
6
4
2
0
8
.
1
1
.
3
4
1
.
9
0
8
.
4
7
.
4
3
.
FY19
FY20
FY21
FY22**
FY19
FY20
FY21
FY22**
* The TRIFR is calculated per 200,000 hours and includes all lost-time, medical treatment and restricted
work injuries for Meridian New Zealand employees and contractors only. While we have incident
numbers for Powershop New Zealand, Powershop Australia and offsite contractors, the TRIFR cannot
be calculated as the number of hours worked for those periods has not been recorded.
** FY22 data excludes Meridian Australia, Flux and offsite contractors.
* The LTIFR is calculated per 1,000,000 hours and includes all lost-time work injuries for Meridian
New Zealand employees and contractors only. While we have incident numbers for Powershop
New Zealand, Powershop Australia and offsite contractors, the LTIFR cannot be calculated as the
number of hours worked for those periods has not been recorded.
** FY22 data excludes Meridian Australia, Flux and offsite contractors.
s
r
o
t
c
a
r
t
n
o
c
e
t
i
s
n
o
n
a
d
i
r
e
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i
l
s
e
e
y
o
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e
(
e
t
i
s
n
o
n
a
d
i
r
e
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i
)
i
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c
s
r
o
t
c
a
r
t
n
o
c
d
n
a
6 5
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022
Employee engagement*
%
0
5
8
.
%
0
5
8
.
%
0
8
7
.
%
0
0
8
.
%
5
9
7
.
%
0
6
7
.
%
0
4
7
.
%
5
2
p
o
t
Z
N
%
5
2
p
o
t
l
a
b
o
G
l
i
Z
N
n
a
d
i
r
e
M
*
a
i
l
a
r
t
s
u
A
n
a
d
i
r
e
M
i
%
0
2
7
.
Diversity by ethnicity
Board
Executive
Corporate Centre
Information &
Comms Technology
Generation,
Development & DSI
Wholesale
NZ Retail*
Flux Federation NZ**
Māori
14%
9%
3%
2%
5%
3%
5%
–
Middle
Eastern/
Latin
American/
Asian
African European
Other Unknown
14%
9%
5%
15%
–
–
–
2%
71%
82%
77%
67%
–
–
–
–
–
–
13%
15%
Pacific
Peoples
–
–
3%
–
1%
7%
3%
64%
3%
17%
3%
3%
1%
–
8%
10%
6%
2%
3%
74%
58%
22%
–
1%
1%
14%
23%
64%
*
**
Covers NZ Retail & Masterton Service Centre (as per FY21 Annual Report)
Includes Flux-UK staff
FY19
FY20
FY21
Nov-FY22**
May-FY22**
* Measured by ‘level of agreement’ – the percentage of staff who ‘agree’ or ‘strongly agree’ with the five
questions that collectively determine our Engagement Index (previously calculated as a weighted mean.
** Australia is not included as we divested from there in 2022.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
6 6
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022
Belonging is crucial
Belonging is a powerful motivation for
everyone, and we continue to develop
ways to further positive experiences
in accessibility (including gaining the
Accessibility Tick), Rainbow choices
and ethnicity. We recognise that
helping diversified teams to perform
well depends on making sure everyone
feels included, welcomed and valued
for their experiences and perspectives,
and that we do all we can to encourage
diversity and accelerate cultural
understanding.
Our diversity and inclusion programme
centres on five aspects – inclusion and
respect; gender; ethnicity; accessibility;
and flexibility. The Board believe
Meridian has more work to do in
this space and we are refreshing our
Belonging Strategy and reviewing our
Belonging Policy in the next financial
year to reflect this. We recognise that
our diversity and inclusion metrics have
largely stalled and that we still have
some way to go to have a workforce
that is accurately representative of
New Zealand’s population.
We have an ongoing programme to
train our people in tikanga and proper
pronunciation of Te Reo to reflect our
commitment to respecting Te Ao Māori
and connecting with our stakeholders.
This year, we also introduced a new
role - Kaihautū Māori, or Head of
Māori Culture - to support us to
realise Meridian’s commitment and
grow our understanding. Our intent
is both moral and strategic. As a large
New Zealand organisation, we need
to actively factor Te Tiriti o Waitangi
into our actions and decisions. Partner-
ships are the backbone of strategic
change across a range of activities
for us. Better understanding those
we work with is part of achieving
greater success, together.
We were disappointed that our
overall employee engagement
declined this year, with engagement
scores in Meridian and Powershop
at 72%. That still puts us firmly in the
top quartile for the Large Industrial
category; however, it also reflects the
pressures that many large companies
are feeling, particularly on their front
lines, as more people look at changing
jobs or careers and cost of living impacts
are more keenly felt. Our overall stay
commitment has decreased by 5%,
which we consider significant, although
these results vary a lot by business unit.
80% of our people rated their pride in
and motivation for the organisation as
favourable and would recommend it
as a great place to work.
Taking a position
on gender injustice
We remain an accredited member of
the Gender Tick programme and our
ongoing goal is to achieve gender
balance in leadership and senior roles.
We believe that increasing gender
diversity will help bring diversity of
thought and better outcomes overall.
Despite nearly half our employees
and Board Directors and 40% of
our Executive Team being women,
women remain under-represented
at senior management levels below
this, and some parts of our business,
particularly our Generation business,
are still predominantly male.
To improve our gender balance, our
target is for 45% of new employees
to be men, 45% women and the
remaining 10% of any gender. We’re
also closely monitoring the retention
of women currently in leadership
roles. We’re pleased to see our
graduate and apprentice programmes
successfully attracting a good balance
of candidates, with more women
choosing technical careers. We hope
that the appointment of Tania Palmer
to the role of General Manager of
Generation sends a clear signal that
we welcome talented women to
lead across the business.
We continue to make steady progress
toward minimising the gender pay
gaps in similar-sized roles. In most of
our pay bands, the gap between the
average male salary and the average
female salary is less than 5%.
As part of the 2022 Mind the Gap
initiative across New Zealand, we have
committed to disclosing our overall
gender pay gap. As a gentailer, we have
a large number of people working in
call centres (traditionally low paid and
more likely to attract females), and a
high proportion of engineering and
electrical roles (traditionally male and
higher paid). This demographic spread
means that the overall median salary
for men in all roles in the organisation
is higher than the overall median salary
for women, resulting in a gap of 35%.
We expect this to reduce as we achieve
a more-balanced gender representation
at every level of the business, and
increase the proportion of women
in senior higher-paying roles.
67
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 Diversity by gender
Female representation
vwta
%
5
6
3
.
%
5
3
6
.
*
l
i
a
t
e
R
Z
N
l
e
a
M
l
e
a
m
e
F
%
8
0
6
.
%
2
9
3
.
*
*
Z
N
x
u
F
l
Female share of total workforce (%)
41.8%
45.3%
46.2%
47.8%
47.6%
Females on the Board
25.0%
28.6%
50.0%
50.0%
71.4%
FY18
FY19
FY20
FY21
FY22
Females in management positions
(as % of total management workforce)
Females in junior management positions,
ie first level of management
(as % of total junior management positions)
Females in top management positions,
ie maximum two levels away from the
Chief Executive or comparable positions
(as % of total top management positions)
Females in management positions in
revenue-generating functions (eg sales)
as % of all such managers (ie excluding
support functions such as HR, IT and Legal)
33.6%
37.2%
37.4%
36.1%
34.5%
36.3%
40.8%
40.0%
40.1%
39.2%
30.7%
33.6%
34.8%
32.4%
30.2%
29.4%
33.7%
34.0%
33.3%
31.0%
Percentage of women in senior roles at 30 June*
32.8%
35.2%
34.3%
37.2%
N/A**
* Parent company only, women in people leadership and senior specialist roles, excluding the Executive Team.
** This data is no longer a KPI for 2022.
%
1
.
7
7
%
9
2
2
.
l
e
a
s
e
o
h
W
l
550
500
450
400
350
300
250
200
150
100
50
0
%
9
6
7
.
%
1
.
3
2
,
n
o
i
t
a
r
e
n
e
G
I
S
D
&
t
n
e
m
p
o
e
v
e
D
l
%
6
8
2
.
%
4
.
1
7
d
r
a
o
B
%
6
3
6
.
%
4
6
3
.
e
v
i
t
u
c
e
x
E
%
8
0
7
.
%
2
9
2
.
T
C
I
%
0
0
3
3
.
%
0
7
6
.
e
r
t
n
e
C
e
t
a
r
o
p
r
o
C
* Covers NZ Retail and Masterton Service Centre.
** Includes Flux-UK staff.
6 8
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022
vwta
Diversity by age (headcount)
Ratio of basic salary and remuneration of women to men
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
%
2
.
1
6
%
4
0
2
.
%
4
8
1
.
e
r
t
n
e
C
e
t
a
r
o
p
r
o
C
%
7
5
8
.
%
3
4
1
.
%
0
0
.
%
3
7
2
.
%
0
0
.
%
7
2
7
.
d
r
a
o
B
m
a
e
T
e
v
i
t
u
c
e
x
E
.
%
8
0
%7
2
9
% 2
0
0
.
.
T
C
I
0
5
–
0
3
0
5
r
e
v
O
0
3
r
e
d
n
U
%
7
3
5
.
%
3
.
1
3
%
4
4
7
.
%
1
.
5
1
Career level – base and total remuneration
Meridian career level
Females
Males
FY22 ratio
Base salary
FY22 ratio
Total rem
Executive, below CEO
Senior Managers
Mid Managers
Team Leaders
Wind Technicians
Non-Managers
Total (Casuals, Flux UK, and CE have been excluded)
Functional area – base and total remuneration
4
18
103
127
–
219
471
6
44
231
121
26
87
515
0.93:1
0.98:1
0.97:1
0.95:1
0:1
0.87:1
0.95:1
0.97:1
0.92:1
0:1
1.01:1
0.95:1
Meridian career level
Females
Males
FY22 ratio
Base salary
FY22 ratio
Total rem
%
8
9
4
.
%
5
0
4
.
%
7
9
.
%
4
.
1
5
%
0
0
4
.
%
6
8
.
%
0
6
1
.
%
6
9
.
l
e
a
s
e
o
h
W
l
*
l
i
a
t
e
R
Z
N
*
*
Z
N
x
u
F
l
,
n
o
i
t
a
r
e
n
e
G
I
S
D
&
t
n
e
m
p
o
e
v
e
D
l
Corporate (HR, Legal, Corporate Affairs)
Customer Support
Energy Trading
Engineering & Electrical
Finance
Information Technology
Marketing
Sales
Senior Leadership
38
190
5
42
49
47
22
31
28
19
0.9:1
0.85:1
0.95:1
0.81:1
0.71:1
0.87:1
0.78:1
0.95:1
0.8:1
0.91:1
0.89:1
0.87:1
0.99:1
0.79:1
0.69:1
0.86:1
0.76:1
0.96:1
0.76:1
0.93:1
11
69
21
152
35
94
16
47
37
33
151
* Covers NZ Retail and Masterton Service Centre.
** Includes Flux-UK staff.
Strategy, Project Management & Delivery
Total (Casuals, Flux UK, and CE have been excluded)
471
Group definitions
Corporate (HR, Legal, Corporate Affairs): HR functions, Legal team, Corporate Affairs and Sustainability team
Customer Support: Call centres/customer service teams
Energy Trading: The Wholesale team, which is made up mainly of analysts and traders
Engineering & Electrical: Teams involved in generating electricity and maintaining assets
Finance: Accounting/financial, procurement, and contract management teams
Information Technology: The ICT team, product development and tech support in Flux Federation
Marketing: Marketing team
Sales: Meridian Sales team, Sales functions in Flux Federation
Strategy, Project Management & Delivery: Teams working on business strategy, large scale projects, or business improvement
Senior Leadership: Leadership teams that report to an Executive
69
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022
Being good humans
Part of doing right by people is ensuring
that our Group and our suppliers meet
our regulatory requirements to behave
ethically. We’ve addressed three
aspects this year.
Firstly, in terms of protecting human
rights, we undertook an ethical
practices review this year to formalise
our commitment to the United Nations
(UN) Guiding Principles on Business and
Human Rights. We’ll be incorporating
the findings of that review into our
updated Group Code of Conduct
in 2022.
At the end of FY22, Meridian joined
the UN Global Compact initiative – a
voluntary leadership platform for the
development, implementation and
disclosure of responsible business
practices. As a participant in the UN
Global Compact, Meridian will align
strategies and operations with 10
universally accepted principles in
the areas of human rights, labour,
environment and anti-corruption.
We’ll report on progress against these
principles at the end of FY23.
In December 2021 we released our
second Modern Slavery Statement as
part of our obligations as a reporting
entity under the Australian Modern
Slavery Act 2018. This annual disclosure
summarises the steps we’ve taken to
assess and mitigate modern slavery
risks in our business and supply chains.
This year we reported that we have a
robust Modern Slavery Framework for
assessing, managing and continually
improving our response to modern
slavery risks in our supply chain.
In terms of our supply chains, we
identified those tier 1 supplier
procurement categories that we
considered to be high risk as security,
cleaning, grounds’ maintenance and
accommodation. We also recognised
tier 1 supplier procurement categories
with a supply chain potential to
be considered to be high risk as
promotional materials, apparel and IT
hardware and equipment. Other drivers
of risk include high-risk geographies
and high-risk raw materials. Our
Supplier Code of Conduct18 sets out our
expectations of all suppliers, including
those relating to ethical business and
social responsibilities.
To help counter these risks, we
have developed a self-assessment
questionnaire. This is completed by all
existing suppliers in high-risk categories.
As part of our submissions programme
this year, we made a submission
on anti-modern slavery, supporting
the implementation of New Zealand-
based equivalent legislation. We also
review our Anti Money Laundering
policy settings every two years.
Collectively, these actions reflect our
commitment to prevent and respect
human rights those relating to (but
not limited to) human trafficking,
forced and child labour, freedom of
association, the right to collective
bargaining, equal remuneration,
and discrimination.
Our commitments are communicated
through a range of internal channels
targeted regular internal and external
engagements (including those with
shareholders) and are available on
our website.
70
18 meridianenergy.co.nz/assets/Investors/Governance/Policies/Supplier-Code-of-Conduct.pdf
Using our learning management system, People Hub.
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 practices for products, materials and
processes throughout the supply chain,
and to ensure we source ethically and
uphold human rights. The Hub includes
guidance, for example, on why and
when modern slavery due diligence is
required during supplier engagement.
Our supplier agreements were also
reviewed to ensure our Modern Slavery
requirements are met.
In FY23 we’ll commence a targeted
Environment, Social and Governance
education programme to grow and
embed business-wide capability
and sustainability expertise across
the company – including in relation
to ethical behaviour and practice.
Individuals can seek advice and raise
any concerns about our policies and
practices relating to responsible
business conduct through a range
of channels. These are outlined in
our Group Code of Conduct and
Whistleblowing Policy, and include
contacting a line manager, the People
Team, the Meridian Legal Team or a
member of the Executive Team.
Embedding policy commitments
into our business
We use a range of ways to ensure that
the Group and our suppliers meet our
commitments to being good humans.
All new starters receive and must
confirm they understand our Group
Code of Conduct. Each member
of Meridian’s Executive Team is
responsible for compliance in their
respective business unit or subsidiary
company’s compliance with our
internal policies, including the Group
Code of Conduct. They provide
monthly compliance statements to the
Chief Executive, as required by our
Compliance Policy.
All staff are required to undertake legal
training through Meridian’s online
People Hub to build understanding
about their legal obligations and
become familiar with some of our key
policies, including the Group Code of
Conduct and Delegation of Authority
Policy.
In FY22 we also launched a
Procurement Hub and online
sustainable procurement e-learning
module. These tools are designed
to build staff knowledge of and
confidence in promoting sustainable
2
2
0
2
T
R
O
P
E
R
D
E
T
A
R
G
E
T
N
I
N
A
I
D
I
R
E
M
S
T
C
A
P
M
I
N
A
M
U
H
R
U
O
7 1
Relationships in the community
We continue to support KidsCan, an
amazing charity that provides essentials
to children affected by poverty so
they can participate in learning. As
Principal Partner, our $1 million annual
investment includes $500,000 to
provide thousands of Kiwi kids with
basics such as food, raincoats, shoes,
socks and basic hygiene and health-
care items, and $500,000 towards
helping them fundraise.
Our community fund Power Up
continues to support local projects in
Te Āpiti, Mill Creek, Manapōuri, West
Wind, White Hill, Te Uku and Waitaki. In
the past 15 years we have undertaken a
wide range of local projects, investing
more than $9 million into 1,241 projects.
Our engagement with our asset
communities also extends to a national
network of dedicated Community
Relationship Managers. Their presence
is intended to reassure people, groups
and communities near to where we
work that we’ll continue to work
closely with them.
We ensure local communities have
access to the outdoor and recreational
activities associated with Meridian’s
assets, supporting recreational activities
such as the Hydro Half Marathon and
Meridian Milford Mountain Classic. It
is also very important to us to engage
with communities through consultation
in the development of potential new
generation assets.
7 2
Papakaio School pool, Papakaio, Oamaru.
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 Partnerships can
change the world
Productive relationships with iwi
underpin our commitment to stepping
up together. We recognise the mana
whenua of Ngāi Tahu, particularly in
relation to our hydro schemes in the
Ngāi Tahu takiwā. We also benefit
from having a Ngāi Tahu presence
on our Board.
We recognise and respond to the
kaupapa of ki uta ki tai (from the
mountains to the sea) and work closely
with local rūnaka (Arowhenua, Awarua,
Hokonui, Moeraki, Ōraka Aparima,
Waihao and Waihōpai) through Te Ao
Marama and the Waitaki Governance
Group, as well as trusts, to enhance
mahinga kai and native fish in the
Waitaki and Waiau catchments.
At Harapaki we continue to work with
Ngāti Hineuru and the Maungaharuru-
Tangitū Trust to determine how we can
be a good long-term partner.
Strengthening our iwi partnerships is
a work in progress. Cultural monitors
are embedded into the Harapaki site
team and will remain throughout
construction of the wind farm.
Ongoing negotiations and
conversations on future access to
water intensify the importance of
open and honest dialogue between
parties based on a spirit of trust and
respect. The reconsenting of the
Waitaki power scheme needs to
commence formally before 2025.
We’re at the point now of discussing
mitigation approaches and options,
with local rūnaka Arowhenua, Moeraki
and Waihao wanting to understand the
impacts of reconsents on their people
and values. Our belief is that the best
solution will be mutually beneficial
and arrived at together rather than
directed by an external decision-maker
in accordance with statutory process.
These discussions are continuing.
Other negotiations are underway with
the Department of Conservation around
the Waitaki catchment biodiversity
mitigation programme. For more
than 30 years the River Recovery
Programme has focused on achieving
biodiversity gains in the Mackenzie
country. Currently, alongside co-funder
Genesis Energy, we’re negotiating a
new biodiversity programme for 2025
onwards. Again, our belief is that the
best solution will be mutually beneficial
and arrived at together.
At Lake Manapōuri, existing resource
consents don’t expire until 2031;
however, a planning process is currently
underway with Southland Regional
Council regarding water allocation,
water quality and reconsenting
standards. This is currently subject
to Environment Court appeals. The
Council is developing and will notify
a new plan with specific standards for
all catchments, including the Waiau
catchment, establishing water quality,
allocations and flow regimes.
Together, these initiatives, negotiations
and conversations form the background
for Manapōuri reconsenting. Ngāi Tahu
aspire to protect and improve cultural
and environmental outcomes across
Murihiku. Recognising that standards
for water quality have yet to be set –
and Manapōuri is one of five hydro
schemes that are deemed to be of
national importance – we’re committed
to working through the range of issues
at stake, recognising that this won’t
always be easy and that differing
aspirations and values exist in tension
with one another.
73
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 New Zealand disconnections*
%
1
3
.
0
%
3
2
.
0
%
0
1
.
0
0.4%
0.3%
0.2%
0.1%
0.0%
i
n
a
d
i
r
e
M
e
g
a
r
e
v
a
Z
N
Z
N
p
o
h
s
r
e
w
o
P
%
2
2
.
0
%
8
0
.
0
%
5
0
.
0
%
7
1
.
0
%
8
0
.
0
%
0
0
0
.
%
8
0
.
0
%
2
0
0
.
%
1
0
0
.
FY19
FY20
FY21**
FY22***
* Data from the Electricity Authority (emi.ea.govt.nz/Datasets/Retail/Disconnections).
** FY21 restated with four quarters of data. Showing as 0% due to decimal place rounding.
*** Data is only based on two quarters. The Meridian and Powershop figures are based on three quarters.
Encouraging
energy wellbeing
As an essential services’ provider,
we want all people to have access to
the energy they need for wellbeing
in their lives. This concept – energy
wellbeing – recognises that energy
itself doesn’t exist in a vacuum, but
rather incorporates a range of other
factors including housing quality
and financial hardship.
New Zealand’s electricity retail prices
remain among the lowest in the OECD,
and data from the Ministry of Business,
Innovation and Employment shows
New Zealanders are benefiting from
the healthy degree of competition and
choice that comes with having more
than 40 retailers competing across the
market. However, rising costs of living
mean more New Zealanders are finding
it hard to pay for things like power.
Our goal is a world with no
disconnections. Between 2018 and
2021 our disconnection rates fell by
62%. We continue to offer customers
products like LevelPay, and our trained
Credit team supports customers in
need with alternative payment options
and access to support with a range
of agencies.
In December 2021 we introduced a
energy wellbeing pilot programme
aimed at lifting customers out of
energy hardship. The holistic approach
considers some of the factors talked
about earlier, such as housing quality,
energy efficiency and financial
situation. The programme will look
to leverage relationships with well-
known community consumer groups
to improve lives for energy users.
For the pilot, 100 customers in
Wellington and Christchurch who
are experiencing energy hardship
will receive support to make the
shift to wellbeing. Twenty customers
have already signed up, with 30
more pending.
In June 2022 we were one of five
retail providers that signed on for the
low-use household power credits
scheme. The $5 million scheme supports
low-use households struggling to pay
their power bills during the phase-out
of the low fixed-charge regulations
by providing them with $110 credits.
Customers who’ve received professional
budgeting advice may then be eligible
to receive a second power credit in
the same year.
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OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022
A summary of our impacts anchored on people
Impact
Description
Commitments and policies (including mitigation and remediation actions)
Access to affordable energy
and new energy solutions
As a retailer of electricity, we’re directly linked
to the affordability of electricity, which affects
residential and business customers.
We also contribute to greater renewable
energy equity by supporting the uptake of
micro generation opportunities that reduce
system costs for electricity users over the
long term.
Supporting opportunities
for local communities
We’re directly linked to supporting various
initiatives and groups that foster the wellbeing
of communities living close to generation
assets and more widely across Aotearoa.
We’re creating employment and career
opportunities for local communities.
We are committed to taking action to ensure electricity users in New Zealand have access to energy solutions in how
we make our business decisions, and initiatives in place, who we partner with externally, and what issues we contribute
thought leadership to. Of note, some of our policies and commitments include:
• Retail energy wellbeing pilot launched in FY22
• Whole social hedge offers executed in FY22 – focused exclusively on retailers seeking to address energy hardship
• Funding the ERANZ Energy Mate programme
• The establishment of a new Energy Solutions team in FY22 who will focus on advancing tangible options to scale
distributed energy generation and demand response options – ultimately aimed to enhance the overall electricity
system performance, which will benefit all electricity users, in a future with higher renewable energy demand
• LevelPay offer so customers can have certainty over their power bill
•
In house team dedicated to energy hardship and customer support, which includes a referral service to FINCAP
(free financial mentoring service) and connection with WINZ (to enable easy energy bill payments)
• Engagement with MBIE to support the advancement of their energy hardship work
• Commitment to the Low Fixed Charge Power Credit Scheme.
We have a range of commitments in place to support the local communities in which we operate, such as:
• community fund Power Up which supports local projects in Te Āpiti, Mill Creek, Manapōuri, West Wind, White Hill, Te Uku
and Waitaki.
• engagement with our asset communities extends to a national network of dedicated Community Engagement Manager
• working with schools to provide scholarships promoting tertiary education
• providing career pathways for students into STEM
• provide recreational opportunities for local communities near assets such as angling and rowing
• several sponsorships to support local events where funding goes back into emergency services or community assets like
bike /running trails - Hydro Half Marathon, Meridian Hard Labour event, Meridian Milford Mountain Classic.
• Local staff volunteer to support community projects, those in need and lending expertise and
equipment to support community initiatives.
Business performance:
diversity and equal opportunities
Meridian continues to focus on increasing
equal opportunitiesfor everyone irrespective
of factors like age, gender, ethnicity, country
of origin, disability and sexual orientation.
Greater diversity also encourages new
thinking and innovation that
can support our future business success.
Our diversity and inclusion programme centres on five aspects – inclusion and respect; gender;
ethnicity; accessibility; and flexibility. Some relevant commitments and policies include:
• Accredited member of the Gender Tick programme
• Member of the Accessibility Tick programme
• Certified by Rainbow Tick as a workplace where people are free to be their authentic selves
• A goal to achieve gender diversity in leadership and senior roles
• Gender pay equity for employees in similarly-sized roles and a part of the 2022 Mind the Gap initiative
• A goal to increase ethnic diversity across our workforce to be more representative of the New Zealand population and
build cultural awareness.
• Providing an educational resource for staff and whānau to learn about te ao Māori (Te Kete Tikanga Māori).
Impacts of supply chain
/ ethical sourcing
Meridian may contribute to procurement
practices that have the potential to create
negative impacts on the environment, people
and human rights; and affect the reputation
of Aotearoa.
Commitments to ethical sourcing include:
• Meridian’s Supplier Code of Conduct, including commitment to aligning practices to the UN Guiding Principles of Business
and Human Rights and requiring suppliers measure and disclose emissions (Meridian’s scope 3 emissions). Specific due
diligence is undertaken on Modern Slavery risk, aligned with Meridian Modern Slavery Framework. Meridian discloses
annually on its commitments, due diligence process and findings to ensure year on year improvements are made.
• We also recently also became a member to the UN Global Compact initiative, which is a commitment to aligning
operations with principles in areas including human rights and labour.
• Our Group Supplier Code of Conduct outlines the behaviours expected of our staff.
• Anti Money Laundering Policy settings.
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OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 2
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“Our goal is to find and
encourage tomorrow’s
energy heroes to recognise
that they could have a
fulfilling future...
76
Brett Horwell (Meridian) and Lucy Schuck, Dux scholarship winner.
Growing tomorrow’s
energy heroes
Involving the community in
what we do is critical to our
being welcomed by those
around us. Our initiatives start
at schools with a range of
programmes to engage youth
and get students thinking
about careers with us.
School visits are a key way for young
people to see for themselves all the
types of work available at our sites.
Last year we welcomed more than
200 children for visits, mainly from
primary schools inside and outside
our catchments.
Our programmes for older students
focus on vocational opportunities.
We work with Connexis on Girls with
Hi-Vis – a programme to encourage
more females to enter our trades. The
programme starts at year 10 and runs
through to year 13, and involves about
50 people. We also have a broader
programme for gateway students
across our catchment high schools
to go on site and gain work experience.
Our engineers too outreach activity
at schools to support Engineering NZ
initiative. These activities include a
Week of Wonder.
This year we had planned to run
Try a Trade days for year 10s up,
but unfortunately this was cancelled
because of COVID-19. Planning for
next year’s event is already underway.
Several years ago, we established
scholarships for Waiau Area School
and Fiordland College. The Fiordland
College scholarships are worth around
$6,500 and are awarded to a student
who has done their best and to the
dux of the school. We also give
$3,000 to Waiau Area School to
help two students with the next
stage of their education.
These scholarships make such a
difference for recipients. As one
Dux Scholarship winner Lucy Schuck
explained, “The whole of my Meridian
scholarship has gone towards my
university accommodation at Hayward
College. Being able to stay in a college
for the first year has been an amazing
experience, allowing me to make
many great friendships, participate
in a number of social events and
receive helpful academic support.
The scholarship money has helped to
alleviate some of the financial pressures
and stress that come with student life.
This has enabled me to focus more on
what’s most important to me: achieving
good grades. So far I have been really
pleased with how my year has gone.”
Another way that we help youth in our
catchment communities is through the
Power Up community fund. Each year we
give money to sports clubs, supporting
youth to purchase everything from club
uniforms to bikes and trips.
The schools in our communities are
filled with people with talent and
potential. Our goal is to find tomorrow’s
energy heroes and encourage them to
recognise that they could have fulfilling
futures, either with us directly or
through our support.
7 7
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 A breathtaking
journey south
The Ross Island wind farm is
the southernmost wind farm
in the world. Located on Crater
Island, the three wind turbines
there supply renewable
energy for New Zealand’s
Scott Base and the American
base at McMurdo Station.
Constructed in 2008 and fully
operational by the following year, the
wind farm not only reduces the carbon
footprint of the Antarctic operations
(1,242 tonnes of CO2), it also lessens
the environmental risks of transporting
diesel fuel. In fact the bases’ annual
fuel consumption has been cut by
approximately 463,000 litres.
To operate well, however, the three
turbines need to be serviced every year.
This year, wind turbine technicians Mark
Porter and Ettiene Mostert got the call-
up. In late November the pair squeezed
onto a packed C130 and hitched a
ride to the southern continent with
the Italian Air Force. After a noisy
and cramped eight-hour journey they
landed on the ice and were taken to
Scott Base to join the 80 other people
working there over the summer.
“The people at the Base were very
welcoming,” says Ettiene. “I was amazed
at the range of activities that were
taking place while we were there.
We roomed with scientists who were
out taking ice core samples – but
everywhere you looked, it seemed,
the place was buzzing with activity.”
Crater Hill was chosen as the site
for the turbines because it has a
high average annual wind speed
of 28.4 kilometres per hour at the
height of the wind turbine’s hub.
Crater Hill is also one of the few
ice-free areas on Ross Island. But
that’s not to say it wasn’t cold.
“The E33 wind turbine is a small turbine,”
says Mark. “Its power output is 330
kilowatts, its blades are only about
15 metres long and because it’s an
air-cooled turbine, it’s reliant on good
airflow. You have cold air coming in
at you from every angle, which enters
every gap in your clothing, and with
the wind chill at around minus 14C
some days it can get a little tricky
staying warm.”
“On more than one occasion we
resorted to literally blowing a heat
gun on our hands so that we could
work,” says Ettiene.
Mark and Ettiene were at the Base
for total of 12 days and managed to
service all three turbines successfully
during that time. It may not have been
the most comfortable assignment either
man has had, but they wouldn’t have
missed it for the world. “It was truly an
amazing experience. Once in a lifetime.”
7 8
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 “Crater Hill was chosen as the site
for the turbines because it has a
high average annual wind speed
of 28.4 kilometres per hour.
Wind turbines on Crater Hill, Ross Island, Antarctica.
7 9
OUR HUMAN IMPACTSMERIDIAN INTEGRATED REPORT 2022 Our
commercial
impacts
8 0
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We added 18,000
new connections
by executing our
multi-brand strategy.
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Real momentum
for action
Brands have a responsibility to deliver the best value they
can to their customers. This year, despite choppy conditions
in the wholesale markets, we grew our retail presence
significantly. Selling our Australian operations also freed up
capital for the ambitious development programme ahead.
In this section:
• Market conditions
• Wholesale activity
• Exiting Australia
• Dividend
• Retail activity
• Meridian brand campaign
• Green Finance Programme
8 2
Our new brand campaign.
Wholesale markets
reflect long-term concerns
It’s been another big year for the wholesale
markets, with pricing reflecting concerns about
gas availability, increased carbon prices and the
impacts of increased global coal prices. As a result
we’ve seen a sustained high spot market that has
particularly affected time-of-use contracts and
large commercial and industrial users.
Overall market demand is also rising after years of
static consumption, and this too has tightened supply
and demand. Such trends reinforce that New Zealand
needs more plant to decarbonise, with thermal plant
required to support that transition for a while longer.
Extremes: from one half to the other
A second year of drought in the Waiau catchment
significantly cut our inflows there in the second half of
the year, driving down earnings from what had been a
very strong first half and interim result. Long periods of
dry weather, above-average temperatures and lower-
than-average rainfall across much of the country saw
inflows into the Waiau catchment at their lowest in
90 years for the January to March period, coming in
at 403GWh, which is about 800GWh below average.
As we’re the country’s largest generator of renewable
energy, low hydrology is of course an integral part of
our risk management, and we have a range of tools
available to mitigate the impacts. We’re comfortable
these will see us through the next two to five years.
In the first quarter of this calendar year, we came very
close to reaching the equinoxial minimum level for
Lake Te Anau. Generation at Manapōuri was minimised
as a result. Two things helped. We were able to work
with other stakeholders to co-ordinate reduced flows
between the lakes, and Lake Pukaki retained good
storage so we were able to increase generation from
there to compensate.
We also called on the Meridian Price Separation
Period clause in our NZAS contract, which reduced
the cover we provided to NZAS to the level of our
Southland generation. These calls occurred in
April 2022 and it was the first time that we used
the flexibility in the NZAS contract to reduce the
quantity of generation allocated to NZAS during
a dry period.
Meridian also has a swaption arrangement with
Genesis for up to 150MW (configured as three
tranches of 50MW each) until the end of 2022.
This is a financial arrangement, which locks in a
fixed price for any volume called. We utilised the
full swaption on a number of occasions this year.
Looking ahead, our arrangement with Genesis runs
out at the end of 2022. We now have greater use of
range of Lake Pūkaki storage down to 513.0 metres.
This gives us additional flexibility in how we manage
our hydrology. We have a swaption agreement with
Nova for up to 235GWh per year for the next five
years starting on 1 January 2023. We also recently
announced a 150GWh swaption with Contact for
2023 and 2024. We’ve also purchased some Power
Purchase Agreements off geothermal generation.
While we didn’t end up needing the Smelter Supply
Demand Response this year, it’s still available to us
for the last two years of our current contract with
NZAS, ie 2023–2024.
8 3
OUR COMMERCIAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Dividend for this year
Retail pricing under pressure
Our ordinary dividend policy is now
to make distributions based on 80%
to 100% of free cash flow (up from
75% to 90%), subject to the Board’s
due consideration. The Dividend
Reinvestment Plan introduced last year
is still in place, but there’s no longer a
discount available on shares purchased
under the Plan. Since the sale of the
Australian business we’ve lifted our
expected level of dividend, starting
with the interim dividend for this year.
The final dividend for the year will be
11.55 cents per share, 3% higher than
for the same period last year.
The volatility in the wholesale markets
has put a lot of pressure on retail
pricing. We’ve done our best to insulate
retail customers from these, with our
one 3% energy-only increase in April
being less than inflation. We’ve also
been encouraging customers to buy
our LevelPay product as another way
to flatten household prices throughout
the year and avoid the winter cost
spikes that can really disrupt household
budgets. At the same time we’ve
continued working creatively with
our large business customers to
insulate them from the impacts via
long-term contracts.
This cash influx came as we continued
to plan for an NZAS exit, further
decarbonisation, data and hydrogen
manufacturing opportunities. The
current smelter arrangement and
hydrogen production alone could
double current consumption. Data
could add another 1,000GWh, and
decarbonisation away from gas and
coal – especially for industry – could
represent another 600GWh. In fact,
we’re forecasting decarbonising and
re-electrifying together to double
national energy consumption by 2050.
As our development team continues
working hard to find new sites to grow
and support New Zealand’s ambitions,
this feels like a good time to be a 100%
renewable energy generator with cash
available for investment.
Exiting Australia
On 1 February 2022 we completed
the sale of our Australian business
to a consortium made up of Shell
Energy Operations Pty Limited and
Infrastructure Capital Group. Through
the transaction, Shell has taken
ownership of Powershop Australia,
while Infrastructure Capital Group
is now the owner of a portfolio of
infrastructure assets including the
Mt Mercer and Mt Millar wind farms
and the Hume, Burrinjuck and Keepit
hydro power stations and development
assets. The agreements allowed for
Flux Federation to continue providing
Powershop Australia with retail
software and customer care services
for at least the next three years. This
means Meridian is now a New Zealand-
based business only. The AU$740
million sale price has boosted our
balance sheet and enables us to fund
growth from these cash proceeds that
we anticipate will generate higher
returns on capital than might have
been achieved from continuing with
our Australian operations.
8 4
OUR COMMERCIAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Customer connections* (ICPs)
Customer sales volume (GWh)*
7
7
2
,
2
0
3
4
0
8
9
0
1
,
400,000
350,000
3
00,000
250,000
2
00,000
150,000
100,000
50,000
0
0
3
8
6
4
3
,
6
4
3
5
6
3
,
116,970
4
3
9
5
8
1
,
32,714
215,662
,
3
5
2
4
2
3
2
0
2
6
3
1
,
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
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3,200
3
5
5
3
8
6
5
8
7
NZ AU
FY19
NZ AU
FY20
NZ AU**
FY21
NZ AU***
FY22
NZ AU**
FY19
NZ AU**
FY20
NZ AU**
FY21
NZ AU***
FY22
* Excludes the Tīwai Point aluminium smelter; <10 of the above ICPs are connected to the
transmission network; around 4,700 customer connections have distributed generation metering.
** Also 43,905 gas customer connections in Australia with total of 1,711 terajoules in volume.
*** Excludes Meridian Energy Australia, sold 31 January 2022.
* Electricity energy volumes only, and excludes the Tīwai Point aluminium smelter.
** Corporate volume restated to include time-of-use volumes, previously included in SME.
*** Australia was divested in Jan 2022 so data excluded.
Switching rates*
Customer satisfaction*
FY18
FY19
FY20
FY21**
FY22
Net Promoter Score**
FY18
FY19
FY20
FY21
FY22
Powershop New Zealand
33.63% 30.35% 24.97% 25.81% 25.07%
Meridian
17.63%
16.94%
14.18% 14.45%
11.98%
New Zealand combined
21.16% 20.08%
16.98%
17.76%
16.10%
New Zealand industry
20.95% 20.64%
18.91% 20.77% 18.35%
* Data from the Electricity Authority (emi.ea.govt.nz) and Meridian analysis.
** Data restated based on final figures from the Electricity Authority.
Powershop Australia
Australian industry average***
Powershop New Zealand
Meridian
New Zealand industry average***
53
(14)
55
14
53
(18)
61
28
18
57
18
64
30
22
46
11
66
28
21
N/A
N/A
62
32
N/A
* Australia surveys both residential and business customers (with exception being customers who opted
‘do not contact’). Powershop New Zealand and Meridian New Zealand residential customers only.
** Calculated from a survey asking customers using a 0–10 scale “How likely is it that you would recommend
Meridian/Powershop to a friend or colleague?” and then subtracting the percentage of detractors from the
percentage of promoters. A positive value indicates that more customers are promoters versus detractors
(and vice versa). All results are a 12-month moving average from July to June each financial year.
*** Perceptive Group Limited: New Zealand and Australia NPS Industry Benchmarks. FY22 data currently unavailable.
8 5
OUR COMMERCIAL IMPACTSMERIDIAN INTEGRATED REPORT 2022
Our retail brands
made substantial gains
We enjoyed strong growth in sales
and customers this year. Segment
sales were up by 11% in residential,
17% in small to medium business
and 10% in corporate.
We are now the country’s biggest
supplier of retail energy with
8,900GWh. In total, we added
18,000 new connections by executing
on our successful multi-brand strategy.
Connections rose by 11,000 for the
Powershop brand and 7,000 for
Meridian, making NZ Retail the
fastest growing retail group in 2022.
Powershop’s growth centred on
residential and small business
customers who want to engage on a
digital platform, while for Meridian the
gains were mostly in the SME and large
business sectors. Our sales volume
growth included the successful
re-signing of large time-of-use
customers as well as significant
Powershop growth.
Importantly, growth was not at the
expense of profitability, with both
brands continuing to reduce our
reliance on low-value acquisition
rates. In fact the Meridian brand has
the lowest churn rate, of 12%, in the
industry, demonstrating our customers’
high commitment to the brand. Our
tracking shows Powershop is now the
#1 retail brand while Meridian is #2
for gentailers in our internal customer
satisfaction surveys. Both brands
have achieved their standings on
a flat-cost base.
We achieved healthy growth in
Commercial and Industrial customers as
we continued looking to partner with
them to decarbonise. We extended our
solar at Lincoln University this year, and
lifted the solar presence at Sylvia Park
to the point where it’s now the largest
commercial solar array in the country.
Despite significant growth and cost
pressure, we continued to drive down
our cost to serve while maintaining
exceptional customer experiences.
Specifically, we focused on process
automation to remove manual work
so that our people can focus on higher-
value work. This has enabled us to grow
while limiting the need for additional
resources to service customer growth.
Establishing multi-brand services
through our Flux platform has also
given us more flexibility.
With its pay-as-you-go Power Packs,
Powershop has emerged as our mass-
market growth engine. This year the
brand hit a new high in terms of volume
– with over 11,000 customer accounts –
thanks to a service proposition, pricing
and brand positioning that continued
to stand out in a bustling retail energy
sector. Whereas the Meridian brand
appeals to business and conscious
consumers, Powershop shows that we
can accelerate growth in retail through
market innovation. Our ambition for
Powershop now is to further si mplify
our unique ‘shop’ model for customers
to provide the best digital experience
in the market and give ‘power to the
people’ to get the best deals when it
suits them.
8 6
Our new brand campaign.
OUR COMMERCIAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 Nature makes her presence felt
Better futures
Meridian was specifically identified,
again, as a sustainable New Zealand
brand in the Better Futures 2022
report. This report reinforces New
Zealanders recognise Meridian as
one of New Zealand’s sustainability
leaders and have done so over
multiple, consecutive years.
Our Meridian brand appeals to
New Zealanders who want to support
a renewable energy generator that is
deeply connected to the environment
and New Zealand. The brand has
achieved good growth.
Meridian is already widely recognised
as a renewable generator – only
generating electricity from renewable
sources of wind, water and sun. We’re
also committed to taking climate
action and using our power to make
a difference and doing what we can
to help Aotearoa decarbonise.
Launching a new climate-centric brand
campaign that features a bold, strong
and confident character, Nature, who
makes an entrance by bursting onto the
scene through an electrical storm and
a flash of lightning! Having a distinctive
and enduring brand platform allows
us to tell our story now and into the
future. We want to give kiwis hope that
a difference future is possible because
when nature thrives, we all thrive.
8 7
OUR COMMERCIAL IMPACTSMERIDIAN INTEGRATED REPORT 2022 A summary of our impacts anchored on commercial activities
A summary of our commercial-related impacts outlined in this section is provided below, including our associated commitments and goals where relevant.
Impact
Description
Commitments and policies (including mitigation and remediation actions)
Erosion of public and customer trust
(market behaviour and pricing)
We’re directly linked to public and customer trust levels
related to a fair and competitive process for electricity pricing.
Risks created by a changing climate We’re directly linked to physical risks for the economy,
the environment and people of as a result of climate
change impacts on its generation infrastructure.
Meridian takes very seriously our commitments to ethical conduct and good governance, to ensure
we uphold deserved trust levels from the public and our customers. Some of our commitments to
ensure we embed ethical conduct into our business decision making include:
• Audits that incorporate the Professional and Ethical Standards
• During FY22 we conducted an ethical practices review that assessed our commitments and due
diligence processes across all operations in relation to range of ethical issues, including human rights.
The agreed actions as a result on that review will be implemented starting FY23 and will include an
update to our Group Code of Conduct, with associated engagement with our staff.
• Electricity Authority code trading rules have been amended (positive code amendment)
• Our Electricity Hedging Policy and pricing plans are mature and embedded, with clearly assigned
responsibilities, to ensure we shield Meridian and our customers from electricity price volatility
• We ensure compliance with Electricity Authority requirements – advertising Powerswitch as a pricing
comparison tool
• We recognise that some electricity users in New Zealand are in energy hardship and we are committed
to playing an active role in addressing the multi-faceted drivers (for a full list of commitments – refer to
impact Access to affordable energy and new energy solutions).
Meridian has voluntarily disclosed the financial impacts of climate-related issues since 2019. Of note, we
continue to disclose the potential impact of Extreme rainfall in hydro catchments and the management
actions we have in place to mitigate the likelihood and potential consequence this risk. Meridian is proud
to produce a fourth disclosure for FY22 and is committed to year of year process improvement and
disclosure quality and look forward to fully aligning our future Climate-related disclosures with the
coming New Zealand Climate Standards.
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StreetDog electric motorbike developed in Te Whanganui-a-Tara Wellington.
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OUR COMMERCIAL IMPACTSMERIDIAN INTEGRATED REPORT 2022
Green Finance
Programme
In August 2020 Meridian
announced a Green Finance
Programme, which covers
both existing and future
issuances of debt instruments.
The Programme recognises
Meridian’s commitment
to leadership of and
investment in renewable
energy generation and
will be used to finance
or refinance sustainable
projects and assets such
as new and existing
renewable energy assets.
The Programme enables Meridian
to connect its company strategy and
vision to its financing requirements, and
provides investors with an opportunity
to invest in a range of accredited debt
instruments. The proceeds of these have
been allocated (directly or notionally)
to refinance eligible wind and hydro
projects and assets that meet the
following market standards:
Further information on the Green
Finance Programme, including the
Programme framework document,
opinions from DNV GL Business
Assurance Pty Limited, Climate
Bonds Standard Certification and
Green Asset and Debt registers is
available on Meridian’s website at
meridianenergy.co.nz/about-us/
investors/reports/green-finance.
• The International Capital Market
Association Green Bond Principles
• The Climate Bonds Standard
• The Pacific Loan Market
Association Green Loan Principles
Page 171 provides detailed information
on the Green Debt included in the
Programme for FY22.
9 0
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West Wind farm, Mākara, Te Whanganui-a-Tara Wellington.
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Benmore Hydro Power Station, Otematata.
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022
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Our remuneration
review process this
year was costed
to keep pace with
the cost of living.
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022
Our approach
to remunerating
our people
Attracting, retaining and motivating talented people, and
rewarding them for delivering desired business performance
and long-term shareholder value, is key to Meridian’s success.
Our remuneration philosophy is guided by the principles that
remuneration will:
• be clearly aligned with our company values, culture and strategy
• support us to attract, retain and engage employees
• be fair, equitable and flexible
• appropriately reflect market conditions and the organisational context
•
recognise and reward high performance
• align with creating shareholder value.
94
The team at Benmore Hydro Power Station, Otematata.
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022 The People and Remuneration Committee regularly
review Meridian’s Remuneration Policy and practice
and provide recommendations to the Board. The
Board approves the Remuneration Policy two-yearly,
and the Executive balanced scorecard objectives,
company financial performance targets and
outcomes on an annual basis.
Fixed remuneration
Fixed remuneration includes base salary and
matched KiwiSaver contributions of up to 4%. It is
benchmarked to independent market remuneration
data obtained from multiple external sources. As
a minimum, Meridian pays the Living Wage for all
permanent and fixed term employees.
The People and Remuneration Committee of
the Board review and approve proposed remuneration
packages for the Senior Executive team. Remuneration
for the remainder of the organisation is determined
and reviewed by managers in accordance with the
Remuneration Policy and framework, and is subject
to one-up approval.
Salaries are reviewed annually, with the budget and
parameters for the company’s annual remuneration
review approved by the Board. Market information
from independent remuneration providers inform
these remuneration decisions.
The STI opportunity within total remuneration
reflects the complexity and level of the roles. In
FY22 the Chief Executive had an STI opportunity
of 50% of salary, and the Executive Team STI
opportunity was 30%.
Variable pay
Meridian has an STI scheme and LTI plan which
are variable, performance-based incentives,
awarded only if specific financial and non-
financial performance hurdles are met, and
at the discretion of the Board.
Short-term incentive (STI)
Permanent employees may participate in variable
pay via a short-term incentive (STI) scheme at the
discretion and invitation of the Board. The STI is an
at-risk incentive, which may be offered for a specific
year. Potential STI payments reflect achievement
of certain company profit levels and individual
performance objectives aligned to business strategy
and goals, and are wholly-discretionary. An STI may
be paid subject to a behaviour gate and company
financial performance hurdles, and at the discretion
of the Board.
Long-term incentive (LTI)
The Chief Executive and Executive Team also have
the opportunity to participate in a long-term
incentive (LTI) plan An LTI plan is offered at the
discretion of the Board, to align executives’ and
shareholders’ interests, and optimise long-term
shareholder returns.
The LTI opportunity is 40% of salary for the Chief
Executive, and 30% of salary for the Executive
Team. This figure is grossed up for tax, KiwiSaver
and additional dividend shares. Vesting of the LTI
is contingent on meeting absolute and relative
Total Shareholder Return (TSR) performance
hurdles at the conclusion of a three-year period.
The current LTI plan which was first offered in
FY20 (for the period commencing on 1 July 2019
and ending 30 June 2022).
The team at Benmore Hydro Power Station, Otematata.
9 5
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022 Under the current LTI plan, the
company issues rights to acquire
ordinary shares in the company (Share
Rights) to eligible participants who
accept the offer to participate in the
LTI plan. Each Share Right entitles the
holder to one ordinary share in the
company and an additional number
of shares equal to the value of gross
cash dividends per share which would
have been paid to a New Zealand
tax resident who held a share for
the duration of the vesting period,
calculated using a 10-day volume
weighted average price.
The number of Share Rights that vest
is dependent on the following Vesting
Conditions:
• Meridian’s total shareholder return
over a 3-year performance period
(Performance Period) relative to
Meridian’s cost of equity and the
total shareholder return over the
Performance Period of a defined
group of NZX Main Board and ASX
listed peer companies (Performance
Hurdles); and
•
if the participant continues to be
employed by Meridian during
the vesting period (Employment
Condition).
Performance hurdles
Share Rights are granted in two
tranches:
• Absolute Return Share Rights; and
• Relative Return Share Rights.
For Absolute Return Share Rights
to vest, the company’s TSR must
be greater than the absolute TSR
benchmark which is set at the
beginning of the vesting period
with regard to the company’s cost of
equity (Absolute TSR Benchmark) on
a compounding annual basis over the
Performance Period. If the company’s
TSR is equal to or lower than the
Absolute TSR Benchmark, no Absolute
Share Rights will vest. If the company’s
TSR is greater than the Absolute TSR
Benchmark, 100% of the Absolute
Return Share Rights will vest.
The number of Relative Return Share
Rights that vest is determined by the
company’s TSR over the Performance
Period relative to the peer group.
For any of the Relative Return Share
Rights to vest, the company’s TSR must
be greater than or equal to the 50th
percentile / median TSR of the peer
group. 100% of the Share Rights will
vest on meeting the 75th percentile
TSR of the peer group, with vesting
on a straight-line basis between
these two points.
For each three-year plan, an
independent external expert measures
the TSR of Meridian and the peer group
of companies along with the outcome
on the progressive vesting scale.
Share Rights will lapse if the Vesting
Conditions are not satisfied (although
this is subject to the Board’s discretion in
relation to the Employment Condition).
For the LTI plan that vested at the
end of 2022, the level of vesting was
48.8% (2021 : 100%). A total amount of
251,565 shares will be transferred to
the eligible participants (2021: 238,725).
Employee benefits
A range of other benefits are provided
to employees, including an employee
share scheme, employee insurance,
enhanced parental leave provisions,
3 days company leave, the ability to
purchase additional leave, access to
purchasing discounts, part-time and
hybrid working arrangements.
A special employee bonus
After the end of FY22, the Board
granted a one off bonus payment of
$1,000 to most Meridian employees,
to show appreciation for their work and
continued commitment to the company,
and to acknowledge the economic
strain and other stresses our employees
have faced during the FY22 year.
Other employment
arrangements
Meridian has written agreements
with the Chief Executive and
executives setting out the terms
of their employment.
Neal Barclay will be employed as
Chief Executive until his employment
is terminated in accordance with his
employment agreement. Pursuant
to the employment agreement, the
Chief Executive and Meridian have
mutual rights of termination on the
provision of six months’ written
notice. Meridian may also terminate
the Chief Executive’s employment on
the grounds of redundancy or serious
misconduct or where an act
of bankruptcy is committed
Termination payments – Redundancy
compensation is payable to permanent
employees whose employment is
terminated as a result of redundancy.
No ‘clawbacks’ are required except if
salary overpayment occurred.
No retirement benefits are payable.
No sign-on bonuses or recruitment
incentive payments are offered.
96
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022 Chief Executive remuneration for performance periods ending 30 June 2021 and 30 June 2022
Year
FY22
FY21
Base salary
Taxable benefits19
Fixed remuneration20
MyShare21
Pay for performance
Total remuneration
STI22
LTI23
Subtotal
$1,092,548
$43,702
$1,136,250
$1,071,125
$42,845
$1,113,970
$2,500
$2,500
$641,754
$358,413
$995,622
$2,134,372
$527,910
$664,066
$1,191,976
$2,308,446
The Chief Executive is entitled to
receive a matching employer KiwiSaver
contribution of 4% of gross taxable
earnings. The company’s KiwiSaver
contributions for the Chief Executive,
including on LTI paid within the
FY22 period, were $89,639
The ratio of Chief Executive salary to
median Meridian Group employee
salary24 in FY22 is 12:1 (using $91,000
median employee salary and FY22
Chief Executive salary).
The ratio of Chief Executive total
remuneration to median Meridian
Group employee total remuneration
paid in FY22 is 20.5:1 (using $104,104
as median employees total
remuneration and FY22 Chief
Executive total remuneration).
The Chief Executive’s salary increased
by 2% in FY22. The median employee
salary increased by 3.2%, resulting
in a ratio of 0.63:1 (Chief Executive to
Median Employee salary increase).
The Chief Executive’s total remuneration
decreased by 7.54% in FY22 due to
the FY20 LTI not fully vesting. Median
employee rotal remuneration increased
by 3.2% in FY22. This results in a ratio
of -2.3:1 (Chief Executive to Median
Employee total remuneration increase).
Five-year remuneration summary
Year
FY22
FY21
FY20
FY19
FY18
Single figure
remuneration
% STI
against maximum
% vested LTIs
against maximum
Span of LTI
performance period
$2,134,372
$2,308,446
$2,039,841
$1,695,195
$2,156,484
78.99%
66.75%
78.69%
90.91%
72.80%
48.8%
100%
100%
100%
75%
FY20–FY22
FY19–FY21
FY18–FY20
FY17–FY19
FY16–FY18
Neal Barclay was appointed as
Chief Executive effective from
1 January 2018.
Chief Executive remuneration for
FY18 therefore reflects the sum of
Chief Executive remuneration for
Neal Barclay and previous Chief
Executive, Mark Binns.
19
20
21
22
23
24
Taxable benefits are 4% company KiwiSaver contributions on salary.
Fixed remuneration is salary plus company KiwiSaver contributions.
MyShare is gross value of award shares received in the applicable period.
STI is the potential payment based on performance achieved for the applicable period and includes 4% company KiwiSaver contributions.
LTI is grossed up for PAYE, and 4% company KiwiSaver contributions. The LTI plan changed in FY20. The vesting period for the FY20 LTI scheme
ends on 7 October 2022. Share rights lapse if the holder ceases to be employed by Meridian during the vesting period, subject to the Board’s discretion.
Median employee salary and total remuneration excludes Flux UK and casual employees.
9 7
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022
Breakdown of Chief Executive pay for performance (FY22)
Description
Performance measures
STI
LTI
50% of base salary. Combination
of company result and a scorecard
of financial and non-financial
company measures.
Conditional award of share rights
under LTI plan. 40% of base salary.
60% weighting on company performance (company profit, which
comprises Group EBITDAF minus capital charge).
40% weighting on performance against a Board-approved scorecard
comprising financial and non-financial objectives, as shown in the
table below, and other aspects of individual performance.
% achieved
133.6%
80%
50% : Absolute TSR over the relevant assessment period:
Hurdle not met
• Must be greater than the company’s cost of equity
benchmark on a compounding basis.
50% : Relative TSR against the peer group25:
• Below the 50th percentile, 0% vests
• 50th percentile TSR of peer group, at least 50% vests
• ≥ 75th percentile TSR, 100% vests
• Between the 50th and 75th percentile TSRs of peer group,
50-100% vests, calculated on a straight-line pro rata basis.
97.6%
The sum of both LTI
measures gave an
outcome of 48.8%
Pay for performance scorecard measures for FY22
For FY22, the Board-approved scorecard comprising up to 40% of the STI for the Chief Executive and for the Executive
team was measured as follows. This mix of measures demonstrates that a large proportion of the remuneration of the Chief
Executive and Executive team is directly impacted by their management of the organisation, and it impacts on the economy,
environment and people.
Performance area
Measures
Decarbonisation-led Growth Grow renewable led consumption in NZ while developing assets to support that consumption growth
Customer
Drive the highest levels of customer satisfaction in NZ while refining commercial delivery of services to customers
Future Development
Complete migration of customers to the new platform while enabling Flux growth
Sustainability
Reduce greenhouse gas emissions while planting trees to offset those that cannot be eliminated while maintaining
Our People
Trend in engagement score while continuing to build levels of health, safety and wellbeing amongst the team
Weighting
20%
20%
20%
20%
20%
9 8
25
Peer Group comprises AGL Energy, Origin Energy, Contact Energy, Mercury NZ, Manawa Energy (previously Trustpower), and Genesis Energy. The vesting period for the
FY20 LTI scheme ends on 7 October 2022. Share rights lapse if the holder ceases to be employed by Meridian during the vesting period, subject to the Board’s discretion.
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022 Five-year summary – three-year rolling TSR performance
(Meridian Energy vs peer group*)
Chief Executive remuneration performance pay for FY22
120%
100%
80%
60%
40%
20%
0%
%
8
0
1
%
6
7
%
6
8
%
5
8
i
n
a
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i
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e
M
i
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a
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e
m
p
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P
55%
58%
39%
44%
%
7
-1%
June 2018
June 2019
June 2020
3 years ended
June 2021
June 2022
* Peer Group comprises AGL Energy, Origin Energy, Contact Energy, Mercury NZ,
Manawa Energy (previously Trustpower), and Genesis Energy. The vesting period for
the FY20 LTI scheme ends on 7 October 2022. Share rights lapse if the holder ceases
to be employed by Meridian during the vesting period, subject to the Board’s discretion.
3,000
2,500
2,000
1,500
1,000
500
0
$(000)
I
T
L
l
e
b
a
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a
v
l
a
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n
n
A
n
o
i
t
a
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e
r
d
e
x
i
F
27%
30%
43%
18%
25%
57%
100%
Fixed remuneration
Meets expectations
Maximum
The TSR summary above illustrates the performance of Meridian’s
shares against a peer group of companies between 30 June 2018
and 30 June 2022. TSR performance outcomes are independently
validated by external experts.
The chart above depicts elements of the Chief Executive’s
remuneration design under various scenarios for the year
ended 30 June 2022, as a proportion of Total Remuneration.
9 9
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022
Employee share ownership
Employees are invited to join
Meridian’s employee share ownership
plan, MyShare. Under MyShare,
Meridian shares are purchased for
participating employees, funded by
monthly pay deductions of between
$500 and $5,000 per annum. After
three years, participants may be
eligible for award shares subject
to ongoing employment (Tenure
Award Shares) and the company
TSR outperforming a peer group of
competitors (Performance Award
Shares). In FY22, 60% of employees
participated in MyShare, although this
has dropped to 55% for FY23.
Meridian has a policy to ensure that
the participants of the Executive LTI
Plan are not permitted to enter into
transactions (whether through the use
of derivatives or otherwise) that limit
the economic risk of participating in
the Plan.
Number of shares owned
(excludes performance
share rights)
Value of
shares as at
30 June 2022
Value of shares as
a % of FY22 Fixed
Remuneration
Chief Executive
Executive Team
450,556
$2,108,602
778,532
$3,643,530
186%
96%
Meridian does not have a share ownership requirement for the Chief Executive
and Executive Team.
v
Employee remuneration range
The number of employees and former employees of Meridian and its subsidiaries
(not including directors) who during the year ended 30 June 2022 received
cash remuneration and other benefits (including at-risk performance incentives,
KiwiSaver contributions and redundancy compensation) exceeding $100,000 is
outlined below:
Band
Total Group
Band
Total Group
100,000 - 109,999
110,000 - 119,999
120,000 - 129,999
130,000 - 139,999
140,000 - 149,999
150,000 - 159,999
160,000 - 169,999
170,000 - 179,999
180,000 - 189,999
190,000 - 199,999
200,000 - 209,999
210,000 - 219,999
220,000 - 229,999
230,000 - 239,999
240,000 - 249,999
250,000 - 259,999
260,000 - 269,999
270,000 - 279,999
280,000 - 289,999
290,000 - 299,999
300,000 - 309,999
71
62
59
54
48
40
24
24
26
15
15
12
6
5
4
4
3
4
3
3
4
310,000 - 319,999
320,000 - 329,999
330,000 - 339,999
340,000 - 349,999
360,000 - 369,999
370,000 - 379,999
390,000 - 399,999
400,000 - 409,999
410,000 - 419,999
470,000 - 479,999
490,000 - 499,999
510,000 - 519,999
540,000 - 549,999
560,000 - 569,999
630,000 - 639,999
680,000 - 689,999
870,000 - 879,999
960,000 - 969,999
1,070,000 - 1,079,999
2,320,000 - 2,329,999
1
1
1
1
4
4
3
1
1
2
1
1
1
1
1
1
1
1
1
1
* This includes 44 employees who are no longer employed
by Meridian Energy Limited and its subsidiaries.
515*
1 0 0
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022 Remuneration report
Approved director remuneration for FY22
As an NZX-listed company, directors fees (Board remuneration) must be approved by a majority of shareholders voting at a shareholders’ meeting. Meridian has no
formal Remuneration Policy for the remuneration of directors; however, shareholders are kept informed of any changes in the way the company allocates the pool of
approved director fees. Refer Corporate Governance statement26.
Director remuneration is paid from the total director fee pool that was last approved by shareholders at the Annual Meeting of 6 October 2021. Prior to the meeting and
vote, Meridian had consulted with a number of shareholder representatives to gain their input, and engaged independent consultants PwC to prepare a benchmarking
report of Meridian’s director fees against those of comparable companies. Further details of that report are available here:.nzx.com/announcements/378714.
Prior to 2021, the last previous change to directors’ fees was in 2016.
Shareholder-approved annual director fee pool
Director remuneration received in FY22
Board fees
Committee fees
Total pool
Individual Board-approved annual fee breakdown
FY21
FY22
$1,000,000
$1,090,000
$100,000
$109,000
$1,100,000
$1,199,000
Name of director
Mark Verbiest27
(Chair)
Peter Wilson28
(Deputy Chair)
Board
fees
Audit & Risk
Committee
People &
Remuneration
Committee
Safety &
Sustainability
Committee
Total
remuneration
$212,000
–
$39,907
$2,625
FY21
FY22
Mark Cairns
$116,750
–
$196,500
$212,000
Jan Dawson
$116,750
$10,500
$137,550
N/A
$108,075
$116,750
Anake Goodall29
$31,263
–
Michelle Henderson
$116,750
$10,500
Julia Hoare
$116,750
$25,000
(Chair)
–
–
–
$21,000
(Chair)
–
$212,000
$2,375
$44,907
$21,000
(Chair)
$137,750
–
$148,250
–
–
–
$2,375
$33,638
$9,500
$136,750
–
$141,750
Audit and Risk Committee Chair
$22,106
$25,000
Audit and Risk Committee member
$9,825
$10,500
Safety and Sustainability Committee Chair
$14,738
$21,000
Safety and Sustainability Committee member
$9,039
$9,500
People and Remuneration Committee Chair
$14,738
$21,000
People and Remuneration Committee member
$8,941
$9,500
Nagaja Sanatkumar30
Tania Simpson31
$116,750
$107,105
–
$9,500
$7,125
$133,375
$7,125
$7,125
$121,355
Total
$974,025
$48,625
$37,625
$49,500
$1,109,775
Directors are reimbursed for all reasonable and properly documented expenses
incurred in performing their duties as Meridian directors. No additional payments
or benefits were received by directors in FY22.
Position held
Chair
Deputy Chair
Director
26
27
28
29
30
31
meridian-preprod-media.s3.ap-southeast-2.amazonaws.com/public/Investors/Governance/View-Meridians-Corporate-Governance-Statement-FY21-PDF.pdf
Does not receive additional fees for committee membership.
Retired from the Board, effective 6 October 2021, so fees do not represent a full year.
Retired from the Board, effective 6 October 2021, so fees do not represent a full year.
Appointed to the Safety and Sustainability Committee, effective 5 October 2021, so does not represent a full year.
Appointed to the Board, effective 24 August 2021, and to the People and Remuneration Committee and Safety and Sustainability Committee, effective effective 5 October 2021, so does not represent a full year.
1 01
OUR REMUNERATIONMERIDIAN INTEGRATED REPORT 2022 Preparing
this report
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West Wind farm, Mākara, Te Whanganui-a-Tara Wellington.
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 T
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This year, we’ve
chosen to adopt
the updated 2021
Global Reporting
Initiative Standards.
MERIDIAN INTEGRATED REPORT 2022
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Intentions
We have a duty to effectively manage a
wide range of resources, including our
physical assets, our technology platforms,
our financial capital, our people and their
knowledge, our many relationships and
the natural resources we use to generate
electricity and value. We’re committed to
providing transparent, evidence-based
information that is easy to read, clearly
understood and consistent with best
reporting practice.
Each year we undertake a materiality assessment to
focus our efforts and disclosures on the most material
issues. This year we’ve chosen to adopt the updated
2021 Global Reporting Initiative (GRI) Standards, which
have moved away from evaluating materiality based
on the issues that immediately influence stakeholder
decision-making.
The focus now is on our actual and potential
positive and negative impacts on the environment,
the economy and people, including human rights.
Those activities could cause the impacts, contribute to
the impacts or have links to the impacts (even when
they neither directly cause nor contribute to them).
As a result of the new approach, some issues that
are immediately important to some stakeholders
are now ranked lower than they were last year.
This could be because important issues like cyber
security (that have a low likelihood of occurring,
or that stakeholders overestimate the significance
of particular impacts relative to others.
1 0 4
Otematata landscape.
To identify material impacts, we have:
• carried out a comprehensive sustainability impacts
assessment of our activities with external support
•
•
•
reviewed and assessed the activities, impacts
and annual reports of peer group companies
reviewed and assessed impacts relating to
Meridian’s previously reported material topics
involved cross-company groups of staff to
identify the company’s most material impacts
• engaged with a range of external experts
and stakeholders, including:
– customers
– customer insights researchers
– tangata whenua and iwi groups
– a range of relevant community groups
and local residents
– local economic development agencies,
– business media
– energy industry experts
– electricity sector researchers and experts
– environmental regulators
– equity analysts.
To prioritise impacts (the effects of activities),
we derived a significance score so one impact
could be evaluated and prioritised relative to
the significance of another impact.
Our FY22 material topics have been determined
by grouping positive and negative impacts
that have strong and related connections32.
Ultimately, the Meridian Board has the authority
to approve material topics via the Safety and
Sustainability Committee. It does this at least
annually at one of the quarterly Committee
meetings, and then at a subsequent Board
meeting. Management engages with the Safety
and Sustainability Committee to identify and
manage impacts on the economy, environment
and people at an aggregate level, at least annually.
In addition, specific positive and negative impacts
receive focused attention by the whole Board, or
one of the directors’ subcommittees, during the
year. This can include the directors engaging directly
with key relationship representatives, to understand
the impacts we have on others and ensure the steps
we take as an organisation to amplify the positive, or
mitigate the negative, have appropriate governance
oversight. For example, the Safety and Sustainability
Committee visited the Harapaki wind farm to meet
our civil contractors and cultural monitors from
Hineuru Iwi Trust and Maungaharuru Tangitū Trust.
The Board and Executive Team have engaged with
Ngāi Tahu to better understand the effects on mana
whenua of changes to waterways and land brought
about by hydro-electricity generation assets.
The Board, or director committees (as is appropriate
and in the bounds of Committee Charters) reviews
the outcomes of these processes through the regular
annual reviews and approvals of material topics, and
also by seeking assurance through either Board
meetings with the Executive Team, or quarterly
director committee meetings. For example, the Safety
and Sustainability Committee reviews management
progress against a range of sustainability initiatives
quarterly, including benchmarking against relevant
targets – such as our progress with supporting
vulnerable customers and the development of
our emission-reduction programme.
32
A sector-specific GRI 2021 standard is not yet available for utilities or renewable energy
1 0 5
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 See for yourself
Material topics and impacts
• Having adopted the new impact-focused GRI
framework and process, our updated material
topics feature below. We’ve also highlighted
how they connect to our FY21 material topics.
• Each of our material topics has an associated
group of impact(s). We’ve prioritised these
impacts relative to each other based on the
use of a significance score.
• Actual negative impacts are assessed by severity,
which is the sum of: scale (how grave the impact
is); scope (how widespread the impact is); and
the irremediable character (how hard it is to
counteract the harm of the impact).
• Actual positive impacts are determined by
scale (how beneficial the impact is) and scope
(how widespread the impact is).
• The significance of a potential negative or
positive impact is determined by the severity
of the possible impact multiplied by the
likelihood of that impact occurring.
We applied a materiality threshold to the resulting
significance of impacts and those which exceeded
this threshold informed the determination of a
material topic. The smaller number of impacts below
the materiality threshold which did not inform a
material topic, still include some disclosure content
throughout this annual report – for example our
commitments and actions to address cyber security
(with a lower significant score being a result of a low
likelihood of this potential impact occurring, based
on existing policies and practices in place).
Throughout this report, we reference the actions taken
to manage a topic and related impacts in more detail
with a summary provided at the conclusion of sections:
our natural impacts, technology impacts, people
impacts, commercial impacts.
Many material impacts have specific processes in
place to track the effectiveness of actions taken
and progress against relevant targets and indicators
– for example, at a project level the Harapaki wind
farm development which contributes to material
impact increasing the supply of renewable energy
has project-specific governance in place and a
range of targets which are measured and reported
on to track progress. At a more aggregated level, at
the quarterly Safety and Sustainability Committee
meeting, Management provide assurance on
the progress against a range of initiatives relating
to material impacts – for example, our Certified
Renewable Energy programme and delivery
against our Half by 30 commitment.
The Board delegates responsibility for managing
impacts on people, planet and economy via our
Delegation of Authority Policy, which applies to
the Board, staff of Meridian and subsidiaries.
Delegation activities include financial activities,
risk management, people and culture and legal.
Delegation of the responsibility of some impacts
to employees beyond senior executives also
occurs through accountability in job descriptions
and impact-specific performance incentives.
The new GRI approach for impact identification
and assessment is one evaluation methodology,
and we recognise that other philosophies and value
systems exists. In particular, adopting a te ao Māori
approach could result in a different expression and
prioritisation of impacts. We believe there is more we
can do in learning from other possible frameworks.
As we continue our journey to build our cultural
understanding, we may find real benefit in adopting
a different way of thinking about materiality and the
impacts we have on people, planet and economy.
1 0 6
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 Identified key relationships
Our key stakeholders are those who can
have significant impacts on our business,
and those on whom we can have significant
potential impacts through our activities.
• Customers
•
Investors
• The Crown
• Ngāi Tahu and other iwi
• New Zealand public
(and their elected officials)
• Regulators
• The electricity sector
• Asset communities
• Local government
• Employees
• Suppliers
Our vision and strategy
to manage our impacts
Our purpose of Clean energy for a fairer and
healthier world, and our, how to be values (be a
good human; be gutsy; be in the waka) inherently
embody a commitment to achieving positive impacts
for people, planet and the economy and preventing
or mitigating negatives. Our business model is
anchored in creating short-, medium- and long-
term value by generating electricity from renewable
energy sources (wind, water and sun) and retailing
electricity to customers. Together, our purpose and
business model ensure we adopt a balanced view
of our impacts as we strive to deliver value.
We’re committed to executing our strategy
in ways that continuously optimise our positive
material impacts, mitigate potential negative
impacts and remediate actual negative impacts.
We recognise that achieving this will take focus,
planning and commitment. With an updated baseline
of impacts, in FY23 we plan to develop an impact
roadmap, anchored by the clear articulation of a
desired future impact-state, including targets on
which to focus our efforts. We’ll formalise our existing
internal stakeholder management group to co-
ordinate resourcing against this roadmap. Alongside
this, and to contribute to the roadmap, we’ll formalise
our commitment to human rights across the Group
and build on our existing due diligence processes.
For example, those related to operationalising our
Modern Slavery Framework and the UN Guiding
Principles on Business and Human Rights. These are
currently included in our Group Code of Conduct
and Supplier Code of Conduct.
The table on the following pages details our
FY22 material topics and impacts. We have not
included the small number of impacts that fell
below the materiality threshold.
1 07
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 FY22
material
topics
Renewable
energy
generation
FY21
material
topics
Pipeline of
generation
options
Material impacts
Material impact definition
100% Renewable
energy generation
Meridian generates 100% renewable energy from its generation
assets, generating approx. 30% of Aotearoa’s total electricity.
Key policies and commitments
(relevant to impacts)
• Operate hydro and wind farm electricity generation
Increasing the supply
of renewable energy
Meridian can increase the amount of renewable energy available in
Aotearoa by having clear development pathway for investment in
new sources of renewable generation that aligns with future demand
projections and includes securing land, consents, financing and
appropriate connection into the grid.
• Renewable development pipeline
• Battery and solar development
• Harapaki wind farm construction
• Good iwi relationships to aid in social license
Customer
decarbonisation
Distributed
energy
resources
Reducing the
emissions of others
Meridian can contribute to decarbonising commercial and residential
energy use by increasing the use of electricity to replace fossil fuels
and through better energy efficiency.
Relevant
section of
this report
Technology
Technology
Natural
• Process heat electrification programme
• Green hydrogen project
• Green data centre project
• Certified Renewable Energy offer to customers and decarbonisation fund
Supporting shift to EVs such as charging installations and EV pricing plan
•
• Certified Renewable Energy offer to customers and decarbonisation fund
• Renewable development pipeline (contribute to increasing grid
renewables)
• New energy solutions established FY22 to advance options for
distributed generation and demand response options
• Pilot commitment for demand response and EVs
• Commercial scale and residential solar
• Biodiversity and deforestation commitment
• Project River Recovery
• Collaboration with Guardians of the Lake
Emissions from
products sold
Meridian sells a portion of non-renewable grid energy in Aotearoa.
Maximising the
potential of distributed
generation and storage
Meridian can contribute to increasing renewable energy use by identifying
and responding to the risks and opportunities that distributed generation
(rooftop and small scale solar), storage (batteries) and electric vehicles will
have in the electricity system, and market.
Impact on water Diversion and reduced
river flows and water
quality issues
Meridian’s structures and water management directly affect the health
of river systems which are obstructed and have reduced river flows due
to hydro dams and generation activities. Some of these impacts occur in
conjunction with impacts caused by others.
Ngā
whakaaweawe
o Te Ao Turoa
the impacts
on the natural
world
Impact on
biodiversity
Harm to biodiversity
in water
Meridian has a direct effect on the health on aquatic biodiversity (particularly
native fish species) affected by hydro dams and restricted river flows.
• Biodiversity and deforestation commitment
•
Elvar trap and transfer
Adverse effects of
generation assets
and activities on
cultural values
Meridian directly affects the cultural values of iwi relating to land,
waterways and biodiversity because they are affected by the operational
presence and use of Meridian’s generation assets.
This creates a negative impact on iwi and their relationship with the land,
water and other taonga.
Improving
biodiversity
on land
Meridian contributes to enhancing natural ecosystems on Meridian
owned / managed land as well as non-Meridian owned land by
supporting planting and biodiversity protection programmes.
Engagement with iwi in Waitaki and Manapōuri catchments
•
• Partnership commitment to the Te Waiau Mahika Kai Trust
• Biodiversity and deforestation commitment
•
Forever Forests afforestation
• Kākāpo recovery programme
•
Te Waiau Mahika Kai Trust joint venture for carbon forest
Access to
energy
solutions
Electricity
pricing
Support for
vulnerable
customers
Access to affordable
energy and new
energy solutions
As a retailer of electricity, Meridian is directly linked to the affordability
of electricity which affects residential and business customers.
Meridian can contribute to greater renewable energy equity by supporting
the affordable uptake of micro generation opportunities that reduce costs
for electricity users over the longer-term.
• Retail energy wellbeing pilot
• Wholesale social hedge offers to Retailers focused on energy hardship
• Consumer care policy (aligned to Electricity Authority consumer care
guidelines)
ERANZ funding for Energy Mate
•
• New energy solutions team and potential impact on electricity system
People
benefits
Level Pay service
•
• Dedicated retail customer hardship team
• Referral service to FINCAP (free financial mentoring service)
• Connection with WINZ
•
Support of MBIE energy hardship work
1 0 8
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 FY22
material
topics
Ethics,
governance
and trust
FY21
material
topics
Good
governance,
ethical
behaviours
and reporting
Material impacts
Material impact definition
Erosion of public and
customer trust (market
behaviour and pricing)
Meridian is directly linked to public and customer trust levels related
to a fair and competitive process for electricity pricing.
Climate-
related
impacts
Business
emissions
and waste
Financial
impacts of
climate change
Risks created by a
changing climate
Meridian is directly linked to physical risks for the economy, the
environment and people of as a result of climate change impacts
on its generation infrastructure.
Action on
climate change
Disposal of waste
and other emissions
Meridian causes waste to landfill and harmful gaseous emissions
from its corporate and generation activities.
Sustainability
leadership
Sustainability
thought
leadership
Contribution to
public policy
Policy change that
enables the rapid
transition to a low
carbon energy future
Meridian can contribute to public policy, legislative and regulatory
developments by advocating for and supporting a policy framework
towards effective action on climate change.
Leading and influencing
change and progress on
sustainability issues
Through its leadership and influence, Meridian can contribute to
ambitious commitments and action in collaboration with other
companies and organisations on social and environmental issues
that most relevant to the business.
Supporting
communities
No FY21
material topic
Supporting
opportunities for
local communities
Meridian is directly linked to supporting various initiatives and groups
that foster the wellbeing of communities living close to generation assets
and more widely across Aotearoa.
Creating employment and career opportunities for local communities.
Relevant
section of
this report
Commercial
Key policies and commitments
(relevant to impacts)
• Audits that incorporate the Professional and Ethical Standards
• Meridian ethical practices review – FY23 implementation phase
Electricity Authority code trading rules amended (positive code
•
amendment)
Electricity hedging policy and pricing plans to shield Meridian and
customers from price volatility
•
• Compliance with Electricity Authority requirements – advertising
Powerswitch as a pricing comparison tool
• Retail energy hardship commitments
• Assessment, management and disclosure of climate-related risks annually Commercial
• Half by 30 commitment – include waste reduction targets and numerous
Natural
•
•
others – refer to Climate action plan.
Science Based Targets initiative approved emission reduction targets
Sustainability KPIs for major projects i.e., waste and emission targets for
Harapaki wind farm construction
• Regular submissions on a range of sustainability issues such as Modern
Natural
Slavery, climate-related disclosures.
• Ambitious, leading commitments such as supporting process heat
electrification
• Proactive media communications
• Member of NZ Climate Leaders Coalition - CEO recent member of the
steering
• CE, executive and senior management presenting a numerous forums
• Power Up fund
• Work with schools, provide scholarships to promote tertiary education
• Pathways for students to get into STEM employment
• Provide recreational opportunities for local communities near assets i.e.,
•
angling and rowing
Sponsorships for community events which supports emergency services
or community assets such as biking and running trails i.e., Hydro half
marathon, Meridian Milford Mount classic
Human
Human
People
No FY21
material topic
Business performance:
Diversity and equal
opportunities
Meridian continues for focus on increasing equal opportunities for
everyone irrespective of factors like age, gender, ethnicity, country of
origin, disability and sexual orientation. Greater diversity encourages new
thinking and innovation that can support Meridian’s future business success.
Initiatives within the Gender and Team Rainbow groups
•
• Belonging strategy
• Accessibility commitment and policy
• Mind the gap
Supply chain
No FY21
material topic
Impacts of supply
chain/ethical sourcing
Meridian may contribute to procurement practices that have the potential
to create negative impacts on the environment, people and human rights;
and affect the reputation of Aotearoa.
• Meridian Supplier Code of Conduct
• Meridian Modern Slavery Framework (including application of supply
People
chain due diligence)
• Anti money laundering policy
• UN Global Compact member
• Commitment to aligning practice with the UN Guiding Principles on
Business and Human Rights
1 0 9
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 UN Sustainable
Development Goals
We focus on the UN Sustainable
Development Goals (SDGs) where we
can have the most impact, considering
our place in the world, our sector and
the business outlook.
The greatest contribution we can make as an energy
company in a time when significant global, national
and multi-sector decarbonisation is required is to:
• enable material decarbonisation to address
climate change meaningfully
• enable the decarbonisation of other sectors
such as transport and process heat
• ensure we consume resources responsibly in
both our operations and development activities
• contribute meaningfully to social wellbeing, fair
commercial actions and upholding human rights.
There are four priority SDGs in which we have a
significant role to play:
• SDG7 Affordable and Clean Energy
• SDG8 Decent Work and Economic Growth
• SDG12 Responsible Consumption and Production
• SDG13 Climate Action.
We can also taken action to have positive impacts
in relation to five other SDGs where our activities
may not materially influence outcomes, but we
can demonstrate a commitment within our sphere
of influence to operate in ways that are consistent
with our purpose and the issues important to
our operations and stakeholders. These SDGs are:
• SDG5 Gender Equality
• SDG6 Clean Water and Sanitation
• SDG9 Industry, Innovation and Infrastructure
• SDG10 Reduced Inequalities
• SDG15 Life on Land.
We’ve recently joined the UN Global Compact
(unglobalcompact.org)– a voluntary leadership
platform for the development, implementation
and disclosure of responsible business practices.
Meridian has joined thousands of other companies
around the globe that are committed to taking
responsible business action to create a better world.
As a participant in the UN Global Compact, we’re
committed to aligning strategies and operations with
10 universally accepted principles (unglobalcompact.
org/what-is-gc/mission/principles) in the areas
of human rights, labour, environment and anti-
corruption, whilst also taking action in support
of UN goals and issues embodied in the SDGs.
Further information on the role of the Board and
Executive Team in relation to setting and achieving
our SDGs can be found in our Board Charter, Safety
and Sustainability Committee Charter, Sustainability
Policy and Corporate Governance Statements.
11 0
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 Global Reporting
Initiative Standards
Again this year, we’re included
in the Dow Jones Sustainability™
Asia/Pacific Index, which adopts a
robust and structured Environmental,
Social, and Governance framework
to assess performance.
This is our fourth year of completing a voluntary
climate-related disclosure (CRD) in accordance
with the recommendations of the TCFD. Our
FY22 disclosure incorporates some new indicative
provisions based on External Reporting Board (XRB)
consultation documents for the proposed standard,
Aotearoa New Zealand Climate Standard 1: Climate-
related Disclosures (NZ CS 1).
Our CRD describes how climate-related issues are
governed, how risks are managed, any impacts
or influences of these on our strategy and what
associated metrics and targets we set for ourselves.
Our FY22 CRD is available at meridianenergy.co.nz/
about-us/investors/sustainability/climate-disclosures.
We also prepare the Annual Report to meet integrated
reporting standards, and this year have chosen to
align to the 2021 GRI Standards. These ensure we
communicate concisely how our strategy, governance
and performance work together, in the context of our
external environment, to enable us to step up together
and deliver balanced, sustainable value creation.
The relevant director committees review our reported
information at a quarterly Committee meeting, and
recommend that information be approved at they
subsequent monthly Board meeting. For example,
the Annual Report and its alignment with the GRI
Standards is reviewed by the Safety and Sustainability
Committee and the FY22 CRD is reviewed by the Audit
and Risk Committee. Both Committees subsequently
recommend that reported information be approved
by the Board.
After reviewing all our disclosures in 2022, we opted
to cease participating in the Carbon Disclosure
Project. We provide emission and climate-focused
information for our stakeholders through the reports
mentioned above.
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our risks
11 2
Looking from Lake Benmore down to Benmore Power Station, Otematata.
The Board sets Meridian’s overall appetite for risk and its
approach to risk management. A summary of our key risks
and the role of the Board and Audit and Risk Committees
in risk management reviews can be found in the FY22
Corporate Governance Statement at meridianenergy.co.nz/
about-us/investors/governance.
13 key risks
• Demand risks
• Market supply
• Adverse hydrological
conditions
• Catastrophic events
• Critical equipment or
technology failure
• Health and safety
• Regulatory risk of
access to water
• Legislative and
regulatory risks
• Competitor behaviour
•
Information technology
security
• Substantial changes in
the costs of different
generation technologies
• Transmission pricing
methodology
• COVID-19
Three priority risks
Demand risks – there is a risk that new electricity demand
will not emerge to offset the reduction in electricity use
caused by the closure of the Tīwai Point aluminium smelter in
December 2024. The key mitigation here is Meridian’s project
to find new sources of demand, which include projects such as
process heat electrification, data centres and green hydrogen
production. Meridian’s FY22 Climate-related Disclosure (CRD)
also captures the opportunity for new electricity demand, the
Electrification of transport and process heat.
Market supply – there is a risk of a disorderly transition to
meet the Government’s renewable electricity generation
target, which is also identified in Meridian’s FY22 climate-
related disclosure under risk Power System Flexibility.
One key risk is the premature retirement of thermal
generation prior to new renewable electricity being in
place – specifically the risk of an early retirement of gas
generation given its role as a transition fuel. Another key risk
is market interventions affecting the potential returns from
new renewable electricity projects, which would likely have
detrimental impacts on investment in new generation. In
response, Meridian has adapted its underlying assumptions
to the market position and updated its strategy. This flows
through to preparation for an accelerated delivery of new
generation and flexible demand response investments
such as hydrogen, which could play a role in a dry-year
scenario, operating practices and how the company
engages with stakeholders and the messages it shares.
Another potential impact relates to the increased costs of
commodity risk management due to a disorderly transition.
Meridian has a mature commodity risk framework in place
to address this, which includes specific limits for allowable
exposure to spot electricity price risks.
Adverse hydrological conditions – dry periods or drought
conditions in the Waitaki or the Waiau catchments may
reduce water levels and significantly affect our generation
capability. Meridian has a number of mitigations in place
to manage water during a dry period, including wholesale
hedge products and a demand response provision within
the electricity agreement with NZAS. One of the potential
benefits of an investment in hydrogen production in the
lower South Island is the potential for demand response
during future dry periods.
To monitor such changes, we engage with Government
and industry regulators and are involved in relevant
regulatory processes.
We were the first New Zealand listed company to produce
a voluntary CRD, aligned with global TCFD guidance.
We have mitigation actions in place for all these risks.
11 3
PREPARING THIS REPORTMERIDIAN INTEGRATED REPORT 2022 Directors’
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Ahuriri Valley, Canterbury.
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As a Group, we seek
to make the best use
of the natural forces
at our disposal.
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About this report
This integrated report reviews our financial, economic,
social and environmental performance for the year ended
30 June 2022 (FY22). It has been prepared using the Value
Reporting Foundation’s integrated reporting framework
and the 2021 GRI Standards.
The report covers the performance of all members of the Meridian Group,
including our Meridian Energy and Powershop brands, Dam Safety Intelligence
in New Zealand and Flux Federation (Flux), our electricity retailing software
business that operates in New Zealand, Australia and the United Kingdom.
The sale of Meridian Australia was completed on 31 January 2022. Because
of this, certain aspects of the report do not contain any FY22 data relating
to the Australian operation.
For the most part, the focus is on Group performance, although many of the
topics discussed centre primarily on the parent company because the other
businesses are smaller (less than 10% of Group revenue).
The report reflects the responsibility we feel throughout the Group for
Meridian to make the best use of the natural forces at our disposal and to take
care of our customers, our people, our local communities, iwi relationships
and the environment. We believe this approach strengthens our ability to
continue to deliver both attractive shareholder returns and value to all
our stakeholders.
11 6
West Wind farm, Makara, Te Whanganui-a-Tara Wellington.
About the Meridian Group
The Meridian Group is listed on the NZX and the
ASX. It is one of New Zealand’s largest companies
on the NZX, with a total market capitalisation in
excess of $13 billion, operating revenue in FY22
of $3.7 billion, EBITDAF of $709 million and net
assets of $5.5 billion. Our workforce of around
1,000 people is directly employed by or contracted
to us. In FY22 we engaged around 1,100 people
who were not employees33. The most common
types were Forever Forests tree-planting volunteers
engaged through the Christchurch Foundation,
ICT technical support (service desk and onsite
IT support staff) and maintenance/construction
contractors at our wind farms with whom we
contract directly. We’re majority owned by the
New Zealand Government. Legislation specifically
precludes Meridian having any other significant
shareholders (ie with more than a 10% holding).
How we prepared this report
The Board has established processes to ensure
the quality and integrity of this integrated report
and has entrusted Management with preparing
and presenting it accordingly. To ensure all data is
as accurate as possible, the financial information
has been prepared in accordance with appropriate
financial reporting standards (see page 147) and
audited by Mike Hoshek for Deloitte Limited on
behalf of the Auditor-General (see the Independent
Auditor’s Report on page 191-194).
The non-financial information has been prepared in
accordance with the 2021 GRI Universal Standards
requirements of the Global Reporting Initiative’s
(GRI Standards) Sustainability Reporting Standards.
The sustainability content has received a limited
assurance engagement from Deloitte Limited (see
the independent accountant’s assurance report
on page 195-196).
The Meridian Group Greenhouse Gas Inventory
Emissions Report FY22 is summarised on pages 135-137
of this report and includes Meridian Energy Australia
data up until the date of its sale. It has received a
reasonable assurance engagement from Deloitte.
Our commitment to effective governance
Our Board closely monitors how the company
is managing long-term drivers of value, such as
retaining access to water, building employee
engagement, investing in new assets, enhancing
environmental performance, advancing climate-
related opportunities, satisfying customers and
building our reputation and brand.
Strategy days and regular meetings allow Board
members to share their thoughts and challenge
Management on the direction in which they wish to
take the business. These also provide opportunity
to advance the Board’s collective knowledge on
sustainable development, which is highly relevant
to Meridian operations and strategy given the
impact Meridian is committed to delivering to shift
Aotearoa to a net zero future. The Board ensure
a commitment to sustainable development is
embedded at a Governance level through the Group
Sustainability Policy6, which requires the business
guide all associated choices and behaviours with
this, and outlines the United Nations Sustainable
Development Goals (UN SDGs) where Meridian can
have the most impact considering our place in the
world, sector and business outlook. You will see
our approach to managing our impact on economy,
environment and people throughout this report.
The Board also sets Meridian’s overall appetite for
risk and approach to risk management. Our FY22
Corporate Governance Statement summarises our
key risks. You can find a copy of it at meridianenergy.
co.nz/assets/Investors/Governance/Meridian-
Energy-Corporate-Governance-Statement.pdf.
We’ve also included information on our risks and
how we manage them in this report.
West Wind farm, Makara, Te Whanganui-a-Tara Wellington.
33
Information on workers who are not employees is compiled from our Contractor Support Database (contractors) and information gathered from internal stakeholder. Total rounded to the nearest 100, by headcount.
117
DIRECTORS’ STATEMENTMERIDIAN INTEGRATED REPORT 2022 Meridian complies with the NZX
Corporate Governance Code
recommendations in all material respects
(with the exception of recommendation
3.6 – see page 138 for more details).
Processes to prevent and mitigate
conflicts of interest are found in the
Board Charter and supported by the
Meridian Whistleblowing policy. The
number of Code of Conduct breaches
are disclosed annually through Meridian’s
Corporate Governance Statement.
Our Board structure
Meridian recruits Board members with
a range of skills and experience. There
are currently five female members and
three male members, bringing gender
balance to our Board.
While the company’s constitution does
not specifically require it, Meridian’s
Board has a collective view that the
relationship with Ngāi Tahu, which
has mana whenua (authority over the
land) over the majority of the South
Island where most of Meridian’s assets
are located, is so important that a
position on the Board for someone
with connectivity to Ngāi Tahu
should always be considered. This
role is currently undertaken by
Tania Te Rangingangana Simpson.
Biographies of our directors and the
Executive Team are available at www.
meridianenergy.co.nz/who-we-are.
All directors are independent directors.
Resources
Board oversight
Financial and manufactured capital (our cash and assets) Audit and Risk Committee
Technology
Human Capital
– Our people and expertise
– Health and safety
Relationships and reputation
– Our people and expertise
– All other groups
Full Board
People and Remuneration Committee
Safety and Sustainability Committee
People and Remuneration Committee
Safety and Sustainability Committee
and full Board
Natural resources
Safety and Sustainability Committee
Significant risks around resources,
including risks due to climate change
Audit and Risk Committee
Further information about the skills,
composition and tenure of Board
members can be found in the FY22
Corporate Governance Statement at
meridianenergy.co.nz/about-us/
board-of-directors
More information on the nomination
and selection process, including criteria
used, for the Board and committee
appointments is outlined in the Meridian
Constitution and Board Charter.
The Board and committees also oversee
an alignment with the UN SDGs. UN SDGs
are approved by the Board through its
approval of the Meridian Sustainability
Policy, which provides the framework to
embed sustainability leadership across
our business. The Safety and Sustainability
Committee has responsibility for our
progress in maintaining a safe workplace
culture and actions that contribute to the
most relevant UN SDGs for our business.
The role of committees
Committees support the Board by
providing detail on specific issues and
having subject-matter experts provide
insights and advice. The committees,
and the Board as a whole, cover the
spectrum of resources on which we
depend for our business success, feed
in to the company’s overall strategy
and direction and keep the Board well
informed of day-to-day operations.
The Board as a whole oversees our
progress as a responsible generator,
particularly as it pertains to the Waitaki
reconsenting process. Our People
and Remuneration Committee the
relationship with Meridian remains a
great place to work. Our Audit and Risk
Committee assists the Board in fulfilling
its responsibilities in matters related to
risk management, including climate-
related risks, and financial accounting
and reporting.
Our
Board
Mark Cairns
Independent Director
Graham Cockroft
Independent Director
Jan Dawson
Independent Director
Michelle Henderson
Independent Director
Julia Hoare
Independent Director
Nagaja Sanatkumar
Independent Director
Tania Simpson
Independent Director
Mark Verbiest
Chair
Diversity of perspective is
important. Meridian recruits
Board members with a range
of skills and experience.
11 8
DIRECTORS’ STATEMENTMERIDIAN INTEGRATED REPORT 2022
T
N
E
M
E
T
A
T
S
’
S
R
O
T
C
E
R
I
D
View our directors’ biographies at: meridianenergy.co.nz/about-us/board-of-directors.
11 9
MERIDIAN INTEGRATED REPORT 2022
The role of people and culture
Our people are critical to the
successful delivery of our strategic
goals, policies and processes.
The Board has approved a
wide range of policies to which
Management must adhere and
incorporate in the company’s
operations, including a Code of
Conduct, the content of which all
employees agree to honour. The
Code provides guidance to staff on
the behaviours that are expected
and how to handle the issues and
challenges they may face.
Our approach to remunerating our
people is on page 94.
If you would like
further information
As a business with a significant retail
shareholder base, we want to be as
accessible and open as possible. If
you’re a shareholder, please feel free
to ask questions, request information or
comment on this report via Meridian’s
website or by directly contacting
the Investor Relations Manager at
investors@meridianenergy.co.nz.
We hope you will be able to attend
the 2022 annual shareholder meeting
in person. The Board has a policy of
rotating the location of the meeting
between Auckland, Wellington and
Christchurch, and our 2022 meeting
will be held at Eden Park, Auckland.
We’ll provide you with more information
closer to the time in the Notice of
Meeting. If you can’t attend, there’ll
be a link to a live webcast on the
Meridian website.
1 2 0
Our
Executive
Team
Neal Barclay
Chief Executive
Tania Palmer
General Manager, Generation
Mike Roan
Chief Financial Officer
Lisa Hannifin
Chief Customer Officer
Guy Waipara
General Manager, Development
Jason Woolley
General Counsel and
Company Secretary
Claire Shaw
General Manager, Corporate
Affairs and Sustainabillity
Jason Stein
Chief People Officer
Nic Kennedy
Chief Executive,
Flux Federation Limited
Chris Ewers
General Manager, Wholesale
Bharat Ratanpal
Chief Information Officer
DIRECTORS’ STATEMENTMERIDIAN INTEGRATED REPORT 2022
Neal Barclay
Chief Executive
Tania Palmer
General Manager, Generation
Mike Roan
Chief Financial Officer
Lisa Hannifin
Chief Customer Officer
Guy Waipara
General Manager, Development
Jason Woolley
General Counsel and
Company Secretary
Claire Shaw
General Manager, Corporate
Affairs and Sustainabillity
Jason Stein
Chief People Officer
Nic Kennedy
Chief Executive,
Flux Federation Limited
Chris Ewers
General Manager, Wholesale
Bharat Ratanpal
Chief Information Officer
T
N
E
M
E
T
A
T
S
’
S
R
O
T
C
E
R
I
D
View our Executive Team’s biographies at: meridianenergy.co.nz/about-us/board-of-directors.
View our Executive Team’s biographies at:
www.meridianenergy.co.nz/about-us/management-team
1 2 1
MERIDIAN INTEGRATED REPORT 2022
Further
disclosures
Further disclosures required by the
NZX Listing Rules, the Companies Act 1993
and other legislation and rules.
1 2 2
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Meridian Energy
The table opposite outlines the
directors of Meridian Energy Limited
as at 30 June 2022. During FY22 there
were three changes to the directors
of Meridian Energy Limited: Anake
Goodall and Peter Wilson ceased to
be directors; and Tania Simpson was
appointed as a director.
Company name
Directors
Meridian Energy Limited
Mark Cairns, Jan Dawson, Michelle Henderson, Julia Hoare,
Nagaja Sanatkumar, Tania Simpson, Mark Verbiest.
The Board has determined that as at 30 June 2022, all Meridian directors are
independent. The factors relevant to this determination are that no director:
• has, within the past three years, been employed in an executive role by
Meridian or any of its subsidiaries
• has held, within the past 12 months, a senior role in a provider of material
professional services to Meridian or its subsidiaries
• has had, within the past three years, a material business relationship with
Meridian or its subsidiaries
•
is a substantial product holder of Meridian, or a senior manager of, or
person otherwise associated with a substantial product holder of Meridian
• has had, within the past three years, a material contractual relationship
with Meridian or any of its subsidiaries
• has close family ties with anyone in the categories listed above
• has been a director of Meridian for a length of time that may
compromise independence.
Current Board
and Executive Team
gender composition
In accordance with NZX Listing
Rules, the gender make-up of
Meridian’s directors and officers
as at 30 June 2022 is:
As at 30 June 2022
As at 30 June 2021
Female
Male
Gender
Diverse
Female
Male
Gender
Diverse
Number of directors
Percentage of directors
Number of officers
5
71%
4
2
29%
7
Percentage of officers
36%
64%
0
0%
0
0%
4
4
50%
50%
4
7
36%
64%
0
0%
0
0%
1 2 3
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Meridian subsidiaries
New Zealand subsidiaries
The opposite tables list the subsidiaries
of Meridian Energy Limited during the
accounting period, and any changes
to those subsidiaries and among the
people who held office as directors.
Company name
Company number Directors
Further information
Dam Safety Intelligence Limited
6152623
Neal Barclay, Jason Stein
Tania Palmer ceased to be a director on 6 December 2021
Mike Roan was appointed a director on 6 December and
ceased to be a director on 11 February 2022
Jason Stein was appointed a director on 11 February 2022
Flux Federation Limited
6292491
Neal Barclay, Michael Roan
No changes
Meridian Energy Captive Insurance Limited
1612020
Neal Barclay, Michael Roan
No changes
Meridian Energy International Limited
1114014
Neal Barclay, Michael Roan
No changes
Meridian Limited
863312
Neal Barclay, Michael Roan
No changes
Meridian LTI Trustee Limited
4644639
Jan Dawson
Anake Goodall ceased to be a director on 29 August 2021
Powershop New Zealand Limited
8184062
Neal Barclay, Michael Roan
No changes
Three River Holdings No. 1 Limited
1920517
Neal Barclay, Michael Roan
Three River Holdings No. 2 Limited
1920515
Neal Barclay, Michael Roan
Amalgamated with Meridian Energy Limited on 30 June
2022 and removed from the Companies Office register
Amalgamated with Meridian Energy Limited on 30 June
2022 and removed from the Companies Office register
UK subsidiaries
Company name
Flux-UK Limited
Directors
Further information
Tania Palmer, Guy Waipara
No changes
1 2 4
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Australian subsidiaries
Meridian Energy Limited sold its Australian subsidiaries during the accounting period.
Company name
Directors
Further information
Meridian Australia Holdings Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Meridian Energy Australia Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Meridian Energy Markets Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Meridian Finco Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Meridian Wind Australia Holdings Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Meridian Wind Monaro Range Holdings Pty
Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Meridian Wind Monaro Range Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Mt Millar Wind Farm Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Mt Mercer Windfarm Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Powershop Australia Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
GSP Energy Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Rangoon Energy Park Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
Wandsworth Wind Farm Pty Limited
Neal Barclay, Tony Sherburn, Mike Roan, Jason Stein No longer a subsidiary of Meridian Energy Limited
from 31 January 2022
1 2 5
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Particulars of entries in the
interests register made during
the accounting period
Shareholders can review
Meridian Energy Limited’s full
interests register on request.
In accordance with sections 140 and
211(e) of the Companies Act 1993,
the table opposite lists the general
disclosures of interest by directors
of Meridian Energy Limited and
its subsidiaries.
Name
Position
Disclosures
Mark Cairns
Director, Meridian Energy Limited
Jan Dawson
Director, Meridian Energy Limited
and Meridian LTI Trustee Limited
Auckland Airport International Limited, Director*
Freightways Limited, Chair*
Sanford Limited, Director*
AIG Insurance New Zealand Limited, Director**
Air New Zealand Limited, Director**
Air New Zealand Limited, Shareholder
Mercury NZ Limited, Shareholder
Ports of Auckland Limited, Director*
Serko Limited, Director*
Westpac New Zealand Limited, Chair**
Anake Goodall
Director, Meridian Energy Limited
and Meridian LTI Trustee Limited
(ceased to be a director on 6 October 2021)
Impax Environmental Markets, Shareholder
Moreton Resources Limited, Shareholder
Seed the Change – He Kākano Hāpai, Chair
Michelle
Henderson
Director, Meridian Energy Limited
Julia Hoare
Director, Meridian Energy Limited
Cycling New Zealand Incorporated, Board member
Fulton Hogan Limited, Director
Fulton Hogan Land Development Limited, Director
Fulton Hogan Australia (Management) Pty Ltd, Director
Fulton Hogan Australia Pty Ltd, Director
Fulton Hogan Construction Pty Ltd, Director
Fulton Hogan Industries Pty Ltd, Director
Fulton Hogan Quarries Pty Ltd, Director
Fulton Hogan Transport Pty Ltd, Director
Fulton Hogan Utilities Pty Ltd, Director
Institute of Directors, Otago Southland Branch Committee*
South Port NZ Limited, Director*
Awarua Holding Limited, Director*
Southern Institute of Technology Engineering and Trades Advisory Committee, Member
Youthline Southland Charitable Trust, Trustee
The a2 Milk Company Limited, Deputy Chair and Shareholder
Auckland International Airport Limited, Director and Shareholder
Chapter Zero New Zealand Steering Committee Member*
Institute of Directors, President
Mercury NZ Limited, Shareholder
Port of Tauranga Limited,Director and Shareholder
Sustainable Finance Forum, Leaders’ Group member**
1 26
* Entries added and effective during the year ended 30 June 2022.
** Entries removed by directors during the year ended 30 June 2022.
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Name
Position
Disclosures
Nagaja Sanatkumar Director, Meridian Energy Limited
Tania Simpson
Director, Meridian Energy Limited
(appointed as director 24 August 2021)
Mark Verbiest
Director, Meridian Energy Limited
Peter Wilson
Director, Meridian Energy Limited
(ceased to be a director 6 October 2021)
Amazon.com, Inc Shareholder
Cawthron Institute, Director
First Fibre Midco Limited, Director
First Fibre Bidco NZ Limited, Director
UFF Holdings Limited, Director
Tuatahi First Fibre Limited (formerly Ultrafast Fibre Limited), Director
Foodstuffs North Island Limited, Director*
Imagen8 Limited, Director
Mediaworks Investments Limited, Director
Mercury NZ Limited, Shareholder
New Zealand Post Limited, Director
Nova Digital Consulting Limited, Director and Principal
Trustpower Limited, Bondholder
Vector Limited, Bondholder
Z Energy Limited, Bondholder
Auckland International Airport Limited, Director and Shareholder*
Deep South National Science Challenge Governance Group, Member*
Oceania Group Limited, Shareholder*
Reserve Bank of New Zealand, Deputy Chair**
Sustainable Seas National Science Challenge Governance Group, Chair*
Tainui Group Holdings Limited, Director*
Ukaipo Limited (formerly Kowhai Consulting Limited), Director*
Waikato Tainui Fisheries Limited, Director*
Waitangi Tribunal, Member*
Waitangi National Trust, Deputy Chair*
ANZ Bank New Zealand Limited, Director
Freightways Limited, Chair** and Shareholder
Infratil Limited, Shareholder
Mycare Limited, Shareholder
Southern Alps Rescue Trust, Trustee
Southern Lakes Art Festival Trust, Trustee
Summerset Group Holdings Limited, Chair*
Willis Bond & Co Limited, adviser to Property Income Fund Limited
Arvida Group, Chair**
Contact Energy Limited, Shareholder
Genesis Energy Limited, Shareholder and Bondholder
Infratil Limited, Shareholder
Mercury NZ Limited, Shareholder and Bondholder
* Entries added and effective during the year ended 30 June 2022.
** Entries removed by directors during the year ended 30 June 2022.
1 2 7
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Particulars of entries in the
interests register made during
the accounting period
Shareholders can review
Meridian Energy Limited’s full
interests register on request.
In accordance with sections 140 and
211(e) of the Companies Act 1993,
the table opposite lists the general
disclosures of interest by directors
of Meridian Energy Limited and
its subsidiaries.
Director
Nature of
relevant interest
Date
Acquisition/
Disposal
Class
Number
acquired*
Consideration
received per share
Mark Cairns
Beneficial interest
15 October 2021
Acquisition – Dividend
Reinvestment Plan
Shares
4,861
$4.84
Jan Dawson
Beneficial interest
15 October 2021
8 April 2022
Acquisition – Dividend
Reinvestment Plan
Shares
Julia Hoare
Legal interest
8 April 2022
Acquisition – Dividend
Reinvestment Plan
Shares
Nagaja Sanatkumar
Beneficial interest
25 February 2022
Acquisition
Shares
Tania Simpson
Beneficial interest
28 February 2022
25 May 2022
Acquisition
Shares
Mark Verbiest
Beneficial interest
15 October 2021
8 April 2022
Acquisition – Dividend
Reinvestment Plan
Shares
1,061
538
41
112
63
4,872
625
281
1,105
1,041
529
$4.84
$5.095
$5.095
$4.920
$4.925
$4.955
$4.950
$4.950
$4.510
$4.84
$5.0950
* Rounded to the nearest whole number.
Director indemnity and insurance
Pursuant to section 162 of the Companies Act 1993, as permitted by Meridian’s Constitution, Deeds of Indemnity have been
given to directors for potential liabilities and costs they might incur for actions or omissions in their capacity as directors. From
1 May 2022, Meridian’s directors’ and officers’ liability insurance was renewed to cover risks normally covered by such policies.
Insurance is not provided for dishonest, fraudulent, malicious or wilful acts or omissions.
1 2 8
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Donations
Interests in Meridian securities
Senior managers’ equity holdings
The Meridian Energy Group made
donations totalling $0.1 million during
FY22. Meridian does not make donations
to political parties. All donations must
be approved by the Board. Donations
do not include sponsorships, community
funds, and contributions to environmental
and cultural enhancement programmes.
In accordance with NZX Listing
Rule 3.7.1(d), as at 30 June 2022
Meridian Energy Limited directors
had the following relevant interests
in Meridian Energy Limited Quoted
Financial Products:
Director
Number
of shares*
Number
of bonds
Auditor
Mark Cairns
239,861
The Auditor-General has appointed
Mike Hoshek of Deloitte as auditor of the
company. Meridian and its subsidiaries
paid $0.7 million (2021: $0.8 million) to
Deloitte as audit fees in FY22.
The fees for other services undertaken
by Deloitte during FY22 totalled $0.1
million (2021: $0.2 million). These
related to other assurance activities
including reviews of carbon emissions,
securities registers, vesting of the
executive LTI plan, solvency return of
Meridian Energy Captive Insurance
Limited and trustee reporting.
Jan Dawson
Michelle
Henderson
52,899
3,525
Julia Hoare
4,041
Nagaja Sanatkumar
8,769
Tania Simpson
2,011
Mark Verbiest
46,570
Peter Wilson
99,170
* Rounded to the nearest whole number.
–
–
–
–
–
–
–
–
As at 30 June 2022, the following
senior managers had relevant interests
in Meridian Energy Limited shares:
Senior
manager
Number
of shares
Unvested
Performance
share rights
Neal Barclay
450,556
415,512
Guy Waipara
298,402
137,329
Mike Roan
223,046
155,883
Jason Stein
204,109
91,491
Chris Ewers
19,243
110,594
Bharat Ratanpal
16,100
–
Claire Shaw
10,716
59,514
Lisa Hannifin
4,058
105,297
Tania Palmer
2,858
131,055
Jason Woolley
–
59,514
1 2 9
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Twenty largest registered
holders of Quoted Financial
Products as at the balance date
The table opposite lists the
company’s 20 largest registered
shareholders as at 30 June 2022:
Names
Number of shares
% of issued shares
Her Majesty the Queen in Right of New Zealand Acting by and Through Her Minister of Finance
and Minister for SOEs
1,315,682,395
HSBC Nominees (New Zealand) Limited*
HSBC Nominees (New Zealand) Limited A/C State Street*
JP Morgan Chase Bank NA NZ Branch-Segregated Clients Acct*
Custodial Services Limited
Citibank Nominees (New Zealand) Limited*
BNP Paribas Nominees (NZ) Limited*
Accident Compensation Corporation*
National Nominees Limited*
JBWere (NZ) Nominees Limited
HSBC Nominees A/C NZ Superannuation Fund Nominees Limited*
BNP Paribas Nominees (NZ) Limited*
New Zealand Depository Nominee Limited
TEA Custodians Limited Client Property Trust Account*
HSBC Custody Nominees (Australia) Limited*
ANZ Wholesale Australasian Share Fund*
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Simplicity Nominees Limited – NZCSD
PT (Booster Investments) Nominees Limited
129,141,409
112,222,628
102,789,338
96,673,134
94,463,688
43,215,464
42,303,557
29,902,174
28,372,519
26,830,722
22,818,260
20,091,710
19,112,923
18,787,763
17,737,193
15,476,357
13,733,271
9,290,231
8,132,516
51.018
5.008
4.352
3.986
3.749
3.663
1.676
1.64
1.16
1.1
1.04
0.885
0.779
0.741
0.729
0.688
0.6
0.533
0.36
0.315
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
1 3 0
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 The table opposite lists the
company’s 20 largest registered
holders of MEL030 retail fixed-rate
bonds as at 30 June 2022:
Names
BNP Paribas Nominees (NZ) Limited*
BNP Paribas Nominees (NZ) Limited*
FNZ Custodians Limited
Forsyth Barr Custodians Limited
Bank of New Zealand – Treasury Support
HSBC Nominees (New Zealand) Limited*
Citibank Nominees (New Zealand) Limited*
ANZ Bank New Zealand Limited*
Investment Custodial Services Limited
Ning Gao
Southern Cross Medical Care Society*
TEA Custodians Limited Client Property Trust Account*
Hobson Wealth Custodian Limited
ANZ Custodial Services New Zealand Limited*
JBWere (NZ) Nominees Limited
FNZ Custodians Limited
University of Otago Foundation Trust
Commonwealth Bank of Australia*
Number of bonds
% of issued bonds
22,605,000
16,164,000
14,914,000
11,503,000
10,317,000
6,105,000
3,552,000
3,442,000
3,405,000
3,331,000
3,000,000
2,735,000
2,588,000
2,535,000
2,399,000
1,499,000
1,400,000
970,000
15.07
10.77
9.94
7.66
6.87
4.07
2.36
2.29
2.27
2.22
2.00
1.82
1.72
1.69
1.59
0.99
0.93
0.64
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
1 31
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 The table opposite lists the
company’s 20 largest registered
holders of MEL040 retail fixed-rate
bonds as at 30 June 2021:
Names
Custodial Services Limited
BNP Paribas Nominees (NZ) Limited*
Citibank Nominees (New Zealand) Limited*
FNZ Custodians Limited
Bnp Paribas Nominees (NZ) Limited*
HSBC Nominees (New Zealand) Limited*
Forsyth Barr Custodians Limited
TEA Custodians Limited Client Property Trust Account*
Hobson Wealth Custodian Limited
NZPT Custodians (Grosvenor) Limited*
Bnp Paribas Nominees (NZ) Limited*
Adminis Custodial Limited
Forsyth Barr Custodians Limited
FNZ Custodians Limited
Woolf Fisher Trust Incorporated
JBWere (NZ) Nominees Limited
Investment Custodial Services Limited
HSBC Nominees (New Zealand) Limited*
Mt Nominees Limited*
Public Trust
Number of bonds
% of issued bonds
30,930,000
21,550,000
15,327,000
8,902,000
7,913,000
7,060,000
6,966,000
4,718,000
3,220,000
3,000,000
2,500,000
2,412,000
1,838,000
1,423,000
1,300,000
1,145,000
1,007,000
1,000,000
1,000,000
1,000,000
20.62
14.36
10.21
5.93
5.27
4.70
4.64
3.14
2.14
2.00
1.66
1.60
1.22
0.94
0.86
0.76
0.67
0.66
0.66
0.66
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
1 3 2
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 The table opposite lists the
company’s 20 largest registered
holders of MEL050 retail fixed-rate
bonds as at 30 June 2022:
Names
Custodial Services Limited
ANZ Wholesale NZ Fixed Interest Fund*
FNZ Custodians Limited
Forsyth Barr Custodians Limited
BNP Paribas Nominees (NZ) Limited*
Hobson Wealth Custodian Limited
BNP Paribas Nominees (NZ) Limited*
Citibank Nominees (New Zealand) Limited*
ANZ Fixed Interest Fund*
HSBC Nominees (New Zealand) Limited *
Mint Nominees Limited*
Mt Nominees Limited*
Generate KiwiSaver Public Trust Nominees Limited*
JBWere (NZ) Nominees Limited
Investment Custodial Services Limited
TEA Custodians Limited Client Property Trust Account*
NZPT Custodians (Grosvenor) Limited*
Forsyth Barr Custodians Limited
NZX Wt Nominees Limited
Forsyth Barr Custodians Limited
Number of bonds
% of issued bonds
29,173,000
25,680,000
22,402,000
18,271,000
11,900,000
9,392,000
7,243,000
6,205,000
5,500,000
4,877,000
4,699,000
4,000,000
3,897,000
3,621,000
2,805,000
2,665,000
2,570,000
2,272,000
1,954,000
1,345,000
14.58
12.84
11.20
9.13
5.95
4.69
3.62
3.10
2.75
2.43
2.34
2.00
1.94
1.81
1.40
1.33
1.28
1.13
0.97
0.67
* Held through New Zealand Central Securities Depository Limited (NZCSD). NZCSD provides a custodial service that allows electronic trading of securities by its members.
1 3 3
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Substantial security holder
The following information is given
pursuant to section 293 of the Financial
Markets Conduct Act 2013 (FMCA).
According to notice given pursuant
to section 280 of the FMCA, the
substantial security holder in the
Company and its relevant interests
as at the date of the notice are noted
opposite. The total number of voting
products in the class as at 30 June 2022
was 2,578,869,01134.
Distribution of shareholders and
holdings as at 30 June 2022
Name
Ordinary shares
Relevant interest
in number of shares
% of shares held
at the date of notice
Date of notice
Her Majesty the Queen in Right of New Zealand
1,353,786,550
52.820
6 July 2015
Size of holding
Number of holders
%
Number of shares
Holding quantity %
The table opposite provides information
on the distribution of shareholders and
holdings of Meridian Energy Limited
ordinary shares as at 30 June 2022:
1–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–500,000
500,001 and over
Total
8,377
22,597
8,099
5,980
432
177
60
45,722
18.32
49.42
17.72
13.08
0.94
0.39
0.13
100
5,935,135
62,697,778
63,255,781
120,112,860
30,117,773
33,213,054
2,263,536,630
2,578,869,011
0.23
2.43
2.45
4.66
1.17
1.29
87.77
100
1 3 4
34
As at 30 June 2022, the total number of ordinary
shares was 2,578,869,011 which included 1,304,226
ordinary shares held by Meridian as treasury stock.
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Distribution of bondholders and
holdings as at 30 June 2022
The table opposite provides information
on the distribution of MEL030 retail
fixed-rate bonds as at 30 June 2022:
The table opposite provides information
on the distribution of MEL040 retail
fixed-rate bonds as at 30 June 2022:
Size of holding
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–500,000
500,001 and over
Total
Size of holding
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–500,000
500,001 and over
Total
Number of
bondholders
% of
bondholders
Number of
bonds
% of
bonds
68
161
347
30
35
24
665
10.23
24.21
52.18
4.51
5.26
3.61
100
340,000
1,533,000
9,622,000
2,518,000
7,308,000
128,679,000
150,000,000
0.23
1.02
6.41
1.68
4.87
85.79
100
Number of
bondholders
% of
bondholders
Number of
bonds
% of
bonds
36
102
389
59
29
24
639
5.63
15.96
60.88
9.23
4.54
3.76
100
180,000
950,000
10,339,000
4,451,000
7,255,000
126,825,000
150,000,000
0.12
0.63
6.89
2.97
4.84
84.55
100
1 3 5
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 The table opposite provides information
on the distribution of MEL050 retail
fixed-rate bonds as at 30 June 2022:
Size of holding
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–500,000
500,001 and over
Total
Number of
bondholders
% of
bondholders
Number of
bonds
% of
bonds
32
89
318
72
22
31
564
5.67
15.78
56.38
12.77
3.9
5.5
100
160,000
831,000
8,703,000
5,450,000
4,832,000
180,024,000
200,000,000
0.08
0.42
4.34
2.73
2.42
90.01
100
Waivers from NZX
Non-standard designation
Credit rating as at 30 June 2022
ASX disclosures
On 31 January 2020, NZX Regulation
published a waiver decision in respect
of Listing Rules 5.2.1 and 8.1.5, which
re-documented a prior waiver decision
dated 18 September 2013. A copy of
this waiver decision and a summary
of all waivers granted and published
by the NZX or relied on by Meridian
during the 12 months preceding 30
June 2022 is available on Meridian’s
website at: meridianenergy.co.nz/
investors/governance/nzx-waivers.
In New Zealand, Meridian Energy
Limited has a ‘non-standard’ (NS)
designation on the NZX Main Board.
This is due to particular provisions of
the company’s constitution, including
requirements that regulate the
ownership and transfer of Meridian
securities. The NS designation is also
required as a condition of any NZX
waivers and approvals.
S&P Global Ratings reaffirmed
Meridian Energy Limited’s credit rating
of BBB+/stable/A-2 on 13 July 2022.
Meridian holds a foreign exempt
listing on the ASX. As a requirement
of admission Meridian must make
the following disclosures:
Registration as a foreign company
• Meridian’s place of incorporation
Meridian has registered with the
Australian Securities and Investments
Commission as a foreign company
and has been issued with an Australian
Registered Body Number of 151 800 396.
is New Zealand.
• Meridian is not subject to Chapters
6, 6A, 6B and 6C of the Australian
Corporations Act dealing with the
acquisition of shares (including
substantial holdings and takeovers).
1 3 6
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022
Shareholding restrictions
10% limit
The Public Finance Act 1989 was
amended in June 2012 to include
restrictions on the ownership of
certain types of security issued
by each mixed-ownership-model
company (including Meridian) and
the consequences of breaching
those restrictions. The constitution
incorporates these restrictions and
mechanisms for monitoring and
enforcing them.
A summary of the restrictions on the
ownership of shares under the Public
Finance Act and the constitution is set
out below. If the company issues any
other class of shares, or other securities
confer voting rights, in the future, the
restrictions summarised below will also
apply to those other classes of shares
and voting securities.
51% holding
The Crown must hold at least 51% of
the shares on issue.
The company must not issue, acquire
or redeem any shares if such issue,
acquisition or redemption would
result in the Crown falling below
this 51% holding.
No person (other than the Crown) may
have a ‘relevant interest’35 in more than
10% of the shares on issue (10% Limit).
The company must not issue, acquire,
redeem or transfer any shares if it has
actual knowledge that such issue,
acquisition, redemption or transfer
will result in any person other than
the Crown exceeding the 10% Limit.
Ascertaining whether
a breach has occurred
If a holder of shares breaches the
10% Limit or knows or believes that
a person who has a relevant interest
in shares held by that holder may
have a relevant interest in shares in
breach of the 10% Limit, the holder
must notify the company of the
breach or potential breach.
Meridian may require a holder of
shares to provide the company with
a statutory declaration if the Board
knows or believes that a person is, or is
likely to be, in breach of the 10% Limit.
That statutory declaration is required to
include, where applicable, details of all
persons who have relevant interests in
shares as a result of the shares held by
or on behalf of that holder.
Determining whether
a breach has occurred
The company has the power to
determine whether a breach of the 10%
Limit has occurred. In broad terms, if:
•
the company considers that a person
may be in breach of the 10% Limit; or
• a holder of shares fails to lodge a
statutory declaration when required
to do so or lodges a declaration
that has not been completed to
the reasonable satisfaction of
the company,
Meridian is required to determine
whether or not the 10% Limit has been
breached and, if so, whether or not that
breach was inadvertent. The company
must give the affected shareholder the
opportunity to make representations
to the company before it makes a
determination on these matters.
Effect of exceeding the 10% Limit
A person who is in breach of the
10% Limit must:
• comply with any notice that they
receive from the company requiring
them to dispose of shares or their
relevant interest in shares, or take
any other steps that are specified
in the notice, for the purpose of
remedying the breach and reducing
their holding below the 10% Limit
• ensure that they are no longer in
breach within 60 days after the
date on which they became aware,
or ought to have been aware, of
the breach. If the breach is not
remedied within that timeframe, the
company may arrange for the sale
of the relevant number of shares on
behalf of the relevant shareholder.
In those circumstances the company
will pay the net proceeds of sale,
after the deduction of any other
costs incurred in connection with
the sale (including brokerage and
the costs of investigating the breach
of the 10% Limit), to the relevant
shareholder as soon as practicable
after the sale has been completed.
35
In broad terms, a person has a ‘relevant interest’ in a share if the person (a) is the registered holder or beneficial owner of the share; or (b) has the power to exercise, or control the exercise of, a right to vote attached to the share or has the power to acquire or
dispose of, or to control the acquisition or disposition of, that share. A person may also have a ‘relevant interest’ in a share in which another person has a ‘relevant interest’ depending on the nature of the relationship between them.
1 37
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 If a relevant interest is held in any
shares in breach of the 10% Limit then,
for as long as that breach continues:
• no votes may be cast directly by a
shareholder in respect of any of the
shares in which a relevant interest
is held in excess of the 10% Limit
• a registered holder of shares in
which a relevant interest is held
in breach of the 10% Limit will not
be entitled to receive, in respect
of the shares in which a relevant
interest is held in excess of the
10% Limit, any dividend or other
distribution authorised by the
Board in respect of the shares.
However, if the Board determines
that a breach of the 10% Limit was
not inadvertent, or that it does
not have sufficient information to
determine that the breach was not
inadvertent, the restrictions on voting
and entitlement to receive dividends
and other distributions described
in the preceding paragraphs will
apply in respect of all of the shares
(as applicable) held by the relevant
shareholder or holder (and not just
the shares in which a relevant interest
is held in excess of the 10% Limit).
The Board may refuse to register
a transfer of shares if it knows or
believes that the transfer will result
in a breach of the 10% Limit or where
the transferee has failed to lodge a
statutory declaration requested from
it by the Board within 14 days of the
date on which the company gave
notice to the transferee to provide
such statutory declaration.
Crown directions
The Crown has the power to direct
the Board to exercise certain of the
powers conferred on it under the
constitution. For example, where the
Crown suspects that the 10% Limit
has been breached but the Board
has not taken steps to investigate the
suspected breach, the Crown may
require the company to investigate
whether a breach of the 10% Limit has
occurred or to exercise a power of sale
of the relevant share that has arisen as
described under the heading ‘Effect
of exceeding the 10% Limit’ above.
Trustee corporations
and nominee companies
Trustee corporations and nominee
companies (that hold securities on
behalf of a large number of separate
underlying beneficial holders) are
exempt from the 10% Limit provided
that certain conditions are satisfied.
Share cancellation
Membership associations
• Electricity Engineers Association
• Sustainable Business Network
• Business Leaders’ Health
and Safety Forum
• Drive Electric Incorporated
• Electricity Retailers’ Association
of New Zealand
• EV100
• New Zealand Hydrogen
Association Incorporated
• NZ Wind Energy Association
• ENGINEERING NEW ZEALAND NZ
Society on Large Dams (NZSOLD)
• Business New Zealand Inc
SBC and Climate Leaders
Coalition membership
• StayLive
In certain circumstances shares can
be cancelled by Meridian through a
reduction of capital, share buyback or
other form of capital reconstruction
approved by the Board and, where
applicable, shareholders.
NZX Corporate
Governance Code
Meridian complied with the NZX
Corporate Governance Code
recommendations in all material
respects during FY22, other than in
respect of recommendation 3.6 as
the Board has determined, given
Meridian’s status as a mixed-ownership
model company, it is not appropriate
or necessary for Meridian to adopt a
takeover protocol, although there are
protocols to ensure compliance with
Meridian’s Constitution. Meridian has
a separate Corporate Governance
Statement available on its website
at meridianenergy.co.nz/about-us/
investors/governance. The Corporate
Governance Statement outlines in
detail Meridian’s compliance with the
NZX Corporate Governance Code and
is current as at 24 August 2022.
1 3 8
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 Ika Rere electric ferry, Days Bay, Te Whanganui-a-tara Wellington.
1 3 9
FURTHER DISCLOSURESMERIDIAN INTEGRATED REPORT 2022 2
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In spite of some challenging
conditions, this year’s strong
financial result exceeded
our expectations.
Group financial statements
Notes to the Group financial statements
E
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143
Income Statement
The income earned and operating expenditure
incurred by the Meridian Group during the
financial year.
143
Comprehensive Income Statement
Items of income and operating expense,
that are not recognised in the income statement
and hence taken to reserves in equity.
144
Balance Sheet
A summary of the Meridian Group assets
and liabilities at the end of the financial year.
145
Statement of Changes in Equity
Components that make up the capital and
reserves of the Meridian Group and the changes
of each component during the financial year.
146
Statement of Cash Flows
Cash generated and used by the Meridian Group.
Key
14 2
Subsequent
event
Key judgements
and estimates
Risks
147
149
153
160
164
174
186
187
About this report
Significant matters in the financial year
A. Financial performance
A1. Segment performance
A2. Income
A3. Expenses
A4. Taxation
B. Assets used to generate and sell electricity
B1. Property, plant and equipment
B2. Intangible assets
C. Managing funding
C1. Capital management
C6. Trade receivables
C2. Share capital
C7. Borrowings
C3. Earnings per share
C8. Green financing
C4. Dividends
C9. Lease liabilities
C5. Cash and cash equivalents
C10. Commitments
D. Financial instruments used to manage risk
D1. Financial risk management
E. Group structure
E1. Subsidiaries
F. Other
F1. Share-based payments
F2. Related parties
F3. Auditors remuneration
Signed report
Independent auditor’s report
F4. Contingent assets
and liabilities
F5. Subsequent events
F6. Changes in financial
reporting standards
MERIDIAN INTEGRATED REPORT 2022
Income Statement
For the year ended 30 June 2022
Comprehensive Income Statement
For the year ended 30 June 2022
Operating revenue
Operating expenses
Note
A2
A3
2022
$M
3,703
(2,994)
2021
$M
3,963
(3,271)
Earnings before interest, tax, depreciation, amortisation, changes
in fair value of hedges and other significant items (EBITDAF)
Depreciation and amortisation
Impairment of assets
Net change in fair value of energy hedges
Operating profit
Finance costs
Interest income
Net change in fair value of treasury hedges
Net profit before tax from continuing operations
Income tax expense
Net profit after tax from continuing operations
Net profit from discontinued operation after tax
Net profit after tax attributed to the shareholders
of the parent company
A3
A3, B1
D1
A3
A2
D1
A4
S1
709
(293)
(2)
145
559
(73)
3
136
625
(174)
451
213
692
(271)
–
157
578
(81)
–
79
576
(161)
415
13
Note
B1
A4
Net profit after tax
Other comprehensive income
Items that will not be reclassified to profit or loss:
Asset revaluation
Deferred tax on the above item
Items that may be reclassified to profit or loss:
Net (loss)/gain on cash flow hedges
Exchange differences arising from translation
of foreign operations
Realisations on disposal of subsidiaries,
transferred to profit and loss
Income tax on the above items
664
428
Other comprehensive income / (loss) for the year, net of tax
Total comprehensive income for the year, net of tax
attributed to shareholders’ of the parent company
2022
$M
664
2021
$M
428
(55)
15
(40)
16
–
24
(5)
35
(5)
202
(58)
144
6
2
–
(2)
6
150
659
578
Earnings per share (EPS) attributed to ordinary equity holders of the parent
Cents
Cents
Basic and diluted EPS from continuing operations
Basic and diluted EPS
C3
C3
17.5
25.8
16.2
16.7
The notes to the Group financial statements form an integral part of these financial statements.
14 3
MERIDIAN INTEGRATED REPORT 2022 OUR FINANCIAL PERFORMANCE Balance Sheet
As at 30 June 2022
Current assets
Cash and cash equivalents
Trade receivables
Customer contract assets
Financial instruments
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax
Financial instruments
Other assets
Total non-current assets
Total assets
Note
2022
$M
202136
$M
Note
2022
$M
202136
$M
C5
C6
D1
B1
B2
A4
D1
363
416
16
232
50
1,077
148
491
25
192
61
917
7,830
8,598
85
–
377
–
8,292
9,369
84
35
214
8
8,939
9,856
Current liabilities
Payables and accruals
Employee entitlements
Customer contract liabilities
Current portion of term borrowings
Current portion of lease liabilities
Financial instruments
Current tax payable
Total current liabilities
Non-current liabilities
Term borrowings
Deferred tax
Provisions
Lease liabilities
Financial instruments
Term payables
Total non-current liabilities
Total liabilities
Shareholders’ equity
Share capital
Reserves
Total shareholders’ equity
Total liabilities and shareholder’s equity
C7
C9
D1
C7
A4
C9
D1
C2
470
18
13
159
4
30
32
726
1,004
1,932
–
37
93
54
3,120
3,846
1,671
3,852
5,523
9,369
577
25
23
378
7
63
37
1,110
1,298
1,940
23
90
131
40
3,522
4,632
1,595
3,629
5,224
9,856
For and on behalf of the Board of Directors who authorised the issue of the financial statements
on 23 August 2022.
Mark Verbiest,
Chair, 23 August 2022
Julia Hoare,
Chair, Audit and Risk Committee, 23 August 2022
36
The 2021 comparative balance sheet includes Meridian Energy Australia. Refer to the discontinued operations note for more information.
14 4
The notes to the Group financial statements form an integral part of these financial statements.
MERIDIAN INTEGRATED REPORT 2022 OUR FINANCIAL PERFORMANCE Statement of Changes in Equity
For the year ended 30 June 2022
$M
Balance at 1 July 2020
Net profit for the 2021 financial year
Other comprehensive income
Asset revaluation
Transferred to retained earnings on disposal
Net gain on cash flow hedges
Exchange differences from translation of foreign operations
Income tax relating to other comprehensive income
Total other comprehensive income, net of tax
Total comprehensive income for the year, net of tax
Share-based transactions
Dividends paid
Balance at 30 June 2021 and 1 July 2021
Net profit for the 2022 financial year
Other comprehensive income
Asset revaluation
Transferred to retained earnings on disposal
Transferred to income statement on disposal
Net gain on cash flow hedges
Exchange differences from translation of foreign operations
Income tax relating to other comprehensive income
Total other comprehensive income, net of tax
Total comprehensive income for the year, net of tax
Share-based transactions
Dividend reinvestment plan
Dividends paid/reinvested
Balance at 30 June 2022
Note
B1
C2, F1
C4
B1
C2, F1
S2
C4
Share
capital
1,598
–
–
–
–
–
–
–
–
(3)
–
1,595
–
–
–
–
–
–
–
–
–
(2)
78
–
1,671
The notes to the Group financial statements form an integral part of these financial statements.
Share option
reserve
Revaluation
reserve
Foreign
currency
translation
reserve
Cash flow
hedge
reserve
1
–
–
–
–
–
–
–
–
–
–
1
–
–
–
–
–
–
–
–
–
1
–
–
2
5,053
(26)
–
202
1
–
–
(58)
145
145
–
–
–
–
–
–
2
–
2
2
–
–
5,198
(24)
–
(55)
(113)
–
–
–
49
(119)
(119)
–
–
–
5,079
–
–
–
24
–
–
–
24
24
–
–
–
–
Retained
earnings
Total equity
(1,542)
5,082
428
428
–
(1)
–
–
–
(1)
427
–
(433)
202
–
6
2
(60)
150
578
(3)
(433)
(1,548)
5,224
664
664
–
113
–
–
–
(34)
79
743
–
–
(437)
(55)
–
24
16
–
10
(5)
659
(1)
78
(437)
(2)
–
–
–
6
–
(2)
4
4
–
–
2
–
–
–
–
16
–
(5)
11
11
–
–
–
13
(1,242)
5,523
14 5
MERIDIAN INTEGRATED REPORT 2022 OUR FINANCIAL PERFORMANCE Statement of Cash Flows
For the year ended 30 June 2022
Operating activities
Receipts from customers
Interest received
Payments to suppliers and employees
Interest paid
Income tax paid
Operating cash flows
Investing activities
Sale of property, plant and equipment
Sale of subsidiaries (net of cash sold)
Purchase of property, plant and equipment
Purchase of intangible assets
Investing cash flows
Financing activities
Term borrowings drawn
Term borrowings repaid
Lease liabilities repaid
Dividends paid
Shares purchased for long-term incentive
Financing cash flows
Note
2022
$M
2021
$M
3,934
4,164
2
–
(3,254)
(3,472)
C5
C7
C7
C7
C4
C2, F1
(76)
(145)
461
2
768
(141)
(31)
598
210
(685)
(7)
(360)
(2)
(844)
215
148
–
363
(82)
(179)
431
–
–
(76)
(38)
(114)
108
(10)
(7)
(433)
(3)
(345)
(28)
176
–
148
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of exchange rate changes on net cash
Cash and cash equivalents at end of year
C5
14 6
The notes to the Group financial statements form an integral part of these financial statements.
MERIDIAN INTEGRATED REPORT 2022 OUR FINANCIAL PERFORMANCE About this report
In this section
The notes to the financial statements
include information which is considered
relevant and material to assist the reader
in understanding changes in Meridian’s
financial position or performance.
Information is considered relevant
and material if:
dual listed on the New Zealand Stock
Exchange (NZX) and the Australian
Securities Exchange (ASX). As a mixed
ownership company, majority owned
by Her Majesty the Queen in Right
of New Zealand, it is bound by the
requirements of the Public Finance
Act 1989.
the amount is significant because
of its size and nature;
These financial statements have
been prepared:
•
•
•
•
it is important for understanding
the results of Meridian;
•
it helps to explain changes in
Meridian’s business; or
it relates to an aspect of Meridian’s
operations that is important to
future performance.
Meridian Energy Limited (Meridian)
is a for-profit entity domiciled and
registered under the Companies Act
1993 in New Zealand. It is an FMC
reporting entity for the purposes
of the Financial Markets Conduct
Act 2013. Meridian’s core business
activities are the generation, trading
and retailing of electricity and the
sale of complementary products and
services. The registered office of
Meridian is 287-293 Durham Street
North, Christchurch. Meridian is
in accordance with Generally
Accepted Accounting Practice
(GAAP) in New Zealand and
comply with International Financial
Reporting Standards (IFRS) and
the New Zealand equivalents
(NZ IFRS), as appropriate for a
for-profit entity;
•
in accordance with the
requirements of the Financial
Markets Conduct Act 2013;
• on the basis of historical cost,
modified by revaluation of
certain assets and liabilities;
•
in New Zealand dollars (NZD),
with all values rounded to millions
($M) unless otherwise stated; and
• using accounting policies as
provided throughout the notes
to the financial statements.
Key judgements and estimates
In the process of applying the Group’s accounting
policies and application of accounting standards,
Meridian has made a number of judgements
and estimates. The estimates and underlying
assumptions are based on historical experience
and various other factors that are considered to
be appropriate under the circumstances. Actual
results may differ from these estimates.
Judgements and estimates which are considered
material to understanding the performance of
Meridian are found in the following notes:
Note
A2 Income
B1
Property, plant and equipment
D1
Financial risk management
147
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 About this report continued
Basis of consolidation
Foreign currency
The Group financial statements
comprise the financial statements
of Meridian Energy Limited and its
subsidiaries and controlled entities,
as contained in Note E1 Subsidiaries.
The financial statements of members
of the Group are prepared for the same
reporting period as the parent company,
using consistent accounting policies.
In preparing the Group financial
statements, all material intra-group
transactions, balances, income and
expenses have been eliminated.
Subsidiaries are consolidated from
the date on which control is obtained
to the date on which control is lost.
Transactions denominated in
foreign currencies are converted at
the exchange rates at the date of
the transactions. Foreign currency
monetary assets and liabilities are
translated at the rate prevailing at
balance date, 30 June 2022.
The assets and liabilities of any
international subsidiaries are translated
to NZD at the closing rate at balance
date. The revenue and expenses of
these subsidiaries are translated at
rates approximating the exchange
rates at the dates of the transactions.
When the financial statements of
subsidiaries are translated into NZD,
exchange differences can arise. These
are recorded in the foreign currency
translation reserve (within equity). If
an international subsidiary is disposed
of, these cumulative translation
differences are recognised in the
income statement in the period in
which that occurs.
The principal functional currencies
of international subsidiaries are
• Australian dollars; the closing
rate at 30 June 2022 was 0.9045
(30 June 2021: 0.9311); and,
• British pounds sterling; the
closing rate at 30 June 2022 was
0.5127 (30 June 2021: 0.5049).
A full list of international subsidiaries
and their functional currencies are
provided in Note E1 Subsidiaries.
Discontinued operations
Classification as a discontinued
operation occurs on disposal, or
when the operation meets the criteria
to be classified as a non-current asset
or disposal group held for sale, if earlier,
and represents a separate major line
of business or geographical area of
operations.
When an operation is classified
as a discontinued operation,
the comparative statement of
comprehensive income is re-
presented as if the operation had been
discontinued from the start of the
comparative period. The comparative
balance sheet is not adjusted. In the
cash flow statement, neither current or
comparative period are adjusted.
14 8
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
Significant matters in the financial year
In this section
Significant matters which have impacted
Meridian’s financial performance.
S1 Meridian Energy Australia
In June 2021, Meridian announced that
it had begun a review of its ownership
of Meridian Energy Australia (MEA) and
was considering all options, including
partial or full divestment. On 20 August
2021, Meridian deemed that MEA was
held for sale (HFS).
On 22 November 2021, Meridian
announced that an agreement had
been reached with a consortium,
comprised of Shell Energy Operations
Pty Ltd and Infrastructure Capital Group,
to purchase the MEA business for
consideration of AU$729 million, subject
to possible adjustment depending
on timing of completion. Completion
occurred on 31 January 2022 and final
consideration was AU$740 million.
A net gain on sale was recorded
of NZ$214 million and net cash
was received of NZ$768 million.
Accordingly, for the financial year
ending 30 June 2022, MEA is
reported as a discontinued operation.
The comparative Income Statement
& Comprehensive Income Statement
and respective notes have been re-
presented to show the discontinued
operation separately from continuing
operations.
MEA was part of the Meridian Group
from 1 July 2021 to 31 January 2022,
and therefore the income, expenses
and cashflows disclosed below are for
seven months in the current period and
12 months in the comparative period.
Results of discontinued operation
7 months ended
31 January 2022
$M
12 months ended
30 June 2021
$M
Operating revenue
Operating expenses
Net result from operating activities
Depreciation and amortisation
Remeasurement of remediation assets and liabilities
Gain / (loss) on sale on disposal of assets
Net change in fair value of energy hedges
Operating profit
Finance costs
Net change in fair value of treasury hedges
Net profit / (loss) from discontinued operations before tax
Tax expense
Net profit / (loss) from discontinued operations after tax
Basic and diluted earnings per share (cents per share)
Net profit / (loss) from discontinued operations after tax
Gain on sale of MEA
Total net profit from discontinued operations after tax
Cash flows from / (used in) discontinued operation
Net cash from / (used in) operating activities
Net cash from / (used in) investing activities
Net cash from / (used in) financing activities
Net cash flows of discontinued activity
209
(181)
28
(6)
–
–
(21)
1
(2)
–
(1)
–
(1)
–
(1)
214
213
12
(9)
7
10
333
(296)
37
(32)
6
(1)
12
22
(3)
–
19
(6)
13
–
13
–
13
7
(19)
(52)
(64)
149
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 S
Significant matters continued
Assets and liabilities disposed of
At 31 January 2022
S3 Climate Risk
Cash and cash equivalents
Trade receivables
Customer contract assets
Financial instruments (assets)
Other assets
Property, plant & equipment
Intangible assets
Deferred tax (asset)
Payables and accruals
Employee entitlements
Customer contract liabilities
Lease liabilities
Financial instruments (liability)
Deferred tax (liability)
Provisions
Total net assets disposed
25
34
11
44
15
574
6
35
(50)
(2)
(9)
(43)
(48)
(27)
(23)
542
As MEA was 100% owned by the Group, net income relating to continuing operations
and the discontinued operation are fully attributable to the owners of the parent.
S2 Dividend reinvestment plan
In March 2021, the Meridian Board
approved the creation of a Dividend
Reinvestment Plan (DRP), with program
details later released in August 2021.
The DRP was available for use on
the FY21 final dividend and the FY22
interim dividend, which were paid to
shareholders on 15 October 2021 and
8 April 2022 respectively.
Under the DRP, Meridian shareholders
can elect to receive Meridian shares
in lieu of cash for all or part of their
dividend. Of the FY21 final dividend
paid in October 2021, $65 million was
settled under the DRP by the issuance
of 13,400,114 new Meridian shares.
Of the FY22 interim dividend paid in
April 2022, $13 million was settled under
the DRP by the issuance of 2,468,897
new Meridian shares. New shares are
issued at the prevailing market price
around the time of issue, which may
be subject to a small discount (at the
Meridian Board’s discretion). A 2%
discount was approved in relation
to the DRP for October 2021 and a
0% discount for April 2022.
Further details on the DRP can be
found at meridianenergy.co.nz/
investors/dividend#Dividend-
reinvestment-plan.
1 5 0
Meridian is exposed to future
changes in climate, which may impact
on our industry, our business and our
customers. Future impacts may be
physical, such as changes in weather
patterns or rising temperatures, or
they may be more transitional in nature,
such as amendments to government
policy and regulation, or changes in
customer energy needs and demands.
Meridian actively assesses the operating
environment in New Zealand, in
respect of the potential future impacts
that changes in climate may have on
Meridian. We report formally on this
process each year in our detailed
Climate Related Disclosures (also
referred to as “TCFD reporting”), which
can be found on our corporate website
at meridianenergy.co.nz/about-us/
investors/sustainability.
Meridian uses a 30-year time horizon
in which to consider various climate-
scenarios and the impact these may
have to supply and demand in the
New Zealand electricity system. Any
mitigating actions are embedded into
the relevant area of Meridian’s business
and longer-term observations are
incorporated in our business strategy.
In accordance with Meridian’s risk
management policy, we identify and
assess climate risks and opportunities
using a likelihood and consequence
matrix, which allows us to determine
the appropriate level of response
for each potential impact identified.
Meridian also sets various targets
for our own emissions profile, and
identifies the metrics we use in tracking
our progress towards our objectives.
As part of preparing this report,
Meridian considers climate risk and
whether it may have any impact on our
financial statements and associated
disclosures. At this point, the most
material area we see climate risk
potentially having a future impact is on
our valuation of generation structures,
which we account for at fair value.
Refer to Section B of the financial
report for further detail on this asset
class, including a sensitivity analysis
indicating how much their value may
change with variations in key inputs,
such as generation volumes and
wholesale market prices.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 Notes to the Group financial statements:
Significant matters in the financial year
Non-GAAP measures
EBITDAF
Meridian refers to non-GAAP financial
measures within these financial
statements and accompanying notes.
The limited use of non-GAAP measures
is intended to supplement GAAP
measures to provide readers with
further information to broaden their
understanding of Meridian’s financial
performance and position. They are
not a substitute for GAAP measures.
As these measures are not defined
by NZ GAAP, IFRS, or any other body
of accounting standards, Meridian’s
calculations may differ from similarly
titled measures presented by other
companies. The measures are
described below, including note
references for reconciliations to
the financial statements.
Earnings before interest, tax,
depreciation, amortisation, change
in fair value of hedges, impairments
and gains or losses on sale of assets.
EBITDAF is reported in the income
statement, allowing the evaluation
of Meridian’s operating performance
without the non-cash impacts of
depreciation, amortisation, fair value
movements of hedging instruments
and other one-off or infrequently
occurring events and the effects
of Meridian’s capital structure and
tax position. This allows a better
comparison of operating performance
with that of other electricity industry
companies than GAAP measures that
include these items.
For the year ended 30 June 2022
In this section
Significant matters which have
impacted Meridian’s financial
performance and an explanation
of non-GAAP measures within the
notes to the financial statements.
Hydro inflows
Meridian started the financial year
with below average storage, however
these levels recovered in late 2021
with some significant inflow events.
Lake levels then trended downward in
early 2022, as the Waiau catchments
in particular endured a long, dry
period. More regular Fiordland
weather patterns resumed in early
April, restoring the Waiau Lakes to
their main ranges in mid April with
generation flexibility returning by May.
The Waitaki was also affected by dry
conditions, but to a lesser extent. Like
the Waiau, inflows resumed a more
“normal” pattern in late April 2022.
Generation structures
and plant revaluation
At 30 June 2022, a valuation of
Meridian’s generation structures and
plant assets has been undertaken,
to determine the fair value of the
assets as at this date. The valuation has
resulted in a net decrease of $55 million.
Management calculates a valuation on
which the Board’s ultimate decision
is based. The valuation is set using
discounted cashflow (DCF) analysis.
Refer to Note B1 Property, plant and
equipment for more information.
COVID-19
Meridian continues to hold a higher
provision for credit losses in the
short to medium term in light of the
continuing uncertainty around the
economy. Meridian will continue to
assess the level of the provision at
each reporting date to ensure it
reflects current economic conditions.
Meridian has also considered the
potential impact of COVID-19 as part
of our key assumptions when valuing
our property, plant and equipment and
financial instruments. However, there
was no impact when taking this into
consideration. Refer to Note B1 Property,
plant & equipment and D1 Financial risk
management for more information.
1 51
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
Notes to the Group financial statements:
Significant matters in the financial year continued
Energy margin
Energy margin provides a measure of
financial performance that, unlike total
revenue, accounts for the variability
of the wholesale electricity market
and the broadly offsetting impact
of wholesale prices on the cost of
Meridian’s retail electricity purchases
and revenue from generation. Meridian
uses the measure of energy margin
within Meridian’s segmental financial
performance in Note A1 Segment
performance.
Net debt
Net debt is a metric commonly used
by investors as a measure of Meridian’s
indebtedness that takes account
of liquid financial assets. Meridian
uses this measure within its capital
management and this is outlined in
Note C1 Capital management.
1 5 2
Benmore Hydro Power Station, Otematata.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
A : Financial performance
In this section
This section explains the financial
performance of Meridian, providing
additional information about individual
items in the income statement,
including:
a. accounting policies, judgements
and estimates that are relevant for
understanding items recognised in
the income statement; and
b. analysis of Meridian’s performance
for the year by reference to key areas
including: performance by operating
segment, revenue, expenses and
taxation.
A1 Segment performance
The Chief Executive (the chief
operating decision-maker) monitors
the operating performance of each
segment for the purpose of making
decisions on resource allocation and
strategic direction.
The Chief Executive considers the
business according to the nature of the
products and services and the location
of operations, as set out opposite:
New Zealand wholesale
• Agency margin from spot sales is
Other and unallocated
• Other operations, that are
not considered reportable
segments, include licensing
of the Flux developed electricity
and gas retailing platform.
• Activities and centrally based
costs that are not directly
allocated to other segments.
The financial performance of the
operating segments is assessed
using energy margin and EBITDAF
(a definition of these measures is
included within significant matters in
the financial year) before unallocated
central corporate expenses. Balance
sheet items are not reported to the
Chief Executive at an operating
segment level.
• Generation of electricity and
its sale into the New Zealand
wholesale electricity market.
• Purchase of electricity from the
wholesale electricity market and
its sale to the NZ Retail segment
and to large industrial customers,
including New Zealand Aluminium
Smelter (NZAS) representing the
equivalent of 37% (30 June 2021:
40%) of Meridian’s New Zealand
generation production.
included within “Contracted sales,
net of distribution costs”.
• The transfer price is set in a similar
manner to transactions with third
parties. Meridian provides front
line customer and back office
services for Powershop Australia
from New Zealand based offices.
Revenue of $5 million (2021:
$3 million) has been recorded in
‘other revenue’ and is eliminated
on Group consolidation.
• Development of renewable
Australia
electricity generation opportunities
in New Zealand.
New Zealand retail
• Retailing of electricity and
complementary products through
two brands (Meridian and
Powershop) in New Zealand.
• Electricity sold to residential,
business and industrial customers
on fixed price variable volume
contracts is purchased from the
Wholesale segment at an average
annual fixed price of $93 per
megawatt hour (MWh) (2021:$88 per
megawatt hour) and electricity sold
to business and industrial customers
on spot (variable price) agreements
is purchased from the Wholesale
segment at prevailing wholesale
spot market prices.
• Generation of electricity from
Meridian’s two wind farms and
three hydro power stations and
energy acquistion through power
purchase agreements, for sale
into the Australian wholesale
electricity market.
• Retailing of electricity and gas,
mainly through the Powershop
brand in Australia.
• Development of renewable electricity
generation options in Australia.
• As noted in the Significant Matters
section, the Australia segment
was sold on 31 January 2022 and
is presented as a discontinued
operation.
1 5 3
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
A
A1 Segment performance continued
Contracted sales, net of distribution costs
Cost to supply customers
Net cost of hedging
Generation spot revenue
Inter-segment electricity sales
Virtual asset swap margins
Other market revenue/(costs)
Energy margin
Other revenue
Dividend revenue
Energy transmission expense
Electricity metering expenses
Gross margin
Employee expenses
Other operating expenses
EBITDAF
Depreciation and amortisation
Impairment of assets
Net change in fair value of energy hedges
Operating profit
Finance costs
Interest income
Net change in fair value of treasury hedges
Net profit before tax from continuing operations
Income tax expense
Net profit after tax from continuing operations
Net profit / (loss) from discontinued operation after tax
Net profit after tax
Reconciliation of energy margin
Energy sales revenue, net of hedging
Energy expenses, net of hedging
Energy distribution expenses
Energy margin
NZ Wholesale
NZ Retail
Australia
2022
$M
525
2021
$M
489
(2,554)
(3,020)
2022
$M
1,057
(874)
148
1,757
965
2
(5)
271
2,193
906
(3)
(5)
–
–
–
–
1
2021
$M
944
(782)
–
–
–
–
1
2022
$M
96
(82)
1
46
–
–
(1)
838
831
184
163
60
2
–
(79)
–
761
(26)
(60)
675
–
–
–
–
–
–
–
–
–
–
–
–
3
–
(82)
–
752
(29)
(59)
664
–
–
–
–
–
–
–
–
–
–
–
–
14
–
–
(43)
155
(32)
(36)
87
–
–
–
–
–
–
–
–
–
–
–
–
14
–
–
(39)
138
(32)
(33)
73
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(3)
–
57
(10)
(19)
28
–
–
–
–
–
–
–
–
–
–
–
–
2021
$M
172
(115)
(9)
50
–
–
(1)
97
2
–
(5)
–
94
(15)
(42)
37
–
–
–
–
–
–
–
–
–
–
–
–
2,824
3,178
(1,986)
(2,347)
–
838
–
831
1,817
(980)
(653)
184
1,663
209
(913)
(587)
163
(86)
(63)
60
333
(131)
(105)
97
1 5 4
Other and Unallocated
2021
$M
2022
$M
Inter-segment and
discontinued operations
2021
$M
2022
$M
Total
2022
$M
2021
$M
(96)
(172)
1,582
1,433
1,047
1,021
(2,463)
(2,896)
(1)
(46)
9
(50)
148
1,757
–
–
–
–
–
–
–
–
41
–
–
–
41
(42)
(34)
(35)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55
52
–
–
107
(36)
(34)
37
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
271
2,193
–
(3)
(4)
–
2
(4)
1,022
994
27
–
(79)
(43)
927
(100)
(118)
709
(293)
(2)
145
559
(73)
3
136
625
(174)
451
213
664
27
–
(82)
(39)
900
(97)
(111)
692
(271)
–
157
578
(81)
–
79
576
(161)
415
13
428
(965)
(906)
–
1
(60)
(30)
–
3
–
(87)
10
31
(46)
–
–
–
–
–
–
–
–
–
–
–
–
–
1
(97)
(47)
(52)
5
–
(191)
15
57
(119)
–
–
–
–
–
–
–
–
–
–
–
–
(1,174)
(1,239)
3,676
3,935
1,051
1,037
(2,001)
(2,354)
63
(60)
105
(97)
(653)
1,022
(587)
994
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 A
A2 Income
Operating revenue
Energy sales to customers
Generation revenue, net of hedging
Energy related services revenue
Other revenue
Total operating revenue
Total revenue by geographic area
New Zealand
United Kingdom
Total operating revenue
Interest income
Operating revenue
Energy sales to customers
Revenue received or receivable from
residential, business and industrial
customers. This revenue is influenced
by customer contract sales prices and
their demand for electricity and gas.
2022
$M
1,990
1,686
10
17
2021
$M
1,903
2,033
9
18
3,703
3,963
2022
$M
2021
$M
3,695
3,948
8
15
3,703
3,963
2022
$M
3
2021
$M
–
Generation revenue, net of hedging
Revenue received from:
• electricity generated and sold
into the wholesale markets; and
• net settlement of energy hedges
sold on futures markets, and
to generators, retailers and
industrial customers.
This revenue is influenced by
the quantity of generation and
the wholesale spot prices. It is
recognised at the time of generation
or hedge settlement.
Key judgements and estimates – Revenue
Electricity consumption
Supply contract with NZAS
Meridian exercises judgement in
estimating retail electricity sales,
where customer electricity meters
are unread at balance date. These
estimates of customer electricity
usage in the unread period are
based on the customers’ historical
consumption patterns.
Revenue is recognised at the time of
supply and customer consumption.
Elements of the sale price such
as discounts and credits given to
customers and any incremental
costs incurred obtaining or retaining
a customer contract are deferred
to customer contract assets on
the balance sheet on a portfolio
basis and released to the income
statement over the contract tenure.
The agreement with NZAS has
been recognised in these financial
statements in a manner consistent
with fixed price supply agreements
with other industrial customers.
Revenue is recognised as electricity
sales revenue in the income
statement and the estimated future
cash flows are included in the fair
value of generation structures and
plant assets on the balance sheet.
Discounts and payment terms
Where a discount is offered,
revenue is initally recognised net
of estimated discount based on
accumulated experience used to
estimate the amount of discounts
taken by customers.
There are no significant differences
between the payment terms and
this policy.
1 5 5
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
A
A3 Expenses
Operating expenses
Energy expenses, net of hedging
Energy distribution expenses
Energy transmission expenses
Employee expenses
Energy metering expense
Other expenses
Depreciation and amortisation
Depreciation
Amortisation of intangibles
Finance costs
Interest on borrowings
Interest on electricity option premium
Interest on lease liabilities
Less capitalised interest
Impairment and gain on sale of assets
Impairment of property, plant and equipment
2022
$M
2021
$M
2,001
2,355
653
79
100
43
118
587
82
97
39
111
2,994
3,271
2022
$M
271
22
293
2022
$M
76
1
2
(6)
73
2022
$M
2
2021
$M
255
16
271
2021
$M
78
1
2
–
81
2021
$M
–
Note
B1
B2
C9
2
2
0
2
T
R
O
P
E
R
D
E
T
A
R
G
E
T
N
I
N
A
I
D
I
R
E
M
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
—
S
L
A
I
C
N
A
N
I
F
E
H
T
O
T
S
E
T
O
N
1 5 6
1 5 6
Solar installation, Lincoln University, Ōtautahi.
A
A3 Expenses continued
Operating expenses
Energy expenses, net of hedging
Energy metering expenses
The cost of:
• energy purchased from wholesale
markets to supply customers;
• net settlement of buy-side
energy hedges; and
•
related charges and services.
Energy expenses are influenced by
quantity and timing of customer
consumption and wholesale spot prices.
Energy distribution expenses
The cost of distribution companies
transporting energy between where
energy is transmitted/stored and
customers’ properties.
Energy transmission expenses
Meridian’s share of the cost of the
high voltage direct current (HVDC)
link between the North and South
Islands of New Zealand and the cost of
connecting Meridian’s generation sites
to the national grid by grid providers.
The cost of electricity meters, meter
reading and data gathering of retail
customer electricity consumption in
New Zealand. Metering expenses in
Australia are bundled with electricity
distribution costs.
Employee expenses
Provisions are made for benefits
owing to employees in respect of
wages and salaries, annual leave, long
service leave and employee incentives
for services rendered. Provisions are
recognised when it is probable they
will be settled and can be measured
reliably. They are carried at the
remuneration rate expected to
apply at the time of settlement.
The current period includes the release
of a $7 million provision. This related
to a Ministry of Business, Innovation
and Employment review of Meridian’s
approach to application of the Holidays
Act (2003). It had previously been
assessed that liability was probable
and therefore a provision was created.
However, recent legal cases have
meant this position has reversed, that
Meridian’s application of the Holidays
Act (2003) is appropriate, and that
further liability is highly unlikely for
the impacted remuneration.
Contributions to defined contribution
plans (largely KiwiSaver) were $4 million
in 2022 (30 June 2021: $4 million).
Finance costs – capitalised interest
In the six month ending 31 December
2021, Meridian commenced capital-
isation of interest costs relating to the
build of the Harapaki wind farm. The
capitalisation rates used to determine
the amount of borrowing costs eligible
for capitalisation was 5.01% (2021: nil).
Impairment of non-financial assets
Meridian reviews the recoverable
amount of its tangible and intangible
assets at each balance date. They are
grouped into cash-generating units
with separately identifiable cash flows.
The recoverable amount is the higher
of an asset’s fair value less costs to sell,
and present value of future cash flows
expected to be generated by the assets
(also known as value in use). If the
carrying value of an asset exceeds the
recoverable amount, an impairment
expense is recognised in the income
statement. For assets that are revalued
refer to Note B1 Property, plant and
equipment for specific treatment.
1 57
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 A
A4 Taxation
Tax expense
Current income tax expense
Adjustments to tax of prior years
Total current tax expense
Deferred tax
Other
Total tax
Reconciliation to profit before tax
Profit before tax
Income tax at applicable rates
Expenditure not deductible for tax
Other
Tax expense
Tax on discontinued operation
2022
$M
140
–
140
36
(2)
174
625
173
3
(2)
174
–
2021
$M
139
–
139
23
(1)
161
576
161
1
(1)
161
6
Current tax expense
Tax expense components are current
income tax and deferred tax.
Current income tax expense is the
income tax assessed on taxable profit
for the year. Taxable profit differs
from profit before tax reported in the
income statement as it excludes items
of income and expense that are taxable
or deductible in other years, and also
excludes items that will never be taxable
or deductible. Meridian’s liability for
current tax is calculated using tax
rates enacted at balance date, being
28% for New Zealand (2021: 28% for
New Zealand and 30% for Australia).
1 5 8
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 A
A4 Taxation continued
Deferred tax assets and liabilities
Balance at beginning of year
Temporary differences in income statement:
Depreciation/amortisation
Term payables
Financial instruments
Australia tax losses utilised
Customer contract assets
Other – payables & receivables
Temporary differences in other comprehensive income:
Revaluation reserve movements
Other
Effect of sale of subsidiaries
Balance at end of year
Made up of:
Property, Plant and Equipment
Term payables
Financial instruments
Customer contract assets
Other – payables & receivables
Deferred tax liability
Carried forward unused tax losses
Deferred income
Deferred tax asset
Total deferred tax
2022
$M
1,905
2021
$M
1,816
(50)
6
76
–
–
5
37
(15)
–
5
(52)
9
70
(1)
–
3
29
58
2
–
1,932
1,905
1,832
1,941
(11)
103
4
4
(13)
6
7
(1)
1,932
1,940
–
–
–
(33)
(2)
(35)
1,932
1,905
Deferred tax assets and liabilities
Unused tax losses
Deferred tax is income tax which is
expected to be payable or recoverable
in the future as a result of the
unwinding of temporary differences.
The deferred tax asset related to
unused tax losses from our Australian
operations and no longer form part
of Meridian’s deferred tax balance.
A deferred tax asset is recognised to the
extent it is probable that future taxable
profit will be available to use the asset.
This is reviewed at each balance date
and reduced to the extent that it is no
longer probable that sufficient taxable
profits will be available in the future
to utilise the defered tax asset.
Offsetting deferred tax balances
Deferred tax assets and liabilities
are offset only if there are legally
enforceable rights to set off current
tax assets against current tax liabilities
and when they relate to the same
taxable entity and taxation authority.
These arise from differences in the
recognition of assets and liabilities
for financial reporting and from the
filing of income tax returns. Deferred
tax is recognised on all temporary
differences, other than those arising:
•
•
from goodwill; and
from the initial recognition of assets
and liabilities in a transaction (other
than in a business combination) that
affects neither the accounting nor
taxable profit or loss.
The majority of Meridian’s deferred
tax balance is made up of temporary
differences on the revaluation of
property, plant and equipment. This
balance will only reverse if the fair
value of these assets declines back
to their original historical cost.
Deferred tax is calculated at the tax
rates that are expected to apply to the
year when the liability is settled or the
asset realised, based on tax rates and
tax laws that have been enacted or
substantively enacted at balance date.
1 59
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 B : Assets used to
generate and sell electricity
In this section
B1 Property, plant and equipment
This section shows the assets Meridian
uses in the production and sale of
electricity to generate operating
revenue. In this section of the notes
there is information about:
$M
Cost or fair value
Less accumulated depreciation
Net book value at 30 June 2020
a. Property, plant and equipment;
Additions
and
b. Intangible assets.
Transfers – work in progress
Adjustment of Right of Use lease assets
MEA decommissioning asset – remeasurement
Disposals
Foreign currency exchange rate movements37
Generation structures and plant revaluations:
Increase taken to revaluation reserve
Depreciation expense38
Net book value at 30 June 2021
Cost or fair value
Less accumulated depreciation39
Net book value at 30 June 2021
Additions
Transfers – work in progress
Adjustment of Right of Use lease assets
Disposals (including sale of MEA)
Impairments
Foreign currency exchange rate movements37
Generation structures and plant revaluation:
Decrease taken to revaluation reserve
Depreciation expense38
Net book value at 30 June 2022
Cost or fair value
Less accumulated depreciation39
Net book value at 30 June 2022
Generation
structures and
plant at fair value
Land and
buildings
at cost
Other plant
and equipment
at cost
Right of Use
Lease Assets
Work in
progress
at cost
8,593
(248)
8,345
–
4
–
11
(1)
4
–
202
(268)
8,297
8,314
(17)
8,297
–
11
–
(522)
–
–
–
(55)
(259)
7,472
7,472
–
7,472
20
(5)
15
–
1
–
–
–
–
–
–
(1)
15
21
(6)
15
–
36
–
(1)
–
–
–
–
(1)
49
56
(7)
49
130
(95)
35
–
17
–
–
(4)
–
–
–
(9)
39
143
(104)
39
–
16
–
(1)
–
–
–
–
(11)
43
148
(105)
43
111
(15)
96
1
–
1
–
(4)
–
–
–
(6)
88
109
(21)
88
–
–
(8)
(38)
(1)
–
–
–
(5)
36
48
(12)
36
105
(2)
103
79
(22)
–
–
–
–
–
–
(1)
159
162
(3)
159
148
(63)
–
(12)
(1)
–
–
–
(1)
230
232
(2)
230
Total
8,959
(365)
8,594
80
–
1
11
(9)
4
–
202
(285)
8,598
8,749
(151)
8,598
148
–
(8)
(574)
(2)
–
–
(55)
(277)
7,830
7,956
(126)
7,830
1 6 0
37 Through the foreign currency translation reserve in other comprehensive income.
38
39 Depreciation expense does not match the Income Statement, due to the re-presenting of the Income Statement for the MEA discontinued operation.
Includes the reversal of accumulated depreciation on generation structures and plant at revaluation date.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 B
B1 Property, Plant and equipment continued
At 30 June 2022, had the generation
structures and plant been carried
at historical cost less accumulated
depreciation and accumulated
impairment losses, their carrying
amount would have been approximately
$1.4 billion (30 June 2021: $2.0 billion).
Right of Use Assets are depreciated
over the term of their underlying
lease arrangement.
Recognition and measurement
Generation structures and plant
assets (including land and buildings)
are held on the balance sheet at their
fair value at the date of revaluation,
less any subsequent depreciation and
impairment losses. All other property,
plant and equipment are stated
at historical cost less accumulated
depreciation and any accumulated
impairment losses.
Fair value and revaluation of
generation structures and plant
Revaluations are performed with
sufficient regularity to ensure that
the carrying amount does not differ
materially from that which would
be determined using fair values
at balance date.
In FY21 Meridian engaged an
independent valuer to assess the
value of its generation structures and
plant. In FY22 the valuation has been
prepared internally by Meridian’s
management team. Management
uses a discounted cash flow (DCF)
analysis to establish a valuation on
which the Board’s ultimate decision
is made.
Any increase arising on revaluation is
credited to the revaluation reserve,
except to the extent that it reverses a
revaluation decrease for the same asset
previously recognised in the income
statement. In that case the increase is
credited to the income statement to
the extent of the decrease previously
charged. A decrease in carrying amount
arising on revaluation is charged to the
income statement to the extent that
it exceeds the balance, if any, held in
the revaluation reserve relating to
a previous revaluation of that asset.
Accumulated depreciation at
revaluation date is eliminated against
the gross carrying amount so that
the carrying amount after revaluation
represents the revalued amount.
Subsequent additions to generation
structures and plant assets are
recorded at cost, which is considered
fair value, including costs directly
attributable to bringing the asset to
the location and condition necessary
for its intended purpose, and financing
costs where appropriate.
Meridian performed a valuation
assessment of its plant assets at
30 June 2022.
At 30 June 2022, the revaluation
resulted in a net decrease of $55
million (2021: increase of $202 million)
in the carrying value of our generation
structures and plant assets. The impact
of the revaluation was recognised
as a decrease of $55 million (2021:
increase of $202 million) in the
revaluation reserve.
As a consequence of this revaluation,
accumulated depreciation on most
generation assets is reset to nil. There
was no depreciation impact of this
revaluation in the income statement.
Depreciation
Depreciation of property, plant and
equipment assets, other than freehold
land, is calculated on a straight-line
basis. This allocates the cost or fair
value amount of an asset, less any
residual value, over its estimated
remaining useful life.
Useful lives
Meridian uses its judgement in
determining the remaining useful lives
and residual value of assets, which are:
• generation structures and plant -
up to 80 years;
• buildings - up to 67 years;
• other plant and equipment -
up to 20 years; and
•
right of use lease assets -
up to 27 years.
The residual value and useful lives
are reviewed, and, if appropriate,
adjusted at each balance date.
Disposals or retirement
The gain or loss arising on the disposal
or retirement of an item of property,
plant and equipment is determined
as the difference between the sale
proceeds and the carrying amount
of the asset and is recognised in
the income statement. Any balance
attributable to the disposed asset
in the asset revaluation reserve is
transferred to retained earnings.
1 61
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 B
B1 Property, Plant and equipment continued
B1 Property, plant and equipment continued
Key judgements and estimates – Generation structures and plant valuation techniques and key inputs
The Meridian Board uses its
judgement to decide on the
appropriateness of key valuation
techniques and inputs for fair value
measurement. Judgement is also
used in determining the estimated
remaining useful lives of assets.
As the valuation of generation structures
and plant does not fully use observable
market data, it continues to be classified
as Level 3 under Meridian’s fair value
hierarchy defined in Note D1 Financial
risk management.
As discussed on the previous page,
Meridian uses DCF analysis to
establish a valuation range. The DCF
methodology involves calculating
the present value of future cash
flows expected to be produced
over a projection period including
forecast revenues, forecast future
generation output and NZAS continuing
to operate until 31 December 2024.
The DCF valuation was prepared
using a 20-year time period in line
with New Zealand Treasury forward
inflation curve.
The impact of COVID-19 has been
considered as part of our key
assumptions when preparing this
years valuation however there was
no impact on the valuation when
taking this into consideration.
The table below describes the key inputs and their sensitivity to changes.
2022
2021
Key input to
measure fair value
Description
Range of
unobservable inputs
Sensitivity
Impact on
valuation
Range of
unobservable inputs
Future NZ wholesale
The price received for NZ generation
$45MWh to $117MWh between
+ $3MWh
$494M
$42MWh to $118MWh
electricity prices
FY23 and FY42 (in real terms)
- $3MWh
($494M)
by FY35 (in real terms)
New Zealand generation volume Annual generation production
13,413GWh p.a. to
13,964GWh p.a.
Operating expenditure
Meridian’s cost of operations
$134M in FY23, $141M
(excluding electricity purchase
costs or transmission charges)
in FY24 (in real terms)
and inflated at appropriate
escalation rates from
FY25 onward
+ 250GWh
- 250GWh
+ $10M
- $10M
$227M
13,059GWh p.a. to
($227M)
14,024GWh p.a.
($128M)
$280M p.a.
$128M
Sensitivity
+ $3MWh
- $3MWh
+ 250GWh
- 250GWh
+ $10M
- $10M
Impact on
valuation
$442M
($442M)
$234M
($234M)
($124M)
$124M
Weighted Average
The discount rate considers the time
7.74%
Cost of Capital (WACC)
value of money and relative risk of
+ 0.5%
- 0.5%
($571M)
6.25% to 7.90%
$680M
+ 0.5%
- 0.5%
($693M)
$810M
achieving the cash flow forecast
Sensitivities show the movement in fair value as a result of a change in each input (keeping all other inputs constant).
1 62
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
B
B2 Intangible assets
$M
Cost or fair value
Less accumulated amortisation
Net book value at 30 June 2020
Additions
Amortisation expenses40
Expensed to Income Statement41
Net book value at 30 June 2021
Cost or fair value
Less accumulated amortisation
Net book value at 30 June 2021
Additions
Expensed to Income Statement
Amortisation expenses
Net book value at 30 June 2022
Cost or fair value
Less accumulated amortisation
Net book value at 30 June 2022
40
41
Amortisation expense does not match the Income Statement, due to the re-presenting
of the Income Statement for the MEA discontinued operation.
Adjustment for Software as a Service costs transferred to Income Statement
Goodwill
Software
Total
Software
Goodwill
5
–
5
–
–
–
5
5
–
5
–
(5)
–
–
–
–
–
182
(123)
59
40
(18)
(2)
79
220
(141)
79
29
(1)
(22)
85
224
(139)
85
187
(123)
64
40
(18)
(2)
84
225
(141)
84
29
(6)
(22)
85
224
(139)
85
Acquired computer software
licences (that are not considered an
integral part of related hardware) are
capitalised on the basis of the costs
incurred to acquire and bring to use the
specific software. Additionally, costs
directly associated with the production
of identifiable and unique software
products that will generate economic
benefits beyond one year are also
recognised as intangible assets.
All these costs are amortised over their
useful lives on a straight-line basis.
Costs associated with maintaining
computer software programs and
Software as a Service costs are
recognised as an expense as incurred.
Useful lives
Meridian uses its judgement in
determining the remaining useful lives
and residual value of intangible assets,
which are:
• electricity and gas retail platform
– up to 5 years;
• generation control – up to
10 years; and
• other software – up to 3 years.
These are reviewed, and, if appropriate,
adjusted at each balance date.
Goodwill represents the excess of
the cost of a business acquisition
over the fair value of the identifiable
assets and liabilities at the date of
acquisition. Goodwill is assessed as
having an indefinite useful life and is
not amortised. Instead, it is subject to
impairment testing at each reporting
date or whenever there are indications
of impairment. Goodwill has been
allocated to the following business units:
$M
2022
2021
Rangoon Energy Park Pty Ltd
Wandsworth Wind Farm Pty Ltd
–
–
–
4
1
5
The goodwill recognised related
to the acquisition of two wind farm
development sites in Australia. As these
are development sites, the impairment
test is based on comparing the carrying
value to the expected recoverable
value of each site. Key inputs into the
expected recoverable amount include
the potential generation capacity of
each site, and a market value multiple
per unit of generation capacity ($/MW).
Potential capacity is revisited as the
development of each wind farm site
progresses. The market value multiple
is reassessed by analysing other similar
purchase transaction, where available.
Goodwill was derecognised during
the current financial year as part of
the sale of MEA.
1 6 3
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
C : Managing funding
In this section
C1 Capital management
This section explains how Meridian
manages its capital structure and
working capital, the various funding
sources and how dividends are returned
to shareholders. In this section of the
notes there is information about:
a. equity and dividends;
b. net debt;
c. receivables and payables; and
d. leases and commitments.
Capital risk management objectives
Meridian’s objective when managing
capital is to provide appropriate returns
to shareholders whilst maintaining a
capital structure that safeguards its
ability to remain a going concern and
optimise the cost of capital.
Capital is defined as the combination
of shareholders’ equity, reserves and
net debt.
Meridian manages its capital through
various means, including:
Share capital
Retained earnings
Other reserves
Drawn borrowings
Lease liabilities payable
Less: cash and cash equivalents
Net capital
• adjusting the amount of dividends
Net debt to EBITDAF
paid to shareholders;
•
•
raising or returning capital; and
raising or repaying debt.
Meridian regularly monitors its capital
requirements using various measures
which consider debt facility financial
covenants and credit ratings. The key
measures are net debt to EBITDAF and
interest cover. The principal external
measure is Meridian’s credit rating
from Standard & Poor’s.
Meridian is in full compliance with
debt facility financial covenants.
Drawn borrowings
Lease liabilities payable
Less: cash and cash equivalents
Add back: restricted cash
Net debt (A)
EBITDAF (B)
Net debt to EBITDAF (times) (A/B)42
EBITDAF Interest cover
EBITDAF (B)
Interest on borrowings
Interest on lease liabilities
Interest (C)
EBITDAF interest cover (times) (B/C)
Note
C2
C7
C9
C5
Note
C7
C9
C5
C5
Note
A3
A3
2022
$M
1,671
(1,242)
5,094
5,523
1,126
41
(363)
804
6,327
2021
$M
1,595
(1,548)
5,177
5,224
1,589
97
(148)
1,538
6,762
2022
$M
2021
$M
1,126
41
(363)
43
847
709
1.2
2022
$M
709
76
2
78
9.1
1,589
97
(148)
97
1,635
692
2.4
2021
$M
692
78
2
80
8.7
1 6 4
Standard & Poor’s rating
BBB+
BBB+
42
To ensure our calculation of Net Debt to EBITDAF is comparable to that calculated by Standard and Poor’s,
we have removed the “Add back: cash buffer” adjustment made in prior periods. This has been removed
in the Net debt to EBITDAF table above for both current and comparative periods. If it were included, the
cash buffer add back would be $80 million in 2022 and $13 million for 2021.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
C
C2 Share capital
Share capital
Shares issued
Treasury shares held
Share capital
Shares
2022
$M
Shares
2021
$M
2,578,869,011
1,678
2,563,000,000
1,600
(1,304,226)
(7)
(1,359,011)
(5)
2,577,564,785
1,671
2,561,640,989
1,595
All shares issued are fully paid and have equal voting rights. All shares
participate equally in any dividend distribution or any surplus on the winding
up of the company.
The movement in Shares issued relates to the new Dividend Reinvestment
Plan (DRP). Refer to the Significant Matters section and to Note C4 Dividends
for more information.
The movement in Treasury shares relates to the purchase and sale of shares by
participants and held on trust as part of a long-term equity settled incentive
plan for New Zealand-based senior executives (Refer to Note F1 Share-based
payments) and for hedging of the LTI scheme.
C3 Earnings per share
Basic and diluted earnings per share (EPS)
Net profit after tax from continuing operations ($M)
Net profit after tax attributed to the shareholders
of the parent company ($M)
Weighted average number of shares used in
the calculation of EPS
Basic and diluted EPS from continuing operations
(cents per share)
Basic and diluted EPS (cents per share)
2022
451
664
2021
415
428
2,570,934,506
2,563,000,000
17.5
25.8
16.2
16.7
2
2
0
2
T
R
O
P
E
R
D
E
T
A
R
G
E
T
N
I
N
A
I
D
I
R
E
M
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
—
S
L
A
I
C
N
A
N
I
F
E
H
T
O
T
S
E
T
O
N
1 6 5
C
C4 Dividends
Dividends declared and paid
Interim ordinary dividend 2022: 5.85cps (cents per share) (2021: 5.7cps)
Final ordinary dividend 2021: 11.2cps (2020: 11.2cps)
Total dividend expense
2022
$M
150
287
437
2021
$M
146
287
433
Dividends declared and not recognised as a liability
Final ordinary dividend 2022: 11.55cps (2021:11.2cps)
298
287
Imputation credit balance
Imputation credits available for future use at 23 August 2022
81
89
Dividend policy
Meridian’s dividend policy considers
free cash flow, working capital
requirements, the medium-term
investment programme, maintaining
a BBB+ credit rating and risks from
short and medium-term economic,
market and hydrology conditions.
As noted in the Significant Matters
section, Meridian has instituted a DRP
under which shareholders can elect
to receive dividends in additional
shares rather than cash.
The first time the DRP was available
for use was for the October 2021 final
dividend payment. For this payment,
new shares were issued at a 2%
discount to the prevailing market
price of Meridian shares around the
time of issue. Whether a discount is
available, and if so the level of that
discount, is at the discetion of the
Meridian Board. Meridian investors
were issued 13,400,114 new shares
with a value of $65 million.
The DRP was also available for use
in the April 2022 interim dividend
payment. For this payment, new
shares were issued at a 0% discount.
Meridian investors were issued
2,468,897 new shares with a value
of $13 million.
Shares issued in lieu of cash are
excluded from dividends paid in
the Statement of Cash Flows.
Subsequent event –
dividend declared
On 23 August 2022 the Board
declared a partially imputed
final ordinary dividend of
11.55 cents per share.
Imputation credit balance
Imputation credits allow Meridian to
pass on to its shareholders the benefit
of the New Zealand income tax it has
paid by attaching imputation credits
to the dividends it pays, reducing the
shareholders’ net tax obligations.
The imputation credits available
for future use reflect the balance
available on 23 August 2022, therefore
recognising any tax payments between
balance date and 23 August 2022.
1 6 6
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
C
C5 Cash and cash equivalents
Cash and cash equivalents
Current account
Short term deposits
Money market account
Cash and cash equivalents
2022
$M
71
250
42
363
2021
$M
148
–
–
148
Reconciliation of net profit after tax
to cash flows from operating activities
Net profit after tax
Adjustments for operating activities’ non-cash items:
Depreciation and amortisation
Movement in deferred tax
Net change in fair value of financial instruments
Cash and cash equivalents are made up of cash on hand, on-demand deposits
and other short-term, highly liquid investments that are readily convertible to a
known amount of cash and are not subject to a significant risk of change in value.
Electricity option premiums
Share-based payments
Restricted cash
Meridian trades electricity hedges on the ASX using Macquarie as a broker.
As a result, a proportion of the funds it holds on deposit are pledged as margin
which varies depending on market movements and contracts held.
At 30 June 2022, this collateral was $43 million (30 June 2021: $97 million).
All other cash and cash equivalent balances are available for use.
Items classified as investing activities:
Remeasurement of MEA remediation assets and liabilities
(Gain)/Loss on sale of assets
(Gain) on sale of subsidiaries
Changes in working capital items:
(Increase)/decrease in accounts receivable
(Increase)/decrease in customer contract assets
(Increase)/decrease in other assets
Increase/(decrease) in payables and accruals/employee entitlements
Increase/(decrease)in customer contract liabilities
Increase/(decrease) in current tax payable
Working capital items in investing activities
Working capital items in financing activities and other non-cash items
Cash flow from operating activities
2022
$M
664
300
37
(260)
(21)
1
57
–
–
(214)
(214)
75
9
11
(114)
(10)
(5)
(11)
(1)
(46)
461
2021
$M
428
303
29
(248)
(21)
2
65
(6)
1
–
(5)
(168)
(1)
(19)
214
–
(42)
(17)
(24)
(57)
431
1 67
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 C
C6 Trade receivables
Trade receivables
Accrued receivables
Current billed
Past due 1 to 30 days
Past due 31 to 60 days
Past due 61 to 90 days
Past due greater than 90 days
Less: credit loss allowance
Total trade receivables
Accounts receivable past due but not impaired
Movement in provision for credit loss allowance
Opening provision
Provision released (created) in the year
Provision used in the year
Closing provision for credit loss allowance
1 6 8
2022
$M
381
19
19
4
1
–
(8)
416
16
(9)
(1)
2
(8)
2021
$M
429
50
14
3
1
3
(9)
491
12
(16)
3
4
(9)
Trade receivables,
measurement and recognition
Trade receivables are measured on
initial recognition at fair value, and are
subsequently carried at amortised cost.
The overdue amounts are largely related
to energy sales to retail customers in
New Zealand and Australia.
Trade receivables written off during
the year were $2 million (30 June 2021:
$4 million).
Receivables are written off at the point
where Meridian believe there is no
reasonable expectation of recovery,
which is typically a combination of an
overdue amount, no communication
or response from the debtor, and no
payments received. Receivables written
off are handed to collection agencies
for enforcement.
Credit losses
The allowance for credit losses are an
estimate of the Group’s expected credit
losses over the lifetime of the current
amounts receivable. Or rather, it is the
difference between the face value of
trade receivables and the future cash
flows we expect to receive. Additions
to the provision are recognised in the
income statement.
We estimate collective future cash
flows by considering customer
credit history, historical recovery
performance and trends, through
which we build default matrices that
apply a probability of default given
the ageing of debtors. Forward-
looking employment statistics are also
monitored for both New Zealand and
Australia, with a large rise in forecast
unemployment acting as a trigger for
us to reconsider the probability rates
in our matrices.
As noted in the Significant Matters
section, Meridian continues to hold a
higher provision for credit losses in light
of continuing economic uncertainty.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 C
C7 Borrowings
$M
Current borrowings
Unsecured borrowings
Unsecured borrowings
Total current borrowings
Non –current borrowings
Unsecured borrowings
Unsecured borrowings
Total non –current borrowings
Total borrowings
Currency
borrowed in
Drawn facility
amount
Transaction
costs paid
Fair value
adjustment
Carrying
amount
Drawn facility
amount
Transaction
costs paid
Fair value
adjustment
Carrying
amount
2022
2021
NZD
USD
NZD
USD
160
–
160
380
586
966
1,126
(1)
–
(1)
–
(1)
(1)
(2)
–
–
–
–
39
39
39
159
–
159
380
624
1,004
1,163
321
47
368
665
556
1,221
1,589
(1)
–
(1)
(1)
(1)
(2)
(3)
–
11
11
–
79
79
90
320
58
378
664
634
1,298
1,676
Borrowings, measurement and recognition
Borrowings are recognised initially
at the fair value of the drawn facility
amount (net of transaction costs paid)
and are subsequently held at amortised
cost using the effective interest method.
Any borrowings which have been
designated as hedged items (USD
borrowings) are carried at amortised
cost plus a fair value adjustment under
hedge accounting requirements. Refer
to Note D1 Hedge accounting section for
further detail on this. Any borrowings
denominated in foreign currencies are
retranslated to the functional currency
at each reporting date. Any retranslation
effect is included in the “Fair value
adjustment” column in the table, along
with any amounts relating to fair value
hedge adjustments.
Meridian uses cross-currency interest
rate swap (CCIRS) hedge contracts
to manage its exposure to interest
rates and borrowings sourced in
currencies different to that of the
borrowing entity’s reporting currency.
More information on Meridian’s risk
management and hedge accounting
practices can be found in Section D
Financial instruments used to
manage risk.
Meridian borrows under a negative
pledge arrangement, which does not
permit it to grant any security interest
over its assets, unless it is an exception
permitted within the negative pledge.
Fair value of items held
at amortised cost
Retail bonds
Floating Rate Notes
Unsecured term loan (EKF facility)
2022
$M
Carrying
value
500
–
40
2022
$M
Fair
value
497
–
41
2021
$M
Carrying
value
2021
$M
Fair
value
500
540
50
50
51
52
Within term borrowings there are
longer dated instruments which are
not in hedge accounting relationships.
The carrying values and estimated fair
values of these instruments are noted
in the table above.
Fair value is calculated using a
discounted cash flow calculation
and the resultant values would be
classified as Level 2 within the fair
value hierarchy. The Retail Bonds
are listed instruments; however, a
lack of liquidity on the NZX precludes
them from being classified as Level 1
(a definition of hierarchy levels
is included in Note D1 Financial
instruments).
Carrying value approximates fair
value for all other instruments
within term borrowings.
1 69
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 C
C7 Borrowings continued
Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.
2022
$M
Unsecured borrowings – NZD
Unsecured borrowings – USD
Unsecured borrowings – AUD
Lease Liabilities
Total
$M
Unsecured borrowings – NZD
Unsecured borrowings – USD
Lease Liabilities
Total
Sources of funding – $M
Bank facilities
New Zealand bank funding43
EKF funding44
Total bank facilities
Other sources of borrowing
Retail bonds45
Floating rate notes43
Fixed rate bonds46
Commercial paper47
Total other sources of borrowing
Total sources of funding
Balance at
30 June 2021
Term
borrowings
drawn
Term
borrowings
repaid
Valuation
adjustments
Foreign
Exchange
Transaction
costs paid
& accrued
Lease
liabilities
recognised
Lease
liabilities
paid
Lease
derecognition
MEA sale
Unwind of
discounting
Balance at
30 June 2022
984
692
–
97
1,773
122
31
57
–
210
(567)
(60)
(58)
–
(685)
–
(78)
–
–
(78)
–
39
1
–
40
–
–
–
–
–
2021
–
–
–
–
–
–
–
–
(7)
(7)
–
–
–
(8)
(8)
–
–
–
(43)
(43)
–
–
–
2
2
539
624
–
41
1,204
Balance at
1 July 2020
Term
borrowings
drawn
Term
borrowings
repaid
Valuation
adjustments
Foreign
Exchange
Transaction
costs paid
& accrued
Lease
liabilities
recognised
Lease
liabilities
paid
Lease
derecognition
MEA sale
Unwind of
discounting
Balance at
30 June 2021
886
802
104
108
–
–
1,792
108
(10)
–
–
(10)
–
(58)
–
(58)
–
(52)
–
(52)
–
–
–
–
–
–
1
1
–
–
(7)
(7)
–
–
(6)
(6)
–
–
–
–
–
–
5
5
984
692
97
1,773
2022
2021
Currency
borrowed in
Facility
amount
Drawn
facility
amount
Undrawn
facility
amount
Facility
amount
Drawn
facility
amount
Undrawn
facility
amount
NZD
NZD
NZD
NZD
USD
NZD
550
40
590
500
–
586
–
1,086
1,676
–
40
40
500
–
586
–
1,086
1,126
550
–
550
–
–
–
–
–
550
770
50
820
500
50
603
225
1,378
2,198
161
50
211
500
50
603
225
1,378
1,589
609
–
609
–
–
–
–
–
43 Funding bears interest at the relevant market
floating rate plus a margin.
44 EKF facility is an unsecured amortising term loan,
provided by the official export credit agency of
Denmark, for the construction of Te Uku wind farm.
45 Retail Bonds are senior unsecured retail bonds bearing
interest rates of 4.53%, 4.88% and 4.21%.
46 USD fixed rate bonds are unsecured fixed rate bonds
issued in the United States Private Placement Market.
47 NZD commercial paper comprises senior unsecured
609
short-term debt obligations paying a fixed rate of
return over a set period of time.
170
43 Funding bears interest at the relevant market floating rate plus a margin.
44 EKF facility is an unsecured amortising term loan, provided by the official export credit agency of
45 Retail Bonds are senior unsecured retail bonds bearing interest rates of 4.53%, 4.88% and 4.21%.
46 USD fixed rate bonds are unsecured fixed rate bonds issued in the United States Private Placement Market.
47 NZD commercial paper comprises senior unsecured short-term debt obligations paying a fixed rate of return over a set period of time.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 C
C8 Green financing
Green Debt Instruments under Meridian’s Green Finance Programme
Green Debt allocated to the Hydro Pool48
30 June 2022
30 June 2021
Type – $M
USPP Series 2014-1 Tranche A49
USPP Series 2014-1 Tranche B49
USPP Series 2019-1 Tranche A49
USPP Series 2019-1 Tranche B49
USPP Series 2019-1 Tranche C49
Total USPP
Wholesale FRN – 10yr
Bank Facilities50
Commercial Paper51
CUSIP/NZX Code
Currency
borrowed in
Facility
amount
Drawn
facility
amount
Facility
amount
Drawn
facility
amount
Q5995*AA6
Q5995*AB4
Q5995#AE4
Q5995#AF1
Q5995#AG9
USD
USD
USD
USD
USD
NZD
NZD
NZD
–
147
183
183
73
586
–
550
–
–
147
183
183
73
586
–
–
–
47
117
183
183
73
603
50
770
225
47
117
183
183
73
603
50
161
225
Total Green Debt allocated to the Hydro Pool
1,136
586
1,648
1,039
Green Debt allocated to the Wind Pool52
30 June 2022
30 June 2021
To recognise Meridian’s commitment,
leadership and investment in renewable
energy, Meridian has designed a Green
Finance Programme which covers both
existing and future issuances of debt
instruments (Programme).
The Programme Framework (Framework)
sets out the process, criteria and guidelines
under which Meridian intends to issue
and/or manage existing and future bonds
and loans under the Programme which
contribute towards achieving Meridian’s
sustainable objectives.
The Framework is aligned with the
following market standards as at the
date of the Framework:
Type – $M
Retail Bond (Mar-23)
Retail Bond (Mar-24)
Retail Bond (Mar-25)
Total Domestic Bonds
EKF Amortising Facility
Total Green Debt allocated to the Wind Pool
Total Green Debt
CUSIP/NZX Code
Currency
borrowed in
Facility
amount
Drawn
facility
amount
Facility
amount
Drawn
facility
amount
•
MEL030
MEL040
MEL050
NZD
NZD
NZD
NZD
150
150
200
500
40
540
1,676
150
150
200
500
40
540
1,126
150
150
200
500
50
550
2,198
150
150
200
500
50
550
1,589
International Capital Markets
Association (ICMA) Green Bond
Principles (GBP); Climate Bonds
Standard currently version 3.0
(CBS); and Asia Pacific Loan Market
Association Green Loan Principles
(GLP), (together the Market Standards).
Further information on the Green Finance Programme, including the Programme framework document, opinions from
DNV Business Assurance Pty. Ltd, Climate Bonds Standard Certification and Green Asset and Debt registers are available
on Meridian’s website at meridianenergy.co.nz/about-us/investors/reports/green-finance.
48
49
50
51
52
Verified as meeting the criteria established for Meridian by DNV which align with the stated definition of Green Bonds and Loans within the Green Bond/Loan Principles.
United States private placement (USPP) Notes are included as the NZD equivalent under the Cross-Currency Interest Rate Swaps related to the Issue. During the period,
the $100m USPP Series 2014-1 Tranche B bond was novated from Australia-based Meridian Finco to New Zealand-based Meridian Energy Limited prior to the sale of the
Meridian Energy Australia operations. On Novation, the associated USD/AUD CCIRS was replaced with a USD/NZD CCIRS at the spot rate on the Novation date. The facility
amount has increased to reflect the FX movement between the original USD/AUD CCIRS and the new USD/NZD CCIRS.
Committed Bank facilities are included at the face value of the facilities.
Commercial Paper is included as the amount on issue.
Climate Bonds Standard Certified.
The proceeds of Meridian’s debt
instruments, outlined in the above tables,
have been allocated (directly
or notionally) to refinance eligible
wind and hydro projects and assets
that meet the market standards.
At 30 June 2022, Meridian remains
compliant with the requirements of
the programme.
17 1
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 C
C9 Lease liabilities
Lease liabilities analysis
Minimum lease payments
Not later than 1 year
Later than 1 year and not later than 3 years
Later than 3 years and not later than 5 years
Later than 5 years
Gross future lease payables
Less future finance costs
Present value of lease liabilities
Analysed as:
Not later than 1 year
Later than 1 year and not later than 3 years
Later than 3 years and not later than 5 years
Later than 5 years
Present value of lease liabilities
Comprising:
Current
Non-current
17 2
Lease details
Meridian’s current leases relate to
office spaces and a transmission
connection asset at Mill Creek.
Meridian reported interest expense
on lease liabilities of $2 million
(30 June 2021: $2 million) in the
income statement.
Refer to Note B1 Property, plant
and equipment for details of the
related right of use lease assets.
2022
$M
2021
$M
Lease liabilities,
measurement and recognition
5
10
9
32
56
(15)
41
4
7
7
23
41
4
37
41
10
19
18
99
146
(49)
97
7
13
12
65
97
7
90
97
Meridian recognises the present value
of expected lease payments under
lease arrangements as a lease liabilities
payable. Subsequent repayments are
split between principal and interest
expense. The interest reflects a
constant periodic charge over the
expected term of the lease.
A number of our lease arrangements
contain options to extend. Where we
are reasonably certain of taking up
those options, they are included in
the lease liability. If there is any
uncertainty around whether a lease
extension will be taken up, it is
excluded from the liability value.
Lease liabilities are classified as
financial liabilities at amortised cost.
The weighted average discount rate
applied in the calculation of lease
liabilities is 3.19% (30 June 2021: 3.10%).
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 C
C10 Commitments
Capital expenditure commitments
Property, plant and equipment
Software
Total capital expenditure commitments
Guarantees
Group
2022
$M
288
1
289
2021
$M
328
–
328
Various entities within the Group provide guarantees to external counterparties,
with these mostly relating to security for energy market clearing and lines
companies. The maximum liability under these guarantees is $150 million
(30 June 2021: $166 million).
GRADE
2
2
0
2
T
R
O
P
E
R
D
E
T
A
R
G
E
T
N
I
N
A
I
D
I
R
E
M
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
—
S
L
A
I
C
N
A
N
I
F
E
H
T
O
T
S
E
T
O
N
Native tree planting of coastal forest on the Kaitoke Peninsula with Raglan Area School.
173
D : Financial instruments
used to manage risk
In this section
D1 Financial risk management
Financial instrument recognition
This section explains the financial
risks Meridian faces, how these risks
affect Meridian’s financial position
and performance, and how Meridian
manages these risks. In this section of
the notes there is information:
a. outlining Meridian’s approach to
financial risk management; and
b. analysing financial (hedging)
instruments used to manage risk.
Meridian’s activities expose it to a
variety of financial risks. Its financial
risk management framework focuses
on the unpredictability of financial
markets and wholesale enegy markets.
The Board approves policies including
Group Treasury, Energy Hedging and
Credit Policies which set appropriate
principles and risk tolerance levels to
guide management in carrying out
financial risk management activities
to minimise potential adverse effects
on the financial performance and
economic value of the Group. The key
risks managed are discussed further
below.
In order to help balance certain
risk exposures, Meridian uses a
variety of financial instruments
(hedges). Hedges are categorised
as either “Treasury” or “Energy”
related, based on their underlying
nature. A small number of Treasury
hedges are designated in hedge
accounting relationships (refer to
Hedge accounting section for further
detail). Meridian does not enter into
speculative trades.
174
Meridian designates or classifies
financial hedging instruments as:
• Fair value hedge, hedges of the
fair value of recognised assets or
liabilities or a firm commitment; or
• Cash flow hedge, edges of a
particular cash flow associated with a
recognised asset or liability or a highly
probable forecast transaction; or
Calculation of fair value
for financial instruments
Meridian uses quoted prices and/or
a discounted cash flows approach in
order to calculate fair values for financial
instruments. Fair value measurements
are grouped within a three-level
fair value hierarchy based on the
observability of inputs to the valuation
process:
• Held for trading, financial
• Level 1 Inputs: quoted prices
instruments which have not been
designated in a hedging relationship.
Meridian accounts for derivative and
certain designated financial instruments
as fair value through the income
statement.
Hedges are initially recognised at
fair value on the dates the contracts
are agreed, and are subsequently
remeasured on a periodic basis.
Remeasurement is recognised in the
income statement.
(unadjusted) in active markets for
identical assets or liabilities that the
entity can access at reporting date
• Level 2 Inputs: either directly (i.e. as
prices) or indirectly (i.e. derived from
prices) observable inputs other than
quoted prices included in Level 1
• Level 3 Inputs: inputs that are not
based on observable market data
(i.e. unobservable inputs).
Meridian has a number of energy
hedges that require management
estimation and judgement in order to
Realised flows on hedges are recognised
generate a fair value at each reporting
in the income statement within EBITDAF,
date. These estimates can have a
in the same line as the underlying
significant risk of material adjustment in
business/transactions being hedged.
future periods. This is discussed in more
detail later in this section.
Fair value (or unrealised) changes
are recognised in “Net change in the
fair value of energy hedges” or “Net
change in fair value of treasury hedges”,
depending on the underlying business
nature of the hedge.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Credit risk
Meridian is exposed to the risk of
default in relation to energy sales
to wholesale and retail customers,
hedging instruments, guarantees and
deposits held with banks and other
financial institutions.
For retail customers, credit checks are
carried out before new customers are
accepted. The credit team oversees
the collection of receivables and works
with customers to minimise the chances
of bad debts occurring. Management
monitors the size and nature of retail
customer exposures on a regular basis
and acts to mitigate the risk if deemed
to exceed acceptable levels.
For banks and financial institutions, only
independently related parties with a
minimum rating of ‘A’ are accepted.
For wholesale customers, individual
credit limits are set based on internal
or external credit ratings in accordance
with limits set by the Board. Where
customers are not independently
credit rated, an assessment of credit
quality is made, taking into account
financial position, past experience and
other relevant factors. If appropriate,
letters of credit/guarantees are
obtained from counterparties to
reduce credit risk to acceptable levels.
These assessments and the utilisation
of credit limits and security provided
by wholesale customers are reviewed
and monitored by the Chief Financial
Officer.
The carrying amounts of financial
assets recognised on the balance sheet
best represent Meridian’s maximum
likely exposure to credit risk at the date
of this report. Refer to Note C6 Trade
receivables for a description of how we
provide for any credit losses. Meridian
does not have any significant credit
risk concentrations of concern.
Liquidity risk
Meridian is exposed to the dynamic
nature of energy markets and weather
patterns, which can affect liquidity.
Meridian ensures flexibility in
funding by mainaining committed
surplus credit lines available of at
least $200 million (refer to Note C7
Borrowings for details of undrawn
facilities). This helps ensure Meridian
has sufficient headroom under both
normal and abnormal hydrological
conditions.
Meridian manages its term debt
requirements on a portfolio basis.
To reduce concentration risk on any
one lender or funding type, Meridian
uses a range of different funding
sources and currencies. Meridian
also monitors contractual maturities
and ensures these are well spaced
(or laddered) so that refinancing
risks are manageable.
In addition to borrowings, Meridian
has entered into a number of
letters of credit and guarantee
arrangements which provide credit
support of $150 million for Meridian’s
general operations (30 June 2021:
$166 million). Meridian indemnifies
the obligations of the bank in
respect of the letters of credit and
performance guarantees issued
by the bank to counterparties of
Meridian.
175
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 D
D1 Financial risk management continued
Liquidity Risk –
Contractual maturities
The following tables are an analysis
of the contractual undiscounted cash
flows (settlements expected under
the contracts) relating to financial
liabilities and a reconciliation from total
undiscounted cash flows to carrying
amounts. Meridian expects to meet
its future obligations from operating
cash flows and debt financing.
2022
$M
Borrowings
Lease liabilities
Payables, accruals, provisions
and option premiums
Treasury hedges
Energy hedges
2021
$M
Borrowings
Lease liabilities
Payables, accruals, provisions
and option premiums
Treasury hedges
Energy hedges
Due
within
1 year
209
5
500
16
17
747
Due
within
1 year
475
10
626
40
27
Due in
1 to 2 years
Due in
3 to 5 years
Due
after
5 years
Total
undiscounted
cash flows
Impact of
other
non–cash
items
Impact of
interest/FX
discounting
2022
carrying
value
202
10
32
4
28
460
9
22
7
56
547
32
4
3
8
1,418
56
558
30
109
276
554
594
2,171
(2)
–
–
–
–
(2)
(253)
(15)
(3)
(4)
(12)
1,163
41
555
26
97
(287)
1,882
Due in
1 to 2 years
Due in
3 to 5 years
Due after
5 years
Total
undiscounted
cash flows
Impact of
other
non–cash
items
Impact of
interest/FX
discounting
2021
carrying
value
207
19
40
30
7
554
18
–
57
15
650
99
35
34
–
1,886
146
701
161
49
(3)
–
–
–
–
(3)
(207)
(49)
(13)
(16)
–
1,676
97
688
145
49
(285)
2,655
1,178
303
644
818
2,943
176
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Market risk
Meridian is involved in both the
energy and financial markets and as
such is exposed to rises and falls in
those markets and the subsequent
income statement volatility this can
cause. The main sub-types of market
risk that we are exposed to are
discussed opposite.
Commodity price risk
Foreign exchange risk
Interest Rate risk
Meridian trades in the wholesale
energy markets and so is exposed to
volatility in forward energy prices.
Being both a generator and a retailer
of energy means that Meridian has a
natural hedge for most of the exposure
to future energy prices.
Meridian also uses derivatives to help
manage its net energy position, some
of which are traded in quoted markets,
and some of which are traded directly
with other energy market participants.
Energy hedges are not placed in hedge
accounting relationships.
Meridian is exposed to foreign
exchange risk arising from sales and
procurement of goods and services
denominated in foreign currencies
and also from term debt raised in
foreign currencies.
For exposures resulting from Meridian’s
general operations, foreign exchange
spot or forward contracts are used to fix
the value in reporting currency terms.
Material items may be placed in hedge
accounting relationships and can be
either fair value hedges or cash flow
hedges, depending on the nature of
the transaction/underlying exposure.
For term debt raised in US Dollars, cross
currency interest rate swaps (CCIRS) are
used to convert the proceeds back to
functional currency. These derivatives
minimise foreign exchange risk on both
the notional and the coupon flows over
the life of the debt. CCIRS are placed
in both fair value and cash flow hedge
accounting relationships.
Meridian is exposed to interest rate risk
arising from its funding portfolio, which
is a mix of fixed and floating rate debt.
Meridian issues debt on both a fixed
and a floating basis and is thus exposed
to changes in interest rates over time.
A portfolio of interest rate swaps (IRS) is
then used to manage the net exposure
to interest rate risk, in line with a Board
approved hedging policy and profile.
Refer to the Foreign exchange risk
section for derivatives used for term
debt raised in foreign currencies.
Meridian swaps a significant portion
of its borrowings to floating rates
at loan inception, and hedges the
resulting interest rate exposure over a
tenure based profile of fixed IRS. This
is achieved using a combination of
CCIRS and IRS hedges. Where Meridian
borrows in foreign currency it uses
CCIRSs to swap all foreign currency
denominated interest and principal
repayments to the reporting currency.
This results in floating rate borrowings in
the entity’s reporting currency. Meridian
uses IRS hedges to fix floating interest
rates in line with the Board approved
hedging policy and profile.
17 7
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Meridian groups its financial instrument into two categories -
Treasury hedges and Energy hedges.
$M
Treasury hedges
Energy hedges
of which
Current
Non Current
Fair value on the balance sheet
2022
2021
Assets
Liabilities
Assets
Liabilities
93
516
609
232
377
609
(26)
(97)
(123)
(30)
(93)
(123)
106
300
406
192
214
406
(145)
(49)
(194)
(63)
(131)
(194)
Further disclosure and analysis of these two categories are noted on the following pages.
2
2
0
2
T
R
O
P
E
R
D
E
T
A
R
G
E
T
N
I
N
A
I
D
I
R
E
M
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
—
S
L
A
I
C
N
A
N
I
F
E
H
T
O
T
S
E
T
O
N
17 8
17 8
The team at Benmore Hydro Power Station, Otematata.
D
D1 Financial risk management continued
Treasury hedges
Treasury hedges – sensitivity analysis
Hedges in the Treasury category generally relate to management of the interest
rate risk and foreign exchange risk that arise from Meridian’s funding activities
and from general Group operations.
The instruments used are CCIRS, IRS and forward exchange contracts (FX).
Fair value on the balance sheet
Fair value
movements
in the income
statement
Outstanding
aggregate
notional
principals53
2022
$M
2021
$M
2022
$M
2021
$M
2022
$M
2021
$M
Treasury hedges
Level
Assets Liabilities Assets Liabilities
The table below summarises the impact of changes in significant inputs (assuming
all other variables are held constant) on the valuation of Treasury Hedges and
therefore on Meridian’s after tax profit and equity.
Note that changes in the fair value of the CCIRS are fully offset by opposite
impacts from hedge accounting entries and the FX retranslation of the USD debt.
Therefore the CCIRS P&L sensitivity is nil and is not shown in the below table.
The majority of the FX portfolio are designated in cash flow hedge relationships.
Changes in spot exchanges rates are fully offset by opposite impacts from hedge
accounting entries in the P&L, for these contracts the P&L sensitivity is nil.
CCIRS
– Interest Rate Risk54
– Basis and Margin Risk55
– Foreign Exchange Risk56
IRS57
FX58
Treasury hedges
(9)
(1)
54
44
30
1 9
93
2
2
2
(6)
62
–
–
(6)
(20)
–
(6)
28
84
16
16
–
–
–
–
4
–
–
4
(1)
–
–
(1)
586
602
Interest rates
Impact on after tax
profit & equity
2022
$M
2021
$M
Sensitivity
New Zealand benchmark bill rate
-100 basis points (bps)
(145)
132
80
1,295
1,502
(145)
–
80
1,295
1,502
(26)
106
(145)
136
79
Australian benchmark bill rate
Meridian uses CCIRS to hedge risks involved with long term debt issued in USD. In the above table the CCIRS are
separated into component parts as follows:
Foreign Exchange Rates
Effect of movement in foreign exchange
rates on foreign exchange contracts
53
54
55
56
57
58
These cover multiple legs including offsetting legs and maturities out to 2036.
Interest rate risk: this is the movement in value of the CCIRS due to changes in benchmark interest rates.
The other side of this movement is recorded in the income statement in the “Net change in fair value of treasury
instruments”, together with changes in the fair value hedge adjustments on the designated USD borrowings.
Basis and margin risk: this is the movement in the value of the CCIRS due to changes in basis (excluding foreign
exchange) and credit margin. The other side of this movement is recorded in the income statement in the “Net
change in fair value of treasury instruments”, together with cash flow hedge accounting adjustments that
transfer effective hedge portions to the Cash Flow Hedge Reserve within Equity.
Foreign Exchange Risk: this is the movement in value of the CCIRS due to changes in spot foreign exchange rates.
The impact of retranslation is recorded in the income statement in “Net change in fair value of treasury instruments”
and is offset by equal and opposite retranslation effects on the related borrowings.
Changes in fair value of IRS are recognised in the Income Statement within “Net change in fair value of
treasury instruments”.
Changes in fair value of FX contracts are recognised in the income statement within “Net change in fair value
of treasury instruments”, together with cash flow hedge accounting adjustments that transfer effective hedge
portions to the Cash Flow Hedge Reserve within Equity.
In the above table, fair value movements in the income statement are shown
net of any related hedge accounting adjustments and retranslation of foreign
currency borrowings.
Refer to the Hedge Accounting section of Note D1 Financial risk management
for further detail on fair value and cash flow hedge relationships.
+100 bps
-100 bps
+100 bps
-20%
+20%
(30)
27
N/A
N/A
(4)
4
(38)
38
(3)
3
(1)
1
17 9
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Energy hedges
Hedges in this category relate to Meridian’s management of risk arising from
the generation, purchase and sale of energy.
Meridian is exposed to changes in the spot price of electricity it receives for
electricity generated, or pays to buy electricity and gas to supply customers.
Additionally, inflows into Meridian’s storage lakes are variable, therefore the
volume of electricity required to supply customers may exceed (or fall short of)
generation production.
Meridian’s hedging strategy focuses on its net exposure by estimating both
expected generation and energy purchases required to support contracted
sales. Execution of this strategy is guided by Board approved parameters.
Changes in the fair value of energy hedges are recognised in the income
statement within “Net change in fair value of energy hedges”. Hedge
accounting is not applied to Energy Hedges.
Fair value on the balance sheet
2022
$M
2021
$M
Fair value movements in
the income statement
2022
$M
2021
$M
Outstanding aggregate
notional volumes59
2022
2021
Energy hedges
Market traded electricity hedges
Market traded gas hedges
Other electricity hedges
Other gas hedges
Electricity options
Large Scale Generation Certificates (LGCs)
LGC – Holdings created from wind farm generation
LGC – Hedges
Energy related hedges
59 These cover multiple legs including offsetting legs and maturities out to 2030.
Level
Assets
Liabilities
Assets
Liabilities
1
1
3
2
3
1
2
283
–
194
–
39
–
–
–
(1)
–
(96)
–
–
–
–
–
149
–
113
3
29
5
1
6
516
(97)
300
(21)
–
(14)
–
–
–
(14)
(14)
(49)
164
–
3
–
(22)
–
–
–
46
–
132
–
(21)
–
–
–
145
157
17,843 GWh
20,158 GWh
Nil
322 TJ
13,137 GWh
13,734 GWh
Nil
3,749 TJ
1,765 GWh
1,722 GWh
Nil
Nil
0.2 million
2.2 million
The “Market traded electicity hedges” and “Market traded gas hedges” categories
contain instruments that are traded on various exchange-based markets.
The “Other Electricity hedges” and “Other gas hedges” categories contain over-
the-counter derivatives, where counterparties include customers, other energy
market participants and financial institutions.
These hedges are generally longer-term, larger volume contracts that manage
specific risks that can not be managed through exchange-based markets.
Meridian trades electricity options with other generators. These are used to
support the management of inflow and storage variability in the catchments
where it generates electricity.
The LGC category had two sub-components. The first represented the Renewable
Energy Certificates (RECs) that Meridian’s Australian wind farms earned in the form
of Large Scale Generation Certificates (LGCs). Additionally, Powershop Australia was
required to purchase and surrender RECs. The second represented the derivatives
used to firm prices received for LGCs generated and consequently reduce the profit
volatility of each wind farm. At the time of generation, LGCs were recognised as
income in energy margin at the prevailing spot price. LGC holdings and hedges
were all recognised as financial instruments on the balance sheet at their fair value.
LGC’s have been derecognised during the current financial year as part of the
sale of MEA.
1 8 0
59 These cover multiple legs including offsetting legs and maturities out to 2030
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Energy hedges – sensitivity analysis
The table below summarises the impact of changes in significant inputs
(assuming all other variables are held constant) on the valuation of Energy
Hedges and therefore on Meridian’s after tax profit and equity.
Energy hedges
Energy prices
Discount rates
Call volumes
LGC prices
Impact on after tax
profit & equity
2022
$M
(105)
105
1
(1)
(3)
3
N/A
N/A
2021
$M
(75)
76
1
(1)
(2)
2
2
(2)
Sensitivity
-10%
+10%
-100 bps
+100 bps
-10%
+10%
-10%
+10%
Settlements of energy hedges
The following provides a summary of the settlements through
EBITDAF for Energy hedges:
2022
2021
Operating
Revenue
Operating
expenses
Total
settlements
in EBITDAF
Operating
Revenue
Operating
expenses
Total
settlements
in EBITDAF
Market traded
electricity hedges
Other electricity hedges
Electricity options
Total settlements
in EBITDAF
(25)
(48)
–
22
159
13
(3)
111
13
(54)
(98)
–
61
227
75
7
129
75
(73)
194
121
(152)
363
211
2
2
0
2
E
N
U
J
0
3
D
E
D
N
E
R
A
E
Y
E
H
T
R
O
F
—
S
L
A
I
C
N
A
N
I
F
E
H
T
O
T
S
E
T
O
N
Waitaki Hydro Power Station, Waitaki Valley.
1 81
MERIDIAN INTEGRATED REPORT 2022
D
D1 Financial risk management continued
Fair value technique and key
inputs
In estimating the fair value of an
asset or liability, Meridian uses market-
observable data to the extent that
it is available. The Audit and Risk
Committee of Meridian determines
the overall appropriateness of key
valuation techniques and inputs for
fair value measurement. The Chief
Financial Officer explains fair value
movements in his report to the Board.
Where the fair value of a financial
instrument is calculated as the present
value of the estimated future cash flows
of the instrument (DCFs), a number of
inputs and assumptions are used by
the valuation technique. These are:
•
forward price curves referenced
to the ASX for electricity, published
market data on gas/oil prices,
published market interest rates
and published forward foreign
exchange rates;
• Meridian’s best estimate of
electricity volumes called over
the life of electricity options;
• discount rates based on market
wholesale interest rate curves,
adjusted for counterparty credit risk;
• calibration factor applied to forward
price curves as a consequence of
initial recognition differences;
• NZAS continues to operate until
31 December 2024; and
• contracts run their full term.
The impact of COVID-19 has been
considered as part of the assumptions
when determining the fair value of our
financial instruments however there
was no impact on fair value when
taking this into consideration.
The table below describes any
additional key inputs and techniques
used in the valuation of Level 2 and
3 energy hedges.
Financial asset or liability Description of input
Range of significant
unobservable inputs
Relationship of input to fair value
Other electricity hedges,
Price, where quoted prices are not available or not relevant (i.e. for long-
$34/MWh to $115/MWh (in real terms),
An increase in the forward wholesale electricity price
valued using DCFs
dated contracts), Meridian’s best estimate of long-term forward wholesale
excludes observable ASX prices.
increases the fair value of buy hedges and decreases the fair
electricity price is used. This is based on a fundamental analysis of expected
value of sell hedges. A decrease in the forward wholesale
demand and the cost of new supply and any other relevant wholesale
electricity price has the opposite effect.
market factors.
LGC forward contracts &
Price, based on a forward LGC price curve from a third party broker,
A$8 to A$39 (2021)
An increase in the forward LGC price decreases the fair value
options valued using DCFs/
and benchmarked against market spot prices.
Black Scholes
of sell hedges and increases the fair value of buy hedges.
A decrease in the forward LGC price has the opposite effect.
1 8 2
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Level 3 financial instrument analysis
The following provides a summary of the movements through EBITDAF and movements in the fair value of Level 3 financial instruments:
Reconciliation of Level 3 fair value movements $M
Other electricity
hedges
Electricity
options
Total
Other electricity
hedgess
Electricity
options
2022
2021
Energy hedges settled in EBITDAF:
Operating revenue
Operating expenses
Total settlements in EBITDAF
Net change in fair value of energy hedges:
Remeasurement
Hedges settled
Total realised and unrealised losses on energy hedges
Balance at the beginning of the period
Fair value movements
Disposals
New hedge recognised
Balance at the end of the year
(48)
159
111
114
(111)
3
99
3
(4)
–
98
–
13
13
(9)
(13)
(22)
29
(22)
–
32
39
(48)
172
124
105
(124)
(19)
128
(19)
(4)
32
137
(98)
225
127
264
(127)
137
(38)
137
–
–
99
–
75
75
54
(75)
(21)
50
(21)
–
–
29
Total
(98)
300
202
318
(202)
116
12
116
–
–
128
Fair value movements of Level 3 energy hedges in 2022 which are held at balance date total ($4) million decrease (30 June 2021: increase of $85 million).
Movements in recalibration
differencesarising from energy hedges
Opening difference
Volumes expired and amortised
Recalibration for future price estimates and time
Closing difference
2022
$M
2021
$M
(2)
2
–
–
(1)
–
(1)
(2)
Initial recognition difference
An initial recognition difference arises when the modelled value of an energy
hedge differs from the transaction price (which is the best evidence of fair value).
This difference is accounted for by recalibrating the valuation model by a fixed
percentage to result in a value at inception equal to the transaction price. This
recalibration is then applied to future valuations over the life of the contract.
The resulting difference shown in the table reflects potential future gains or losses
yet to be recognised in the income statement over the remaining life of the contract.
1 8 3
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
D
D1 Financial risk management continued
Hedge accounting
This means that
This means that
Foreign exchange risk
Meridian makes use of hedge
accounting for USD borrowings, certain
highly probable forecast transactions
and the financial instruments that are
used to economically hedge these
exposures. Refer to the start of the Risk
Management section for a description
of the key risks Meridian manages.
Meridian only designates hedge
accounting relationships where the
underlying exposure and the hedge are
eligible for hedge accounting and are
an economic match, where credit risk is
not expected to dominate the fair value
of the hedge, and where we expect the
hedge relationship to remain effective
over its life.
The USD borrowings (hedged items)
and the CCIRS (hedging instruments)
present Meridian with risks which we
account for in the following ways:
Interest rate risk
The USD borrowings are fixed rate
liabilities and thus present interest
rate risk, should benchmark interest
rates change. This risk is neutralised
by receiving the same fixed rate on
the USD leg of the matching CCIRS.
Meridian designates the interest rate
risk on USD borrowings in fair value
hedge accounting relationships.
•
the carrying value of the USD
borrowings are adjusted for
changes in the fair value of the
hedged risk - noted as “hedge
accounting adjustments” in
Note C7 Borrowings; and
•
the CCIRS are revalued to the
income statement for this same risk.
As long as the hedge accounting
relationships remain effective, the
revaluations of both the hedged item
and hedging instrument should net
to a minimal amount in the income
statement. This residual difference is
referred to as hedge ineffectiveness.
The accumulated life to date hedge
accounting adjustments on the USD
borrowing decrease the carrying
value of the borrowing by $16 million
(2021: increase by $56 million).
Basis and margin risk
The combination of USD borrowings
and CCIRS economically results in
Meridian having floating rate NZD
borrowings. This presents a risk of
variability in future cash flows. As
such, Meridian designates basis risk
(excluding FX) and margin risk into
cash flow hedge relationships.
•
•
the CCIRS are revalued to the
income statement for basis risk
and margin risk; and
the effective portions of the
hedge are moved from the income
statement to the Cash Flow Hedge
Reserve within Equity.
As noted earlier, there may be small
differences between the above entries
which result in hedge ineffectiveness in
the income statement.
Refer to:
• Note C7 Borrowings for the carrying
value of the hedged items (USD
borrowings)
• Note D1 Treasury hedges for
further information on the hedging
instruments (CCIRS), including
notionals and changes in fair value
during the period
• The Statement of Changes in Equity
for the balance of the Cash Flow
Hedge Reserve and movements
during the period.
On the balance sheet, USD borrowings
are included within Term Borrowings
and CCIRS are included within
Financial Instruments.
Meridian has hedged highly
probable forecast capital expenditure
denominated in currencies other than
NZD using forward exchange contracts.
The foreign currency exposures give
rise to the risk of variability to future
cashflows. To mitigate this risk, forward
foreign exchange contracts have
been entered into. The cash flows
associated with these contracts are
timed to mature when the payment
for the capital expenditure is made.
For contracts designated as cash flow
hedges for accounting purposes, when
the cash flows occur Meridian adjusts
the carrying value of the asset acquired.
Hedge ineffectiveness
The below table summarises hedge
ineffectiveness. This is included within
“Net change in fair value of Treasury
Hedges” in the income statement.
Impact on income statement
2022
$M
2021
$M
Hedge Ineffectivenss gain (loss)
4
–
Ineffectiveness is primarily caused by
credit counterparty risk on CCIRS. This risk
is part of the CCIRS fair value but is not
included in the hedge accounting entries.
Hedge ineffectiveness will net to zero
over the life of the hedge relationships.
1 8 4
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 D
D1 Financial risk management continued
Future cash flows
The below table estimates the contractual undiscounted future cash flows that we expect on hedge accounted items.
Amounts noted include coupons and repayment/exchange of notionals on maturity.
Currency as indicated below
USD Borrowings (shown in USD)
CCIRS
– USD leg (coupons and maturity flow – shown in USD)
– Functional currency leg (coupons and maturity flow – shown in NZD)
Foreign Exchange Contracts
– Foreign currency leg (shown in NZD)
– Functional currency leg (shown in NZD)
2022
$M
2021
$M
Due within
1 year
Due within
1–2 years
Due within
2–5 years
Due after
5 years
Due within
1 year
Due within
1–2 years
Due within
2–5 years
Due after
5 years
(16)
(16)
(144)
(342)
(56)
(16)
(47)
(454)
16
(26)
101
(90)
16
(34)
66
(59)
144
(240)
342
(528)
–
–
–
–
56
(58)
12
(11)
16
(13)
95
(90)
47
(53)
62
(59)
454
(638)
–
–
Functional currency coupons are set quarterly based on NZ and AU benchmark rates. They are shown in this table based
on market forward interest rates and translated to NZD equivalent using spot AUD/NZD exchange rates at reporting date.
The foreign currency leg of foreign exchange contracts is translated to NZD using spot exchange rates at reporting date.
Financial instruments which are offset
In certain circumstances Meridian offsets the fair value of financial instruments where it has legal agreements in place
that permit netting of positions and net settlement.
Financial instrument assets
– Energy hedges
– Treasury hedges
Total financial instrument assets
Financial instrument liabilities
– Energy hedges
– Treasury hedges
Total financial instrument liabilities
Net financial instruments
2022
$M
2021
$M
Gross Value
Value Offset
Carrying Value
Gross Value
Value Offset
Carrying Value
691
93
784
(272)
(26)
(298)
486
(175)
–
(175)
175
–
175
–
516
93
609
(97)
(26)
(123)
486
505
106
611
(254)
(145)
(399)
212
(205)
–
(205)
205
–
205
–
300
106
406
(49)
(145)
(194)
212
1 8 5
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
E : Group structure
In this section
This section provides information to
help readers understand the Meridian
Group structure and how it affects the
financial position and performance of
the Group. In this section of the notes
there is information about Meridian’s
Subsidiaries.
E1 Subsidiaries
The consolidated financial statements
include the financial statements of
Meridian Energy Limited and the
subsidiaries listed adjacent.
They all have share capital consisting
solely of ordinary shares that the Group
holds directly, and the proportion of
ownership interests held equals the
Group’s voting rights.
Meridian Energy Limited provides
support to its subsidiaries where
necessary in order to ensure they
meet their obligations as they fall due.
Name of entity
Meridian Energy Limited60
Flux Federation Limited
Flux-UK Limited
Principal activity
Functional Currency
2022
2021
Interest held
by the group
Software development
New Zealand dollar
Licence holder
British pounds
100%
100%
Three River Holdings No. 1 Limited61
Holding company
New Zealand dollar
Three River Holdings No. 2 Limited61
Holding company
New Zealand dollar
Meridian Energy Australia Pty Limited62
Management services
Australian dollar
GSP Energy Pty Limited62
Electricity generation
Australian dollar
Meridian Finco Pty Limited62
Financing
Australian dollar
Rangoon Energy Park Pty Limited62
Wind farm development
Australian dollar
Wandsworth Wind Farm Pty Limited62
Wind farm development
Australian dollar
Meridian Energy Markets Pty Limited62
Non-trading entity
Australian dollar
Meridian Wind Monaro Range Holdings Pty Limited62
Holding company
Australian dollar
Meridian Wind Monaro Range Pty Limited62
Holding company
Australian dollar
Mt Millar Wind Farm Pty Limited62
Electricity generation
Australian dollar
Meridian Australia Holdings Pty Limited62
Holding company
Australian dollar
Meridian Wind Australia Holdings Pty Limited62
Holding company
Australian dollar
Mt Mercer Windfarm Pty Limited62
Electricity generation
Australian dollar
Powershop Australia Pty Limited
Electricity retailer
Australian dollar
Dam Safety Intelligence Limited
Professional services
New Zealand dollar
Meridian LTI Trustee Limited
Meridian Energy Captive Insurance Limited
Trustee
Insurance
New Zealand dollar
New Zealand dollar
Meridian Limited
Non-trading entity
New Zealand dollar
Meridian Energy International Limited
Non-trading entity
New Zealand dollar
Powershop New Zealand Limited
Non-trading entity
New Zealand dollar
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
1 8 6
60 Member of the guaranteeing group as at 30 June 2022.
61 On 31 January 2022, Meridian sold its MEA business. Accordingly as at 30 June 2022, ownership percentages above are nil.
62 On 30 June 2022, Three River Holdings No. 1 Limited and Three River Holdings No.2 Limited were amalgamated into Meridian Energy Limited.
Accordingly as at 30 June 2022, ownership percentages above are nil.
60
Member of the guaranteeing group as at 30 June 2022.
61
On 30 June 2022, Three River Holdings No. 1 Limited and Three River Holdings No.2 Limited were amalgamated into Meridian Energy Limited.
Accordingly as at 30 June 2022, ownership percentages above are nil.
62
On 31 Januaray 2022, Meridian sold its MEA business. Accordingly as at 30 June 2022, ownership percentages above are nil.
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
F : Other
In this section
New LTI Plan
This section includes the remaining
information relating to Meridian’s
financial statements which is required
to comply with financial reporting
standards.
F1 Share-based payments
Long term incentive (LTI)
In August 2019, the Board approved
a new LTI plan to replace Meridian’s
previous LTI plan. Set out below is a
summary of the previous LTI Plan which
was last offered in FY19 (for the period
commencing on 1 July 2018 and ending
on 30 June 2021). Also set out below is
a summary of the new LTI plan which
was first offered in FY20 (for the period
commencing on 1 July 2019 and ending
30 June 2022).
Under the new LTI plan, the company
issues rights to acquire ordinary shares
in the company (Share Rights) to
eligible participants who accept the
offer to participate in the LTI plan. Each
Share Right entitles the holder to one
ordinary share in the company and an
additional number of shares equal to
the value of gross cash dividends per
share which would have been paid to
a New Zealand tax resident who held
a share for the duration of the vesting
period, calculated using a 10-day
volume weighted average price.
The number of Share Rights that vest is
dependent on:
• Meridian’s total shareholder return
over a three-year performance
period (Performance Period) relative
to Meridian’s cost of equity;
• Meridian’s total shareholder return
over the Performance Period
relative to a defined group of NZX
Main Board and ASX listed peer
companies (Performance Hurdles);
and
•
if the participant continues to be
employed by Meridian during
the vesting period (Employment
Condition).
Performance Hurdles
Share Rights are granted in two tranches:
• Absolute Return Share (ABS) Rights;
and
• Relative Return Share (REL) Rights .
For ABS Rights to vest, the company’s
TSR must be greater than the absolute
TSR benchmark which is set at the
beginning of the vesting period
with regard to the company’s cost of
equity (Absolute TSR Benchmark) on
a compounding annual basis over the
Performance Period. If the company’s
TSR is equal to or lower than the
Absolute TSR Benchmark, no ABS Rights
will vest. If the company’s TSR is greater
than the Absolute TSR Benchmark,
100% of the ABS Rights will vest.
The number of REL Rights that vest is
determined by the company’s TSR over
the Performance Period relative to the
peer group. For any of the REL Rights to
vest, the company’s TSR must be greater
than or equal to the 50th percentile /
median TSR of the peer group. 100% of
the REL Rights will vest on meeting the
75th percentile TSR of the peer group,
with vesting on a straight-line basis
between these two points.
For each three-year plan, an
independent external expert measures
the TSR of Meridian and the peer group
of companies along with the outcome
on the progressive vesting scale.
Share Rights will lapse if the Vesting
Conditions are not satisfied (although
this is subject to the Board’s discretion in
relation to the Employment Condition).
In the current financial year, 476,168
share rights were issued to eligible staff,
238,084 being ABS Rights and 238,084
being REL Rights.
1 8 7
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 F
F1 Share-based payments continued
Previous LTI Plan
The previous LTI is a share loan and
cash bonus scheme, where executives
purchase Meridian shares via an
interest-free loan from the company,
with the shares held on trust by the
LTI plan trustee.
Any shares awarded depend on whether
the following performance hurdles are
met over a three-year period:
•
•
the company’s absolute total
shareholder return (TSR) must
be positive; and
the company’s TSR compared to
a benchmark peer group.
If the performance hurdles have been
achieved, a progressive vesting scale
is applied to determine how many
shares vest:
•
•
if the company’s TSR over the
three-year period exceeds the 50th
percentile TSR of the benchmark
peer group, at least 50% of an
executive’s shares will vest.
100% shares will vest on meeting
the 75th percentile TSR of the peer
group, with vesting on a straight-line
basis between these two points.
• no shares will vest if the company’s
TSR is less than the 50th percentile
TSR of the peer group.
Once the vesting level has been
confirmed, a cash amount (after the
deduction of tax), but before other
applicable salary deductions, is used
to repay the executive’s outstanding
loan balance.
For each three-year plan, an
independent external expert measures
TSR of Meridian and the peer group
of companies along with the outcome
on the progressive vesting scale. If TSR
is not positive (i.e. in absolute terms is
less than zero), or if TSR does not meet
the peer group relative TSR hurdle
of 50th percentile, all of the shares
are forfeited to the trustee and the
relevant executive receives no benefits
under the LTI. Where the TSR is
greater than the 50th percentile of the
benchmark peer group, but below the
75th percentile, shares are allocated on
a percentage basis and any that have
not vested will also be forfeited.
For the LTI plan that vested at the end
of 2021, the level of vesting was 100%.
Therefore, the outstanding balance of
the interest free loans at 30 June 2021
of $0.7 million has now been repaid. A
total amount of 238,724 shares were
transferred to the eligible participants
in 2021.
Movement in zero–priced share options
Number of options/rights
Grant date
Vesting date
LTI Scheme & Type
Weighted average
fair value of option
Balance at
the start
of the year
2022
21/10/21
21/10/21
9/03/21
9/03/21
7/10/2019 & 28/2/20
7/10/2019 & 28/2/20
Total
2021
9/03/21
9/03/21
7/10/2019 & 28/2/20
7/10/2019 & 28/2/20
22/08/2018
Total
21/10/24
21/10/24
30/06/23
30/06/23
7/10/22
7/10/22
30/06/23
30/06/23
7/10/22
7/10/22
30/06/21
1 8 8
New - ABS
New - REL
New - ABS
New - REL
New - ABS
New - REL
New – ABS
New – REL
New – ABS
New – REL
Previous
$2.14
$2.93
$3.53
$3.75
$3.54
$3.36
$3.53
$3.75
$3.54
$3.36
$1.78
–
–
238,084
238,084
204,834
204,834
885,836
–
–
204,834
204,834
238,724
648,392
Granted
during
the year
209,180
209,180
–
–
–
–
418,360
238,084
238,084
–
–
–
476,168
Vested
during
the year
Forfeited
during
the year
Balance at
the end of
the year
–
–
–
–
–
–
–
–
–
–
–
(238,724)
(238,724)
–
–
(25,663)
(25,663)
(204,834)
209,180
209,180
212,421
212,421
–
204,834
(256,160)
1,048,036
–
–
–
–
–
–
238,084
238,084
204,834
204,834
–
885,836
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
Movement in zero–priced share options
Number of options/rights
Grant date
Vesting date
LTI Scheme & Type
Weighted average
fair value of option
Balance at
the start
of the year
Vested
during
the year
Forfeited
during
the year
Balance at
the end of
the year
2022
21/10/21
21/10/21
9/03/21
9/03/21
Total
2021
9/03/21
9/03/21
7/10/2019 & 28/2/20
7/10/2019 & 28/2/20
7/10/2019 & 28/2/20
7/10/2019 & 28/2/20
22/08/2018
Total
21/10/24
21/10/24
30/06/23
30/06/23
7/10/22
7/10/22
30/06/23
30/06/23
7/10/22
7/10/22
30/06/21
New - ABS
New - REL
New - ABS
New - REL
New - ABS
New - REL
New – ABS
New – REL
New – ABS
New – REL
Previous
Granted
during
the year
209,180
209,180
–
–
–
–
–
–
–
238,084
238,084
$2.14
$2.93
$3.53
$3.75
$3.54
$3.36
$3.53
$3.75
$3.54
$3.36
$1.78
–
–
238,084
238,084
204,834
204,834
885,836
–
–
204,834
204,834
238,724
648,392
476,168
(238,724)
(238,724)
–
–
–
–
–
–
–
–
–
–
–
(25,663)
(25,663)
(204,834)
–
–
–
–
–
–
–
–
209,180
209,180
212,421
212,421
–
204,834
238,084
238,084
204,834
204,834
–
885,836
418,360
(256,160)
1,048,036
F2 Related parties
F3 Auditors remuneration
Meridian transacts with other Government-owned or related entities
independently and on an arm’s-length basis. Transactions cover a variety
of services including trading energy, transmission, postal, travel and tax.
Directors of the Group may be directors or officers of other companies or
organisations with which members of the Group may transact.
Compensation of key management personnel
The remuneration of directors and other members of key management
during the year was as below:
Directors' Fees
Chief executive officer, senior management team
and subsidiary chief executives
Salaries and short-term benefits
Long-term benefits
Group
2022
$M
1
8
–
8
2021
$M
1
7
1
8
Auditors remuneration to Deloitte Limited for:
Audit and review of New Zealand-based companies’ financial statements
Audit of overseas-based companies’ financial statements
Total audit fees
Other assurance fees
Total auditor remuneration
Group
2022
$M
0.6
0.1
0.7
0.2
0.9
2021
$M
0.6
0.2
0.8
0.1
0.9
The Board has adopted a policy to maintain the independence of the Company’s
external auditor, including an approval of all other services performed by Deloitte
Limited. The Auditor-General has appointed Mike Hoshek of Deloitte Limited
as auditor of the company. The audit fee includes Office of the Auditor-General
overhead contribution of $39,973 (30 June 2021: $37,000).
Other assurance services undertaken by Deloitte Limited during the year
included reviews of greenhouse gas inventory and sustainability reporting
assurance, review of the interim financial statements, audit of the securities
registers, vesting of the executive long-term incentive plan, the solvency return
of Meridian Energy Captive Insurance Limited and supervisor reporting.
Meridian has also paid $17,000 (2021: $14,000) to Deloitte Limited for
administrative and other advisory services to the Corporate Taxpayers Group,
of which Meridian, alongside a number of other organisations, is a member.
In addition to this, Meridian paid $62,880 (2021: nil) to Deloitte Touche Tohmatsu
for assurance services relating to the sale of Meridian Energy Australia.
1 8 9
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022
F4 Contingent assets and liabilities
There were no contingent assets or liabilities at 30 June 2022 (2021: Nil).
F5 Subsequent events
In July 2022, NZAS announced they have begun exploring potential pathways with
electricity generators for a future beyond 2024. Meridian will engage with NZAS
as part of its process and expects this will include contract negotiations. Due to
the inherent uncertainty surrounding the timing and effect of any negotiations,
and regulatory requirements that may have to be met, it is not possible to
determine any effect this might have on these financial statements.
In August 2022, Meridian and Contact Energy Limited entered into a swaption
and a contract for difference (CfD). The two financial contracts provide Meridian
with additional portfolio flexibility and are for a two year period commencing on
1 January 2023. Both financial contracts are subject to conditions precedent that
Contact has obtained a certain amount of natural gas each year, with this being
confirmed or otherwise no later than 15 September 2022 for the 2023 year and
15 September 2023 for the 2024 year. The swaption is limited to 150GWh per
annum and may be called between 1 April and 30 September for each of 2023
and 2024. Meridian is the fixed price payer. Meridian also pays Contact a
premium each year for the right to call the swaption. The CfD is for 294GWh
per annum and Meridian is the fixed price payer.
There are no other subsequent events other than dividends declared on
23 August 2022 (refer to Note C4 Dividends for more information).
F6 Changes in financial reporting standards
All mandatory amendments and interpretations have been adopted in the current
year. None have had a material impact on these financial statements. Meridian
is not aware of any standards issued but not yet effective that would materially
affect the amounts recognised or disclosed in the financial statements.
1 9 0
MERIDIAN INTEGRATED REPORT 2022NOTES TO THE FINANCIALS — FOR THE YEAR ENDED 30 JUNE 2022 Independent auditor’s report
To the shareholders of Meridian Energy Limited
for the year ended 30 June 2022
The Auditor-General is the auditor
of Meridian Energy Limited and its
subsidiaries (the Group). The Auditor-
General has appointed me, Mike
Hoshek, using the staff and resources
of Deloitte Limited, to carry out the
audit of the consolidated financial
statements of the Group on his behalf.
Opinion
We have audited the consolidated
financial statements of the Group on
pages 143 to 190, that comprise the
consolidated balance sheet as at 30
June 2022, the consolidated income
statement, consolidated comprehensive
income statement, consolidated
statement of changes in equity and
consolidated statement of cash flows
for the year ended on that date and
the notes to the consolidated financial
statements including a summary of
significant accounting policies and
other explanatory information.
In our opinion, the consolidated financial
statements present fairly, in all material
respects, the consolidated financial
position of the Group as at 30 June
2022, and its consolidated financial
performance and its consolidated
cash flows for the year then ended
in accordance with New Zealand
equivalents to International Financial
Reporting Standards and International
Financial Reporting Standards.
Basis for our opinion
We conducted our audit in accordance
with the Auditor-General’s Auditing
Standards, which incorporate the
Professional and Ethical Standards
and the International Standards
on Auditing (New Zealand) issued
by the New Zealand Auditing
and Assurance Standards Board.
Our responsibilities under those
standards are further described in
the Auditor’s responsibilities for the
audit of the consolidated financial
statements section of our report.
We are independent of the Group in
accordance with the Auditor-General’s
Auditing Standards, which incorporate
Professional and Ethical Standard
1: International Code of Ethics for
Assurance Practitioners issued by the
New Zealand Auditing and Assurance
Standards Board, and we have fulfilled
our other ethical responsibilities in
accordance with these requirements.
We believe that the audit evidence
we have obtained is sufficient and
appropriate to provide a basis for
our opinion.
Other than the audit, our firm carries
out other assurance assignments for
the Group in the areas of greenhouse
gas inventory assurance, limited
assurance of the sustainability content
in the integrated report prepared in
accordance with the Global Reporting
Initiative Sustainability Reporting
Standards, review of the interim
financial statements, audit of the
securities registers, audit of the fixed
rate bond registers, vesting of the
executive long-term incentive plan, the
solvency return of Meridian Captive
Insurance Limited, assurance of lockbox
workings for the Meridian Energy
Australia Group of subsidiaries, and
supervisor reporting. We also carried
out non-assurance assignments for the
Group relating to Corporate Taxpayers
Group, which are compatible with
those independence requirements.
In addition, principals and employees
of our firm deal with the Group
on arm’s length terms within the
ordinary course of trading activities
of the Group. These services have
not impaired our independence as
auditor of the Group. Other than
these engagements and arm’s length
transactions, and in our capacity as
auditor acting on behalf of the Auditor-
General, we have no relationship with,
or interests in, the Group.
Other than in our capacity as auditor
we have no relationship with, or
interests in, Meridian Energy Limited
or any of its subsidiaries.
Audit materiality
We consider materiality primarily
in terms of the magnitude of
misstatement in the consolidated
financial statements of the Group
that in our judgement would make it
probable that the economic decisions
of a reasonably knowledgeable person
would be changed or influenced (the
‘quantitative’ materiality). In addition,
we also assess whether other matters
that come to our attention during the
audit would in our judgement change or
influence the decisions of such a person
(the ‘qualitative’ materiality). We use
materiality both in planning the scope
of our audit work and in evaluating the
results of our work.
We determined materiality for the
Group consolidated financial statements
as a whole to be $19 million.
Key audit matters
Key audit matters are those matters
that, in our professional judgement,
were of most significance in our audit of
the consolidated financial statements of
the current period. These matters were
addressed in the context of our audit of
the consolidated financial statements
as a whole, and in forming our opinion
thereon, and we do not provide a
separate opinion on these matters.
1 9 1
MERIDIAN INTEGRATED REPORT 2022INDEPENDENT AUDITOR’S REPORT Key audit matters
How our audit addressed the key audit matters
Valuation of Generation Structures and Plant
As explained in note B1 in the Group financial statements, generation structures and plant are
carried at fair value less any subsequent accumulated depreciation and impairment losses at
balance sheet date.
The net book value of generation structures and plant as reflected in note B1 is $7,472 million
(2021: $8,297 million).
The Group performs a valuation every year to ensure that the carrying value does not differ
significantly from the fair value at balance date.
As a result of this valuation, generation structures and plant have been revalued this year as
at 30 June 2022. The revaluation resulted in a decrease in value by $55 million (2021: increase
of $202 million). The impact of the revaluation is recognised as a decrease of $55 million in
the revaluation reserve with no income statement impact in the current period (2021: increase
of $202 million in the revaluation reserve with no income statement impact).
The valuation methodology is based on a discounted cashflow (‘DCF’) approach. The key
inputs into the DCF are the future New Zealand wholesale electricity price path, forecasted
future generation volumes and the weighted average cost of capital (‘WACC’). Changes to
these forecasts could significantly change the fair value of the generation assets. The inputs do
not fully use observable market data and require significant judgement and estimates to be
made by the valuer. As outlined in Note B1 the valuation has considered the impact of COVID
19 and the potential New Zealand Aluminium Smelter (‘NZAS’) exit in 2024 on the valuation.
We include valuation of generation structures as a key audit matter because of the inherent
technical and judgemental complexity associated with determining the fair value.
Valuation of Level 3 Electricity Derivatives
As explained in note D1, the Group’s activities expose it to commodity price, foreign exchange
and interest rate risks which are managed using derivative financial instruments.
These instruments are carried at their fair value as at 30 June 2022. Fair value
measurementsgrouped into three categories based on their inputs into the valuation, with
level 3 derivatives being the most complex valuation, given that they use significant inputs
that do not use directly observable market data.
At 30 June 2022, level 3 electricity derivative assets totalled $233 million (2021: $142 million)
and level 3 electricity derivative liabilities were $96 million (2021: $14 million).
We include valuation of level 3 electricity derivatives as a key audit matter for the
following reasons:
• The forecast price path used in the valuation of electricity hedges is based on the
Group’s best estimate of the long-term forward wholesale electricity price, which
involves significant judgement and estimates regarding discount factors, expected
demand, cost of new supply, and other relevant market factors; and
• The complexity and judgement involved in the valuation techniques and the
judgement involved in evaluating the long-term expected call volumes and
discount factor used to determine the fair value of electricity options and swaps.
1 9 2
Our audit procedures focused on assessing the key inputs into the model used to estimate
the fair value of the generation structures and plant. This included:
• The reasonableness of the future New Zealand wholesale electricity price paths;
• The reasonableness of the future forecasted generation volumes; and
• The reasonableness of the applied weighted average cost of capital.
Our procedures included but are not limited to:
•
Evaluating the Group’s processes and controls for the valuation of the generation structures and
plant;
Reviewing the valuation methodology and the reasonableness of the significant underlying
assumptions as well as challenging whether the forecast was in line with internal and external
data;
Assessing the competence, objectivity and integrity of the valuation team;
Utilising our in-house valuation specialists to assess the appropriateness of the valuation
methodology and the reasonableness of the valuation range determined by the Group,
including WACC rates and forward price path;
Assessing the reasonableness of the forecasted future expenses (including the consideration
of any impacts relating to COVID-19 and the impacts of the potential New Zealand Aluminium
Smelter exit in December 2024);
Performing sensitivity analysis on the key assumptions within the model;
Performing a retrospective review of budgets compared to actual data for prior periods to assess
the accuracy and robustness of the forecasting process; and
•
•
•
•
•
•
• Evaluating the adequacy of the Group’s disclosures in respect of the valuation of generation
structures and plant.
As a result of the above procedures, we are satisfied that the valuation and key assumptions
applied and the disclosures included in Note B1 are reasonable.
Our audit procedures focused on:
• The reasonableness of the future NZ wholesale electricity price paths (including the
consideration of any impacts relating to COVID-19 and the impacts of the potential
New Zealand Aluminium Smelter exit in December 2024);
• The reasonableness of the future forecasted generation volumes; and
• The reasonableness of the applied weighted average cost of capital.
Our procedures included:
•
In conjunction with our internal experts, evaluating the appropriateness of the methodology
applied in the valuation models for these electricity hedges, options and swaps and ensuring
that the methodology has been consistently applied with the prior year where appropriate;
• Challenging the key assumptions applied, including the long-term forward wholesale electricity
price, long-term expected call volumes, day one adjustments and discount rates;
• Agreeing underlying data to contract terms, specifically the contract term, price and volumes;
and
• Evaluating the adequacy of the Group’s disclosures in respect of the valuation of level 3 electricity
derivatives.
As a result of the above procedures, we are satisfied that the valuation and key assumptions applied
to estimate the fair value of the level 3 electricity derivavtives and the disclosures made in Note D1
are reasonable to estimate the fair value of the level 3 electricity derivatives.
MERIDIAN INTEGRATED REPORT 2022INDEPENDENT AUDITOR’S REPORT Other information
The Directors are responsible on
behalf of the Group for the other
information. The other information
comprises the information included
on pages 1 to 142 and 197 to 200, but
does not include the consolidated
financial statements and our auditor’s
report thereon.
Our opinion on the consolidated
financial statements does not cover
the other information and we do not
express any form of audit opinion or
assurance conclusion thereon.
In connection with our audit of the
consolidated financial statements,
our responsibility is to read the other
information and, in doing so, consider
whether the other information is
materially inconsistent with the
consolidated financial statements or
our knowledge obtained in the audit
or otherwise appears to be materially
misstated. If, based on the work we
have performed, we conclude that
there is a material misstatement of
this other information, we are required
to report that fact. We have nothing
to report in this regard.
Directors’ responsibilities
for the consolidated
financial statements
The Directors are responsible
on behalf of the Group for the
preparation and fair presentation of
the consolidated financial statements
in accordance with New Zealand
Equivalents to International Financial
Reporting Standards and International
Financial Reporting Standards, and for
such internal control as the Directors
determine is necessary to enable the
preparation of consolidated financial
statements that are free from material
misstatement, whether due to fraud
or error.
In preparing the consolidated
financial statements, the Directors
are responsible on behalf of the
Group for assessing the Group’s
ability to continue as a going concern,
disclosing, as applicable, matters
related to going concern and using
the going concern basis of accounting
unless the Directors either intend
to liquidate the Group or to cease
operations, or have no realistic
alternative but to do so.
The Directors’ responsibilities arise
from the Financial Markets Conduct
Act 2013.
Auditor’s responsibilities for
the audit of the consolidated
financial statements
Our objectives are to obtain
reasonable assurance about whether
the consolidated financial statements
as a whole are free from material
misstatement, whether due to fraud
or error, and to issue an auditor’s
report that includes our opinion.
Reasonable assurance is a high level
of assurance, but is not a guarantee
that an audit conducted in accordance
with the Auditor-General’s Auditing
Standards will always detect a
material misstatement when it exists.
Misstatements can arise from fraud
or error and are considered material
if, individually or in the aggregate,
they could reasonably be expected
to influence the economic decisions
of shareholders taken on the basis
of these consolidated financial
statements.
As part of an audit in accordance
with the Auditor-General’s Auditing
Standards, we exercise professional
judgement and maintain professional
scepticism throughout the audit.
We also:
•
Identify and assess the risks of
material misstatement of the
consolidated financial statements,
whether due to fraud or error, design
and perform audit procedures
responsive to those risks, and obtain
audit evidence that is sufficient and
appropriate to provide a basis for
our opinion. The risk of not detecting
a material misstatement resulting
from fraud is higher than for one
resulting from error, as fraud may
involve collusion, forgery, intentional
omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal
control relevant to the audit in order
to design audit procedures that are
appropriate in the circumstances, but
not for the purpose of expressing an
opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of
accounting policies used and the
reasonableness of accounting
estimates and related disclosures
made by management.
• Conclude on the appropriateness
of the use of the going concern
basis of accounting by the directors
1 9 3
MERIDIAN INTEGRATED REPORT 2022INDEPENDENT AUDITOR’S REPORT and, based on the audit evidence
obtained, whether a material
uncertainty exists related to
events or conditions that may cast
significant doubt on the Group’s
ability to continue as a going
concern. If we conclude that a
material uncertainty exists, we
are required to draw attention in
our auditor’s report to the related
disclosures in the consolidated
financial statements or, if such
disclosures are inadequate, to
modify our opinion. Our conclusions
are based on the audit evidence
obtained up to the date of our
auditor’s report. However, future
events or conditions may cause
the Group to cease to continue
as a going concern.
• Evaluate the overall presentation,
structure and content of the
consolidated financial statements,
including the disclosures, and
whether the consolidated financial
statements represent the underlying
transactions and events in a manner
that achieves fair presentation.
• Obtain sufficient appropriate
audit evidence regarding the
financial information of the entities
or business activities within the
Group to express an opinion on the
consolidated financial statements.
We are responsible for the direction,
supervision and performance of
the group audit. We remain solely
responsible for our audit opinion.
We communicate with the Directors
regarding, among other matters,
the planned scope and timing of the
audit and significant audit findings,
including any significant deficiencies
in internal control that we identify
during our audit.
We also provide the Directors with
a statement that we have complied
with relevant ethical requirements
regarding independence, and
to communicate with them all
relationships and other matters that
may reasonably be thought to bear
on our independence, and where
applicable, related safeguards.
From the matters communicated
with the Directors, we determine those
matters that were of most significance
in the audit of the consolidated
financial statements of the current
period and are therefore the key audit
matters. We describe these matters
in our auditor’s report unless law or
regulation precludes public disclosure
about the matter or when, in extremely
rare circumstances, we determine that
a matter should not be communicated
in our report because the adverse
consequences of doing so would
reasonably be expected to outweigh
the public interest benefits of such
communication.
Our responsibilities arise from the
Public Audit Act 2001.
Mike Hoshek, Partner
for Deloitte Limited
On behalf of the Auditor-General
Wellington, New Zealand
23 August 2022
1 94
MERIDIAN INTEGRATED REPORT 2022INDEPENDENT AUDITOR’S REPORT Independent accountant’s assurance report
To the shareholders of Meridian Energy Limited
for the year ended 30 June 2022
Report on sustainability content
within the 2022 Integrated Report
Meridian Energy Limited’s Integrated
Report for the year ended 30 June
2022 (the ‘Integrated Report’) includes
sustainability content on pages 14
to 88, 97, 103 to 120, and 197 to 200
(‘Sustainability Content’) prepared in
accordance with the Global Reporting
Initiative Sustainability Reporting
Standards (the ‘GRI Standards’).
The subject of our limited assurance
engagement is the information
included on pages 14 to 88, 97, 103 to
120, and 197 to 200 of the integrated
report, prepared in accordance with
Reporting Principles specified in
section 4 of GRI 1: Foundation 2021;
and the disclosures listed in the GRI
index on pages 197 to 200 prepared
in accordance with the GRI standards
as referenced in the GRI index on
pages 197 to 200. Our report does
not cover forward looking statements
or online supplements.
Conclusion
Basis for Conclusion
Our Independence and Quality Control
This conclusion has been formed on the
basis of, and is subject to, the inherent
limitations outlined elsewhere in this
independent assurance report.
Based on the evidence obtained from
the procedures we have performed;
nothing has come to our attention that
causes us to believe that:
• the Sustainability Content on pages
14 to 88, 97, 103 to 120, and 197 to
200 of the Integrated report for
the year ended 30 June 2022, has
not been prepared, in all material
respects, in accordance with the
Reporting Principles specified in
section 4 of GRI 1: Foundation 2021:
being accuracy, balance, clarity,
comparability, completeness,
sustainability context, timeliness,
and verifiability; and
• the disclosures listed on the GRI
index on pages 197 to 200 has
not been prepared, in all material
respects, in accordance with the
GRI Standards referenced in the
GRI index on pages 197 to 200.
Our engagement has been conducted
in accordance with International
Standard on Assurance Engagements
(New Zealand) 3000 (Revised):
Assurance Engagements Other than
Audits or Reviews of Historical Financial
Information (‘ISAE (NZ) 3000 (Revised)’)
issued by the New Zealand Auditing
and Assurance Standards Board.
We believe that the evidence we have
obtained is sufficient and appropriate
to provide a basis for our conclusion.
Board of Directors’ Responsibility
The Board of Directors is responsible for:
• ensuring that the Sustainability
Content is prepared in accordance
with the GRI Standards and
specifically those GRI Standards set
out in the GRI Index;
• determining Meridian Energy
Limited’s objectives in respect of
sustainability reporting;
• selecting the material topics; and
• establishing and maintaining
appropriate performance
management and internal control
systems in order to derive the
Sustainability Content.
We have complied with the
independence and other ethical
requirements of Professional and Ethical
Standard 1 International Code of Ethics
for Assurance Practitioners (including
International Independence Standards)
(New Zealand) (‘PES-1’) issued by the
New Zealand Auditing and Assurance
Standards Board, which is founded on
fundamental principles of integrity,
objectivity, professional competence
and due care, confidentiality and
professional behaviour.
Other than this engagement and our
role as auditor of the statutory financial
statements on behalf of the Auditor-
General, our firm carries out other
assignments for the Meridian Energy
Group in the areas of greenhouse gas
inventory assurance, review of the
interim financial statements, audit of
the securities registers, audit of the
fixed rate bond registers, vesting of the
executive long-term incentive plan, the
solvency return of Meridian Captive
Insurance Limited, assurance of lockbox
workings for the Meridian Energy
Australia Group of subsidiaries, and
supervisor reporting. We also carried
out non-assurance assignments for
the Group relating to the Corporate
Taxpayers Group, which are compatible
with those independence requirements.
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MERIDIAN INTEGRATED REPORT 2022
In addition, principals and employees
of our firm deal with the Meridian
Energy Group on arm’s length
terms within the ordinary course of
trading activities of the Meridian
Energy Group. These services have
not impaired our independence for
the purposes of this engagement.
Other than these engagements and
arm’s length transactions, we have no
relationship with, or interests in, the
Meridian Energy Group.
The firm applies Professional and
Ethical Standard 3 (Amended): Quality
Control for Firms that Perform Audits
and Reviews of Financial Statements,
and Other Assurance Engagements
issued by the New Zealand Auditing
and Assurance Standards Board, and
accordingly maintains a comprehensive
system of quality control including
documented policies and procedures
regarding compliance with ethical
requirements, professional standards
and applicable legal and regulatory
requirements.
Independent Accountant’s
Responsibility
Our responsibility is to conduct a
limited assurance engagement in
order to express an opinion whether,
based on the procedures performed,
anything has come to our attention
that causes us to believe that the
Sustainability Content has not been
prepared, in all material respects, in
accordance with the GRI Standards.
We did not evaluate the security
and controls over the electronic
publication of the Integrated Report.
In a limited assurance engagement,
the assurance practitioner performs
procedures, primarily consisting
of discussion and enquiries of
management and others within the
entity, as appropriate, and observation
and walk-throughs, and evaluates the
evidence obtained. The procedures
selected depend on our judgement,
including identifying areas where the
risk of material non-compliance with
the GRI Standards is likely to arise.
Our procedures included:
• Obtaining an understanding of the
internal control environment, risk
assessment process and information
systems relevant to the sustainability
reporting process;
• A review of the materiality process
followed to determine the material
topics chosen for inclusion in the
Sustainability Content;
• Analytical review and other test
checks of the information presented;
• Checking whether the appropriate
indicators have been reported in
accordance with the GRI Standards; and
• Evaluating whether the information
presented is consistent with our
overall knowledge and experience of
sustainability reporting processes at
Meridian Energy Limited.
The procedures performed in a limited
assurance engagement vary in nature
and timing from, and are less in extent
than for, a reasonable assurance
engagement. Consequently, the level
of assurance obtained in a limited
assurance engagement is substantially
lower than the assurance that would
have been obtained had a reasonable
assurance engagement been
performed. Accordingly, we do not
express a reasonable assurance opinion
about whether Meridian Energy
Limited’s Sustainability Content has
been prepared, in all material respects,
in accordance with the GRI Standards.
Inherent Limitations
Because of the inherent limitations of
any limited assurance engagement,
it is possible that fraud, error or
non-compliance may occur and not
be detected. A limited assurance
engagement is not designed to detect
all instances of non-compliance with
the GRI Standards as it generally
comprises making enquiries, primarily
of the responsible party, and applying
analytical and other review procedures.
The conclusion expressed in this report
has been formed on the above basis.
A limited assurance engagement does
not provide assurance on whether
compliance with the GRI Standards
will continue in the future.
Use of Report
Our assurance report is made solely
to the directors of Meridian Energy
Limited in accordance with the terms of
our engagement. Our work has been
undertaken so that we might state to
the directors those matters we have
been engaged to state in this assurance
report and for no other purpose. To
the fullest extent permitted by law, we
do not accept or assume responsibility
to anyone other than the directors of
Meridian Energy Limited for our work,
for this assurance report, or for the
conclusions we have reached.
Chartered Accountants
Auckland, New Zealand
23 August 2022
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MERIDIAN INTEGRATED REPORT 2022
GRI standards content index
Meridian Energy Limited has reported in accordance with the GRI Standards for the period 1 July 2021 to 30 June 2022. GRI1: Foundation 2021 has been used.
GENERAL DISCLOSURES
Pg #
Comment
GENERAL DISCLOSURES
Pg #
Comment
GRI 2: GENERAL DISCLOSURES 2021
2-1
2-2
2-3
2-4
2-5
2-6
Organizational details
Entities included in the organization’s
sustainability reporting
Reporting period, frequency and
contact point
Restatements of information
External assurance
Activities, value chain and other
business relationships
Front
cover
116
116, 120
Discussed where relevant
throughout the report.
195-196
Refer to independent
accountant’s assurance report
35, 116-117 All our energy retailing brands
have very short supply chains
because the physical assets
used to distribute electricity
and meter its use are managed
by national and local lines
and metering companies. Our
retail operations’ requirements
are similar to those of many
corporate offices. They
include physical facilities and
ICT, sales and marketing, billing
and governance functions. Note
value chain (activities, products,
services and markets served)
information throughout report.
2-7
Employees
62
2-8
2-9
Workers who are not employees
Governance structure and composition
117
66, 68,
105, 118
126-128
2-10
Nomination and selection of the highest
governance body
118
2-11
Chair of the highest governance body
2-12
2-13
Role of the highest governance body in
overseeing the management of impacts
Delegation of responsibility for
managing impacts
105-107,
118
106
* Disclosures starting with “EU” are from the Electric Utilities G4 Sector Disclosure.
Headcount has been used,
not FTE. Data sourced from
the PayGlobal System as at the
end of the reporting period.
Australian employees are not
included due to sale of Meridian
Australia.
Refer to Corporate Governance
Statement Directors Skills
Matrix and Board Charter
(pp 1–2)
Refer to Constitution (pp13-15)
and Board Charter (p2) plus
further detail in Corporate
Governance Statement
Refer to Corporate Governance
Statement (p5).
2-14
Role of the highest governance body in
sustainability reporting
105, 111
2-15
Conflicts of interest
2-16
Communication of critical concerns
2-17
2-18
2-19
2-20
2-21
2-22
2-23
2-24
Collective knowledge of the highest
governance body
Evaluation of the performance of the
highest governance body
Renumeration Policies
Process to determine remuneration
Annual compensation ratio
Statement on sustainable development
strategy
Policy commitments
Embedding policy commitments
2-26
Mechanisms for seeking advice and
raising concerns
2-27
Compliance with laws and regulations
2-28
Membership associations
117
117
117
92-101
92-101
97
18-27, 70,
110, 114-
120
70
70-71
71
34
138
2-29
Approach to stakeholder engagement
104-105
2-30
Collective bargaining agreements
EU STANDARDS*
EU1
EU2
EU3
EU4
EU5
32
32
85
Installed capacity
Net energy output
Number of customer accounts
Transmission and distribution lines (length
of above and underground transmission and
distribution lines by regulatory regime)
Allocation of CO2e emissions allowances or
equivalent broken down by carbon trading
framework
EU15
Employees eligible to retire
62
Refer to Corporate Governance
Statement
Refer to Corporate Governance
Statement (Principle 6)
Refer to Board Charter (p3)
Refer to Corporate Governance
Statement (pgs 4–5) and Board
Charter (p3)
Refer to Corporate Governance
Statement Recommendation
1.1 and Meridian Compliance
Policy.
Refer to Supplier Code of
Conduct
See throughout report where
relevant. We take a purpose
driven approach.
No staff are covered by collective
bargaining agreements
Length insignificant
No emissions allowances
received
1 9 7
MERIDIAN INTEGRATED REPORT 2022GRI STANDARDS CONTENT INDEX MATERIAL TOPICS AND ASSOCIATED DISCLOSURES
Pg #
Comment
MATERIAL TOPICS AND ASSOCIATED DISCLOSURES
Pg #
Comment
GRI 3: Material Topics 2021
3-1
3-2
Process to determine material topics
List of material topics
Economic performance
GRI 3: Material Topics 2021
3-3
Management of material topics
105
108
41, 88,
106-109
GRI 201: Economic Performance 2016
201-2
Financial implications and other risks and
opportunities due to climate change
111-113
Water and effluents
GRI 3: Material Topics 2021
3-3
Management of material topics
41, 106-109
GRI 303: Water and Effluents 2018
303-1
303-2
303-3
303-4
303-5
Interactions with water as a shared
resource
Management of water discharge-
related impacts
31-34, 73
31-34
Water withdrawal
Water discharge
Water consumption
33
33
33
Non-GRI KPIs*
Strength of relationships with
stakeholders interested in water
28-41, 73,
104-109
See also Taskforce for
Climate-related Financial
Disclosures (TCFD) Report
at meridianenergy.co.nz/
who-we-are/sustainability/
climate-disclosures.
Water stress not tested this FY.
Data is collected by Meridian
and independently audited each
month. There are no priority
substances that are present in
our water discharge. Total then
spilt into water that re-enters
the same river (nonconsumptive)
and water that is consumed
or diverted (consumptive).
Breakdown of total water
withdrawal and discharged not
categorised by 1000 mg/L total
dissolved solids. Excludes Flux.
Includes central government,
local government, Ngāi Tahu
and other iwi, local community
groups and the general public.
Biodiversity
GRI 3: Material Topics 2021
3-3
Management of material topics
41, 106-109
GRI 304: Biodiversity 2016
304-2
Emissions
Significant impacts of activities, products
and services on biodiversity
31, 33-34,
41, 108
Excludes Flux
GRI 3: Material Topics 2021
3-3
Management of material topics
41, 106-109
GRI 305: Emissions 2016
305-1
305-2
305-3
Direct (Scope 1) GHG emissions
37
Energy indirect (Scope 2) GHG emissions 37
Other indirect (Scope 3) GHG emissions 37
Occupational health and safety
GRI 3: Material Topics 2021
3-3
Management of material topics
75, 106-109
GRI 403: Occupational Health and Safety 2018
403-1
Occupational health and safety
management system
63-64
The OHS System is not
externally audited, however
a gap analysis with respect
to the ISO45001 standard
was undertaken with the
assistance of PWC in FY22. No
significant gaps were identified
and the intention is to obtain
accreditation to this standard
in FY23. Accreditation to NZS
7901:2008 Electricity and Gas
Industries Safety Management
Systems for Public Safety,
externally audited by Telarc,
was maintained.
1 9 8
* Non-GRI – some material topics and disclosures listed above are additional or alternatives to those covered in the GRI Standards.
MERIDIAN INTEGRATED REPORT 2022GRI STANDARDS CONTENT INDEX MATERIAL TOPICS AND ASSOCIATED DISCLOSURES
Pg #
Comment
MATERIAL TOPICS AND ASSOCIATED DISCLOSURES
Pg #
Comment
403-2
Hazard identification, risk assessment,
and incident investigation
403-3
Occupational health services
403-4
403-5
403-6
403-7
403-8
Worker participation, consultation,
and communication on occupational
health and safety
Worker training on occupational
health and safety
Promotion of worker health
Prevention and mitigation of
occupational health and safety impacts
directly linked by business relationships
Workers covered by an occupational
health and safety management system
63-64
63-64
63-64
63-64
63-64
63-64
100% employees and
contractors working on
Meridian Sites and assets
are covered by the OHS
management system. Flux
permanent employees and
contractors are fully covered
by Flux’s health and safety
management system.
403-9
Work-related injuries
65
Excludes Flux.
Diversity and equal opportunity
GRI 3: Material Topics 2021
413-1
Operations with local community
engagement, impact assessments,
and development programs
72-73, 75
100% of our power stations
have local community
engagement programmes.
Social and environmental
impacts disclose through
impacts/materiality process
via annual report. We have
no formal grievance policy
for communities, these would
be dealt with by appropriate
manager and escalated through
to line managers if appropriate.
Meridian does not donate to any
political parties (as specified in
our Code of Conduct)
Non-GRI KPIs* Contribution to local communities in
72-75
New Zealand
Non-GRI KPIs* Number of community fund grants in
72
New Zealand
Public policy
GRI 3: Material Topics 2021
3-3
Management of material topics
41, 106-109
GRI 415: Public Policy 2016
415-1
Political contributions
Pipeline of generation options
3-3
Management of material topics
75, 106-109
GRI 3-3
Management of material topics
56, 106-109
GRI 405: Diversity and Equal Opportunity 2016
EU10**
Planned capacity against demand
51
405-1
405-2
Diversity of governance bodies
and employees
66, 68-69
Ratio of basic salary and
remuneration of women to men
69
Local communities
GRI 3: Material Topics 2021
3-3
Management of material topics
75, 106-109
GRI 413: Local Communities 2016
Plant performance
GRI 3-3
Management of material topics
56, 106-109
EU30**
Plant availiability factor
33
Financial performance
GRI 3-3
Management of material topics
88, 106-109
Non-GRI KPIs*
Various financial measures
26
* Non-GRI – some material topics and disclosures listed above are additional or alternatives to those covered in the GRI Standards.
** Disclosures starting with “EU” are from the Electric Utilities G4 Sector Disclosure.
1 9 9
MERIDIAN INTEGRATED REPORT 2022GRI STANDARDS CONTENT INDEX MATERIAL TOPICS AND ASSOCIATED DISCLOSURES
Pg #
Comment
MATERIAL TOPICS AND ASSOCIATED DISCLOSURES
Pg #
Comment
Financial impacts of hydrology
Electricity pricing
GRI 3-3
Management of material topics
56, 106-109
GRI 3-3
Management of material topics
Non-GRI KPIs*
Financial implications of variability
in hydrology
26, 113
Action on climate Change
GRI 3-3
Management of material topics
41, 56, 75,
106-109
Non-GRI KPIs*
Proportion of Meridian Group generation
from renewable resources
13
Non-GRI KPIs*
Support for customers’ climate actions
23-24,
52-56
Non-GRI KPIs*
Support for our people’s climate actions 23-24, 56
Non-GRI KPIs* Operational emissions reduction target
23-24
Non-GRI KPIs*
Price of electricity in NZ compared
to other OECD countries
Non-GRI KPIs* Customer sales volume
Support for vulnerable customers
26, 113
74
85
GRI 3-3
Management of material topics
75, 106-109
Non-GRI KPIs* Disconnections
74
See also Meridian’s Climate
Action Plan at meridianenergy.
co.nz/about-us/investors/
sustainability
Process safety
GRI 3-3
Management of material topics
75, 106-109
Non-GRI KPIs* Actions to improve process safety
63
Employee engagement
Dam safety
GRI 3-3
Management of material topics
75, 106-109
Non- GRI KPIs*
Employee engagement surveys
66
Customer satisfaction
GRI 3-3
Management of material topics
75, 106-109
Non-GRI KPIs*
Level of Customer satisfaction –
Brand monitor
Non-GRI KPIs* Customer retention rates
85
85
GRI 3-3
Management of material topics
75, 106-109 TCFD report at
meridianenergy.co.nz/about-
us/investors/sustainability/
climate-disclosures
Corporate Governance
Statement meridianenergy.
co.nz/investors/governance
Non-GRI KPIs* Actions to improve dam safety
63
Information security
GRI 3-3
Management of material topics
88, 106-109
Non-GRI KPIs* Actions to improve information security
54
2 0 0
* Non-GRI – some material topics and disclosures listed above are additional or alternatives to those covered in the GRI Standards.
MERIDIAN INTEGRATED REPORT 2022GRI STANDARDS CONTENT INDEX Directory
Registered office
Meridian Energy Limited
287-293 Durham Street North
Christchurch Central
Christchurch 8013
New Zealand
PO Box 10840
The Terrace
Wellington 6143
New Zealand
T +64 4 381 1200
F +64 4 381 1201
Offices
Level 11, NTT Tower
157 Lambton Quay
Wellington, 6011
PO Box 10840
The Terrace
Wellington 6143
New Zealand
T +64 4 381 1200
F +64 4 381 1201
Quad 7, Level 2
6 Leonard Isitt Drive
Auckland Airport
Auckland 2022
New Zealand
PO Box 107174
Auckland Airport
Auckland 2150
New Zealand
T +64 9 477 7800
287-293 Durham Street North
Christchurch Central
Christchurch 8013
New Zealand
PO Box 2146
Christchurch 8140
New Zealand
T +64 3 357 9700
Corner of Market Place
and Mackenzie Drive
Twizel 7901
New Zealand
Private Bag 950
Twizel 7944
New Zealand
T +64 3 435 9393
Flux Federation offices
Suite 1, Level 3
104 Fanshawe Street
Auckland 1010
New Zealand
5th Floor
125 Colmore Row
Birmingham B3 3SD
United Kingdom
Powershop
427 Queen Street
Masterton 5810
PO Box 392
Masterton 5810
T +64 0800 1000 60
Share Registrar New Zealand
Computershare
Investor Services Limited
Level 2
159 Hurstmere Road
Takapuna
Auckland 0622
New Zealand
Private Bag 92119
Victoria Street West
Auckland 1142
New Zealand
T +64 9 488 8777
F +64 9 488 8787
enquiry@computershare.co.nz
investorcentre.com/nz
Share Registrar Australia
Computershare
Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford
VIC 3037
Australia
GPO Box 3329
Melbourne VIC 3001
Australia
T 1800 501 366 (within Australia)
T +61 3 9415 4083 (outside Australia)
F +61 3 9473 2500
enquiry@computershare.co.nz
Auditor
Mike Hoshek, Partner
Financial audit on behalf of
the Office of the Auditor-General
Jason Stachurski
GRI Standards limited assurance
Deloitte Limited
PO Box 1990
Wellington 6140
New Zealand
Banker
Westpac Wellington
New Zealand
Directors
Mark Verbiest, Chair
Mark Cairns
Graham Cockroft
Jan Dawson
Michelle Henderson
Julia Hoare
Nagaja Sanatkumar
Tania Simpson
Executive Team
Neal Barclay, Chief Executive
Chris Ewers
Lisa Hannifin
Nic Kennedy
Tania Palmer
Bharat Ratanpal
Mike Roan
Claire Shaw
Jason Stein
Guy Waipara
Jason Woolley
If you have any questions
or comments, please email
investors@meridianenergy.co.nz or
service@meridianenergy.co.nz
meridian.co.nz
Meridian Energy Limited. Integrated Report 2022.