Annual Performance Report 2001>2002 The power is in your hands

The poweris in your hands The power is in your hands 1 Overview 4 The Future > Contents 2 Performance 52 The future 3 Year at a glance 53 Corporate plan 4 Highlights/lowlights 54 Management discussion and analysis 5 Objectives and results Financials 2 Year in Review 56 Financial statements 8 Chairman’s report 91 Appendices 11 CEO’s report 110 Location of operations 16 Building value in the network 111 Directory 22 Preparing for competition 112 Index 26 Ensuring support systems are in place Cover: Generating his own power, Brandon McBey, 5, son of Operational Manager Steve 3 The organisation McBey (Bowenfels/Kandos) at the Hampton wind farm, Lithgow, a source of ‘green’ 30 Environment power for Integral Energy. 34 Our people Opposite page: Against a typical South Coast 38 Community partnerships backdrop, live line workers Rod Tennison 40 Corporate Governance (Leading Hand) and Dave Warren are able to maintain or enhance Integral Energy’s 45 Organisational structure electricity supply network without 46 Board of Directors disconnecting customers. 48 Executive group

…to serve customers1> OVERVIEW

31 October 2002

The Hon Michael Egan MLC Treasurer Minister for State Development Vice-President of the Executive Council Parliament House Macquarie Street, Sydney 2000

Dear Mr Egan

Report of performance for the year ended 30 June 2002

This performance report covers Integral Energy’s performance, operations and statement of accounts for the year ended 30 June 2002, in accordance with the provisions of the Annual Reports (Statutory Bodies) Act, 1984 and is submitted on behalf of the Board of Integral Energy for tabling in Parliament.

Copies are being sent to the Premier of New South Wales, the Auditor- General, Members of Parliament, key customer groups and the media. Sincerely

Michael McLeod Richard Powis Chairman Chief Executive Officer Electricity Supply Act Energy Services Act 1995. on behalf of our shareholder, the on behalf of our shareholder, electrical contracting, and providing Market, retailing energy services and and metering services to industrial and We operate in the National Electricity We commercial customers. We also commercial customers. We distribute and retail electricity and value NSW Government. added services to 790,000 customers, or 1995 2.1 million people, in households and the terms of the businesses across a network franchise commercial and customer focus, within spanning 24,500 square kilometres in We conduct our business with a sharp We Greater Western Sydney, the Illawarra, Sydney, Greater Western and the Southern Highlands. under the Integral Energy Annual Report owned energy corporations, incorporated 2 We are a forward looking, financially are a forward We Integral Energy is one of NSW’s largest state- Integral Energy is one of NSW’s

disciplined business, intent on achieving our > vision: to be Australia’s leading energy business. leading energy business. vision: to be Australia’s In pursuit of this vision, we intend to build sustainable success into all facets of our operation, and have set ourselves the following mission: to be a successful energy corporation with a long term focus on being a best practice asset manager and competing in profitable energy markets. Our corporate values drive an ethical and responsible culture and underpin the way we work at Integral Energy. customer Our values are safety excellence, integrity, commitment, sustainability and commercial success, respect for people, accountability and responsibility, and management by fact. the inherent quality of our people that believe it is We enables Integral Energy to look confidently to the future. > This is Integral Energy > This is Integral best

This report sets out the organisation’s achievements throughout 2001-2002, and the contribution made by its employees on behalf of our and the community. 790,000 customers, our shareholder, At the same time, the organisation continued to plan for its immediate and long-term future. Integral Energy again improved its financial performance and continued to perform strongly in a highly competitive market, growing its customer base. The organisation rose to these challenges, determined to achieve its aims of being a practice asset manager and a competitive energy retailer. This year’s report further underlines the value This year’s of concentrating on core business – electricity distribution and sales – as external pressures increased. Apart from meeting customer expectations, reinforced by their ability to choose their electricity Integral Energy’s supplier, distribution network also withstood a record number of storms, and raging bushfires. The advent of full retail competition in the New South The advent of full retail era for Integral Energy. electricity heralded a new Wales > Performance report > Performance n/a n/a n/a 5.0 12.0 7.6 (31.6) 8.2 (14.6) 4.0 (2.5) 2.5 (4.0) 6.1 (3.3) 446 22.2 200 (25.0) 35.5 13.2 12.8 3.9 2,809 14.3 1,765 10.1 9,462 (1.4) 2,966 (1.7) 136.3 (1.9) 15,100 (0.8) 11,368 (6.4) 13,750 19.9 74,240 (15.1) 71,735 1.7 16,524 159.9 14,196 19.9 52,776 71.7 152,550 (4.7) 267,613 (19.5) 179,338 (2.4) 105,247 54.9 773,383 2.1 1,159,807 (13.8) 1,013,028 (0.1) 5.6 5.2 7.0 3.9 2.4 5.9 AA 545 150 40.2 45.0 50.3 13.3 3,212 1,944 9,329 2,915 133.7 14,975 10,635 16,480 63,024 72,963 42,938 17,025 90,632 999,692 145,454 215,531 175,111 163,056 789,923 1,012,394 $'000 Min/lost/cust

> 3 1 2 (planned and unplanned interruptions to supply) Integral Energy Annual Report Dividend Life Support Equipment Rebate $'000 Payment of capital from equityPayment of capital from $m Pensioner Rebates $'000 Income tax equivalents $'000 Target % Result % OutputReturns to NSW Government GWh System loss index % Return on equity % Energy Accounts Payment Assistance (EAPA) $'000 Asset salesNet assetsReturn on net operating assets % $'000 $'000 Greenhouse emissions reductionGreenhouse Millions of tonnes Times earned interest EBIT before capital contributionsEBIT before tax and capital contribution before Operating result operationsCash flow from costsNet borrowing cover costs X interest Net borrowing Capital expenditure $'000 Debt/equity ratio $'000 $'000 $'000 $'000 $'000 % Social programs $'000 Absenteeism per employee Days/year Qualified credit rating Standard & Poor's rating Standard Qualified credit 1. Based on performance in a series of customer services 2. Includes a special dividend of $80m AA People learning and growth employees Total and services products Business processes, Lost time accidents frequency rate – per million hours worked rate – per million hours Lost time accidents frequency Sales revenue $'000 Business results Total sales of electricityTotal customer connections Total System maximum demandReliability Customer Service Indicator GWh MW > Year at a glance > Year ItemsCustomer and market 2001/2002 2000/2001 %change > Integral Energy Annual Report 4 > – and our inaugural sustainability report.

Network 2010

Returned $133m to our shareholder, the NSW Government, the including a special dividend of $80m. Returned to our shareholder, $133m to $267.7m. by $37m above forecast (EBITDA) profit Increased including the Christmas the franchise area, number of natural disasters across Responded to a record 10 years. and the worst storm in bushfires totalling $107m in the supply network to further of capital investment Embarked on an ambitious program safety and reliability. improve corporate positioning strategy. Revitalised our brand and embarked on a new contestability. for full retail business in preparation Rebuilt our retail for end-to-end billing processes. Achieved new standards for Full Retail Contestability. Led the NSW energy industry in preparations gas emissions. of 3.9m tonnes of greenhouse leadership with a reduction Maintained industry environmental safety field days for the second successive year. Hosted the NSW Electricity Supply Industry’s – Published our inaugural annual planning statement injuries and illnesses. lost time accidents (LTAs), to reduce of safety among all staff Develop a culture and drive reliability to upgrade the network to improve Draw sharper focus on the capital program the franchise. throughout efficiency an ethical culture. to promote strategy in order Complete implementation of our fraud control to develop our people. programs Continue to introduce … and where we need to improve < need to improve we … and where > This is what we did well … what we did > This is > > > > > > > > > > > > > > > > > Business scorecard for 2001-2002

Critical success Measures Target Results Comments Future action factors

Business results Financial EBITDA $230.6m $267m Reflects stronger Finance unit support financial discipline for IPART submission

Return on % 7.50% 6.9% Revenue allowances To be addressed in regulated did not include higher submissions to the assets level of investment to regulator. drive improved reliability

Customer and Network Customer 130 minutes 133.68 Higher incidence of Target for 2002-03 market reliability minutes minutes unstable weather and reduced to 125 higher than usual minutes number of planned outages

Customer % 45% 50.3% Compiled from a 2002-03 measure will service range of internal and focus on customer indicator external indicators. satisfaction Overall customer service targets were achieved

Profitable % 55.3% 58.4% Target exceeded Continue to improve market share among contestable performance franchise customers

Business processes, Debtor days Days 35 days 27.3 days Achieved as a result of Continue to improve products and improvements to performance services clearing of backlog of overdue accounts

People, Learning Staff performance % 42.1% 47.8% Target achieved Measure for 2002-03 and Growth index will focus on an improvement in staff satisfaction based on previous research.

Level of staff Frequency 10 13.27 A high incidence of Target for 2002-03 is 9.5. safety rate accidents was the major factor

Severity 85 72.61 Achieved. Time lost as Target for 2002-03 is 80. rate a result of accidents has reduced.

Staff development % 67.5% 53.3% Unfavourable against 2002-03 will focus on index target due to career 100% completion of plans incomplete, performance appraisals lower proportion of for all staff vacant positions filled internally and performance appraisals being incomplete. >

Integral Energy Annual Report 5 The power is in your hands > 2 YEAR IN REVIEW Three key strategies – building value in our network, responding to the mass-market challenge, and ensuring the quality and integrity of our support systems – have put us on course for long-term success. …to chart a course for success

It wasn’t all plain sailing, but there’s time for quiet reflection on a successful year by Business Analyst Shelley Zerni (Customer Interaction) and daughter Gabrielle, 5. Inset pics from left: > Craig Hadfield, Transmission Major Projects, Coniston > David Neville, Manager Regulatory and Pricing > Belinda Hernandez, Call Centre, Coniston Integral Energy Annual Report building value in our network; ourselves for the mass preparing market challenges; and ensuring the quality and integrity of our support systems. 8

to be a successful energy corporation to be a successful energy on being a with a long term focus best practice asset manager and energy competing in profitable markets. This vision and mission work to balance the often competing demands of diverse stakeholders while financial outcomes. delivering strong intend to achieve this aim by We fundamental pursuing the three strategies articulated in our corporate relatively plan, which remain These last year. unchanged from strengths. strategies build on our core 2001-2002, they worked Throughout the of the Board, to focus the efforts on the issues Executive and staff central to our long-term success. included: These focus areas > > > strategies form the These three cornerstone of our corporate strategy to 2004 and underpin all that through we do. Our performance against each report. is detailed in the CEO’s One of the major challenges in pursuing this strategy is that it us demands a certain discipline from all to stick to our plan. It means divesting those businesses to our core not considered that are the long-term success. For this reason, decided to sell the small Board gas network located in the reticulated during the course of Shoalhaven area Returns generated by this the year. business had been very disappointing. strategy also requires Our agreed discipline in the assessment of the long-term value of new business of a as a result presented ventures competitive market. This means that >

The past year has been one of consolidation, building one of consolidation, year has been The past to reap continued of 2001. We achievements on the to basics” philosophy our “back from the rewards in 2000. commenced which we This strategy of refining and improving This strategy of refining has paid every aspect of our business in terms of improved especially off, financial performance. It follows a work to period of sustained hard strengths capitalise on the inherent drive business and to within our core in those dramatic improvements our parts of the business where performance was previously found wanting. Financial performance be and Executive team can The Board financial pleased with the impressive that have been achieved. We results tax, before a net profit delivered and amortisation depreciation interest, (EBITDA) of $267.7m – a slight This result. over last year’s increase favourably with others compares result and is the second in the industry, financial successive year of improved performance for Integral Energy. return of a strong delivered We the NSW $53m to our shareholder, Government, with a further special dividend of $80m. This is a substantial of result on last year’s increase results $69.3m. These impressive financial can be ascribed to strong discipline, an unfaltering commitment success, and our to commercial continuing consolidation efforts. for the year Capital expenditure of $58m totalled $163m, an increase but falling short of the last year, from budgeted target by $16.3m. Among for the underspend the reasons against budget was the need to to the to respond often divert staff abnormal major natural crises and the year, throughout IT projects. deferred Strategic direction leading Our vision is to be Australia’s energy business. In striving to achieve its renewed this vision, the Board commitment to our business purpose: > Chairman’s report > Chairman’s It was followed by an exhaustive It was followed by an business systems, policies of review over by the presided and processes, Powis, with a special CEO, Richard emphasis placed on fraud prevention. of revision It also meant a thorough and the the Code of Ethics. The Board that winning Executive team recognise the confidence of customers, staff, and suppliers demands the highest levels of integrity in the course of our business. Safety Of considerable concern to the Board lacklustre has been the organisation’s safety performance, which appeared This was to have stalled by mid year. unacceptable to the Board entirely and the management team and led push on safety matters a renewed occupational health and our through safety strategic plan. This plan defines our philosophy that people must feel if and safe in the workplace secure to contribute to the they are organisation. challenges Future by the was impressed The Board ability to deliver solid organisation’s for Full Retail in preparation results Contestability (FRC) against a demanding timetable, with a smooth transition to the new fully contestable market being achieved for millions of domestic and small business customers in NSW and Victoria January 2002. from Competing successfully in the retail both challenges and business presents opportunities for us. This market brings a new set of challenges for Integral Energy as well as other NSW industry participants, with increased competition for customers, on margins pressure downwards and costs, and heightened customers expectations from about dramatically improved and customer service. products scrutiny, both in Australia and both in Australia scrutiny, worked the Board internationally, to develop a tight framework of corporate governance. This was domestic and achieved by researching international best practice governance frameworks and by benchmarking our past performance against them. The development of a new Board policy on governance has been one of the key instruments in driving understandings throughout improved the business since this benchmarking was completed. exercise In addition, all members of the Board risk management focused on retail are due to the importance of protecting value in a volatile market, shareholder as witnessed with electricity trading in May and June 2002. of corporate governance areas Two that have focussed the Board’s thinking during the year have been business ethics and our safety performance. Business ethics a set of Our corporate values provide principles that guide our behaviour and business operations. These values detailed on pages 104-5. At are the heart of these values sits a integrity and commitment to honesty, fairness in all aspects of our business. also expect others to conduct their We to business with us according these principles. the During the course of the year, was concernedBoard to take steps of business the robustness to review the systems, and to review Code of Ethics. This organisation’s an allegation of corrupt flowed from conduct by an employee about an employee that was immediately to ICAC for further referred in the investigation. This resulted dismissal of one employee.

> 9 Integral Energy Annual Report while many of our competitors appear while many of our competitors opportunities to have seized emerging themselves with a view to reinventing Integral Energy as a multi-utility, intent on doing what it remains does best. Sustainability the Board In considering our strategy, that the relationship recognises between our financial, environmental and social performance is critical to our long-term business success. Like many leading Australian and international businesses, we recognise and social that sound environmental on impact performance has a direct our financial bottom line. Also, sound financial performance to return able healthy we are ensures the NSW dividends to our shareholder, Government. It should be recognised that Integral Energy has made significant returns shareholder to its of the since the introduction competitive electricity market in NSW in 1996. These dividends provide the quality of funding for improving generations and the life for future long-term success of communities for example, expenditure, through on schools, hospitals, police and the environment. Last year we committed ourselves to the principle of sustainability and value of the enshrined it as a core organisation. Our aim over the course an of the next year is to provide of financial, social integrated report performance for and environmental all our stakeholders. Corporate governance is little doubt that the There community expects improved and greater management controls businesses, from levels of transparency especially those owned by governments. Against this rising tide of community expectation and Integral Energy has made significant returns to its shareholder since returns significant Energy has made Integral shareholder to its NSW in market in electricity of the competitive the introduction of the quality improving funding for provide dividends 1996. These success of the long-term and generations future life for schools, for example, on expenditure, through communities and the environment. hospitals, police Integral Energy Annual Report 10

Most importantly, the Board Most importantly, and dedication the efforts recognises who members of Integral Energy staff have gone the extra mile for the organisation in another challenging I would On behalf of the Board, year. our especially like to express admiration and thanks to them in to the unusually high responding number of natural disasters the Integral Energy over confronting that in doing so, I am sure past year. I am also echoing the indebtedness of the community to them. Moving forward understand our of Directors The Board as custodians of a valuable state role believe we are owned enterprise. We well equipped to build on the foundations laid over the course of remain the past two years. We steadfastly committed to delivering solid returns and and building value, while shareholder protecting contributing to the long-term benefit of our people, the customers whom we serve, and to the communities in which we live. and Executive team the Board Finally, the value is committed to improving of Integral Energy for all its stakeholders. I am confident that we have all the fundamentals in place to meet further challenges and opportunities as they present themselves, and that our performance to strength. strength will go from Michael McLeod Chairman > since I took up the role benefits to customers, while at the benefits to customers, financial same time ensuring the that are to our shareholder returns expected of us. Maximising our contributions from this business and building value for as customers and our shareholder poses a challenge to us a result longer term. Strategic leadership I am very grateful for the support my fellow from I have received directors from our former Chairman, Neil from Neil 2002. McDermott, on 1 March as chose not to seek re-appointment to and left Chairman of the Board pursue new challenges that had arisen a through for him. He led the Board period when the organisation was gearing itself for major change, and made a valuable contribution to our join of Directors success. The Board with me in wishing Neil well in his new pursuits. and former NSW Premier John Fahey, Federal Finance Minister joined our in June 2002. Besides adding to Board focus, John commercial the Board’s brings a wealth of experience in business and government. John is also familiar with the particular needs of economies, having resided regional and worked for many years within franchise. His skills Integral Energy’s and understandings will be a significant asset to the Board. Thank you also acknowledges Richard The Board Powis and his Executive team, for their dedicated and determined leadership and commitment over the past year. of 2001-2002 speak for The results the healthy themselves, and reflect that has been established relationship and the between the Board Executive team. Industry pundits have long promoted the view that the market can not number of players. sustain the present Consolidation of the industry is well Strategic alliances and under way. one of the options are joint ventures These intends to consider. the Board viable options for delivering provide We now need to focus on plans to We While our future make up lost ground. focus will be to seize the lead by we market share, profitable growing also cognisant of the limits to are what we can be achieved in this type of market, characterised by pricing declining margins and an volatility, competitors. abundance of aggressive Integral Energy, on the other hand, Integral Energy, has spent the past few years getting itself fit to compete. It has built strong its sales and trading skills, regrouped marketing functions, and developed sound risk management and business systems. Our retail business has already Our retail witnessed considerable change in the competitive landscape since for competition was first introduced large businesses over five years ago. emerging Those businesses presently their as leaders have actively grown mergers and customer base through strategic acquisitions. This has been the case in Victoria during 2001-2002, Origin Pulse and with AGL purchasing business of the retail purchasing AGL and Origin As a result, Citipower. each have customer bases in excess of ample scope for cost 2m, providing minimisation. Of focus to the Board longer term is longer term Of focus to the Board to business the capacity of our retail compete in such an aggressive marketplace, particularly against businesses that possess the scale and scope to drive out costs as margins of decline due to the pressures competition. the Electricity Tariff Equalisation Fund Equalisation the Electricity Tariff by the NSW (ETEF), introduced Government in 2001. was $99.1m, tax before Net profit but figure, marginally below last year’s well ahead of our budget of $53m. to our plans Last year we revealed embark on a five-year network capital worth over program expenditure to is designed $800m. This program successive years of under redress in maintenance of expenditure ageing assets, which has significant implications for maintaining and while reliability, improving simultaneously investing in growth end, we had By year’s projects. related invested $108m in planned projects, falling slightly short of the budgeted amount of $126m, mainly due to the need to divert our people from to respond planned capital programs and to the unusually high frequency intensity of natural disasters that hit at various times our franchise area have plans We the year. throughout that capital in place to ensure is better managed into expenditure outlined below. the future, Building value in the network to fulfil our obligations to If we are and our customers, our shareholder that we effectively we must ensure manage network assets worth an estimated $2 billion. network is our Integral Energy’s primary asset management and covers some of responsibility and residential the fastest growing including in NSW, industrial areas the and South-west Sydney, West South Coast and Illawarra. It is made up of 25,000 transmission, zone and distribution substations, 370,000 power poles and 150,000 streetlights. bound together by The latter are of overhead and 33,000 kilometres cable. underground On behalf of the Executive team, On behalf of the Executive my gratitude I would like to express sense of for their strong to our staff and commitment to professionalism customer service. Our people performed beyond the limits of expectation, particularly our asset and management, call centre teams. response front-line Despite these unexpected pressures, end we had met the majority by year’s of ten challenging performance with our shareholder targets agreed in our Statement of Corporate Intent and encapsulated in our Corporate Plan. Financial performance serving our – through Being profitable customers well and managing our assets – is a vital element of what we community contribute to the broader This is and to the people of NSW. supplemented with employment opportunities, developing the expertise of our people, listening and economies, contributing to regional and investing in them. It is worth noting that since competition commenced in the NSW electricity industry in 1996, Integral Energy has returned over $500m to the NSW Government. This has enabled further investment and job in public schools, hospitals creation and roads. this end, Integral Energy continued To in the to deliver solid financial results should feel Staff year under review. of our performance. justifiably proud a healthy $133m to our delivered We which included a special shareholder, an dividend of $80m, representing over 92% improvement impressive the 2000-2001 results. This can be attributed to the fact we demonstrated sound financial discipline and, to a lesser extent, to

> 11 Integral Energy Annual Report > Chief Executive Officer’s report Executive Officer’s > Chief Integral Energy’s year saw most performance targets achieved against a targets achieved performance year saw most Energy’s Integral the disasters, including of natural number unprecedented of an backdrop These disasters in ten years. worst windstorm and the bush fires Christmas management of our crisis the robustness of our staff, resolve tested the of our customers. and the patience systems Integral Energy Annual Report 12

By doing so, we sought to engage our By doing so, we sought to seeking are stakeholders in how we technical and align with customer, drivers. In addition, we regulatory them with an have provided understanding of how we will put in place major investment and asset management policies to maintain the ongoing capability of our network. Regulatory management network and Integral Energy’s operations primarily retail regulated fall under the determinations of the Independent Pricing and Regulatory plays a The Tribunal (IPART). Tribunal in influencing the incentives major role and operations of NSW electricity and in distributors and retailers, outcomes and revenue regulating pricing determinations. producing As such, it has a significant impact on the financial performance of both our businesses. distribution and retail Network Determination current IPART’s February was set to operate from 2000 to June 2004. This cap for Determination set a revenue all NSW distributors for the regulatory period until the end of 2003-2004. As we believe report, stated in last year’s this Determination has not provided changes in our for recent sufficiently and that the operating environment capital and operating expenditures insufficient. were by IPART approved Capital and operating expenditures two of the components, or are “building blocks”, that the regulator assesses in determining the revenue that the distribution business stream is able to earn over a given period. > – Network 2010 which details our plans to invest in the network over the course of the next initiated the plan to ten years. We inform our stakeholders – customers, local government, the regulators, business community and all other parties – of our plans and interested our long-term strategies to improve we network asset value and ensure deliver optimal returns. Integral Energy learned important the impact lessons about mitigating on on the network and of bushfires Following the fires, the community. review we conducted a comprehensive performance during of the network’s this period, culminating in the development of an extensive bushfire risk management plan endorsed by the Board. Practical steps to minimise the risk of the network contributing to fires included or arcing sparks through focus on vegetation a renewed management, the systematic installation of over 23,000 ‘spreaders’ on our overhead network, and a campaign public safety awareness designed to alert customers to steps they can take. preventative to achieve longer-term If we are targets, we need to ensure reliability program that our capital expenditure is well planned and implemented. The significance of our capital should not be investment program This was again one of underestimated. that we the most important programs focused on during the past year. launched our inaugural Annual We Planning Statement – The bushfires, in particular, had a in particular, The bushfires, devastating impact on our network and customers. In the space of three work costing $7.4m was weeks, repair undertaken, with 500 burnt power of and 100 kilometres poles replaced with no lost overhead cable re-strung, time accidents recorded. The impact of storms was much than usual. Over the previous greater franchise four years, Integral Energy’s experienced an average of six area The frequency major storms a year. and severity of these natural disasters planned work and from diverted staff of called on the unified efforts of field and customer service hundreds conditions on to work in extreme staff an almost monthly basis. This result is primarily due to the This result higher incidence of unstable weather – other than storms – and a higher than usual number of planned outages. It is therefore disappointing that disappointing It is therefore slightly exceeded our target reliability of 130 minutes of supply lost per with 133.68 minutes customer, unable to therefore are We recorded. that we claim the excellent reliability strive to provide. It goes without saying that a reliable and safe electricity supply is integral to communities, the success of regional employment helping to create opportunities, attract investment, and build globally competitive businesses. These assets play a vital role in the role These assets play a vital economies. Vast success of regional West Greater tracts of land in Sydney’s being and the Illawarra are transformed into major residential estates housing thousands of young of numbers families, while growing capitalising on improved businesses are and lower operating infrastructure the city. away from costs in relocating Within framework the revised for regulated established by IPART we will continue to focus tariffs, retail that are on moving those tariffs below target, or ‘under- currently target the allowed collecting’, towards we by June 2004. Longer term, tariff to working with IPART look forward and other stakeholders in improving of any and effectiveness the efficiency arrangements. retail regulated future for the mass market Preparing challenge Integral Energy invested a total of $30.4m to meet the demands of the mass-market and full retail contestability (FRC). These undoubtedly were preparations challenges one of our greatest period. during the reporting by January The race to be prepared emphasis renewed 2002 required enhanced on service delivery, understanding of customer needs, robust development of new products, technical systems to enable customers and a choice of supplier, to exercise business. soundly managed retail Integral Energy’s Retail business Retail Integral Energy’s regulatory also has its own set of Retail challenges. The current Determination, which also extends until the end of 2003-2004, prices retail establishes the regulated that Integral Energy can charge in supplying electricity to customers who supply contracts on standard remain and do not enter into a negotiated contract with a licensed retailer. has been This form of regulation developed based on the setting of which is a by IPART, ‘target tariffs’ established by the Tribunal tariff retail based on its assessment of each cost of supplying retailer’s standard electricity to franchise customers. conducted During 2001-2002, IPART of the existing a mid-term review arrangements in the retail regulatory its Integral Energy argued that area. and had been set too low target tariffs the to reflect needed to be increased actual costs associated with supplying customers. In terms of outcomes, we welcomed the steps taken by the to relax tribunal in its mid-term review price limits and increase existing retail more towards target tariffs retail levels. While commercial appropriate IPART many difficulties, remain there is to be commended for the practical that have been made improvements in this area.

> 13 Integral Energy Annual Report Due to Integral Energy’s ageing asset Due to Integral Energy’s and demand growth base, increasing expectations community greater to network service quality and relating we have substantially revised reliability, requirements our capital expenditure $200m higher than that to around Network current allowed in IPART’s Determination. This has placed further on the pressures commercial organisation as the funding of this additional $200m will need to be met that the existing level of income from our Network business will receive cap under the fixed revenue arrangement. This has focused our attention on the 2004 Network Determination a and the importance of receiving The outcome. balanced commercial the will determine forthcoming review path for the Network revenue/price business, which will in turn directly future impact on the organisation’s return, along with its commercial of asset ability to deliver in the areas strategies, investment and renewal network performance and standards of service. of the fact that very mindful are We to this response Integral Energy’s determine more will effectively review for the period than $2b in revenue 2004-2009. Our objective is to achieve a Determination outcome that enables Integral Energy to meet or exceed our customers’ expectations, objectives set achieve the commercial and appropriately by our shareholder, medium the organisation’s address to long term investment and requirements. expenditure Returns to shareholder since the since to shareholder Returns in NSW electricity reform of introduction $m (cumulative)

< GOOD Result Target Integral Energy Annual Report 14 Specifically, we are concerned we are about Specifically, accidents the number of lost-time 49 recorded during 2001-2002. We lost time accidents with 43 accidents The frequency year. in the previous rate was 13.27 accidents per million hours worked, against a target of 10. Given our corporate value of respect for people, I am of the firm view that it is unacceptable for us to tolerate performance that falls well below industry norms. The challenge for 2002-2003 will be to translate that view into specific behaviours that that each employee returns ensure safely to his or her family at the end assist with this objective, To of the day. we benchmarked our safety performance against best-performing businesses, sought external advice, and made a commitment to ten safety then deployed principles that were the management team. throughout deserve the efforts Our people’s support of world class IT&T systems and strategies. This has proven to achieve at various points in difficult and so we moved towards our history, our strategic management refocusing of IT&T to bring it ‘in-house’. This of an IT&T in the preparation resulted strategic plan and the formation of a strategic team built on the specific of our various business requirements key themes of this units. The three risk cost restraint, strategy are management and business alignment. Sustainability published, and then welcomed We party endorsement of our third inaugural Sustainability Report. This documents our commitments, report our performance to date and plans for in balancing our financial, the future and social environmental performance. Reliability of electricity supply ia a key driver ia a key supply of electricity Reliability satisfaction of customer per customer Minutes lost > Pitching our brand a deliberate Integral Energy required strategy to build, and coordinated sustain and defend a positive brand in NSW energy image and reputation market, particularly among its franchise customers. strategy aimed to build The resulting value in the Integral Energy brand, and achieve a high level of awareness and brand loyalty, increase recognition, favourable brand strong, create set for were associations. Targets of Integral awareness increasing with the brand Energy and affinity both within and beyond the franchise area. corporate on the desired Agreement positioning was critical to the success The positioning needed to of strategy. competitive draw on the organisation’s and the attributes most strengths important to energy consumers. showed that most energy Research consumers saw electricity as a to "public right" and found it hard players in the market. differentiate want to trust and They did, however, was know that their energy provider "doing the right thing". – a global trend This insight reflected importance consumers the increasing place on both behavioural and performance attributes. That is, how an organisation conducts its business is just as important, if not moreso, as what an organisation does. Within beyond our franchise, the and market visibility was organisation’s brand advertising. through increased Safety Safety is a key focus for the Board and Executive team and I echo the comments about our Chairman’s commitment to driving improved safety performance. Despite renewed disappoint. our safety results efforts, Ensuring support systems in place are of our that the efforts recognise We people form the backbone of our worked to fine tune our success. We to enhance the effectiveness structure of teams and to deliver improved the year. customer service throughout teams and refocussed rebuilt We equipping them necessary, where training and to succeed through particularly for development programs, senior leaders. By bringing together this team, the Executive aimed to one that our top people shared ensure uniting effectively vision of our future, a common goal. our people towards This was a significant achievement for the Executive team in the year under review. In less than a year, Integral Energy has In less than a year, our competition for witnessed fierce new and traditional customers from intent on increasing energy retailers geared We their market share. ourselves to meet this competition by our our brand, revising revitalising marketing strategies and giving emphasis to issues of renewed customer service and competitive prices. While the market is still quite it is clear that the current immature, number of participants cannot be industry sustained. For this reason, consolidation is emerging as a strategic issue for us. A huge effort was required behind the behind was required A huge effort a smooth transition scenes to ensure market to a a monopoly from competitive market. These challenges saw many parts of our organisation working together across organisational boundaries on over the designed to enable 90 projects, business units to and back office retail retail a smooth transition to full ensure contestability against non-negotiable time frames. Since competition began, over 160,000 customers in NSW have their right of choice between exercised energy providers. I would also like to acknowledge the I would also like to acknowledge of the Board Chairman and Directors for their guidance, effective governance and continued support. The close of 2002 will mark a full twelve months during which the new Executive team has been working I would like to thank them together. for their individual and collective contributions and demonstrated leadership. Outlook Integral Energy is a sound business with significant potential for growth in a new competitive environment, underpinned by a solid foundation of well positioned now are expertise. We to capitalise on the foundations we over the course of the have rebuilt past two years. As we strive to achieve our vision of leading energy being Australia’s business, we will focus on building and maintaining value in our network, on managing reliability; on improving activities in risks in retail the inherent a rapidly changing competitive our on progressing environment; safety performance by living our our safety principles; on renewing commitment to our customers; and on ensuring that the basic foundations robust. of our business remain I am confident that by working Executive team our Board, together, poised to contribute are and staff substantially to Integral Energy’s ongoing success in the years ahead. Powis Richard Chief Executive Officer We have co-operated with ICAC We investigation. during the course of the of have also embarked on a review We with a policies and procedures relevant the scope for fraud. view to reducing As CEO, I have an unwavering commitment to delivering effective leadership and developing a culture noted for the highest levels of of course, I am, integrity. professional of the actions disappointed to report the dismissed employee, and remain concerned about the inevitable consequences of his actions, as I the serious impact that an realise incident of fraud has on the good of Integral Energy and reputation its people. Changes to the Executive team the during made solid progress We past year in bringing together a new leadership team complemented by the addition of two new General Manager positions – that of GM Sales and which Marketing and GM Trading, and taken up by Michael Tauber were These new Stephen Lowe respectively. positions signify our commitment to business, and our retail refocusing since their appointment, both GMs in have made solid progress developing strategic plans and building new teams. Acknowledgments Paramount to our success is the effort and commitment of our people, who vigour to the with renewed respond to them. As challenges presented I would like to mentioned earlier, thank them for working sincerely and often in pressure under inordinate conditions during the extraordinary past year.

> 15 Integral Energy Annual Report In addition, I was honoured to accept to In addition, I was honoured external by the acknowledgment Sustainable Energy Development Authority (SEDA) in April 2002, as This SEDA Ambassador of the Year. Energy’s Integral recognises award leadership and commitment to sustainable energy initiatives, including gas unparalleled greenhouse of and promotion reductions, energy programs. renewable Sale of gas business Several years ago, we embarked on tentative steps to expand the capability in dual-fuel organisation’s operations by buying the Shoalhaven gas business. Since then, the its organisation has reviewed commitment to dual-fuel initiatives. the business decided to relinquish We as it had failed to generate expected and it did not fit in with our returns commitment to focus on our core capabilities. The gas network assets at Harrington Park and Nowra, along business was sold with the gas retail to ActewAGL on 30 June 2002. ICAC investigation One disappointment in our social performance in 2001/2002 involved a fraud committed by a former employee. This involved the unauthorised sale of a number of electricity redundant Integral Energy’s transformers to scrap metal merchants. of The action was in serious breach Code of Ethics and Integral Energy’s the employee was dismissed to The fraud was referred immediately. the Independent Commission Against Corruption (ICAC) in February 2002 in with Integral Energy’s accordance statutory obligations. Safety is a key focus for the Board and for the Board a key focus Safety is echo the Chairman’s team and I Executive to driving commitment about our comments performance. safety improved It includes Network 2010. Integral Energy Annual Report 16

Asset Management, which employs Asset Management, which half of the organisation’s than more organisation’s that the ensures staff, ‘fit for service’ electrical assets are transmission and distribution through engineering, maintenance, and construction, refurbishment emergency response. Reliability of supply The past financial year has been a one for network reliability difficult due to the impact of major storms target The reliability and bushfires. was set at 130 minutes, comprising 35 minutes for planned outages and 95 minutes for unplanned outages. of 34.36 minutes achieved a result We an extremely for planned reliability, given the high levels pleasing result, of maintenance carried out on the the year. network throughout Excluding major storms, the of 99.32 result unplanned reliability minutes was 4.5% above target. was 133.7 minutes, Overall reliability excluding storms. The impact of heavy storms on customers was dramatic, taking the unplanned interruption to 704 minutes lost per figure customer. Meeting demand Our geographically diverse franchise contains some of Australia’s area annual where fastest developing areas electricity capacity demand has been at 5% per year over the last growing four years. During 2001-2002, growth than in demand continued, with more including 4,500 connection projects, sub-divisions. residential As well as meeting the growing demands of new customers, Integral Energy has embarked upon a major for the capital investment program is detailed in network. This program annual planning Integral Energy’s statement, >

our obligation to provide a safe our obligation to provide network for the public, and reliable customers and staff; who of regulators the role influence our financial returns assets and operations; from the expectation of our shareholder the returns through for commercial optimum mix of capital and operating expenditures; developments in technology – and comparisons with industry benchmarks – so as to continually our asset management improve technologies and practices; and, sensitivity in all environmental our activities. We recognise that the long-term success of our long-term success that the recognise We of our sound management hinges on organisation their committed to are assets, and we network improvement. continual Integral Energy’s electricity supply electricity Integral Energy’s million network serves over two 24,500 square people across Withkilometres. estimated value in an excess of $2b, the network is made than 25,000 substations, up of more 370,000 power poles and 150,000 in bound together by streetlights, excess of 33,000km of overhead and mains. It is our key underground income-generating asset and, as such, to its positive contribution we ensure the business, while meeting our entire needs of our customers for a safe and electricity supply. reliable In addition, we have to take into account: > > > > > Responsibility for the development and operation of the network rests with two key business units: Engineering Performance provides to engineering support related planning, operation, maintenance and connection within the franchise area. The business unit also develops strategies, policies and plans for the development of electrical assets to needs and future meet the current of customers. > Building value in the network value in the > Building > Recover affected Integral Energy’s extensive demand Integral Energy’s aims to management (DM) program of electricity manage the growth in our demand in selected ares have enabled franchise. Key projects energy consumption, us to reduce better manage peak consumption the impact of periods, and reduce network charges on customers. were At 30 June, major DM programs Park and Seven in place at Wetherill summer afternoonHills – controlling among industrial peaking problems customers – and Katoomba, where has been reduced load growth programs energy efficiency through among new and existing homeowners. for power factor New DM programs begun at Blacktown were corrections and the Camden Zone industrial area a realised Substation. These programs saving of $460,000 by deferring 26 August 2 October Electrical/snow18 November 2 Electrical Wind 3 December Electrical 25 December 3 Bush fires 16,334 2002 47 January 2 1116 February 14,822 Electrical Electrical/wind 26 March 165,058 62,966 4 89,575 Electrical 2 160,273 2 30,620 19,543 Date2001 Cause16 August 18 August Wind Wind Days to Customers 4 2 40,431 61,496 At the mercy of the elements At the mercy every seven of our customers were On average, six out of series of storms and by an unprecedented affected between August and that hit our supply network bushfires supply to worked to restore All up, our field staff February. is usually a total of 660,000 customers. Storm activity November to February. confined to the months from service achieved an average 99% rate within 36 hours of response customers. This was a from requests given a tenfold significant result in enquiries in the South increase of due to re-definition Coast area with boundaries, and when compared to 95% a service level of responding within 48 hours. Demand Management Integral Energy continued its strong commitment to the investigation and development of demand management the and improving (DM) programs to achieve this industry wide processes outcome. The organisation has also to developed internal procedures allow all stakeholders the opportunity to have input into the development of non-network options. The first of to be placed in the these projects public domain is Penrith Transmission Substation.

> 17 Integral Energy Annual Report new or upgraded zone and transmission substations. new substations were During the year, and Prestons, completed at Narellan supply for thousands of improving suburbs customers in rapidly growing south of Liverpool. Built at a total cost of $15m, both substations came on on November 2001. stream issued for construction Major projects include new zone substations at Bow Bowing, North Richmond, Wetherill Park (also transmission), Lennox, Park and Quarries. Glenmore Mamre, In addition, a long-term plan for electricity supplies to the Parramatta CBD is nearing finalisation, ahead of community liaison on the impact of the project. Enquiries on the location of assets carried out on underground you dig’ behalf of the ‘Dial before Natural disasters number of had to cope with an unprecedented We compared incidents during 2001-2002 – nine major storms four years, plus the to an average of six over the previous a that affected bushfires devastating Christmas/New Year the Blue from significant part of our franchise area, to Sussex Inlet. Mountains, east to Helensburgh and south significant damage to the caused The storms and bushfires Over work exceeding $7m. network with the cost of repair clean-up included the Christmas period alone, the bushfire of 500 burned transmission and distribution replacement than supply to more poles and 100km of cable, restoring 89,000 customers. to of our staff These events again demonstrated the ability conditions, and difficult work as a team under extremely supply to customers as their commitment to restore speedily as possible. of the impact of the bushfires, review Following a thorough risk bushfire the organisation developed a comprehensive ahead of the 2002- management plan due to take effect season. 2003 bushfire > How’s the weather? All bad, including a furious windstorm at Smithfield, snow falling at Bowral, bad, including a furious windstorm at Smithfield, the weather? All > How’s Park depot. bushfires, and floods at the Hoxton in the Christmas/New Year burned out power poles Integral Energy Annual Report as part of the Prestons zone as part of the Prestons installation of substation project, the longest single length of 33kV cable in the underground franchise; major design and construction work for the Liverpool to project, Parramatta Transitway for which we have successfully and won design work tendered for all 13 stages, as well as construction work for one of two major stages; construction of a 132kV supply cable for a distance of 2.5kms Parklea zone substation from the Stanhope Gardens through development, the longest property installation of its kind ever carried out by the organisation; in conjunction with Landcom, a to underground $950,000 project 18

performance within 99% of the set performance within 99% targets by year-end. during the was introduced A program to be trimmed year that allows trees without the normal practice of interrupting supply to customers. Four have been Integral Energy crews that have grown trained to trim trees within normal safe working clearances. Further information on environmental initiatives is contained in the on page 30. report environment Capital and maintenance programs With in continued anticipated growth on we focused our franchise area, planning for an accelerated capital designed program and refurbishment network reliability. to improve in was an increase Overall, there capital for 2001-2002 to $107.7m, that program part of a ten-year rolling in than $1.6b invested will see more the network. Among the highlights of our capital over the year were: program > > > > > Summer Winter ASPs, who carry out 95% of new ASPs, who carry out 95% also used to connections, were service to customers during improve system disruption, times of extreme 40 ASPs such as storms. In February, effort, assisted in the restoration about 1,200 customers. reconnecting was manual An emergency response safe the compiled to further ensure as to use of ASPs, as well and efficient existing emergency procedures. refine initiatives Environmental A number of major changes were and processes made to environmental during the past year, procedures including an assessment of how new poles and padmount substations are installed in the network; updating our soil erosion standards; environmental training for over and sediment control and, 300 asset management staff; training waste awareness hazardous for the drivers of Integral Energy’s vehicles licensed to carry such waste. management Vegetation Striking a balance between concernsenvironmental and network needs, Integral Energy operates a $12m vegetation management specifically through program contracted firms and its own staff with skills in horticulture. contact with overhead Vegetation powerlines is a common cause of help maintain supply interruptions. To we have a supply reliability, vegetation comprehensive management policy that is underpinned by both Australian and industry horticultural standards. 12 vegetation activity, In a year-round managed contracts were control from during the year to help recover significant backlogs in this program over the past five years. Careful by planning and cooperative responses contractors helped achieve Megawatts Increasing use of air conditioners in summer has changed the nature changed the has in summer air conditioners use of Increasing performance. ways to improve requiring network, on the of demand The process controlling the design and controlling The process connection of contestable works carried out by both external (ASPs) Service Providers Accredited and the and internal was refined, staff terms and conditions updated. As a contestable activity, connection As a contestable activity, of customers to the network required continued development of processes and systems. Network connections A total of 37,841 customer connection services – for existing expansion or customers requiring augmentation of their electricity and and at new residential supply, subdivisions - were commercial reflecting completed during the year, in development in the the growth franchise. Integral Energy conducted an interruptible air conditioning study over the 2000-2001 summer period. as the only The study is recognised trial if its kind in Australia with the objective of reducing express peak demand as set residential out in the NSW Sustainable Energy Development Authority (SEDA) report, Demand Side Management: Evaluation of Market Potential in NSW. Integral Energy played a leading role in the NSW Independent Pricing and inquiry into (IPART) Regulatory Tribunal the Role of Demand Management and of Other Options in the Provision Energy Services, making presentations data on DM programs and providing It is of IPART. at the request anticipated that this inquiry will result in the development of regulatory policy to assist the implementation DM programs. of cost-effective network build options valued at network build options in also resulted $6.6m. The programs of 877 tonnes of total reduction emissions. greenhouse Network 2012, Penrith and this will be considered Penrith and this will be a solution. during development of the end of 2002, Integral Towards Energy will publish detailing the rolling capital investment detailing the rolling the next 10 years. for program Details of the benefits of the given are DM programs organisation’s on page 17, and in the appendices on page 96. Systems management program Integral Energy is committed to maintaining and investing in its that the increasing network to ensure electrical demands of our customers includes computer-based met. This are systems that underpin the operation and performance of the network. in drive improvements to In order systems, the organisation established the Integrated Asset Information Management System (IAIMS) project to evaluate existing business systems and assist in making and processes, optimal decisions about upgrades to or new investments. started in 2001, The project of the organisation’s with a review Geographical Information System (GIS), a database showing the location of all network assets. After of documenting the requirements range of GIS users, and a broad a detailed solution design, preparing an external vendor was appointed to of the manage the replacement system by April 2002. This date was subsequently extended to November 2002 due mainly to additional identified by the requirements organisation. Notwithstanding is running the project the delay, to budget. The IAIMS team is also documenting within business processes improved the Mincom Information Management giving Network 2010 Network 2010: our implementation of an improved implementation of an incident recovery environment used effectively procedure, of transformers following failures Liverpool; and West at Guildford condemned achievement of zero for replacement; poles overdue and, to identify and a major program upgrade overloaded substations and transformers. In all, 595 upgraded, substations were primarily due to load growth air-conditioning. from resulting > > > Network 2010 In November 2001, Integral Energy published blueprint for sustainability, details of immediate, medium and long-term development planned for an giving the network. Apart from insight into the complex mix of factors and when planning to be considered operating a large electricity distribution network, was also designed to engage the input of stakeholders into our long- term network planning. The blueprint was published in Demand to the industry’s response Management Code of Practice, issued by the in May 2001, and recognised Ministry of Energy and Utilities. As a leading practitioner of demand management (DM) strategies to help in electricity better manage growth demand, Integral Energy made a major contribution to the development of the code, and the working group. chaired As a first step, Integral Energy of interested established a register customers, service parties, recording and others who want to be providers informed of our network plans on an ongoing basis, and to gather opinions on possible solutions to identified issues or constraints. Input has already at on a constraint area been received

> 19 Integral Energy Annual Report new oil containment bund walls constructed at Ulladulla, Sussex Huskisson, Yattah, Inlet, Yatta Bonnyrigg, Meadow Flat, Berry, Sherwood, Gerringong, South Nowra and Granville zone substations; establishment of a new contract for oil separators, with units installed at Hawkesbury transmission substation, Falls, Glossodia, Wentworth and Granville zone Yennora substations, and at most of the newly walled bund sites mentioned above; two 66kV feeders for a distance of two 66kV feeders for the Garden through 550 metres Gates estate at Mt Annan, on land adjacent to the botanic gardens; and, Castle Hill augmentation at West zone substation to meet increased demand following strong growth, and commercial residential with plans to add capacitor banks to make additional power available when required. We are also conducting a review of also conducting a review are We our design, construction and maintenance practices with a view caused to minimising supply problems weather conditions. by extreme Major maintenance programs, included: > > programs for replacement of for replacement programs condemned power poles, vegetation management, upgrading of overloaded transformers, cleaning sites, and to spreaders installing or replacing of overhead low clashing prevent in high winds. voltage wires > In addition to normal maintenance activities and emergencies, we to continued with special programs events and improve unplanned address and safety of our the reliability network, and meet environmental expectations. These included major Integral Energy Annual Report 20

During the year, Integral Energy During the year, moving from advocated strongly cap in the current the revenue determination to a weighted average price cap form of regulation. implemented, Integral If appropriately Energy considers that the weighted average price cap should deliver stable and end-user prices and cost reflective revenues. sustainable and commercial will continue working with IPART We and the NSW electricity industry to issues to the regulatory address benefit of our organisation and our key stakeholders. Undergrounding In November 2001, the NSW Government announced an the examination of ways to reduce number of overhead electricity cables to was asked in the State. IPART the costs, benefits and funding review electricity cables. for undergrounding Integral Energy made a major supporting submission to the review, in principle, but undergrounding seeking consideration of a number of to achieve the best matters in order outcome for customers and other stakeholders. The submission clearly indicated the to work closely desire organisation’s with local Councils and other stakeholders in developing that have the projects undergrounding support of the local community. broad > the prices we charge; we earn;the revenue the level of ‘efficient’ allowed we are costs/expenditure to incur/spend; of the the type and standard services we provide; to to relate required how we are customers; the return to our we can deliver and, shareholder; to required the information we are disclose to customers, other market participants and regulators. Regulatory strategy complex Integral operates in a that environment regulatory substantially impacts on network operations by influencing or controlling: > > > > > > > The network operations primarily fall under the determinations of the NSW Independent Pricing and Regulatory plays a The Tribunal (IPART). Tribunal in influencing the incentives major role and operations of NSW electricity revenue distributors, and in regulating pricing outcomes and producing determinations. The organisation was an active participant in the Independent Pricing review (IPART) & Regulatory Tribunal’s of the Form of Regulation for the next Network Determination. This was a key debate within the regulatory framework as it determines the arrangements under which we, and other NSW distributors, will derive in the period from their revenue July 2004. Total repairs repairs Total Within 5 days provide improved reliability of reliability improved provide supply for our customers; the safety of the promote community and our staff; our network performance, improve comply with statutory and community expectations; and, with our shareholder provide value. increased IAIMS has a long-term vision and, on successful completion, it will ultimately asset and works managers provide with access to best practice processes, systems and information for the management of the ongoing effective asset base. This, in turn, organisation’s will: > > > > > During the past year, the project team the project During the past year, completed business requirements documentation and moved to solution design. Implementation is scheduled for completion in April 2003. In addition, an extensive business has been program awareness at depots implemented with key staff being briefed on the IAIMS project and the importance of accurate asset information. System (MIMS) as a blueprint to System (MIMS) as a blueprint support Engineering Performance and Asset Management in any design for decisions that may be required re-engineering. process future Total repairs % repairs Total Over the year, only 220 street lights were not repaired within the within not repaired lights were street only 220 the year, Over Service Guarantees. Customer out in our period set five-day agreed > In July 2002, the Asset Management In July 2002, the Asset base structure product business unit’s to one based on was reorganised will This change geographical regions. the way we deliver help improve service, assist our operations to and help efficiently, run more maintain our competitiveness market. in a deregulated In the year ahead, we will continue to develop work practices that drive and increased reliability efficiency, will also continue to We productivity. benchmark our performance against that of other asset managers, striving as to gain and maintain a reputation a "best practice" network asset manager. On the network, the organisation plans to continue its drive for greater setting the overall target at reliability, 125 minutes lost per customer (excluding storms), made up of 35 minutes for planned reliability and 90 minutes unplanned. Network 2012. and In line with our regulatory obligations, In line with our regulatory incidents over and taking into account safety year, the previous communications also included the dangers of fallen overhead lines/trees in contact with fallen lines, overloaded power points inside the home and the use of high machinery near electricity infrastructure. Outlook network The 2004 IPART determination is fundamental both to development as a the organisation’s electricity distributor, safe and reliable and to its financial performance. In balancing these issues, Integral Energy will continue to focus on working with and other stakeholders the regulator to achieve an outcome that enables the organisation to meet the price and service expectations of customers, objectives, deliver on our commercial our medium address and appropriately to long-term asset investment and requirements. expenditure The vast majority of the work that the organisation needs to complete for will be completed in the next review determined 2002-2003, and we are to continue building value in the we will focus network. In particular, on achieving a further increased that amounts to capital program than in 2001- $135m, 27% more to be undertaken 2002. Major projects spelled out in detail in are 2010

> 21 . Integral Energy Annual Report Integral Energy recognises the obvious Integral Energy recognises has and benefits of undergrounding along with local been pro-active, councils and developers, in the in of electricity assets undergrounding new developments over the last three in has resulted decades. This approach a 16% of high voltage and 36% of low voltage mains being placed underground. At the time of assembling this report, the organisation was awaiting the review. outcome of IPART’s Safety commitment demonstrated our commitment to We and supporting safety promoting initiatives in the electricity industry by once again hosting the 2002 National Electricity Supply Field Days on 16-17 contained in April 2002. Details are Our People on page 34 > Transmission substations technologists Jason D’Angelo and Kevin Moon, Coniston > Protection Technologists Satya Lal, > Protection Technologists Jason D’Angelo and Kevin Moon, Coniston substations technologists > Transmission Prestons zone substation Project Manager, Richard Fenech > Bob McCue, Seven Hills > Technologist Page, Nepean and Terry Public Integral Energy’s Each year, seeks to both Plan Safety Awareness meet and exceed regulatory information to provide requirements to the public about the hazards associated with electricity. In 2001-2002, the plan aimed to minimise electrical accidents by advising the public of the hazards reduce associated with electricity, incidents of vandalism on the network, and demonstrate the commitment to organisation’s particularly public electrical safety, safe work practices. Integral Energy Annual Report customer interface and pricing, Integral Energy was the first where competitive quotes over to offer for a the phone and registration contract price on the Internet; and systems to manage procedures contract and the offer administration process; implementing a business-to- business (B2B) transaction based customer transfer solution, communicating with the central market system; development of new standing data arrangements for all customers, than involving collation of more 1.3 million records; upgrade of the meter reading system to handle both basic and interval meters on manually read the same route; upgrading systems to help deliver basic metering data and receive NEMMCO and market from participants; for billing enhanced processes external and newly retailers contract customers; acquired development and implementation of new activities to manage customer billing configuration of customer changes as a result churn; developing a debt policy and strategic framework to support new market conditions of FRC, assessment for out- including credit of-franchise customers and credit risks among customers churning to and, another retailer; development of a corporate meter data management strategy to assist settlements and forecasting. 22

individual projects. The projects, which The projects, individual projects. than $30m, linked to every cost more business aspect of Integral Energy’s to systems through office back from the customer interface. included: Major projects > > > > > > > > > > >

Sales and Marketing, which is and service for product responsible development, negotiated pricing, and channel management; for responsible Energy Trading, matching financial supply to demand over time and settlements; call which provides Commercial, service and meter data centre functions; Billing Operations, which is for customer transfers, responsible field operations and meter reading, collections; and, Corporate Development, which for brand, carries responsibility pricing and eCommerce regulated strategies. On 1 January 2002, Full Retail Competition (FRC) Retail Competition 2002, Full On 1 January 2.7 million the first time, For in NSW. commenced retailer their electricity could choose customers energy they used. amount of of the irrespective For Integral Energy, the launch of For Integral Energy, of a new era of FRC meant the dawn and competition, testing our resources our with systems and the relationships an existing customers. It also provided opportunity to test the lessons learnt the of FRC in during the introduction UK and New Zealand. for the Charting our preparedness onset of this final market step was of our primarily the responsibility dedicated Full Retail Contestability team, established in April 2000, and supported by: > > > > > Market preparations Integral Energy worked to build a solid and platform of business processes systems designed specifically for the mass market, and performed well against a series of non-negotiable In fact, deadlines for market readiness. and recognised were our efforts acknowledged by our key external stakeholders including the NSW the Ministry for Energy and Treasury, Utilities and the national market operator NEMMCO. of This accomplishment was the result meticulous planning and careful by a team of industry experts control than 90 for more responsible > Preparing for competition > Preparing > > The organisation coordinated an The organisation coordinated study in the area industry best practice Cross of customer service protocols. collect formed to business teams were leading some of Australia’s ideas from customer focused companies. These to prioritised and tailored ideas were suit our business, then collated into to allow manual a reference a through communication to staff training program. comprehensive customer service The organisation’s performance underpins ongoing and customer reputation retention, and commitment. The call centre and teams supported customer care assisted customers against a backdrop major number of of an unprecedented natural emergencies, as well as the start of the fully competitive market. the of committed staff, As a result customer time taken to resolve by approximately reduced problems 10%, with 96% of complaints being within 30 days, exceeding resolved our target of 90%. than more answered staff Call centre customers, with 1.5 million calls from within 30 over 70% being answered seconds, slightly below the target of 77.5%. establishment of a strategy and vision for customer service that the concepts of genuine reinforces commitment to customers and on the part personal responsibility of management and staff; development of a new company- wide customer service charter and and to all residential promotion small business customers with their electricity accounts; conducting organisation-wide on customer training for all staff service and new customer service and, protocols; of targeted introduction performance monitoring on customer service. This process continues at a fundamental level, of the culture seeking to address the organisation and the personal motivation of staff. However, the costs associated with However, and increased serving customers have in the new competitive environment, was achievements one of the greatest profitable a more our ability to secure market share. key customers Integral Energy retained and won major new contracts, such as and Corporation the Rail Infrastructure major client BHP. also retained Integral Energy was also the first NSW a competitive to provide retailer over the "quote and contract" offer telephone and on the Internet, one of the key developments in our strategy. eCommerce Customer service in customer service Improvements targeted were philosophy and culture as one of the strategic initiatives to be implemented during the year. Highlights of this initiative included the following achievements: > > > >

> 23 Integral Energy Annual Report a significant number of customers won by a team of professional, face-to-face sales agents; and, marketing direct cost-effective for responsible campaigns were securing substantial numbers of customers onto existing profitable contract with higher margins, while savings to customers. still offering Market results already The organisation had anticipated the evolution of the retail sophisticated business into a more the important model by recognising Sales and of roles but differing In late Marketing and Energy Trading. April 2001, the Retail operations were split, with General Managers appointed for trading activities and the sales and marketing portfolio. of both In a complete restructure parts of the business, new staff specific skills with recruited were and expertise, and on the sales and marketing side, engaged the services sales-driven external of professional, to work with our existing call centres in a pool of This resulted call centres. experienced managers keen to embrace the challenges of the by market, supported deregulated and customer systems, market proven existing and a strategy to retain accounts and attract new business beyond the franchise. In a tough market, Integral Energy developed negotiated contract pricing existing as a means of retaining customers, and attracting new business beyond its franchise. Negotiated contracts made significant savings on energy bills available to the majority of NSW consumers. As a its the organisation grew result, customer base, and converted tens of thousands of customers to negotiated supply contracts. include: Key results > > > Andrew Nash, Manager Commercial, Sales and Marketing > Contracting Assistant Jodi Loeckenhoff, Sales and Marketing Sales Assistant Jodi Loeckenhoff, Commercial, Sales and Marketing > Contracting > Andrew Nash, Manager Retail Sales De Lorenzo, Small Business Development, Call Centre > Tony > Dianne Wynn, Coniston Integral Energy Annual Report 24

Green energy Green designed to meet In a program energy targets, and to give renewable are options that customers purchasing two green friendly, environmentally developed and were power products by the approved launched. Both were NSW Sustainable Energy Development were Authority (SEDA). The products launched in June 2002 as part of a and are negotiated contract offering, expected to attract thousands of customers to negotiated contracts by December 2002. Solar for Schools energy scheme, Our community green Solar for Schools, which is supported by voluntary contributions by pace. By year- customers, gathered customers 9,664 were end, there by contributing to this program up or nominating fixed rounding bills. their electricity amounts through spent on Customer contributions were installing solar energy systems at two bringing the schools during the year, total of school and community solar systems to 32 in and beyond the savings in Apart from franchise area. school energy bills, and environmental benefits, the solar panels create issues of environmental awareness generations. among future > Integral Energy met its Mandatory Renewable Mandatory Energy met its Integral in NSW retailer – the only (MRET) Target Energy Renewable of the purchase – through to do so Certificates. Energy Target tariffs are an essential an are tariffs Target the prices that benchmark in setting Integral Energy and other standard should be charging customers retailers on the who choose to remain due However, tariff. regulated to side constraints set by IPART, Integral Energy has been limited in the target levels for some reaching of these tariffs. submission argued Integral Energy’s in the existing target for an increase in required based on increases tariffs net margin, operating the current compliance, and the costs, ‘green’ FRC costs. inclusion of retail-related It also argued that side constraints to to enable prices should be relaxed target to any revised be increased set by IPART. tariffs by released Based on the final report in June 2002, some important IPART changes have been made, particularly to the level of the target in relation and the application of side tariffs constraints. These changes improve our ability to achieve a commercial customers small retail return from The tariffs. on regulated remaining of side constraints also relaxation flexibility in re- greater provides the ‘basket’ of balancing prices across are there however, tariffs, small retail any still overall limits which will restrict gains over the substantial revenue period of the current remaining determination. the appropriateness of existing the appropriateness (those target tariffs retail established by the tribunal based on the cost of supplying electricity to customers); the amounts allowed for the net margin; operating costs and ‘green’ compliance; and, of existing side the appropriateness constraint requirements. Among other issues, the review considered: > > > > In working to protect and promote In working to protect of our retail interests the commercial activities, the focus continued on framework. shaping the regulatory A key part of our regulatory to IPART’s involvement was responding retail of regulated mid-term review price retail The current tariffs. January determination runs from 2001 until June 2004. Prices and the Regulator The organisation operates in a environment, complex regulatory which substantially impacts on the operations by influencing or retail among other things, controlling, the prices we charge, the type and and of service we provide, standard to to relate required how we are customers. Billing and payments accuracy and timeliness was significantly improved over the course of the year with performance now superior to many competitors. Field services staff maintained a consistently high of timeliness in fulfilling standard service orders. The quality of customer service was The quality of customer a through significantly increased and a management focus professional commitment to engaging, retaining as well as and training skilled staff, implementation of new systems. An improved trading position also An improved margin of contributed to a positive of $7m. Re-positioning approximately the portfolio against price volatility not also our margins but only protected $12m in extra approximately delivered EBIT. margin to the retail Integral Energy met its Mandatory (MRET) – Renewable Energy Target – in NSW to do so the only retailer of Renewable the purchase through Energy Certificates. These targets were met with total costs coming in under target by 33%. This success was the management of this of effective result associated costs. and process Outlook The organisation has developed a dynamic market strategy to carry the years. business over the next three focus will remain Continued strong customer on comprehensive with strategies, acquisition/retention market share. the aim of profitable In serving customers, the organisation the overall will continue to promote benefit of dealing with a business that Ongoing operates with integrity. application of a comprehensive a strategy will ensure eCommerce greater that offers continued program customer choice.

Actual Target > < GOOD 25 Integral Energy Annual Report Improvements to billing processes have allowed have billing processes to Improvements targets to set industry-leading Energy Integral accounts. of customer delivery for on-time Trading that In late 2001, it was recognised the the impact of FRC would stretch energy limits of Integral Energy’s trading system capabilities. A review systems was completed of the current combined with the business needed to ensure requirements competitiveness while managing the risks associated with an ongoing business. The organisation is currently evaluating a number of alternatives to achieve this goal. also worked to formally Trading separate pricing and deal structuring wholesale market functions from activities. This will allow transfer- as the pro-active pricing to be more market evolves. It marks a significant practice of the previous shift from in transfer pricing being reactive activities. Changes in trading methodologies and in practices have led to improvements transfer pricing and risk reward, allowing Integral Energy to win new major contracts. contracts and retain 3 For the first wave of Tranche customer marketing, transfer-pricing attractive effective, delivered structures which enhanced the margin offers, earned by the business. Trading expects to continue to offer competitive pricing into the future, systems particularly when improved of market and picture deliver a clearer customer flows. Integral Energy Annual Report a renewed focus on the a renewed occupational health and safety strategic plan; updating and implementing that guide policies and procedures our HR practices; the development and implementation of graduate and cadet programs; of our remuneration a revision and a strategy for senior roles program; of our reward redesign and, development and implementation workshops. of performance review 26

Supporting our people our The ongoing success of organisation depends on the establishment of a working that supports and environment individual and team recognises focus performance. Integral Energy’s on people issues over the past two years has put in place strategies for the of staff, and retention recruitment development of skill sets and career and planning as well as recognition programs. reward initiatives over Key human resources the past year included: > > > > > given in the people Full details are on page 34. report Information technology and telecommunications (IT&T) IT&T supports the organisation’s overall business strategy by developing and coordinating, IT&T solutions. maintaining proven The business unit also recommends, and supports technology and procures the to ensure systems infrastructure achievement of cost-effective corporate objectives. to meet these challenges, In order IT&T completed its strategic plan for major themes: 2002-2005, with three cost containment, risk management and business alignment. >

developed an automated tool, budgeting and forecasting enabling 160 users to gain access a to and update data through web-based process; rolling commenced a three-year stock-take of fixed assets, including the development of an integrated and, equipment register; developed a scenario planning and decision making matrix designed to from optimise value created network investments, as well as feedback to regulatory providing and network development strategy development processes. Integral Energy continues to make excellent progress to make Energy continues Integral structure organisational a sound establishing towards needs. with our business that aligns Integral Energy continues to make Integral Energy continues establishing towards excellent progress that a sound organisational structure aligns with our business needs. During 2001-2002, we moved with our “one Integral” forward the ensuring that we have approach, right financial, technology and people in place to and resources processes of our business. support the growth Financial management financial performance Integral Energy’s was one of the highlights of 2001- assist this performance, the 2002. To its Finance unit strengthened centralised accounting and reporting functions. In further developing financial strategy, of provision discipline and cash flow management for the organisation, and the accurate of and reporting control capture, financial performance to key stakeholders, the Finance unit: > > > Supporting the organisation’s on the network submission to IPART key determination by providing a focus over financial data will remain the next 12 months. > Ensuring support systems are in place are support systems > Ensuring development, implementation and development, implementation evaluation of the corporation’s launched for staff brand strategy, with 86% of staff in mid-January, attending special sessions; development and in a key project, implementation of an eCommerce beginning with a redesign strategy, and launch of a new website, ranked as the national energy number one site for industry’s service and content, and the only site to allow customer connections/transfers online; and, management of the alternative arrangements energy purchase with the Smithfield cogeneration plant and the Appin Tower Collieries coal bed methane project. > > > The organisation continued to better assets and consolidate property portfolio, finalising align the property a a new strategy that provides for the direction sustainable property organisation over the next few years. Integral Energy also pursued revenue opportunities on developed sites and telecommunications towers, and managed a comprehensive management environmental (details on page 30). program With network of depots, a widespread substations and construction sites, our closed off security team effectively of loss and risk to the sources organisation. in supply In pursuing improvements the organisation and procurement, commercial continued to bring greater discipline to the selection and engagement of contractors and suppliers. improved risk management by improved designing and deploying risk business units, methodology across risk, planning and and introducing audit software; of a development and coordination program guidance and preparation of privacy for the introduction legislation; and updating the Code reviewing a fraud and of Ethics and releasing corruption policy and procedure; and distribution to all staff contractors of advice on addressing fraud, corruption and other ethical breaches; Trade emphasis on a robust Practices Act compliance program during our move into Full Retail Contestability; launch and deployment of the 2001-2004 Corporate Plan; documenting end-to-end processes and identifying and evaluating key in major systems of controls and HR; accounts payable, payroll development of 15 major regulatory tariffs, submissions covering retail of electricity cable, undergrounding Demand Management, form of ring fencing of NSW regulation, of electricity businesses, review licence conditions, the accounting code of separation, and capital contributions; management of the 1 July 2001 – price increases network and retail delivering an estimated $26m in – and the additional revenue Mid Term to IPART’s response Review of Regulated Retail Tariffs; Average monthly customer call rates of 22,000 call rates customer monthly Average storms. times of heavy at are exceeded Overseeing positioning Overseeing positioning team The corporate development positioning oversees Integral Energy’s of governance,in the areas regulatory management, stakeholder In management and reputation. such a delivering outcomes across we focused on key spectrum, broad initiatives, achieving a high rate of success, including: > > > > > > > > >

>

< 27 GOOD Integral Energy Annual Report Customer call waiting times call waiting Customer waiting time/seconds Average The major focus during 2001-2002 The major focus during for Full Retail was on preparing linking the technical Contestability, for FRC with required architectures developing enterprise architectures, technical while also providing consultancy and operational support organisation. to the entire IT&T directions Future IT&T will In the coming financial year, cost significant be working towards in delivering essential reductions services to the organisation. This will to a shift in focus be achieved through leveraging the information technology and telecommunications to provide competitive advantage through information access, faster improved customer and market responsiveness, management, network effective more and automation process increased enhanced management efficiency. Managing meter data InfoMet became During the year, chief agent for Integral Energy’s managing all meter data. In particular, the InfoMet team implemented new meter data handling systems and vital to operating in a processes and secured contestable environment, NEMMCO as a from accreditation for FRC meter meter data provider data requirements. InfoMet will be In the coming year, as a company and will be deregistered integrated into a single meter data within Integral Energy. group Significant work on the integration been completed without has already disruption to customers or staff. The power is in your hands …to aim high

3> THE ORGANISATION The ability of our people to respond with renewed vigour to the challenges presented to them is paramount to our success.

Reaching for the sky, Liga Walters, 9, daughter of Administrative Assistant Anna Walters (Corporate Development) helps set the benchmark for Integral Energy’s success. Inset pics from left: > Sharon Finlay, Manager Strategic Finance > Frank Bucca, Demand Manager, Engineering Performance > Daniel Bubb, Economics Graduate, Regulatory and Pricing Integral Energy Annual Report Developing environmental benchmarks. asbestos control. Improved site licences in All environmental place. Development of the organisation- management wide environmental system. Development and issue of an incident response environment process. to examine the A pilot program impact of drainage environmental systems at substations. to install and maintain A program oil/water separators in bunds. in aesthetics and Improvements security. removal. in graffiti Improvements of Embedding a culture care. environmental 30

Achievements under the strategy Achievements under the include: > > > > > > > > > > Report card has been made on Significant progress a range of specific environmental issues: training Environmental Integral Energy launched an organisational wide environmental covering training program, awareness commitment; how our environmental to identify and manage environmental and projects risks; and, environmental can help to improve how staff performance. The environmental their and Executive received Board training, which will be environmental in a rolling extended to all staff in 2002-2003. program also As part of this training, staff training undertake an environmental needs self-analysis to determine if they job-specific training in further, require such as pesticide use, spill areas management, oil handling, etc. This begun during will extend a program 2001-2002, which included training in as and control, awareness soil erosion waste driver training. well as hazardous >

Developing an improved management environmental system. environmental Improving governance. operational Improving controls. environmental and education. In 1995, Integral Energy seized the opportunity to seized the Integral Energy In 1995, in energy companies one of the first become the Federal Government’s to embrace Australia of program – a Challenge” “Greenhouse and industry between agreements cooperative emissions. government greenhouse to reduce In the seven years since, Integral In the seven years since, in Energy has led the industry through gas reduction greenhouse including range of programs a broad coal bed methane solar energy, extraction, co-generation, wind and water generated power. At the same time, the organisation developed programs has increasingly pollution and waste to address to management issues in response industry and community expectations, licence compliance and regulations. The extensive suite of environmental the activities continued throughout further underlining the year, commitment strong organisation’s of to the continual improvement performance by environmental to ensure implementing measures of pollution. Integral the prevention that long-term Energy recognises business success hinges on sound are performance. We environmental committed to compliance with all applicable legislative and regulatory reasonable and, where requirements and practicable, to exceed these requirements. Governance In 2001-2002, Integral Energy put into action its first Corporate Environment a document that coordinates Strategy, actions environmental and streamlines the organisation and is across prioritised on the basis of risk. 96 individual actions, the Through a more strategy aims to create and responsible environmentally sustainable organisation, in particular, focusing on the following priorities: > > > > training Rollout of environmental > Environment > > later this year. From around 2,500 around From later this year. 240 initial inquiries received, customers signed up to receive alternative energy as part of their and this number is rapidly supply, an Integral Energy has increasing. arrangement exclusive purchase with each supplier. Renewable energy target On 1 April 2001, the Federal Mandatory Renewable Government’s (MRET) scheme was Energy Target under the Renewable introduced Energy Electricity Act 2000. This of the additional purchase requires other than sources electricity from rising to a total of coal each year, 9,500GWh by 2010, to be shared among all electricity suppliers. as a expressed Individual targets are of total demand for percentage its existing Through electricity. Integral Energy comfortably programs, of the target (58,000 met its share wholesale MWh) this year through energy from of renewable purchases all sources. management Waste Like most major organisations, Integral Energy generates a mixed waste its day-to-day operations. from stream years, development of In recent management strategies environmental and to control has included programs possible, and wastage where reduce dispose of waste material. to properly have been Recycling programs the year for operating throughout paper, aluminium, steel, copper, batteries tyres, concrete, cardboard, to waste. In an effort and green waste, data is constantly reduce to determine the most gathered action to achieve appropriate this objective. Greenhouse and Greenhouse energy renewable gas reduction Greenhouse performance, Continuing its strong Integral Energy again led the industry gas reduction, in greenhouse contributing a total of 3.9 million tonnes of CO2 equivalent (CO2e) in 2001-2002, 0.25% less than the The year. 4 million in the previous lower was due to the small reduction at Appin-Tower recorded production of coal bed the source colliery, methane for electricity generation. Alternative energy for its Retail As part of the regime licence, Integral Energy Supplier’s complied with conditions to reduce gas emissions by greenhouse 32% below our allocated remaining benchmark. Reduction is slightly lower last year (36.4%) than that reported performance across due to improved the energy industry pool. several years of good However, performance by Integral Energy – with its pool partners – compared Any surplus have been recognised. returned to the pool will currently January 2003 be available to from Integral Energy to sell to others who cannot meet their licence conditions. Alternative make a energy sources significant contribution to reducing gas emissions. In 2001- greenhouse 2002, Integral Energy purchased alternative17.25% of its energy from including, for the first time, sources the Hampton wind farm, south of hydro Water and the Wyuna Lithgow, power plant, at Kembla Grange, near Both sites commenced Wollongong. Integral Energy’s last year. production initial marketing campaign for these by the accredited which are products, NSW Sustainable Energy Development solely at Authority (SEDA) is directed customers. Further residential planned marketing campaigns are

> 31 Integral Energy Annual Report The aim of this training is to equip our The aim of this training knowledge people with the skills and necessary to live our commitment to well management, as environmental as meeting our legislative obligations. Inspections and incident response occupational health Environmental, and safety and security assessments conducted at every field location are of these The results at least annually. to the reported inspections are put Executive and action plans are any non- in place to correct conformances found at these sites. also defects are Environmental of eight weekly in a program captured inspections of substations and reports Executive to the forwarded are Steering Committee. Environmental Integral In the past financial year, one environmental Energy received penalty infringement notice for a vehicle emitting smoke. All incidents, no matter environmental as well as near misses, how minor, to the Corporate reported are Regular reports Manager. Environment for the Executive prepared are Steering Committee, Environmental who decide if any changes need to be or practices, or if made to processes any to rectify funding is required issues that may arise. of these inspections and The results incidents allows Integral Energy to gather accurate data to identify issues. It also potential environmental enables the organisation to focus on to any patterns and allocate resources they lead to before fix problems harm. environmental > Anita Mitchell, Corporate Environment Manager > Greg Reilly, Acting Operations Manager, Transmission South Transmission Manager, Acting Operations Environment Manager > Greg Reilly, > Anita Mitchell, Corporate mains Transmission Security > Jack Druc, Lineworker, > Michael Owens, Manager > Environmental improvement timeline

Establish environmental governance 2000-2001 Focus on: > Environmental Committees > Environmental Management System architecture > Regular reporting > Policies in place > Environmental issues controlled > Environmental roles defined

Move to beyond compliance Focus on: 2001-2002 > Environmental Management > System certification > Refining environmental strategy > Risk minimisation > Further environmental training > Engaging stakeholders > Triple bottom line > Sustainability > Corporate social responsibility

Improve environmental compliance 2002-2003 Focus on: > Environmental Management System organisation-wide > Environmental strategy > Risk minimisation > Operational controls > Environmental training > Improving reporting > Renewable energy policy and strategy > > Audit and review >

32 Integral Energy Annual Report Alternative source Coal-based generation < GOOD A systematic approach to A systematic approach management. environmental Compliance with legislation. Ecologically sustainable development. Consultation with stakeholders. responsible An environmentally culture. Public health and safety. use of energy and the Efficient gas of greenhouse reduction emissions. Minimising waste. Minimising the impact of our infrastructure. Minimising harm to the environment. Goals – 2006, 2010, 2020… Goals – 2006, 2010, the 2002-2003 Looking forward, Strategy Corporate Environment strives to move beyond compliance with over sustainability, and towards 170 individual actions, the strategy focuses on 10 high level organisational objectives, coming our policy, out of our environmental Management System Environmental and our sustainability report. These objectives include: > > > > > > > > > > years. next two Energy purchased from alternative sources from alternative purchased Energy purchased % of energy 2 Conducting employee, customer and other stakeholder surveys. training environmental Increasing and OH&S training in specific areas. Achieving certification of our Management Environmental System to International Standard ISO 14001. Developing a set of key performance indicators (KPIs) for in conjunction with sustainability, our stakeholders. Initial benchmarking of sustainability performance. Commencing triple bottom line reporting. Contaminated land In the first year of a three-year has been remediation program, depot sites, completed at three disused removing cost effectively or abandoned fuel tanks and allocated contaminated soil. Funds are nine sites to be for the remaining undertaken over the The table at let sets out the environmental organisation’s As we enter the compliance journey. the phase, we have addressed third aim sustainability in "beyond of a publication compliance" through Sustainability Report, which included the following objectives: > > > > > > Beyond 2003, the organisation aims to incorporate triple bottom line goals into overall corporate business planning; balance competing financial, and social demands; environmental fully integrated TBL systems introduce and monitoring reporting with regular an integrated of KPIs; and, produce sustainability report

> 33 Millions of tonnes CO Licence Target < GOOD Integral Energy Annual Report Reduction in greenhouse emissions in greenhouse Reduction Resources and recycling Resources operations, the In its office-based organisation conducted a trial of paper for photocopying and recycled less than printing, which proved showed results successful. Preliminary higher than expected levels of on required maintenance were paper. machines using the recycled an continuing in Investigations are quality recycled high to source effort paper that does not have a significant negative impact on valuable machinery. In its field operations, Integral Energy timber poles has a policy of re-using possible. The timber wastes wherever principally poles and generated are timber, arms, typically of treated cross and not structurally sound which are also unsuitable for other applications. of success is in recycling One key area of oil used as an insulating and cooling medium in transmission disposed of equipment. Previously of as waste, last year 250,000 litres and filtered transformer oil were as part of an innovative oil re-used are Programs management strategy. a further 200,000 on track to recycle of oil by end of 2002. litres oil has a higher Although refurbished cost than new oil, Integral Energy has step in order taken this unprecedented ensure to minimise our waste stream; that significant amounts of oil are dependence and, to reduce recycled; on new oil, which is a non-renewable resource. Integral Energy Annual Report procedures and work instruction; and work procedures our people by support and improve at and responsibilities defining roles all levels, communicating strongly on safety and developing improved and, training programs; our working environment improve and conditions. 34

> > safety focus was inspired The renewed standards that revealed by research in decline. In addition to serious were incidents, the number of slips, trips and falls was on the rise. to adequately benchmark In order safety performance against best practice industry and other organisations, Integral Energy has adopted key performance indicators and (LTIFR) for accident frequency severity (LTISR). of 49 lost time accidents As a result with in 2001-2002 – compared (LTAs) year – the 43 in the previous rate was 13.27 accidents in frequency each one million hours worked, against a target of 10. For severity, was 72.61 shifts lost in each the result one million hours worked, well below the target of 85. concern the organisation’s Reinforcing at the number of accidents caused by slips, trips and falls, and incorrect manual handling techniques, the number of shifts lost in the 49 LTAs with 324 shifts was 268, compared year. in the previous 43 LTAs lost from in manual handling and Training emphasis on workplace renewed and risk assessments are hazard designed to dramatically reduce injuries in these categories. the organisation’s Further reinforcing safety commitment, an Occupational Health and Safety Manager was in HR. appointed in July 2002, residing In support of this appointment, the – formerly in Electrical Safety Group >

learning and following safety and to jobs; related health requirements learning to do work safely; maintaining safety and health in all tasks; awareness maintaining a clear and orderly at all times; work area constantly checking the workplace and, when necessary, for hazards fixing them; the from coming to work free influence of drugs and alcohol; taking action when co-workers or not working safely; contractors are looking for opportunities to safety and health improve performance; taking part in safety and health activities; and, all near immediately reporting misses, incidents, injuries and occupational illnesses. our safety management strengthen system, including training, Key achievements of building value key strategies The organisation’s of to the demands and responding in the network challenges significant presented the mass-market people. to the organisation’s The health and safety of our staff is of our staff The health and safety first priority. the organisation’s At Integral Energy safety is the In line with number one priority. and Executive this priority the Board far-reaching, endorsed a new, occupational health and safety strategy for all Integral Energy staff. focus to They have also led a renewed workplace safety by committing to a set of 10 safety principles, which include: > > > > > > > > > > Integral Energy As part of this process, safety is integrating improved into all business and standards and striving to management processes safety management while improve a goal of zero working towards accidents, injuries and illnesses. The safety statements include key to safety performance points relating set out in a new and these are corporate value of safety excellence. aim to: The measures >

Full time equivalents Staff numbers Staff > Our people > appoints site co-ordinators to better appoints site co-ordinators than more manage work involving one team, and to help merge work variances between practices to reduce work groups. have also been New work procedures to manage the introduced of mains under live high replacement voltage. While Integral Energy has a for working with de- preference energised high voltage lines, the new followed where are work procedures this is not feasible. training has been As well, improved implemented along with enhanced information on the qualifications of and safety training work crews, the importance of further reinforces maintaining adequate clearances under live associated with rescue 11kV lines. taken, Integral Since these steps were Energy has not experienced any lost time accidents due to similar incidents. Key achievements key strategies of The organisation’s building value in the network and to the demands of the responding significant mass-market presented challenges to the organisation’s of an people, against a backdrop ongoing restructure. of workloads in the areas Increasing asset management customer care, in contestability resulted and full retail that again pushed demands for staff up total employee numbers for the By year-end, second successive year. an 1,936 full time staff, were there year. of 171 on the previous increase The organisation has sought always to numbers against the balance staff escalating demands of the business, particularly the key activities of supply, and customer satisfaction. reliability Between early 1996 and July 2000, of a very heavy workload in building of a very heavy workload figures and maintaining the network, working were showed that some staff to be excessive, hours considered their the risk of damage to increasing This situation will health and safety. to continue to be closely monitored alert, especially remain staff ensure when working in high risk areas. Following extensive consultation with safety uniforms were new staff, early in 2002, featuring introduced high visibility yellow shirts and safety satisfying vests. Apart from set out in occupational requirements health and safety legislation, the cope also designed to uniforms were with varying work demands, including heavy-duty assignments. Safety breach against taken were Proceedings NSW Integral Energy by WorkCover of the Occupational over a breach Health and Safety Act 1983, for failure a safe system of work. This to provide 1999 to an incident in March related severe when two employees suffered electrical burns when a low voltage conductor came into contact with a phase of a live 11,000-volt high voltage conductor. 2002 in March The matter was heard at the NSW Industrial Relations Commission. Integral Energy entered The an early plea of guilty. Commission fined Integral Energy $160,000, as well as costs. In setting the fine – the maximum is $825,000 – the Commission took into account the “…fine industrial record organisation’s for an organisation operating with a large number of employees over a long period of time in a high-risk occupation”. of the accident, significant As a result taken to minimise the steps were possibility of such an incident being Integral Energy now repeated.

> 35 Integral Energy Annual Report 20-point plan addresses a number 20-point plan addresses of key safety issues including: accident investigation; risk and assessment; hazard consequence management; and, emergency preparedness; control. work process Engineering Performance – was Engineering Performance into the Occupation Health transferred members and Safety portfolio. Group in HR to joined existing OH&S staff dedicated form the organisation’s safety team. This team has conducted an extensive and an of safety standards review action plan was drawn up to ensure of put at the top safety values were at all levels of the agenda for all staff, the corporation. > > > > > > The team has also established a for simple and consistent process investigating accidents and near- to strengthen misses in order strategies. prevention being formed are Other action groups additional safety issues. to address reintroduced. OH&S committees were These committees hold a wealth of knowledge about safety issues and the members will be asked to make and then work with recommendations All their manager to solve problems. by monitored issues will be carefully safety senior managers to make sure and quickly addressed are problems adequately. tolerance policy for poor safety A zero and has been introduced standards disciplinary action will be taken if staff take calculated risks. The message the corporation is across is no – there straightforward with safety! compromise the end of the financial year, Towards the organisation moved to curb a in excess overtime disturbing trend In the face worked by many field staff. > Business Development duo, Fiona Macleod and John Carroll, Sales and Marketing > Deepak Sahay, Demand Marketing > Deepak Sahay, duo, Fiona Macleod and John Carroll, Sales and > Business Development Officer B2B Transfers Mokaraka, Tui Penrith > Officer, > Steve Allen, Project Officer Management and Forecasting Integral Energy Annual Report 36

New programs was orientation program A revitalised The orientation program introduced. new starters – permanent, provides – with part-time and contract staff information about the organisation and its operations and allows new team members to understand our corporate vision, mission and values. Graduate and cadet trainee programs now also developed and are were the being implemented across provide corporation. These programs a consistent supply of quality, academically qualified, specialists leaders who could become future in Integral Energy. policies and Human Resources updated and have been procedures being implemented. These policies are our practices guide and procedures and selection, for recruitment employment conditions, leave, equal employee benefits, opportunity, occupational health and safety, learningpayroll, and development and termination of employment. the right people are ensure To and employed for the job, recruitment undergoing selection practices are a This will ensure further review. that delivers high process streamlined new recruits. calibre Aboriginal employment Integral Energy has developed an Aboriginal Employment Strategy a 2003-2008, which provides employment framework for increasing opportunities for aboriginals and Strait islanders within our Torres The current franchise area. of in our workforce representation Strait islanders aboriginals and Torres is 0.6%: our target is 2% by 2008, consistent with NSW Government targets. > being filled internally, against a against being filled internally, target of 60%; and, performance appraisals were completed for 75% of staff to a target of 100%. compared

> all in place to achieve Strategies are targets in 2002-2003. Electrical training numbers adequate to ensure In order for the future, of skilled electrical staff the organisation operates an electrical located at the Penrith training group Campus of the University of Western The facility was Sydney at Werrington. developed though a partnering arrangement between Integral Energy, the University of Western Sydney and the Western of TAFE. Sydney Institute the helps to meet The training centre training needs of our organisation and those of other businesses that need to develop or maintain their employees’ electrical competencies. Up to 5,000 trainees attend courses at the centre each year. again Recruitment of apprentices in 2001-2002, with a total increased undertaking their of 63 apprentices a further plan to recruit training. We 27 in 2003 and to host train 10 in their electrical industry apprentices or fourth years. third 90% of apprentices Currently, completing their training continue in permanent employment with Integral Energy. Training Integral Energy is a Registered Organisation (RTO) and enjoys high Over several in the industry. regard training years, the organisation’s award- have produced programs State at regional, winning apprentices and national level.

< GOOD career plans were completed for plans were career 95% of staff; higher than expected recruitment appointments from levels requiring the external labour market resulted in only 43% of vacant positions occupational illnesses. occupational Integral Energy’s safety commitment Energy’s Integral injuries and accidents, is zero In the year under review: > > Training and development Training As part of its performance program, Integral Energy operates a training development plan for all and career we fell short of employees. This year, our target to complete individual development plans for all employees, due largely due to the impact of the which organisation restructure, most parts of the business. affected Human Resources also provides advice also provides Human Resources and support on issues such as terms and conditions of employment, recruitment, employee relations, performance management, training leadership initiatives, programs, workers compensation, rehabilitation and pay administration. Implementation of the new structure The was completed during the year. incorporates client- new structure services, based human resource learning and development, and occupational health and safety, services. payroll The organisation operates a client- structure focussed human resources designed to meet the needs of the business units and their people, while consistent, organisation-wide retaining As people policies and procedures. a corporate part of the restructure training function was established with an initial focus on developing the skills and knowledge of the organisation’s line leaders. front staff numbers fell from 2,294 to 1,668 numbers fell from staff in 2000- was reversed but this trend 2001with full time equivalent staff numbers rising by 97.

ic, < < GOOD GOOD > Rate Target Rate Target Lost time injury frequency rate (LTIFR)* *Per million hours worked Lost time injury severity rate (LTIFR)* *Shifts lost per LTI Continued development of the competency based progression the to improve structure knowledge and skill of award employees. than Rationalisation of more 20 enterprise agreements and workplace arrangements. Leadership programs of the leadership abilities Improving managers will continue our frontline Management the through which covers Development Program, managing teams, coaching skills, managing change and creating motivational work environments. Following a successful trial in Asset is being Management, the program the organisation. extended throughout Integral Energy also utilises 360- surveys as an important degree component of all senior managers’ a Following development program. will be successful trial, the program expanded next year. support Staff Now in its tenth year of operations, centre childcare Integral Energy’s balance work continues to help staff The needs and family responsibilities. of is licensed for a maximum centre either full- or part-time. 39 children, high throughout remained Enrolments caters for children The centre the year. six weeks to five years of aged from by the National age, and is recognised Council. Accreditation Childcare challenges Future high on the agenda Safety will remain for Integral Energy and its people. will concentrate on Human Resources implementation of the Safety Management System, re-focussing attitudes and behaviour towards staff and ensuring that everyone safety, understands their accountability and for safety. responsibility initiatives include: Employee relations > >

> 37 Integral Energy Annual Report Ulladulla > Steve Lette, Regulatory Development Manager, Corporate Development > Mark Jarman, Lineworker, Ulladulla Corporate Development > Mark Jarman, Lineworker, Regulatory Development Manager, Ulladulla > Steve Lette, Coniston Willis, Technologists, Jeff Ward, > Warwick Sales and Marketing Administrator, Branch > Helen Roffey, Coniston Transmission, Manager, > Peter D’Angelo, Project Performance reviews and Integral Energy has developed implemented performance review and the skills workshops to improve knowledge of managers in the use of the performance management system and in the day to day performance management of their team. A performance management program utilising a skills “passport” has been for field staff. introduced Compensation Workers' received A total of 117 claims were of five on a decrease during the year, with an average year, the previous cost per claim of $1,313 ($1,195 last handled year). In all, 275 claims were which included claims during the year, years. previous from carried forward The total cost of all claims and levies was $1,424,785. relations Workplace Industrial action was taken by 200 in Manager/Specialist roles, staff technical, over the predominantly of their workplace renegotiation arrangement and the use of performance based contracts for The action involved senior roles. two half-day stoppages, and was supported by short-term overtime A committee of bans by field staff. management, union and employee was established to representatives negotiate a new Manager/Specialist workplace arrangement. The two-step 5% wage increase and under the Integral Energy Terms Conditions of Employment Award 2001 was implemented in January and July 2002. With due to the award in January 2003, negotiations expire will begin towards for a new award the end of 2002. > Rosa Tabusares, Business Process Coordinator, Corporate Development > Ron McCullagh, Leading Hand Electrical Fitter Mechan > Ron McCullagh, Leading Hand Electrical Corporate Development Coordinator, Business Process > Rosa Tabusares, Integral Energy Annual Report 38

Our contributions to the communities Our contributions to the the past in which we worked over outlined below and on year are pages 39 and 100. Building a sustainable future Our publicly stated commitment to among a sustainability was reinforced wide variety of stakeholders through publication in April 2002 of the sustainability report, organisation’s for us all. Building a better future The publication looks at ways to build and examines the a better future, of active promotion organisation’s of for the benefit sustainable growth all our stakeholders. achieve this goal, Integral Energy is To gas emissions, greenhouse reducing the customers choices about offering of their electricity and working source is on total energy solutions. The report on a our first stake in the ground sustainable journey a more towards It outlines how we can move future. beyond compliance with present and regulations environmental to achieve a "triple bottom standards line" goal – integrating financial, and social environmental responsibilities. Customer Service Charter for our Our vision is to be recognised and genuine personal responsibility commitment to our customers. Our focus is on getting it right for our a quality customers by providing further service, every time. To underline this commitment, we have set out clear principles in a new developed Customer Service Charter, as a key initiative of our customer The charter covers service strategy. issues such as customer safety, complaint handling, connections and disconnections, disruptions to trimming and tree electricity supply, lighting and was issued to all street customers. residential >

Integral Energy believes corporate We contribute to the success of the regional the success contribute to We we live and in which and communities economies earningwork by… credibility, trust and community and customer loyalty employee and building expectations. to community responding Integral is committed to Energy with an conducting its operations in approach ethical and responsible all that we do. This commitment is enshrined it our corporate values of safety excellence; integrity; customer commitment; sustainability and for people; success; respect commercial and, accountability and responsibility; management by fact. In striving to meet this commitment, the interests Integral Energy recognises and of stakeholders of a diverse group has put in place steps to consult with and engage with them on issues of and concern.mutual interest These stakeholders include: our customers, welfare consumer advocacy groups, employee unions, staff, groups, groups, suppliers, environmental business advisory regional regulators, representatives, media groups, government, and the broader community. the Integral Energy recognises expectations and scrutiny increased that these stakeholders have of all plans businesses, and for this reason, to develop an integrated corporate strategy over the social responsibility next year. to be the social responsibility continuing commitment to behave ethically and to contribute to economic development while the quality of life for our improving and their families as well as workforce the local community and society at large. While Integral Energy already and has many positive programs including initiatives in areas community partnerships, sponsorships, and ethics, it plans workplace relations to integrate these into a strategy that will drive further improvements. > Community partnerships > Community > – the Schools Spectacular and the largest variety show in the southernlargest variety show in featuring the best hemisphere, performing arts talent in public an schools. Both activities provide opportunity for young Australians to of the challenges develop through public performance. Coaching clinics run by St George Illawarra Rugby League and the NBL Integral Energy Razorbacks also develop young Australians in teamwork and fitness. The portfolio also partners with the NSW Sports Council for the Disabled for 26 valued scholarships in providing athletes with disabilities who excel in athletics to sailing. events from Integral Energy has funded the scholarship scheme for seven years, for helping build a successful future 99 talented young athletes. Many Australia in have gone on to represent Paralympic and international competition. include opportunities Other programs for families to attend regional Australia Day events, and an extensive business awards. series of regional Outlook Development of the corporate social strategy is the central responsibility initiative to be completed in the coming year. – showcasing ArtExpress adults and school students on all adults and school students aspects of electrical safety. Safety field days Industry-wide electrical safety was again in the spotlight in April 2002 when Integral Energy hosted the13th National Electricity Supply Industry Field Days with the theme of 2002: of in anticipation a national approach, a national electrical safety code to be in 2002. This was the introduced second year that Integral Energy has hosted the expo on behalf of the Industry Safety Steering Committee, convened by the NSW Ministry of Energy and Utilities. The expo opportunity to raise an provided and encourage national standards, and management to share field staff their safety information and improve techniques. Regional economies Integral Energy is an active and participant in issues of interested economies. significance to regional These economies include some of residential fastest growing Australia’s areas. Integral Energy lends support through task forces participation in regional and planning, comment on issues of significance, and support for regional business awards. a series of regional Sponsorships Integral Energy completed a strategic of its sponsorship portfolio in review the As a result, the year under review. with the portfolio was realigned corporate positioning revitalised strategy and covers key economic, programs. social and environmental The portfolio includes support for talented young Australians through the NSW Department of Education and Training’s arts the best in visual and creative among NSW high school students –

> 39 Integral Energy Annual Report Customer Consultative Committee Customer Consultative an important to provide In order to voice forum for customer groups their ideas and concerns, Integral Energy operates a Customer Consultative Committee that meets issues. quarterly to consider current The committee includes of small business representatives customers groups, welfare groups, non-English speaking from low-income earningbackgrounds, groups, environmental groups, and the Australian Consumers’ Association. The committee’s in February. charter was revised The committee works to an annual work plan. Achievements for the year of advice on included provision customer service issues, including accounts, pricing and payment issues; the Customer Service Charter; existing streetlighting, industry regulations; and vegetation undergrounding management policies and practices; policy and performance environmental and plans to upgrade the network. and education Safety awareness Integral Energy has a regulatory obligation to warn the public about associated with electricity. the hazards Integral meet this requirement, To Energy developed a comprehensive which program, safety awareness educates people about electrical accidents. As part of this campaign, and radio advertisements raised press about the hazards awareness associated with fallen power lines, overloaded power points and vandalism. The theme – Imagine what – was and it won’t can go wrong, of research the results developed from conducted in January 2002 to identify an at risk of receiving the groups electric shock because of a lack of knowledge about electrical hazards. Integral Energy manages Additionally, and a community Safety Awareness which educates Education project, > Keith Brooke, Manager Customer Care > Margaret Bird and Jenny Clough, Billing Operations, Commercial Customer Care > Margaret Bird and Jenny Clough, > Keith Brooke, Manager Ritchie and Solutions > Business Representative Robert Capital Migration Officer, > Alf Marino, GIS Data Scott Williams, IAIMS project MIMS Project Officer corporation’s am, the Integral Energy Annual Report 40

resources behind the effort to change behind the effort resources possible, but behaviours as rapidly as in a sustainable manner. the full retail New legislation covered the regime, competition regulatory marketing code of conduct, privacy occupational health and regime, as well as changes to various safety, industry codes. On top of these new the organisation was requirements, market entering a totally new retail full compliance with trade requiring practices laws, while our field staff storms to work through required were in compliance with and bushfires laws. safety and environmental of these challenges the As a result corporation established a dedicated compliance committee and developed specifically to promote a program compliance integrated and effective with this range of laws. Benefits have this initiative, flowed from already an with the corporation exercising and targeted focus on its increased compliance with laws as business decided, implemented are processes Identified compliance and improved. to the attention of brought risks are and, if required, the compliance officer changed. The organisation’s processes view is that the absence of the compliance committee and program would have heightened risks and costs. increased Ethics and conduct accountability and role Improved definition for executive committees their was put in place by revising charters, to explicitly include conduct in line with our Code of Ethics. The of many year has also seen the review to reflect key policies and procedures of the code of ethics and standards conduct it contains. In a specific progr corruption push to detect and prevent in with the introduction was increased > Integral Energy is determined to improve Energy is determined Integral of governance.its culture The year was marked by an The year was marked risks: the exceptional number of network was hit by major storms and the across bushfires severe prolonged to franchise. The ability of our staff deal with these incidents was helped incident and crisis by pre-planned strategies, which help coordination minimise the impact of natural Despite disasters on the community. the constant challenge of these emergencies, our people worked safe and reliable continually to restore while learning from electricity supply, the events. controls Improved also drive the Governance procedures need for behavioural change among the by continuously developing staff policies and processes organisation’s to take account of contemporary attitudes and events. The corporation ended the year with and framework of policy a renewed the risks that reflects procedures year by the identified in the previous and management. These Board direction, policies carry improved providing and accountability, control available documented guidance readily diligence in undertaking to improve our business. In 2002-2003, the organisation will focus on two-way communication and to in an effort training for all staff encourage behavioural change by embodiment and practice increasing principles, values, of the improved now in place. and processes standards Compliance step-change A major initiative in governance for the corporation this year was the and commitment by the Board the management to improve of the organisation’s effectiveness compliance system. This was by a raft of new legislation prompted both sharp focus and that required

This resulted in sharper focus on key This resulted for example, risks to the community, upgrading of assets critical to growth environmental improving in supply, at our sites, and improving standards equipment and depots used by field staff. Risk management the optimum allocation of ensure To energy to the community’s resources needs, the year saw the increased incorporation of risk assessment methodology and risk management into planning decisions. Risk in assessment played a key role deciding strategies and actions to electricity to a growing deliver reliable customer base, as well as commercial for benefit returns for its shareholder, to achieve In order of the community. these outcomes, the Corporate Plan for 2001-2004 included a risk the spectrum assessment across of its business risks. This level of transparency is a This level of transparency demonstration that Integral Energy was determined to embark on of governance its culture improving over the 2001-2004 planning cycle, and beyond. NSW, Australian and global best NSW, practice in governance frameworks practices to meet and was researched were or exceed these standards agreed. Directors and management gave full and management gave Directors support to a statement on how the and control Corporation will direct, hold itself to account. > Corporate Governance> Corporate the In the year under review, further organisation set out to its overall governance strengthen of practices against a backdrop stakeholder demands for greater on audit with emphasis transparency, and risk management procedures. While the Board assigns the major While the Board for stakeholder relations responsibility to the CEO and senior management, the Chairman maintains liaison with critical stakeholders, principally the and their voting shareholders delegates. This takes place at points particularly the year, throughout the around during discussion revolving annual development of our Statement of Corporate Intent. These consultations keep our shareholders informed about the corporation’s strategic and financial direction. Memorandum and Articles of Association of the voting At the request and the Memorandum shareholders, replaced Articles of Association were at a general meeting held on 23 February 1999. One of the more significant changes of the new Memorandum and Articles of Association was the deletion of the to retire, for directors requirement basis, each March. on a rotation of office Term Except for the Chief Executive Officer, can be appointed by the all directors for a period of up voting shareholders to five years. of director A vacancy in the office (excepting the CEO and Labor Council or nominee), either by retirement is filled by a nominee other reason, of the voting shareholders. of each non- The remuneration is paid out of the executive director and is funds of Integral Energy, by the voting shareholders. approved The CEO is not entitled to any for being additional remuneration an executive director. For further details about remuneration to page 84. please refer nominated by the Labor Council of nominated by the Labor is This director New South Wales. a selected by the committee from persons nominated panel of three by the Labor Council; and, than five at least two and not more by to be appointed other directors at their the voting shareholders discretion. > responsibilities Board for the overall is responsible The Board corporate governance of Integral Energy and its subsidiaries – InfoMet Pty Limited and Integral Energy Gas Pty Limited – including setting the establishing goals strategic direction, for management, and monitoring the achievement of those goals. The of each subsidiary Board respective the corporate governancecontrols Some members of that subsidiary. also members of are of those Boards of Integral Energy. the Board meets The Integral Energy Board of monthly to consider the progress Integral Energy against its Corporate Plan, and places special emphasis on of its financial position and the review management of risk. During these takes the meetings, the Board opportunity to seek the input and advice of senior management about to the corporation’s matters relating and performance. strategic direction and senior management The Board also meet at least annually for a dedicated planning session to help strategic direction. shape future delegates authority and The Board for operational issues responsibility Chief Executive to Integral Energy’s who, with other members Officer of the Executive team, is directly accountable for achieving set a series performance targets through endorsed policies, delegated of Board authorities, and performance targets.

> 41 State Owned , the Integral Energy Annual Report the Chief Executive Officer (CEO) the Chief Executive Officer is to be a member of the Board; to be appointed by one director on the the voting shareholders of a selection recommendation committee comprising: a) two persons nominated by the voting and b) two persons shareholders, August 2001 of a transparent to available to all staff, procedure, of corrupt encourage disclosures a range of alternativeconduct through to external direct or bodies. officers, This mechanism was accompanied by induction sessions explaining the ethics and organisation- code to new staff, the wide team briefings stressing The importance of ethical behaviour. corporation is also implementing a an strategy together with fraud control organisation-wide update of the code, its principles, values and standards, training for all staff. including refresher of Any detected or notified breaches were our principles and standards disclosed during the year and action taken. promptly and committees Board Integral Energy Australia's Board and is responsible of Directors accountable to the voting being the NSW Treasurer shareholders, and NSW Special Minister of State, for and on who each hold one share behalf of the New South Wales Government. of Directors Board The Integral Energy Australia Board comprises a non-executive Chairman, as an the Chief Executive Officer and six non- executive director, executive directors. with the In accordance Corporations Act 1989 composition of Integral Energy's Board is determined using the following principles: > > Integral Energy Annual Report responsibilities; compliance to Integral reviewing Code of Ethics; Energy’s significant transactions reviewing the not a normal part of which are business; entity’s the nomination of the approving internal auditors; and, taking such independent advice as it considers professional necessary. and efficiency the effectiveness of business operations; policies, processes the programs, the effective and systems to ensure identification, analysis and of the Corporation’s treatment risks; and, compliance with legal requirements. the to the Board recommending annual corporate strategies for risk; and, addressing compliance with the reviewing health and safety policies, plans, statutory requirements procedures, particularly those and regulations imposed by the Occupational Health and Safety Act. 42

> > > > Members of the committee during the Neil McDermott, Michael year were Downing (Chair) and McLeod, Terry Powis attends Richard Paul Sinclair. meetings by invitation. Business Risk Management Committee The Business Risk Management Committee considers any matters to: relating > > > In addition, the Business Risk Management Committee shall to examine any other matters referred it by the Board. Specific duties include: > > > monitoring the performance of the monitoring the performance internal and external audit contractor; the annual consolidated approving audit plan; against the monitoring of progress consolidated audit plan; internal and externalreviewing that where to ensure audit reports major deficiencies or breakdowns have or procedures in controls and been identified, appropriate is taken by action prompt management; liaising with the external auditors and ensuring that the annual and half-year statutory audits are manner; conducted in an effective on any major reports reviewing defalcations, frauds and thefts Integral Energy and the from monitoring of procedures; initiating and supervising special investigations; information and receiving the Audit from recommendations Group; financial statements and reviewing other financial information distributed externally; assessing the performance of financial management; monitoring the establishment of an internalappropriate control framework, including information systems, and considering enhancements; against progress reviewing Statement of Corporate Intent targets; monitoring corporate risk assessment and the internal instituted; controls in place monitoring the procedures that Integral Energy is to ensure complying with the relevant legislation and reporting requirements; the the declaration from reviewing on compliance Company Secretary with financial statutory Specific duties include: > > > > > > > > > > > > > > > The committee’s responsibilities The committee’s to the include any matters relating of the company and financial affairs entities and to internal its controlled and external audit that it considers In addition, the committee necessary. examines any other matters referred to it by the Board. Audit Committee The Audit Committee draws specific focus on audit matters for the that these are organisation and ensures dealt with in an independent manner. The Manager Audit and Business for Performance has responsibility supporting the work of this committee to it. directly reports and therefore During the course of its work, the able to and its committees are Board draw on independent advice to assist in its deliberations and to supplement internal The Board advice it receives. has taken advantage of this in the last considering the advice financial year, of PricewaterhouseCoopers, Jardine Lloyd Thompson and KPMG. Board committees Board operates four committees, The Board each with a specific function and each year. which is reviewed charter, Audit; committees are The Board Business Risk Management; Retail Risk Management; and, Remuneration and The Board Human Resources. committees meet at least four times and The key responsibilities a year. objectives of these committees are outlined below. Changes to the Board the Shareholders On 26 February, of the announced the re-appointment (other than Neil Directors current McDermott, who chose not to seek as Chairman of the re-appointment and of Integral Energy Australia) Board the appointment of a new Director. Mr John Fahey was appointed to the 2002. on 1 March Board > > Remuneration and Human Committee Resources The Remuneration and Human from Committee (renamed Resources Remuneration Committee this year) the development, reviews of implementation and effectiveness and human resources policy Board strategy on the organisation’s employees. As well, the committee makes decisions or makes reviews, on: to the Board recommendations Remuneration policies, principles and guidelines applicable to contract staff (including senior executives), and staff. award-based Committee members during the year Neil McDermott, Michael were Janice Mcleod, Mary Reemst, Prof. Powis. Reid (Chair) and Richard the policies, procedures and the policies, procedures to the Energy strategies relating sales and marketing and energy portfolio management business activities; determining the appetite for risk in business line with Integral Energy’s plans and strategic objectives; for energy performance measures trading and sales; counterparties and their exposure limits; the use of financial contracts and the limits associated with their use; dealer trading limits; delegation of payment limits for settlements; the performance of the risk reviews management activities; of customers; limit exposure credit and, targets. market share Committee members during the year Committee members McDermott, Michael Neil were Downing, Mary Reemst, Mcleod, Terry 8 John Fahey (appointed Chair from Janice Reid, Paul May 2002), Prof. Powis. Sinclair and Richard Retail Risk Management Committee The Retail Risk Management Committee considers and makes in to the Board recommendations to: relation > > > > > > > > > > In addition, the committee examines to it by the any other matters referred Board. Committee members during the year Neil McDermott, Michael Mcleod were Downing, Mary May 2002), Terry (from Powis. Reemst (Chair) and Richard

> 43 Integral Energy Annual Report development, review and development, review the effective assessment to ensure identification, analysis and risks. of the corporation’s treatment from reports regarding Board, on compliance Company Secretary to environment, with laws relating trade practices, health and safety, and licences under ICAC, privacy, the Energy Supply Act. statement of corporate intent and those risks in addressing progress organisation. the through occupational health and safety risks, litigation, contingent liabilities and implementation of policy an these. strategies to address risks, litigation, environmental contingent liabilities and implementation of policy and these. strategies to address in depots and progress implementation of actions. cover and major insurance litigation and liabilities. communication and embodiment. management processes. In addition, the attainment of the In addition, the attainment may involve: above responsibilities 1. of a program Maintaining 2. by the matters referred Reviewing 3. all risks listed in the Reviewing 4. to specific exposure Reviewing 5. to Reviewing specific exposure 6. Reviewing site assessments of all 7. Reviewing adequacy of insurance 8. Reviewing Code of Ethics 9. of risk Reviewing the effectiveness Mark Mostyn, Debt Manager, Revenue Management, and Mohammed Khan, Debt Recovery Officer > Dave Campbell, Khan, Debt Recovery Officer Revenue Management, and Mohammed Mark Mostyn, Debt Manager, Horlyck, Manager Meter Data Project, Commercial Bruce Leonard Project Manager, Steed Manager Customer Transfers, Anna Storti, Sales and Marketing Hitchcock and Business Development Manager Tamara > Direct Response Manager Retail Sales Manager, > Joel Manning, Account 2 Remuneration Integral Energy Annual Report 44 > Chairman (until 28 February 2002) Chairman (until 28 February 28/2/2002) Deputy Chairman (until 1/3/2002 Chairman from 2002 1 March Deputy Chairman from Chief Executive Officer Retail Risk Business Risk and Human Integral Energy Audit Management Management Resources 11 11 6 6 9 11 4 4 4 4 AB 22 ABAB AB 33 AB 44 111166 44 1111 - - 11 11 ------3 3 4 4 1 5 4 3

Michael McLeod DowningTerry 2000 – 28 February 2004 1 March Non Executive Director 2000 – 28 February 2004 1 March Non Executive Director Notes: 4 July 2001. Janice Reid appointed Chair of Remuneration Committee from 1. Professor Committee in April 2002. Remuneration and Human Resources 2. Remuneration Committee renamed 12 April 2002. 3. John Fahey appointed Chair of Business Risk Management Committee and a member of the Audit Committee from Powis attends the Audit Committee Meetings as an invitee. 4. Richard May 2002. Committee Meetings from 5. Michael McLeod attended Retail Risk Management Board Richard Powis Richard A – Number of meetings attended 2001-2002 term of office B – Number of meetings held during the Director’s on 12 April 2002 committees was revised Membership of Board Professor Janice Reid Professor Paul Sinclair 10 11 3 6 - - 3 3 - - Mary ReemstJohn Fahey 11 11 - - 9 11 4 4 4 4 Neil McDermottMichael McLeod 7 DowningTerry 7 11 11 4 4 6 6 7 7 10 11 3 4 3 4 4 - 4 - Name Australia Board Committee Committee Board Committee Committee John FaheyPaul Sinclair PowisRichard 2002 – 28 February 2004 1 March 2000 – 28 February 2003 1 March Appointed 17 January 2000 Non Executive Director Non Executive Director Executive Director Mary ReemstJanice Reid Professor 2005 2001 – 28 February 1 March February 2004 2000 – 28 1 March Non Executive Director Non Executive Director NameNeil McDermott 26 April 2000 – 28 February 2002 (including re-appointments) Term Non Executive Director

> Directors’ meetings > Directors’ > Terms of office > Terms Developing, marketing and selling retail products Developing, marketing and selling retail that meet customer needs and maximise the value of the customer base. General Manager Energy Trading STEPHEN LOWE Matching financial supply to demand over time while minimising cost and risk of energy supply. SANDRA TRUDGETT Supporting business strategy by coordinating, developing and maintaining IT&T solutions. General Manager Finance CRAIG JAMES discipline and cash financial strategy, Providing flow management for the organisation by the of and reporting control accurate capture, financial performance to key stakeholders. General Manager Corporate Development/Company Secretary KAREN WALDMAN custodianship and development of Providing a regulatory, positioning from Integral Energy’s and governance perspective. reputational General Manager Full Retail Contestability ROD HOWARD Managing ‘customer connections to collections’ and leading Integral Energy’s for the mass market. preparation General Manager Sales & Marketing MICHAEL TAUBER General Manager Asset Management ALAN FLETT assets. maintaining the network Building and General Manager Engineering Performance JOHN WALLACE monitoring the Designing, operating and sustained capacity, its network to ensure integrity and long-term value. General Manager Commercial SIMON DRAPER and fulfilment in core Driving customer service of management as well as commercial processes portfolio. supply and logistics and the property General Manager Human Resources ALAN PRIESTLEY Supporting the organisation to manage people to and to achieve a healthy and safe environment, high quality people. develop, attract and retain General Manager IT&T Infomet RICHARD POWIS Integral Energy Gas Chief Executive Officer

> 45

Integral Energy Annual Report Board of Directors Audit Committee > Organisational structure > Organisational in January 2000. Integral Energy Annual Report 46 > in March 2000. Paul is an Organiser, in March in March 2000, and Deputy Chairman in in March in March 2000, and appointed Chairman in 2000, and appointed Chairman in March Chief Executive Officer and Non Executive Director

Executive Director Non Executive Director Non Executive Director

Paul Sinclair Michael McLeod, Chairman Richard Powis Richard Terry Downing Terry Electrical Trades Union (New South Wales Branch). He is also Assistant Secretary Union (New South Wales Electrical Trades Branch. Federation of Unions, New South Wales of the Metal Trades Full biographical details are listed in the Executive group section on page 48. listed in the Executive group Full biographical details are >4 Re-appointed BEc DipEd Appointed B Comm, M Mgmt, Dip Bus Studies (Insurance) Appointed >1 Appointed March 2002. Terry is a Management Consultant with extensive experience in 2002. Terry March held a number of senior executive Terry Previously the financial services sector. He is a Certified Practicing Accountant, positions in the financial services sector. a Fellow of the a Fellow of the Australian Institute of Company Directors, and a Fellow of the Australian Institute of Company Secretaries Chartered and New Zealand Institute of Insurance and Finance. >3 March 2002. Michael is Chief Executive Officer of United Medical Protection and Protection of United Medical Officer 2002. Michael is Chief Executive March at Willis Ltd. He was also Managing Director of Milyn Holdings Pty a Director Oliver International Pty Ltd. He is a Australia Ltd and CEO at Richard Corroon Directors. Fellow with the Australian Institute of Company >2 Board of Directors of Board > Michael McLeod Downing Terry Powis Richard Paul Sinclair Janice Reid Professor John Fahey Mary Reemst , who was Changes to the Board Neil Martin McDermott in his appointment Chairman from April 2000, chose not to seek re- appointment, and stepped down because of work the Board from commitments on 28 February 2002.

> in March 2000. An Executive Director with 2000. An Executive Director in March in March 2002. Former Premier of NSW 2002. Former Premier in March in March 2001. Vice-Chancellor 2001. and in March 47 Non Executive Director Non Executive Director Non Executive Director Integral Energy Annual Report Professor Janice Reid, AM Professor John Fahey Mary Reemst Appointed BA (Hist/ Pol), Dip Fin Mgmt (Accountancy) Dip L Appointed >5 PhD (Stamford) B Sc (Adelaide), MA (Hawaii), MA (Stamford), Appointed the University of Western Sydney since April 1998, Janice has of President Australia and overseas, and has and honours in both several awards received organisations and public agencies at both of community served on the boards education and cultural welfare, State and Commonwealth levels in the health, Western Sydney Economic fields. She has been a member of the Greater Institute of Health of the Australian the Board and chaired Development Board Janice is a Fellow of the Academy of for six years until mid 2001. and Welfare Social Sciences in Australia, a Fellow of the Australian Institute of Management, of In recognition and a Member of the Australian Institute of Company Directors. the development of health and public health research her service to cross-cultural of Australia in January 1998. services, Janice was made a Member of the Order >6 The team that sets the strategic direction for the organisation’s sustainable for the organisation’s sets the strategic direction The team that works closely with the of Directors Board success. Integral Energy’s and governanceExecutive team to bring direction Energy. to Integral Macquarie Bank, where she specialises in providing financial advisory services to she specialises in providing Macquarie Bank, where an Mary was previously in particular the energy industry. providers, infrastructure She is a Fellow of the Australian Bankers Trust. with Executive Vice President Institute of Company Directors. and member of State Parliament for 12 years (1984-96), John was elected to Federal Parliament in 1996, and served as Minister for Finance and government 1997 until 2001. Besides Administration in the Howard from within from residents focus, John represented commercial adding to the Board's during his State and Federal Parliamentary franchise area Integral Energy’s of local customers. giving him a close insight into the needs and interests career, >7 Integral Energy Annual Report Karen Waldman Karen Simon Draper 48 BEc (Hons), M Bus (Finance), GAICD Appointed General Manager in September 2000. Simon Commercial the CEO of Northernwas previously Airports, a privatised airport Territory He has held executive company. positions with Qantas, the Federal Airports Corporation and the Property Council of Australia, after starting his with the CFMEU. career professional skills in economic He draws on strong strategy, analysis, commercial operations and general management. >5 (Hons), MBA, GAICD BArch BSc(Arch), Appointed General Manager Corporate in July Development/Company Secretary was General 2000. Prior to this Karen Manager Integral Energy Contracting. employed by Sydney Water Previously she held positions including where Central Region, and Regional Manager, Prior to that Senior Strategic Planner. she was General Manager and Director and construction of her architectural specialising in project company, management. Directors; and, Member, Institution and, Member, Directors; of Engineers Australia. He is also a the NSW Energy and of Director Ombudsman scheme (EWON). Water >4 > d Simon Draper Waldman Karen Tauber Michael Stephen Lowe Rod Howard Craig James BE (Hons), M Eng Sc, B Bus, MBA, MIE Aust, GAICD Appointed General Manager Full Retail Contestability in July 2000. Rod's included responsibilities previous General Manager Corporate Development/Company Secretary, General Manager Business Development, General Manager Integral Energy Contracting and, with General Manager Electricity, Prospect Network Services, General Manager Corporate, and Manager Technical in 1974 Services. Rod joined Prospect His professional as a cadet engineer. memberships include: Member, Australian Institute of Company Appointed General Manager Finance employed in August 2000. Previously by the Rail Access Corporation in and senior finance/secretarial the from roles commercial inception in 1996. corporation’s Prior to this he worked with Ferrier his corporate Hodgson, strengthening skills within the re-organisation transport industries. shipping and road Craig has gained wide experience in accounting, financial and administrative re-organisation. >3 >2 ACIS BFin Admin, CA, CPA, Richard Powis Richard Appointed Chief Executive Officer in January 2000. He has since presided over realignment of corporate objectives; of corporate over realignment presided 2000. He has since in January Chief Executive Officer Appointed to full retail a smooth transition initiatives; major environmental in financial performance; significant improvements for supply industry in NSW in the electricity has worked image. Richard corporate fresh and, the launch of a competition; of a number development across and strategic in business management track record and had a strong over ten years (ESAA), and a member of the NEMMCO of the Electricity Supply Association of Australia member industries. He is a board team at TransGrid, was part of the senior management Prior to his appointment, Richard Participant Advisory Committee. charting its Pacific Power and then challenging separation from was instrumental in managing the organisation’s he where of the National Electricity Market, in the development figure corporatisation. He was also a central next steps towards via QNI. of the Queensland and NSW markets which included the connection >1 BEc DipEd Richard PowisRichard Craig James Rod Howar Alan Priestley John Wallace BE, BFin Admin Appointed General Manager Engineering Performance in July 2000. with responsibilities previous John’s Integral Energy included Acting General Manager Integral Energy Contracting and Branch Manager in the Contracting business. Prior to the John was formation of Integral Energy, employed as the Divisional Engineer Development with Illawarra Electricity, after joining the electricity distribution industry as a cadet engineer. >11 B Sc (Hons), G Dip Labour Relations, MBA Appointed General Manager Human in February 2001. Previously Resources employed as General Manager Human for Royal & Sun Alliance Resources experience in the Insurance. Broad field includes human resources senior personnel appointments with Mt Newman Mining and BHP Collieries Division. Energy was General Manager of ABB's division, in Australia Power Transformer and China, a position he had held since 1986. >10 Alan Flett Dr Sandra Trudgett BA (Maths/Computing), MBA, DBA, GAICD Appointed General Manager and Information Technology in July 2000. Telecommunications the General Sandra was previously Manager Sales Solutions and Management Information Systems for roles She has held numerous Telstra. to information technology and related general management for over 20 years a skills across and draws on strong Sandra variety of technology streams. in interest research maintains a strong management and has published articles in this field. numerous >9 BE Ind Eng (Hons) Appointed General Manager Asset Management in July 2000. Alan's has seen him employed with career companies in Australia and overseas, Crompton including ABB, Brook Parkinson and Cablemakers Australia. His overseas work included service in both the UK and China. Whilst working with ABB, Alan worked in and Distribution both Transmission and prior to joining Integral areas risk management, proprietary trading, risk management, proprietary and as a senior dealer in international finance markets. >8

> 49 Executive group Executive Integral Energy Annual Report Michael Tauber Stephen Lowe >6 B Com, M Com Appointed General Manager Sales and Marketing in July 2001. Michael has a in sales and background strong marketing, including senior positions leading with some of the world’s companies. Prior to joining Integral Michael headed the mortgage Energy, and led the priority team at Westpac, customer marketing activities. Before Michael was joining Westpac, of global vice-president Citibank’s office. marketing in their New York experience also includes Michael’s within senior sales and marketing roles Coca-Cola South Pacific, Fuji Film and Unilever. >7 Appointed General Manager Energy in September 2001. Stephen Trading a wealth of experience in brought energy trading, including responsibility deals in for originating structured as well as generating new electricity, business and expanding the client base for a major US organisation. His past experience includes establishing the energy trading Commonwealth Bank’s capabilities, as well as recommending strategies on the development of a commodity trading department. Stephen also has experience in asset > sustainable for the organisation’s sets the strategic direction The team that works closely with the of Directors Board success. Integral Energy’s and governanceExecutive team to bring direction Energy. to Integral Dr Sandra Trudgett Alan Flett John Wallace Alan Priestley The power is in your hands …to build a better future

4>THE FUTURE Integral Energy has broadened its strategic horizon to one with a clear focus on sustainable growth.

Integral Energy’s commitment to building for the benefit of future generations is reflected by SCADA Team Leader Wayne Dafter and son Jarrod, 10. Inset pics from left: > Jim Hickey, Team Leader, Testing Services > Melissa Tabone, Contestable Works Officer, Customer Connections > Tom Boslem, Leading Hand Lineworker, Bowenfels Integral Energy Annual Report improve margins of the Retail and margins improve Network businesses by driving down "cost to serve" to competitive levels. commercially sales and marketing through grow and trading initiatives to deliver customer solutions. 52

vi. Competitive "cost to serve": To vii. To contribution: gross retail Grow These seven strategic initiatives are complemented by four strategic Organisational ongoing programs, capability and cultural change, IT cost management, customer restraint service strategy and systems capability, and economic value propositions. a new The organisation will introduce concept in corporate planning, the "back to moving away from to one of basics" approach strategic challenging our current This and testing assumptions. direction new level of strategic maturity will be that a process achieved through embodies discussion of long-term issues, tests our position in light of and broadens changes in the industry, latitude in strategic thinking. creative the past from Rather than forecasting the organisation the future, to predict thinking through will test current information that is scenarios built from and recognisable. current Integral Energy anticipates enriched this process, strategic debate through as well as an opportunity to explore assessment new concepts, a rigorous of existing strategies, and for a wider range of preparedness possible eventualities. > through achieving best practice in achieving through network asset management. This capital involves making appropriate investment in the network to and reliability improve performance, maximising the value of the network for our and developing shareholders, strategies to influence the environment. regulatory Retail business. Delivering value by providing shareholder electricity product profitable to each segment solutions, tailored of the electricity market. construction, the efficient ensure maintenance and operation of the network. deliver the To investment process: for 2002- network capital program and prioritise the 2005 and review and its ongoing capital program supporting principles and delivery mechanisms. reputation Integral Energy’s protect a electricity supplier, as a reliable key driver of customer satisfaction. integration of safety into all business and management processes. influence and monitor the framework and regulatory our stakeholders to ensure protected are interests commercial and developed. We aim to build a unified sense of purpose a unified sense aim to build We of our understanding and a common future. long-term organisation’s The deployment of Integral Energy’s The deployment of Integral be guided over vision and mission will this period by two fundamental strategies . . . 1 Building value in the network, 2 the Maximise the contribution from … and seven strategic initiatives: i. To operating efficiency: Network ii. the network capital Improving iii. To improvement: Network reliability iv. support the Safety excellence: To v. outcomes: To Optimise regulatory

Effective strategy implementation Effective an aligned leadership team through in 2002-2003 will be a key focus area as the success of our initiatives will be the collective through realised aim to contribution of our people. We build a unified sense of purpose and a common understanding of our long-term future. organisation’s Our Corporate Plan aims to communicate the strategies and will initiatives for the way ahead. We focus on the pursuit of our strategies by using the plan as a decision-making framework and an aid to prioritising allocation and investment resource decisions. We will continue to strive towards our will continue to strive towards We leading energy be Australia’s vision, To business, and in fulfilling our mission, to be a successful energy corporation with a long term focus on being a best practice asset manager and competing energy markets. retail in profitable In preparing the 2002-2005 Corporate In preparing Plan to move the organisation ahead, able to plan confidently we were spent on because of time and effort fine tuning the foundations laid down over the past two years. Integral Energy its strategic is now able to broaden horizon to one with a clear focus on growth. sustainable and profitable Both challenges required careful Both challenges required the management to ensure organisation was well placed in the long-term to meet the needs and its expectations of its shareholder, customers, the community and its staff. > The future our strategic horizon Broadening Contestability, The onset of Full Retail and its impact on our retail asset age, operations, and increasing issues with consequent reliability the in the network part of inherent of the major areas business, were focus during the past year. Target Target e service, a helpful attitude on the part of Rate (DIFR) Accident SeverityRate (DISR) 80 75 on time per customer

> 53 completed for all staff Compliance to budgetCompliance with policies and standards improvementOperating efficiency % % audit corrective in Opexdecrease % 90% 3.0% actions complete 90% 3.5% <5% <5% compliance Capital budget complianceCustomer satisfaction* Budgeted contribution from % $ % satisfaction levelStaff Performance appraisals >90% $53.9m 56% >95% % % $63.2m 63% 50% 100% 60% 100% Key performance indicator Measure Capital investment program % 2002-2003 2004-2005 >90% >95% EBITDA $ $233.2m $265.9m ReliabilitySales and Marketing safetyLevel of staff Minutes lost mins 125 120 mins Accident Frequency 9.5 9.0 Integral Energy Annual Report Maximising the contribution staff, and following up on requests. staff, * Customer satisfaction is defined by an aggregation of performance (excellent or very good) in areas such as reliability, phon such as reliability, of performance (excellent or very good) in areas * Customer satisfaction is defined by an aggregation Business fundamentals from the Retail business from Building value in the Network Strategic ongoing programs > Corporate Plan > Corporate 2002-2003 to 2004-2005 Key performance indicators Integral Energy Annual Report 54

Provision for depreciation also for depreciation Provision the by $14.3m or 13% from increased of adoption as a result year previous commissioned of a NSW Treasury valuation. This valuation was used by to set the price path for the IPART Network business commencing February 2000. The valuation was adopted by the Corporation from 1 January 2001. return Shareholder Integral Energy is committed to delivering sustainable and attractive NSW the returns to its shareholder, government. In view of the continued good have performance the Directors first and final dividend of a declared $90.6m which includes a special an dividend of $80m. This reflects $37.9m (or 72%) on the of increase prior and paid in the dividend declared and $61.5m higher than budget. year, Balance sheet At the end of June 2002, working capital showed a decline of $94.7, primarily due to $68.9m of debt long term to maturity moving from and addition dividend provided current of $37.9m. The Corporation ended the financial cash position. year with a strong cash and other During the year, by $21.7m financial assets increased the emphasis placed on reflecting working capital management. During the period the amounts receivable by $6.3m debtors increased from decreased whilst the level of creditors by $5.7m. >

Integral Energy is committed to delivering Energy is committed Integral returns and attractive sustainable to its the NSW government. shareholder, Overview characterised The year 2001-2002 was by continuation and consolidation of changes in the organisational structure of ethics, vision and a restatement and values. Revenue activities for the ordinary Revenue from year of $1.14b was slightly lower than of $1.15b. revenue year’s the previous During the year total electricity sales by $29.2m or 3%, whereas increased “use external from Network revenue by of system charge” decreased $29.9m or 18%. other activities was Revenue from levels. year’s maintained at previous by was again impacted Overall profit a loss in value of superannuation investments due to overseas influences. Net profit a net profit Integral Energy recorded tax of $99.1m for the year before a This represents under review. the of $5.2m or 5% from decrease Budgeted net profit year. previous tax for the year was $53.0m. before It is significant to note that the net tax for the year was above before profit budget by $46.1m despite difficult in trading conditions and increases and and depreciation interest amortisation expense during the year. by $4.1m or expense increased Interest 5% primarily due to an additional debt of $150m raised in August 2001 on to the account of capital repatriation in by reduction offset NSW Treasury, rates during the year. interest > Management discussion and analysis discussion > Management InfoMet Pty. Limited will be integrated Limited InfoMet Pty. effective into Integral Energy Australia 1 July 2002. of The voluntary de-registration Infomet Pty Limited will occur during for reasons 2002/03. The commercial maintaining Infomet Pty Limited’s status as a separate legal entity have significantly diminished, particularly as has increased Contestability Full retail internal as an role Infomet Pty Limited’s function. The financial performance of environment and commercial not Infomet Pty Limited were consistent with the objectives for operating a subsidiary business. rating Credit maintained Integral Poor’s & Standard rating at AA credit Energy Australia’s and for long-term corporate credit, maintained A-1+ for the short-term rating. Both ratings continue to reflect NSW government ownership of Integral Energy Australia. The closing cash balance was $19.5m The closing cash balance At the end of June, the Corporation facilities of $97.0m. had unused credit Subsidiary companies Limited Integral Energy Gas Pty. was In February 2002, an agreement to sell the natural gas reached customer base and network assets to 30 June 2002. ActewAGL, effective assets and liabilities as The remaining to at 30 June 2002 will be transferred Integral Energy Australia, during the Accordingly, 2002/03 financial year. Integral Energy Gas Pty Limited ceased trading on 30 June 2002. Limited InfoMet Pty. The principal activity of InfoMet during Data Meter the period was to provide to services Agent and Meter Provider in the contestable energy retailers national market of the electricity industry. of contestability for The introduction all customers within New South Wales and Victoria had a significant impact on Infomet Pty Limited. New systems needed to be commissioned to meet of the the meter data requirements market. Revenue for the year was below expectations due to zero penetration of Manually Read Interval Meters into the market.

> 55 Integral Energy Annual Report The written down value of property, The written down value by plant and equipment increased $75.6m, with $22.4m of this increase land of attributable to the revaluation and buildings on 30 June 2002. Cash flows year operations for the Cash flow from at $215.5m. This was very strong (or 19%) a $52.1m represents year primarily the previous on decrease due to income tax paid for the first time of $27.4m. This healthy position put in of the measures is a reflection as the billing cycle place to improve management well as the credit process. during the year payments Interest of totalled $82.0m, an increase $9.1m (or 13%). Capital expenditure was higher Capital expenditure than last year at $163.1m, an $57.8m. of increase was predominantly Capital expenditure as well as targeted at asset renewals The capital projects. related growth is underpinned by Integral program Strategic Asset Management Energy’s Plan (SAMP), which details the framework for network investment in to five year horizon. the three

Integral Energy Annual Report 56 >

> 2001-2002 Financial Statements Financials > 57 Integral Energy Annual Report 1. Summary of significant accounting policies 1. Summary of significant accounting policies activities ordinary 2. Revenue from income tax activities before ordinary from 3. Profit 4. Taxation 63 68 for dividend 5. Provision 6. Receivables (current) 7. Other financial assets (current) assets 8. Other current entities (external) 67 to controlled 9. Particulars in relation 73 10. Other financial assets (non-current) plant and equipment 11. Property, assets 12. Other non-current 13. Payables (current) liabilities (current) bearing 14. Interest 72 (current) 15. Provisions 71 liabilities 16. Other current 73 71 liabilities (non-current) bearing 17. Interest (non-current) 18. Provisions 74 69 72 liabilities 19. Other non-current 20. Contributed equity 79 profits 21. Reserves and retained 79 79 22. Statement of cash flows commitments 23. Expenditure 24. Contingent liabilities 79 25. Remuneration of directors 26. Remuneration of executives 79 79 27. Auditors' remuneration 80 80 appointments 28. Directors' 29. Related party disclosures 80 30. Financial instruments 31. Capital repatriation 80 81 82 32. Prudential requirements 84 84 83 85 85 85 87 89 89 Statement by Members of the Board Statement by Members of the Board 90 Directors’ Report Directors’ Independent Audit Report Statement of Financial Performance Statement of Financial Position Statement of Cash Flows Notes to the Financial Statements 60 59 61 58 62 > Contents Integral Energy Annual Report 58 > Environmental regulation performance regulation Environmental waste discharge and The economic entity's environmental under both State and Federal Law. regulated obligations are by monitored are performance obligations All environmental subjected, from Steering Committee and the Environmental time to time, to Government agency audits and site entity has a policy of at least inspections. The economic cases exceeding its environment complying, but in most have breaches No environmental performance obligations. been notified by any Government Agency during the year ended 30 June 2002. benefits Directors' or of the entity has received During the period no Director of a any benefits by reason become entitled to receive body corporate with contract made by the entity or a related is a member or a firm of which a Director or with a Director has a substantial interest. with an entity in which a Director Rounding of amounts have been Amounts in the consolidated financial statements thousand dollars unless specifically to the nearest off rounded stated to be otherwise. Auditors in The Auditor General of NSW continues in office 327 of the Corporations Law. with Section accordance of the Directors: with a resolution Signed in accordance Michael McLeod Director 4 September 2002 Powis Richard Director 4 September 2002

Likely developments The economic entity will pursue its vision "to be Australia's leading energy business" by focusing on delivering superior now and into value to our customers and our shareholders Its business purpose is "to be a successful energy the future. corporation with a long term focus on being a best practice energy markets". asset manager and competing in profitable Further information about likely developments in the and the expected results operations of the economic entity, and the expected of those operations in the economic entity, of those operations in subsequent financial years, has results because, the directors not been included in this report to include such that grounds, believe, on reasonable in unreasonable information would be likely to result to the economic entity. prejudice Events subsequent to the balance date has not arisen in the interval between the end of the There any item, financial period, and the date of this report, in likely, transaction or event of a material and unusual nature of the Corporation, to affect the opinion of the Directors the results significantly the operations of the economic entity, of the economic of those operations, or the state of affairs in subsequent financial years. entity, State of Affairs Victoria, The corporation operates in the New South Wales, and South Australia electricity industry in its Queensland ACT, of the Electricity Supply Act own right under the provisions 1995, and in the national electricity market. corporatised The consolidated financial statements for the Energy Gas entity and its wholly owned subsidiaries Integral for the period ended 30 Limited Limited and Infomet Pty. Pty. on pages 60 to 89 presented June 2002 are inclusive. base and assets As at 30 June 2002 the natural gas customer sold to ActewAGL. were Principal activities during the The principal activities of the economic entity purchase, course of the period ended 30 June 2002 were sale of natural gas, meter distribution and sale of electricity, and data agent as well as maintenance, construction management of electricity distribution assets. Results of the economic entity for The consolidated after tax profit the year was $56.3m. Directors' meetings Directors' in given are attendance by Directors Details of meetings and the Corporate Governance section on page 44. Directors Directors and 46. appear on pages 44 Details of Directors The Board of Directors of Integral Energy Australia ("the of Directors The Board the consolidated in submitting Corporation") has pleasure being the Corporation and entity, accounts of the economic 2001 to 30 June entities, for the period 1 July the controlled thereon. audit report 2002, and the independent > Report Directors’ > 59 Integral Energy Annual Report 71,539 71,539 71,539 (78,310) (33,556) 571,814 571,814 643,353 105,095 (959,471) 1,142,876 22,376 22,376 62,983 40,607 40,607 86,521 40,607 (82,430) (45,914) (965,018) 1,133,969 Integral Energy Annual Report 60 > 73,521 73,521 73,521 (78,310) (30,721) 571,814 571,814 645,335 104,242 (962,839) 1,145,391 CONSOLIDATED CORPORATION 2002 2001 2002 2001 56,273 56,273 22,376 22,376 78,649 99,066 56,273 (82,430) (42,793) (959,296) 1,140,792 Notes $'000 $'000 $'000 $'000

YEAR ENDED 30 JUNE 2002 YEAR ENDED Total revenues, expenses and valuation adjustments expenses and valuation revenues, Total attributable to members of Integral Energy and changes in equity other than those resulting Total from transactions with owners as owners transactions from in conjunction with the accompanying notes. The above Statement of Financial Performance should be read recognised directly in equity directly recognised 21(a) Net increase/(decrease) in asset revaluation reserve in asset revaluation Net increase/(decrease) 21 Profit from ordinary activities after income tax expense ordinary from Profit after tax Net profit Borrowing expenseBorrowing activities to ordinary Income tax expense relating 4 3 Revenues from ordinary activities ordinary Revenues from 2 Profit from ordinary activities before income tax expense income tax activities before ordinary from Profit to members of Integral Energy attributable Net profit 21 Expenses from ordinary activities ordinary Expenses from 3 > Performance Financial of Statement - 5,200 9,290 8,132 4,142 8,789 6,418 67,792 44,936 37,764 92,310 88,496 18,688 19,900 95,275 20,015 23,226 52,776 32,078 117,340 185,330 400,815 867,886 532,327 668,392 485,046 157,903 239,911 589,842 2,061,761 1,170,163 1,170,163 1,170,163 1,400,213 2,169,561 2,570,376 - - - 6,778 9,963 2,224 70,592 28,402 10,619 30,068 21,164 94,211 22,925 47,118 26,651 24,160 90,632 67,503 128,178 214,630 459,199 977,960 994,382 994,382 994,382 100,063 686,319 760,761 335,046 156,398 308,788 612,218 2,148,230 1,664,279 2,199,462 2,658,661 - - 200 7,596 8,354 4,149 8,789 6,470 67,792 45,039 37,764 88,504 18,688 92,808 84,919 16,524 23,230 52,776 32,085 114,455 185,330 396,465 868,392 530,571 668,392 485,046 159,575 239,911 589,842 1,159,807 1,159,807 1,159,807 2,079,302 1,398,963 2,162,305 2,558,770 CONSOLIDATED CORPORATION - - - 2002 2001 2002 2001 6,963 2,224 70,592 29,007 10,619 30,380 21,164 10,011 94,221 22,925 52,428 26,651 24,203 90,632 64,972 120,712 214,630 452,523 977,926 999,692 999,692 999,692 681,312 760,761 100,019 335,046 153,831 308,788 612,218 2,154,863 1,659,238 2,206,407 2,658,930 Notes $'000 $'000 $'000 $'000

> 61 Integral Energy Annual Report Retained profits 21 Contributed equity 20 Reserves 21 Property, plant and equipmentProperty, 11 Current Assets Current Cash assets 22 Receivables meters unread from Estimated revenue 6 Inventories Other financial assets tax assetsDeferred 7 4 The above Statement of Financial Position should be read in conjunction with the accompanying notes. The above Statement of Financial Position should be read Total parent entity interest in equity entity interest parent Total Equity Total Total Current Assets Current Total Assets Non-current Other financial assets 10 Liabilities Non-current Total Liabilities Total Net Assets Other 19 Other 16 Other Assets Non-current Total Assets Total 12 Other tax assetsDeferred Loans to subsidiaries 8 4 ProvisionsEquity entity interest Parent 18 Total Current Liabilities Current Total Liabilities Non-current liabilitiesInterest-bearing tax liabilitiesDeferred 17 4 Current Liabilities Current Bank overdraft 22 Payables liabilitiesInterest-bearing liabilities tax Current 14 4 13 Deferred tax liabilitiesDeferred for dividendProvision Provisions 4 5 15 AT 30 JUNE 2002 AT > Position Financial of Statement - 6,574 51,147 11,367 (92,082) (29,743) (22,583) (72,926) 207,160 143,473 194,620 258,138 (103,449) (200,000) (859,925) 1,184,415 8,533 9,467 17,786 (52,776) (41,530) (30,887) (82,049) 161,246 194,620 212,406 213,504 (154,188) (162,721) (150,000) (777,788) 1,094,761 - Integral Energy Annual Report 62 6,575 > 37,275 15,868 (29,743) (22,583) (89,379) (72,926) 207,160 155,651 192,926 267,613 (105,247) (200,000) (860,380) 1,194,344 CONSOLIDATED CORPORATION 2002 2001 2002 2001 8,535 9,467 19,480 (52,776) (41,530) (27,396) (82,049) 161,246 192,926 212,406 215,531 (163,056) (154,521) (150,000) (782,750) 1,098,259 Notes $'000 $'000 $'000 $'000

YEAR ENDED 30 JUNE 2002 YEAR ENDED Cash flows from financing activities Cash flows from borrowings from Proceeds Dividends paid Net increase/(decrease) in cash held Net increase/(decrease) The above Statement of Cash Flows should be read in conjunction with the accompanying notes. in conjunction The above Statement of Cash Flows should be read Cash at the beginning of the financial year Cash at the end of the financial year 22 Capital repatriation by/(used in) financing activities Net cash provided Purchase of property, plant and equipment plant and of property, Purchase by/(used in) investing activities Net cash provided Net cash provided by/(used in) operating activitiesNet cash provided 22 Cash flows from operating activites Cash flows from operations Receipts in the course of Income tax paid Cash flows from investing activities Cash flows from plant and equipment sale of property, from Proceeds Payments in the course of operations Payments in the course received Interest Interest paid Interest > Cash Flows of Statement the Board approved the execution of a Deed of Indemnity approved the Board Australia and its subsidiaries Infomet between Integral Energy Energy Gas Pty Limited. This Deed of Pty Limited and Integral as at 30 June 2002. Indemnity is still in force human accounting, provides Integral Energy Australia which EDP and other services to these entities for resources, no charge is made. (ii) Money market securities other financial assets comprise: Current maturity date is the term where (a) investments for a fixed year end balance date; or twelve months or less from likely to be investments which are tradeable (b) readily end balance converted to cash within twelve months of year than date even though the maturity date may be greater year end balance date. twelve months from or with those repayable other financial assets are Non-current year-end than twelve months from a maturity date of more balance date. (g) Inventories at the lower of cost or net realisable carried Inventories are price purchase value. Cost is determined using the average and the cost of each item and comprises the cost of purchase and of bringing the inventories to the existing condition labour goods, direct location. In the case of manufactured overhead costs, variable overhead and a portion of fixed have capacity, costs, allocated on the use of normal operating been included. meters (h) Unread an estimate At balance date, Integral Energy Australia accrues the meter has not been read. of electricity consumed where in meters on unread as revenue This calculation is recognised the Statement of Financial Performance. assets (i) Recoverable amount of non current written down to their recoverable assets are Non current asset the carrying value of any non current amount where amount. In determining the exceeds the recoverable assets, the expected net amount of non current recoverable value. The cash flows have been discounted to their present entity's weighted average cost of capital of 7.5% has been used as the discount rate. plant and equipment (j) Property, plant and equipment and non-system (i) System property, land and buildings System assets have been valued at the lower of the cost or recoverable replacement optimised-depreciated amount. System land and non-system land and building valued at the latest market valuation based on a assets are the from resulting fair value of the asset. Any increment reserve to an asset revaluation directly is credited revaluation a reverses except that, to the extent that the increment as an expense in recognised previously decrement revaluation of that the Statement of Financial Performance in respect in the as revenue same class of assets, it is recognised period. statement of financial performance for the reporting as an expense in the is recognised decrement A revaluation statement of financial performance except that, to the extent

> 63 Integral Energy Annual Report SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES OF SIGNIFICANT ACCOUNTING POLICIES SUMMARY 1 (a) Basis of accounting financial report is a general purpose The financial report with the in accordance which has been prepared Urgent of Australian Accounting Standards, requirements Consensus Views, authoritative other Issues Group Standards of the Australian Accounting pronouncements 1989 and the the State Owned Corporations Act Board, Act 1983. Public Finance and Audit with in accordance has been prepared The financial report stated, does the historical cost convention and except where or current not take into account changing money values assets. valuations of non-current and disclosure The entity has adopted the presentation AASB 1005 "Segment Standards of Accounting requirements Assets" Reporting", AASB 1041 "Revaluation of Non-current for the first time and AASB 1042 "Discontinuing Operations" with In accordance of this financial report. in the preparation Standards, of these new/revised the requirements to in order comparative amounts have been reclassified format. The comply with the new presentation in a of comparative amounts has not resulted reclassification assets, non amounts of current change to the aggregate liabilities or liabilities, non current asset, current current in the of the entity as reported or the net profit/loss equity, prior financial year. (b) Changes in accounting policies no significant changes to accounting policies were There noted under during the 2001/2002 financial year except as note (a) above. (c) Principles of consolidation include the The consolidated accounts of the economic entity financial statements of the Integral Energy Australia (the entities. The balances and Corporation) and its controlled of transactions between the Corporation and its effects entities have been eliminated on consolidation. controlled currency (d) Foreign transactions during the financial year are currency All foreign at the to account using the exchange rate in effect brought monetary items at currency date of the transaction. Foreign translated at the exchange rate existing at date are reporting in the profit recognised are that date. Exchange differences and loss in the period in which they arise. and other receivables (e) Trade at amounts due less a recorded are receivables Trade for any uncollectable debts. An estimate for provision doubtful debts is made when collection of the full amount is as incurred. written-off Bad debts are no longer probable. normally settled within 27.3 days. debtors are Trade (f) Investments (i) Controlled entities carried in the entities are Investments in controlled Corporation's books at the lower of cost and recoverable amount. held on the 6 September 2000, At a meeting of the Board 30 JUNE 2002 > Statements Financial to the Notes Integral Energy Annual Report 64 > continued (l) Other non-current assets (l) Other non-current for all method of accounting is used The purchase as the fair value of Cost is measured acquisitions of assets. liabilities undertaken at the date of the the assets given up or to the attributable costs directly acquisition plus incidental of assets constructed or internallyacquisition. The costs labour. cost of materials and direct generated include the also are attributable costs and other overheads Directly capitalised to the asset. to reviewed assets are non-current The carrying amounts of the recoverable in excess of are determine whether they of a non- amount at balance date. If the carrying amount amount, the asset is asset exceeds the recoverable current written down to the lower amount. (m) Payables accounts payable, other payables and accruals are Trade to when the economic entity becomes obliged recognised and of goods of purchases as a result payments make future services. days. normally settled within 32.6 accounts payable are Trade costs (n) Borrowing amortisation of discounts or costs include interest, Borrowing amortisation of ancillary to borrowings, relating premiums in connection with arrangement of borrowings costs incurred expensed costs are and lease finance charges. Borrowing capitalised. to qualifying assets that are unless they relate shown in the Loans outstanding at 30 June 2002 are or non- statement of financial position as either a current of any unamortised discount and net liability and are current premium. . (o) Revenue recognition (i) Revenue from operating activities earned operating activities comprises revenue Revenue from and other ancillary of energy products the provision from services to entities outside the economic entity. and services are when energy products Revenue is recognised energy supply is Metered to the consumer. provided estimate is and an read when the meters are recognised (refer not been read meters have to account where brought note 1(h)). invoiced to out-of-area Network use of system charges are of meters of customers within following the reading retailers to external contracted who are retailers. the franchise area on an accrual Network use of system income is recognised is accrued for consumption that is not basis, as revenue invoiced at month end. operating activities from and other revenue receivable Interest to account as it is earned, when is brought and is recognised provided. the goods and services are assets are Developer or customer contributions of non-current and an asset when Integral gains as revenue recognised is the of such contributions. The amount recognised control fair value of the contributed asset at the date on which of such asset. Integral gains control is of energy products, outside the provision Other revenue, with the on an accrual basis and in accordance recognised

30 JUNE 2002 (k) Leased plant and equipment deemed to be under leases acquired Assets which are "finance leases", that is, leases which substantially transfer, the lessor to the lessee, all the risks and benefits from incidental to the ownership of the leased assets, are appropriate. capitalised as fixed assets where carried at fair value and capitalised by Finance leases are an initial asset and liability equal to the present recording value of the minimum lease payments including any amortised over values. Leased assets are guaranteed residual the expected useful lives using the straight line method. expense and allocated between interest Lease payments are the from removed Defeased lease liabilities are lease liability. with the Accounting Standard balance sheet in accordance and Extinguishment of Debt". AAS 23 - "Set-Off that the decrement reverses a revaluation increment a revaluation reverses that the decrement an to, and still included in the balance of, credited previously of that same class of in respect reserve asset revaluation (refer reserve to that revaluation asset, it is debited directly note 21(a)). plant and equipment (ii) Other property, initially assets are plant and equipment Other property, cost and in the Statement of Financial Position at recorded as outlined below. depreciated are (iii) Valuation Haskins & In June 1998, a consortia comprising Gutteridge, InternationalDavey (GHD), Worley and Arthur Andersen plant and carried out a valuation of the system property 1 January 2001 equipment. This valuation was adopted as of made to the asset values to reflect and necessary entries were the from resulting increment the new values. The revaluation and of the new values has been recognised recognition reserve. to the revaluation credited revalued are System land and non-system land and buildings year period. The valuation of on a cyclical basis over a three in 2001/2002 system land and non-system land and building was conducted by Colliers International Consultancy & Limited. Pty. Valuation (iv) Depreciation and equipment assets is plant of property, Depreciation based on calculated using the straight-line method, at rates is the assets estimated useful economic life. Depreciation or sold basis for assets purchased charged on a pro-rata shown in note 11(c). rates are Depreciation during the year. (v) Disposal of revalued assets assets is Any gain or loss on the disposal of revalued between the carrying amount of determined as the difference of the the asset at the time of disposal and the proceeds disposal, and is included in the Statement of Financial increment revaluation Any related Performance for the year. time of disposal is at the reserve in the asset revaluation to the statement of financial performance. transferred (vi) Capitalisation threshold below $500 and equipment assets purchased plant Property, expensed in the year of acquisition. are > Statements Financial to the Notes 2000/01 2001/02 Thereafter (q) Employee entitlements (q) Employee entitlements (i) General have maturing allowance provisions Long service leave and assessment undertaken by the been based on an actuarial NSW Government Actuary as at 30 June 2001 and the periods between for intervening associated formulae provided assessments. The NSW Government on Actuary has based their assessment the following assumptions: return(a) Rate of investment (after tax and investment related expenses) 6%; 3.5% (b) Rate of general salary increase have been calculated at nominal amounts All other provisions wage and salary rates. based on current leave and Liability for employee entitlements (long service not expected to be settled maturing allowance), which are discounted at 6% per annum. within twelve months, are (ii) Superannuation superannuation The Corporation's contributions to employee time of payment. An actuarial expensed at the are assessment of funds held by the Energy Industries Energy Superannuation Scheme on behalf of Integral scheme's Australia was performed during the year by the the Chairperson of the fund, dated 10 A letter from actuary. superannuation contribution of July 2002 advises a prepaid the difference $29.16m ($45.76m in 2001). This represents liability assessed of $87.4m and the between the gross in the balance of $116.6m. The decrease account reserve in the books of the surplus of $16.6m has been recognised from Corporation as an expense, and has been subtracted assets. of prepaid balance the previous The actuary adopted the following assumptions: Rate of investment return 6.0%Rate of salary escalationRate of CPI increase 3.0% (7.0%) pa 7.5% 5.5% 4.0%(r) Financial instruments a financial Financial instruments give rise to positions that are 4.0% pa asset of either Integral Energy Australia or its counterparty 2.5%and a financial liability (or equity instrument) of the other pa 2.5% For Integral Energy Australia these include cash assets, party. other financial assets, payables, other financial receivables, deferred liabilities which includes deposits and retentions, bearing liabilities and dividends payable. All income, interest on an recognised at cost and are recorded amounts are accrual basis. As at 30 June 2002, all derivative instruments rate swaps. interest to energy trading and relating were rate swap is terminated early and the When an interest still expected to occur as underlying hedged transactions are designated, the gains or losses arising on the swap upon its and are early termination continue to be deferred, to account over the period during brought progressively recognised. which the hedge transactions are of and Disclosure with AAS33 - "Presentation In accordance continued

> 65 Integral Energy Annual Report substance of the agreement covering such transactions. covering such substance of the agreement as cash contribution is recognised A developer or customer or modified when the network is extended revenue of the contribution. consistent with the terms activities (ii) Revenue from non-operating of the out of revaluation Surplus or deficit arising funds held by Energy Industries superannuation pooled notified of such when is recognised Superannuation Scheme note 1(q)(ii)). event by the trustees (refer when recognised the sale of assets is Revenue arising from of the goods, and the amount the entity has passed control reliably. measured can be of revenue and financial distributions equivalents (p) Tax Equivalent (i) Taxation Integral Energy Australia commenced 1 July 2001, From administered regulations operations under Australian Taxation Prior to this the entity Office. by the Australian Taxation Regime Equivalent operated within the NSW Government Tax of the to the Office still payable equivalents are (TER). Tax State Revenue. adjusted profit Income tax expense is calculated on operating between taxable and accounting for permanent differences which arise of timing differences, income. The tax effect periods for to account in different brought items being from in the forward income tax and accounting purposes, is carried income tax benefit statement of financial position as a future income tax. deferred for or a provision unless to account not brought benefits are income tax Future doubt. beyond reasonable of the assets is assured realisation to entities with tax losses benefits relating income tax Future is virtually to account when the realisation only brought are certain. (ii) Distributor Levy imposed in the 1997 NSW State Budget, A distributor levy, was collected on use of system charges billed to contestable of the State customers and paid quarterly to the Office Revenue (OSR). The distributor levy ceased on 30 June 2001. (iii) Financial Distribution by A financial distribution in the form of a dividend, approved The dividend is also paid to NSW Treasury. the Board, income tax before entitlement is based on 85% of profit (excluding capital contributions) less income tax payable, or a in amount as determined by NSW Treasury reasonable consultation with the Board. (iv) Goods and Services Tax net of the recognised Revenues, expenses and assets are amount of goods and services tax (GST) except: from is not recoverable the amount of GST incurred (i) where as part of the cost of it is recognised the taxation authority, acquisition of an asset or as part of an item of expense, or inclusive recognised and payables which are (ii) for receivables of GST. or payable to, the from, The amount of GST recoverable or taxation authority is included as part of receivables payables. 30 JUNE 2002 > Statements Financial to the Notes Integral Energy Annual Report 66 > continued (a) Identifying amounts set aside for the renewal or set aside for the renewal (a) Identifying amounts of fixed assets; replacement for set aside to any provision (b) Identifying amounts known commitments; of the repayment for appropriated (c) Identifying amounts or deposits; loans, advances, debentures asset sale over (d) Identifying excess of non-current cost; replacement (e) Identifying material items of income and expenditure basis. or activity on a program Exemptions are as follows: Exemptions are (i) and loss statements of trading profit Preparation (ii) of notes: Preparation (v) Discontinuing Operations with ActewAGL was reached In February 2002, an agreement assets, to sell the natural gas customer base and network assets and liabilities 2002. The remaining 30 June effective company, to the parent as at 30 June 2002 will be transferred financial year. Integral Energy Australia, during the 2002/03 Limited ceased trading Integral Energy Gas Pty. Accordingly, base and on 30 June 2002. The natural gas customer sold for the sum of $2,100,000 which network assets were July 2002. The carrying value of the net on 5 was received in a loss on sale before assets sold was $7,694,996 resulting have been income tax of $5,594,996. No further disclosures these discontinuing operations, given the to made in relation immaterial. financial impact is considered (w) Segment Reporting in one Integral Energy Australia operates predominantly and of energy, industry segment, that being the distribution Australia. within one geographical sector, - - - - 7.46m 1.27m 4.28m 1.91m 2001/02 2000/01

30 JUNE 2002 Total Financial Instruments", information in respect of interest rate of interest information in respect Financial Instruments", risk is disclosed at note 30. risk and credit (nil in 2001). $7.46m were gains as at 30 June 2002 Deferred over the following as revenue These gains will be recognised periods: Not later than one year (u) NSW Treasury exemptions (u) NSW Treasury has granted Integral Energy Australia The NSW Treasury of part 3 of requirements certain disclosure exemptions from of disclosure the Public Finance and Audit Act, 1983, to avoid sensitive information to externalcommercially competitors. (t) Rounding of amounts to rounded Amounts shown in the financial statements are presented are dollars whenever figures thousand the nearest an amount is quoted within where in tabular form. However, whole dollar. to the nearest text, the amount is rounded involved, the values are $10m are amounts over Where figures to compared they are shown as $xx.xm except where below $10m. (s) Energy trading operations changes in the The trading activities of the entity expose it to policy to market price of electricity and gas. It is the entity's it from to protect enter into financial transactions in order are adverse price fluctuations. Energy trading transactions same basis as designated as hedges and accounted for on the the underlying exposure. Later than one year and not later than five years Later than five years > Statements Financial to the Notes 2,413 6,574 (1,204) 27,800 14,196 30,002 11,368 81,705 (12,572) 813,822 844,035 167,568 118,281 1,025,799 1,144,080 1,142,876 2,800 8,533 3,122 9,467 (8,067) 17,025 36,042 68,345 (16,600) 867,532 113,854 873,454 137,703 1,142,036 1,133,969 1,028,182 2,413 6,575 (1,204) 27,800 14,196 30,002 11,368 82,794 (12,572) 815,247 119,371 845,460 167,568 1,146,595 1,145,391 1,027,224 CONSOLIDATED CORPORATION 2002 2001 2002 2001 2,800 3,122 9,467 (5,965) 17,025 36,042 10,635 71,829 (16,600) 868,769 117,338 874,691 137,703 1,146,757 1,140,792 1,029,419 Notes $'000 $'000 $'000 $'000

> 67 Integral Energy Annual Report REVENUE FROM ORDINARY ACTIVITIES REVENUE FROM ORDINARY Total revenues from outside operating activities from revenues Total activities ordinary from revenues Total Other revenue from operating activities from Other revenue operating activities from revenues Total assets of non-current sale Revenue from Reimbursement of community service obligations operating activities from Sales revenue Capital contribution 2 Operating activities sales of electricity Metered lighting Street Estimated revenue on unread meters on unread Estimated revenue electricity sales Total Network use of system income 1(h) Other revenue income Interest activities non-operating Revenues from contributions superannuation Prepaid 1(q)(ii) 30 JUNE 2002 > Statements Financial to the Notes - - - 849 (251) 5,123 6,822 4,681 1,212 9,536 4,415 4,070 2,389 89,969 78,310 21,398 18,264 44,785 15,465 15,465 61,952 12,446 19,840 90,136 68,535 12,914 11,368 (11,619) 105,434 959,471 677,734 809,252 - 651 6,901 1,276 7,098 5,450 4,267 8,533 2,572 (5,200) (5,200) (4,940) (4,103) 82,430 24,831 40,873 61,601 15,835 15,835 63,016 10,705 12,513 24,088 81,006 14,033 (13,473) 103,805 119,640 965,018 629,179 783,777 107,257 - - Integral Energy Annual Report 90 849 (446) 68 5,199 6,822 1,212 4,766 9,536 4,428 4,070 2,399 > 92,425 78,310 21,411 18,277 44,887 15,465 15,465 61,952 12,475 20,571 70,846 94,527 12,959 11,368 (11,814) 107,890 962,839 673,295 810,062 CONSOLIDATED CORPORATION ---- 216 651 (200) (200) 2002 2001 2002 2001 6,901 1,276 7,081 5,457 4,267 $'000 $'000 $'000 $'000 2,578 (3,970) 82,430 24,847 40,873 61,750 15,835 15,835 63,016 10,754 24,692 83,350 12,513 14,056 10,635 (22,128) (11,493) 106,394 122,229 959,296 615,477 775,317 111,856

PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE INCLUDES: INCOME TAX ACTIVITIES BEFORE PROFIT FROM ORDINARY Expenses relating to sale of investments Expenses relating Gain (loss) on sale of investments Gain (loss) on sale of non-current assets Gain (loss) on sale of non-current Expenses relating to sale of non-current assets to sale of non-current Expenses relating Revenue from sale of investments Revenue from Revenue from sale of non-current assets sale of non-current Revenue from 30 JUNE 2002 Government guarantee expenses borrowing Total Employee entitlements Employee entitlements Amortisation expense assets of non-current amortisation Total and amortisation expenses depreciation Total activities ordinary Expenses from Leased system assets Reticulation assets assets of non-current depreciation Total Other operations and services activities to ordinary expenses relating Total Total amount set aside to provisions Total Amount set aside to provisions Amount set aside to Doubtful debts Other provisions expenses Borrowing expense interest Gross (a) Significant Items is and expenses whose disclosure income tax expense includes the following revenues activities before ordinary from Profit in explaining the financial performance of the entity: relevant 3 Expenses relating to ordinary activities to ordinary Expenses relating Bad debts written off expense Depreciation Buildings on loans Net amortisation of discounts/premiums Consultants Contractors System plant and equipment Employee benefits Superannuation contributions EDP Equipment Motor vehicle, mobile plant, unregistered plant Motor vehicle, mobile plant, unregistered Radio communication equipment Other non system equipment > Statements Financial to the Notes ------d 7 41 (96) 156 680 3,870 3,870 1,733 4,274 (2,640) (4,611) 32,326 33,556 20,015 14,282 33,556 35,732 - - - - 7 14 (56) 150 5,366 5,366 8,607 8,367 6,651 1,500 4,980 (3,099) (2,530) (2,530) (1,392) (6,507) (3,099) (1,392) 47,569 45,914 45,914 45,469 25,956 ------8 41 (96) 156 680 3,044 3,044 4,274 (2,627) (3,804) 30,304 30,721 30,721 16,524 14,957 35,442 (10,201) - (10,201) CONSOLIDATED CORPORATION ------8 14 (56) 223 223 150 (613) (613) 2002 2001 2002 2001 8,631 $'000 $'000 $'000 $'000 8,367 4,980 (8,386) 43,183 42,793 42,793 42,938 29,720

> 69 Integral Energy Annual Report TAXATION Provision for write down of loan for write Provision Depreciation of buildings Depreciation Depreciation on assets not depreciable for tax not depreciable on assets Depreciation Legal expenses Easement purchases Entertainment Prepaid superannuation Prepaid Internal loan provision of investment in subsidiary Write-down Capital contributions Restatement of deferred balances due to income tax rate change balances due to income tax rate Restatement of deferred Prior period tax adjustment Tax benefit gained for Infomet Pty. Limited losses benefit gained for Infomet Pty. Tax Energy Limited and Integral Infomet Pty. Adjustments to correct Limited balances Gas Pty. Limited and Infomet Pty. losses from Tax year Limited for current Integral Energy Gas Pty. Tax benefit gained for Infomet Pty. Limited losses for Infomet Pty. benefit gained Tax Limited and Infomet Pty. Adjustments to correct Limited balances Integral Energy Gas Pty. Limited and Infomet Pty. losses from Tax year Limited for current Integral Energy Gas Pty. Income tax expense on operating profits Under/(over) provision of previous year of previous Under/(over) provision Total Prior period tax adjustment to 34% or 30% depending on the time of expected settlement to 34% or 30% depending on the time of expected activities Income tax expense attributable to ordinary Total income tax expense is made up of: income tax Total Income tax payable income tax provision Deferred income tax benefit Future 4 (a) Income tax expense the income tax provide from items differs and extraordinary tax rates applicable on operating profit The prima facie tax, using in the financial statements as follows: in the financial statements expense calculated at 30% Prima facie income tax (34% last year) on the operating profit in prior period Under/(over) provision Adjustment to income tax expense due to non-tax deductible items: Adjustment to income tax expense due to non-tax 30 JUNE 2002 > Statements Financial to the Notes ------92 115 588 237 (292) 2,496 4,142 4,050 2,240 (6,364) 20,015 19,978 92,310 20,015 23,226 20,338 76,200 - 26 988 382 748 314 (505) 4,622 1,414 2,400 (2,530) (7,961) 45,468 25,428 28,402 20,015 23,398 26,651 24,160 21,177 81,608 (37,716) 100,063 ------Integral Energy Annual Report 99 115 588 236 (315) 70 2,556 4,149 4,050 2,268

(6,849) > 16,524 19,978 92,808 16,524 23,230 20,338 77,123 CONSOLIDATED CORPORATION - 39 51 382 748 314 (467) 2002 2001 2002 2001 1,445 5,050 1,868 2,392 $'000 $'000 $'000 $'000 (8,180) 42,938 25,428 29,007 16,524 26,651 24,203 23,524 21,177 81,326 (34,679) 100,019

TAXATION (continued) TAXATION 30 JUNE 2002 Current years income tax expense on operating profit years income tax expense Current Tax losses from Infomet Pty. Limited and Infomet Pty. losses from Tax year Limited for current Integral Energy Gas Pty. Capitalised labour Sundry Total Other Total (d) Future income tax benefit (d) Future (i) Current income tax benefit comprises the estimated future Future income tax rates of the following items: benefit at current and accrued employee entitlements Provisions deductible not currently Other Total Under/(over) provision in prior period Under/(over) provision Total (b) Provision for current income tax for current (b) Provision as follows: period were Movements during the of the period Balance at the beginning Income tax paid plant & equipment for in property, Difference accounting and tax purposes 4 (c) Provision for deferred income tax income deferred for (c) Provision (i) Current tax comprises the estimated income for deferred Provision income tax rates on the following items: expense at current meters accrual Unread (ii) Non Current tax comprises the estimated income for deferred Provision income tax rates on the following items: expense at current plant and equipment of property, in depreciation Difference for accounting and income tax purposes swaps assessable for tax profit Deferred Difference in depreciation of property, plant and equipment of property, in depreciation Difference for accounting and income tax purposes Capitalised labour Asset write downs Asset write downs Prepayments > Statements Financial to the Notes - - (9,060) 44,936 52,776 52,776 44,936 87,040 39,360 30,300 (16,376) 103,416 117,340 - (832) 1,857 (9,797) 96,251 30,068 90,632 90,632 28,211 86,454 42,556 41,724 128,178 - - (9,170) 45,039 52,776 52,776 45,039 87,422 36,203 27,033 (16,595) 104,017 114,455 CONSOLIDATED CORPORATION 309 (865) 2002 2001 2002 2001 1,857 $'000 $'000 $'000 $'000 30,380 90,632 90,632 97,768 28,214 87,591 33,986 33,121 (10,177) 120,712

> 71 Integral Energy Annual Report RECEIVABLES (CURRENT) RECEIVABLES PROVISION FOR DIVIDEND TAXATION (continued) TAXATION Provision for doubtful debts Provision Total 6 debtors – electricity Trade for doubtful debts Provision Dividends provided for by the Corporation to the NSW Treasury are: for by the Corporation to the NSW Treasury Dividends provided to and as proposed for dividend Provision in consultation of Directors by the Board declared with the shareholders Total 5 Deferred profit swaps assessable for tax swaps assessable profit Deferred Total tax benefit will only be obtained if: income This future (a) to enable the benefit to be realised; of an amount sufficient and assessable income is derived of a nature future (a) for deductibility imposed by tax legislation continue to be complied with; and the conditions (b) the benefit. the consolidated entity in realising no changes in tax legislation adversely affect 4 (ii) Non Current income tax benefit comprises the Future income benefit at current estimated future items: tax rates of the following and accrued employee entitlements Provisions deductible not currently Difference in property, plant & equipment for in property, Difference accounting and tax purposes Other debtors 30 JUNE 2002 > Statements Financial to the Notes ------60 584 145 8,789 8,000 63,706 17,741 63,953 17,834 81,787 81,447 186,040 185,330 104,253 104,253 103,883 103,883 - - - - 474 841 135 728 441 8,000 10,619 26,454 26,454 86,910 18,732 87,245 18,786 82,821 82,534 215,306 214,630 106,031 105,642 109,275 108,988 ------Integral Energy Annual Report 60 584 145 72 8,789 8,000 > 63,706 17,741 63,953 17,834 81,787 81,447 186,040 185,330 104,253 103,883 104,253 103,883 CONSOLIDATED CORPORATION - - - - 841 474 135 728 441 2002 2001 2002 2001 $'000 $'000 $'000 $'000 8,000 10,619 86,910 26,454 26,454 18,732 87,245 18,786 82,821 82,534 215,306 214,630 106,031 109,275 105,642 108,988

OTHER CURRENT ASSETS OTHER FINANCIAL ASSETS (CURRENT) OTHER FINANCIAL ASSETS 30 JUNE 2002 Other current assets Other current Total Prepayments and CTP insurance Motor vehicle registration 8 Total Unit trust deposits Unit trust deposits Total Unit trust deposits Private sector securities Money market securities Unit trust deposits Corporation. Private sector securities include Public sector securities include financial assets invested with NSW Treasury financial assets invested with non Government-owned bodies. 7 Term deposits Term Market value of Private sector securities rates Money market securities based upon buy back Market value of term deposits Public sector securities rates Money market securities based upon buy back Public sector securities Money market securities Market value of term deposits Term deposits Term Software licence fee Software PC lease/software maintenance PC lease/software Prepaid superannuation Prepaid Insurance > Statements Financial to the Notes t, ns f sed of Entity's receivable Consolidated Investment Profit CONSOLIDATED CORPORATION 2002 2001 2002 2001 Notes $'000 $'000 $'000 $'000

> 73 Share Held Revenue before taxof Parent received/ Parent HeldShare taxof to Revenue before Class of Interest Total Profit/(Loss) Net value Dividends Contribution Integral Energy Annual Report OTHER FINANCIAL ASSETS (NON-CURRENT) PARTICULARS IN RELATION TO CONTROLLED ENTITIES (EXTERNAL) TO CONTROLLED IN RELATION PARTICULARS that have a potential liability lower than the threshold figure will be automatically covered. figure that have a potential liability lower than the threshold will cover all transactions that it has been advi body, is that Integral Energy Australia, as the parent of the Deed The effect contract, undertaking, deed or legally enforceable arrangement ("transaction"), in the proper operation of its business, with a arrangement ("transaction"), in the proper contract, undertaking, deed or legally enforceable Transactio than $25,000.00 (other than annual Integral Energy Australia cost overhead allocation). potential liability greater figure. below the threshold as well as those that are to cover, and agreed sold to Limited were base and network assets of Integral Energy Gas Pty. As at 30 June 2002, the natural gas customer Integral Energy Australia. company, to the parent liabilities will be transferred ActewAGL for $2.1m. Remaining assets and o 1 July 2002. The voluntary de-registration Limited will be integrated into Integral Energy Australia, effective Infomet Pty. Limited will occur during 2002/03. Infomet Pty. Integral Energy Australia controlled entities: controlled Integral Energy Australia Integral Energy LimitedGas Pty. LimitedInfomet Pty. entity as detailed above. Integral Energy Australia and its entity within the economic Integral Energy Australia is the parent Ord Ord incorporated in Australia. Limited, were Limited and Integral Energy Gas Pty. subsidiaries, Infomet Pty. was granted to execute a Deed of held on 6 September 2000, approval Board At a meeting of the Integral Energy Australia Limited, and Integral Energy Gas Pty. Limited its subsidiaries, Infomet Pty. Indemnity between Integral Energy Australia and 100% 100% as at 30 June in force of the subsidiaries. This Deed was signed on 22 November 2000 and remains indemnifying the officers 2002. any agreemen is to be notified prior to a subsidiary entering into Board The Deed stipulates that the Integral Energy Australia 9,394 1,438 (3,534) (5,994) - - - - (3,534) (5,994) Total - 200 - 5,200 10 entities in controlled Shares entitiesInvestment in non controlled - - 200 - - - 200 5,000 9 30 JUNE 2002 > Statements Financial to the Notes 221 221 (669) 21,669 59,516 63,514 27,499 63,514 27,499 21,669 37,847 38,516 (47,487) 378,629 331,142 (228,891) 1,896,669 1,703,184 1,474,293 195 195 (1,160) 25,424 67,516 75,454 31,784 75,454 31,784 25,424 42,092 43,252 (63,322) 378,629 315,307 (310,053) 1,949,164 1,836,477 1,526,424 Integral Energy Annual Report 221 221 (669) 74 > 21,669 59,516 63,514 27,500 63,514 27,500 21,669 37,847 38,516 (47,487) 378,629 331,142 (235,695) 1,906,476 1,719,794 1,484,099 CONSOLIDATED CORPORATION 195 195 2002 2001 2002 2001 (1,160) 25,424 67,516 75,454 31,784 75,454 31,784 25,424 42,092 43,252 (63,322) 378,629 315,307 (318,525) 1,955,712 1,851,497 1,532,972 11(d) 11(d) 11(d) 11(d) 11(d) 11(d) 11(d) Notes $'000 $'000 $'000 $'000

PROPERTY, PLANT AND EQUIPMENT PLANT PROPERTY,

30 JUNE 2002 Total system assets Total Capital stores 11(a) Work in progressWork 11(a) System land Accumulated depreciation Accumulated amortisation Total non system land and buildings Total Accumulated depreciation Non system land and buildings Non system land and land Freehold 11 System assets Leased system assets System plant and equipment 11(a) Buildings 11(c) > Statements Financial to the Notes - - - - asis 8,989 8,989 1,927 7,571 (5,644) 85,014 14,255 50,874 45,994 29,531 41,263 (34,140) (16,463) (27,008) 105,576 (360,302) 2,061,761 2,061,761 2,422,063 - - - - 1,281 7,576 (6,295) 34,637 78,567 34,637 16,010 48,795 30,827 49,356 50,490 (34,480) (29,772) (18,529) 131,550 (463,611) 2,148,230 2,148,230 2,611,841 - 7,705 7,705 8,990 8,990 7,705 1,927 7,571 (5,644) 85,171 14,255 50,897 29,536 45,998 41,263 (27,008) (34,274) (16,462) 105,605 (367,239) 2,079,302 2,079,302 2,446,541 CONSOLIDATED CORPORATION - - - - 2002 2001 2002 2001 1,281 7,576 (6,295) 34,637 78,727 16,091 34,637 48,799 30,827 49,356 50,577 (34,486) (29,928) (18,529) 131,635 (472,245) 2,154,863 2,154,863 2,627,108 11(d) 11(d) 11(d) 11(d) 11(d) 11(d) Notes $'000 $'000 $'000 $'000

> 75 Integral Energy Annual Report PROPERTY, PLANT AND EQUIPMENT (continued) PLANT PROPERTY, Gas assets Reticulation assets and amortisation Accumulated depreciation amount written down Total Accumulated depreciation gas assets Total plant and equipment property, Total Work in progress Work non system plant and equipment Total Accumulated depreciation Accumulated depreciation Accumulated depreciation 11 equipment Non system plant and EDP Equipment Accumulated depreciation Other plant and equipment Motor vehicle, mobile plant, unregistered plant Motor vehicle, mobile plant, unregistered Radio communication equipment (a) System assets assumes an approach cost (ODRC). The ODRC valuation replacement valued at the optimised-depreciated (i) System assets are electrical distribution system configuration. This is achieved by valuing network distribution system assets, on the b altered to support the maximum possible electrical load. above that required that the system is built to assumed engineering standards within this optimised system configuration, such capacity is valued at zero. If excess capacity still remains International engaged a consortium comprising Gutteridge, Haskins & Davey (GHD), Worley and (ii) The NSW Treasury cost asset valuations of the Network assets. The valuation report replacement Andersen to update the optimised depreciated 1 January 2001. from decided to incorporate this valuation with effect in February 1999. Directors was presented Total property, plant and equipment property, Total 30 JUNE 2002 > Statements Financial to the Notes a in a ------Integral Energy Annual Report 935 935 (364) (364) 76 2002 2002 5,4994,950 5,499 4,950 $'000 $'000

(1,744) (1,744) > CONSOLIDATED CORPORATION

PROPERTY, PLANT AND EQUIPMENT (continued) PLANT PROPERTY,

30 JUNE 2002 Carrying amount at end 315,307 315,307 Amortisation expense (15,835) (15,835) Leased system assets Carrying amount at beginningAdditions 331,142 331,142 Depreciation expenseDepreciation Carrying amount at end (1,276) 42,092 (1,276) 42,092 Buildings Carrying amount at beginningAdditions Disposals Revaluations Disposals 37,847 37,847 Carrying amount at end 25,424 25,424 Revaluations Freehold land Carrying amount at beginningAdditions 21,669 21,669 (d) Reconciliations financial and equipment at the beginning and end of the current plant Reconciliations of the carrying amounts of property, year. (c) Depreciation rates (c) Depreciation BuildingsSystem plant and equipmentEDP Equipment plantMotor vehicle, mobile plant, unregistered Radio communication equipmentOther non system plant and equipmentReticulation assets 10% Other gas assets – 33.33% 1.67% 4.29% – 33% 14.28% 2.5% – 12.38% – 33.33% 14.29% 1.25% – 33% – 33% 1.25% (b) Sale and lease back of system assets. (b) Sale and lease back is classified as a sale and leaseback transaction and the leaseback into entered Electricity Prospect During 1994/95, the then the transaction resulted of the finance lease and loss on defeasance, revaluation lease liability, finance lease. The resulting at consequently capitalised sale and leaseback transactions were, The finance lease asset established by the net effect. zero concerned. economic life of the assets being amortised over the remaining value and are their optimised deprival Disposals 11 > Statements Financial to the Notes ------13 13 (26) (26) (198) (197) (420) (60) 2002 2002 $'000 $'000 (6,055) (6,050) 17,196 17,191 11,613 11,613 133,243 133,197 103,318 102,855 CONSOLIDATED CORPORATION

> 77 Integral Energy Annual Report PROPERTY, PLANT AND EQUIPMENT (continued) PLANT PROPERTY, Depreciation expenseDepreciation Carrying amount at end (4,267) 30,827 (4,267) 30,827 Depreciation expenseDepreciation Carrying amount at endMotor vehicle, mobile plant, unregistered plant Carrying amount at beginningAdditions (14,056) 48,799 29,536 (14,033) 48,795 29,531 Carrying amount at endEDP equipment Carrying amount at beginningAdditions Disposals Asset write downsDisposals Revaluations 195 50,897 (5,040) 50,874 195 (5,040) Depreciation expenseDepreciation - - Depreciation expenseDepreciation Carrying amount at endSystem capital stores Carrying amount at beginningAdditions 31,784 - 221 31,784 - 221 Depreciation expenseDepreciation Carrying amount at endSystem work in progress Carrying amount at beginningAdditions 75,454 - 27,500 75,454 27,499 - Disposals Asset write downsCarrying amount at endSystem land Carrying amount at beginningAdditions Disposals RevaluationsCompleted projectsRevaluations 1,532,972 (600) 63,514Movements Revaluations 1,526,424 63,514 - 11,927 (99,034) 11,927 (98,570) 11 System plant and equipment Carrying amount at beginningAdditions expenseDepreciation 1,484,099 1,474,293 (83,350) (81,006) 30 JUNE 2002 > Statements Financial to the Notes ------55 Integral Energy Annual Report (23) (18) 195 - 78 2002 2002 $'000 $'000 4,437 4,345

(7,684) - > 59,765 59,711 CONSOLIDATED CORPORATION

PROPERTY, PLANT AND EQUIPMENT (continued) PLANT PROPERTY,

30 JUNE 2002 Depreciation expenseDepreciation Carrying amount at end (216) - - - Completed projectsRevaluations Gas reticulation assets Carrying amount at beginningAdditions Disposals Revaluations (34,118) 7,705 (34,063) - Carrying amount at end 34,637 34,637 Depreciation expenseDepreciation - - Non system work in progress Carrying amount at beginningAdditions 8,990 8,989 Depreciation expenseDepreciation Carrying amount at end (2,578) 16,091 (2,572) 16,010 Other non system plant and equipment Carrying amount at beginningAdditions 14,255 14,255 Depreciation expenseDepreciation Carrying amount at end (651) 1,281 (651) 1,281 Disposals Revaluations Disposals Revaluations 11 Radio communication equipment Carrying amount at beginningAdditions 1,927 1,927 > Statements Financial to the Notes - 68 59 999 720 2,710 8,907 1,174 2,378 6,418 6,418 1,402 13,661 16,168 15,910 32,078 668,392 668,392 239,911 239,911 68 59 819 1,210 2,815 1,613 1,244 2,517 8,350 9,963 1,856 46,516 10,399 18,185 49,318 67,503 760,761 760,761 308,788 308,788 - 68 59 999 720 2,711 1,174 2,378 6,470 6,470 8,913 1,402 13,661 36,76013,883 26,461 14,264 35,623 13,883 16,175 15,910 32,085 37,76437,764 21,164 21,164 37,764 37,764 668,392 668,392 108,932159,575 115,673 156,398 108,397 157,903 239,911 239,911 CONSOLIDATED CORPORATION 68 59 820 2002 2001 2002 2001 2,815 1,244 2,518 1,210 8,398 1,613 1,856 43,977 10,011 22,325 14,264 10,405 18,192 46,780 64,972 21,164 21,164 760,761 760,761 117,242 153,831 308,788 308,788 Notes $'000 $'000 $'000 $'000

> 79 Integral Energy Annual Report OTHER NON-CURRENT ASSETS OTHER NON-CURRENT OTHER CURRENT LIABILITIES LIABILITIES (NON-CURRENT) INTEREST-BEARING INTEREST-BEARING LIABILITIES (CURRENT) INTEREST-BEARING PROVISIONS (CURRENT) PAYABLES (CURRENT) PAYABLES Other provisions Other (iii) Sick leave (i) Long service leave Maturing allowance (ii) Annual leave Self insurance Payroll tax Payroll Workers compensation Workers Dependents fund 17 Unsecured - other loansTotal 30 16 Deposits and retentions Unearned income Total Total other provisions Total provisions current Total Total employee entitlements Total Employee entitlements: Unsecured - other loansTotal 15 30 Trade creditors Trade Accruals Other Total 14 Other provisions (i) Sick leave - vested sick leave only - closed scheme since 1992. (ii) of employee "length of service". set aside in recognition Maturing allowance - closed scheme since 1996, previously (iii) special leave. Other includes leave in lieu and award 12 superannuation Prepaid Total 13 30 JUNE 2002 > Statements Financial to the Notes - 37 153 4,970 4,780 or 29,589 95,275 18,028 18,340 83,526 88,496 18,688 18,688 35,597 571,814 589,842 685,046 485,046 589,842 (200,000) 22 153 5,436 6,190 5,261 32,546 22,376 47,118 17,515 88,775 94,211 16,735 22,925 38,714 612,218 485,046 335,046 612,218 589,842 (150,000) - Integral Energy Annual Report 37 153 80 4,970 4,780 > 29,589 84,919 18,340 83,534 88,504 18,688 18,688 18,028 35,605 571,814 589,842 685,046 485,046 589,842 (200,000) CONSOLIDATED CORPORATION 22 153 2002 2001 2002 2001 5,436 6,190 5,261 32,546 52,428 22,376 17,515 88,785 94,221 16,735 22,925 38,724 612,218 485,046 335,046 612,218 589,842 (150,000) Notes $'000 $'000 $'000 $'000

RESERVES AND RETAINED PROFITS RESERVES AND RETAINED CONTRIBUTED EQUITY OTHER NON-CURRENT LIABILITIES PROVISIONS (NON-CURRENT)

Total other provisions Total Dependents fund Maturing allowance (ii) Sick leave (i) Self insurance Long service leave Workers compensation Workers 30 JUNE 2002 Balance at end of year Transfers into reserve Transfers Retained profits 21(b) 21 Asset revaluation 21(a) Closing balance 20 Opening balance Repayment of Equity Deferred income Deferred Total 19 Deposits and retentions Total non current provisions non current Total Total employee entitlements Total (ii) Movements in reserve Balance at beginning of year (i) Included in contributed equity is issued capital of two $1 ordinary shares held by the Treasurer and The Special Minister f by the Treasurer held shares (i) Included in contributed equity is issued capital of two $1 ordinary State. (a) Asset revaluation (i) Nature and purpose of reserve assets. in the value of non-current and decrements increments to record is used reserve The asset revaluation 18 Employee entitlements Other provisions (i)only - closed scheme since 1992. Sick leave - vested sick leave (ii) of employee "length of service". set aside in recognition allowance - closed scheme since 1996, previously Maturing > Statements Financial to the Notes - - 251 9,290 9,536 3,578 1,372 (4,693) (5,905) (1,611) (4,611) 33,823 95,275 71,539 89,969 15,465 93,186 76,512 71,539 12,572 (28,533) (27,800) (52,776) 258,138 185,330 194,620 148,051 100 8,686 5,040 6,623 5,000 1,354 (2,224) (2,800) (9,391) (1,830) 12,513 39,612 47,118 40,607 15,835 95,275 40,607 16,600 17,073 (34,485) (88,764) (10,838) 103,805 213,504 214,630 212,406 135,882 - - 446 (754) 7,596 9,536 3,710 (2,993) (5,910) (4,875) (1,367) 31,483 84,919 73,521 92,425 15,465 64,174 73,521 12,572 (28,533) (27,800) (52,776) 267,613 185,330 192,926 137,695 100,687 CONSOLIDATED CORPORATION - - 2002 2001 2002 2001 5,640 6,619 8,434 $'000 $'000 $'000 $'000 6,053 1,390 (2,800) (2,224) (1,830) 52,428 56,273 15,835 12,513 46,371 84,919 56,273 16,600 (34,485) (88,764) (15,642) (11,834) 215,531 214,630 212,406 106,394 141,192

> 81 Integral Energy Annual Report STATEMENT OF CASH FLOWS OF CASH STATEMENT RESERVES AND RETAINED PROFITS (continued) RESERVES AND RETAINED Closing cash balance Asset value write down Capital contributions provisions in payables and (Decrease)/increase in other liabilities (Decrease)/increase income tax in deferred (Decrease)/increase (used in) operating activities Net cash flow from (b) Reconciliation of cash Cash balance comprises: - Cash and deposits investments - Current and net of outstanding overdrafts For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, funded investment reserves. investments in the Statement of Financial Position other than current current Balance at end of year 22 after (a) Reconciliation of the operating profit operations tax to the net cash flows from activities after tax ordinary from Profit Non-Cash Items assets of non-current Depreciation assets Amortisation of non-current Amortisation of discounts/premiums meters in unread (Increase)/decrease 21 (b) Retained profits of year Balance at the beginning attributable to members of Corporation Net profit for or paid Dividends provided Total available for appropriation Total Prepaid super contribution Prepaid entity in controlled of shares on write-off Net (profit)/loss in inventory (Increase)/decrease Net (profit)/loss on disposal of fixed assets/investments on Net (profit)/loss subsidiary net assets for loss on Provision income tax benefit in future (Increase)/decrease in prepayments (Increase)/decrease Changes in assets and liabilities in trade and other receivables (Increase)/decrease 30 JUNE 2002 > Statements Financial to the Notes - - - 114 2,006 2,006 4,627 6,942 11,683 54,323 20,000 25,000 95,000 25,000 95,000 50,000 20,000 50,000 185,259 303,267 542,849 323 129 5,132 3,735 1,268 2,000 2,000 83,799 35,437 35,760 20,000 25,000 97,000 25,000 97,000 50,000 20,000 50,000 189,005 306,209 579,013 - - - Integral Energy Annual Report 114 82 2,006 2,006 4,627 6,942 > 11,683 54,340 20,000 25,000 95,000 25,000 95,000 50,000 20,000 50,000 185,259 303,267 542,866 CONSOLIDATED CORPORATION 129 323 2002 2001 2002 2001 5,132 3,735 1,268 2,000 2,000 $'000 $'000 $'000 $'000 83,909 20,000 25,000 97,000 25,000 97,000 35,437 35,760 50,000 20,000 50,000 189,005 306,209 579,123

EXPENDITURE COMMITMENTS STATEMENT OF CASH FLOWS (continued) STATEMENT

30 JUNE 2002 - not later than one year (c) Operating expenditure commitments (c) Operating expenditure payable: for, contracted for at balance date, but not provided Estimated operating expenditure - later than five years Total Total - later than five years - later than one year and not later than five years - not later than one year - later than one year and not later than five years Total (a) Capital expenditure commitments (a) Capital expenditure payable: for, contracted for at balance date, but not provided Estimated capital expenditure Total 23 orporate credit card (CBA) card orporate credit corporate credit card (CBA) card corporate credit Total Total facilities Total (CBA) - Bank overdraft - not later than one year (c) Financing facilities available (c) Financing facilities available: and were financing facilities had been negotiated At balance date, the following commitments (b) Lease expenditure for in the accounts: Non-cancellable operating lease commitment not provided 22 - Come and Go facility (NSW Treasury Corp.) - Come and Go facility (NSW Treasury Facilities unused at balance date (CBA) - Bank overdraft - later than one year and not later than five years - Westpac purchasing card facility card purchasing - Westpac - Bank guarantees, cheques encashment, payroll, Corp.) - Come and Go facility (NSW Treasury - Westpac purchasing card facility card purchasing - Westpac - Bank guarantees, cheques encashment, payroll, > Statements Financial to the Notes 71,218 373,560 1,769,464 2,214,242 2,770,780 72,537 304,711 1,769,464 2,146,712 2,766,617 71,218 373,560 1,769,464 2,214,242 2,770,797 CONSOLIDATED CORPORATION 2002 2001 2002 2001 $'000 $'000 $'000 $'000 72,537 304,711 1,769,464 2,146,712 2,766,727

> 83 Integral Energy Annual Report CONTINGENT LIABILITIES EXPENDITURE COMMITMENTS (continued) EXPENDITURE COMMITMENTS 24 liabilities or information that would lead them to believe that the following of any circumstances not aware are The directors of these matters: included in the accounts in respect are will crystallise and consequently no provisions - Industrial relations and Authority: - WorkCover - Sundry general claims. The estimated total of these claims is up to $1.5m Total commitments expenditure Total 23 commitments operating expenditure contract purchase (d) Smithfield energy payable: for, for at balance date, but not provided contracted Estimated operating expenditure - not later than one year - later than five years - later than one year and not later than five years - later than one year and Notes the to five years. Leases generally provided one under operating leases expiring from The consolidated entity leases property Lease payments comprise a base renegotiated. at which time all terms were consolidated entity with a right of renewal Price based on either movements in the Consumer are Contingent rentals contingent rental. amount plus an incremental Index or operating criteria. expected to be recovered of $251.5m ($251.6m in 2001) which are input tax credits commitments include expenditure Total commitments include input tax contract operating expenditure purchase Smithfield energy Office. Taxation the Australian from commitments and included in operating expenditure are ($201m in 2001). Remaining input tax credits of $195.2m credits total $56.3m ($50.6m in 2001). 30 JUNE 2002 > Statements Financial to the Notes s: y or 595 7,436 816 14,877 Integral Energy Annual Report 595 84 7,436 > CONSOLIDATED CORPORATION 5353 5555 3131 3333 1111 1111 1111 No. No. No. No. No. No. No. No. 816 2002 2001 2002 2001 $'000 $'000 $'000 $'000 14,877

REMUNERATION OF EXECUTIVES REMUNERATION REMUNERATION OF DIRECTORS REMUNERATION

30 JUNE 2002 Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of Corporation, directl to all directors of the financial year, in respect Income paid or payable, or otherwise made available, party: or any related the entity from indirectly, The number of executives of the consolidated entity and the company whose remuneration (including superannuation The number of executives of the consolidated entity and the company whose remuneration contributions) falls within the following bands: $140,000 - $149,999 $150,000 - $159,999 $160,000 - $169,999 $170,000 - $179,999$180,000 - $189,999$190,000 - $199,999 $200,000 - $209,999$210,000 - $219,999$220,000 - $229,999$230,000 - $239,999$240,000 - $249,999$250,000 - $259,999$350,000 - $359,999$430,000 - $439,999 1 - - - - 2 2 - 4 1 1 2 - 1 - 1 1 - - - - - 1 - 2 - 1 2 4 1 1 2 - - 1 - - - 1 - $100,000 - $109,999$110,000 - $119,999$120,000 - $129,999$130,000 - $139,999 45 24 17 23 9 7 45 24 17 23 9 7 26 is $100,000 of the consolidated entity whose remuneration by executive officers or due and receivable Remuneration received of the of the affairs in connection with the management party, entities in the consolidated entity or a related from or more, or otherwise: an executive officer entities in the consolidated entity whether as (a) Directors' remuneration remuneration (a) Directors' of each entity in the to all directors of the financial year, or otherwise made available, in respect Income paid or payable, party: or any related directors entities of which they are by the or indirectly, directly consolidated entity, 25 Remuneration received or due and receivable by executive officers of the company whose remuneration is $100,000 or more, of the company whose remuneration by executive officers or due and receivable Remuneration received of the company or any of its of the affairs in connection with the management party, the company or any related from or otherwise subsidiaries, whether as an executive officer The number of directors of Corporation whose income (excluding superannuation contributions) falls within the following bands i of Corporation whose income (excluding superannuation contributions) falls within the The number of directors $10,000 - $19,999 $40,000 - $49,999$60,000 - $69,999$70,000 - $79,999 $80,000 - $89,999$350,000 - $359,999$390,000 - $399,999 full time employees of Integral Energy Australia. who are includes salaries paid to Directors remuneration Directors' - 4 - - 1 4 - 1 1 - - 4 - - 1 4 - 1 1 - > Statements Financial to the Notes t r 627 280 280 907 224 403 471 225 225 696 230 241 681 280 280 961 278 403 CONSOLIDATED CORPORATION 524 225 225 749 283 241 2002 2001 2002 2001 $'000 $'000 $'000 $'000

> 85 Integral Energy Annual Report RELATED PARTY DISCLOSURES PARTY RELATED DIRECTORS' APPOINTMENTS AUDITORS' REMUNERATION 29 a) Directors of Integral Energy Australia during the financial The name of each person who held or is holding the position of director period is set out in note 28 above. set out in note 25 above. is remuneration Details of directors' transactions for the 2001/2002 financial year. party related director no declared were There b) Wholly-owned Group includes a consolidation of the following entites: The group Integral Energy Australia Limited Integral Energy Gas Pty. Limited Infomet Pty. as follows: are Details of dealings with entities in the wholly owned group Loans Limited Infomet Pty. a loan of $19,899,910 in the 1998/99 financial year to assist in the establishment of Infome Integral Energy Australia provided 28 at the completion of their term on 28 February 2002, with the re-appointed were All existing non-Executive Directors exception of Neil McDermott who resigned. Re-appointments Downing Terry Michael McLeod Mary Reemst Janice Reid Paul Sinclair New appointments 2002) John Fahey (appointed 1 March Departures 28 February 2002) Neil McDermott (resigned Continuing Director during the period. Powis, continued as Director Richard The Chief Executive Officer, - Internal Auditors auditor's remuneration Total Limited's consideration for Infomet Pty. during the period by $5,365,617 which represents Limited. The loan was reduced Pty. due on 1 January 2009 to Integral Energy Australia. The loan consists of a 10 year loan of $8,500,000, tax losses transferred the assets loan of $6,034,293, which represents free rate of 5% per annum, and a long term interest with an interest of $425,000 fo interest Limited. Integral Energy Australia received Integral Energy Australia to Infomet Pty. from transferred 27 for audit services by: Amounts paid and payable - External- Auditors of the Corporation - Internal- Auditors of the Corporation the year ended 30 June 2002 ($425,000 in 2001), but had not received any principal repayment up to 30 June 2002. any principal repayment the year ended 30 June 2002 ($425,000 in 2001), but had not received expected loss of $14,534,293 representing a provision and recorded As at 30 June 2002 Integral Energy Australia recognised Limited. on the loan to Infomet Pty. Amounts paid and payable for other services by: Amounts paid and payable for other services 30 JUNE 2002 > Statements Financial to the Notes l $3,942,162 $3,294,226 $1,441,162 Integral Energy Annual Report 86 > 2001/02 2000/01 $5,577,393 $9,976,998 $6,315,949 Payables

RELATED PARTY DISCLOSURES PARTY RELATED

30 JUNE 2002 Infomet Pty. LimitedInfomet Pty. Receivables Receivables/Payables entities include the following amounts: entities and payables to the controlled controlled the Receivables from Other transactions entities. into a number of transactions with its controlled entered During the financial year Integral Energy Australia Limited Infomet Pty. management, Limited at no cost. For all other services such as property to Infomet Pty. provided Accounting services were rates. has been charged commercial Limited of business systems, Infomet Pty. leasing of motor vehicles, IT&T and maintenance Services during the financial Meter Data Agent and Meter Provider Integral Energy Australia with Limited provided Infomet Pty. rates. to Integral Energy Australia at arms length commercial provided These services were year. Limited Integral Energy Gas Pty. Limited at no cost. No services to Integral Energy Gas Pty. provided EDP and other services were Accounting, human resource, Limited. to Integral Energy Australia by Integral Energy Gas Pty. provided were Energy Gas Pty. Limited. An additional amount of $10,223 was advanced in the 1998/99 financial year, which represents a 5 which represents advanced in the 1998/99 financial year, Limited. An additional amount of $10,223 was Energy Gas Pty. at 5% per is being paid on the total loan of $5,096,741 1 July 2002. Interest due on year bullet loan with redemption in 2001), but had for the year ended 30 June 2002 ($254,837 of $254,837 interest Australia received annum. Integral Energy up to 30 June 2002. any principal repayment not received expected loss on representing of $5,096,741 a provision and recorded Energy Australia recognised At 30 June 2001 Integral assets of Integral the natural gas customer base and network Limited. As at 30 June 2002 Gas Pty. the loan to Integral Energy 2002. Remaining assets and liabilities will be and the company ceased trading on 30 June sold, Limited were Energy Gas Pty. financial year. to Integral Energy Australia during the 2002/03 transferred 29 Limited Integral Energy Gas Pty. to assist in the establishment of Integra of $5,086,518 in the 1996/97 financial year a loan provided Integral Energy Australia Integral Energy Gas Pty. LimitedIntegral Energy Gas Pty. Payables Integral Energy Australia has also provided the necessary cash facilities for each of the controlled entities, with respect to entities, with respect the necessary cash facilities for each of the controlled Integral Energy Australia has also provided entity. external controlled not settled by the transactions which were parties c) Other related party transactions. other related no declared were There > Statements Financial to the Notes

(a) Notional principal amount principal Notional (a)

iblte 9,6 7,7 9871903546245762619186624442881136271,127,124 1,326,247 218,821 254,474 198,636 216,139 405,756 504,622 129,033 59,847 174,878 291,165 liabilities

Total financial Total

wp a 4,0 400--(000 8,0)3,0 20,000 30,000 (84,000) (70,000) - - 64,000 40,000 (a) swaps ------

Interest rate Interest

------payable Dividends 0625,7 0625,7 - - 52,776 90,632 52,776 90,632

iblte 5,6 1,7 76319035462497616191866--109599833667.0 6.6 908,303 1,069,549 - - 178,636 186,139 489,756 574,622 129,033 57,623 110,878 251,165 liabilities

Interest bearing Interest

------liabilities financial Other 0016401,1 ,7 - - 6,470 10,011 6,470 10,011

------Payables 5,3 5,7 5,3 5,7 - - 159,575 153,831 159,575 153,831

akoedat--2,224 - - overdraft Bank ------,2 . - 4.3 - 2,224

(ii) Financial liabilities Financial (ii)

oa iaca ses--2460192,926 214,630 - - assets financial Total 2,1 1,5 3,4 307,581 335,342 114,655 120,712 ----

------200-200-- unlisted entities Investments in other in Investments >

87 te iaca ses--2460185,330 214,630 - - assets financial Other ------1,3 8,3 . 5.0 4.8 185,330 214,630

Receivables ------2,1 1,5 2,1 1,5 - - 114,455 120,712 114,455 120,712

ahast 7,596 - - - assets Cash ------,9 4.5 - 7,596

(i) Financial assets Financial (i)

'0 '0 '0 '0 '0 '0 '0 '0 '0 '0 '0 '0 % % $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

0220 0220 0220 0220 0220 0220 022001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001 2002

Floating interest rate 1 year or less Over 1 to 5 years More than 5 years Non-interest bearing balance sheet effective interest rate interest effective sheet balance bearing Non-interest years 5 than More years 5 to 1 Over less or year 1 rate interest Floating

Fixed interest rate maturing in: amount as per the Weighted average Weighted the per as amount in: maturing rate interest Fixed

Financial Instruments Financial Total carrying carrying Total

Integral Energy Annual Report

and unrecognised at the balance date, are as follows: as are date, balance the at unrecognised and

interest rates of financial assets and financial liabilities, both recognised both liabilities, financial and assets financial of rates interest

The consolidated entity's exposure to interest rate risks and the effective the and risks rate interest to exposure entity's consolidated The

30(a) Interest rate risk risk rate Interest 30(a)

30 30 JUNE 2002 INSTRUMENTS FINANCIAL > Statements Financial to the Notes - - 1 r 490 490 490 490 5,001 6,470 6,418 7,596 9,290 52,776 52,776 969,879 969,879 317,671 308,092 159,575 157,903 114,455 117,340 186,040 186,040 1,186,976 1,188,700 - - - - 6,844 6,844 6,844 6,844 2,224 2,224 9,963 90,632 90,632 10,011 343,517 336,051 153,831 156,398 120,712 128,178 215,339 215,339 1,120,784 1,120,784 1,380,001 1,377,482 ------Integral Energy Annual Report CORPORATION CONSOLIDATED 200 88 5,200 6,470 6,418 7,596 9,290 > 52,776 52,776 317,160 307,581 159,575 157,903 908,303 908,303 114,455 117,340 185,330 185,330 1,125,400 1,127,124 ------2002 2001 2002 2001 2002 2001 2002 2001 2,224 2,224 9,963 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 90,632 90,632 10,011 342,808 335,342 153,831 156,398 120,712 128,178 214,630 214,630 1,328,766 1,326,247 1,069,549 1,069,549 Total carrying amount as perTotal Aggregate Total carrying amount as perTotal Aggregate the Statement of Financial Position net fair value the Statement of Financial Positionthe Statement of Financial net fair value

FINANCIAL INSTRUMENTS (continued) FINANCIAL INSTRUMENTS

30 JUNE 2002 Off balance sheet AUD interest rate swaps rate balance sheet AUD interest Off rate derivative liabilities interest Total Dividends payable financial liabilities Total Total financial assets Total Investment in other entities unlisted Total interest rate derivative liabilities interest Total Off balance sheet AUD interest rate swaps AUD interest balance sheet Off Dividends payable financial liabilities Total Investment in other entities unlisted financial assets Total liability settled in a current transaction between willing parties after allowing for transaction costs. between willing parties after allowing for transaction liability settled in a current Financial liabilities Bank overdraft 30 30(b) Net fair values given are and financial liabilities held at balance date estimated net fair value of financial assets The carrying amounts and o amount at which the asset could be exchanged, of a financial asset or a financial liability is the The net fair value below. Financial liabilities Bank overdraft Payables Payables Other financial liabilities bearing liabilities Interest Other financial liabilities Interest bearing liabilities Interest Financial assets Cash assets Receivables Receivables Financial assets Cash assets Other financial assets Other financial assets Interest rate derivative liabilities Interest Interest rate derivative liabilities rate derivative Interest > Statements Financial to the Notes ly a 2002 2002 - 7,596 7,596 $'000 $'000 $'000 87,591 33,121 120,712 87,422 27,033 114,455 Energy Sales Other Total

> 89 Integral Energy Annual Report CAPITAL REPATRIATION CAPITAL PRUDENTIAL REQUIREMENTS FINANCIAL INSTRUMENTS (continued) FINANCIAL INSTRUMENTS Financial Assets Receivables At the request of the Shareholder, an amount of $150m was paid out of the contributed equity, in August 2001. in August 2001. the contributed equity, an amount of $150m was paid out of of the Shareholder, At the request 32 Bank Guarantee of $111.3m ($76.9m in 2001) is given to the National Electricity Marketing Management Co. An unsecured The guarantee is a condition of Integral Corporation payment facility. Treasury Ltd. (NEMMCO) by way of a New South Wales License. Energy Australia's Trading End of Audited Financial Statements 31 Short term money market investments financial assetsTotal approved individual customer or counterparty outside Board to any exposure Integral Energy does not have any significant counter party limits. 30(d) Derivative Financial Instruments exempt applicable to the energy trading activities of Integral Energy Australia were During 2001/2002 all derivative products under AAS33. disclosure from - 185,330 185,330 87,422 219,959 307,381 Short term money market investments financial assetsTotal Financial Assets - 214,630 214,630 87,591 247,751 335,342 Cash Receivables 30 risk exposures 30(c) Credit to discharge party to a contract, or financial position failing another from risk is the risk of financial loss arising Credit financial obligation thereunder. Integral Energy Australia's maximum exposure to credit risk is represented by the carrying risk is represented to credit Energy Australia's maximum exposure Integral financial obligation thereunder. Position. assets included in the Statement of Financial amounts of the financial is minimised due to in the Statement of Financial Position have not been recognised risk on derivative contracts which Credit in Australia. or one of the four major trading Banks Corporation, Treasury either New South Wales the counterparties being Energy Australia. rating which is acceptable to Integral & Poor's credit have a Moody's or Standard These counterparties all does not usual and and monitoring procedures, ratings, limits the use of credit risk through controls Integral Energy Australia risk. instruments with credit collateral or other security to support financial require 30 JUNE 2002 > Statements Financial to the Notes Integral Energy Annual Report 90 >

which has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group Consensus Views, Consensus Group Urgent Issues with Australian Accounting Standards, in accordance which has been prepared the State Owned Corporations Act Board, Australian Accounting Standards of the other authoritative pronouncements and fair and Audit Regulation 2000, and give a true and Audit Act 1983 and the Public Finance 1989, the Public Finance at 30 June 2002 and its performance entities as of Integral Energy Australia and its controlled view of the financial position that date. for the year ended on due and payable. and when they become be misleading or inaccurate to financial report Richard Powis Richard Director 4 September 2002 Michael McLeod Director 4 September 2002 Pursuant to Section 41C of the Public Finance and Audit Act 1983, we state that in the opinion of the Directors of Integral we state that in the opinion of the Directors of the Public Finance and Audit Act 1983, Pursuant to Section 41C Energy Australia: (a) a general purpose financial report notes on pages xx to xx are consolidated financial statements and The accompanying (b)will be able to pay its debts as to believe that the Corporation grounds reasonable are there At the date of this statement, (c) any particulars included in the the date of this statement that would render at of any circumstances not aware are We of the Directors: with a resolution Signed in accordance > of the Board Members by Statement > Appendices

BUSINESS RESULTS Summary of the Statement of Corporate Intent 92 Review of contestable business 92 Integral Energy business units 92 Five year statistical table 94

BUSINESS PROCESSES, PRODUCTS & SERVICES Major works in progress 95 Expansion of the distribution system 96 Overseas travel 96 Consultants 96 Disclosure of approved exemptions 97 Abbreviations 97

CUSTOMER & MARKET Customer Service Guarantees 98 Customer comments 98 Electronic service delivery 99 Publications 99 Funds granted to non-government community organisations 100 Legislative changes 100 Freedom of Information 104

PEOPLE, LEARNING & GROWTH Code of ethics 104 Equal Employment Opportunity 109 Employee numbers 109 Executive management remuneration 109 >

Integral Energy Annual Report 91 2000-2001 55% 50% 60% 52% 2001-2002 48% 38% 24% 26% 2000-2001 54% 57% 50% Integral Energy Annual Report 92

INTEGRAL ENERGY BUSINESS UNITS Limited Integral Energy Gas Pty year Integral During the last financial completed the Energy Gas Pty Limited in conversion of its gas network a town gas network to Nowra from a network that was suitable for the transport of natural gas. The conversion completed a four-year to deliver the benefits of project than 1,700 natural gas to more of the urban area customers around Nowra and Bomaderry. of its future Following a review and after taking corporate direction into account the changing dynamics of the national energy market it was decided to sell the gas network assets to ActewAGL. The sale was completed on 30 June 2002. > % 10% 2001-2002 Design Construction 47% 37% 23% 30 Type of work or project type % of contestable projects won by ESPs type % of contestable projects of work or project Type New subdivisions Non-urban extensions Industrial & commercial customers Asset relocation Integral Energy’s performance against performance Integral Energy’s targets is the 2001-2002 SCI financial summarised in the Management section on Discussion and Analysis page 54. REVIEW OF CONTESTABLE BUSINESS policy is to ensure Integral Energy’s that all internal provided services are to its core and efficiently effectively this cannot be businesses. Where and at a cost achieved to a standard externalavailable from suppliers, sought and competitive tenders are is a clear there evaluated. Where economic and service standard advantage to Integral Energy, is pursued. outsourcing During the last 12 months, Integral Energy further developed its processes associated with contestability with the aim of establishing a level playing field between internal and external crews (ESPs). service providers Integral In the year under review, bids for design and Energy entered construction of customer-funded open to were that projects of competition. The percentage won by externalprojects service during the year is given in providers These projects the table below. involved 20 design contractors and 18 construction contractors currently and active within Integral accredited franchise area. Energy’s

the five year period to 2006-2007 activities commercial (including energy procedures trading risk management) system assets pertaining to the electricity network; and non-system assets including land, buildings, vehicles and information technology. As at 30 JUNE 2002 As at 30 JUNE • and non- social programs • asset and liability management In addition, the SCI includes details of: • the objectives of the organisation • for performance targets/projections Integral Energy’s capital program Integral Energy’s areas: constitutes two broad • of establishment and replacement • of establishment and replacement in is reviewed Capital expenditure and renewal, terms of growth, compliance, with due regulatory consideration of the impact of the investment on our customers, our business and our shareholders. Summary and scope of The SCI states the nature activities of the main commercial the strategic direction Integral Energy, of the organisation, the organisation’s commitment to network service for and the capital program quality, the period of the agreement. Overview as part of its Each financial year, owned obligations as a State is required corporation, Integral Energy of Corporate to submit a Statement voting Intent (SCI) to its two voting The present shareholders. NSW Treasurer the are shareholders and the Special Minister of State. The SCI sets out key policies, performance that targets and business directions of to by the Board have been agreed Integral Energy and its shareholders. SUMMARY OF THE STATEMENT OF OF THE STATEMENT SUMMARY INTENT CORPORATE BUSINESS RESULTS > Appendices term of office Integral Energy Nightwatch Integral Energy Nightwatch Service markets, installs and maintains security lighting for and promotional in the customers with premises Integral Energy franchise area. provide lighting fixtures Existing street the means for the installation of to illuminate a wide range luminaires dusk to from of customer premises rates. dawn at reasonable The business again performed well during the year, extremely to combining innovative approaches lighting with internal process to attract new improvement Integral customers throughout The total Energy's franchise area. number of lights installed as part of the Nightwatch service was 2,695, an These of 3% on 1999-2000. increase include security lighting at factories, and car park lighting at promotional licensed clubs, and security lighting for small business premises. attended during 2001-2002 hold office attended held during on 22 March 2002 on 22 March The challenge for InfoMet in the year the systems ahead will be to refine associated with FRC and processes together with the development of a asset management comprehensive plan for Integral Energy's meters and associated equipment. Due to the convergence of metering InfoMet has technologies and the role in the management of all meter data it has on behalf of Integral Energy, the been decided to reintegrate operations of InfoMet within Integral 1 July 2002. Energy effective

> 93 Integral Energy Annual Report Directors of InfoMet Pty Ltd 2001-2002 Directors Name Date appointed Ceased to Comment Meetings Meetings Michael McLeod DowningTerry PowisRichard 19 April 2000John WallaceCraig James 2002 26 March Neil McDermott 21 January 2000 and Chair Director Current 1 July 2000 Director Current 21 June 2000 Director Current 4 28 September 2000InfoMet Pty Limited Director Current Integral Energy's metering business, of InfoMet, specialises in the provision Director Current Ceased to hold officemetering services within the National 1Electricity Market, and in Tasmania. 4 engaged in The business has 65 staff the key functions of meter installation, 4 4 3 metering assets, maintaining remote 4 and data meter data retrieval services to retailers. forwarding 1 The focus of InfoMet this year has 4 been to implement systems and 4 to meet the metering processes 3 challenges associated with the 4 of FRC. These changes introduction now mean that InfoMet is responsible for the management of all meter data This on behalf of Integral Energy. and transmission includes the receipt of meter data associated with domestic customers that have changed retailers. Directors of Integral Energy Gas Pty Limited, 2001-2002 of Integral Energy Gas Pty Limited, Directors Directors Date appointed Comment Meetings Meetings held Richard PowisRichard Craig JamesSimon Draper 21/01/2000 28/09/2000 16/10/2000 Director Current Director Current Director Current Chair 5 4 5 5 5 5 As at 30 JUNE 2002 As at 30 JUNE > Appendices Integral Energy Annual Report 94 > ---NA45 ---NA45 ---NA50 (1) 1997-98 1998-99 1990-00 2000-01 2001-02

TAX EQUIVALENTTAX DIVIDEND PAYMENT OF CAPITAL PAYMENT FROM EQUITY (25) (26) 14.3 92.1 (27) 0.0 45.9 0.0 29.7 0.0 0.0 52.8 16.5 0.0 90.6 42.9 200.0 150.0 DOMESTICBUSINESS (13) 87.5 (14) 80.0 80.0 77.5 78.0 74.0 NA NA NA NA SOLD ($/MWh) SOLD 22.6 21.925.6 27.1 23.8 RESULT (%) RESULT TARGET (%) TARGET As at 30 JUNE 2002 As at 30 JUNE OPERATING ASSETS (%) ($M) FINANCIAL INDICATORS EBIT TAX PROFIT AFTER OPERATING ASSETS SIGNIFICANT ITEMS (20)REVENUE5.5 7.8 8.2 7.0 11.5 RETURN ON NET (17)BASE OPERATING 100.4RETURN ON EQUITY (%)ASSET ASSET SALES ($M) (18) 19.0FINANCIAL DISTRIBUTION (21) (16) 14.3 112.5 225.2 (19) (22) (24)GEARING RATIO 1,087.5 1,195.8 1,162.3 1,145.4 1,140.8 1,977.1 1,843.8 1,903.4 2,558.8 2,658.9 (DEBT/ASSETS) (%) 106.4 (23) 73.5TIMES INTEREST EARNED 2.7 104.2 24.2SOCIAL PROGRAMS ($m) 45.9 146.2 56.3 15.5 20.5 (29) (30) (28) 29.7 3.6 182.6 13.0 41.0 7.6 24.1 269.3 181.5 1.6 13.1 37.6 5.2 11.4 283.5 2.3 13.4 36.8 10.6 14.2 35.5 2.5 17.0 40.2 2.4 NOMINAL AVERAGE PRICE(GWh) AVERAGE EFFECTIVENESS OUTPUT RELIABILITY (MINUTES)SUPPLY NOMINAL 72.8 67.1 81.2 80.9 INDEX CUSTOMER SATISFACTION (12) (11) 139.4 67.6 CUSTOMER SERVICE INDICATOR 12,579 (15) 137.7 13,346 123.7 13,896 15,100 14,975 136.3 133.68 EFFICIENCY EMPLOYMENTOUTPUT / EMPLOYEE (GWh)SALES REVENUE ($'000) RATIOCUSTOMER / EMPLOYEE COST / UNITOPERATING (3) COSTS / CUSTOMEROPERATING (5) 6.0 SYSTEM LOSS INDEX (%) (4) 349.1 SICK LEAVE/EMPLOYEE DAYS (2) (7)LOST TIME INJURY (6) 1,021,682FREQUENCY RATE 2039 387.5 6.9 1,079,413 385.3 (9) (8) 1,010,965 4.2 1845 398.2 4.6 422.0 7.9 1,013,028 1,012,394 436.3 (10) 1668 4.4 443.4 5.6 12.2 8.8 507.5 1765 411.8 5.0 5.5 13.1 8.1 530.9 1944 6.1 14.2 5.0 12.8 5.8 5.6 13.3 FIVE YEAR STATISTICAL TABLE FIVE YEAR STATISTICAL > Appendices augment North Richmond system capacity to improve improve reliability. improve acquisition carried out. ZS to a 2 x 25MVA installed in 27 zone were substations to address issues with Integral Energy's power factor as seen by Transgrid. and reliability. contributions), divided by the average asset base. contributions), divided by the average on the basis of this have been restated All figures definition. average equity. capital contributions), divided by on the basis of this have been restated All figures definition. assets. of capital from dividend payment and payment equity. based on the income tax payable (after taking income tax and future into account deferred income tax benefits). on the basis of this have been restated figures definition. ordinary from expense to the profit net interest tax (including abnormals income activities before and capital contributions), and dividing by the have been expense. All figures net interest on the basis of this definition. restated (20) capital Redefined as EBIT (including (21) after tax (including profit Redefined as operating (22) and non-current Asset base includes all current (23) asset sales. from proceeds Total (24) tax equivalent, Financial distribution includes (25) tax equivalent has been 1995-96 onwards From (26) Includes special dividends. (27) Involves a special payment to the Government. (28) Redefined as debt divided by the asset base. All (29) Times earned interest calculated by adding the (30) of CSO's. Based on reimbursement and provides a score out of 100 to indicate the a score and provides of customers to the service positive perception by distributors. The customer provided by a was replaced satisfaction index measure note (15). customer service indicator as per the the number of issues with EWON, 30 days of complaints closed within percentage of customer service and the percentage guarantee breaches. items income tax expense (including before capital as abnormals and treated previously All expenses. contributions), less borrowing on the basis of this have been restated figures definition. activities after income tax expense ordinary from as abnormals treated (including items previously have been and capital contributions). All figures on the basis of this definition. restated have subject to separate disclosure previously of EBIT, been included within the measures after tax and revenue. operating profit non-operating from activities and revenues activities, including capital contributions and any as abnormals. treated items previously revenue on the basis of this have been restated All figures definition. (15) calculation include Factors contributing to the (16) activities ordinary from EBIT is defined as profit (17) after tax is defined as profit Operating profit (18) significant items For the purposes of consistency, (19) operating from Revenue includes revenue

> 95 Cost to date Cost Estimated Integral Energy Annual Report employees. only. network use of system income employees. borrowing and amortisation but excluding units sold. expenses, divided by number of borrowing and amortisation but excluding number of expenses, divided by the average customers. energy purchased. electricity employees. worked. peak bulk transfers. Output for 1997-98 slightly adjusted. including planned and unplanned supply, outages. customer satisfaction study specifically commissioned to meet Integral Energy's business conducted by AC Nielsen was needs. Research Bow Bowing ZS augment Nil $1,460,532 $1,460,532 - December 2002 Installation of equipment North Richmond ZS Upgrade $1,340,000 $2,065,830 $3,405,830 Nil June 2003 to commenced Works BUSINESS PROCESSES, PRODUCTS & SERVICESBUSINESS PROCESSES, PRODUCTS MAJOR WORK IN PROGRESS Description 2000-2001 2001-2002 Total overruns completion date Comments (4) sales and includes total electricity Sales revenue (5) number of customers per average Average (6) including depreciation Operating expenditure (7) including depreciation Operating expenditure (8) less energy sold, divided by purchased Energy (9) number of sick leave days per average Total (10) Number of lost time accidents per million hours (11) Electricity sales (GWh), excluding accruals and off (12) minutes per customer per year without Average (13) & (14) based on a are 1997-98 to 1989-90 Results from (1) dollars. in real reported All dollar amounts are (2) as at 30 June. Full time equivalent staff (3) of electricity GWh sold per average number Quarries ZS Nil Nil Nil - September 2003 Initial planning and site Power Factor Nil $7,903,843 $7,903,843 -Albion Park ZS Ongoing Nil units 42 x 11kV 5MVAr Nil Nil - December 2002 Installation equipment to As at 30 JUNE 2002 As at 30 JUNE > Appendices electricity industry/market performance and quality audit Integral Energy Annual Report – FRC market research initiatives – FRC market research Consultancy on sale of gas assets planning for the competitive of readiness market retail Association – Regulation and consultancy report WACC 96 Management services 1. Commonwealth Bank of Australia 2. ANZ Investment Bank – 3. Marsh Pty Ltd – FRC contingency 4. – Review Peppers + Rogers Group 5. National Economic Research At 30 June 2002, DSM projects At 30 June 2002, DSM Park, in Wetherill continued to operate and Seven Hills, Fairfield, Kandos targeted power Rooty Hill, as well as a As a result program. factor correction of the new Demand Management plan was Code of Practice, a DM where giving details of areas prepared the public input will be sought from into non- and other stakeholders transmission network options. Penrith substation will be the first, with a planned for 2002-2003 further three for the development of DM programs in other areas. > Network business strategy, organisational review, regulatory audit and realignment Participation in national power quality survey outsourcing Engineering 1. Austpac Consultants Pty Ltd – 2. Ltd – Group Illawarra Technology IT&T 1. Gartner Australasia Pty Ltd – IT&T Demand Side Management (DSM) is Demand Side Management investigated as an alternative to major all cases. DSM network expansion in working initiatives primarily involve or modify with customers to reduce via voluntary or their load profile mechanisms. If the peak controlled reduced, demand can be sufficiently can the major network expansion and sometimes often be deferred the when avoided. DSM is appropriate network limitation is due to customer DSM strategies are load growth. with network expansion compared options with the economically superior option being adopted.

research on Quantitative market research customers residential justified. As at 30 JUNE 2002 As at 30 JUNE OVERSEAS TRAVEL CONSULTANTS Craig James PowisRichard John Wallace Gary Brennan 16/4/02-1/5/02 22/4/02-28/4/02 13/5/02-18/5/02 Singapore/UK Singapore/UK Indonesia/Thailand Insurance arrangements Insurance arrangements company Transformer Robert MooreMichael Tauber Stephen Lowe 9/10/01-14/10/01 10/11/01-24/11/01 China UK project ZE relay Energy market operations Alan Flett John WallaceRod Howard Michael Tauber 2/9/01-21/9/01 24/9/01-28/9/01 South Africa/UK Zealand New Benchmarking infrastructure Information on New Zealand Name/s Dates Location Purpose 2. Novaction Australasia Pty Ltd – Evaluation includes assessment of the demand on existing risk of increased any and calculation of infrastructure that is, the excess energy supply, energy at risk. Brand research 1. Australia – Brand Brown Millward 3. Alternative strategies. 3. Alternative in 2001-2002 Consultancy projects cost a total of $2.22m. Major projects costing a total of $1.35m were: Any proposals involving major Any proposals network expansion of the distribution a through considered carefully are that process value based management options: incorporates the following 1. needed. Whether the expansion is 2. If so, is the expansion economically EXPANSION OF THE DISTRIBUTION EXPANSION SYSTEM > Appendices Commission accidents per million hours worked). as supply capacity to increase infrastructure an alternative investment in to capital network assets) development of the electricity market customers in NSW to include residential of all physical assets) Strategy Review Tribunal telecommunications in the loss of at least one full shift) system (computer based management human of organisational functions – payroll, stationery supplies etc.) resources, control for remote (computer program of the supply network) flow is measured current is measured of an electric current force electromotive flows under of one ampere when a current a resistance of one volt through a pressure of 1 ohm the consumption energy which represents of electrical energy at the rate of one kilowatt over a period of one hour equal to in an alternating circuit, current 1,000 volt amperes the rating of used when expressing a transformer or one million watts kilowatt hours megawatt hours or one million kilowatt hours ABBREVIATIONS ACCC Australian Competition and Consumer CSGCSSDIFR Customer Service Guarantees Customer Service System DSM rate (lost time frequency Disabling injury Demand side management (utilising existing FRC Full Retail Contestability (staged GISGST (data base Geographic information system IAIMS Goods and services tax Integrated Asset Information Management IPART NSW Independent Pricing and Regulatory IT&TLTA Information technology and LTIFR (one which results time accident Lost LTISR rate Lost time injury frequency MIMS Lost time injury severity rate management Mincom information SEDASCADA Authority Sustainable Energy Development and data acquisition Supervisory control AOhm amp) - unit in which electrical (or Ampere to the flow unit in which the resistance VW potential or - the unit of electrical volt of the power present watt - a measure kWkWh kilowatt - one kW = 1,000 watts unit of kilowatt hour - the standard kVkVA kilovolt - one kV = 1,000 volts kilovolt ampere power a unit of apparent MVA - a unit commonly megavolt ampere MWMWh megawatt - one MW = 1,000 kilowatts megawatt hour - one MWh = 1,000 GWh - one GWh = 1,000 gigawatt hour ating to and expenses on a program or and expenses on a program is that comments and information rel of operationsthe summary review are to be performance. and expenses). major categories of revenues disclosed in a summarised form. to is that comments and information relating to be “management & activities” are disclosed in a summarised form. to be disclosed. required highlighted are is that the total amount spent on consultants is to be disclosed along with a summary of the main purposes of the engagements. summarised form. not subject to the payment of as they are in s 18 of the Public accounts provisions Finance and Audit Regulation. disclosed in a summarised form. entities are is that the names of the controlled to be disclosed along with a summarised entities’ objectives, of the controlled disclosure of operations and activities and measures of revenues and expenses). of revenues summarised Operating Statement (ie summarising is that overseas visits with the main purposes to is that comments and information relating to be disclosed in a are consumer response trading and profit and loss statements. and loss statements. trading and profit a summarised Operating to prepare Required Statement (ie summarising major categories

> 97 basis activity basis. basis activity reported on reported reported on reported to detailed budget for the year Entities a to prepare trading statements. Required & Insurance Activities to be is that the comments and information are for known commitments of loans/advances/debentures/deposits or on a program expenditure activity - of revenues for the year detailed budget - for next year outline budget Integral Energy Annual Report s.7(1)(a)(iv)ARSBA Summary Review of Operations Exemption subject to a condition. The condition Abbreviations: ARSBA Annual Reports (Statutory Bodies) Act 1984 ARSBR 1995 Annual Reports (Statutory Bodies) Regulation PF&AA Public Finance & Audit Act 1983 Schedule 1 ARSBR Management & Activities The condition Exemption subject to a condition. Schedule 1 ARSBR ConsultantsSchedule 1 ARSBR Exemption subject to a condition. The condition Payment of accounts This exemption only applies to statutory SOCs Schedule 1 ARSBR Entities of Controlled Disclosure Exemption subject to a condition. The condition Schedule 1, Part 1: (General) PF&FA Notes - Income & Expenditure Amounts set aside for renewal cl 13 ARSBRs.7(1)(a)(ia) ARSBA Financial Statement of Controlled Performance Liability Management manufacturing and preparing Exemption from cl 12 ARSBR Performance Investment Management Schedule 1 ARSBRSchedule 1 ARSBR Time for Payment of Accounts Report on Risk Management As above Exemption subject to a condition. The condition Schedule 1 ARSBRSchedule 1 ARSBR Land Disposal Consumer Response Exemption subject to a condition. The condition Item 6Item 13 for repayment Amount appropriated Material items of income and cl 6 ARSBR to summarise the material items Required - particulars of material adjustments Schedule 1 ARSBRSchedule 1 ARSBR & Development Research Human Resources Exemption subject to a condition. The condition S.7(1)(a)(iii)ARSBA Budgets Reg Item 2Item 4 of fixed assets replacement or Amounts set aside to any provision References41B(c) PF&AA Requirement Financial statements manufacturing, preparing from Exemption Comment DISCLOSURE OF APPROVED EXEMPTIONS DISCLOSURE OF APPROVED exemptions for this annual was granted for the following reporting Approval list of exemptions, some changes to legislation. The expanded following report concernsto overcome by the Treasury was approved with conditions attached, Corporations (SOCs) about the loss of commercial of statutory State Owned competitive electricity market in NSW. confidentiality in the increasingly As at 30 JUNE 2002 As at 30 JUNE > Appendices Integral Energy Annual Report Customer Care; Ombudsman of New South Water or, Wales; procedures the dispute resolution outlined in Integral Energy’s for Complaints, “Procedures Appeals and Dispute Resolution”. is available to the This procedure public by calling our customer on 131 081. service representatives 98

branch within Commercial Services. branch within Commercial as a key form This data is recognised research. of customer satisfaction it is When information is captured with systemic classified and analysed, being problems and recurring identified and rectified. is prepared A monthly report summarising and analysing the results, clearly identifying issues requiring management attention. Managers branch work with the Customer Care that may be to focus on trends developing and devise strategies and services processes to improve accordingly. 7,563 were During 2001-2002 there complaints and compliments recorded, total of year’s last from a decrease 11,393. Included in these figures 555 compliments for staff, were of to the restoration mainly related services during storms and bushfires. Complaints continued to focus on issues, payments and debt recovery unplanned outages. for complaints, Procedures appeals and dispute resolution Customers who wish to make an comment or complaint about enquiry, services can any of Integral Energy’s on 1800 staff contact Customer Care 806 698, submit an on-line feedback form on our Internet site, or write a letter. If a customer considers the complaint to their has not been addressed satisfaction, they may: • to the Manager, speak directly • the matter to the Energy & refer • the matter under to resolve choose > outages, including a process than of more outages whereby line from approval 4 hours require supervisors. delays restoration thus reducing due to operators being unavailable. customer interruptions and, customer interruptions exposure greater consequently, Initiatives to this type of payment. to being undertaken or planned include: minimise these payments • for of requests scrutiny Increased • Extending work party switching, Payments of $3,300 (220 incidents) to repair also made for failure were date. lighting by the agreed street of the process Due to a review to determine eligibility for this category of payment, the amount does not include the last two months of the year. In 2002-2003, Integral Energy plans performance under the to improve guarantees to a level that will result in payments. in a 10% reduction Customer comments Customer comments, complaints managed and compliments are centralised Customer a through Comments System established in August 1994 and developed in line AS 4269 with Australian Standard Complaints handling a single point of contact provide We in most cases. for complaint resolution This has helped manage complaints in way, and effective efficient a more customer satisfaction. thus increasing All information on comments, complaints and compliments is and managed on a system recorded operated by our Customer Care No. of occasions Customers affected Payments

the customer of a planned outage; or, than that indicated in the notification. As at 30 JUNE 2002 As at 30 JUNE Late restorationEarly interruptionNo notificationLate notificationTotal 75 2 94 6 3,566 $71,320 8 177 371 34 $160 $7,420 3,979 $680 $79,580 The breakdown of CSG payments is as follows: The breakdown • the outage is for a longer period the continued to reduce Efforts impact of significantly higher capital on the network, which expenditure planned in more had resulted A payment of $20 is made to a customer where: • to notice is provided insufficient During the year, CSG payments During the year, made, mostly of $79,580 were associated with planned outages, on the total a significant reduction of $113,200 paid in 2000-2001. The new customer service guarantees September 1998 12 from took effect and communicated to staff and were customers in September and October included in standard 1998. They were 12 form customer contracts from last December 1998, and reviewed year as part of the customer service strategy. The Electricity Supply (General) was gazetted Amendment Regulation the on 12 June 1998, requiring of form customer contracts standard electricity retail NSW network and/or guaranteed licence holders to contain The customer service standards. 24-hour telephone required regulation monetary hotlines, and introduced to meet required penalties for failure for planned interruptions, standards connection and disconnection, and punctuality faulty streetlights in keeping appointments. CUSTOMER SERVICE CUSTOMER SERVICE GUARANTEES (CSG) CUSTOMER & MARKET > Appendices Safety at home Safety clearances Safety stickers (school program) Safety switches Saving energy at home Services and information guide Services and installation rules Solar for schools* Solutions to heating problems form customer contract for Standard electricity connection and supply home The energy efficient trimming Tree Integral Energy easements What to do in an emergency For Integral Energy staff Code of ethics* Customer service standards Employee assistance program Equal Employment Opportunity Harassment card* Incident response scheme Service awards after this year or re-issued * Publications introduced and editing substantial revision Fact sheets Cooling your home Heating your home Hot water systems Insulation, lighting Solar energy systems Fact sheets for business Power factor correction metering Downstream Energy management Pricing analysis Quality of supply Energy studies publications on the Internettransactions on the Internet 31 December 2000transactions on the Internet Complete 30 September 2001 Complete electronic appropriate delivery channels 31 December 2001 Complete Ongoing Planned Target AreaTarget 1 completed ESD Survey 2 completed ESD Assessment 3the Internet information on Tender 3 Government 2000 31 December All appropriate 11 August 2000 2000 9 June Complete 4 high volume All appropriate Due Date Complete Complete 5 All other appropriate Progress 6 on other Services delivered Annual Report Appliance running costs* Assistance for users of life support machines for us all Building a better future (Sustainability report)* Customer Service Standards Customer Service Charter* of electricity debit payment Direct accounts with energy Efficiency Electric and magnetic fields fact sheet Electrical appliance running costs Electrical safety Electricity concessions for pensioners Electricity outdoors Electricity prices and distribution Electricity production Emergency situations and services products Energy efficiency Energy price guide policy Environmental General terms and conditions for of distribution residential underground electricity Guide to energy safety Handypersons guide to powerline safety by supporting Help our environment power Wyuna Water Help our kids use the sun to save our costs electricity and reduce environment Look, learn and live Nightwatch service Now you have the power to choose your electricity supplier* Power line safety PUBLICATIONS Information for the Public

> 99 Integral Energy Annual Report Energy & Water Ombudsman Energy & Water Scheme (EWON) Ombudsman The Energy and Water NSW (EWON) is an independent body whose dispute resolution available to our services are customers at no cost. to services In any dispute relating under the Customer provided Customer Supply Contract or the Connection Contract, Integral Energy to comply with any direction agrees or decision of the Energy and Water The Energy and Ombudsman NSW. Ombudsman NSW may be Water contacted on 1800 246 545. Copies of the Customer Supply Contract or the Customer Connection our available from Contract are customer service representatives on 131 081. Service Delivery (ESD) Electronic 1999 the NSW In March Government made a commitment governmentfor all appropriate services to be available electronically via the Internet by 31 December 2001. As a state-owned corporation, Integral Energy put in place of activities to meet a program deadlines. The program progressive outlined the organisations’ high volume transactions, services and publications that could be developed online, together with funding requirements. Critical dates established by the Office to ensure of Information Technology NSW Governmentcompliance across along shown below, agencies are against progress with Integral Energy’s these dates for those activities that had funding approved. Although the ESD reporting ceased on 31 December requirement 2001, Integral Energy maintains eCommerce a comprehensive the intent strategy that captures service delivery of the electronic The strategy works to program. that a continued program ensure customer choice, greater offers costs as well as delivering reduced to serve for the organisation. As at 30 JUNE 2002 As at 30 JUNE > Appendices ). 2001; 1988 Privacy Financial Corporations Privacy Act 2001 an entity 1996 with the State Owned "private sector regime" Integral Energy Annual Report , the four NSW Government- above licences; or by an exemption under the Financial Services Reform Act or 100 The Financial Services Reform The Financial Services Act (Consequential Amendments) the 2002 repealed Electricity Corporations (National Market) Regulation Integral Energy Australia's that result will be industry dealings in the futures particular electricity in affected, Under the trading. futures Services Act Reform by the covered presently (Exempt Futures Market - National Wholesale Electricity) Declaration 1999 that is carrying on a business of entering derivatives (e.g. electricity an trading) will need either futures Australian markets licence, an Australian financial services licence, or to be within the scope of an exemption under the Act, by the end of the transition period. The transition period will end on the earlier of: • the entity obtaining one of the • the entity beginning to be covered that organisations comply require privacy code, with either an approved or (if no code applies) the National Privacy Principles. These amendments on 21 December came into effect 2001 (the • 2004. 11 March 1.2 Commonwealth Privacy Act 1988 Amendments to the With exceptions, the private some only applies to sector regime personal information collected by an organisation after 21 December 2001. defined to exclude Organisations are so that, authorities State or Territory of the 1 June 2002, the effect before exclusion was that Integral Energy to comply Australia was not required with the private sector regime. Since 1 June 2002, by changes to made under the regulations Act (including owned distributors/retailers Integral Energy Australia) have been to comply with the private required sector regime. > (NSW); (NSW); (NSW); (Cth). Regulatory Financial (NSW); Civil Liability Act 2002, which (NSW); and (NSW); (Cth); (NSW); State Owned Corporations Act Trade Practices Act 1974 Trade Sustainable Energy Development Act 1995 State Owned Corporations Act State Owned Corporations 1989 Independent Pricing and Independent Pricing and Tribunal Act 1992 Tribunal Public Authorities (Financial Arrangements) Act 1987 Act Renewable Energy (Electricity) 2000 Energy Services Corporations Act 1995 Electricity Supply Act 1995 Electricity Safety Act 1945 • Integral Energy Australia considers these to be amongst the principal Acts it or the users of services affecting it. Section 3 of this by provided summary concerns significant judicial decisions. • • • • • • • 2002. It is anticipated that the other of Australia will States and Territories over the adopt similar provisions next few months. operation The Act has retrospective which commenced on 20 March 2002. It was on this date that the NSW Government announced in a ministerial statement that it was considering a range of legislative to personal injury law. reforms The Act aims to tighten controls of damages and impose on awards on lawyers additional requirements to discourage unmeritorious claims out to It sets and over-servicing. achieve these objectives by making a number of changes to the legislation governing and the legal profession of civil actions for the law in respect damages. State Owned Corporations Act 1989 The 1989 was amended by the 1. Acts 1.1 New South Wales Civil Liability Act 2002 government In New South Wales, in the initiatives have resulted of the introduction Services Reform (Consequential Amendments) Act commenced on 21 June 2002. •

organisation and its products and organisation and its products services. in the community. directions. development. obligations. As at 30 JUNE 2002 As at 30 JUNE Integral Energy Australia's operations laws, both at subject to numerous are a State and at a Federal level. During the financial year ended 30 June Integral 2002, new laws affecting introduced Energy Australia were and a number of the existing laws amended or it were affecting Sections 1 and 2 of this repealed. summary contain an outline of the material changes (if any) to the following Acts and their subordinate legislation: SUMMARY OF LEGISLATIVE SUMMARY CHANGES Integral Energy also sponsored 16 Integral Energy also sponsored community organisations in 2001- 2002, with amounts ranging from $200 to $110,000. • Enhance its image and involvement • Contribute to achieving strategic • Contribute to organisational development regional • Fulfil Organisations that met the criteria in 2001-2002 included the Department ArtExpress of Education and Training’s and Schools Spectacular; the Australia arts regional Day Council of NSW; the NSW Sports Council for programs; Disabled; Illawarra surf lifesaving; the NSW Cancer Council; environment business, sporting and programs; community events; and, the Children’s Hospital, Westmead. Integral Energy does not grant funds Integral Energy does not to non-government organisations. a Board-approved through Rather, of policy and annual program the sponsorships and donations, to a limited corporation lends support organisations number of community that meet a set of predetermined policy. criteria outlined in the Board considered Requests for support are on their ability to: • of the awareness Increase FUNDS GRANTED TO NON- FUNDS GRANTED TO GOVERNMENT ORGANISATIONS > Appendices 2001 2001. The Electricity Supply Electricity ; Electricity Supply (General) purposes of the operation of purposes of the operation electricity industry ombudsman's of schemes and the exercise functions by the approved electricity industry ombudsman; are electricity suppliers that electricity in the licensed to provide event of a default by another including provisions supplier, setting out the terms and to apply in conditions that are of customers who are respect subject to the arrangements; of the provisions Supply Act for energy; for contestable accreditation in relation services to be provided to connection services and appeals to applications for relating and accreditation; of trees. Amendment Regulation commenced on 1 January 2002, and amended the (General) Regulation amending Regulation impacts Integral Energy Australia's business in the following ways: (in its notices, to provide required bills, application forms and to contracts) information relating the availability of interpreter services; to pay electricity bills has been 15 business days to from reduced 12 business days; and customers will now be able to make an oral application for review of decisions by suppliers or service providers. • matters for the prescribing • to arrangements relating detailing • from to exemptions relating • programs to social relating • containing a scheme for • preservation to the relating • The • now Integral Energy Australia is • period for customers the minimum • Integral Energy Australia's The amending Regulation clarifies to retailers that arrangements relating of apply in respect of last resort certain customers under exempt electricity supply arrangements, supply fees cannot be and last resort charged to customers who were form under a standard previously customer supply contract. 1995, and 2001 was made under Electricity Supply (General) Electricity Supply Act Regulation the commenced on 1 July 2001. the and replaced It repealed Electricity Supply (General) Regulation 1996. The Regulation to facilitate contains provisions customers' selection of their retail electricity supplier and, specifically, provisions: retail endorsement of standard suppliers suppliers, that is, retail to provide required who are customers electricity to small retail and other customers located in their supply districts; consumption levels for classification customer and as a small retail conferring rights on small retail customers; electricity supply and the disconnection of customers from distribution systems; to the establishment of customer by distribution consultative groups and network service providers suppliers; retail standard form customer contracts standard between distribution network or suppliers and service providers customers, and for negotiated customer contracts between or suppliers and service providers customers; small retail may be sought by which review customers and setting small retail of for reviews out procedures decisions by licence holders; 1.3 Other Acts been no significant have There the other Acts amendments to any of not mentioned listed above which are in sections 1.1 and 1.2. 2. Subordinate legislation, codes 2. Subordinate and determinations 2.1 New South Wales Electricity Supply (General) Regulation 2001 • The • setting out conditions of • the electricity prescribing • to the discontinuance of relating • relating out requirements setting for • setting out requirements • additional decisions for prescribing

> 101 2001 1974 Trade ) which commenced in Trade Practices Act Trade ), however the most "TPA Act" "TPA "TPA" Integral Energy Annual Report part on 26 July 2001 and the balance Act on 15 December 2001. The TPA and the enforcement strengthens which of the TPA provisions remedy to the consumer protection relate provisions. Act clarifies and expands The TPA the types of sanctions the Court may allow the impose. New provisions a variety of non- Court to order such as community punitive orders orders, probation service orders, and advertising orders corrective adverse publicity orders. access to the Act improves The TPA The period of available remedies. limitation for commencing actions for damages contained in section 82(2) 3 to 6 years. has been extended from that The new section 79B ensures both able to order courts are where compensation for a victim and a fine the court must or pecuniary penalty, to making an order give preference for compensation if the defendant financial resources has insufficient to pay both. to The transactional limit in relation the unconscionable conduct provisions contained in section 51AC has been $1million to $3million. raised from Practices Amendment Act (No 1) (the significant for Integral Energy Australia is the amendment by the Prior to 1 June 2002, a range of Prior to 1 June 2002, Integral Energy obligations affected personal Australia's handling of and retailers information by electricity Most relevantly, distributors in NSW. that this included a requirement license holders comply electricity retail of Conduct with the Marketing Code turnfor electricity which in required comply with the National to retailers of Principles for the Fair Handling similar Personal Information (broadly but not identical to the National Privacy Principles). This obligation no longer applies, following amendments to the Marketing Code of Conduct. Practices Act 1974 Trade A number of amendments have been made to the (the As at 30 JUNE 2002 As at 30 JUNE > Appendices Retail Electricity Supply) 2001. Integral Energy Annual Report between retail suppliers and between retail distribution network service providers. 102 NEMMCO operates Transfer Systems NEMMCO operates Transfer a framework for the orderly to provide transfer of a customer's electricity to another one retailer account from under the contestable market retailer, eligible to for customers who are The choose their electricity retailer. purpose of this Rule is to integrate the for NSW transfer requirements operation of the NSW retail efficient electricity supply market with the Systems. NEMMCO Transfer this Rule establishes Specifically, for the following requirements matters: • the exchange of information for (Network Market Operations Rule No.2 Use of System Agreements) of 2001 arrangements The Rule puts in place service between distribution network suppliers in and retail providers to Network Use of System relation services, and applies to such services a distribution by provided that are to a retail network service provider The distribution network supplier. and the retail service provider supplier may enter into alternative arrangements, in which case most not of this Rule will of the provisions apply to them. Market Operations Rule (NSW Rules for Electricity Metering) No.3 of 2001 Electricity metering for the purposes of wholesale market settlement is by the National Electricity regulated The Procedure. Code or the Metrology purpose of this Rule is to regulate electricity metering to the extent that by the National it is not regulated Electricity Code or the Metrology Procedure. Market Operations (NSW Transfer Rules for Retail Electricity Supply) Rule No.4 of 2001 This Rule commenced on 30 the November 2001, and revoked Market Operations (NSW Transfer Rules for Rules > 1995 and Electricity 2001; 2001 and the No.4, all 1988 (Cth) Market Operations Electricity Supply 2001; Privacy Act 1995 and, with the Electronic Transactions Act Electronic Transactions Electricity Supply Act Electricity Supply (General) Codes of Conduct for gas and Codes of Conduct for "Energy" electricity into a single Marketing Code of Conduct; statutory requirements current including the (General) Regulation Retail Gas Supply (Natural Gas Competition) Regulation functionality, clarity and accuracy functionality, of the Code; of wording the new and National Privacy Principles; the 2000; and for Marketers to comply with the new Code. of suppliers of the provision connection services to the premises with of customers in accordance the the Regulation connection services by a retail supplier to the distribution network the where service provider customer is not liable to pay such to the distribution charges directly under network service provider their connection contract; connection services to customers suppliers and between retail distribution network service providers; distribution network service and provider; • of the Marketing convergence • consistency with to ensure changes • the general changes to improve • consistency with changes to ensure • consistency with changes to ensure • of a transition period provision Market Operations Rules The following Market Operations made under the Rules were Supply Act exception of the Rules for Retail (NSW Transfer Electricity Supply) Rules commenced on 1 January 2002: Market Operations (Arranged Connection Services) Rule No.1 of 2001 This Rule sets out requirements: • arrangement by retail for the • of charges for for payments • of delivery of co-ordination for the • keeping by the for record Electricity Supply Electricity Supply

1995, cited as the Electricity 1995, cited as the Electricity

Order under the under Order Act of Supply (First Termination Retail Customer Status) Transitional the purpose of which 2001, Order that an electricity was to declare customer who, at 1 July 2001, than 40 consumed more Megawatt hours (MWh) of electricity annually and was a customer under transitional retail the Act, ceased to be a transitional Relevant to Integral customer. retail Energy Australia's business of a operations, the effect customer being subject to the the customer may is that Order their electricity elect to purchase a licensed retail supply from supplier of their choice. Act of Supply (Second Termination Retail Customer Status) Transitional the purpose of which 2001, Order that all customers, was to declare who at 31 December 2001 were customers, ceased transitional retail customers to be transitional retail The with the Order. in accordance of a customer being subject effect is that the customer to the Order their may now elect to purchase a licensed electricity supply from supplier of their choice. retail Order under the Order As at 30 JUNE 2002 As at 30 JUNE Changes to the Code were the result Changes to the Code were intended to accomplish of proposals the following: • The Minister for Energy made an Marketing Code of Conduct The former Marketing Code of Conduct for electricity is now revoked by a new and has been replaced Marketing Code of Conduct (the "Code") which applies to the retail marketing of electricity by "Marketers" (including Integral Energy Australia and its contractors) in NSW. Orders under the Electricity under Orders Supply Act 1995 • Minister for Energy made an The Finally, the amending Regulation has Finally, rules to be enabled market operations of made about the transfer licence holders. information between > Appendices 2001 ("OH&S Regulation") Occupational Health and Safety more than inflation; than more for those nominal price increases on that are customers on tariffs or above the target level; customers constraint for residential below cost for those tariffs where, levels (i.e. below target), reflective of the greater a maximum increase change in of the percentage CPI + 2% or $25 is allowed; and for business customers where, below cost reflective those tariffs levels (i.e. below target), a of the greater maximum increase change in of the percentage CPI + 5% or $50, is allowed. the relevant arising from and the physical premises and work environment; under the OH&S responsibilities Regulation (including any contractors which Integral Energy Australia engages in connection with the performance of construction, supply or installation work) with all available information that is necessary to enable that person to fulfil their obligations to the identification, with respect of and provision control to risks information in relation and hazards. • will be no that there maintains • the existing price changes • maintains the price constraint for charges do retail The regulated on not apply to customers who are negotiated customer supply contracts. Occupational Health & Safety Regulation 2001 The Regulation on 1 September 2001, came into force in September 2002. and took effect to the extent Integral As a result, Energy Australia is the "controller" it will be under an of premises, obligation to: • hazards all foreseeable identify • other persons having provide Chapter 8 of the OH&S Regulation applies to "construction work" and sets out a variety of specific to the in relation requirements performance of "construction work". The term "construction work" includes the "construction, structural 1995 on Electricity Supply Act tariffs to apply from 1 August to apply from tariffs 2002; tariffs; "extended Off-Peak" tariff; the "Off-Peak" tariff on tariffs, retail regulated where by average, cannot increase Independent Pricing and Independent Pricing ("IPART") Regulatory Tribunal determinations determinations The following IPART Energy may impact on Integral Australia's business operations: in the Capital Contributions Electricity Industry determination commenced This IPART on 1 July 2002. This determination governs the payment of contributions by new customers who required connect to the electricity network. determination means that IPART's new customers will pay for connection used only by them works that are and (in some cases) common connection works. Large load New customers who are or rural customers may also have to pay for assets that need to be or upgraded because of replaced the additional demand placed on the network by the new customers. Large load or rural customers will when other customers be reimbursed connect to the network and use the works for which the original contributor had paid. of regulated Mid-term review 2004 prices for electricity to retail 1 August 2002, new electricity From prices for domestic and small retail NSW (who business customers across form customer supply on standard are following an contracts) will take effect under determination released IPART the 24 June 2002. The determination aims to ensure from that consumers will be protected competition price shocks as full retail in the electricity market unfolds in NSW over the next few years. The determination: • retail targets for regulated sets new • a separate target for introduces • load" the "controlled renames • price constraint a new introduces

> 103 Integral Energy Annual Report licence holders may use the licence holders may use Systems for NEMMCO Transfer the effecting enabling, initiating or customer transfer of a small retail or other changes to information NEMMCO Transfer in the stored Systems; small retail supply arrangements for able to choose customers who are supplier; their retail holders of dispute management to matters systems in relation arising under the NEMMCO Systems; Transfer NMI to provide service providers discovery services for retail suppliers, marketers and small retail customers; be consistent with the cooling-off period allowed to small retail customers entering into new supply contracts; and customers. retail • the manner in which limiting • consent to negotiated evidencing • for the use by licence providing • network distribution requiring • timed to ensuring that transfers are • of small the interests protecting Market Operations Rule (Retailer of Last Resort) No.5 of 2001 for implementation This Rule provides in supply for a customer of last resort the event that the customer's retailer's licence is cancelled or if NEMMCO issues a suspension notice to the (a last resort customer's retailer supply event). The Rule facilitates of last information flows to a retailer supply following a last resort resort event, and to facilitate arrangements suppliers, retailers between retail distribution network of last resort, NEMMCO and service providers, supply. other parties for last resort Ministerial Determination in to Retailer of Last Resort relation Under the Ministerial Determination to Retailer of Last Resort in relation made in November 2001, Integral of last Energy Australia is a retailer for customers within its supply resort district. The determination requires Integral Energy Australia to have the necessary systems and resources to carry out its obligations. This obligation applies for an initial period of 2 years. As at 30 JUNE 2002 As at 30 JUNE > Appendices Integral Energy Annual Report 104

1. Our principles and values 1. Our principles and set a Our corporate values provide our behaviour of principles that guide and business operations. goals, In pursuit of our corporate management and staff our Board, statements have adopted seven key values of to describe the core Integral Energy. Safety excellence commitment safety Integral Energy’s accidents, injuries and is to zero occupational illnesses. This commitment is supported by making safety our first priority; a belief that all working preventable; accidents are safely is a condition of employment; not taking shortcuts; not accepting unsafe behaviour; and, expecting personal accountability everyone. for safety from will be expected to live this value We by learning safety and appropriate and how to work health requirements in all safely; maintaining awareness work tasks; having a clear and orderly and fixing, hazards; checking for, area; of drugs and coming to work free alcohol that could impair you doing your job or cause danger to yourself or others; taking action when you see unsafe working practices; looking for safety and opportunities to improve health performance; taking part in safety and health activities; and, all near misses, immediately reporting incidents, injuries and occupational illnesses. Integrity At all levels of the organisation and in all its business dealings, Integral Energy aims to act with honesty and to achieve the highest level This means setting of integrity. consistent policy with no exceptions, and maintaining soundness of moral principle and character, thus enhancing the organisation’s among all image and reputation each have a stakeholders. We is no there to ensure responsibility resources; misuse of Integral Energy’s that our business dealings do not or conflict lead to any compromise that we take ownership of interest; for our actions; and and responsibility > 2.2 Commonwealth is unaware Integral Energy Australia of any significant amendments to Commonwealth subordinate financial year legislation during the it in its capacity as which affect an energy services corporation, the users of its services, or affects of in their capacity as customers an energy services corporation PEOPLE, LEARNING & GROWTH CODE OF ETHICS of the Code of Ethics was A review conducted in May 2002 to ensure alignment of the text with changes values, customer, in the organisation’s and management expectations, staff and developments in the method breaches of identifying and reporting code was of the code. The revise in September distributed to staff 2002, and included training on ethical issues for all senior managers and, in turn, It also their staff. of accommodated the introduction new values identified by the Executive – safety excellence, accountability and – and further responsibility development of existing values. 3. Significant judicial decisions Integral Energy Australia is unaware of any significant judicial decisions during the financial year which affect it in its capacity as an energy services of its the users corporation, or affects services, in their capacity as customers of an energy services corporation. FREEDOM OF INFORMATION During 2001-2002 Integral Energy for information two requests received Act of Information under the Freedom processed, 1989. Of the two requests one was granted access in full to the other whilst the documents requested was granted access to the documents in part. no formal appeals to the were There Ombudsman or Administrative Decisions Tribunal.

construction work on the site (including subcontractors and their employees) participates in OH&S induction training and keep records of all such training carried out; health and safety management plans prior to work commencing; a safe work method prepares statement for the work it is to carry out; to comply with their safe directed work method statements and the of the Occupational requirements Health and Safety Act 2000 and that OH&S Regulation and ensure subcontractors' activities are to determine monitored compliance; and on the site. substances present As at 30 JUNE 2002 As at 30 JUNE • site specific occupational prepare • subcontractor that each ensure • that subcontractors are ensure • of hazardous keep a register The "principal contractor" is by Chapter 8 of the OH&S required Regulation to: • each person carrying out ensure Therefore, to the extent that Integral to the extent Therefore, Energy Australia is the "owner" of any place of work at which construction work is being carried out, Integral Energy Australia will either have to appoint its main contractor as the "principal contractor" or fulfil the functions and obligations of the "principal contractor" (and assume itself. liability accordingly) Where the value of the construction the Where that $250,000, or the work is greater asbestos work involves demolition, other "high risk or removal OH&S construction work", the the "owner" Regulation requires of the place of work to appoint a for the person who is responsible construction work at all times as the "principal contractor". If no such appointment is made, the owner of the place of work is deemed to be the "principal contractor". alteration, repair, maintenance and alteration, repair, and demolition of energy supplies" of prefabricated the manufacture a building. items to form part of > Appendices including what principles you need to operate within; and never make (written or verbal) without first representations checking the underlying facts; fair and do not mislead people; observe the safety guidelines you and your to protect provided colleagues; service to your customers; never be a party to anti- competitive behaviour; for your decisions; reasons and take or perceived, real steps to deal with appropriate them; knowledge and experience when 2. Standards of personal and 2. Standards conduct professional in maintain customer confidence To it is the integrity of our employees to exhibit the essential that you be seen out in carrying highest ethical standards to take pride in need your duties. You and be seen to your work and must act and act in line with the values booklet. principles outlined in this Also as an Integral Energy employee, you need to operate within all laws applicable to Integral and regulations business operations. Energy’s If you do not deal fairly or honestly in a with customers, this may result Act. A Practices the Trade of breach could customer complaint, if proved, lead to a heavy fine for both the member organisation and the staff this will importantly, involved. More have a negative impact on our and your Corporate reputation personal reputation. for your responsible Ultimately you are own conduct and behaviour and you should understand: • what your job is; • how your job is to be performed, • to achieve. you are the results Performing your duties In performing your duties, you must: • at all times and act professionally • be with integrity, act impartially, • and operate in a safe manner • and effective efficient provide • and be honest in all your dealings • to demonstrate the be prepared • for any conflicts of interest, be alert • make the best use of your to ensure a healthy and safe to ensure customers for our staff, environment and the community. Sustainability and commercial success the Integral Energy recognises significant corporate responsibilities energy business. we carry as a leading corporate citizen As a responsible goals for a we must set and achieve Sustainability sustainable future. means balancing “triple bottom line” of financial, environmental interests in order and social responsibilities long-term business success. to ensure a way operate in will therefore We that meets the needs of the present the ability without compromising generations to meet their of future own needs. success on In valuing commercial our behalf of our shareholders, people, our customers and the a sustainable we ensure community, for all stakeholders. economic future success is also an Commercial of how efficiently important measure managing the business we are on behalf of our shareholders. success means satisfying Commercial the needs of our customers in a manner which delivers ongoing for Profitability business profitably. the network business can be as our return on regulated measured for the retail assets. Profitability as the business can be measured margin we make between the cost of supplying electricity and the price we can sell it for to customers. Accountability and responsibility Complementing the value of “Respect for people”, and the personal and it workplace standards professional expected to demands, our people are and accountability take responsibility for their actions, and to maintain the integrity of performance of responsibility. within their area In all our business dealings, we will trust, openness, teamwork, promote and pride in what we professionalism do. This includes an expectation that our people will accept accountability for any gaps in their performance, and by seeking will raise their standards training. advice or appropriate

> 105 Integral Energy Annual Report that we demonstrate outstanding to others. leadership as an example will be Executive and staff The Board, the principles guided at all times by Code set out in the organisation’s of Ethics. Management by fact the Management by fact forms to planning backbone of our approach It encompasses and decision making. the use of all available information to make objective, impartial and confident business decisions and of open and honest disclosure information to shareholders relevant the also respect and customers. We confidentiality of certain business information and do not use this inappropriately. Customer commitment vision is to be Integral Energy’s best performing energy Australia’s business by focusing on delivering superior value to our customers and now and into the our shareholders This means taking personal future. to deliver a standard responsibility of service that goes beyond customer expectations and exceeds the service our competitors. by provided this service we have In providing to deal in a fair, a responsibility open and honest way with all our challenge and customers; to review, work practices and processes improve which stand in the way of better of customer service; standards that, in the end, and to recognise customer loyalty depends on individual with our customers. relationships Respect for people a At Integral Energy we respect ‘fair go for all’. This value is crucial to the personal and professional expected in our workplace. standards the principles It means we respect of equal employment opportunity; acknowledge and value diversity and opinion; offer in culture on opportunities for promotion merit; cultivate an environment open and of trust through honest communication; promote and skills self-improvement development; encourage effective empowerment, teamwork and participative decision making; and our safety standards continually review As at 30 JUNE 2002 As at 30 JUNE > Appendices Integral Energy Annual Report Integral Energy is dealing with Integral Energy is dealing with or having friends or relatives that you are such an interest of; aware with that Integral Energy is dealing a go beyond the level of working relationship; professional influence the impartiality of advice that you give; work with your through acquired Integral Energy for personal gain; your integrity or compromises impacts on your ability to perform your full-time job with Integral Energy; and, adverse political comments that business. to Integral Energy’s relate 106 4. Acceptance of gifts or benefits any must never solicit or request You gift or benefit for yourself or anyone else in connection with your must not accept employment. You any personal benefits that are flyer schemes, under frequent offered as a Fly Buys or other promotions of Integral of the expenditure result funds or in connection with Energy’s travel. any official Some examples of situations that may Some examples of situations interest give rise to a conflict of include: • in a matter interests financial • with people relationships personal • personal beliefs or attitudes that • use of business information • secondary employment that • party political activities or making What should I do? It is important that customers, suppliers and colleagues can be confident that all decisions made by fair and impartial. Integral Energy are An individual employee may often be of the potential the only person aware the for conflict. Therefore, is on you to identify any responsibility conflict of interest or perceived real and disclose it. If you think you have a or that others may conflict of interest, is a conflict of interest, there perceive you must talk to your manager about the situation. ways to resolve that lead to Conflicts of interest decision making that is not impartial may constitute corrupt conduct. > employees with respect and employees with respect sensitivity to their rights, provide assistance and, if appropriate guidance; necessary, similar your colleagues to exercise qualities of personal and behaviour to those professional outlined above; managed in a way that will, to the possible, avoid the extent greatest opportunity for unethical behaviour by others; and that you ensuring and procedures, work in a safe manner while not putting yourself or others at risk. 3. Conflicts of interest What is a conflict of interest? arises when A conflict of interest or those of your personal interests, people close to you, conflict with the impartial performance of your public duties. or professional could exist where A conflict of interest or a you have a personal interest, or anybody relative family member, that could close to you has an interest, lead you to be influenced in the way you carry out your duties. The of a conflict of interest perception exist circumstances could arise where person to which lead a reasonable think that you could be influenced. It is better for all if you tell someone in It is better for all if you plan to do higher authority that you you do it. something – before others Behaviour towards to our value of Respect In responding a major part in for People, ethics plays others. the way you behave towards need to: You • customers and other treat • lead by example and encourage • are and resources that staff ensure • follow all health and safety policies Alcohol and other drugs should not come to work or You under the return to work if you are influence of alcohol or other drugs that could impair you in doing your job or cause danger to yourself or taking prescribed others. If you are your medication that could affect work performance, you should discuss manager or your this with your direct Manager. Human Resources

exercising your technical or exercising judgement; professional field; of your professional to you information made available or to Integral Energy; assets; Integral Energy’s corrupt conduct; and the policies and procedures operating licences; organisation’s and Integral Energy. your delegation; and procedures requirements by the delegation and any required legislation; and relevant properly upon which it is based are documented. As at 30 JUNE 2002 As at 30 JUNE This principle applies to approval of This principle applies to approval that is within your expenditure delegated authority on items from which you gain some kind of personal benefit. Some examples of this include to related expenditure approving attendance at a function or course, acceptance of an invitation or gift, or of work materials. the purchase The once removed principle The once removed When making decisions about is a there where activities or purchases likelihood that people might think you gaining some kind of personal are it may be perceived benefit, or where could be a conflict of that there you need to inform your interest, manager and obtain approval, direct you make the decision. before • and develop knowledge maintain • the confidentiality of all protect • after and do not misuse look • not commit fraud or engage in do • comply with Integral Energy’s • the good name of always protect Delegated authority When making business decisions for or taking actions by Integral Energy, you a delegated authority, exercising that: should ensure • the decision or action is within • it complies with all decision-making • the decision and the evidence in any doubt about the If you are limits of your delegated authority, your you should seek advice from A copy of the supervisor or manager. delegations policy can be accessed the Intranet or obtained from through the Manager Corporate Governance. > Appendices other paid work; Integral Energy's business strategies; and, Integral Energy is not affected. 8. Secondary employment cannot work in any capacity for, You or as, our competitor while employed This is a condition by Integral Energy. of your employment. If you do undertake other paid work, you should: • the let your manager know about • information about avoid revealing • work for the quality of your ensure As a general rule Integral Energy’s As a general rule Integral cannot be used for private resources permission. purposes without specific minimal use of the However, telephones, faxes, photocopiers including and desktop computers, E-mail and Internet access, for private Unauthorised purposes is acceptable. interstate and international telephone and you calls should not be made of the organisation’s should be aware policy on the use of E-mail and Internet facilities. may also make minimal use of You portable computers and issued tools for private purposes. Certain tools and minor items of equipment may be if you obtain permission borrowed, manager responsible the relevant from the loan is and for the resources recorded. appropriately to be used in Motor vehicles are with the policies and accordance dealing with the use of procedures vehicles. and resources Integral Energy’s equipment shall not be used in to a second job or business relation without the specific permission of the Chief Executive Officer. accounts and securities; information; and, 7. Integral Energy’s resources 7. Integral Energy’s vital to our business, are Our resources helping us meet our customers’ expected to be careful, are needs. You and economical in your use efficient and management of Integral Energy’s including your own work resources, resources time. Integral Energy’s include: • material, equipment and vehicles; • cards, cash, cheques, credit • data and records, documents, • time and staff. 6. Corporate information to our commercial Information relating factor in activities is an important should our business success and use should not You be protected. Energy, information about Integral or business customers its staff, to gain personal relationships or other advantage for yourself Integral Energy, people, or to damage other people or organisations. information must also protect You parties. or about, third from, Business information that is not confidential should be communicated in an honest and unbiased as to unsure If you are manner. the confidentiality of information, please ask your manager or supervisor. Dealings with former employees of Integral Energy when dealing should take care You with former employees of Integral Energy that you do not give them, or appear to give them, access to privileged information. my obligations to What are Integral Energy after I leave? Once you leave Integral Energy obliged not to divulge any you are confidential information about the organisation or your job, or pass on any information which may be its staff, detrimental to Integral Energy, must suppliers or customers. You not use, or take advantage of, any confidential information obtained in the course of your employment with Integral Energy in any new employment or business venture.

> 107 Integral Energy Annual Report 5. Public comment for you to make It is not appropriate public comment about or on behalf This includes of Integral Energy. statements to the media. If you are the caller asked to do so, please refer to the Corporate and Government Group. Affairs If in your own time you undertake views speaking engagements, express in letters to newspapers, in books or on notices that appear in the public that you are you must ensure arena, not seen to be commenting on behalf of Integral Energy. Do not accept any gift or benefit if Do not accept any gift person you think, or a reasonable be could think, that you would you do your influenced in the way of the gift or benefit. job as a result accepted gifts may only be Token be seen to if the gift is not likely to gifts are Token be compromising. a significant those that do not have inconsequential monetary value, are on a not offered or trivial, and are basis. frequent If you consider a gift or benefit that than token is acceptable, is more your you must seek permission from both you to protect manager in order Non-token gifts and Integral Energy. could include sporting tickets or Your invitations to a restaurant. non- tangible manager must forward token gifts to the Manager Corporate and Government These gifts Affairs. will be donated to a charity. or uncertain if a gift is token If you are not you should discuss it with your manager. never Gifts of cash (any amount) are acceptable. considered If a substantial gift or benefit is to you to influence the way offered you do your work, you should report with this immediately in accordance fraud, for reporting the procedure corruption, maladministration and serious and substantial waste. As at 30 JUNE 2002 As at 30 JUNE > Appendices Integral Energy Annual Report What are the consequences of What are making this decision? your colleagues? explaining your actions to external authorities? as a whole? 108 12. An ethics quick test For those not-so-easy-to-answer questions clearly Not all ethical decisions are In fact, many complex right or wrong. situations we face in business fall own in between. Your somewhere an excellent values and judgments are area’ to use in making ‘grey resource our corporate values. choices. So are If, after considering all the issues, to still uncertain about what you're do, use these questions to test your decisions: • Does it conflict with our values? • If you do it, will you feel bad? • How will you feel explaining this to • you be confident in Would • How will it look in a newspaper? • the organisation it affect How will • view? What is my manager’s If your decision passes this test and you feel confident about the decision the right you have made, it is probably still in doubt give thing to do. If you’re your supervisor or manager a chance the issues with you or to talk through ask the Manager Audit and Business Performance. not comfortable sum up, if you are To requires in any situation, it probably thought. more responsible Remember that you are for your own actions and decisions the one who must live and you are with them. If you are aware of any breach of this of any breach aware If you are in fraud or Code or any involvement you corrupt conduct by others, as outlined in should make a report section 10. be treated All information given will in the strictest confidence. > corrupt conduct – (02) 9318 5999 corrupt conduct – (02) of maladministration – (02) 9286 1000 of serious or substantial disclosures waste – (02) 9285 0155. 11. Breaches of the code 11. Breaches Integral Energy is committed to the and principles outlined in standards of the Code this Code. Minor breaches internallywould normally be resolved in counselling or the and may result to avoid clarification of procedures serious More further breaches. may lead to disciplinary breaches action, up to and including termination of employment and/or the bringing of Criminal civil or criminal proceedings. to the Police. matters may be reported that appear to involve Breaches corrupt behaviour by one or more to must be reported members of staff the Independent Commission Against Corruption, which may then decide to investigate the incident. in An ICAC investigation may result criminal charges against individuals and findings against Integral Energy evident in its if shortcomings are policies and procedures. • Ombudsman, for disclosures NSW • Auditor General, for NSW all information given to will treat We us in the strictest confidence. in If you voluntarily make a report you with this procedure accordance under may be entitled to protection Act 1994. Disclosures the Protected This law makes it a criminal offence for anyone to take detrimental action against a person who in reprisal Integral disclosure. makes a protected Energy is committed to ensuring that a not victimised as employees are of such a disclosure. result fraud, corrupt conduct, If you report maladministration or serious and substantial waste you will be fairly. treated is not available for Protection frivolous or that are disclosures vexatious or primarily question the are or merits of Government policy, made in an attempt to avoid dismissal or disciplinary action.

Performance – (02) 9853 4908 (02) 9853 6101 on Corruption, for disclosures As at 30 JUNE 2002 As at 30 JUNE In accordance with our procedure with our procedure In accordance for dealing with fraud, corruption, maladministration and serious and substantial waste you can make a of suspected instances disclosure to the: • Manager Audit and Business • – Executive Officer Chief • Against Independent Commission All staff have a responsibility not only have a responsibility All staff to act honestly but also to disclose any instances of possible fraud, corruption, maladministration or serious and substantial waste. This includes acts of dishonest or unethical behaviour that can not only damage the reputation of Integral Energy but also that of its employees. 10. Reporting possible fraud and corruption Integral Energy encourages employees to get involved in volunteer and community work in their own time. you should not use Integral However, assets in this, or any other Energy’s type of work, unless authorised to do so. Under no circumstances are Integral are Under no circumstances Energy funds to be used to make political donations. If you nominate as a candidate in a state or federal election, you should the day of nomination take leave from to conduct your campaign in order without risking conflict between your employment and political interests. You are free to be involved in any free are You hours so activities outside working do not interfere long as these activities operations. with your normal working should not use working hours or You to conduct Integral Energy resources political or other business or social activities, or involve Integral Energy in outside activities, unless authorised to do so. 9. Political and community participation Integral Energy can require you to Integral Energy can require that cease any secondary employment your employment adversely affects with Integral Energy. > Appendices 8.3 1.2 8.6 6.4 76.4 13.3 27.5 11.0 1.7 1.9 5.3 11.6 77.6 10.9 29.1 17.1 22 147 234 486 152 194 113 1348 33 36 224 211 563 331 102 1500 Prospect and Illawarra Electricity. and Illawarra Electricity. Prospect exit programs in June-July 1998. exit programs 1.5 0.1 6.1 6.4 5.0 2.4 2.2 23.6 2.4 0.1 4.1 9.7 0.3 3.9 1.9 22.4 deal with the financial and operational issues Integral Energy in the lead-up to confronting various IT projects. Full Retail Contestability. competition. 2 26 88 42 38 417 108 113 2 6 47 79 76 37 434 187 9.8 1.4 8.6 100 19.4 13.6 33.9 13.4 paid to Performance 1.8 2.2 7.2 100 14.0 15.0 38.8 21.0 Remuneration > 24 109 173 342 599 236 151 240 All employees employees Female Male employees 1765 1997/98 1998/99 1999-2000 2000-2001 2001-2002 of staff total staff of staff total staff of staff total staff Number % of Number % of Number % of 42 35 271 290 750 407 139 1934 Integral Energy Annual Report Total staffTotal % (reduction)/increase (2)% cumulative reduction 35.0 (5.5) 2,039 41.0 (9.6) 1,845 46.7 (9.6) 1,668 43.6 5.8 1,765 38.2 9.6 1,934 TradingGeneral Manager IT&T Sandra TrudgettManager Retail $198,525 $24,164 Managing conflicting issues associated with 10 September 2001. to 7 September 2001. General Manager Finance Craig JamesGeneral Manager Full Retail Contestability Rodney Howard $224,700 $215,587Human ResourcesGeneral Manager $28,300Sales and Marketing financial result. Managing a strong $30,366General Manager Alan Priestley for Delivery of FRC systems in preparation Michael Tauber $232,299 $225,249 Stephen Lowe $179,850 $11,706 Development of HR strategy. n/a Commenced with corporation on 31 July 2001. n/a Commenced with corporation on (2) These figures represent the change in employee numbers since the creation of Integral Energy in 1995 through the merger of of Integral Energy in 1995 through creation the change in employee numbers since the represent (2) These figures At the time of the merger the total employee number was 3,127. Asset ManagementGeneral Manager Commercial Alan FlettGeneral Manager Corporate Development Simon DraperGeneral Manager Engineering Performance Waldman Karen $220,351 $213,463 John Wallace $215,504 $209,135 $28,228 $24,175 and storm performance. Network reliability and call centre Review of supply procedures 29,610 Regulatory issues and further development of $28,200 Reliability and storms. Development of SAMP. corporate governance. rata). upgrade (10 months pro TitleChief Executive Officer Powis Richard $382,083 Name $48,000 the organisation to reorganised Successfully 30 June 2002 pay Performance criteria Note: of voluntary as a result numbers occurred in staff based on full time equivalents. Significant reductions numbers are (1) Staff EXECUTIVE MANAGEMENT REMUNERATION EMPLOYEE NUMBERS > $80,499 full time equivalents (FTE) quoted are All figures Salary ranges< $26,802 01/02 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 00/01 01/02 00/01 EQUAL EMPLOYMENT OPPORTUNITY EQUAL EMPLOYMENT of of the Director by the Office Public Sector rate ranges, as required to NSW employees according Ratio of female to male Employment (ODEOPE). Equal Opportunity in Public Totals Acting General Brian Lloyd $111,937 1 July 2000 Acting executive team member from General Manager General Manager $26,802 - $35,202 $35,203 - $39,354 $39,355 - $49,799 $49,800 - $64,400 $64,401 - $80,499 As at 30 JUNE 2002 As at 30 JUNE > Appendices > Location of operations

Integral Energy’s franchise area Integral Energy’s network franchise area spans 24,500 square kilometres and forms the organisation’s platform into the National Electricity Market for energy and energy related products and services.

The franchise includes some of Australia’s fastest-growing residential and commercial areas, spread across Sydney’s greater west, the Illawarra and Southern Highlands.

Field service depots are located at key points, helping meet the needs of our customers and the network.

The expertise and skill of our staff not only help repair, maintain and develop our network: they also enable us to win construction and maintenance contracts and engineering consultancies in Australia.

Our Retail business plays a pivotal role in meeting the needs of more than 789,000 Integral Energy customers located within our scope of operations, as well as customers beyond our franchise.

Transmission details Drawing on our arrangements with generators in NSW and Victoria – along with supply generated by independent sources such as cogeneration, coal bed methane extraction plants, wind and water plants – we purchase wholesale electricity in bulk for our customers.

Supply is taken from TransGrid’s transmission network at either 132,000 or 66,000 volts and reduced to 33,000, 22,000 or 11,000 volts through a network of transmission and zone substations. Distribution substations further reduce the supply to 415/240 volts to suit customer requirements. >

110 Integral Energy Annual Report > Directory

MAIN OFFICE CUSTOMER SERVICE HOURS FIELD SERVICE DEPOTS 51 Huntingwood Drive Account enquiries Bowral Huntingwood NSW 2148 131 002 Bong Bong Street (cost of a local call) SOUTH COAST OFFICE 24 hours, 7 days a week Hoxton Park Bridge Street, Coniston NSW 2500 Hoxton Park Road CREDIT CARD PAYMENTS POSTAL ADDRESS 1300 361 104 Penrith PO box 6366, Blacktown NSW 2148 (24 hours, cost of a local call) Blaikie Road, Jamisontown

TELEPHONE 24-HOUR EMERGENCY SERVICE Katoomba General inquiries 131 003 Cnr Camp and Whitton Streets 02 9853 6666 (cost of a local call) Bowenfels 24-hour emergency service HOT WATER HOTLINE Cooerwull Drive 131 003 131 003 Kandos Account enquiries, connections, TO REPORT STREETLIGHTS OUT Cnr Davies Road and White Crescent disconnections 131 003 131 002 Seven Hills GENERAL ENQUIRIES Powers Road FACSIMILE 02 9853 6666 02 9853 6000 Parramatta CUSTOMER COMMENTS OR Cnr Fennell and Macarthur Streets E-MAIL COMPLAINTS [email protected] 1800 806 698 Coniston Bridge Street WEBSITE www.integral.com.au Shellharbour Buckley Road

Nowra Cnr Yalwa and Depot Roads

Ulladulla Deering Street >

Integral Energy Annual Report 111 111 111 92 22, 27 27 45 37 12, 20, 24, 27 5 31 37 12, 16 36, 37 27, 40, 42, 43 14, 26 96 43, 109 20 39, 100 9, 14, 19, 38 24 99 93 33 11, 16, 19, 21, 96, 110 3 35, 36 25 12, 17 2, 4 15, 26 38, 104 2, 34 9, 14, 21, 34, 39 15 9, 22, 43 8, 11 Integral Energy Annual Report 3, 23 112 Streetlighting Streetlighting Supply and procurement Support systems Sustainability Theme and facsimile numbers Telephone Trading Training Values management Waste compensation Workers' relations Workplace Recycling Regional and field service depots Regulatory environment Reliability of supply Remuneration Objectives and results Organisational structure Overseas travel People Profile Profit Publications Retail Revenue Risk management Safety Sales SEDA Solar energy Sponsorships development Staff Statement of Corporate Intent Storms National electricity market National electricity market Network Nightwatch > 99 109 13, 22 37 95 18, 27, 30 94 104 8, 11, 26, 60 30, 31 3, 109 34 100 31 26, 34 61 9, 27, 40 23, 27 15, 48 25 24 20 24 23, 25, 27 10, 37 4 27, 93 54 3 52 12, 20, 21, 26, 27 15 26 15, 92 EBITDA eCommerce Service Delivery (ESD) Electronic Employee numbers Employee support services Ombudsman (EWON) Energy & Water 98, 99 Energy trading initiatives Environmental Equal Employment Opportunity Ethical standards Executive group Financial performance Financial position Five-year statistical table Information of Freedom Full Retail Contestability [FRC] Future Gas energy Green gases Greenhouse GreenPower Highlights Human resources IAIMS project ICAC InfoMet Internet/lntranet IPART IT&T Leadership Legislative changes Metering (see InfoMet) Licence compliance Lost time accidents Management discussion and analysis Major works in progress 39 11 98 97 38, 100 36 111 17, 18 9 3, 18 98 8, 12, 16, 18 27, 31 8 10, 40, 44, 46 3, 23, 38 42 3 44 27, 104 22, 37 23 IBC 92 27 97 53 3 3, 55 13, 32 96 91 62 3, 8 34 12, 17 111 37

3 22, 24

Brand strategy Cash flows Chairman's report report Chief Executive Officer's Board of Directors of Directors Board Bushfires Business units Capital expenditure Board meetings Board Business plan Code of ethics Cogeneration Community partnerships Competition Benchmarking Billing Consultants Appendices Awards Corporate governance rating Credit Customer comments Customer connections Customer Consultative Committee Debt/equity ratio Demand management Directory Dividends Assets Audit committee > Index Abbreviations Aboriginal employment Absenteeism Annual report exemptions Annual report Customer service Customer service hours Accidents Alternative energy Customer Service Guarantees > About this year’s Annual Performance Report

Integral Energy's Annual Performance Report for 2001-2002 presents critical information about the organisation's activities in a candid, transparent and reader-friendly manner. In addition to meeting the requirements of a broad range of legislation, our report is also prepared against the criteria set out by Australasian Reporting Awards, Inc, and is benchmarked against reports from other leading Australian organisations.

We printed 3,000 copies of the 2001-2002 Annual Performance Report at an estimated cost of $29.50 per copy (GST inclusive).

The 2001-2002 Annual Performance Report was produced by the Corporate and Government Affairs Branch.

Design/production Versa 02 9438 1711

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