Water Stewardship

Dependencies

Through these processes we have identified the following dependency related water risks:

• Meridian currently has rights to use water in the Waitaki and the Manapōuri catchments as set out in the resource consents held by the company. Those consents are time bound and impact on current and future water quantities available.
• Weather related patterns (including El Niño and La Niña), seasonable variability and climate change impacting on the reliability of water flow.
• Meridian’s Climate Related Disclosure (CRD) outlines Meridian’s Governance, Risk Management, Strategy, and Metrics and Targets related to climate-related risks and opportunities. Meridian’s short, medium and long term risk planning horizons are set out, as are Meridian’s climate scenarios, methodology and assumptions, and climate considerations in asset management. Physical risks identified in the CRD that may have potential impacts on future water access include PR2 - Changing seasonal weather patterns increases hydro inflow volatility and PR3 – Increased severe weather events could damage assets and infrastructure. Their risk assessment, current and future impacts and management actions are outlined in the CRD.
• Upstream water users, including irrigators and Tekapo A and B asset owners that can affect the amount of water available for hydro operations downstream.

Impacts (including those on local stakeholders)

Meridian’s hydro generation impacts on water quantity and availability which results in adverse impacts on ecological values and other water users.

Stakeholder engagement is a key aspect to addressing water related challenges. Engagement occurs during the consenting process and via ongoing activities which include:

• Regular reporting, flood management and engagement with Environment Canterbury and Environment Southland and the Guardians of Lakes Manapōuri, Te Anau & Monowai.
• Ngāi Tahu - South Island iwi Ngāi Tahu are the tangata whenua of the area where our Manapōuri and Waitaki hydro schemes are located. Meridian and Ngāi Tahu invest time and effort in understanding each other’s views and long term aspirations, particularly in regard to water management issues, including mahinga kai. Ngāi Tahu play an integral role in the eel trap and transfer activities in the Waitaki and Manapōuri catchments.
• Flow and lake level information provision to recreational water users.
• Ongoing communication and management of lake Ruataniwha with South Island Rowing.
• Monitoring activities in conjunction with Salmon farms operators.
• Involvement on Government-led initiatives for invasive aquatic organisms

There are also a number of positive water-related impacts that arise through Meridian’s operations beyond the generation of renewable energy. For example: the historical creation of Waitaki catchment lakes and canals that provide many recreational opportunities for boating, fishing, and camping; recreational flow releases in the Lower Waiau River; and, the creation of ponds accessible for rural fire fighting (e.g. Harapaki Wind Farm).

In addition to these engagement activities every year, Meridian completes a materiality assessment of our impacts (both positive and negative and actual and potential) on the environment, society and the economy. Every second year this included feedback from external stakeholders including asset communities via a Stakeholder Research Project.

Our material impacts (outlined in our annual report) which align to our water risks include

1. Meridian directly impacts the health of certain river systems as a result of modified water flows caused by hydro structures and water management
2. Meridian directly impacts the cultural wellbeing of some iwi and their relationship with the land, water, biodiversity and other taonga through the construction and operation of generation assets
3. Meridian has a net negative impact on natural ecosystems around its assets and lands that it owns
4. Meridian has a direct ability to enhance New Zealand's security of supply through how we manage operational risks related to natural disasters and climate change (e.g. dry year water shortages, excess water and physical damage to generation infrastructure)

Water risk management measures

Meridian closely manages water related risks via a number of measures which include;

• Engagement with stakeholders to manage water resources, including regional councils for the catchments where our hydro schemes are located and other industry participants.
• Monitoring weather forecasts, including impacts to water levels and snow pack and adjusting operations during times of restricted and extreme water flows.
• Monitoring river and lake erosion, including sediment
• Participation in district and regional council planning processes that guide regulatory responses to water quantity and quality matters
• Extensive monitoring of physical conditions and biological indicators in Doubtful Sound
• Ensuring monitoring of water quality for impacts at the outlet of the facilities oil interceptors and sumps on a monthly basis, these are reported to our Environmental team and external Authorities
• Releasing of flushing flows into rivers to flush weed growth and which helps maintain cleaner waterways
• Surveillance and eradication of high risk invasive aquatic weeds in lakes and canals associated with our hydroelectric schemes

Potential changes impacting water related risks (including regulatory change)

There is a risk that Meridian’s access to water could be compromised either through a change in regulations, resource consent conditions being changed or through precedents set in the Court. Water policy reform could lead to charges for the use of water, taxes, trading and auctions for water rights, with compliance costs also increasing. The amount of water that Meridian has access to may be reduced. This could be through: increased levels of minimum flow for certain rivers through regulation or local resource consent changes; other users being granted greater access to water via future re-consenting processes; or other users paying for the use of water removing it from Meridian’s generation catchments. This may also entail additional costs for changes to Meridian infrastructure to deliver flows.

Consent changes also have the potential for increased monitoring around the accuracy of gauges, thus impacting positively on future water quality. Future water quality could also be impacted via changes in land use around lakes if that was to alter nutrient levels.

We continue to monitor changes which may have the potential to have an impact on our water related risks. Meridian actively takes part in many regulatory policy and planning processes where these may, among other things, impact on Meridian's current and future access to water for hydrogeneration energy. Refer www.meridianenergy.co.nz/about-us/investors/reports/submissions.

Risk Reporting

Water related risks are reported to the Audit & Risk Committee in line with our Risk Management Policy and Framework. Refer to our Corporate Governance Statement where the following enterprise risks related to water are included:

- 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

Catastrophic event – such as a major earthquake, fire, flood, cyclone, explosion or act of terrorism affecting Meridian’s power stations.

Access to water – restrictions, conditions or costs related to Meridian’s use of and access to water

Legislative and regulatory risk – changes to public policy that lead to amendments to legislation or regulation, including electricity regulation, changes in policies to support renewable energy, and new or amended environmental regulations.