A Guide to the AER's South Australian Transmission Determination for Electranet Email: [email protected]

A guide to the AER's South Australian transmission

determination for ElectraNet

April 2013

This work is copyright. Apart from any use permitted by the Copyright Act 1968, no part may be reproduced without permission of the Australian Competition and Consumer Commission. Requests and inquiries concerning reproduction and rights should be addressed to the Director Publishing, Australian Competition and Consumer Commission, GPO Box 3131, Canberra ACT 2601.

Inquiries about this document should be addressed to:

Australian Energy Regulator

GPO Box 520

Melbourne Vic 3001

Tel: (03) 9290 1444

Fax: (03) 9290 1457

2 A guide to the AER's South Australian transmission determination for ElectraNet Email: [email protected]

AER reference: [46839]

3 Contents

Contents ...... 4

Brief overview ...... 5

1 Background ...... 7

1.1 Who we are and what we do...... 7

1.2 Who ElectraNet is and what it does ...... 8

2 Consumer questions ...... 10

2.1 How does this affect you? ...... 10

2.2 What do your network charges cover? ...... 10

3 Further information ...... 18

3.1 Where to find the final decisions and other related material? ...... 18

3.2 Our consultation process ...... 18

3.3 How does the AER’s Better Regulation program impact this decision? ...... 19

4 A guide to the AER's South Australian transmission determination for ElectraNet Brief overview

ElectraNet is the principal transmission network service provider (TNSP) in South Australia. We, the

Australian Energy Regulator (AER), regulate the revenues of ElectraNet, and the revenues of all other

TNSPs in the national electricity market (NEM).

We have made a transmission determination for ElectraNet's upcoming 2013–18 regulatory control period, setting a cap on the revenue ElectraNet can recover from customers. In total, ElectraNet will recover $1578 million from its customers over five financial years, beginning on 1 July 2013. If we had accepted

ElectraNet's revenue proposal in full, it would have recovered $1609 million.

This paper is intended to give consumers a better understanding of our transmission determination for

ElectraNet. It offers an insight into what we considered, the conclusions we made and how those conclusions were reached. Background information on the NEM as a whole and our role as the NEM's economic regulator is provided.

The release of our final decision for ElectraNet follows an eleven month process beginning with ElectraNet submitting its revenue proposal on 31 May 2012. We made a draft decision in November 2012, from which

ElectraNet had 30 business days to submit a revised revenue proposal. Throughout this process we sought the views of stakeholders.

We consider our final decision arrives at an appropriate balance. ElectraNet will receive sufficient revenue to cover its costs and provide a commercial return to its investors, while consumers will not pay more than required for efficient investment in, and efficient operation and use of, ElectraNet's transmission network.

How to use this document

We have tried to make this paper accessible to a wide ranging consumer audience. However, we understand parts of our decision are inherently complex.

To account for different levels of knowledge we have layered the paper to allow readers to be more selective in what they read. For issues that may be more complex, look out for text boxes that explain the issues at a more detailed level.

5 We know from reading submissions by customer representative groups that some stakeholders already have a good understanding of our approach. For more complex and technical discussions of the issues, see section 3.1 for links to the final decision documents and other related material.

6 A guide to the AER's South Australian transmission determination for ElectraNet

1 Background

This section provides information about us and the South Australian transmission arrangements. If you are

familiar with AER processes and the industry, then refer straight to the section on 'consumer questions'.

1.1 Who we are and what we do

We are Australia’s national energy market regulator and an independent statutory authority. Our functions

are set out in national energy market legislation and rules, and mostly relate to energy markets in eastern

and southern Australia. These functions include:

. setting the prices charged for using energy networks (electricity poles and wires and gas pipelines) to

transport energy to customers

. monitoring wholesale electricity and gas markets to ensure suppliers comply with the legislation and

rules, and taking enforcement action where necessary

. publishing information on energy markets, including the annual State of the Energy Market report and

more detailed market and compliance reporting, to assist participants and the wider community

. assisting the Australian Competition and Consumer Commission with energy-related issues arising

under the Competition and Consumer Act, including enforcement, mergers and authorisations.

Specific to this review, we are responsible for the economic regulation of all transmission networks in

eastern and southern Australia.

The National Electricity Law (NEL) and National Electricity Rules (NER) set out the regulatory framework

for the NEM. Chapter 6A of the NER contains the timelines and processes for the regulation of transmission

businesses. It provides that regulated transmission businesses must periodically apply to us to assess their

revenue. Typically, this happens every five years. The application, known as a revenue proposal, starts a

process often referred to as a regulatory reset, or simply a 'reset'.

Our revenue determinations are divided into components called 'building blocks'. This is a requirement of

the NER. The sum of each building block is equal to the regulated revenue of a transmission business and,

7 together, they cover the costs of providing prescribed transmission services. They also include an incentive

mechanism to drive efficiencies. For more information on each building block see section 2.2.

1.2 Who ElectraNet is and what it does

ElectraNet operates the transmission network in South Australia. Its role is to connect generators with

demand centres in cities, towns and regional communities.

To fund its activities, which are highly capital intensive, ElectraNet levies transmission charges on its

customers; its main customer being the distribution network business in South Australia, SA Power

Networks (formerly ETSA Utilities). Those transmission charges are then passed on to almost every South

Australian household and business when they pay their final electricity bill. Figure 1.1 illustrates the

electricity supply chain and the role of ElectraNet as an operator of the transmission network.

Figure 1.1 The electricity supply chain

Source: Productivity Commission (October 2012)

8 A guide to the AER's South Australian transmission determination for ElectraNet To elaborate, the electricity supply chain begins with a wholesale market in which generators produce electricity and sell it through a central dispatch process. Because generators are typically located near fuel sources, often hundreds of kilometres away from where consumers live and work, the electricity produced by a generator needs to be transported over long distances. The most efficient way to do this is at high voltages because this minimises energy losses which naturally occur when electricity is transported. In effect, this is ElectraNet's role: it operates the high voltage transmission network in South Australia which transfers electricity, in bulk, over long distances from where it is generated to where consumers need it. In addition to SA Power Networks, ElectraNet also supplies a number of large direct connect customers.

The distribution network, operated by SA Power Networks in South Australia, connects with the principal transmission network in a region. This occurs at zone substations. While electricity moves along a transmission network at high voltages to minimise energy loss, it must be stepped down to a lower voltage before it enters a distribution network. This is so the electricity can be safely used by end-users. Distribution networks criss-cross urban and regional areas to provide electricity to every electricity consumer.

Energy retailers issue the final electricity bill a consumer receives. Their function in the supply chain is to buy electricity in the wholesale market and package it with transportation services (transmission and distribution) for sale to consumers. In South Australia, energy retailers include AGL and Origin.

2 Consumer questions

In this section we have tried to address the questions consumers may have about our transmission

determinations.

2.1 How does this affect you?

The final electricity bill a consumer receives incorporates transmission network charges. In South Australia it

is estimated that about 8 per cent of an average electricity consumer's final bill can be attributed to

1 transmission services. The other components relate to generation, distribution and retail services.

We expect our final decision for ElectraNet to have minimal impact on the average South Australian

electricity consumer's final bill. More information on how we estimated the impact on a typical electricity bill

can be found in attachment 8 of our final decision: http://www.aer.gov.au/node/16617.

2.2 What do your network charges cover?

In order to transport electricity from a generator to a power outlet in your home or business, several different

activities take place. We can divide these businesses up into four discrete sectors: electricity production,

transmission (high voltage), distribution (low voltage) and retail services.

We only control the prices charged by the transmission and distribution networks. We seek to make sure

that the businesses which operate these networks recover just enough revenue to provide a safe and

reliable delivery of electricity to household businesses, and to give investors an adequate return. In doing

this the NEL requires us to take a long-term perspective of the interests of consumers and the needs of

businesses. Our most recent determination for SA Power Networks, the South Australian distribution

network provider (formerly known as ETSA Utilities), was for a five year regulatory control period from 1

July 2010 to 30 June 2015. It can be accessed at: http://www.aer.gov.au/node/4.

1 ESCOSA, Email response to information request to the AER, Enquiry regarding average electricity bills, 17 October 2012.

10 A guide to the AER's South Australian transmission determination for ElectraNet In making an assessment of a network business's revenue requirement, we ask them to forecast how much

they expect to spend over the next five years for a number of cost categories. These cost categories are

referred to as 'building blocks' and include:

. a return on the regulatory asset base (return on capital)

. depreciation of the regulatory asset base (return of capital)

. forecast operating expenditure (opex)

. increments or decrements resulting from the efficiency benefit sharing scheme (EBSS) for opex

. the estimated cost of corporate income tax.

2.2.1 Operating expenditure

We did not accept ElectraNet's proposed total forecast operating expenditure (opex) of $466 million

($2012-13) for the 2013–18 regulatory control period and instead estimated a substitute forecast of $418

million ($2012-13). Figure 2.1 compares our substitute forecast on total opex with ElectraNet's opex

proposal.

11 2 Figure 2.1 ElectraNet's total opex–actual, revised proposal and allowance, 2003–13 ($ million,

2012–13)

100

60 $ million, 2012-13 50 40

Base-year-extrapolated forecast Step change Controllable (actual) Non-controllable (actual) Non-controllable (forecast) AER final decision Allowance Proposed

Source: AER analysis.

Opex refers to the ongoing costs of running a business. Specific to ElectraNet, opex includes activities such as field maintenance, corporate support and debt raising costs.

The largest area of difference between our determination and ElectraNet's opex proposal related to field maintenance. This is a broad cost category encompassing routine maintenance, corrective maintenance, operational refurbishment and network optimisation.

In real terms, that is, taking inflation into account, ElectraNet proposed a 57 per cent increase on its previous field maintenance allowance. We substituted this proposal with an amount representing a 27 per cent real increase.

This conclusion was reached following an assessment of ElectraNet's new asset management regime and the way in which it was implemented. We found that the transition from the old to the new regime was a costly exercise, which should be able to provide long term benefits for customers. But we think that

ElectraNet has not sufficiently factored the benefits of its new system into its regulatory proposal. We also

2 2012-13 is estimated.

12 A guide to the AER's South Australian transmission determination for ElectraNet noted ElectraNet's forecast expenditure was much higher than current levels. All this indicated to us that

ElectraNet's forecast was too high. So we developed a substitute forecast which was lower than

ElectraNet's proposal.

More broadly, ElectraNet's total opex can be divided into controllable and uncontrollable cost categories.

Controllable opex refers to costs which ElectraNet can influence through its decisions, while uncontrollable opex are those costs which ElectraNet cannot influence. Most of ElectraNet's total opex is controllable.

Our assessment of ElectraNet's forecast controllable opex in more detail

We used two methodologies to assess ElectraNet's proposed controllable opex: the revealed cost approach and a bottom-up technical review.

The revealed cost approach, also known as 'base-step-trend', involves selecting an efficient base year in

ElectraNet's historical costs and trending it forward. Costs which were not incurred in the selected base year but which are certain to occur in the 2013–18 regulatory control period were incorporated through step changes. Thus changes in circumstances from the base year are included in the forecast.

We also used a 'bottom up' technical review to assess ElectraNet's controllable opex forecast. This is where individual expenses are aggregated to determine ElectraNet's total future expenditure. Expert engineering knowledge is helpful when conducting a bottom up forecast so we engaged a technical consultant for advice

– Energy Market Consulting associates (EMCa).

Both forecasting methodologies, the revealed costs method and the bottom up technical review, arrived at a similar outcome. The revealed cost method found that ElectraNet's proposed controllable opex did not reasonably reflect the base year extrapolation plus step changes, while EMCa's bottom up forecast

3 concluded that specific areas of ElectraNet's opex proposal were higher than necessary.

3 EMCa, Technical review, November 2013, p. 29.

2.2.2 Capital expenditure

We did not accept ElectraNet's proposed total forecast capital expenditure (capex) of $750.1 million for the

2013–18 regulatory control period. We estimated a substitute forecast of $691 million, which we consider to

be enough for the efficient operation of ElectraNet's transmission network.

Capex refers to the cost of building new facilities or replacing existing infrastructure. The amount of overall

capex required will vary depending on a network provider's circumstances. Factors that influence the

required level of capex include the age and condition of existing assets, and changes in both the number of

customers connected to the network and demand profile of customers.

We considered ElectraNet's proposed capex to be 'overly cautious', in that, it did not sufficiently consider

the efficiency savings that are available. ElectraNet had not fully accounted for these in its proposed capex

so we estimated a substitute forecast.

To use a metaphor, all of ElectraNet's capex projects must pass through a series of 'gates', at the end of

which is a formal review from a panel of senior management. As projects move through each gate and

senior management suggest more prudent ways of achieving project outcomes the estimated cost of the

project ought to decrease. We have seen this trend in operation at ElectraNet over the past five years. To

account for this, as well as ElectraNet's stated commitment to continuous improvement, we applied a

prudency adjustment of 7 per cent, or $24 million.

Specific to replacement capex, ElectraNet applied for a cost estimation risk factor. If approved, this would

lead to a percentage increase to ElectraNet's total replacement capex. It stated that this was necessary to

account for forecasting errors which tend to underestimate the actual cost of replacing ageing assets. Past

practice showed ElectraNet's proposal overstated this risk. Consequently we rejected the proposal and

substituted cost estimation risk factors that accounts for ElectraNet's actions on continuous improvement.

Our assessment of ElectraNet's proposed replacement capex in more detail

Cost estimation risk factor

14 A guide to the AER's South Australian transmission determination for ElectraNet We did not accept ElectraNet's proposed cost estimation risk factor of 4.9 per cent.

A cost estimation risk factor applies to concept stage capital projects that are yet to undergo a detailed cost

4 build-up. The objective of this is to account for an asymmetric risk that unforeseen factors will lead actual project costs to exceed initial cost estimates across a portfolio of projects.

To assess ElectraNet's proposed cost estimation risk factor we engaged our technical consultant, EMCa, to

5 assess actual past cost outcomes. EMCa's detailed assessment methodology is set out in its report. In summary, it assessed the difference between ElectraNet's project concept estimates and actual costs incurred.

EMCa's analysis concluded that at the portfolio level ElectraNet incurs actual costs approximately five per cent below that of its estimates. Actual costs for replacement projects were found to come in around 15 per cent under estimated levels, while actual augmentation and connection capex project costs were about one per cent above estimates.

Therefore, past practice indicates that ElectraNet tends to overestimate the cost of capital projects. We therefore considered that a forecast inclusive of this uplift of 4.9 per cent does not meet the rule requirements of efficient and prudent capex forecast.

Prudency adjustment

We applied a prudency adjustment of 7 per cent to the replacement capex forecast. This adjustment is consistent with ElectraNet's forecast and actual capex outcomes in the current regulatory period

The principle of the AER’s prudency adjustment is that forecasts based on concept stage estimates are inefficient without sufficient consideration of prudent decision making over the regulatory control period.

In its revised revenue proposal ElectraNet did not propose capex associated with demand growth and therefore reduced its original capex proposal by $132 million ($, 2012–13). Our final decision accepts

ElectraNet's capex proposal which does not include any new demand related capex. We have also included

4 ElectraNet, Revenue proposal, pp.67-68. 5 EMCa, ElectraNet technical review – revised revenue proposal, April 2013, pp. 50–8, paragraphs 198–248.

15 11 contingent projects in our final decision. Contingent projects can assist in dealing with specific demand

uncertainty by allowing an amendment to the revenue determination if a step change in demand occurs

consistent with the trigger event.

2.2.3 Cost of capital

Significant investment is required to build a transmission network. ElectraNet raises the required investment

from banks and other investors in two ways:

1. Borrowing money from banks or other financial institutions (when a business borrows money it has to

make a promise to the lenders to pay back the borrowed funds, with interest, in the future)

2. Raising money by selling shares usually to financial institutions, investment funds, or individuals (the

buyers of shares expect to receive, in return, a regular stream of payments known as dividends).

Either way, ElectraNet will only be able to continue to raise money from banks and other investors if these

investors have a reasonable assurance they will be able to get their money back, plus a reasonable return.

ElectraNet's current shareholders include the State Grid Corporation of China, YTL Power Investments, and

Hastings Fund Management.

We assessed the return ElectraNet submitted that it needs to pay to its investors and to lenders. This

allowed rate of return is also known as the ‘cost of capital’.

Even a small difference in the cost of capital can have a big impact on revenues. Just as an interest rate

rise can have a substantial impact on a homeowner with a large mortgage, a small change in the cost of

capital we allow a business can have a significant impact on consumer prices for electricity transmission

services. This is because network businesses like ElectraNet have borrowed large amounts from lenders

and other investors in the past––which is to be expected given the capital intensive nature of their

operations. These past capital raising activities need to be financed, along with new capital spending.

Our decision sets the allowed rate of 7.50 per cent. The rate of return determined for the previous period

was 10.65 per cent. Rates of return set by us for previous energy related decisions from several years ago

were higher. The main reason for the decrease is the current lower level of interest rates in Australia. Our

decision on the rate of return for ElectraNet is consistent with current financial market conditions.

16 A guide to the AER's South Australian transmission determination for ElectraNet Our assessment of the weighted average cost of capital

6 We accepted ElectraNet’s proposed averaging period for calculating the risk free rate. Consistent with this, we updated ElectraNet’s revised proposal weighted average cost of capital (WACC) to reflect the agreed averaging period. This results in a WACC of 7.50 per cent.

Our final decision on the WACC is consistent with ElectraNet's proposed WACC components. However, the final WACC is different because ElectraNet's revised proposal WACC was based on market data from

September–October 2012. Our final decision is based on market data from February–March 2013 as agreed with ElectraNet in June 2012.

6 ElectraNet's approved averaging period is the 20 days (on which indicative mid rates for Commonwealth government bonds are published by the Reserve Bank of Australia) commencing on 18 February 2013. Under the rules, this information is confidential until the period has passed.

3 Further information

This section highlights links to the final decision documents and other related material, our consultation

process and how this review relates to our Better Regulation program.

3.1 Where to find the final decisions and other related material?

Our final decisions for ElectraNet's 2013–18 regulatory control period was made in accordance with the

relevant sections of the NEL and NER. In forming our final decisions, we considered:

. ElectraNet's revenue proposal and supporting information—we undertook our own analysis to verify this

information

. submissions from interested parties

. views expressed by stakeholders at our public forum and predetermination conference

. expert advice or analysis commissioned by us and others on certain aspects of ElectraNet's revenue

proposal.

Our draft and final decisions, stakeholder submissions and other supporting material can be found on our

website: www.aer.gov.au/node16617

. The NEL can be found on the following website:

http://www.austlii.edu.au/au/legis/sa/consol_act/neaa1996388/sch1.html

. The NER can be found on the Australian Energy Market Commission’s website:

http://www.aemc.gov.au/Electricity/National-Electricity-Rules/Current-Rules.html

3.2 Our consultation process

ElectraNet submitted its revenue proposals to us on 31 May 2012. We issued our draft decision on this

proposal in November 2012, from which time ElectraNet had 30 business days to submit a revised revenue

proposal. Throughout these stages of the regulatory process stakeholders were given the opportunity to

make submissions and voice their views.

18 A guide to the AER's South Australian transmission determination for ElectraNet Understanding consumer interests is central to our role in regulating electricity transmission and distribution.

Indeed, the National Electricity Objective in the NEL is ‘to promote efficient investment in, and efficient

operation and use of, electricity services for the long term interests of consumers of electricity with respect

to price, quality, safety, reliability and security of supply of electricity’.

We held public forums and invited consumer groups and other stakeholders. Consumer groups made

submissions on our draft decision which we took into account when making our final determination.

We are continuing to develop ways to better engage with consumers. A key part of our Better Regulation

program (discussed below) are initiatives to involve customers in the regulatory decision making process.

3.3 How does the AER’s Better Regulation program impact this decision?

We are currently consulting on our Better Regulation program of work to deliver an improved regulatory

framework focused on promoting the long term interests of electricity and gas consumers. This follows from

changes to the National Electricity and Gas Rules that were published by the Australian Energy Market

Commission (AEMC) on 29 November 2012. We announced the start of the program in December 2012.

Better Regulation builds upon the processes that we have developed as an independent regulator since

2005. It includes improved approaches to assessing revenue proposals and setting the return that may be

earned on network investments. These changes are likely to impact on future electricity transmission

determinations.

Due to the timing of ElectraNet's revenue proposal, the AEMC decided that the changes to the National

7 Electricity rules would not apply to it over the 2013–18 regulatory control period. This was to allow us time

to develop the Better Regulation guidelines which we expect to finalise towards the end of 2013.

7 AEMC, National Electricity Amendment (Economic regulation of network service providers), 29 November 2012, p.213

19 SA power prices continue to rise as network asks to push bills higher Updated about 4 hours ago

Photo

SA power bills, some of the highest in the world two years ago, continue to rise.

ABC News

SA Power Networks is continuing to push up bill prices, lodging yet another proposal with the Australian Energy Regulator just months after a 4.4 per cent increase was approved.

If successful, customers could face an average $14 additional increase to their electricity bills per year over the next five years.

SA Power spokesperson Paul Roberts said the increase would fund a variety of services, including replacing ageing assets and tree-trimming around power lines, and would partly cover an expected rise in blackout compensation payments, up from $6 million to $9 million a year.

"The number and extent of the storms that we're seeing in South Australia is increasing," he said.

"The Bureau of Meteorology and the CSIRO both expect that trend to continue and the result has been we've been spending considerable more money in terms of supporting customers."

Mr Roberts said customers had requested more tree-trimming to support bushfire safety. Power bills on the up and up

SA's electricity bills have skyrocketed over the past four years.

Earlier this year power prices rose by 4.4 per cent, or about $84 annually for each household. Mr Roberts said those increases were due to distribution costs, ElectraNet's transmission costs, and the SA Government's feed-in tariff scheme.

At the time, he acknowledged that it reflected some "very significant" costs that had occurred for network charges, but said it was the "final year of more significant increases and people should see lower increases in future years".

In 2012, the state's power prices were dubbed the most expensive in the world.

An 18 per cent hike from July 2012 was heavily criticised by the SA Council of Social Services, who said it meant prices had risen by 65 per cent since March 2010.

"I don't know too many people around South Australia whose incomes were growing at the kinds of rates that these price increases keep coming," executive director Ross Womersley said.

Posted about 4 hours ago Allendale East Wind Farm

Community Sentiment Research

Quantitative Findings

August 2010 Job No: 10050

Quantum Market Research (Aust) Pty Ltd / Level 10 Como Tower, 644 Chapel Street, South Yarra Vic 3141 Australia / t 61 3 9289 9599 / f 61 3 9289 9595 / e [email protected] / w www.qmr.com.au p. 1 Table of Contents

This report is broken into key sections:

Section Section name Page

• Key Highlights 3 1

2 • Context for Research 4

3 • The Research Approach 5

3 • Key Findings From Research 8

4 • Appendix 20

p. 2 Key Highlights

Key Metrics

Based on the assessment of Allendale (and district) residents, it is clear that community sentiment towards the proposed development of the wind farm is very favourable. Some key metrics supporting this include the following…

Strong support for Allendale East Wind Farm

The majority of residents are aware of the proposed Allendale East Wind Farm (83%)

Residents are largely supportive of the Allendale East Wind Farm (91% supportive)

Community benefits such as bringing money into the area, employment opportunities and efficient and clean energy production are key drivers of support.

Strong support for Wind Farms generally

Almost nine in ten residents (86%) indicate that they are generally supportive of wind farms

Again green, clean and low emission energy drives this support

Where concerns exist, they relate to possible visual and noise aspects as well as concerns about land values being eroded

Awareness of appeal does not diminish support

Almost two thirds of residents are aware of the appeal (59%) – although this appeal has not net affect on increasing or decreasing support for the project with almost nine in ten residents (89%) indicating that it neither increases nor decreases their support.

p. 3 Context for Research

Background

The following report features the results from a quantitative telephone- based survey conducted in August 2010 on behalf of ACCIONA.

ACCIONA was keen to understand the extent and nature of local community opinion and perception of the proposed wind farm at Allendale East in South East South Australia.

Through Porter Novelli, Quantum Market Research was commissioned to conduct research among residents of the local area, specifically those from the immediate Allendale areas.

Telephone numbers were sourced via the electronic white pages across the various local areas within this largely rural community. The telephone interviewing methodology was chosen as it offered the best means of sourcing local opinion via coverage of the specific geographic area the study was to incorporate.

p. 4 The research approach

The sample for this study was generated by electronic white pages listings in the Allendale area south of Mt Gambier in South Australia.

Quotas were set from a potential list of 1300 possible numbers to call to achieve a final sample of 150. Approximately 600 numbers were called to achieve this final sample.

The sample slides overleaf indicates the geographic breakdown.

The majority of respondents were from local areas such as Port MacDonnell, Yahl, OB Flat, Moorak and Allendale East.

The sample is skewed naturally towards an older demographic that is likely to be broadly reflective of the actual landowner spread.

Notes for the Reader: Significant differences in results (at the 95% confidence level) between key respondent profiles and the total are outlined in this report .

If differences are not highlighted, assume no significant difference between results exists. Caution should be exercised when examining responses based on relatively small sub-samples (i.e. less than 30 respondents) – in these instances results should be viewed as indicative rather than definitive findings. Where a table or chart does not total to 100%, this will be due to either a rounding effect or a multiple response question.

p. 5 Sample

Based on a sample of 150 telephone interviews, conducted among residents in the Allendale district south of Mount Gambier South Australia.

p. 6 Respondents (n=150) %

Total Location Respondents (n=150) Port Macdonnell 25 %

Gender Yahl 16

Male 41 O B Flat 15

Female 59 Moorak 13

Age Group Allendale East 11

18-24 1 Kongorong 6

25-34 7 Nene 4

35-44 19 Mount Schank 3

45-54 28 Burrungule 3

55-64 28 Carpenter Rocks 1

65 and older 17 Eight Mile Creek 1

Blackfellows Caves 1

Pelican Point 1 Q1 p. 7 Key Research Findings

p. 8 Support for Wind Farms

p. 9 Majority supportive of wind farms

Residents across all age groups indicate support 100 10 As per the chart opposite, there is strong support for wind farms. 80 There is no demographic differences of note here with both males and females and all age groups being supportive. 60

40 86

0 4 % of Total Respondents (n=150) (n=150) RespondentsRespondents Total Total ofof %%

-20

In general I am supportive of wind farms In general I am against wind farms I have no strong views either way

Q4. Which of the following would you say best describes your views? BASE: Total Respondents (n=150) p. 10 Efficient and clean energy driving support

Green and clean elements as well as a move away from fossil fuels drive support

As per the charts below, energy efficiency and positive environmental benefits drive support.

Respondents Reasons for being supportive of Wind Farms (n=6*) % It's a good idea/efficient way of generating electricity 33 Reasons for being against Wind Farms in general Good for environment/don't cause pollution/reduces 29 greenhouse emissions Turbines have devalued our land/destroyed the 33 landscape/not a good idea Natural/clean energy 26 Unsightly/looks ugly 33 Great for green energy/sustainable/renewable energy 26 Dislike the flashing lights/red lights/lights at 17 Alternative energy/using wind for energy/saving energy 20 nights Burning of fossil fuels/will solve problems with fossil They still have to prove themselves/if 19 17 fuels/not reliant on coal worthwhile/if costs cheaper Plenty of wind/won't run out/windy area 16 Too noisy/constant noise 17 Good for the environment/don't cause It's free/cost saving/cheaper alternative 16 17 pollution/reduces greenhouse emissions Looks good/graceful/no unsightly powerlines 12 Birds are not affected/cows 17 They have mislead the community/given wrong 0 10 20 30 40 17 information/it's a scam % of Respondents (n=129) *Note responses below 12% not shown Other 17

*Note small sample size Q5. Why is that? Q5. Why is that? BASE: Respondents who are generally supportive (n=129) BASE: Respondents who are generally not supportive (n=6*) p. 11 Environmental benefits resonate strongly

Aesthetics & local jobs considered important Good things about Wind Farms

As per the chart opposite, the majority of all Producing more environmentally friendly electricity 75 respondents (75%) indicate that the production of environmentally friendly Looks good/elegant to look at/like the lights 11 electricity is a key benefit from wind farms. This response can be coupled with other Providing jobs/income for the local community 11 benefits such as reduced emissions, saving natural resources and reduced pollution Cost effective/wind is cheap/will make power cheaper 11 overall. Supply/Saves electricity/it generates energy/fewer 9 blackouts Importantly, there is also support for the aesthetics of the farms as well as other No/less pollution/reduced emissions 8 benefits for local communities including producing jobs and providing income in the Alternative energy/renewable energy 5 local community. Providing income for the local landowners 5

Saves our natural resources/fossil fuels 5

0 20 40 60 80 % of Total Respondents (n=150) *Note responses below 5% not shown

Q6. What would you say would be some of the good things about the Wind Farms? BASE: Total Respondents (n=150) p. 12 Visual and noise elements are raised as potential downsides

When all respondents were asked to identify possible downsides of wind farms visual and noise elements were raised (27% and 19% Not so good things about Wind Farms respectively). Unsightliness 27 Intrusiveness (if built too close to homes), maintenance costs, and affects on wildlife were The noise it generates 19 also raised as potential issues. Too close to the house/intrusive/in nice area 9

Too expensive to maintain/power is expensive 7

Affect on native wildlife 7

The lights at night time 3

Turbines only last a certain amount of time 3

Environmental impact 3

Too many of them/taking up too much land 3

Need a lot of maintenance 3

0 10 20 30

*Note responses below 3% not shown % of Total Respondents (n=150)

Q7. What would you say would be some of the not so good things about the Wind Farms? BASE: Total Respondents (n=150) p. 13 Over 8 in 10 aware of proposed wind farm

Males more aware than female counterparts

The strong majority indicate awareness of the proposed Allendale East wind farm. 100 Males (93%) more aware than their female counterparts (75%) 80 Older residents more likely to be aware than younger residents (18-34 years). 60

40 83

0 17 -20 % of Total Respondents (n=150) (n=150) RespondentsRespondents Total Total ofof %%

-40 Yes No

Q8. Were you aware of the proposed Allendale Wind Farm before today? BASE: Total Respondents (n=150) p. 14 Local newspapers and ACCIONA communications driving awareness

Broad range of information sources evident

As per the chart opposite, local newspapers Source of awareness of proposed Allendale East Wind Farm and ACCIONA’s community newsletters 60 were cited as the key communications that drove awareness of the proposal. 56

20 21 18 % of Respondents (n=124) (n=124) RespondentsRespondents ofof %% 16 10 9 8 4 0 Local Community T.V./ Talking to Community Local radio Word of Live newspaper newsletters local TV local Information coverage mouth locally coverage from residents days company that will build wind farm

*Note responses below 4% not shown

Q9. How have you become aware of the proposed Allendale Wind Farm? BASE: Respondents who were aware of the proposed Allendale Wind Farm prior to now (n=124) p. 15 A quarter of residents aware of ACCIONA’s upgrade work

Just under one in four residents (24%) indicated awareness of ACCIONA’s sponsorship and upgrade of the Allendale East Hall.

Males 30% were more aware than their female counterparts Aware of the company's sponsorship and upgrade work to the (20%). Allendale East Hall

Those aware of the proposed wind farm were also more 1% likely to be aware of this initiative (27% vs. 8%). 24%

Yes No Don't know/can't recall

75%

Q10. Before today, were you aware of the company’s sponsorship and upgrade work to the Allendale East Hall? BASE: Total Respondents (n=150) p. 16 9 in 10 supportive of Allendale Wind Farm

Older age groups strongly supportive

As per the chart opposite, there is strong support for the proposed Allendale Wind 100 Farm . 3 80 This support is equally balanced across gender and age. 47 60 Those indicating being very supportive (47%) is more pronounced amongst older residents (aged 55+)- 60%. 40

20 43

0 3

% of Total Respondents (n=150) (n=150) RespondentsRespondents Total Total ofof %% 3 -20 Very supportive Quite supportive Not very supportive Not at all supportive Don't know

Q11. Having heard more about the proposed Allendale Wind Farm, which of the following statements best describes how supportive you are of the proposal? BASE: Total Respondents (n=150) p. 17 Consistent drivers of support

Support for Allendale Wind Farm driven by employment and community benefits as well as energy efficiency / green energy

Total Reasons for supporting proposed Allendale Wind Farm Respondents (n=9*) Employment opportunities/more jobs 20 % Reasons for being against proposed Allendale East Wind Farm It's a good idea/efficient way of generating electricity 20 Great for the community/bought money into the Don't build them too close to town/people 33 20 areas/attracts tourists They still have to prove themselves/if worthwhile/if 22 Great for green energy/sustainable/renewable energy 17 costs cheaper Good for the environment/don't cause Dislike the flashing lights/red lights/lights at nights 11 15 pollution/reduces greenhouse emissions No impact on me/makes no difference to me 11 Natural/clean energy 13 Lack of contact from ACCIONA in resolving & 11 Generates more power/energy 13 investigating issues They have mislead the community/given wrong 11 It's free/cost saving/cheaper alternative 10 info/it's a scam It's for the future generations/need to do something 10 Don't know much about them/need more info 11

Don't know 11 0 5 10 15 20 25 % of Respondents (n=136)

*Note small sample size

Q12. Why is that? Q12. Why is that? BASE: Respondents who are supportive (n=136) BASE: Respondents who are not supportive (n=9*) p. 18 Majority aware of appeal

Appeal to halt construction has no influence on existing support

As below almost six in ten indicate awareness of the appeal to stop construction (59%). Males (72%) and older residents aged 55+ (74%) more pronounced here.

The objection to the proposed project has no net influence on residents support for the Wind Farm with almost 9 in 10 (89%) indicating it has neither increased nor decreased their support. 20

2 Aware of appeal to stop construction of the Wind Farm 0 4

-20

-40 89 41% Yes No -60 % of Respondents (n=89) (n=89) Respondents Respondents ofof %% -80 4 59% -100

Increase your support for its progress Neither increase nor decrease your support Decrease your support for its progress Don't know/Can't say

Q13. Were you aware of an appeal to stop construction of the Allendale Wind Farm? Q14. In light of this objection, does this change your level of support for the development? BASE: Total Respondents (n=150) BASE: Respondents who were aware of the appeal to stop construction of the Wind Farm (n=89) p. 19 SA power transmission company ElectraNet may cut up to 45 jobs

 by: JULIAN SWALLOW  From: The Advertiser 26.8.13

ELECTRANET is looking to shed up to 45 jobs as it reacts to a forecast decline in future network expansion and falling revenues.

The proposed redundancies are equivalent to about 13 per cent of the workforce and will affect employees in professional roles like designers, engineers, project managers and accountants, chief executive Ian Stirling said yesterday.

He said a proposal was put to staff last week targeting roles no longer required and that staff have until Thursday to suggest alternatives before a final decision is made next week.

"We are in a genuine consultation with staff because they are the ones who are doing the work and who are closer to the activity, so we want to hear what they say," Mr Stirling said.

"This is a genuine attempt to make the place more efficient."

The proposed redundancies are the result of a forecast 40 per cent fall in the company's capital expenditure this financial year as a series of industry reports show demand for expansion of electricity networks has receded because annual energy usage in South Australia is predicted to fall over the next decade.

"Everyone's talking about falling electricity demand and falling demand impacts work on capital expenditure," Mr Stirling said.

He said it was also brought about by a mandated average 12.5 per cent cut in prices ElecraNet can charge, which will result in a $40 million a year fall in revenue.

It is understood members of the Australian Services Union as among those likely to be affected, and that the union is monitoring the situation.

The Australian Energy Market Operator's National Electricity Forecasting Report released in June found annual energy usage in the state is expected to decline at an average annual rate of 0.1 per cent over the next ten years as a result of lower population growth, the deferral of BHP Billiton's Olympic Dam expansion and an increase in solar panels