Meridian Energy and New Zealand's Aluminium Smelter (NZAS) have signed a package of conditional 20-year contracts for part of the NZAS Tiwai Point aluminium smelter's electricity needs. The package includes a long-term fixed price contract for wholesale electricity price cover and a significant demand response agreement. Meridian Energy Chief Executive Neal Barclay says the agreement is an excellent result after many years of hard work.

Meridian will now consider implications on future pipeline investment and dividend policy. An update on the dividend policy can be expected at Meridian's full year results briefing in late August. Key terms of the long-term contracts include: 377 MW base load volume from 2025 pricing that begins 1 July 2024 with a 20-year term, up to and including 31 December 2044 four demand response options, ranging from 25 MW to 185 MW - an upper limit that roughly equates to one of Huntly's Rankine units.

Three quarters of a called option will come off Meridian's contracted volume A maximum of approximately 800 GWh of demand response is available in any given year, with an average of approximately 400 GWh per annum over the 20-year term of the contract. This will be valuable during periods of low lake inflows, providing critical dry year cover to the electricity system. The new arrangements will replace all the current arrangements between Meridian and NZAS, with the current arrangements terminating when the new arrangements take effect.

The contracts are conditional on satisfaction of conditions precedent, which include regulatory approval from the Electricity Authority. If approval is given, the contracts will take effect from the later of 1 July 2024 and the date Meridian confirms to NZAS that all conditions precedent are satisfied or waived. If conditions precedent are not all satisfied or waived before 31 December 2024, the contracts will not come into effect.