2018 a Year in Review

2018 A year in review MainPower New Zealand Limited is your electricity distributor On behalf of the communities of Looking ahead, MainPower is North Canterbury, MainPower committed to contributing towards owns, maintains and operates the a bright future for the region by poles, wires, substations and other delivering an electricity network that network equipment that deliver is ready for the future. electricity safely to your homes, The energy sector is facing schools and businesses. significant change; from the MainPower has been a part of North uptake of solar photovoltaic (PV) Canterbury for almost 90 years. technology, to the electrification of Our staff of 149 dedicated field and the nation’s vehicle fleet and moves office-based workers are proud of towards a low carbon economy, the contribution they make to the our customers’ energy needs are region every day. changing. We are not only a key service While our core business focus provider but also play an important remains providing a safe, secure role in making North Canterbury and reliable power supply to our a great place to live and work. customers, MainPower is also In the past year, MainPower has taking steps to ensure our network sponsored around 40 community- is ready to meet the demands of the led initiatives through our future. community support programme. Financial Highlights 2018 PROFIT BEFORE TAX $8.3 million 2018 NETWORK CAPITAL INVESTMENT $9.9 million Contents 1 Welcome MainPower by 2 the numbers 3 Chair’s Review Board of 5 Directors Chief Executive’s 7 Message 9 The Network Customers at 11 the Centre Health and 13 Safety at Work Keeping the 15 community safe 17 New Technology 19 Team MainPower Community 21 Sponsorship Financial Report 23 2018 Welcome From North of Christchurch, through the MainPower’s purpose is simple. It is our job to provide and maintain a safe and Waimakariri, Hurunui and Kaikōura districts, reliable electricity distribution network, MainPower New Zealand Limited delivers capable of powering the homes and electricity to North Canterbury. businesses in our region. Who owns MainPower? MainPower’s ownership structure is designed to benefit the people of North Canterbury. The MainPower Trust holds the ownership of MainPower New Zealand Limited on behalf of the qualifying customers*. The seven Trustees appoint MainPower’s Board of Directors, monitor the company’s performance through its Statement of Corporate Intent and regularly meet with the Directors. Consumer ownership of MainPower entitles qualifying customers to a rebate. Once a customer is connected to the MainPower network, that customer is issued with a redeemable preference share (also called a rebate share) in MainPower through which they receive a rebate and this has the effect of reducing their monthly lines charge. * Customers previously connected to the Kaiapoi Electricity Network and builders temporary supply are not deemed qualifying customers under the Trust Deed. GENERATION TRANSMISSION DISTRIBUTION RETAIL Generators produce Transpower is MainPower is one Retailers sell electricity to electricity. Around the state-owned of 29 electricity residential and business 30% of your electricity enterprise distributors or lines customers. Around 30% bill goes towards the responsible for companies in New of your electricity bill cost of generating the transmitting Zealand, responsible goes to paying costs electricity you use. electricity produced for the power lines and involved in the retail by generators. distribution networks sector (including GST). Around 10% of your in local areas. Around electricity bill goes to 26% of your electricity paying costs involved bill goes to paying in the national grid. costs involved in the local distribution of electricity. 1 MAINPOWER, BY THE NUMBERS Total number of employees 149 Number of Depots 3 Kilometers of lines and cables 5,030 Volume of electricity distributed 604 GWh* Average supply interruptions per customer during the 2017-18 year 1.60 Annual expenditure on vegetation management 640k Number of connected customers 40,624 Qualifying customer rebates $9.8 million Total assets $305 million *Gigawatt hours is a unit of energy equivalent to one million kilowatt hours (kWh) 2 Chair’s Review In last year’s Annual Report and at this time, she has been a strong advocate the Annual Meeting, we commented for the community and the Company. Her on changes that were taking place contribution has been greatly appreciated within MainPower arising from orderly by her Board colleagues. Two new succession, people deciding to move Director appointments are scheduled for on, and industry challenges. It is worth approval at the Annual Meeting. recapping what has occurred during the Bruce Emson resigned as Chief 2017/18 year involving our people. Executive, leaving the Company at the The MainPower Trust has a new Chair, end of November 2017. The extended Kevin Brookfield, who has replaced notice period allowed for a smooth Catherine McMillan. The Board transition to our new Chief Executive appreciated the always constructive Andy Lester. way we interacted with Catherine and The earthquake and climatic effects that look forward to maintaining a similar marked the 2016/17 period have been relationship with the Trust under Kevin’s largely absent and, with that, increased leadership. profits have been reported on the back of Three Board retirements flagged last higher lines revenues. This was partially year (Gill Cox, Peter Cox and Trevor Burt) offset by lower contracting revenue. occurred, leaving the Company with its Expenditure on maintenance was five current Directors. Judith Hoban is lower than budgeted as crews worked retiring at the 2018 Annual Meeting after in Central Otago assisting with urgent over 12 years as a Director. Throughout maintenance. 3 Back in North Canterbury, we undertook considering the technological and a redesign of the way we test poles and regulatory changes ahead. That process schedule work arising from that testing. has given confidence in a continuing As of the start of the 2018/19 year, we central role for MainPower in the have all staff back working in our network North Canterbury area and we are now area, with a modest and predictable pole developing more detailed plans for replacement workload as part of normal investments and changes to position us asset maintenance activities. for the future. It is the Board’s expectation that these moves should start to become The Parent Company had strong evident during the next year. operating cashflows of $20.6M which, when combined with capital expenditure The Board is looking forward to a period at a level of $9.0M (which is the Parent where, along with management, we total fixed asset additions for the can focus on strategy implementation year), meant we were able to reduce and investment for network fitness and debt to $23M at balance date. This business growth. puts the Company’s finances in a very strong position as we look towards the longer term. During the year we finished a strategic Tony King review process which was focused on Chairman the long-term viability of lines businesses MainPower New Zealand Limited 4 MainPower Board of Directors Tony King Chair Judith Hoban Janice Fredric Graeme Abbot Stephen Lewis 5 6 Chief Executive’s Message Andy Lester joined MainPower in through our community sponsorship November 2017, taking over from programme. Ranging from youth outgoing Chief Executive Bruce Emson. sports scholarships to learn to swim Welcome to MainPower’s Annual Report programmes, supporting the arts and for 2018. This is our opportunity to share sponsoring business excellence awards, a summary of our performance over the MainPower is proud to support North 2017/18 financial year and our goals for Canterbury and the people within it. the year ahead. These pleasing results were achieved by MainPower is a community-owned a team of extremely dedicated, skilled enterprise, which means that our and valuable employees who approach customers are our owners. It also their task of “keeping the power on” very means that MainPower’s success is our seriously and professionally. customer’s success. When I joined the team at MainPower last In the 2017/18 financial year, MainPower year, I found a company in transition. An has had a positive financial performance. organisational restructure was underway We have been able to provide $9.8M and the wider electricity industry was worth of rebates to our customers. We’ve starting to seriously consider the impact also been able to distribute $469,000 that new technologies will have on future to community groups and initiatives operations. 7 As we continue this journey, our company values provide guidance for how we will approach and achieve our goals. Do what’s right – we want to behave with integrity and deliver on our responsibility to provide a safe, secure electricity distribution network to the people of North Canterbury. Make it better – we want to find even more efficient ways of operating, have a positive impact on our community and be leaders in innovation and technology, Work continues within MainPower to while delivering true value to our realign the business to be in a position shareholders. of strength to meet the challenges Work together – we want to partner in that the future will hold. Our goal is to our customers’ energy futures and work partner in our customers’ energy futures. collaboratively across the New Zealand This means improving our internal energy sector to achieve great results for processes and getting to know who our the people of North Canterbury. customers are and what they want. It also means having a keen understanding of Make it happen – we want to take action emerging technologies and the impact and provide tangible results, building they will have on the network 10, 20, or towards a positive future. another 90 years down the line. As I look to the year ahead, I am confident It is our responsibility to plan for that MainPower will continue to deliver the future and develop an electricity value to our customers and will plan for distribution network that is ready for our and rise to the challenges that the future customers’ future needs.

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