Meridian Energy : Core Agreement Confirmation dated 30 May 2024

CONFIRMATION - ELECTRICITY AGREEMENT (CORE AGREEMENT)

To:	Chris Blenkiron
	General Manager
	New Zealand Aluminium Smelters Limited
Address/Email:	1530 Tiwai Road
	Tiwai Point
	Invercargill 9877

From:	Chris Ewers
	Meridian Energy Limited
Address/Email:	287, 293 Durham Street North, Christchurch Central City,
	Christchurch 8013

Date:

30 May

2024

1. GENERAL

1. This Confirmation supplements and forms part of the 2002 ISDA Master Agreement and Schedule, dated on or about the date of this Confirmation ("Agreement"), between you and us. All provisions contained in the Agreement govern this Confirmation except to the extent as expressly modified below. A reference to "Party A" in this Confirmation is a reference to Meridian Energy Limited and a reference to "Party B" is to New Zealand Aluminium Smelters Limited.
2. The purpose of this document is to confirm the terms and conditions of the transaction entered into between us on the Trade Date specified below ("Transaction"). This document constitutes a "Confirmation" as referred to in the Agreement.
3. The parties agree that, with effect from the Effective Date:
4. 1. the Electricity Agreement is terminated, except:
   2. 1. as provided in clause 12.10 of the Electricity Agreement (other than clauses 7.9A-7.9E of the Electricity Agreement which shall not apply in respect of a month if the Clearing Manager does not issue a First Payer Invoice in relation to that month); and
      2. for clause 5.1 of the Electricity Agreement which shall continue to apply for each Half Hour until (and including) the Half Hour that ends immediately before the Effective Date; and

1. 1. the process in clause 12.9 of the Electricity Agreement shall be followed as if references to "Expiry Date" are references to the "Effective Date" under this Confirmation, except:
   2. 1. that clause 12.9(a) of the Electricity Agreement shall not apply; and
      2. clause 12.9(b) of the Electricity Agreement shall be applied subject to paragraph 1.3(a)(ii).
2. On or before the date which is 3 Business Days before the Effective Date the parties shall sign a notice to the Clearing Manager in the form of the notice set out in Appendix 3. On receipt of the signed notice, Party A shall send the notice to the Clearing Manager on behalf of the parties, copying Party B.
3. On the Effective Date Party A shall, upon being reasonably satisfied that all amounts of whatever nature that are due and payable to Party A on or before the Effective Date under the Electricity Agreement and each Surety described below (other than contingently) have been paid in full, deliver the following documents to Party B or its nominated lawyers:
4. 1. the bank demand guarantees issued by ANZ Bank New Zealand Limited with
      instrument numbers and and
   2. a signed release of the deed of guarantee and indemnity dated 29 November 2016 between Sumitomo and Party A.
5. In this paragraph 1, "First Payer Invoice", "Half Hour" and "Surety" have the meanings given to them in the Electricity Agreement, and other defined terms in the Electricity Agreement shall continue to apply to the extent necessary to give effect to paragraphs 1.3 and 1.7.
6. Party B shall, on each date on which an amount becomes payable to Party A under clause 7 or clause 25 of the Electricity Agreement on or after the Effective Date ("relevant amount"), pay to Party A an amount equal to the relevant amount ("equal amount") and, if Party B pays an equal amount to Party A under this paragraph 1.7, the payment shall discharge Party B's obligation to pay the relevant amount under the Electricity Agreement.
7. The Trade Date is the date specified in the table on Page 1.
8. For the purposes of Subpart 7 of Part 13 of the Code, the parties agree that nothing in the Agreement shall be construed as a restriction on Party B's ability to on-sell any unused megawatt quantities without Party B being subject to any worse terms than if it had consumed the relevant quantity itself.

2. DEFINITIONS

Aluminium Business means a business that:

1. owns an aluminium smelter with an expected remaining operating life of the greater of:
2. 1. the Term of this Confirmation having regard to the rights of Party B under paragraph 6.1(b); and
   2. 10 years;
3. purchases alumina, electricity and other goods and resources;
4. processes alumina into aluminium at a smelter that it owns; and

1. sells the aluminium it produces.

Best Endeavours means:

1. in relation to Party A, the endeavours that would be applied by Party A acting without reference to electricity prices and as a Best Practice Generation Business, doing everything which Party A could reasonably and safely be expected to do so acting and as such, as soon as it is possible to do so, in order to restore the actual ability of the Underlying Generation Assets to generate at no less than Normal Generation.
2. in relation to Party B, the endeavours that would be applied by Party B acting without reference to aluminium prices or electricity prices and as a Best Practice Aluminium Business, doing everything which Party B could reasonably and safely be expected to do so acting and as such, as soon as it is possible to do so, in order to restore the actual ability of the Smelter to Consume at or above Normal Consumption.

Best Practice Aluminium Business means an Aluminium Business whose standard of performance and operation (including as to safety) is equal to or better than that generally recognised by businesses operating elsewhere in the world as best practice for Aluminium Businesses comparable to the Smelter.

Best Practice Generation Business means a generation business ("Generation Business") whose standard of performance and operation (including as to safety) is equal to or better than that generally recognised by businesses operating elsewhere in the world as best practice for Generation Businesses comparable to the Underlying Generation Assets.

Business Day means any day other than a Saturday, Sunday or statutory public holiday in Wellington or Invercargill, New Zealand.

Clearing Manager means Energy Clearing House Limited.

Consume or Consumption means the consumption of electricity at the Grid Reference Point by Party B in connection with the smelting of alumina and for related purposes (including the production and processing of aluminium and related products).

Demand Response Agreement means the agreement entered into by the parties on or about the date of this Confirmation that is headed "Demand Response Agreement".

Effective Date means the date on which the Transaction evidenced by this Confirmation takes effect, as described in paragraph 3.1(a) below.

Electricity Agreement means the electricity agreement dated 1 October 2007 (as restated on 31 July 2015 and amended by letters dated 22 March 2016, 27 April 2018, 30 April 2018 and 24 December 2020 (countersigned on 13 January 2021)) between Party A and Party B.

Force Majeure Event means any event or circumstance which:

1. is beyond the affected party's reasonable control (but does not include any event or circumstance that results from a lack of, or inability to use, money or available funds); and

1. has one or both of the following actual consequences:
2. 1. in the case of Party A as the affected party, a reduction in its actual ability to generate electricity at its Underlying Generation Assets, taken as a whole, by 21% or more over a period of 240 consecutive Calculation Periods compared to Normal Generation which could not reasonably have been avoided or overcome by Party A by applying Good Electricity Industry Practice; or
   2. in the case of Party B as the affected party, a reduction in its actual ability to Consume by an average of 95 MWh per Calculation Period or more over a period of 240 consecutive Calculation Periods compared to Normal Consumption which could not reasonably have been avoided or overcome by Party B by applying Good Aluminium Industry Practice; and
3. is not caused or contributed to by the affected party's negligence or the negligence of any of the affected party's contractors.

For the avoidance of doubt, any loss of price protection under a contract will not be an event that has the consequence of reducing Party B's actual ability to Consume for the purposes of paragraph (b)(ii) of this definition.

Force Majeure Notice means, in relation to a Force Majeure Event, a written notice in the form of Appendix 2 to this Confirmation, given by the affected party to the other party giving full particulars of the Force Majeure Event, including:

1. the date and time that the Force Majeure Event started;
2. the nature of the Force Majeure Event;
3. the anticipated impact of the Force Majeure Event;
4. the steps the affected party is planning on taking to restore Consumption or Generation to Normal Consumption or Normal Generation (as applicable); and
5. the expected duration of the Force Majeure Event.

Force Majeure Start Date has the meaning set out in paragraph 4.5.

Good Aluminium Industry Practice means the exercise of that degree of skill, care, diligence, prudence, methods, practices, processes, workmanship and use of materials and equipment that would be reasonably expected from a skilled and experienced person who is engaged in carrying on the same type of activity under the same or equivalent circumstances and in the aluminium smelting sector.

Good Electricity Industry Practice means the exercise of that degree of skill, care, diligence, prudence, methods, practices, processes, workmanship and use of materials and equipment that would be reasonably expected from a skilled and experienced person who is engaged in carrying on the same type of activity under the same or equivalent circumstances and in the New Zealand electricity sector.

Hedge Settlement Agreement means the hedge settlement agreement dated on or about the date of this Confirmation between Party A, Party B and the Clearing Manager.

Manapouri Power Station means Party A's power station located within the Fiordland National Park.

Normal Consumption means, in relation to a Force Majeure Event affecting Party B, the average Consumption of the Smelter per Calculation Period (expressed in Units per Calculation Period) over the 60 day period immediately preceding the day that the Force Majeure Event started as set out in the Force Majeure Notice, provided that the 60 day period shall exclude any day on which an event giving rise to any Force Majeure Event is claimed by Party B to have occurred and was continuing. If any Calculation Period during that 60 day period falls during a DR Period, Ramp-Up Period, Paused Period or Ramp-Down Period (as those terms are defined in the Demand Response Agreement), when calculating Normal Consumption, the actual Consumption will be increased by the Gross Reduction achieved in that Calculation Period. For the purposes of this definition, "Gross Reduction" means, in respect of a Calculation Period, M - D, where "M" and "D" have the meanings given to them in the definition of Actual Reduction in the Demand Response Agreement.

Normal Generation means, in relation to a Force Majeure Event affecting Party A on a particular day and the Underlying Generation Assets on that day, the average generation of those Underlying Generation Assets per Calculation Period (expressed in Units per Calculation Period) on each Clear Day in each of the following periods:

1. the period that commences on the day that is the lesser of 45 days and 30 Clear Days before the day that is 1 year prior to that day and ends on the day that is the lesser of 45 days and 30 Clear Days after the day that is 1 year prior to that day;
2. the period that commences on the day that is the lesser of 45 days and 30 Clear Days before the day that is 2 years prior to that day and ends on the day that is the lesser of 45 days and 30 Clear Days after the day that is 2 years prior to that day; and
3. the period that commences on the day that is the lesser of 45 days and 30 Clear Days before the day that is 3 years prior to that day and ends on the day that is the lesser of 45 days and 30 Clear Days after the day that is 3 years prior to that day,

where a "Clear Day" is a day on which no Force Majeure Event is claimed by Party A as having occurred and was continuing, provided that, if there are no Clear Days under any of paragraphs (a), (b) or (c) above, Normal Generation shall be deemed to be 684 Units per Calculation Period or such other amount Party A has notified to Party B to take account of changes to the Underlying Generation Assets since the Trade Date.

NZAS Entities means the entity or entities that are the shareholder(s) of Party B.

Restoration Date means, in relation to a Force Majeure Event:

1. in the case of a Force Majeure Event affecting Party A, the time at which the generation of electricity at the Underlying Generation Assets could again be at Normal Generation for a period of no less than 240 consecutive Calculation Periods if Party A had used Best Endeavours to so restore; or
2. in the case of a Force Majeure Event affecting Party B, the time at which the actual ability to Consume could again be at Normal Consumption for a period of no less than 240 consecutive Calculation Periods if Party B had used Best Endeavours to so restore.

Smelter means the aluminium smelter and associated facilities (as may from time to time exist) located on the Tiwai Peninsula, New Zealand, currently owned and operated by Party B.

Sumitomo means Sumitomo Chemical Company, Limited.

Underlying Generation Assets means, as at any date, each of Manapouri Power Station, the stations in the Waitaki Power Scheme and any other generation stations that Party A and Party B agree in writing to be an Underlying Generation Asset, in each case that are owned by Party A on that day.

Waitaki Power Scheme means Party A's power stations referred to as Ohau A, Ohau B, Ohau C, Benmore, Aviemore and Waitaki, located in the Waitaki Valley.

3. TRANSACTION

3.1 Term:

1. Effective Date: The later of 00:00 hours on 1 July 2024 and 00:00 hours on the fourth Business Day following the date on which Party A confirms to Party B that all of the conditions specified in Appendix 1 to this Confirmation as being "Party A conditions precedent" have been met or waived provided that, if:
2. 1. the "Party A conditions precedent" specified in Appendix 1 to this Confirmation have not been met or waived on or before 31 December 2024; or
   2. the "Party B conditions precedent" specified in Appendix 1 to this Confirmation have not been met or waived before the date on which Party A confirms to Party B that all "Party A conditions precedent" have been met or waived,

the Effective Date shall not occur and the Agreement will immediately terminate and be of no further effect, and the Transaction shall not come into existence.

1. 1. The parties acknowledge that:
   2. 1. the Party A conditions precedent are included solely at the request, and for the benefit, of Party A and may be waived by Party A in its absolute discretion at any point in time; and
      2. the Party B conditions precedent are included solely at the request, and for the benefit, of Party B and may be waived by Party B in its absolute discretion at any point in time.
   3. The parties shall keep each other apprised in a timely manner as to progress with satisfaction of their respective conditions.
   4. Termination Date: 23.59 hours on 31 December 2044, unless terminated earlier in accordance with the Agreement.
2. Grid Reference Point: TWI2201.
3. Notional Quantity: The Notional Quantity for the Transaction will be:
4. 1. for each Calculation Period falling during the period from (and including) the Effective Date to (and including) 23.59 hours on 31 December 2024, 236 Units per Calculation Period; and
   2. for each Calculation Period falling during the period from (and including) 00:00 hours on 1 January 2025 to (and including) the Termination Date, 188.5 Units per Calculation Period,

in each case, subject to any adjustment in accordance with paragraphs 4 and 5.

1. For the purposes of the Transaction:
2. 1. Party A is the Floating Price Payer; and
   2. Party B is the Fixed Price Payer.
3. Calculation of Fixed Amount: The Fixed Amount payable in respect of each Settlement Period shall be calculated and paid in accordance with Part 5(2)(3) of the Schedule to the Agreement except for the first Settlement Period. In relation to the first Settlement Period, the Fixed Amount will be calculated as though paragraph (a) of Part 5(2)(3) of the Schedule to the Agreement was replaced with the following:

"A Fixed Amount shall be equal to the aggregate of:

1. the amount calculated in accordance with the formula set out in Article 5 of the 2005 Definitions (defined in the Schedule to the Agreement) in respect of each Calculation Period in each day during the Settlement Period; and
2. where the Effective Date falls after 1 July 2024 and on or before 31
   December 2024, an amount equal to the product of NZ$ multiplied by the number of days from (and including) 1 July 2024 to (but excluding) the Effective Date.

The aggregate amount shall be paid by the Fixed Price Payer to the Floating Price Payer on the Settlement Date for that Settlement Period."

1. Fixed Price: In relation to each Calculation Period during a Settlement Period, the Fixed
   Price is equal to $ , as adjusted in accordance with paragraph 3.7 below.
2. Adjustment of Fixed Price: With effect from 1 January in each calendar year of the Term, commencing on 1 January 2028, if the Avg LME Price for the LME Reference Periody is greater than the Avg LME Price for the LME Reference Periody-1, the Fixed Price shall be adjusted in accordance with the formula below, calculated to four decimal places:

= + ( )

Where:

⬚ = the adjusted Fixed Price to have effect from 1 January in the relevant calendar year

⬚ = the Fixed Price as originally specified in paragraph 3.6 or, if the Fixed Price has previously been adjusted in accordance with this paragraph 3.7, the Fixed Price as at the end of the Reference Periody.

CPI Escalatory means an escalator in accordance with the formula:

Reference CPIy − 1

Base CPI

provided that, if the CPI Escalatory for any year is less than zero, the CPI Escalatory for that year shall be equal to zero.

Reference CPIy	=	the CPI most recently published in respect of the Reference
		Periody;
Base CPI	=	the CPI most recently published in respect of the period ending on
		30 September in the calendar year prior to the relevant Reference
		Periody;
Reference Periody =	in relation to an adjustment to apply from 1 January of any year
		(yeary), is the period ending on 30 September in the year
		immediately preceding that year; provided that if, at the date of

calculation, CPI has not been published in respect of Reference Periody, then:

(a) CPI Escalatory shall be calculated by substituting for such Reference Periody the immediately preceding date on which CPI for a 12 month period has been published; and

(b) any subsequent publication of CPI for such Reference Periody shall be treated as a revision of the relevant CPI under paragraph 3.12.

where:

y = the calendar year in respect of which the Base Price is being adjusted.

the "Avg LME Price" means, in relation to any period, the average of the NZ Dollar Equivalent of the LME Price for each day of that period on which the London Metal Exchange was open for trading.

"BFIX Rate" means, in relation to a day:

1. the mid-rate for NZD/USD displayed on the Bloomberg FX Fixing Page for conversion between NZD and USD at or about 2pm (New Zealand time) on that day; or
2. if the BFIX Rate cannot be determined in accordance with paragraph (a), the NZD/USD mid-rate at or about 11:10am (New Zealand time) for that day published by the Reserve Bank of New Zealand in its B1 Exchange Rate series,

provided that if the BFIX Rate cannot be determined in accordance with either paragraph (a) or (b), the parties shall agree a substitute method of determining an exchange rate for conversion between NZD and USD for a day that most closely reflects the average of the spot mid-rate of exchange provided by 3 major New Zealand trading banks selected by the parties for New Zealand foreign exchange market transactions in NZD/USD at or about 2pm on the relevant day.

"CPI" means the "Consumers Price Index (All Groups)" published by the Government Statistician or, if that index ceases to be published, any measure certified by the Government Statistician as being equivalent to that index.

"LME Price" means, in relation to a day the official price in US dollars per tonne (rounded to 5 decimal places) recorded at the end of the second ring of the aluminium metal in the first session of the London Metal Exchange for the cash seller and settlement price on that day.

"LME Reference Periody" means, in relation to an adjustment to apply from 1 January of any year, the 12 month period ending on 30 September in the year immediately preceding that year.

"LME Reference Periody-1" means, in relation to an adjustment to apply from 1 January of any year, the 12 month period ending on 30 September in the year prior to the immediately preceding year.

"NZ Dollar Equivalent" means, in relation to an amount denominated in US dollars, the NZ dollar equivalent of the amount determined using the BFIX Rate.

"Government Statistician" has the meaning set out in section 13 of the Statistics Act 1975.

3.8 Alternative LME Price: If at any time the London Metal Exchange publishes official prices for low-carbon aluminium or the London Metal Exchange no longer exists or does not publish official prices for aluminium (either temporarily or permanently) or the time at which the official price is recorded changes, the LME Price will be the official price per tonne of aluminium determined in accordance with such mechanism that the Calculation Agent determines. In making this determination, the Calculation Agent:

1. will act in good faith and in a commercially reasonable manner; and
2. may consult with such sources of market practice as it considers.

The Calculation Agent will promptly notify the other party of the alternative reference rate after having made its determination.

3.9 If the party that is not the Calculation Agent disputes the Calculation Agent's determination of the alternative reference rate in accordance with paragraph 3.8 then Negotiated Fallback shall occur as if a Market Disruption Event had occurred, and if:

1. Negotiated Fallback does not produce an agreement within the specified period; and
2. the parties do not agree to refer the matter to arbitration under the Arbitration Act 1996,

No Fault Termination will apply.

3.10 Linking to rebased Consumers Price Index (All Groups): If, at any time, the then-existingConsumers Price Index (All Groups) ("Old Index") is rebased, or is otherwise amended, such that the movement in CPI between any period in Old Index and any period in the rebased or amended Old Index ("New Index") does not accurately reflect the underlying rate of price change between those periods, then Old Index and New Index shall be linked as set out below, so that references in this Confirmation to CPI shall, with respect to any period:

1. prior to the Link Period, be a reference to CPI of Old Index for that period multiplied by the Link Factor; and
2. from and after the Link Period, be a reference to CPI of New Index for that period,
   where:

Link Period	=	the latest period for which both Old Index was published and New
		Index was published;
Old CPI	=	the CPI of Old Index for the Link Period;
New CPI	=	the CPI of New Index for the Link Period; and
Link Factor	=	New Index	(expressed to 5 decimal places).
		Old Index

1. If a Link Period cannot be determined under paragraph 3.10 then a method of linking Old Index and New Index, so that the movement in CPI between any period in Old Index and any period in New Index accurately reflects the underlying rate of price change between those periods, shall be resolved as a Dispute under paragraph 8.1(d), and that method shall be applied in interpreting references to CPI under this Confirmation.
2. Revisions to CPI: If, at any time, the Government Statistician publishes CPI later than expected or publishes a revision to any CPI that would, had that CPI or revised CPI, as the case may be, been available at the time of calculation of the relevant invoice, have resulted in a different amount being payable from any amount already invoiced under this Confirmation then the Calculation Agent shall advise the other party of the amount of that difference and the identity of the party required to pay that difference to the other. The party obliged to make the payment shall then pay that amount within five Business Days of such notification.
3. Settlement Date:
4. 1. In respect of a Settlement Period and a Fixed Amount payable by Party B for that Settlement Period, the later of:
   2. 1. the 17th day of the month following that Settlement Period; and
      2. if Party B has not actually received from Party A (as Calculation Agent) by the 15th day of the month following that Settlement Period an invoice or statement detailing the aggregate of the Fixed Amounts and Floating Amounts in respect of that Settlement Period, the date falling 5 days after the date on which Party B actually receives such statement or invoice.
   3. In respect of a Settlement Period and a Floating Amount payable by Party A for that Settlement Period:
   4. 1. if paragraph 3.13(a)(i) applies, the 18th day of the month following that Settlement Period; or
      2. if paragraph 3.13(a)(ii) applies, the Business Day following the day determined in accordance with clause 3.13(a)(ii),

provided that Party A's obligation to pay the Floating Amount for a Settlement Period only arises if Party B has paid, and Party A has received, the Fixed Amounts payable in accordance with paragraph 3.13(a).

Party B shall issue to Party A an invoice for the Floating Amount (as calculated by the Calculation Agent) payment.

1. If an amount is owed by a party ("Party X") under the Hedge Settlement Agreement for a Settlement Period ("HSA amount") then the discharge of Party X's obligation to pay the HSA amount to the Clearing Manager in accordance with the Code shall automatically satisfy and discharge Party X's obligation to pay an amount to the other party under paragraph 3.13 in respect of the Transaction for that Settlement Period ("Transaction amount") to the extent of an amount equal to the lesser of (i) the HSA amount and (ii) the Transaction amount. If the HSA amount owing by Party X for a Settlement Period exceeds the Transaction amount payable by Party X for that Settlement Period then, provided Party X's obligation to pay the HSA amount to the Clearing Manager has been discharged in accordance with the Code, the other party shall pay to Party X on the related Settlement Date the difference between the HSA amount and the Transaction amount.