ANNUAL PERFORMANCE REPORT 2012–13
WORKING FOR OUR COMMUNITIES About this report
This report provides a candid account of Endeavour Energy’s performance during the financial year 2012-13. It notes successes, areas for improvement and our future direction and challenges. Endeavour Energy has a proud tradition of dedicated service to our communities. The theme for this year’s report – working for our communities – reflects our commitment to improve efficiency and productivity to control future increases in electricity prices for our customers while delivering a reliable and sustainable network for our communities. The contents of this report are guided by the requirements of the Annual Report Statutory Bodies Act 1984, the State Owned Corporations Act 1989 and the principles of the Global Reporting Initiative. Statutory accounts and financial information are verified by the NSW Auditor General. This annual report can be found on our website at www.endeavourenergy.com.au. It was produced at a cost of $11,360 (GST inclusive).
© Endeavour Energy 2013
This work is copyright. Material contained in this document may be reproduced for personal, in-house or non-commercial use without formal permission or charge provided there is due acknowledgement of Endeavour Energy as the source.
Requests and enquiries concerning reproduction and rights for a purpose other than personal, in-house or non-commercial use should be addressed to the Manager Corporate Affairs, Endeavour Energy, PO Box 811, Seven Hills NSW 1730.
ISSN 1834-0733
Cover image: Part of the team responsible for the construction of the award winning Casula Zone substation Troy Kidd (Civil Project Manager) and Manju Puthan Veetil (Senior Engineer, Subs Civil Design). Casula Zone Substation won the Master Builders Association annual Regional Building Award for the Best Commercial New Building $3‑$5 million category.
Project management Corporate Affairs, Endeavour Energy Design Impress Design CONTENTS
Letter to Shareholding Ministers Our organisation 2 31 October 2013 Year at a glance 3 The Hon. Mike Baird MP Treasurer The year in review 4 Level 36, Governor Macquarie Tower 1 Farrer Place Our plans and priorities 6 SYDNEY NSW 2000 The Hon. Andrew Constance MP Our performance 8 Minister for Finance and Services Improve safety performance 8 Level 34, Governor Macquarie Tower 1 Farrer Place Deliver the network plan 9 SYDNEY NSW 2000 Improve customer value 10 Leverage technology 11 Dear Ministers REPORT ON PERFORMANCE FOR Manage business risk 12 THE YEAR ENDED 30 JUNE 2013 Deliver performance through people 13 We are pleased to submit Endeavour Energy’s annual report detailing performance, operations and Network 14 financial results for the year ended 30 June 2013. The report has been prepared in accordance with People 22 the Annual Reports (Statutory Bodies) Act 1984 and is submitted for tabling in Parliament. Community 24 Copies are being sent to the Premier of NSW, the Auditor-General, the Minister for Resources and Environment 26 Energy, and other key stakeholders. Governance 28 The report is available on our website: www.endeavourenergy.com.au. Management discussion and analysis 32 Sincerely Financial statements 34 Appendices 77
Roger Massy-Greene Vince Graham Chairman Chief Executive Officer
Endeavour Energy Annual Performance Report 2012–13 1 1 OUR ORGANISATION
Endeavour Energy is a New South Wales state-owned energy corporation serving some of Australia’s largest and fastest growing regional economies.
Endeavour Energy manages a $5.31 billion electricity distribution network for 907,996 customers, or 2.2 million people, in households and businesses across a network area spanning 24,500 square kilometres in Sydney’s Greater West, the Illawarra and South Coast, the Blue Mountains, the Southern Highlands and Shoalhaven. Endeavour Energy is incorporated under the Energy Services Corporations Act 1995 and operates within the terms of the Electricity Supply Act 1995 on behalf of our shareholder, the New South Wales Government. The focus of our 2,635 people is to deliver a safe, reliable and efficient electricity supply to our residential and business customers while delivering strong financial results to our shareholder. We are committed to making a serious and sincere effort to deliver better value for customers by reducing our operating costs without compromising safety or services.
Our business purpose To be of service to our communities by efficiently distributing electricity to our customers in a way that is safe, reliable and sustainable.
Our values These five values form the basis for everything we do.
Safety Respect Continuous excellence for people improvement
• put safety as your • treat all people with • look for safer and number one priority respect, dignity, fairness and equity better ways to do your job • do not participate in unsafe acts, • demonstrate co-operation, • improve our financial performance and challenge unsafe behaviours trust and support in the workplace • support innovation to add value • think before you act • practise open, two-way to our business. • lead by example communication. • take responsibility for the health and safety of yourself and others. Customer and Act with integrity community focus
• deliver value and reliable • act honestly and service to our customers ethically in everything you do and communities • be accountable and own • use resources responsibly your actions and efficiently • follow the rules and speak up. • be environmentally and socially responsible.
1 Refers to Endeavour Energy’s Regulatory Asset Base.
2 OUR ORGANISATION
Jason Perkins (Project Manager Civil) and Brett Hooper (Project Manager Subs) at the new 1 $32 million Claremont Meadows Zone Substation. This new zone substation was constructed to supply significant residential development in the Claremont Meadows area and provide support to the rapid increase in load on the adjoining Kingswood and St Marys Zone Substations.
Year at a glance
ITEMS 2011–12 2012–13 % CHANGE OUR SHAREHOLDER EBITDA $m 755.7 821.0 8.6 Operating profit after tax $m 265.5 306.5 15.4 Returns to NSW Government $m 302.3 340.9 12.7 Dividend $m 186.6 209.5 12.3 Income tax equivalents $m 115.7 131.4 13.5 Net assets $m 1,450.7 1,586.2 9.3 Return on assets % 10.6 10.3 (2.3) Return on equity % 19.8 20.2 2.0 OUR OPERATIONS Reliability (unplanned interruptions to supply) Min/lost/cust 81.8 88.0 ( 7.6) Capital expenditure $m 634.3 577.7 (8.9) Output (GWh) GWh 16,506 16,001 (3.1) Sales revenuea $m 1,225.0 1,299.2 6.1 OUR CUSTOMERS Total network customer connections 883,658 907,996 2.8 Customer Satisfaction Indicator % 76 75 (1.3) ENVIRONMENT Transformer oil recycledb litres 253,254 342,092 35.1
c Greenhouse gas emissions – direct emissions t CO2e 6 37,702 633,106 0.7 Reportable environmental incidents No. 5 2 60.0 OUR PEOPLE Total employeesd 2,824 2,635 (6.7) Lost time injury frequency rate (LTIFR)e 3.6 2.6 27.8
To ensure consistency on an annual basis, prior year statistics may have changed in line with amendments to comparative financial statement disclosures and amended definitions. a. Sales revenue includes total network use of system income only. b. The increase in recycled oil is the result of an increase in transformer refurbishments, replacements and transformers being decommissioned in 2012–13. c. We have reported our emissions using the National Greenhouse and Energy Reporting Scheme Determination where available, or if unavailable, using methods consistent with the emission estimates published by the Department of Climate Change and Energy Efficiency in the National Greenhouse Accounts, or relevant environmental key performance indicators developed by the Energy Network Association of Australia. Includes all scope 1 and 2 emissions minus offsets purchased. d. Full time equivalent employees as at 30 June 2013. e. The LTIFR indicates how frequently lost time injuries have occurred per million hours worked. It is calculated by taking the number of LTIs reported in the previous 12 months (multiplied by 1,000,000) and then dividing by the average number of employees for the previous 12 months (multiplied by 2,000 hours worked per FTE).
Endeavour Energy Annual Performance Report 2012–13 3 To be of service to our communities by efficiently distributing electricity to our customers in a way that is safe, reliable and sustainable Our purpose statement THE YEAR IN REVIEW
Industry reform This achievement is a direct result Our network endured temperature The NSW Government introduced of our collective efforts to realise extremes last year with snow and high a reform program for state owned efficiencies totalling over $99 million winds in the upper Blue Mountains electricity networks on 1 July 2012, over the past three years. It also interrupting power to 31,000 customers including a shared group management reflects our success in delivering on 12 October, while a mini tornado model called Networks NSW. on our voluntary commitment to savaged the coastal town of Kiama on the Australian Energy Regulator the 23–24 February, again testing crews Along with Endeavour Energy, the (AER) to reduce operating costs by as they worked in dangerous conditions group includes Ausgrid and Essential 2% a year from 2009. to safely restore power to more than Energy. Each business continues to 44,000 customers. operate as a separate legal entity Safety performance improves managed by a joint Board of Directors Safety excellence is Endeavour Because of the large number of weather and a common Chief Executive Officer. Energy’s number one priority events, we did not meet our reliability and the responsibility of every performance target in 2012–13 although A key objective of the Government’s employee. Our goal is to keep our our underlying reliability remains reform program is to deliver more workers and the public safe. In the consistently strong. than $400 million in cost and efficiency past year, the number of lost time Financial performance savings over four years to assist injuries fell significantly – from 22 in Endeavour Energy met our financial electricity customers, particularly those 2011–12 to 14. While this result had targets contributing to our continued receiving Low Income Household and a favourable impact on our lost time sustainability and ability to contain Family Energy rebates. These savings injury frequency rate of 2.6, being future electricity price increases are being delivered across the three our best result, we did not meet our for customers. businesses through more streamlined target of 2.2. corporate and support services, Endeavour Energy’s profit after tax reducing duplication, more efficient We encouraged greater reporting of was $306.5 million and earnings capital spending and strategic incidents, continued to use incident before interest, tax, depreciation and procurement initiatives. investigation to identify improvements amortisation was $821.0 million. and renewed our focus on leadership The industry reforms also aim to and personal accountability for safety. Revenue was down compared to budget deliver a more efficient, lower cost due to declining demand, a trend which electricity distribution service to We also started training workers about is expected to continue. Energy use customers while maintaining the random alcohol and drug testing, due across our network has fallen 8.2% since financial sustainability and reliability to start in October 2013. This forms July 2009. This is due to mild summers of the network in a way that is safe for part of our Lifeguard program, and winters; prevailing economic its employees and the public. designed to minimise the risk of a conditions; the high Australian dollar; worker affected by alcohol, drugs or reduced electricity use in response to Keeping our pricing promise fatigue causing injury or death. These reforms build on Endeavour high prices; and the rapid uptake of Energy’s efficiency and productivity Delivering a more solar across the network. programs – Projects Challenge and resilient network Origin Energy transition a Compete. These programs began To meet the electricity needs of great success two years ago with a promise to 2.2 million people located in some After nearly two years of operating our customers to do everything we of the fastest growing regions in a Transition Services Agreement could to keep network prices at or NSW, we invested $780 million in our (TSA), Endeavour Energy successfully below the rate of inflation without network during the year, delivering a transitioned its retail customer data compromising safety or reliability. capital program of around $578 million for 477,000 sites and all retail functions We delivered on this promise this and an operating program of almost across to Origin Energy following year, when our average distribution $240 million. network price increase of 0.01% from the sale of our retail business in 1 July 2013 fell below CPI for the first We worked on 49 major projects and March 2011. We now operate as a time in a decade. over 4,900 distribution projects. This ‘network only’ business. investment program and targeted reliability improvement projects have New rules for made our network more resilient, as engaging customers its performance during 45 degree Following recent changes to the plus days in Western Sydney in National Electricity Rules and to guide January 2013 testified. the development of our investment plans, the AER requires electricity distributors like Endeavour Energy to increase engagement with customers.
4 OUR ORGANISATION
Leading Hand Technologist Graeme Sydenham with Third Year Apprentice, Michael Baiada at Penrith Transmission 1 Substation. $38.7 million has been invested in the construction of a new 132/33kV indoor transmission substation to meet the electricity needs of approximately 40,000 customers across the Penrith region.
The AER’s determination is critical for Endeavour Energy plans further Submitting a robust, prudent network our business as it sets the revenues we improvements to our customer service investment proposal to the AER for the will receive over the five-year period systems and processes to enable our five-year period commencing July 2014 from 2014–15 to 2018–19. The key focus networks customers to receive efficient represents a considerable challenge. of the determination is to continue service and adequate protections. The AER’s determination will set to deliver safe, reliable electricity our revenue and drive customers’ while taking account of community Our people electricity prices for that period. concerns about affordability. In Capable, skilled people are critical to the addition we must ensure long-term success of our strategy. We continued to Thanks to all sustainability of investment to deliver build our leadership capability through Our ambition is to continue to keep predictable outcomes for customers development programs attended by price increases low for our customers on an ongoing basis. 100 managers focused on culture, without compromising safety, reliability change management, business acumen or the sustainability of our network. During the year we worked with and safety leadership. Our plans to achieve this ambition Networks NSW to develop key present challenges and changes We also negotiated a new two-year themes and principles to guide the for us all. Notwithstanding these Enterprise Agreement to help us development of Endeavour Energy’s challenges, we have continued to make deliver our business objectives and AER submission. real progress this year – improving provide rewarding and sustainable safety, running a more efficient New customer framework jobs for our employees. For the business, delivering our capital plan requires changes first time, Endeavour Energy used and our pricing promise. Against this interest-based bargaining principles In preparation for the implementation backdrop, we gratefully acknowledge under the Australian Fair Work Act of the National Energy Customer the combined efforts of Endeavour to negotiate a two year Agreement Framework (NECF) on 1 July 2013, we Energy’s people for their dedicated effective from 24 December 2012. completed extensive work to ensure commitment to our customers The 2.7% per annum wage increase our business processes and systems and communities. meet the requirements of the new met our key objectives of improving framework, which aims to streamline safety, providing fair and responsible It is entirely due to their dedication the regulation of energy distribution wage outcomes for our people and that millions of Australians have access and retail functions. delivering value to our customers. to a safe and reliable electricity supply, every day. The framework has required us to make Plans for 2013–14 changes to our contractual relationship Improving our safety performance with customers, to the process for will remain our top priority in 2013–14. connecting them to our network, to the In addition, we plan to improve management of supply interruptions, our asset management efficiency interactions with customers and through initiatives including better electricity retailers, and reporting and management of our road fleet, revising compliance responsibilities. our network investment plans and developing a common logistics and supply chain plan.
KEY RESULT AREAS MEASURES TARGET ACTUAL SAFETY Safe, capable, Lost time injury frequency rate (LTIFR) – pathway to zero 2.2 2.6 motivated employees Reportable incidents – internal SENI 11 28 Total recordable injuries frequency rate 21.7 26.2 CUSTOMER / COMMUNITY Valued by our community Customer satisfaction 75% 75% Protect public safety and Reportable incidents controlled – environmental 2 2 environment – pathway to zero Reportable incidents – external SENI 18 45 Reliable & sustainable network Network reliability – unplanned SAIDI 76 mins 88 mins FINANCIAL Financial sustainability NPAT – Net Profit After Tax inc. Capital Contributions $299.5m $306.5m EBITDA – Inc. Capital Contributions $820.7m $821.0m Effective investment CAPEX budget $669.8m $577.7m Efficient operations OPEX budget $389.0m $356.3m BUSINESS PROCESS Network Plan delivery % of SAMP milestones met/complete 95% 99% Governance, risk and Audit recommendations outstanding ≥ 90 days 0 0 compliance management Risk treatment plans outstanding ≥ 90 days 0 0 CULTURE Safe, capable, Absenteeism (excluding family/carer’s leave) 2.5% 2.9% motivated employees No. of employees with gross to base pay ratio above 1.5 45 17
Endeavour Energy Annual Performance Report 2012–13 5 1
Our plans and priorities for 2012–13 Endeavour Energy’s six strategic objectives identify those areas that will lead to significant transformational changes in our business in the areas of safety, customer service and efficiency.
1 2 3 IMPROVE DELIVER IMPROVE SAFETY THE NETWORK CUSTOMER PERFORMANCE PLAN VALUE
Why? Why? Why? • To reduce the risk and • To continue to deliver safe • To keep network price increases close to CPI occurrence of incidents and and reliable electricity while at over the next five years without affecting injuries so that all workers and the same time taking account the safety, reliability and sustainability of the public go home safely of the community’s concerns our network and we achieve a best practice about affordability. • To fund NSW Government’s Low Income result of zero harm and injuries. Household Rebate and Family Energy Rebate schemes. Target for 2012–13 Target for 2012–13 Target for 2012–13 • LTIFR of < 2.0 on a pathway • Invest $669.8 million in capital • Reducing corporate and administration costs to zero by 2015. expenditure to replace ageing by $22m pa by June 2014 assets and meet future growth • Reducing the real cost of operation our • Deliver our next Australian regional and network operations by $26m pa Energy Regulator submission by June 2014 by May 2013. • Support delivery of the Network Electricity Reform Program over four years from July 2012. Result Result Result • LTIFR result was 2.6, against • Delivered $577.7 million in • Savings for Project Challenge to date is our target of 2.2. While we did capital expenditure, which $26.4m OPEX and $0.3m CAPEX not meet our target, it was a includes work on 60 major • Savings for Project Compete to date is significant improvement from construction projects $4.4m OPEX and $2.6m CAPEX our 3.6 LTIFR result in 2011–12. • As a result of changes to the • A part of Reform Program, Endeavour Energy: This decrease is attributed to National Electricity Rules, the –– implemented new Level 3 and 4 number of reported lost time deadline for submission to Management structures injuries which declined from 22 the AER has been deferred in 2011–12 to 14 in 2012–13. to 2013–14. –– delivered OPEX and CAPEX savings of over • Actively encouraged the $8 million reporting of all incidents and –– implemented the governance requirements near misses. to improve fraud control, compliance and risk frameworks. Focus for 2013–14 Focus for 2013–14 Focus for 2013–14 • Implement our Safety Strategic • Develop our Network Reliability • Deliver our Customer Value Improvement Plan Plan to reduce the risk of Plan by December 2013 to during 2013–14 to 2018–19 to improve electricity incidents and injuries to our maintain reliability for customers affordability for our customers employees, contractors and to meet service standards. • Develop our Network Reliability Plan by the public. December 2013 to maintain reliability for customers to meet service standards • Develop and deliver our submission to the Australian Energy Regulator on time to deliver a safe, reliable and affordable network throughout 2014 to 2019. 6 OUR ORGANISATION 1
These strategic objectives and the community; and delivered the 1. Continuously improving related actions are outlined in our successful transition of our retail safety performance 2012–13 Corporate Plan. Over the customer data to Origin Energy. 2. Maintaining the reliability and past year, we made excellent progress Our focus for 2013–14 is to deliver sustainability of the network against these objectives, which three key outcomes designed to has led to improvements in safety; 3. Containing average distribution promote the long-term interests placed the organisation in a strong network tariff increases to CPI for of our customers, employees position to respond to ongoing our customers. and shareholders: electricity affordability concerns in 4 5 6 DELIVER LEVERAGE MANAGE PERFORMANCE TECHNOLOGY BUSINESS RISK THROUGH PEOPLE
Why? Why? Why? • To play our part in delivering cost • To meet relevant government • To control future electricity price savings and improved efficiencies. policies and fulfil our contract increases for our customers and secure obligations to Origin Energy future employment and fair wage • Ensure readiness to operate as a outcomes for employees. stand-alone business following the transition of retail data. Target for 2012–13 Target for 2012–13 Target for 2012–13 • Use new technologies, particularly in • Completion of transition of • Negotiate a new Enterprise Agreement the areas of smart grid, new business customers and relevant services to by December 2012. systems and field force support. Origin Energy in line with TSA by January 2013 • Operate as a stand-alone business following the transition of retail data and processes by January 2013. Result Result Result • Significant savings were achieved • TSA delivered achieving 98.2% of • A new Enterprise Agreement was through the renegotiation of all key performance indicators reached to deliver a 2.7% per annum outsourcing support contracts • Highly successful transition of retail wage increase, while meeting our • Successful implementation of a smart customer data to Origin Energy in key objectives of improving safety, grid self-healing network, which January 2013, with a success rate providing fair and responsible wage achieved a saving of around 0.2 of 99.98% outcomes for our employees, and delivering value to our customers. minutes of SAIDI • The Network Operational Readiness • $300,000 savings achieved through project was complete by June 2013. improved business systems such as The exception is the Customer automation of Dial Before You Dig. Data into Banner project, which is scheduled for delivery in late September 2013. Focus for 2013–14 Focus for 2013–14 Focus for 2013–14 • Develop our Network Reliability • Endeavour Energy has completed • Implement aligned leadership Plan by December 2013 to maintain the priority actions for this objective, capability programs to improve reliability for customers to which were to finalise TSA delivery performance and productivity. meet service. and transition to Origin; and design and implement a network-only business model • A new strategic objective ‘Achieve the financial plan’ has been introduced to focus on the delivery of the Customer Value Improvement Plan and the submission to the AER.
Endeavour Energy Annual Performance Report 2012–13 7 2 OUR PERFORMANCE
1. Improve safety performance Safety is our number one priority and We also updated our Workers Lifeguard Program the responsibility of every employee. Compensation and Injury Management We seek to encourage a culture where procedures to comply with the Our Lifeguard Program is one way to no employee knowingly participates requirements of the amended Workers ensure employees on duty are fit for in an unsafe act. One of the ways we’ll Compensation Legislation Amendment work and free of the effects of drugs, measure our success is by reducing Act 2012, and communicated these alcohol or fatigue. our Lost Time Injury Frequency Rate changes to employees who are Random alcohol testing will be (LTIFR) to below 2.2 by June 2014 on a directly impacted. introduced from October 2013. pathway to zero. During 2012–13, we continued our Endeavour Energy’s LTIFR performance Asbestos management consultation with stakeholders on of 2.6 for 2012–13 represents a During the year we improved our the parameters that were set by Fair significant improvement in comparison asbestos management system. Work Australia on breath alcohol to the previous year. This is largely the We worked closely with employees, concentration (BAC) levels for result of the decline in the number of Ausgrid, Essential Energy, unions alcohol testing. lost time injuries reported from 22 in and WorkCover NSW to develop and We now have an agreed method and 2011–12 to 14. deliver a program of work to ensure have applied this for determining safe management of asbestos in our In March 2013, an employee working BAC levels across Endeavour’s assets – for our workforce and the on our overhead electricity network in 1,400 role classifications. Merrylands received an electric shock. community. These efforts included First aid-trained Endeavour Energy additional training for front line staff, Our Fatigue Management procedure employees immediately commenced independent assessment of work has been developed in accordance CPR, and he was treated in hospital for practices and disposal of hazardous with the Work Health and Safety a third-degree burn to his thumb and materials by specialists. Regulations 2011 and relevant code. a minor burn to his abdomen. He was Consultation on this procedure is discharged from hospital next day and continuing with employees and unions. has returned to work. We provided the employee and his family with all the assistance and support they needed for his recovery. Subsequently we reviewed our risk PERFORMANCE INDICATOR controls for work undertaken on an energised overheard network, and Lost time incident frequency rate and total recordable injuries issued three safety alerts to employees to reinforce safe work practices. LTIFR TRIFR 28.3 26.2 Safety management 22.5 23.4 23.7 The Incident Cause Analysis Method (ICAM) methodology is used to 4.5 investigate incidents so we can learn 3.9 3.6 3.1 from them and take corrective action. 2.6 In 2012–13, we reviewed and made improvements to our compliance program and audit reporting information to demonstrate that our 2008–09 2009–10 2010 –11 2011–12 2012–13 Good Health, Safety and Environmental Management Systems have been As at 30 June 2013. effectively implemented. LTIFR indicates how frequently lost time injuries have occurred – LTIs per million hours worked. TRIFR is the total number of injuries or illnesses certified by workers compensation medical certificate per million hours worked. This includes measures such as medical treatment, restricted work and LTIs.
8 OUR PERFORMANCE
An external audit in April recognised that our Health and Safety Case Management team 2 operates at the highest level. This is a direct reflection on the great work of Case Managers Anita Chandra and Rosa Martins, and Operational Safety Administrator Dianne Kirk.
2. Deliver the network plan
Endeavour Energy is committed to During 2012–13 we worked on 60 major Following changes made to the managing network assets in a way building construction projects and National Electricity Rules (the that meets customers’ expectations, delivered over 4,900 distribution Rules) implemented in 2013–14, the fulfils our business needs and satisfies projects. We have increased the governance and project milestones our obligations to stakeholders, the delivery of our capital program by established to support the submission regulator and the community. Capital focusing on our peak resourcing of Endeavour Energy’s five-year investment and maintenance programs strategy, which was developed to assist regulatory proposal to the AER are independently regulated by the us to deliver the program sustainably. have been revised and deferred to Australian Energy Regulator (AER) This includes supplementing May 2014. every five years. We have completed Endeavour Energy’s workforce with Significant changes to the Rules the fourth year of the AER-approved external providers during peak work include increased customer five-year program to invest $2.7 billion periods, and has proven to efficiently engagement to guide the in our network business and $1.5 billion deliver investment for our customers. development of our investment in our operations by June 2014. plans, the requirement for the AER This investment is being directed Australian Energy to develop a series of guidelines to servicing the growth in customer Regulator submission as part of its ‘better regulation’ demand, and renewing ageing reform program, as well as changes network assets so we can deliver a The AER determination is critical to the conduct of the regulatory safe, reliable and secure supply to for Endeavour Energy as it sets the review processes and the powers customers. It is also helping us meet revenues we will receive over the and discretion of the AER within the licence conditions set by the five ‑year period from 2014–15 to those processes. New South Wales Government. 2018–19. To facilitate the accommodation of the Implicit in our network strategy is the The key focus of our submission is Rule changes and new guidelines we need to ensure expenditure programs to continue to deliver a safe and are required to submit a transitional provide value for money for customers. reliable supply while taking account regulatory proposal to the AER in of community concern about January 2014 to determine network affordability. We must also address prices for 2014–15, followed by a How we performed the long-term sustainability of our substantive regulatory proposal in In 2012–13, we delivered $577.7 million investment to deliver predictable May 2014. This will establish target of the total forecast capital budget of outcomes for customers in reliability revenues and indicative network prices $669.8 million. Of this, $545.0 million and pricing. from 2015–16 to 2018–19 inclusive. was network system capital investment, compared with a budget of $599.4 million. This expenditure represented a delivery of 97% of network program milestones resulting from a more efficient delivery of the program than originally forecast.
PERFORMANCE INDICATOR Annual capital investment (2004–2015)
700 600 58 33 576 60 545 500 509 77 63 62 48 420 400 399
$m 381 65 77 369 87 317 300 296 54 249 200 203
100 System actual 0 Non system actual 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 System forecast at June 2013 –05 –06 –07 –08 –09 –10 –11 –12 –13 –14 –15 Non system forecast at June 2013
Endeavour Energy Annual Performance Report 2012–13 9 2 3. Improve customer value
drive a prudent cost control culture across the organisation, delivering PERFORMANCE INDICATOR $33.7 million in annualised savings. Supply reliability – normalised unplanned SAIDI (minutes) We plan to pursue further savings by delivering the Network Reform Program. This includes streamlining of corporate and support services, 89 88 implementing policy changes and 79 82 capital programs that deliver better 72 practice across the industry, and streamlining sourcing processes for products and services. Thanks to our collective efforts to contain costs and boost productivity,
2008–09 2009–10 2010 –11 2011–12 2012–13 Good the average distribution network price increase of 0.01% from 1 July 2013 fell below CPI for the first time in a decade. Customers in our network now benefit from the lowest regulated electricity prices in New South Wales. PERFORMANCE INDICATOR We aim to maintain downward Our pricing promise to customers (2009–2018) pressure on prices by controlling costs and keep average distribution network price increases to CPI (or below) for the 20 next five years. 18 Actual Distribution Network Prices Increases 16 17.48 16.22 Future Distribution 14 15.06 Network Prices Constrained Reliability improvement 12 to no more than CPI We monitor the reliability of our 10 network with the System Average 8 Interruption Duration Index (SAIDI). 6 This measures the number of 4 unplanned minutes customers, 3.55 on average, are without electricity 2 2.5 2.5 2.5 2.5 2.5
Endeavour Energy’s Distribution Energy’s Endeavour 0.01 Network Price Increase (Nominal %) 0 each year, excluding the impact July July July July July July July July July July of significant storms. 09 10 11 12 13 14 15 16 17 18 Our SAIDI improved from 126 minutes Note: Distribution network prices do not include costs outside of Endeavour Energy’s control, such as, transmission costs and contributions to the NSW Government’s Climate in 2003–04 to 88 minutes by the end of Change Fund. June 2013. However due to the large number of weather events, we did not meet our target of 76 minutes this year. The cumulative contribution of major In 2009, Endeavour Energy committed property and logistics and other weather events added 28 minutes to reducing the cost of running the business services. SAIDI. Changes to reporting systems business by 10% over five years in also resulted in 760 interruptions being Renegotiating with existing suppliers a plan designed to keep electricity included in SAIDI that would not have and market testing of specific services affordable for customers. been reported in previous years. This are among the ways we achieve the added a further 1.9 minutes to SAIDI. Through our two efficiency programs, required savings. The finalisation of Projects Challenge and Compete, the transition of our retail business Events that significantly we aim to contain electricity price has also enabled us to simplify some impacted our reliability result increases close to the Consumer corporate support functions and allow included 38 interruptions to the Price Index (CPI) for customers by us to focus more closely on ‘network sub ‑transmission network, 2,267 reducing corporate and administration only’ operations. interruptions to the distribution costs and the cost of operating our network, and 1,862 interruptions to Project Compete looks at regional regional and network operations, while the low voltage network, mainly due and network operations. Its work delivering a reliable and sustainable to adverse weather. Four big weather includes a review of our workforce network for our communities. events, in particular, and a major delivery model, improving scheduling sub ‑transmission outage caused Project Challenge focuses on processes, standardising work significant disruption. corporate support and network practices, better overtime control services. This work includes optimising strategies, and reviewing our Nevertheless Endeavour Energy processes in corporate governance, maintenance standards and defect customers continued to benefit from finance, health and safety, human management strategies. These one of the most reliable electricity resources, information technology, initiatives in combination have helped networks in Australia.
10 OUR PERFORMANCE 2 4. Leverage technology Endeavour Energy is using technology Feeder automation Dial before you dig to support delivery of Projects Challenge and Compete (see page 10), We continued to implement To boost efficiency further, we particularly in the areas of field technology to help maintain network developed a new dial‑before‑you‑dig force support, smart grid and new reliability. Our feeder automation (DBYD) application which automatically system in the Springwood area business systems. collects data from the GIS and eDocs successfully detected and isolated systems and provides information During the year we made excellent faults, automatically restoring supply to customers on underground progress on a number of important from adjacent feeders and ensuring assets. The DBYD response rate initiatives, delivering significant customers were not inconvenienced has enabled over half of our 7,000 benefits to the organisation in savings by blackouts. In six months of monthly requests to be automated, and productivity improvements. operation this scheme has prevented saving $300,000 a year. Before we They include: 465 customers from experiencing implemented this solution, 85% of outages – totalling 4.7 hours saved enquiries were responded to within MySafe in lost supply. 48 hours, supported by eight full- time employees. The new application We contributed to improvements means 99.2% of enquiries are in safety through MySafe, a new Controlled metering now answered within 48 hours by system for reporting and tracking Through the use of controlled two employees. incidents relating to health and safety, metering and management of air environment, security, network shocks, conditioning, along with more network fires and vehicles. Once traditional commercial demand Geographic fully implemented, MySafe will be management, we completed the Information System/ a valuable source of information for final year of the Rooty Hill demand analysing safety issues. management program. It achieved Computer Aided Design more than 5 MVA peak reduction, Our new GIS/CAD system allows faster iSafe helping defer the need for a new capture of, and access to, electrical substation in Glendenning. drawings for regional employees and We continued with the rollout of iSafe, accredited service providers in the with installation completed in 90% field. It provides a more up‑to‑date of our vehicles. This system enables view of our network assets and field employees to notify the office helps boost the Asset Information in an emergency and be located Team’s productivity. through GPS (global positioning system) technology.
Field force automation Field force automation initiatives included the introduction in the field of tablet computers and applications for the Service Wire Replacement Program and live line crews. These applications enable data to be loaded in the field directly into systems, and accessed from anywhere for job dispatch, to calculate conductor loading on poles, and provide access to the live line manual and safety documentation. Projects are also underway to deliver solutions to reduce back office manual data entry for meter changes, streetlight maintenance and other inspection types.
Keith Irwin, Project Officer – South (Springhill) demonstrates how easy it is to record a safety observation in MySafe. MySafe empowers our people to respond to a wide range of incidents, hazards, near misses and safety observations with the most up-to-date information.
Endeavour Energy Annual Performance Report 2012–13 11 2 5. Manage business risk Our priority actions included Network readiness Our management of business risk is management of two key business risks based on three key behaviours: in 2012–13, discussed below. The aim of the Network Operational Readiness Project was to put in • We are aware of our activities, place systems and process changes operations and objectives. Transition to Origin necessary to ensure Endeavour • We consider what can go wrong Energy could continue to operate as The former Integral Energy Retail and the consequences. business was sold to Origin Energy a network-only organisation following with effect from 1 March 2011, the completion of the TSA. A program • We take action to prevent what can and a two-year Transition Services of 17 separate work packets was go wrong. developed and their progress was Agreement (TSA) then commenced. We also implemented initiatives monitored by an Executive Steering In this period Endeavour Energy outlined in the risk management Committee. The committee also delivered retail services on behalf strategy to strengthen risk provided oversight of the day-to-day of Origin Energy, issuing almost five management practices across TSA activities. million retail bills and answering more the company. than two million customer phone calls. Risk management Both the risk management strategy Transitioning 477,000 customer and risk management plan are accounts involved enormous In 2012–13, Endeavour Energy, reviewed by the Audit and Risk effort from employees across together with Ausgrid and Essential Committee of the Board throughout several business units, and close Energy, implemented a revised the year. ‘Risk owners’ provide regular communication and a strong working common risk management framework reports to management and to the relationship with Origin Energy. that enables us to identify and manage Audit and Risk Committee on the The organisations’ shared objective of risks that could affect customers, the results of ongoing monitoring and prioritising service delivery throughout community, environment, our people, review of risks, and on action plans to the TSA ensured there was no adverse assets and financial resources. manage them. Risks to achievement impact on customers. This year we reviewed major risks of our corporate plan are continually to our strategic objectives and identified and assessed across nine developed and implemented action categories, as shown in this table: plans to help manage them.
BUSINESS RISK CATEGORY RISK DESCRIPTION
Safety Fatality/serious injury of employee or member of public
Network Significant customer impact related to the network
Finance Significant unbudgeted financial loss
Compliance Liability associated with a dispute or material breach of legislation or licence
Reputation Sustained public criticism of Endeavour Energy
Environment Significant environmental incident
People Failure to deliver performance through people
Strategy Strategic objectives are not delivered and business opportunities are lost
ICT Significant information communications technology (ICT) &/or organisational technology service failure
Incident management and business continuity Endeavour Energy is committed to maintaining continuity of supply and business systems during network and other events. An important function of our incident management plan therefore is to enable us to mobilise resources, communicate with stakeholders and quickly recover key business processes. Our incident management plan provides a framework to guide us through major disruptive events. This is supported by our business continuity and disaster recovery plans for critical processes and systems. All plans are regularly reviewed and tested. The incident management plan was activated several times during the year, on one occasion during a major simulation exercise in early 2013.
12 OUR PERFORMANCE 2 6. Deliver performance through people A new Enterprise The agreement is for a two-year Developing our term and provides a wage increase Agreement of 2.7% per annum. Wage-related leadership capabilities Endeavour Energy commenced the allowances (excluding the Electrical and culture negotiation process for the 2012 Safety Rules Allowance) were also During 2012–13, we continued to build Enterprise Agreement in July 2012. increased in accordance with the Fair our leadership capability and aligned Under the Australian Fair Work Act Work Commission’s recommendations leadership development programs to 2009, for the first time Endeavour following the previous agreement. our purpose and desired culture. Energy used interest-based bargaining Employer contribution to principles to negotiate. This requires Our leadership development programs accumulation superannuation parties to focus on their respective this year focused on developing payments will remain at 15% for the interests and work on generating Strategic Leaders and Active Leaders. life of the agreement, regardless options to address them. These programs aim to develop of changes in the Commonwealth leadership capability in mobilising Our three key objectives included: Government’s Superannuation change, develop other employees, to improve safety outcomes for Guarantee Contribution. communicate and influence and employees, contractors and the public; The new agreement also contains enable managers to hold others to provide fair and responsible wage new clauses relating to consultation, account. During 2012–13 over 90 outcomes and deliver sustainable dispute resolution and work practice leaders participated in the programs. jobs for employees; and demonstrate change. In addition to these, a new value to customers by improving our The frontline leaders program was domestic violence clause has been productivity and containing future successfully piloted with 15 Operations added to reflect growing community network tariff increases to CPI. Managers in 2012–13. It delivered concern about this important issue. greater understanding of leader Following ten months of negotiations, Overall, the 2.7% per annum wage accountabilities and developed on 21 May 2013, the Fair Work increase met our three key objectives. practical skills and tools that leaders Commission certified the new need to be effective. Endeavour Energy Enterprise Agreement 2012 following a secret ballot held in accordance with the requirements of the Fair Work Act 2009. Employees voted 79% in favour of the agreement.
Chief Executive Officer Vince Graham talks to field staff as part of a program to develop future Leading Hands. The program focuses on three primary areas – safety, operations and leadership – with participants becoming preferred candidates ready to act as Leading Hands in the future.
Endeavour Energy Annual Performance Report 2012–13 13 3 NETWORK
Our Network Strategy During the current regulatory period • While customers expect secure and Major projects approved (2009–14), total expenditure on the reliable supply, they have become network of $2.7 billion was approved increasingly concerned about 2012–13 by the Australian Energy Regulator the price of electricity. Network To replace ageing assets, cater (AER). We are now in the final year investment must be prudent for future growth and ensure the of this five-year plan, with a capital and efficient to minimise upward security and reliability of electricity program of $509 million to deliver pressure on prices. supply to customers, two major in 2013–14. projects were approved this year • Peak temperatures across the valued at $28.6 million. They included This investment aims to address three network are typically higher and stay $19.9 million for the establishment significant challenges: high for longer than those of central of Marsden Park Zone Substation Sydney and other coastal areas. 1. Servicing growth in demand across and $8.7 million to replace the our network area. New network • Eighty-one percent of households in 132kV transmission cable between infrastructure must be built to Greater Western Sydney now have Union Street Switching Station and support the continued development air conditioning units, compared Camellia Transmission Substation. of Sydney’s northwest and southwest with 59% in the Illawarra and 40% Construction on these will commence residential growth centres. While we in the Blue Mountains. This has in coming years. have seen reductions in demand resulted in a ‘peakier’ load pattern from industrial customers in the last in hot weather requiring more assets two years, our network is forecast to service demand that only exists to grow at a rate of 2.1% per year for a short time each year. over the next 10 years, mainly due • Increasing penetration of to greenfield development. rooftop photovoltaic systems is 2. Meeting customers’ reliability contributing to reduced energy needs. Our recent capital investment usage and increased network program has helped us ensure management issues. our network has a high degree of resistance to environmental impacts. The focus is now to improve operational effectiveness and reliability and reduce costs. 3. Managing the network efficiently and sustainably. A sustainable network is one in which we can maintain consistent levels of safety and reliability over long asset lives, while minimising volatility in costs. In developing our network strategy, we took a range of regional, climatic, asset, customer and licence requirement issues into account. Some of these are: • Our network contains some of Australia’s fastest growing communities. Under the NSW Government’s draft Metropolitan Strategy for Sydney, Endeavour Energy’s network area is forecast to accommodate 180,000 new dwellings and 171,000 new jobs by 2031. Apprentice Zoe Osborne in a pole dressing challenge at the 2012 Electricity Supply Industry Field Days. Endeavour Energy crews demonstrated a high standard of safety excellence claiming four first places, four second places and four third places, out of the 14 events entered.
14 OUR NETWORK OPERATIONS
Steve Jones Project Manager (Civil) at the $11m East Parramatta switching station. Endeavour 3 Energy is investing $300 million in essential electricity infrastructure for Parramatta and surrounding areas over the next 15 years to meet the future electricity demand of one of Australia’s major business centres now and in the future.
Major works in progress
INVESTMENT ($)
TOTAL INVESTMENT PRACTICAL BEFORE TO DATE COMPLETION DESCRIPTION 2012–13 2012–13 JUNE 30 2013 DATE a COMMENTS
Abbotsbury ZS 3,264,697 7, 231,16 0 10,495,857 July 2014 Construct a new 132/11kV indoor establishment zone substation (ZS). Includes related transmission mains and distribution line works
Baulkham Hills ZS 8,8 07, 201 429,585 9,236,786 Completed Constructed a new 132/11kV establishment October 2012 substation within an existing transmission substation (TS)
Blackheath ZS 5,481,255 1,183,294 6,664,549 Completed Rebuilt the existing redevelopment June 2012 66/11kV substation
Bomaderry ZS 6,291,310 1,723,553 8,014,863 Completed Replaced three transformers, redevelopment May 2013 installed bus-section circuit breakers and augmented 33KV feeder
Bulli ZS 2,800,927 4,949,924 7,75 0,851 May 2014 Construction of a new 33/11kV redevelopment indoor substation
Canley Vale ZS 9,541,373 2,936,276 12,477, 6 49 September 2013 Constructed a 33/11kV indoor redevelopment zone substation
Castle Hill ZS 2,685,642 2, 587,8 6 4 5,273,506 July 2017 Rebuilding an existing 66/11kV redevelopment substation with indoor switchgear
Casula ZS 7,15 6, 374 9,772,410 16,928,784 Completed Constructed a new 33/11kV establishment July 2013 indoor zone substation
Cattai ZS feeders 619,595 8,253,417 8,873,012 July 2014 Replacement of 33kV outdoor 443 and 458 switchgear with indoor and augmentation of 33kV feeders
Cawdor ZS 15,797,739 3,138,094 18,935,833 Completed Constructed a new establishment November 2012 33/11kV substation
Cheriton Ave ZS 42,135,377 3,440,859 45,576,236 Completed Constructed a new 132/11kV establishment October 2012 indoor substation
Chipping Norton 2,640,408 8,070,101 10,710,509 November 2013 Construction of a new ZS establishment 33/11 kV zone substation
Claremont 21,538,642 8,672,501 30,211,143 Completed Constructed a new 33/11kV Meadows ZS February 2013 indoor substation establishment
Connection 15,146,759 3,274,133 18,420,892 June 2014 Connection works associated works for the with the new TransGrid Macarthur establishment of Bulk Supply Point Macarthur BSP a The practical completion date typically refers to the energisation of electrical assets within a project. After practical completion, expenditure may still be undertaken on complementary distribution works, network reconfiguration, defect rectification, landscaping and road restoration.
Endeavour Energy Annual Performance Report 2012–13 15 3 Major works in progress
INVESTMENT ($)
TOTAL INVESTMENT PRACTICAL BEFORE TO DATE COMPLETION DESCRIPTION 2012–13 2012–13 JUNE 30 2013 DATE COMMENTS
Corrimal ZS 6,933,527 3,645,264 10,578,791 December 2013 Construction of a new redevelopment control building to house new switchgear and electrical equipment. Installation of two new transformers
Culburra ZS 415,517 4,796,494 5,212,011 August 2014 Installation of indoor 33KV augmentation switchgear; construction of a new 33KV feeder
Doonside ZS 32,298,466 9,917,074 42,215,540 May 2014 Rebuilding an existing substation establishment with a new higher capacity 132/11kV indoor substation
East Liverpool 24,992,609 8 07, 678 25,800,287 Completed Constructed a new 132/33kV TS establishment September 2012 indoor substation
East Parramatta 37,4 0 9,0 81 37,759, 3 02 75,168,383 October 2013 Construction of a new 132/11kV SS & West indoor substation and a new Parramatta ZS 132kV indoor switching station establishment
East Richmond ZS 12,269,019 8,979,133 21,248,152 October 2013 Construction of a new 33/11kV establishment indoor substation to replace the existing Richmond ZS
Figtree ZS 9,146,255 6,370,531 15,516,786 Completed Construct a new 33/11kV zone establishment February 2012 substation. Rebuild existing 33kV feeder to a higher rating
Gerringong ZS 7, 6 47,770 701,616 8,349,386 Completed Replaced 11KV switchgear; augmentation July 2012 augmented the 33KV feeder
Glenorie ZS 3,396,900 6,258,617 9,655,517 September 2013 Construction of a new establishment 33/11kV modular substation
Granville ZS 39,993,458 2,858,030 42,851,488 Completed Constructed a new 132/11kV establishment May 2012 indoor substation to replace the existing substation
Guildford TS 29,082,247 12,938,189 42,020,436 December 2013 Construction of a new control redevelopment building and installation of 132kV and 33KV GIS switchgear and three new transformers
Holroyd ZS 10,931,472 2,173,312 13,104,784 August 2013 Replaced 33 KV and 11KV redevelopment switchgear with new indoor switchgear
Homepride ZS 9,694 434,908 444,602 July 2014 Augmentation of the 33kV sub establishment transmission electricity network
Huntingwood ZS 5,669,908 11,137, 3 03 16,8 07, 211 December 2013 Construction of a new 132/11kV establishment outdoor substation
Jordan Springs ZS 1, 2 97,714 9,154,573 10,452,287 December 2015 Construction of a new 33/11kV establishment indoor substation (initially deploy mobile substation)
Kemps Creek ZS 6,555,000 357,431 6,912,431 Completed Extended the control room redevelopment October 2012 to accommodate new 11kV switchboard
16 OUR NETWORK OPERATIONS 3 Major works in progress
INVESTMENT ($)
TOTAL INVESTMENT PRACTICAL BEFORE TO DATE COMPLETION DESCRIPTION 2012–13 2012–13 JUNE 30 2013 DATE COMMENTS
Lawson TS 15,501,961 196,561 15,698,522 Completed Rebuilt the existing 132/66kV redevelopment July 2012 substation with indoor 66kV GIS switchgear
Leabons Lane ZS 200,740 763,677 964,417 December 2016 Rebuilding the existing redevelopment substation with a higher capacity indoor substation
Leppington South 37,428 1,902,188 1,939,616 December 2014 Construction of a new 132/11kV ZS establishment outdoor modular substation
Mamre ZS 34,358 2,935,703 2,970,061 April 2014 Increasing the substation augmentation capacity with an additional power transformer
Mittagong ZS 4,435,971 706,461 5,142,432 Completed Installed a third transformer augmentation August 2012 and associated switchgear
Mt Ousley ZS 18,975,601 1,018,869 19,994,470 Completed Constructed a new 33/11kV establishment October 2012 indoor substation
Nepean TS to 5,893,395 1,906,967 7,8 0 0, 3 62 Completed Constructed a new 66kV Narellan ZS January 2013 underground electricity line Feeder
Nepean ZS 12,102,937 1,405,420 13,508,357 Completed Constructed a new 66/11kV establishment October 2012 substation to replace the existing Camden ZS
Northmead ZS 1,394,261 6,541,658 7,935,919 October 2014 Rebuilding the existing redevelopment substation with a new 33/11kV indoor control building
Nowra ZS 8,707, 371 202,780 8,910,151 Completed Installed two new transformers augmentation May 2012 with higher capacity units
Oran Park 9,345,858 848,566 10,194,424 May 2014 Construction of two new 132kV establishment – electricity lines to supply to line works Oran Park ZS and deploy mobile substation
Oran Park ZS 164,533 619,791 784,324 September 2015 Construction of a new 132/11kV establishment outdoor substation
Penrith TS 36,940,452 1,772,553 38,713,005 May 2014 Construction of a new 132/33kV redevelopment indoor transmission substation
Port Kembla ZS 2,550,742 6,821,364 9,372,106 February 2014 Construction of a new 33/11kV redevelopment indoor substation to replace the existing Port Kembla substation
Ringwood ZS 790,621 2,094,126 2,884,747 Completed Installed new 11kV switchgear redevelopment May 2013 and associated equipment
Rosehill ZS 12,613,709 1,000,326 13,614,035 Completed Constructed a new 11kV redevelopment September 2012 switchgear room; installed a new transformer; replaced existing 33kV feeders
Russell Vale ZS 7,506,203 267,123 7,773, 326 October 2014 Replacement of two transformers augmentation with higher capacity units
Endeavour Energy Annual Performance Report 2012–13 17 3 Major works in progress 2012–13
INVESTMENT ($)
TOTAL INVESTMENT PRACTICAL BEFORE TO DATE COMPLETION DESCRIPTION 2012–13 2012–13 JUNE 30 2013 DATE COMMENTS
Rydalmere ZS 8,814,101 7, 652,171 16,466,272 October 2015 Rebuilding the existing 66/11kV redevelopment substation with indoor 66kV GIS switchgear
Schofields ZS 30,373,860 2,153,159 32, 527,019 Completed Constructed a new 132/11kV establishment October 2012 indoor substation
South Granville ZS 9,047,604 3,230,932 12,278,536 July 2013 Constructed a new 33/11kV redevelopment indoor substation
South Nowra ZS 5,912,111 353,743 6,265,854 Completed Constructed a new control redevelopment September 2012 building; replaced Transformer No.2 and augment 33kV Feeder 7507
South Windsor ZS 1,129,893 1,522,946 2,652,839 Completed Rebuilt the fire damaged redevelopment December 2012 11kV switchroom
St Marys ZS 234,145 1,360,594 1,594,739 July 2016 Rebuilding the existing redevelopment substation with a higher capacity indoor substation
The Oaks ZS 3,198,782 3,442,289 6,641,071 Completed Constructed a new March 2013 33/11kV modular substation
Tomerong ZS 4,455,477 9,926,338 14,381,815 March 2014 Construction of a new establishment 33/11kV indoor substation
West Liverpool ZS 15,8 07, 3 6 0 1,450,698 17,258,058 Completed Constructed a new establishment November 2012 33/11kV indoor substation to replace Hoxton Park ZS
West Tomerong 8,856,267 15,371,924 24,228,191 December 2013 Construction of a new TS establishment 132/33kV substation
Westmead ZS 44,692 889,649 934,341 May 2014 Rebuilding the existing redevelopment 33/11kV indoor substation
Wilton Park ZS 20, 277, 617 3,998,788 24,276,405 Completed Constructed a new establishment May 2013 66/11kV substation
Windsor ZS 10,755,239 2,616,713 13,371,952 August 2013 Rebuilding the existing augmentation substation with a higher capacity indoor substation
Total 628,059,225 268,926,703 896,985,928
Graduating apprentices Shimeon Sumner, Shane Worthington and Shawn Craig won best in their category at regional NSW Training Awards in Wollongong and Western Sydney.
18 OUR NETWORK OPERATIONS 3 Network maintenance Vegetation management Streetlighting Our Strategic Network Maintenance Endeavour Energy is committed to Endeavour Energy owns and maintains Plan, which is part of our Strategic best practice asset inspection and over 195,000 streetlights on behalf of Asset Management Plan, analyses vegetation management to ensure 29 public lighting customers, which maintenance needs against business our network can operate safely and include 23 local councils. During the objectives and outlines the strategies reliably. A key component of this year we replaced 62,228 lamps as we need to adopt to maintain strategy is to minimise the risk of part of the bulk change maintenance our network. bushfires and risk to our assets and program. Since 1 January 2011, customer reliability resulting from trees defective streetlight lamps have been This work includes vegetation coming in contact with our network. replaced with fluorescent lamps that management, asset inspections and We are now employing LiDAR (light consume less energy. pre-summer bushfire inspections detection and ranging) technology for of our overhead electricity lines in We are also undertaking trials in pre-summer bushfire inspections. bushfire-prone areas. The plan is Blacktown, Penrith and The Ponds reviewed and updated annually to We have also introduced new, to assess the performance of more identify what network maintenance innovative vegetation maintenance efficient light emitting diode (LED) we will need to undertake over the contracts. For the first time we have lights and Ceramic Arc Metal Halide ensuing 12 months. an auditable management system lamps for street illumination. They which details the type and location are more efficient and reliable than In 2012–13, Endeavour Energy of vegetation close to our overhead other technologies available to date. delivered its maintenance program at mains. This information will be used to To facilitate LED technology being a cost of $240.4 million, in compliance identify ways we can reduce costs in available as an option for public with our maintenance targets. controlling vegetation. lighting customers, in addition to Maintenance work and expenditure running field trials Endeavour Energy included: has developed pricing for approval by the AER. • $24.4 million on vegetation management to maintain safety The NSW Public Lighting Code clearances, reduce outages, improve requires us to repair faulty streetlights reliability and manage bushfire risk reported to us by a customer within eight working days of receiving the • $11.6 million on metering, work fault report. In 2012–13, our average which included reading of meters response time to repair such faults and providing information for billing was 4.3 days. • $16.9 million for fault and emergency work following weather-related events and third-party incidents • $32.1 million on preventative maintenance and inspections of the transmission and distribution network • $31.1 million on condition‑based maintenance • $10.2 million for expenses related to contestable customer connection works, including transformers and switchgear paid by customers • $11.5 million for the overhead line and pole inspection program, involving the inspection of 104,858 poles • $6.1 million on street lighting, including replacing 62,228 lamps • $96.5 million on network operating management and other maintenance activities.
In 2012–13 adverse weather events had a greater impact of the reliability of supply to customers than in the three years prior. In response to storms and high winds, Endeavour Energy emergency crews are ready to immediately respond to make safe fallen powerlines and restore supply to customers.
Endeavour Energy Annual Performance Report 2012–13 19 3 Demand management further. We perform these tests and The three-year program period summarise the results in our annual concluded at the end of summer. It One way of reducing the cost of Demand Management Plan (DM Plan). revealed that customers are happy to network management is to investigate participate at 88% satisfaction and that If a non-network option is deemed to demand management alternatives the demand reduction recorded was be feasible, a request for proposals (also known as non-network options) as high as 35% for PeakSaver (1.7 kVA (RFP) is issued or an inhouse to network upgrades for capital per customer) and 30% for CoolSaver demand management investigation expenditure projects. (1.5 kVA per customer). We now seek to is conducted. The RFP is a public expand the programs. Where feasible, we investigate and process in which Endeavour Energy implement projects that modify invites interested stakeholders to demand as an alternative to spending make submissions for system support Dial Before You Dig money to upgrade the network. options, which are evaluated against (DBYD) Projects may include negotiating with network options. high-use customers to move electricity Since the exposure of some consumption away from the network at The table below outlines our Network high‑profile ‘dig‑ins’ and the peak times, or implementing projects Demand Management Plan projects associated legislative response in to reduce overall usage in those times. for investigation in 2012–13. 2009 to prevent damage to electricity assets, we have seen a 120% increase We recognise there is an imperative in the number of enquiries per to ensure electricity is delivered Residential demand day through our DBYD service. reliably and in an energy efficient and management programs We currently receive 350 enquiries environmentally responsible manner, daily on average, with peaks of which is why we evaluate demand-side The CoolSaver and PeakSaver around 450. as well as construction options in the residential DM programs were network planning process. implemented in the Rooty Hill Zone Substation supply area and were Metering services The National Electricity Rules (NER) the first operational residential require distribution network service DM programs that Endeavour Endeavour Energy undertook providers to investigate demand Energy implemented. Trials into air 6,561,614 routine meter reads in management options when planning conditioning cycling and dynamic peak 2012‑13. In addition we supplied about major network upgrades by engaging pricing were conducted previously, and 191,000 out-of-cycle meter reads to in a thorough consultation process. their findings were used to implement facilitate requests for reconnections, This gives all interested parties the effective residential DM programs. disconnections and special reads. opportunity to submit ideas, and allows for cost-effective demand The CoolSaver program used air management and other system conditioners that were built to the new support options. Australian Standard to control energy consumption. The PeakSaver program The NER calls for a ‘screening test’ for allows customers to manage their all capital projects above $5 million to own consumption, and be financially determine if a non-network option is rewarded depending on how much credible and should be investigated energy they save.
TARGET DEMAND CAPITAL REDUCTION EXPENDITURE AREA DESCRIPTION (KVA) DEFERRED RESULTS OF INVESTIGATION
Warilla ZS Commercial, 1,500 $5 million Firm rating exceeded in 2014. residential areas Licence condition limits exceeded in 2028 DM not warranted at this stage
Kingswood ZS Commercial, 4,000 $23 million Firm rating exceeded in 2014. residential areas & Licence condition limits exceeded in 2030 major customer DM not warranted at this stage
Sherwood ZS Commercial, 1,500 $10 million Firm rating exceeded in 2013. residential areas Licence condition limits exceeded in 2030 DM not warranted at this stage
20 OUR NETWORK OPERATIONS 3 Exceptional National Energy Network connections customer service Customer Framework Endeavour Energy developed and certificated 788 contestable designs During 2012–13, our Customer The National Energy Customer for proposed changes to the network Interaction Centres (CICs) in Framework (NECF) legislative package and 798 contestable construction Huntingwood and Coniston commenced in NSW on 1 July 2013. projects representing approximately received 622,361 retail calls on Endeavour Energy invested much $75 million of non-cash capital behalf of Origin Energy under the time and effort to ensure we were contributions in 2012–13. Overall Transitional Services Agreement (TSA), prepared to operate within this new there were approximately 13,279 new which expired on 25 January 2013. regulatory framework. connections to the network. However The average answering time The NECF harmonises the activity remained weak across all major for retail calls was 36 seconds. jurisdiction‑based regulatory development categories, including The CICs also received 202,223 calls frameworks in relation to the sale residential and commercial/industrial relating to emergencies and outages and supply of energy, and Endeavour subdivisions. We have been working on our network. The average speed Energy supports its intent to improve closely with developers, particularly of answer for network calls was customer protection measures. UrbanGrowth (formerly Landcom), in 29 seconds. Our outage management support of the NSW Government’s aim Changes introduced include interactive voice response satisfied to increase residential land supply. 172,356 customers. • New contractual arrangements We have also been involved in for customers connecting to We received 3,689 complaints in negotiating supply arrangements the network 2012–13 compared with 4,461 the for a number of government previous year. The main complaints • Priority management of life support infrastructure projects, such as the related to planned and unplanned customers to ensure supply South West and North West rail lines, outages, property access issues and as well as upgrading of supply to • Increased lead times for notifying vegetation management. the Western line at Toongabbie and customers of planned outages numerous asset relocation projects for The CIC also launched a new ‘Network the ARTC freight rail expansion of the General Enquiries’ contact number • Acting on connect or disconnect Southern line. (133 718) in May 2013, to differentiate requests from retailers within given time frames emergency and outage enquiries. In the coal mining sector a number This followed the transition of the • Improved communication between of mines have upgraded their supply former ‘Retail Account Enquiries’ retailers and distributors. arrangements in preparation for phone number to Origin Energy. increasing production. The development of new data centres requiring substantial supply capabilities has continued, despite the reduction in activity of many other commercial development types.
Major network events On 23 and 24 February 2013, our network was hit with strong winds and heavy rain. The Kiama region was one the worst affected areas with parts of the township devastated by a coastal tornado. Heavy rain in the area had softened ground which meant large trees were brought down over mains and service lines. Trees across roads and dangers associated with wind gusts limited employees’ access to many of the hardest‑hit areas. Our crews worked throughout the day and into the night to restore power to over 44,000 customers. Another 300 customers had their power restored on 25 February. The cost to replace the assets damaged by the windstorm was almost $600,000. The Kiama region was hit by a coastal tornado which devastated a narrow, 200 metre- Our response to the incident was completed wide corridor. Extraordinary winds and heavy rain tested our crews as they worked to with no harm or injury to any of our people or restore power to more than 44,000 customers across our network franchise. The intensity the public. and ferocity of the tornado resulted in homes with roofs missing, walls blown out and many trees being brought to the ground.
Endeavour Energy Annual Performance Report 2012–13 21 4 PEOPLE
Endeavour Energy employees Endeavour Energy understands that to Employee Mobility Team It was a successful year for Endeavour achieve our business goals and deliver Energy apprentices at the 2013 NSW better value to our customers, we need The Employee Mobility Team Training Awards, with four being an engaged and capable workforce continues to support employees nominated for awards. In the South who reflect our values and culture. whose positions have been impacted Western Sydney Region, Shane by organisational change. A significant Worthington and Shawn Craig were During 2012–13, we continued to focus and achievement for the finalists for Apprentice of the Year, focus on implementing initiatives team this year was the successful and in the Illawarra and South East to improve productivity, to provide redeployment of employees affected NSW Region, Joel Ward was given the most efficient service possible by the sale of the retail business. an Industry Excellence Award in for customers. These improvements, Through Mix and Match we enabled the Supply Industry – Distribution along with the NSW Government’s 49 employees to be permanently category. Shimeon Sumner was recruitment freeze, meant that our appointed in the network-only awarded Certificate of Excellence – workforce decreased to 2,635 full‑time business, and provided proactive Apprentice of the Year for the Supply equivalent employees in 2012–13. career transition support. Industry category. This represents a decrease of 6.7% over the previous year. Apprentices In early 2013, we employed 28 new It was a successful year Recruitment apprentices, including one existing With the ongoing changing needs employee and one woman. They will for Endeavour Energy of the business, our focus during the complete a Distribution Electricity year was to support more internal Supply Industry trade qualification. apprentices at the recruitment across the organisation. 2013 NSW Training This work included the successful Meanwhile 71 apprentices completed Mix and Match program. their qualification during the year, Awards, with four being with most accepting permanent The development of a new agency employment in the organisation. nominated for awards. supplier panel for temporary We now employ 200 people in resources and the centralisation of the development programs, including management of temporary employees 187 apprentices. to the recruitment team were among major changes introduced to our recruitment processes. The new panel and centralised management will bring more transparency, efficiency and visibility in relation to our temporary labour recruiting. In addition, it will PERFORMANCE INDICATOR result in significant cost savings, with more competitive margins offered by Employee numbers 2008–2013 (based on full time equivalents) our new suppliers. 1.3% 4.0% 0.6% 2,925 -3.5% 2,871 2,888 2,824
-6.7%
2,635 2008–09 2009–10 2010 –11 2011–12 2012–13
22 OUR PEOPLE
Carmen Depares, Charline Coombes, Cherrie Sharpe and Ian Cambourne have changed careers 4 as part of our innovative Mix and Match Program.
Diversity Diversity at Endeavour Energy continues to focus on three themes: equality, multiculturalism and ability (disability awareness and action) within our Diversity Framework. Our Diversity workgroup has developed a five-year plan to embed our diversity principles and continue working towards government-set EEO group targets, which are detailed on page 79–80. We continued to work towards strengthening our indigenous employment connections, developing our ability awareness and improving our flexible working arrangements.
Recognising Endeavour Energy’s success depends upon attracting and retaining high calibre employees to deliver our business strategy and meet the needs and expectations of our customers. In 2012, long‑serving employees we congratulated Ann Smith, Electrical Fitter Mechanic from our Springhill Field Service Centre, on 25 years of continuous service. In 1987, Ann was the first female electrical apprentice of one At our annual Service Awards in of our predecessor organisations Illawarra County Council. Ann is pictured here receiving her August 2012, we recognised the award from Chief Operating Officer Rod Howard (left) and General Manager Network Operations contribution of 41 employees who had Scott Ryan (right). collectively contributed 1,185 years of service to meeting the energy needs of our community. A special presentation celebrated the achievement of our longest-serving employee, who had been with us for over 49 years, and three, five and 32 employees who had served for 45, 40 and 25 years respectively.
Our Diversity workgroup has developed a five- year plan to embed our diversity principles
Endeavour Energy employed 28 new apprentices in 2012-13. Amongst these new apprentices were (front row) Andrew Eisenhuth, Shane Hearne, Matthew Emerson, Karyn Downs, Jackson Dwyer, Jack Cromer, Thomas Hill and (back row) Ryan Dalley, Jaymee Dillon, Ryan Harwood, Reece Crofts, Brendan Mc Kay, Brett Gibbs (Trainer).
Endeavour Energy Annual Performance Report 2012–13 23 5 COMMUNITY
Public safety Through our Public Electrical Safety Graffiti service centres and substations to Awareness Plan we have targeted increase electronic monitoring to community groups most at risk from Endeavour Energy has been actively detect attempted site breaches. electrical hazards. involved in graffiti management Security patrols have been valuable in activities across the network franchise identifying illegal entry attempts. Work associated with the plan has area in 2012–13. Information is involved engaging emergency services gathered through our graffiti email and the construction industry to address, local council contacts and Community engagement embed specially developed training customer complaints phone service. Our communities expect us to deliver resources into their training programs, A total of 1,800 reports have been a safe and reliable electricity supply upgrading our community safety received and attended to by the to homes, businesses and regional website and running well-received company’s graffiti management centres – every day. Living up to this information evenings with the Master contractor, costing the organisation expectation requires careful planning, Builders’ Association. Once again we just over $215,000. and heeding community views are helped to educate primary school There has been a 10% decrease an important part of the process. students about electricity safety We plan community engagement to through the Electricity Safety Week in costs associated with this work compared to the previous three years, ensure there is minimal impact on program. This was taken up by 91% people’s day-to-day activities when we of schools in our franchise area. thanks to initiatives with Penrith and Parramatta City Councils, supplying undertake major works. We used radio messages to raise paint to community groups, and In 2012–13, major projects on which awareness about electricity hazards allowing murals to be painted on we engaged with local communities in relation to vegetation around power some of our assets. We seek to further included the upgrades of our: lines and preparing for the bushfire reduce these costs and are trialling season, ‘tingles’ in the home, DIY and anti-graffiti coatings on our Securemax • Existing Leabons Lane Zone staying away from power lines and fencing around substations. Substation in Seven Hills, originally underground cables. built in 1964 Copper theft • Existing transmission lines that ‘Black spot’ pole program supply Cattai Zone Substation Theft of cable remains an important Our black spot pole program aims to and the new Jordan Springs issue for Endeavour Energy – financially reduce vehicle impacts into power Zone Substation currently under and, more importantly, as a safety poles by identifying sites were fatalities construction. and serious accidents have occurred. concern. In July 2012 a person Poles are then relocated to improve suspected of attempting to steal As part of the Australian Energy public safety. In 2012–13 four sites were cable from a work site at Liverpool Regulator’s (AER) ‘Better Reform’ completed and a further three sites was severely injured when he cut into program, a consumer engagement were in construction at the end of the energised electricity cables. guideline has been developed to encourage network businesses to financial year at a cost of $703,090. During 2012–2013 30 incidents of engage in genuine and ongoing copper theft were reported, with consultation with customers. Overhead power line losses costed at $72,351. This is a ‘Plan ahead. Keep your substantial decrease in incidents over Endeavour Energy has developed a distance’ campaign the previous year, when 121 incidents significant program to improve our were reported, costing $158,150. engagement with customers over The need for construction industry time. Preliminary research conducted workers to plan ahead and manage We have placed advertisements in in early 2013 indicated that customers electricity hazards before starting local media and organised radio value price stability, safety and work was the focus of the campaign announcements to warn the public reliability. Our proposal to the AER to prevent overhead power line strike. of the dangers of stealing copper – to be submitted in May 2014 – will The campaign used local media and and to remind them to contact Crime be prepared on the basis of these billboards on major roads. Stoppers if they are aware of any customer priorities. cable theft. Our security systems are constantly upgraded at field
24 OUR COMMUNITY
The proactive action of our Bowenfels Field Support Centre Health and Safety Committee 5 members Lee Wiggins, Neil Charlton, Brendan Quince and Nathanael Hunter inspired a new public safety campaign highlighting the risks of tampering with power lines. Two billboards with the campaign message ‘Electricity Can Kill’ are highly visible on the Great Western Highway in the Blue Mountains and Lithgow.
Customer consultative at Ausgrid, Endeavour Energy and In July 2013, we made a commitment Essential Energy need to be assessed. to continue the partnership for another committee three years from 1 July 2013. During 2012–13, we provided $41,000 We have run our Customer to our community partners, which Consultative Committee successfully included support for Australia Day, Investment in for over 20 years. Electric Energy Society of Australia and the community In late 2012 we refreshed membership the Western Sydney and Illawarra TAFE of the committee to align its Student Excellence Awards. Since its launch in July 2004, our operations with a network-only workplace giving program I care! business. University of Wollongong has donated almost $1.7 million to 11 employee-selected charities. In 2012–13, the committee met twice Power Quality and Employees can make pre-tax to discuss Endeavour Energy’s Reliability Centre donations to the program and their strategic priorities, our 2013–14 Endeavour Energy has been a partner donations are matched dollar‑for‑dollar network prices, the National Energy of the Power Quality and Reliability by Endeavour Energy, up to $150,000 Customer Framework and delivery of Centre since it was established at the per year. Currently, 8.5% of employees our network investment program. University of Wollongong in 1996. Key participate in I care! areas of research include power quality Community partnerships issues that can affect the performance of the network and equipment, During 2012–13 a new Networks reliability of the distribution network, NSW Community Partnership Policy and integration of renewable energy introduced set out the key criteria into existing networks. under which community partnerships
Multicultural policies and services program Endeavour Energy’s corporate values commit the Employees organisation to acknowledging and valuing cultural diversity across our stakeholder base. This commitment is We are committed to fostering an environment in which evident in our delivery of customer services, management diversity in the workplace is respected and valued as a of employees and interactions with suppliers, source of new ideas and perspectives. This commitment communities and other stakeholder groups. includes encouraging diversity across all areas of employment such as recruitment, remuneration, training, Customers development and career progression and accommodating the needs of employees in their observance of religious We strive to ensure that appropriate services are offered duties and cultural obligations while at work. to our multicultural customers and that customers are not disadvantaged because of their cultural backgrounds. Please see page 23 for more information on Endeavour Energy’s diversity policy. Data collected from the 2010 Census indicates that 31% of people living in our franchise area – Sydney’s Greater Focus for 2013–14 West, the Blue Mountains, Southern Highlands, the Illawarra and Shoalhaven – were born outside Australia. • Action Endeavour Energy Diversity Plan to further To ensure we offer the same level of service to everyone, embed our diversity principles and work towards we provide an interpreter service that allows customers to government-set EEO group targets. speak their own language. • Continue to raise awareness of the interpreter service As part of our efforts to improve access to information and availability of translated safety information for for customers from non‑English‑speaking backgrounds, targeted areas of our franchise area. based on a benchmarking study conducted in 2011–12, • Develop new electricity safety signage with we now include the interpreter information on all translated information. significant customer communication materials we produce and have it prominently displayed on our ‘Contact us’ page on our website.
Endeavour Energy Annual Performance Report 2012–13 25 6 ENVIRONMENT
Strategy Environmental Greenhouse In line with our Environment Policy, performance We met our commitments Endeavour Energy established a to state‑based and national three ‑year Environment Strategy Environmental compliance environmental schemes again in in 2011–12. We again faced no fines or 2012–13. The schemes aim to reduce prosecutions in 2012–13. Our strategic greenhouse gas emissions or promote The strategy aims to create value for focus on risk reduction resulted energy efficiency among businesses the organisation through the efficient in a significant decrease in the and consumers. use of resources, reduction of risk number of incidents reported to the and engagement with stakeholders. In addition we complied with the regulator under the Protection of the Implementation continued in Australian Government’s Large Environment Operations Act 1997. 2012–13, with the following significant Scale Renewable Energy Target In 2012–13, two incidents were defined achievements: and Small‑scale Renewable as ‘notifiable’ under the legislation Energy Scheme, the Queensland compared with five the previous • We established an integrated Government’s 15% Gas Scheme and year. Each has been investigated and training and communications plan. the NSW Energy Savings Scheme. To reinforce key messages, training corrective actions implemented. and communication initiatives Following the closure on 1 July 2012 The Environment Protection Authority are now aligned under a common of the NSW & ACT Greenhouse Gas (EPA) is currently investigating one of theme each quarter. As a result Reduction Schedule, we completed the ‘notifiable’ incidents related to the environmental awareness has the final surrender of certificates disposal and transport of drilling mud improved among field employees. and Benchmark Statement in by an Endeavour Energy subcontractor. September 2012. Endeavour Energy’s We are cooperating with the EPA and • The Environmental Impact commitments under GreenPower were have taken steps to mitigate this risk. Assessment process for minor similarly completed in 2011–12. works was revised to strengthen key In addition to the two reportable controls and continue to meet our incidents, a further 66 minor Carbon policy obligations under the Environmental incidents were reported internally. Endeavour Energy’s Carbon Planning and Assessment Act 1979. Environmental incidents decreased by Management Policy aims to eliminate • We developed and implemented 18% compared to 2011–12. 20,000 tonnes of carbon from our a risk-based program of operations by 2016. In 2012–13, We continue to report illegal dumping environmental performance audits the business continued to identify activities to align our efforts with the in 2012‑13. The program was closely and assess opportunities to NSW Government’s 10-year strategic aligned with the training and reduce emissions. business plan, NSW 2021: A plan to communications plan. make NSW number one. During the The detailed design and tender for year we worked in partnership with the Springhill Field Service Centre Regional Illegal Dumping Squads redevelopment was completed. established by the EPA and local Designed to achieve a 4.5 star councils. Incidents were jointly NABERS1 rating when constructed, investigated and actions taken to it will commence in 2013–14 and be prevent future illegal dumping. completed the following year.
1 NABERS is a national program managed by the NSW Office of Environment and Heritage. NABERS tools measure the environmental impact of a building on a rating scale from 1 to 6 stars.
26 ENVIRONMENT
Endeavour Energy is committed to the sustainable management of all waste including the 6 continual reduction of waste disposed to landfill and increasing the quantities of materials reused and recycled so that future generations will be able to meet their own needs.
PERFORMANCE INDICATOR Number of environmental incidents
“Endeavour Energy 5 is considered a benchmark company 2 2 2 for environmental 1 protection, spill response and ethical business practices” 2008–09 2009–10 2010 –11 2011–12 2012–13 Good Enviropacific Services Detailed design was similarly completed for a five-year plan to upgrade the heating, ventilation and air conditioning system of the Huntingwood head office. The first stage of works – replacement of the cooling towers – will commence in early 2013–14, and when complete will result in significant water and energy savings. A number of energy efficiency works were also completed at Field Service Centres, including LED lighting upgrades and improvements to energy and environment systems.
Waste management and minimisation Our strategic focus on resource efficiency continued in 2012–13 with the diversion of 2035 tonnes of materials from landfill. The extension of the timber pole recycling program to the Southern Region in early 2012 contributed to the diversion of 498 tonnes of valuable timber resources across the regions. A further 372,092 litres of transformer oil were recycled in 2012–13. With a view to identify further opportunities to increase recycling and reduce costs, a comprehensive waste audit commenced in 2012–13. Over the next year, we will be working to evaluate and implement the cost Endeavour Energy is committed to acting with due diligence in preventing accidental contamination effective recommendations. of land and water and in minimising harm to the environment in the event that contamination should occur. The images above show the clean-up of soil contamination at Termeil on the NSW South Coast undertaken by Enviropacific Services on behalf of Endeavour Energy. The remediation resulted in the improvement of the environmental and aesthetic values of the site as well as removing the risk of further localised contamination in future.
Endeavour Energy Annual Performance Report 2012–13 27 7 GOVERNANCE
Endeavour Energy is a State Owned and common Chief Executive includes the CEO, Group Executive Corporation subject to a number of Officer (CEO). The three network Managers, the Chief Operating Officer statutory and legislative requirements. companies operate under a shared from each network company and the Our Board has overall responsibility Group management model known as Board Secretary. for corporate governance at Networks NSW. Each business remains The CEO reports to the joint Board, Endeavour Energy. focused on the objectives of the State which in turn is accountable to the two Owned Corporations Act, including: voting shareholders, the NSW Treasurer Changes to governance and • operating a safe, reliable and management structure and the NSW Minister for Finance, who sustainable network each hold one share in each of the three In 2012 the NSW Government • operating at least as efficiently businesses for and on behalf of the NSW announced plans to reform the three as any comparable privately Government. The Portfolio Minister of NSW electricity network companies owned business each of the network companies is the – Endeavour Energy, Ausgrid and NSW Minister for Energy. Essential Energy – to generate • maximising the value of the company $400 million in efficiencies over four to the State The joint Board is responsible for setting years to fund its energy rebate scheme • balancing commercial, social, the overall strategic direction and for low income households and families. environmental and customer performance targets, and monitoring expectations. the implementation of the strategy by Endeavour Energy, Ausgrid and Networks NSW consists of a shared the three organisations. The CEO leads Essential Energy continue to operate the ELG in delivering the approved as separate legal entities but are Group management structure. The Executive Leadership Group (ELG) strategy and achieving the performance managed by a joint Board of Directors targets set by the joint Board.
Endeavour Energy’s governance and organisational structure (as at 30 June 2013)
Board of Directors
EXECUTIVE LEADERSHIP GROUP Chief Executive Officer Board Secretary ESSENTIAL ENERGY Vince Graham
AUSGRID Group Group Executive Group Executive Chief Operating Officer Chief Financial Officer Network Strategy People & Services Rod Howard
Chief Engineer General Manager General Manager General Manager General Manager General Manager General Manager Network Network Finance Health, Safety Information, People Development Operations & Compliance & Environment Communication & Service and Technology Jim Battersby Ty Christopher Scott Ryan Michael Ghattas David Neville Ian Robinson Bruce Rowley • Primary systems • Portfolio • Regional • Finance • Operational • Strategy, • Human resources • Secondary management operations • Governance safety architecture & • Corporate affairs governance systems • Project • System control & business risk • Public safety • Customer service • Asset & development • Operational • Network program • Infrasture & operations • Procurement & network planning • Major projects performance regulation • Safety logistics management management • Business systems • Network data • Capital programs • Legal • Property & fleet and performance • Network • Health & • Vendor • Maintenance • Strategy & • Internal audit • Electrical safety & vegetation connections compliance wellbeing management & authorisations • Environment
Integrated suite of ethical principles Code of Conduct Statement of Business Ethics Sets out the principles and values by which the Board Outlines Endeavour Energy’s expectations of private sector service and employees of Endeavour Energy are expected to act providers in conducting business with Endeavour Energy
28 GOVERNANCE
The project team responsible for building the new $33 million Schofields Zone Substation included Christian Abran 7 (Project Manager (Subs)), Steve Semmens (Project Manager (Civil)), Ben Maude (Project Supervisor (Contractor)) and Satnam Johal (Techologist – Protection). The new substation provides a safe, reliable and sustainable electricity supply for families and businesses in Schofields, Riverstone and Quakers Hill. Part of the North West Growth Centre, the Schofields Zone Substation will meet the increased capacity required by 6,300 new homes, two new schools and commercial development planned for the Alex Avenue precinct in coming years.
Board of Directors (during 2012–13)
Roger Massy-Greene Philip Garling Laura Reed BSc BE (Hons) MBA, FAICD BBuild, FAIB, FAICD, FIE (Aust) BBus, MBA, FCPA Chairman Non -Executive Director Non -Executive Director Term: 1 July 2012 to 30 June 2015 Term: 1 January 2013 to Term: 1 January 2013 to Chairman of the Board from 1 July 2012 31 December 2015 31 December 2015 Chairman, Nominations Committee Chair, Safety, Human Resources Member, Audit and Risk Committee and Environment Committee Member, Audit and Risk Committee Other Directorships: (from 25 March 2013) Member, Safety, Human Resources • Ausgrid, Director Other Directorships: and Environment Committee • Essential Energy, Director • Ausgrid, Director, • ATCO Australia Pty Limited, Director Other Directorships: • Essential Energy, Director • ATCO Gas Australia GP Pty Limited, • Ausgrid, Chairman • Australian Renewable Fuels Limited, Director • Essential Energy, Chairman Chairman • MAPS Group, Director • Eureka Capital Partners Pty Ltd, • Downer EDI Limited, Director Chairman • Water Polo Australia Limited, Director Vince Graham • Salvation Army’s Red Shield Appeal • Biofuel Producers Limited, Director BE (Civil), Grad Dip Mgmt, FAICD Committee Sydney, Chairman • Charter Hall Limited, Director Chief Executive Officer and • Eureka Benevolent Foundation, • Charter Hall Funds Management Executive Director Chairman Limited, Director • OneVentures Pty Ltd, Director Term: Initial appointment as • The Hunger Project Australia, Penny Le Couteur Chief Executive Officer 1 July 2012 to 31 December 2012. Following a Director BSc (Hons), MAICD recruitment process, appointed as Peter Dodd Non -Executive Director Chief Executive Officer December 2012 PhD, MSc MCom, BCom, Dip Ed Term: 1 July 2012 to 30 June 2013 Ex-officio member Audit and Risk Non -Executive Director Chair, Safety, Human Resources Committee and Safety, Human and Environment Committee Resources and Environment Committee Term: 1 July 2012 to 31 December 2013 (from 1 July 2012 to 25 March 2013) Other Directorships: Chair, Audit and Risk Committee Member, Audit and Risk Committee • Ausgrid, CEO & Executive Director Member, Nominations Committee Member, Nominations Committee • Essential Energy, CEO & Other Directorships: Note: Term expired on 30 June 2013 – Executive Director • Ausgrid, Director Did not seek re-appointment • Graham Management Services Pty • Essential Energy, Director Limited, Director (inactive) Other Directorships: • The Centre for Independent Barbara Ward Studies Ltd, Director • Ausgrid, Director • Peter Dodd Pty Ltd, Director • Essential Energy, Director BEc, MPol Econ MAICD • Collgar Wind Farm Pty Ltd, Director • Aurora New Music Inc, Director Non -Executive Director • Bennelong Forty Two Pty Ltd, • CWF Holding Pty Ltd, Director Term: 1 July 2012 to 31 December 2012 • Energy Industries Superannuation Director Scheme, Director • The Song Company, Director Note: Term expired on 31 December • Investa Listed Funds • WorkCover Tasmania, Director 2012 – Did not seek reappointment Management Limited, Director • Macquarie University Group of companies, Director
Board and Board Committee meetings held in 2012–13 BOARD OF SAFETY, HUMAN DIRECTORS’ AUDIT & RISK RESOURCES & MEETINGS MEETING COMMITTEE ENVIRONMENT NOMINATIONS HELD A B A B A B A B R Massy-Greene 16 16 6 6 2 2 3 3 P Dodd 16 16 6 6 – – 3 3 P Garling 6 5 – #1 2 2 – – P Le Couteur 16 15 3 3 2 2 3 3 L Reed 6 6 3 3 – – – – B Ward 10 10 3 3 – – – 3 V Graham 15 14 *6 6 *2 2 – –
A Indicates number of meetings held during the period the Director was entitled to attend B Indicates the number of meetings attended by the Director during the period * the CEO is an ex-officio member of the Audit & Risk and Safety, Human Resources and Environment Committees # Attended meetings while not a member of the Committee Endeavour Energy Annual Performance Report 2012–13 29 7 Board of directors Audit and Risk Committee Director indemnity and insurance The Energy Services Corporations The Audit and Risk Committee meets Act 1995 (NSW), the State Owned five times per year and ensures that Under the State Owned Corporations Corporations Act 1989 (NSW), and audit and business risk matters, Act 1989 and the Company’s the Constitution of Endeavour Energy including compliance, are dealt with Constitution, Endeavour Energy may, address the membership of the Board in an independent manner. The with the approval of its Shareholder of Endeavour Energy. committee’s responsibilities cover Ministers, indemnify its Directors matters relating to the financial affairs against certain liabilities incurred in the All members of the Board of and business risks of Endeavour course of their duties. This indemnity Directors, with the exception of the Energy, internal and external audits, does not cover the Director if the CEO, are appointed by the voting risk management, compliance and liability arises out of conduct involving shareholders for terms of up to five fraud prevention. In addition, the lack of good faith. Endeavour Energy’s years. Appointments may be renewed committee examines any other matters non-executive Directors have been by the voting shareholders. The voting referred to it by the Board. granted indemnity in accordance with shareholders may appoint the other Shareholder approval and the NSW directors at their discretion. Safety, Human Resources and Treasury State Owned Corporation Each non-executive director’s Environment Committee Indemnity Policy. Endeavour Energy remuneration is determined by the The Safety, Human Resources and also has in place a Directors’ and voting shareholders and is paid out of Environment Committee meets four Officers’ liability and professional Endeavour Energy’s funds. The Chief times per year and assists the Board indemnity insurance policy. Executive Officer is not entitled to in fulfilling its responsibilities with additional remuneration for being an regard to work health and safety Ethics and conduct executive director. and environmental practices, and to discharge the Board’s responsibilities Endeavour Energy’s Code of Conduct Role and responsibilities of oversight and corporate governance states the corporate values and behaviours expected of employees. The Board is responsible for the in relation to human resources and environment matters. In addition, Supporting the code is the Statement corporate governance of Endeavour of Business Ethics which sets out the Energy. The Board’s accountabilities the Committee examines any other matters referred to it by the Board. business principles for our dealings include setting the strategic direction, with suppliers. Both documents are establishing performance targets available on our website. as set out in the Statement of Nominations Committee Corporate Intent, and monitoring The Nominations Committee meets On 27 February 2013, the Board the achievement of those targets. as required and assists the Board approved the revised Code of In carrying out its responsibilities, in fulfilling its responsibilities with Conduct. the Board undertakes to serve the regard to Director appointments and A key initiative supporting our interests of voting shareholders, as well reappointments. The Nominations ethical culture is the five-year Ethics as employees, suppliers and customers Committee consists of the Chairman Communication and Engagement and the broader community, honestly, of the Board and two non-executive Strategy developed to make our fairly, diligently and in accordance with directors. Membership is subject corporate values meaningful to applicable laws. to rotation so that non-executive directors do not participate in the employees in their everyday work, The Board of Directors operates at all review of their own reappointment. encourage a culture of personal times in accordance with its Charter accountability for behaviour, which is designed to complement Board of Directors and provide tools to apply in the Constitution of Endeavour ethical dilemmas. A new governance and management Energy, the Directors’ Legal Duties structure commenced on 1 July 2012 The Year 4 Program (2012–13) of the and Obligations Manual, and the with a common Chairman, Directors strategy included the training of Company’s Code of Conduct. and CEO replacing the three Chairs, 159 leaders to deliver ethics awareness Board committees Directors and CEOs at Ausgrid, sessions to employees. One hundred Endeavour Energy and Essential percent of available employees The role of the Board is to provide Energy. As a result, the term of the received the training, which focused on strategic guidance for the corporation former non‑executive directors our value of safety excellence and our and effective oversight of its concluded on 30 June 2012. Ms Penny anti-corruption initiatives. management. In undertaking this Le Couteur was reappointed to serve Endeavour Energy’s Code role, the Board has established the a further term until 30 June 2013. following committees: of Conduct is available at www.endeavourenergy.com.au.
30 GOVERNANCE 7 Fraud risk register Compliance Endeavour Energy’s Fraud Risk Our Strategic Compliance Plan 2011–13 Register is reviewed and updated is structured around the four key focus throughout the year as the business areas of commitment, implementation, environment changes. An independent monitoring and measurement and review of the Fraud Risk Register was continual improvement from Australian conducted in July 2012. The revised Standard AS 3806-2006: Compliance register formed the basis of the Programs. The plan’s status was company-wide Fraud Risk Assessment regularly reported to the Audit & Risk conducted between December 2012 Committee throughout the year and and February 2013. a new plan for the 2013–15 reporting period commenced. Key initiatives in our Fraud and Corruption Control Plan (FCCP) 2012–2014 (approved by the Internal audit Audit and Risk Board Committee The Board and Executive Leadership in May 2012) drive the continuous Team are committed to the operation update of the register. of an objective and independent internal audit function. Internal Audit Conflicts of interest assists management to achieve our statutory and business objectives To ensure their independent status, by adopting a disciplined approach all directors of Endeavour Energy are to evaluating and improving risk subject to the statutory duties and management, controls and governance prohibitions in relation to conflicts of processes. During the year we interest. We rely on the integrity of the completed 28 internal audits across Board to identify and disclose issues the organisation, with no serious which may give rise to any conflict issues identified. of interest. The Board Secretary maintains the Register of Disclosures which is reviewed, as a minimum, every External audit six months. The Auditor-General of New South Wales provides independent external Insurance audit services through the Audit Office of New South Wales. It does not Endeavour Energy reviews the provide other services to Endeavour adequacy of insurance policy Energy. The Audit and Business Risk coverage and limits during each Committee reviews the NSW Audit annual insurance renewal process Office Client Service Plan, issues raised and ensures all participating in the Annual Management Letter markets meet acceptable insurer and the results of the annual audit of security requirements. financial statements.
Endeavour Energy Annual Performance Report 2012–13 31 78 MANAGEMENT DISCUSSION & ANALYSIS
Performance The better than expected profit result Balance sheet was primarily due to: Endeavour Energy is required to Endeavour Energy’s total assets submit a Statement of Corporate • lower operating expenditure with increased by $464.3 million compared Intent (SCI) to NSW Treasury. The the benefits of savings resulting to the prior year. The major SCI is an agreement with the NSW from continued focus on targeted contributing factor was an increase in Government which documents the programs to reduce costs and property, plant and equipment in the objectives, strategies and obligations improve efficiencies. In addition, amount of $499.8 million resulting from by which the organisation is expected employee benefit actuarial increased capital expenditure. to operate. The SCI sets financial assessment outcomes resulted in a Return on assets, calculated as EBIT targets and sets clear limits on the decrease in employee entitlements, divided by the average asset base, scope of activities the organisation primarily driven by an increase in the decreased marginally from 10.6% in may undertake. discount rate. 2011–12 to 10.3% at 30 June 2013. In 2012–13 Endeavour Energy • lower borrowing costs resulting Total liabilities increased by maintained strong performance, from reduced borrowings (in line $328.8 million compared to previous achieved through continued focus with reduced capital expenditure year driven by an increase in on business fundamentals, financial purchases) and lower funding borrowings (inclusive of discounts / discipline and corporate governance. costs; and premiums) of $355.7 million, primarily • higher capital contributions due to the need to fund the capital Profit results expenditure program, and increased • partially offset by an unfavourable deferred tax liability outcomes totalling Endeavour Energy’s profit before tax Gross Margin. result was $437.9 million, exceeding $54.1 million. Partly offsetting this the 2012–13 SCI target of $427.9 million were decreases in provisions totalling by $10.0 million, despite lower than $45.8 million driven by EISS defined budget Network revenue driven by benefit superannuation and employee reduced energy consumption. entitlement actuarial assessment outcomes (driven by an increase in the discount rate), and reduced balances for derivative financial liabilities totalling $17.4 million.
2011–12 2012–13 2012–13 VARIATION FINANCIAL RESULTS RESULT SCI RESULT TO SCI
Earnings before interest, tax, depreciation & 755.7 820.7 821.0 0.3 amortisation (EBITDA) ($m)
Earnings before interest and tax (EBIT) ($m) 585.9 638.3 636.6 -1.7
Operating profit before tax ($m) 381.3 427.9 437.9 10.0
Operating profit after tax ($m) 265.5 299.5 306.5 7.0
Dividend ($m) 186.6 209.7 209.5 -0.2
Total Distribution (Dividend + Income Tax Expense) ($m) 302.3 338.0 340.9 2.9
Return on assets (%) 10.6 10.2 10.3 0.1
Return on equity (%) 19.8 20.1 20.2 0.1
Capital Expenditure ($m) 634.3 669.8 577.7 -92.1
32 MANAGEMENT DISCUSSION AND ANALYSIS
Contract Inspector Chris Jarett was recently nominated for an award by Electricity Safety 8 Inspector Grant Gillard for his ability to coordinate the fast track replacement of two live feeder cables that where exposed and damaged.
Return on equity, calculated as profit The dividend is in line with the 2012–13 is updated annually and reflects plans after tax divided by average equity, SCI target, and represents an increase and strategies which: are aligned was 20.2% at 30 June 2013. This result of $22.9 million compared to the to customer and technical drivers; increased from the 2011–12 outcome prior year. improve long-term network asset of 19.8%, with a 15.4% increase in profit values; and produce optimal returns to after tax compared to an increase of shareholders. The plan sets priorities 13.2% in average equity. Capital expenditure and summarises the investment in the Capital expenditure for the 2012–13 network required to maintain ongoing financial year was $577.7 million, network capability, consistent with a Cash flows $92.1 million below the 2012–13 SCI ‘best in class’ network asset manager. Cash and cash equivalents at the target and a decrease of $56.6 million In 2012–13, Endeavour Energy’s end of the financial year increased compared to the prior year. The network capital expenditure achieved by $1.5 million compared to the capital program is underpinned by 97% of network program milestones prior year. Net cash flows from Endeavour Energy’s Strategic Asset through a more efficient delivery of the operating activities for the year Management Plan (SAMP). The SAMP program than originally forecast. were $415.4 million, an increase of $31.8 million compared to 2011–12. Net cash outflows from investing activities for the year were $576.7 million, compared to $607.2 million in the prior year, driven by lower payments for property, plant and equipment. Net cash flows from financing activities for the year were $162.8 million, compared to $219.2 million in the prior year, driven by less proceeds from borrowings with reduced capital expenditure payments and higher cash inflows from operating activities.
Debt Balance sheet debt increased by $354.6 million compared to the prior year, primarily due to the requirement to fund the capital expenditure program. The gearing ratio, calculated as debt divided by debt plus equity, increased marginally from 67.4% at 30 June 2012 to 67.9% at 30 June 2013. This result was driven by a slightly lower percentage increase in debt plus equity compared to the percentage increase in debt.
Shareholder return The directors declared a final dividend of $209.5 million, determined based on the Government’s dividend cap policy for the energy sector of the State Owned Corporations and negotiations Endeavour Energy’s Demand Management/Network Utilisation Manger Frank Bucca and Plumpton Marketplace Operations Manager Barry Thompson working at saving electricity and money as between NSW Treasury on behalf part of the Rooty Hill demand management program. The success of this program, which included of the shareholders and Endeavour Plumpton Marketplace’s significant demand reductions, has enabled Endeavour Energy to defer energy prior to 30 June 2013. indefinitely the construction of the $23 million North Glendenning Zone Substation.
Endeavour Energy Annual Performance Report 2012–13 33 9 FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Independent Auditor’s Report 35 Statement of Comprehensive Income 36 Statement of Financial Position 37 Statement of Changes in Equity 38 Statement of Cash Flows 39 Notes to the Financial Statements 40 Statement by Directors 76
34 FINANCIAL STATEMENTS 9
INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 30 JUNE 2013
Endeavour Energy Annual Performance Report 2012–13 35 9
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013
2013 2012 Note $m $m
Revenue 2 1,492.8 1,476.9 Expenses excluding finance costs 3(a) (856.2) (891.1) Interest and finance charges paid/payable 3(b) (198.7) (204.6)
Profit before income tax 437.9 381.2 Income tax expense 4 (131.4) (115.7)
Profit for the year 306.5 265.5
Other comprehensive income Items that will not be reclassified subsequently to profit or loss Superannuation defined benefits actuarial gains/(losses) 23(b) 37.8 (97.1) System asset revaluation 9 – 267.3 Revaluation of land and buildings 9 16.1 32.4 Income tax relating to items that will not be reclassified 4 (16.1) (60.8)
37.8 141.8
Items that will be reclassified subsequently to profit or loss Effective portion of changes in fair value of cash flow hedges 1.0 (4.5) Income tax relating to items that will be reclassified 4 (0.3) 1.4 0.7 (3.1)
Total comprehensive income for the year 345.0 404.2
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes
36 FINANCIAL STATEMENTS 9
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013
2013 2012 Note $m $m
ASSETS Current assets Cash and cash equivalents 6 0.4 – Trade and other receivables 7 240.1 264.5 Inventories 26.6 24.6 Derivative financial instruments 8,15(g) 0.6 13.0
267.7 302.1 Assets classified as held for sale 4.8 4.8
Total current assets 272.5 306.9
Non-current assets Derivative financial instruments 8,15(g) 0.3 0.7 Property, plant and equipment 9 6,055.8 5,556.0 Intangible assets 10 72.2 72.9
Total non-current assets 6,128.3 5,629.6
Total assets 6,400.8 5,936.5
LIABILITIES Current liabilities Bank overdraft 6 – 1.1 Trade and other payables 11 201.2 209.3 Borrowings 12 513.5 457.3 Derivative financial instruments 8,15(g) 0.4 16.7 Current tax liabilities 47.1 54.8 Provisions 13 386.5 354.2 Other current liabilities 14 11.9 12.8
Total current liabilities 1,160.6 1,106.2
Non-current liabilities Borrowings 12 2,844.9 2,545.4 Deferred tax liabilities 5 592.3 538.2 Provisions 13 211.7 289.8
Derivative financial instruments 8,15(g) 5.1 6.2
Total non-current liabilities 3,654.0 3,379.6
Total liabilities 4,814.6 4,485.8
Net assets 1,586.2 1,450.7
EQUITY Contributed equity 335.0 335.0 Reserves 24 928.3 916.6 Retained earnings 322.9 199.1
Total equity 1,586.2 1,450.7
The above Statement of Financial Position should be read in conjunction with the accompanying notes
Endeavour Energy Annual Performance Report 2012–13 37 9
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013
Asset Hedge Contributed Revaluation Revaluation Retained Equity Reserve Reserve Earnings Total Note $m $m $m $m $m
Balance at 1 July 2011 335.0 711.2 (1.1) 188.1 1,233.2 Profit for the year – – – 265.5 265.5 Other comprehensive income Superannuation defined benefits actuarial gains/(losses) 23(b) – – – (68.0) (68.0) System asset revaluation 9 – 187.1 – – 187.1 Revaluation of land and buildings 9 – 22.7 – – 22.7 Effective portion of changes in fair value of cash flow hedges – – (3.2) – (3.2)
Total other comprehensive income – 209.8 (3.2) (68.0) 138.6
Transactions with owners recorded directly in equity Dividends provided for or paid – – – (186.6) (186.6) Transfers to retained earnings, net of tax – (0.1) – 0.1 –
Total transactions with owners – (0.1) – (186.5) (186.6)
Balance at 30 June 2012 335.0 920.9 (4.3 ) 199.1 1,450.7 Profit for the year – – – 306.5 306.5 Other comprehensive income Superannuation defined benefits actuarial gains/(losses) 23(b) – – – 26.5 26.5 Revaluation of land and buildings 9 – 11.3 – – 11.3 Effective portion of changes in fair value of cash flow hedges – – 0.7 – 0.7
Total other comprehensive income – 11.3 0.7 26.5 38.5
Transactions with owners recorded directly in equity Dividends provided for or paid – – – (209.5) (209.5) Transfers to retained earnings, net of tax – (0.3) – 0.3 –
Total transactions with owners – (0.3) – (209.2) (209.5)
Balance at 30 June 2013 335.0 931.9 (3.6) 322.9 1,586.2
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
38 FINANCIAL STATEMENTS 9
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2013
2013 2012 Note $m $m
Cash flows from operating activities: Receipts from customers (inclusive of GST) 1,601.9 1,554.4 Payments to suppliers and employees (872.9) (890.8) Interest received 0.2 0.1 Interest paid (212.4) (197.5) Income taxes paid (101.4) (82.6)
Net cash inflow from operating activities 22 415.4 383.6
Cash flows from investing activities: Proceeds from sale of property, plant and equipment 10.7 3.8 Payments for property, plant and equipment and intangible assets (587.4) (611.0)
Net cash outflow from investing activities (576.7) (6 07.2)
Cash flows from financing activities: Proceeds from borrowings 349.4 376.3 Repayment of borrowings – (0.3) Dividends paid (186.6) (156.8)
Net cash inflow from financing activities 162.8 219.2
Net increase (decrease) in cash and cash equivalents 1.5 (4.4) Cash and cash equivalents at the beginning of the year (1.1) 3.3
Cash and cash equivalents at the end of the year 6 0.4 (1.1)
The above Statement of Cash Flows should be read in conjunction with the accompanying notes
Endeavour Energy Annual Performance Report 2012–13 39 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1 Significant (iii) Functional and In relation to employee benefit Accounting Policies presentation currency related provisions, a 3.5% expected The financial statements are presented increase rate has been assumed for (a) Reporting entity in Australian dollars. The amounts the purposes of actuarial valuations, however the NSW Government Wages Endeavour Energy is a New South shown in the accounts have been Policy requires that any salary increase Wales statutory State Owned rounded to the nearest tenth of a above 2.5% be offset by appropriate Corporation (for profit) established million dollars, unless otherwise stated. productivity savings made by under the Energy Services The Corporation is exempt from Part 2 the Corporation. Corporations Act 1995. paragraph 5 of the Public Finance and Audit Regulation 2010. The financial statements were (e) Income tax authorised for issue by the Directors Endeavour Energy is exempt from on 13 September 2013. (d) Use of estimates and judgements federal income tax under the Income Tax Assessment Acts. However, The preparation of financial (b) Statement of compliance Endeavour Energy is subject to the statements require management to The financial statements comprise a National Tax Equivalent Regime make judgements, estimates and general purpose financial report which which is based on the Income Tax assumptions that affect the application has been prepared in accordance Assessment Acts. Tax equivalents are of policies and reported amounts with Australian Accounting Standards payable to the Office of State Revenue. of assets and liabilities, income (AASBs) (including the Australian and expenses. The estimates and Income tax on the profit or loss for the Accounting Interpretations) adopted associated assumptions are based year comprises current and deferred by the Australian Accounting on historical experience and various tax. Income tax is recognised in the Standards Board, the requirements other factors that are believed to be profit or loss except to the extent that of the Public Finance and Audit Act reasonable under the circumstances, it relates to items recognised directly 1983, the Public Finance and Audit the results of which form the basis of in equity. Regulation 2010, and the State Owned making the judgements about carrying Corporations Act 1989. The financial Current tax is the expected tax values of assets and liabilities that statements of the Corporation payable on the taxable income for are not readily apparent from other also comply with International the year, using tax rates enacted or sources. Actual results may differ from Financial Reporting Standards substantively enacted at the statement these estimates. (IFRSs) and interpretations adopted of financial position date, and any by the International Accounting The estimates and underlying adjustment to tax payable in respect of Standards Board. assumptions are reviewed on an previous years. ongoing basis. Revisions to accounting Deferred tax is provided using the (c) Basis of preparation estimates are recognised in the period statement of financial position liability in which the estimate is revised if the method, providing for temporary (i) Basis of measurement revision affects only that period or in differences between the carrying The financial statements are prepared the period of the revision and future amounts of assets and liabilities on the historical cost basis except that periods if the revision affects both for financial reporting purposes the following assets and liabilities are current and future periods. and the amounts used for taxation stated at their fair value: derivative Judgements made by management purposes. The following temporary financial instruments, provisions and in the application of AASBs that have differences are not provided for: initial property, plant and equipment. significant effect on the financial recognition of goodwill and initial (ii) Comparative figures statements and estimates with a recognition of assets or liabilities that significant risk of material adjustment affect neither accounting nor taxable When the presentation or classification in the next year are included in the profit. The amount of deferred tax of items in the financial statements is following notes: provided is based on the expected amended in respect of changes in the manner of realisation or settlement current year, comparative amounts are Note 1(f)(iv) – Unread meters of the carrying amount of assets and reclassified to enhance comparability Note 5 – Deferred tax assets/liabilities liabilities, using tax rates enacted or unless the reclassification is substantively enacted at the statement impracticable. No material amounts Note 1(k)(i), 9 – Property, plant and of financial position date. have been reclassified during the equipment current or prior period. A deferred tax asset is recognised only Note 13 – Provisions to the extent that it is probable that Note 15 – Financial instruments future taxable profits will be available against which the asset can be utilised. Note 19 – Contingent liabilities and Deferred tax assets are reduced to the contingent assets extent that it is no longer probable Note 23(d) – Superannuation defined that the related tax benefit will benefits plan - valuation method and be realised. principal actuarial assumptions.
40 FINANCIAL STATEMENTS 9
1 Significant (iv) Unread meters (i) Inventories Accounting Policies At reporting date, Endeavour Energy Inventories are stated at the lower continued accrues an estimate of the network of cost and net realisable value. Additional income taxes that arise use of system charges associated Cost is determined using the average from the distribution of dividends and with electricity consumed where purchase price of each item. In the other payments are recognised at the the meter has not been read. The case of manufactured stock for internal same time as the liability to pay the accounting estimating methodology use, costs include direct labour, related dividend or payment. for calculating the unread revenue materials and a portion of variable accrual calculates unread revenue overhead which comprises the cost (f) Revenue volume where energy imports relating of bringing the inventories to their to basic meters are phased over the appropriate location and condition. Revenue is recognised when the current month and future months in Net realisable value is the estimated significant risks and rewards of order to estimate the likely billing selling price in the ordinary course of ownership have been transferred to pattern relating to consumption. This business, less the estimated costs of the buyer, the amount of revenue calculation is accounted for as revenue completion and selling expenses. can be reliably measured, and it is from unread meters in profit or loss. probable that the future economic (j) Assets classified as benefits will flow to the entity. (v) Other revenue held for sale Other revenue is recognised on an (i) Network use of system revenue Non-current assets and disposal accrual basis and in accordance with groups are classified as held for sale Endeavour Energy recognises the substance of the agreement and measured at the lower of their revenue involving the rendering of covering such transactions. electricity supply services in the carrying amount and fair value less costs to sell, if their carrying amount Statement of Comprehensive Income (g) Cash and cash equivalents when the goods are provided or will be recovered principally through when the fee in respect of services Cash and cash equivalents in the a sale transaction as opposed to provided is receivable. Network Statement of Financial Position use. Once classified as held for sale, use of system income is recognised comprise cash balances and call depreciation and amortisation ceases. on an accrual basis as revenue is deposits. For the purposes of the For an asset or disposal group to be accrued for consumption which is not Statement of Cash Flows, cash includes classified as held for sale, it must be invoiced at month end. No revenue cash assets net of bank overdraft. available for immediate sale in its is recognised if there are significant present condition and its sale must be uncertainties regarding recovery of (h) Trade and highly probable. the consideration due, or if the costs other receivables Non-current assets held for sale for incurred or to be incurred can not be Trade and other receivables are Endeavour Energy relate to vacant measured reliably. financial assets recognised initially at non‑infrastructure land & buildings. fair value plus any directly attributable (ii) Rental income transaction costs and subsequently (k) Property, plant Rental income from properties leased measured at amortised cost using the and equipment under property leases is recognised effective interest rate method, less any in the Statement of Comprehensive impairment losses. (i) Recognition and measurement Income on a straight line basis over Items of property, plant and the term of the lease. Lease incentives Collectability of trade receivables equipment are initially recognised at granted are recognised as an integral is reviewed on an ongoing basis in cost. Cost includes expenditure that is part of the total rental income. accordance with AASB 139 Financial Instruments. Individual debts that are directly attributable to the acquisition of the asset. (iii) Contributions for capital works known to be uncollectible are written This represents sums contributed by off when identified. An impairment After initial recognition as an customers and developers, mainly provision is recognised when there is asset, items of property, plant and towards the capital cost of electricity objective evidence that the entity will equipment are measured at fair value. connections. Cash and non‑cash not be able to collect the receivables, Fair value is determined in accordance capital contributions have been such as evidence of financial difficulties with NSW Treasury Accounting reported in order to comply with of the debtor, and default payments. Policy TPP 07-1 Valuation of Physical Australian Accounting Interpretation 18 Non-current Assets at Fair Value Transfers of Assets from Customers. and AASB 116 Property, Plant and Equipment, and reviewed annually Contributions of non-current assets for impairment in accordance with are recognised as revenue and an AASB136 Impairment of Assets. asset when Endeavour Energy gains control of the asset. The fair value of contributed assets is recognised at the date at which control is gained.
Endeavour Energy Annual Performance Report 2012–13 41 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1 Significant discounted cash flow. The net carrying Gains and losses on disposal of Accounting Policies amount of system assets did not differ revalued assets are included in the continued materially to the discounted cash flow. Statement of Comprehensive Income for the year. Any related revaluation System assets Land and non‑system buildings increments in the asset revaluation System assets are stated at fair value Land and non‑system buildings are reserve upon disposal are transferred less accumulated depreciation and valued at fair value of the asset. to Retained Earnings. impairment losses. Fair value is Following initial recognition at best represented as current market (iii) Capitalisation policy cost, land and non‑system building price, however where this cannot Non‑system assets purchased below assets are carried at fair value less be observed, an asset’s fair value $1,000 are expensed as acquired. accumulated depreciation and is measured at either depreciated All costs of assets constructed by impairment losses, in accordance replacement cost or an income Endeavour Energy are capitalised. with NSW Treasury Accounting approach in accordance with AASB 116 This includes the cost of materials, Policy TPP07-1 Valuation of Physical Property, Plant and Equipment. direct labour, the initial estimate, Non‑current Assets at Fair Value. where relevant, of the costs of Land and non-system buildings are Treasury Circular NSW TC12/05 Fair dismantling and removing the items subject to independent valuation on a Value of Specialised Physical Assets and restoring the site on which they cyclical basis over a three year period. also allows the option in AASB 116 are located, a proportion of overhead Property, Plant and Equipment to The carrying amount of land and allocated on the basis of labour hours, measure specialised assets using non‑system building assets is reviewed other costs directly attributable either depreciated replacement cost between independent valuations, to bringing the asset to a working or an income approach. The income to ensure the carrying amount does condition for intended use and approach methodology reflects a not differ materially from fair value. capitalised borrowing costs. discounted cash flow methodology to A revaluation of land and non‑system value Endeavour Energy’s assets, and buildings was undertaken by an (iv) Subsequent costs a calculation to subtract the value of independent valuer and recognised as The entity recognises in the carrying other business assets and liabilities at 30 June 2013. The valuations were amount of an item of property, plant to arrive at a value for Endeavour based on market‑based evidence in and equipment the cost of replacing Energy’s network assets. accordance with AASB 116 Property, part of such an item when that cost is The income approach is based on a Plant and Equipment. incurred if it is probable that the future discounted cash flow model using the economic benefits embodied with the following methods and assumptions: Other property, plant item will flow to the entity and the cost and equipment of the item can be measured reliably. • Use of an estimate of future cash Other property, plant and equipment All other costs are recognised in the flows to be derived based on assets comprise non‑specialised assets Statement of Comprehensive Income financial forecasts; with short useful lives. These assets are as an expense as incurred. • Expectations about possible stated at fair value which is equivalent variations in the amount/timing of to their depreciated historical costs (v) Depreciation future cash flows to reflect the most (deemed to be fair value in accordance Where parts of an item of property, likely outcome; with NSW Treasury Accounting Policy plant and equipment have different Valuation of Physical Non‑Current useful lives, they are accounted for • The time value of money, Assets at Fair Value [TPP07‑1] as any as separate components of property, represented by the current market difference is unlikely to be material). plant and equipment. risk free rate and the price for bearing the uncertainty inherent (ii) Revaluations Depreciation is charged to the in the asset, as encapsulated in Statement of Comprehensive Income Revaluation increments are credited the Weighted Average Cost of on a straight‑line basis over the directly to the asset revaluation Capital (WACC); estimated useful lives of each part reserve, except that, to the extent that of an item of property, plant and • Other factors such as liquidity that an increment reverses a revaluation equipment. Land is not depreciated. should be reflected in pricing future decrement in respect of that asset The estimated useful lives in the cash flows; and previously recognised as an expense current and comparative periods are in net profit or loss, the increment is • The regulated asset base (RAB) used as follows: recognised immediately as revenue as a proxy for the terminal value. in net profit or loss. Revaluation System assets are revalued at least decrements are recognised Years every five years in accordance with immediately as expenses in net profit TPP07-1. However, an assessment is or loss, except that, to the extent that buildings 40 made at each reporting date to ensure a credit balance exists in the asset system assets 7 – 60 the net carrying value of system assets revaluation reserve in respect of the plant and equipment 4 – 10 does not differ materially from its fair same asset, they are debited directly value, which is calculated on a ‘cash to the asset revaluation reserve. The residual value, if significant, is generating unit’ (CGU) basis using the reassessed annually.
42 FINANCIAL STATEMENTS 9
1 Significant An impairment loss in respect of a An impairment loss is recognised Accounting Policies financial asset measured at amortised whenever the carrying amount of continued cost is calculated as the difference an asset or its CGU exceeds its between its carrying amount and recoverable amount. Impairment (l) Intangible assets the present value of the estimated losses are recognised in the Statement future cash flows discounted at the of Comprehensive Income, unless an Intangible assets that are acquired asset’s original effective interest asset has previously been revalued, externally or internally generated rate. Losses are recognised in profit in which case the impairment loss is by the entity are stated at cost less or loss and reflected in an allowance recognised as a reversal to the extent accumulated amortisation and account against receivables. Interest of that previous revaluation with any impairment losses (see Note 1(m)(ii)). on the impaired asset continues to be excess recognised through profit Subsequent expenditure on recognised through the unwinding of or loss. capitalised intangible assets is discount. When a subsequent event Impairment losses recognised in capitalised only when it increases the causes the amount of impairment respect of CGU are allocated first to future economic benefits embodied loss to decrease, the decrease in reduce the carrying amount of any in the specific asset to which it relates. impairment loss is reversed through goodwill (if any) allocated to CGU and All other expenditure is expensed profit or loss to the extent that the then, to reduce the carrying amount as incurred. carrying amount reversed does not of the other assets in the unit on a exceed what the amortised cost would pro‑rata basis. Easements, which are interests in land have been had the impairment not allowing access to network assets, are been recognised. An impairment loss is reversed if there not amortised as they are granted for has been a change in the estimates an unlimited time. Significant receivables are used to determine the recoverable individually assessed for impairment. amount. An impairment loss is Amortisation is charged to the Non‑significant receivables are reversed only to the extent that the Statement of Comprehensive collectively assessed instead, by asset’s carrying amount does not Income on a straight‑line basis placing them in portfolios of similar exceed the carrying amount that over the estimated useful lives of risk profiles, based on objective would have been determined, net of intangible assets unless such lives are evidence from historical experience depreciation and amortisation, if no indefinite. Intangible assets with an adjusted for any effects of economic impairment loss has been recognised indefinite useful life are systematically and credit conditions existing at each for the asset in prior years. tested for impairment at each balance date. statement of financial position date. Other intangible assets are amortised (ii) Non‑financial assets (n) Trade and other payables from the date they are available The carrying amounts of non‑financial Trade and other payables represent for use. assets, other than inventories, liabilities for goods and services The estimated useful lives in the derivatives and deferred tax assets provided to Endeavour Energy prior current and comparative periods are are reviewed at each reporting date to the end of the financial year where as follows: to determine whether there is any there is an obligation to make future indication of impairment. If any payment. The amounts are unsecured such indication exists, the asset’s and usually paid within 30 days Years recoverable amount is estimated. of recognition. computer software 4 – 9 For assets that have an indefinite Subsequent to initial recognition of useful life and intangible assets that these liabilities at fair value, they are are not yet available for use, the measured at amortised cost using (m) Impairment recoverable amount is estimated the effective interest rate method. (i) Financial assets annually irrespective of any indication This measurement is equivalent to the (including receivables) of impairment. The recoverable original invoice amount. amount of an asset or cash generating A financial asset not carried at fair unit (CGU) is the greater of their fair value through profit or loss is assessed value less costs to sell and value in use. at each reporting date to determine In assessing value in use, the estimated whether there is objective evidence future cash flows are discounted to that it is impaired. A financial asset their present value using a pre‑tax is impaired if objective evidence discount rate that reflects current indicates that a loss event has occurred market assessments of the time value after the initial recognition of the of money and the risks specific to asset, and that the loss event had a the asset. For an asset that does not negative effect on the estimated future generate largely independent cash cash flows of that asset that can be inflows, the recoverable amount is estimated reliably. determined for the CGU to which the asset belongs.
Endeavour Energy Annual Performance Report 2012–13 43 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1 Significant (ii) Non‑novated Cumpston Sarjeant Pty Limited Accounting Policies energy derivatives has based their assessment on the continued Where energy derivative contracts following assumptions: were not novated to Origin Energy in (a) 10 year Commonwealth (o) Loans and borrowings the Retail sale during 2010/11, a back Government bond rate used as Loans and borrowings are initially to back arrangement is created for the gross discount rate; and recognised at fair value, net of each contract. Derivative assets and (b) Rate of general salary increase transaction costs incurred. After initial liabilities for non‑novated contracts generally in line with prior year. recognition, borrowings are are recognised in the Statement of subsequently measured at amortised Financial Position, with an offsetting Liability for employee benefits (long cost using the effective interest asset and liability. service leave, pre 93 sick leave and method. This includes capital indexed maturing allowance) which are not bonds whose carrying amount is (iii) Derecognition of expected to be settled within twelve restated at each reporting date by way financial instruments months are discounted at 3.76% per of an indexation adjustment based Endeavour Energy derecognises annum, based on 10 year Government on the Consumer Price Index (CPI) a financial asset only when the bond rates as at 30 June 2013. All other in Australia. contractual rights to the cash flows provisions have been calculated at from the asset expire, or when it nominal amounts based on expected Amortised cost is calculated by taking transfers the financial asset and settlement rates. into account any issue costs, and any substantially all the risks and rewards discount or premium on settlement. of ownership of the asset to another The difference between the face value (r) Superannuation entity. Endeavour Energy derecognises and the capital value of these debt a financial liability when, and only Defined contribution plan securities is amortised over the life when, Endeavour Energy’s obligation of the specific instrument. Interest A defined contribution plan is a post specified in the contract is discharged, associated with these instruments employment benefit under which an cancelled or expired. is brought to account on an accrual entity pays fixed contributions into basis. Indexation adjustments on CPI a separate entity and will have no indexed bonds are also recognised as (q) Employee benefits legal or constructive obligation to part of finance costs in profit or loss. All liabilities for employee benefits that pay further amounts. Obligations for are expected to be paid for services contributions to defined contribution Gains and losses are recognised in provided by employees to balance plans are recognised as an employee the Statement of Comprehensive date represent present obligations benefit expense in profit or loss in Income when the liabilities are that are fully provided for in the the periods during which services are derecognised as well as through the financial statements. rendered by employees. amortisation process. Liabilities for employee benefits for Defined benefit plan Loan debt shown as a current liability wages, salaries, maturing allowance, is nominally due for repayment within A defined benefit plan is a post‑ annual leave, pre 93 sick leave and employment benefit plan other than twelve months. However due to the long service leave that are expected availability of roll‑over facilities and a defined contribution plan. The net to be settled within twelve months of obligation in respect of defined benefit the liquidity of the underlying debt the reporting date, represent present instruments, Endeavour Energy may plans is calculated separately for each obligations resulting from employees’ plan by estimating the amount of not necessarily need to repay these services provided to reporting date, loans within twelve months. future benefit that employees have are calculated at undiscounted earned in return for their service in the amounts based on remuneration current and prior periods; that benefit (p) Financial instruments wage and salary rates that the entity is discounted to determine its present expects to pay as at reporting date (i) Foreign exchange contracts value, and the fair value of any plan including related on‑costs, such as assets is deducted. Endeavour Energy enters into foreign workers compensation, insurance and exchange contracts for anticipated payroll tax. The discount rate is the yield at the purchase commitments for the supply statement of financial position date of parts and equipment which are Long service leave, pre 93 sick leave on government bonds that have denominated in foreign currencies. and maturing allowance provisions maturity dates approximating to Where the instruments are not have been based on an actuarial the terms of the entity’s obligations. designated to hedging relationships, assessment undertaken by Cumpston The calculation is performed by a movements in the fair value of these Sarjeant Pty Limited as at March 2011 qualified actuary using the projected instruments are recognised in the and the associated formulae provided unit credit method. Statement of Comprehensive Income. for intervening periods between assessments. Actuarial assessments All actuarial gains and losses arising are performed, as a minimum, every from defined benefit plans are three years. recognised in other comprehensive income in the year in which they occur.
44 FINANCIAL STATEMENTS 9
1 Significant (t) Other liabilities (w) Finance costs Accounting Policies Deferred revenue Finance costs are recognised as continued expenses in the Statement of Deferred revenue is recognised for Comprehensive Income in the period Where the calculation results in a customer prepayments for external, in which they are incurred and include: benefit to the entity, the recognised recoverable and contestable works asset is limited to the net total of any carried out by Endeavour Energy • interest expenses calculated using unrecognised actuarial losses and past at reporting date. The revenue is the effective interest method as service costs and the present value deferred pending completion of the described in AASB 139 Financial of any future refunds from the plan or works and services. Instruments: Recognition and reductions in future contributions to Measurement e.g. interest on the plan. Deposits overdrafts and short‑term and Past service cost is the increase in the Deposits represent liabilities for long‑term borrowings, including present value of the defined benefit contractors’ deposits which can be amounts paid or received on obligation for employee services in refunded at any time after the end interest rate swaps, amortisation prior periods, resulting in the current of the financial year and unclaimed of discounts or premiums relating period from the introduction of, or monies which are held up to 6 years to borrowings, and indexation changes to, post‑employment benefits before being transferred to the Office adjustments on CPI indexed bonds; or other long‑term employee benefits. of State Revenue. The amount which • discount expense applied to Past service costs may either be can be refunded in the succeeding provisions and amortised assets; positive (where benefits are introduced financial year and at any time is shown or improved) or negative (where as current and the remainder of the • amortisation of ancillary costs existing benefits are reduced). liability as non‑current. incurred in connection with the arrangement of borrowings; and Endeavour Energy has classified the defined benefits schemes wholly as (u) Share capital • a government loan guarantee fee a non‑current liability to reflect the Endeavour Energy is incorporated assessed by NSW Treasury. under the State Owned Corporations appropriate timing of the obligation. The amount excludes finance costs Act 1989 with issued capital of two fully relating to qualifying assets, in which paid $1 ordinary shares. (s) Provisions case they are capitalised as part of the A provision is recognised in the Current shareholders are the Treasurer cost of those assets in accordance with Statement of Financial Position when and the Minister for Finance on behalf AASB 123 Borrowing Costs. Qualifying the entity has a present legal or of the NSW Government. The holders assets are assets that take a substantial constructive obligation as a result of of ordinary shares are entitled to period of time to get ready for their a past event, and it is probable that receive dividends as declared from intended use. The Corporation an outflow of economic benefits will time to time and are entitled to one considers this to be 12 months be required to settle the obligation. vote per share at meetings of the or more. If the effect is material, provisions Corporation. The $2 share capital is Capitalisation of borrowing costs is are determined by discounting the included in Contributed Equity in the undertaken where a direct relationship expected future cash flows at a pre‑tax Statement of Financial Position. can be established between the rate that reflects current market borrowings and the relevant projects assessments of the time value of (v) Reserve giving rise to qualifying assets. money and, where appropriate, the Typically, these are projects whose risks specific to the liability. Asset revaluation reserve expected total project expenditure is The revaluation reserve relates to fair approximately $10 million or greater. value movements in property, plant and equipment. The amount of borrowing costs capitalised during the year was Hedging reserve $31.4 million (2012: $14.4 million), The hedging reserve is used to record and the capitalisation rate used unrealised gains or losses of effective to determine this amount was at a cash flow hedges. The unrealised gains weighted average interest rate of 7.1% or losses of all other derivatives are (2012: 7.6%). recognised in profit and loss.
Endeavour Energy Annual Performance Report 2012–13 45 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
1 Significant (y) Greenhouse legislation (z) Goods and services tax Accounting Policies Under various legislation described Revenues, expenses and assets are continued below, the Corporation surrendered recognised net of the amount of certificates in 2012/13 to acquit Goods and Services Tax (GST), except (x) Leases obligations as at 31 December 2012 where the amount of GST incurred placed on it by the various is not recoverable from the taxation As lessee Commonwealth and New South authority. In these circumstances, the Payments made under operating Wales greenhouse schemes. GST is recognised as part of the cost leases are recognised in the Statement The obligations relate to one retail of acquisition of the asset or as part of of Comprehensive Income on a customer that was not transferred as the expense. straight‑line basis over the term of part of the electricity sales transaction Receivables and payables are stated the lease. Lease incentives received on 1 March 2011. For the period with the amount of GST included. are recognised in the Statement of commencing 1 July 2012, the following The net amount of GST recoverable Comprehensive Income as an integral schemes apply: part of the total lease expense and from, or payable to, the taxation spread over the lease term. Commonwealth authority is included as a current asset or liability in the Statement of The RET scheme, from 1 January 2011, Endeavour Energy has not entered into Financial Position. any finance leases as at reporting date. is split into Small‑scale Renewable Leases in terms of which the entity Energy Scheme (SRES) and Large‑scale Cash flows are included in the assumes substantially all the risks and Renewable Energy Target (LRET) Statement of Cash Flows on a gross rewards of ownership are classified as requiring the surrender respectively basis. The GST components of finance leases. of Small‑scale Technology Certificates cash flows arising from investing (STCs) and Large‑scale Generation and financing activities which are As lessor Certificates (LGCs). The Act also recoverable from, or payable to, the Endeavour Energy leases out its imposes an annual liability statement taxation authority are classified as properties, including premises, land to the Office of the Renewable Energy operating cash flows. and communications towers, under Regulator (ORER) in discharge of operating lease agreements at market Endeavour Energy’s renewable energy (aa) Foreign currency obligations under the RET Scheme. rentals, predominantly on a fixed Foreign currency transactions are term basis. converted to Australian currency at New South Wales Rentals received from the tenants the exchange rates at the date of the The Electricity Supply Act 1995 No.94 transaction, with resulting exchange during the year are recognised imposed an obligation on electricity as income in the Statement of differences recognised as income or retailers in NSW to comply with expense in profit or loss. Comprehensive Income and the costs the Energy Savings Scheme. These of repairs and maintenance incurred obligations require Endeavour Energy At each balance sheet date, on these properties for the year are to acquire and surrender sufficient monetary items denominated in recognised as an expense in the Energy Savings certificates (ESCs), and foreign currencies are translated at Statement of Comprehensive Income. to lodge an annual statement with the the rates prevailing on the balance Independent Pricing and Regulatory sheet date, with resulting exchange Tribunal (IPART) in discharge of differences classified as equity and Endeavour Energy’s greenhouse gas transferred to the foreign currency emission reduction obligations. translation reserve.
46 FINANCIAL STATEMENTS 9
1 Significant AASB 9 Financial Instruments, AASB AASB 119, AASB 2011‑10 and AASB Accounting Policies 2010‑7 Amendments to Australian 2011‑11 are applicable to annual continued Accounting Standards arising from reporting periods beginning on or AASB 9 (December 2010) [AASBs 1, 3, after 1 January 2013. Endeavour (bb) New and revised 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, Energy has not elected to adopt accounting standards and 127, 128, 131, 132, 136, 137, 139, 1023 & these standards early. The entity will 1038 and Interpretations 2, 5, 10, 12, 19 apply these standards in the 2013/14 Australian Accounting & 127] and AASB 2012‑6 Amendments financial statements. Interpretations to Australian Accounting Standards AASB 2012‑2 Amendments to – Mandatory Effective Date of AASB Accounting standards and Australian Accounting Standards – 9 and Transition Disclosures [AASB 9, Interpretations issued but not Disclosures – Offsetting Financial AASB 2010‑7]. yet effective Assets and Financial Liabilities [AASB 7 Various new and revised accounting AASB 9 (Revised), AASB 2010‑7 and & AASB 132] and AASB 2012‑3 standards and Australian Accounting AASB 2012‑6 are applicable to annual Amendments to Australian Accounting Interpretations have been published reporting periods beginning on or Standards – Offsetting Financial Assets that are not mandatory for the after 1 January 2015. Endeavour and Financial Liabilities [AASB 132]. 30 June 2013 reporting period. Energy has not elected to adopt AASB 2012‑2 and AASB 2012‑3 are this standard early. The entity will applicable to annual reporting periods Endeavour Energy’s assessment of apply these standards in the 2015/16 beginning on or after 1 January 2013 the impact of new standards and financial statements. interpretations which may have an and 1 January 2014 respectively. impact and have not been early AASB 13 Fair Value Measurement Endeavour Energy has not elected to adopted is set out below. The main and AASB 2011‑8 Amendments to adopt these standards early. The entity impact of these standards and Australian Accounting Standards will apply these standards in the interpretations will be on presentation arising from AASB 13 [AASB 1, 2, 3, 4, 5, 2013/14 (AASB 2012‑2) and 2014/15 and disclosure, except for AASB 119 7, 9, 2009‑11, 2010‑7, 101, 102, 108, 110, (AASB 2012‑3) financial statements. Employee Benefitswhich becomes 116, 117, 118, 119, 120, 121, 128, 131, 132, All other new standards and mandatory for the entity’s 2014 133, 134, 136, 138, 139, 140, 141, 1004, interpretations have no impact financial statements and will have 1023 & 1038 and Interpretations 2, 4, on Endeavour Energy and will an impact on the classification 12, 13, 14, 17, 19, 131 & 132]. not affect Endeavour Energy’s between interest expense and other AASB 13 and AASB 2011‑ 8 are financial statements. comprehensive income for defined applicable to annual reporting periods benefit schemes. Amendments to beginning on or after 1 January 2013. AASB 119 require retrospective (cc) Joint venture Endeavour Energy has not elected to application. Based on initial A joint venture is a joint arrangement adopt this standard early. The entity estimates, when the entity applies the whereby the parties that have joint will apply these standards in the amendments for the first time for the control of the arrangement have rights 2013/14 financial statements. year ending 30 June 2014, profit after to the net assets of the arrangement. tax for the comparative period year AASB 119 Employee Benefits, AASB Ausgrid, Endeavour Energy and ended 30 June 2013 will reduce by 2011-10 Amendments to Australian Essential Energy have entered into $7.6 million and other comprehensive Accounting Standards arising from a joint venture agreement. A legal income after income tax for the said AASB 119 (September 2011) [AASB entity Networks NSW Pty Limited has year will increase by $7.6 million. 1, AASB 8, AASB 101, AASB 124, been used as the vehicle for this joint AASB 134, AASB 1049 & AASB 2011‑8 venture. Networks NSW Pty Limited is and Interpretation 14] and AASB incorporated in Australia (refer to Note 2011‑11 Amendments to AASB 119 17 for details). (September 2011) arising from Reduced Disclosure Requirements.
Endeavour Energy Annual Performance Report 2012–13 47 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
2 Revenue
2013 2012 $m $m
Revenue Network use of system income 1,299.2 1,225.0 Capital Contributions 74.7 72.3 Solar Bonus Rebate Scheme Recovery 25.6 69.9 Interest income 0.2 0.1 Gain on disposal of assets 0.8 – Other revenue 92.3 109.6
Total operating revenue 1,492.8 1,476.9
3 Expenses (a) Expenses excluding finance costs
2013 2012 $m $m
Expenses relating to operating activities Distribution of energy and other services 426.5 378.4 Employee benefits expense 191.8 286.8 Bad debts and impairment of trade receivables (1.1) 1.9 Operating lease rentals 4.7 2.7 External consultants 0.5 2.1 Superannuation (defined benefit plan) recognised in profit for the year 5.8 7.1 Superannuation expense (defined contribution plan) 43.6 38.6 Loss on disposal of assets – 3.7
Total expenses relating to operating activities 671.8 721.3 Depreciation of property, plant and equipment Buildings 4.2 3.6 System assets 142.3 130.0 Plant and equipment 21.2 20.5
Total depreciation 167.7 154.1 Amortisation of intangible assets Computer software 16.7 15.7
Total amortisation 16.7 15.7
Total expenses excluding finance costs 856.2 891.1
(b) Finance costs
2013 2012 $m $m
Interest and finance charges paid/payable 198.7 204.6
Finance costs recognised in the Statement of Comprehensive Income 198.7 204.6
48 FINANCIAL STATEMENTS 9
3 Expenses continued (c) Maintenance expenses
2013 2012 $m $m
Employee benefits expense 65.0 71.1 Contracted labour and other (non‑employee related) expenses 56.0 47.0
Total maintenance expenses 121.0 118.1
4 Income tax expense (a) Income tax expense recognised in the Statement of Comprehensive Income
2013 2012 $m $m
Current tax expense Current year 94.0 88.9 Adjustments for prior years (0.3) 5.5
93.7 94.4
Deferred tax expense Origination and reversal of temporary differences 37.4 26.3 Under/(over) provided in prior years 0.3 (5.0)
37.7 21.3
Total income tax expense in Statement of Comprehensive Income 131.4 115.7
(b) Numerical reconciliation between income tax expense and prima facie tax payable
2013 2012 $m $m
Profit before tax 437.9 381.2 Income tax using the domestic corporation tax rate of 30% (2012: 30%) 131.4 114.4 Increase (decrease) in income tax expense due to: Tax concessions/non‑deductible expenses – 0.8 Under/(over) provided in prior years – 0.5
Income tax expense on pre-tax net profit 131.4 115.7
(c) Income tax recognised in Other Comprehensive Income
2013 2012 $m $m
Items not to be reclassified subsequently to profit or loss Actuarial gains or losses on defined benefits superannuation 11.3 (29.1) Revaluation of property, plant and equipment 4.8 89.9
16.1 60.8
Items to be reclassified subsequently to profit or loss Revaluation of hedge derivatives 0.3 (1.4)
0.3 (1.4)
Income tax charged directly to Other Comprehensive Income 16.4 59.4
Endeavour Energy Annual Performance Report 2012–13 49 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
5 Deferred tax assets/liabilities Recognised deferred tax assets and liabilities
2013 2012 $m $m
Assets subject to depreciation/amortisation/capital allowances 677.1 643.8 Assets held for sale 1.1 1.1 Deferred income and interest 0.6 0.3 Defined benefits superannuation (33.5) (47.2) Unread meters 31.5 33.1 Provisions and accruals (83.2) (90.5) Emission rights and deductible prepayments 0.2 0.2 Derivatives (1.5) (2.6)
Deferred tax (assets)/liabilities 592.3 538.2
The deductible temporary differences and tax losses do not expire under current tax legislation.
Recognised in Other Opening Recognised in Comprehensive Closing balance profit or loss Income balance $m $m $m $m
Movement in temporary differences during 2013 Assets subject to depreciation/amortisation/ capital allowances 643.8 28.5 4.8 677.1 Assets held for sale 1.1 – – 1.1 Deferred income and interest 0.3 0.3 – 0.6 Defined benefits superannuation (47.2) 2.4 11.3 (33.5) Unread meters 33.1 (1.6) – 31.5 Provisions and accruals (90.5) 7.3 – (83.2) Emission rights and deductible prepayments 0.2 – – 0.2 Derivatives (2.6) 0.8 0.3 (1.5)
Total deferred tax (assets)/liabilities 538.2 37.7 16.4 592.3
Movement in temporary differences during 2012 Assets subject to depreciation/amortisation/ capital allowances 521.7 32.2 89.9 643.8 Assets held for sale 1.1 – – 1.1 Deferred income and interest (0.2) 0.5 – 0.3 Defined Benefits superannuation (19.5) 1.4 (29.1) (47.2) Unread meters 27.4 5.7 – 33.1 Provisions and accruals (74.5) (16.0) – (90.5) Emission rights and deductible prepayments 2.5 (2.3) – 0.2 Derivatives (1.1) (0.1) (1.4) (2.6)
Total deferred tax (assets)/liabilities 457.4 21.4 59.4 538.2
50 FINANCIAL STATEMENTS 9
5 Deferred tax assets/liabilities continued Endeavour Energy treats certain income from network distribution services as being derived for income tax purposes in the years in which meters are read and related income is billed. This treatment is consistent with the treatment applied in the prior year and reflects consideration of expert advice and relevant taxation case law. This treatment has resulted in the recognition of a deferred tax liability of $31.5 million as at 30 June 2013 (2012:$33.1 million). It is noted that the Australian Taxation Office (ATO) has issued interpretive decision ATO ID 2012/15Derivation of Income: Unbilled Supply of Energy. This document is an edited and summarised record of a decision made in respect of another taxpayer and relates to the retailing of electricity and gas to consumers. The ATO concluded that the taxpayer derived assessable income at the time of the supply of electrical and gas energy to certain customers. Given that the interpretive decision relates to energy retailers, Endeavour Energy does not believe that the conclusions reached are relevant to the determination of when that income is derived for income tax purposes in relation to its network distribution services. This view has been further affirmed by external tax advice. 6 Cash and cash equivalents
2013 2012 $m $m
Bank balances and term deposits 0.4 (1.1)
Cash and cash equivalents 0.4 (1.1)
7. Trade and other receivables
2013 2012 $m $m
Current Trade receivables 73.5 88.7 Less: impairment of trade receivables (1.7) (3.0)
Trade debtors, net of provision 71.8 85.7 Other debtors 38.5 50.9 Prepayments 7.1 6.4 Unread meters 122.7 121.5
Total current trade and other receivables 240.1 264.5
The movement in the impairment of trade receivables is detailed below:
2013 2012 $m $m
Opening balance at 1 July (3.0) (1.5) Additional provisions – (1.8) Amounts used 0.3 0.3 Amounts reversed 1.0 –
Closing balance at 30 June (1.7) (3.0)
Endeavour Energy Annual Performance Report 2012–13 51 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
8 Derivative financial instruments
2013 2012 $m $m
Derivative financial assets – current Energy derivatives 0.4 12.7 Treasury derivatives 0.2 0.3
Total derivative current assets 0.6 13.0
Derivative financial assets – non‑current Energy derivatives – 0.1 Treasury derivatives 0.3 0.6
Total derivative non‑current assets 0.3 0.7
Derivative financial liabilities – current Energy derivatives 0.4 12.8 Forward exchange and commodity hedge contracts – 3.9
Total derivative current liabilities 0.4 16.7
Derivative financial liabilities – non-current Energy derivatives – 0.1 Treasury derivatives 5.1 6.1
Total derivative non-current liabilities 5.1 6.2
Endeavour Energy’s exposure to credit, currency and interest rate risk related to derivatives is disclosed in note 15.
52 FINANCIAL STATEMENTS 9
9 Property, plant and equipment
Land and Plant and System assets buildings equipment Total Note $m $m $m $m
At 1 July 2012 – fair value Gross carrying amount 14,313.3 447.2 294.6 15,055.1 Accumulated depreciation and impairment (9,336.1) (0.5) (162.5) (9,499.1)
Net carrying amount 4,977.2 446.7 132.1 5,556.0
At 30 June 2013 – fair value Gross carrying amount 14,934.0 460.3 303.1 15,697.4 Accumulated depreciation and impairment (9,469.4) (3.0) (169.2) (9,641.6)
Net carrying amount 5,464.6 457.3 133.9 6,055.8
Year ended 30 June 2013 Net carrying amount at start of year 4,977.2 446.7 132.1 5,556.0 Additions 635.1 6.4 26.6 668.1 Disposals (5.4) (0.5) (3.6) (9.5) Revaluation – 8.9 – 8.9 Depreciation expense 3(a) (142.3) (4.2) (21.2) (167.7)
Net carrying amount at end of year 5,464.6 457.3 133.9 6,055.8
At 1 July 2011 – fair value Gross carrying amount 13,398.5 403.0 276.6 14,078.1 Accumulated depreciation and impairment (9,213.0) (2.7) (150.4) (9,366.1)
Net carrying amount 4,185.5 400.3 126.2 4,712.0
At 30 June 2012 – fair value Gross carrying amount 14,313.3 4 47.2 294.6 15,055.1 Accumulated depreciation and impairment (9,336.1) (0.5) (162.5) (9,499.1)
Net carrying amount 4,977.2 446.7 132.1 5,556.0
Year ended 30 June 2012 Net carrying amount at start of year 4,185.5 400.3 126.2 4,712.0 Additions 659.1 15.7 28.8 703.6 Disposals (4.7) (0.1) (2.4) ( 7.2) Revaluation 267.3 34.4 – 301.7 Depreciation expense 3(a) (130.0) (3.6) (20.5) (154.1)
Net carrying amount at end of year 4,977.2 446.7 132.1 5,556.0
Endeavour Energy Annual Performance Report 2012–13 53 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
9 Property, plant and equipment continued
Assets under construction
During the year ended 30 June 2013, the entity continued with its Network capital program. At the Statement of Financial Position date, construction in progress totalled: Land and buildings $2.3 million (2012: $16.2 million) System assets $869.0 million (2012: $803.6 million) Plant and equipment $10.7 million (2012: $32.1 million)
Historical cost of revalued assets
The carrying amount of assets had they been carried under the cost model is: Land and buildings $291.1 million (2012: $289.0 million) System assets $4,333.9 million (2012: $3,846.4 million) Plant and equipment $133.8 million (2012: $132.0 million)
54 FINANCIAL STATEMENTS 9
10 Intangible assets
Computer Software Easements Total Note $m $m $m
At 1 July 2012 At cost 207.1 12.4 219.5 Accumulated amortisation and impairment (146.6) – (146.6)
Net carrying amount 60.5 12.4 72.9
At 30 June 2013 At cost 213.1 15.6 228.7 Accumulated amortisation and impairment (156.5) – (156.5)
Net carrying amount 56.6 15.6 72.2
Year ended 30 June 2013 Net carrying amount at start of year 60.5 12.4 72.9 Acquisitions 13.1 3.2 16.3 Disposals (0.3) – (0.3) Amortisation 3(a) (16.7) – (16.7)
Net carrying amount at end of year 56.6 15.6 72.2
At 1 July 2011 At cost 193.9 11.7 205.6 Accumulated amortisation and impairment (132.2) – (132.2)
Net carrying amount 61.7 11.7 73.4
At 30 June 2012 At cost 207.1 12.4 219.5 Accumulated amortisation and impairment (146.6) – (146.6)
Net carrying amount 60.5 12.4 72.9
Year ended 30 June 2012 Net carrying amount at start of year 61.7 11.7 73.4 Acquisitions 14.9 0.7 15.6 Disposals (0.4) – (0.4) Amortisation 3(a) (15.7) – (15.7)
Net carrying amount at end of year 60.5 12.4 72.9
Assets under construction During the year ended 30 June 2013, the entity continued with its capital program. At the Statement of Financial Position date, construction in progress totalled:
Computer software $22.0 million (2012: $26.5 million)
Endeavour Energy Annual Performance Report 2012–13 55 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
11 Trade and other payables
2013 2012 $m $m
Current Trade payables 30.6 31.7 Accruals 161.9 168.8 Other payables 8.7 8.8
Total current trade and other payables 201.2 209.3
12 Borrowings This note provides information about the contractual terms of the entity’s interest bearing loans and borrowings. For more information about the entity’s exposure to interest rate and foreign currency risks, see Note 15.
2013 2012 $m $m
Current liabilities Current portion of loans 513.5 457.3
Non-current liabilities Non-current portion of loans 2,844.9 2,545.4
Loans are unsecured and repayable in full on various maturity dates. Interest rates are based on weighted average effective rates on the entire debt, excluding the impact of the Government Guarantee fee.
56 FINANCIAL STATEMENTS 9
12 Borrowings continued The Corporation has access to the following lines of credit:
2013 2012 $m $m
Financing facilities Total facilities available Bank overdraft (1) 2.0 2.0 TCorp short term accommodation 100.0 100.0 TCorp loans 3,611.0 3,166.0
Total facilities available 3,713.0 3,268.0
Facilities utilised at reporting date Bank overdraft (2), (3) – 1.1 TCorp short term accommodation (3) 21.5 5.3 TCorp loans (3) 3,336.9 2,9 97.4
Total facilities utilised 3,358.4 3,003.8
Facilities not utilised at reporting date Bank overdraft 2.0 0.9 TCorp short term accommodation 78.5 94.7 TCorp loans 274.1 168.6
Total facilities not utilised 354.6 264.2
(1) Reflects the net balance of accounts held which are subject to a Set-Off Arrangement and which must not exceed the Net Facility Limit of $2.0m. (2) The bank balance at reporting date was $0.4 million credit (2012: $1.1 million debit). (3) Effective interest rates:
% %
Bank overdraft 9.59 10.24 TCorp short term accommodation 2.90 3.65 TCorp loans – AUD floating rate 3.32 3.99 TCorp loans – AUD fixed rate 5.73 5.91 TCorp loans – AUD inflation indexed 4.07 3.93
In addition, Endeavour Energy has working capital facilities totalling $75.5 million.
Endeavour Energy Annual Performance Report 2012–13 57 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
12 Borrowings continued
Financing arrangements Bank overdrafts Interest on bank overdraft is charged at commercial bank market rates on any balance. Additional market interest is charged on any balance in excess of the approved overdraft on Endeavour Energy’s Limit Facility of $2 million. The bank overdraft is unsecured. Bank overdrafts are payable on demand and subject to annual review.
TCorp short term accommodation Endeavour Energy has approval under the Public Authorities (Financial Arrangements) Act 1987 (“PAFA Act”) to obtain a $100 million short term accommodation (Come‑and‑Go facility) from TCorp. Interest on TCorp short term accommodation is charged at prevailing market rates.
TCorp loans Endeavour Energy has approval under the Public Authorities (Financial Arrangements) Act 1987 to obtain $3,611 million (2012: $3,166 million) loan funds from TCorp. The loans amount in current liabilities includes the portion of the entity’s TCorp loans payable within one year of $492 million (2012: $452 million). The non-current TCorp loans are payable on or before 1 April 2041, with maturity dates ranging between 1 and 28 years from reporting date. All TCorp debt is fully payable on maturity with the majority being fixed rate loans. 13 Provisions
Employee Insurance Dividends benefits Other Total $m $m $m $m $m
Opening balance at 1 July 2012 8.7 186.6 441.9 6.8 644.0 Additional provisions 0.8 209.5 198.3 10.0 418.6 Amounts used (2.6) (186.6) (269.2) (6.0) (464.4)
Closing balance at 30 June 2013 6.9 209.5 371.0 10.8 598.2
Current 1.3 209.5 164.9 10.8 386.5 Non-current 5.6 – 206.1 – 211.7
6.9 209.5 371.0 10.8 598.2
The current provision for employee benefits includes accrued annual leave, vesting sick leave and long service leave. For long service leave it covers all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro‑rata payments in certain circumstances. The entire amount of the provision of $164.9 million (2012: $159.5 million) is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the entity does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. The following amounts reflect leave that is not to be expected to be taken or paid within the next 12 months.
2013 2012 $m $m
Current leave obligations expected to be settled after 12 months 121.1 117.3
58 FINANCIAL STATEMENTS 9
13 Provisions continued
(i) Worker’s compensation insurance Endeavour Energy is a self-insurer through its insurance provision for workers’ compensation and meets all liabilities under the Workers’ Compensation legislation in NSW and other States. The liabilities cover claims incurred but not yet reported and the anticipated fund management fees in respect of the management of those claims. During 2012/13, a consulting actuary undertook the annual investigation of Endeavour Energy’s estimated liability for workers’ compensation as at 30 June 2013. The liability is measured as the present value of future payments at 30 June 2013 and was estimated to be $6.9 million (2012: $8.7 million). This includes the liability for dust related diseases which is estimated at $1.5 million (2012: $1.5 million).
(ii) Dividends Provision is made for the amount of any dividend and other payments determined by the Directors on or before the end of the financial year but not distributed at balance date. The dividend has regard to the annual performance agreement (Statement of Corporate Intent) with NSW Treasury. The current year dividend payable of $209.5 million has been based on the Government’s dividend cap policy for the energy sector of State Owned Corporations and negotiations between NSW Treasury on behalf of the shareholders and Endeavour Energy prior to 30 June 2013, and is in compliance with TPP09‑6 Financial Distribution Policy for Government Businesses. The prior year dividend payable of $186.6 million was calculated in accordance with NSW Treasury policy TPP09‑6 Financial Distribution Policy for Government Businesses, which is based on profit adjusted for certain non‑cash items.
(iii) Employee benefits The provision for employee benefits relates to amounts accruing to employees up to reporting date in respect of employee benefits including annual leave, maturing allowance, pre 93 sick leave and long service leave. Amounts provided for in relation to maturing allowance and long service leave are based on an actuarial assessment and associated formulae provided for intervening periods between assessments as outlined in note 1(q). All other employee benefit amounts have been calculated at nominal amounts based on expected settlement rates. It is noted that Endeavour Energy’s 2010 Enterprise Bargaining Agreement included the freezing of pre‑93 sick leave balances. The non-current provision for employee benefits also includes $111.5 million relating to the Defined Benefits Superannuation liability as detailed in note 23.
(iv) Other The balance of $10.8 million is not detailed due to commercial and legal sensitivity. 14 Other liabilities Current
2013 2012 $m $m
Deposits and retentions 8.8 9.7 Unearned income 3.1 3.1
Total other current liabilities 11.9 12.8
Endeavour Energy Annual Performance Report 2012–13 59 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
15 Financial instruments (a) Financial risk management objectives and policies Financial instruments comprise cash, trade debtors, trade creditors, short term deposits, loans and derivatives. The main purpose of these financial instruments is to raise finance or invest surplus cash for the entity’s operations, and to manage exposure to price movements. Endeavour Energy’s treasury function, leadership team and Board manage the Corporation’s exposure to key financial risks including credit risk, currency risk, interest rate risk, liquidity risk and commodity price risk, in accordance with the Board’s financial risk management policies. The Board reviews and agrees policies for managing each of the key financial risks by approving an annual Debt Funding Strategy paper and receiving regular updates. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements. Exposure to credit, interest rate, foreign currency and liquidity risks arise in the normal course of the entity’s business. Derivative financial instruments are used to hedge exposure to fluctuations in foreign exchange rates and interest rates. These derivative financial instruments are not held for speculative or trading purposes, however there are some derivatives that do not quality for hedge accounting and are accounted for as trading instruments.
(b) Credit risk Credit risk is the risk of financial loss arising if counterparties fail to meet their financial obligations. The credit risk on trade and other receivables and accrued sales of energy that have been recognised in the Statement of Financial Position, is generally the carrying amount net of any impairment provisions. Endeavour Energy’s policy requires customers to pay in accordance with agreed payment terms. The payment terms are generally 15-30 days. All credit and recovery risks associated with trade receivables have been provided for in the Statement of Financial Position. The ageing of trade receivables past due but not impaired at 30 June 2013 is detailed below:
2013 2012 $m $m
Less than 3 months overdue 4.3 11.4 3 months to 6 months overdue 0.6 0.4 Later than 6 months overdue 0.1 –
5.0 11.8
Endeavour Energy’s credit risk on other assets is minimised as it transacts predominantly with other corporations in the energy industry. Where the counterparty is a non‑Government owned corporation its credit worthiness is established in accordance with Endeavour Energy’s risk management policies which include the use of external credit ratings used to derive risk limits as approved by the Board of Directors, and appropriate monitoring procedures. Endeavour Energy does not have any credit risk in relation to electricity derivative contracts, as the risks and rewards of electricity derivative contracts were transferred to Origin Energy through a Pass Through Agreement entered into as part of the sale of the Retail net assets in 2010/11.
(c) Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Endeavour Energy’s exposure to foreign currency risk is immaterial. The Corporation limits currency risk by entering into foreign currency options and forward foreign exchange contracts. As the foreign currency risk is immaterial in terms of a possible impact on profit and loss or total equity, a sensitivity analysis has not been completed.
60 FINANCIAL STATEMENTS 9
15 Financial instruments continued (d) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The entity adopts a policy of ensuring that its debt portfolio is managed within a risk framework including approved duration ranges and debt maturity profiles. Interest rate risk is managed through a combination of fixed rate long duration debts, inflation linked securities, floating rate debts and interest rate derivative instruments. The interest rate profile for Endeavour Energy’s interest bearing financial instruments at the reporting date was:
2013 2012 $m $m
Carrying amount Fixed rate Financial liabilities 2,329.7 2,302.1
2,329.7 2,302.1
Floating rate/inflation indexed Financial assets 0.4 – Financial liabilities 1,028.7 701.6
1,029.1 701.6
Endeavour Energy does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Endeavour Energy has variable rate financial liabilities at year end and it is estimated that a change in interest rates by one percentage at reporting date would have a $4.2 million impact on the entity’s profit before tax (2012: $3.8 million).
(e) Capital risk management Consistent with NSW Treasury Policy Capital Structure Policy for Government Businesses [TPP02‑7] which is a component of the NSW Government’s Commercial Policy Framework, the entity’s objectives are to determine an appropriate capital structure to enable an appropriate return on equity and efficient investment decisions to be made on a commercial basis. Under the policy, both an appropriate capital structure and minimum‑to‑maximum capital structure range are determined whilst considering the following criteria: – provision of an acceptable stream of dividends; – maintenance of an appropriate investment grade rating, taking into account industry and entity specific factors; – ability to meet key debt service criteria, based on industry benchmarks; – capacity to finance the approved capital expenditure program through internally generated cash flows and debt, with consideration of the current phase of the investment cycle; and – provision of sufficient flexibility for relevant contingencies. The minimum‑to‑maximum capital structure ‘range’ includes an acceptable range of gearing levels within the entity’s capital structure. The entity monitors gearing levels and ratios. The key ratio is calculated as net debt divided by total capital. Net debt is calculated as total loans and TCorp short term accommodation less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the Statement of Financial Position plus net debt.
Endeavour Energy Annual Performance Report 2012–13 61 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
15 Financial instruments continued
2013 2012 $m $m
Total loans 3,358.4 3,002.7 Add/(less): cash and cash equivalents/bank overdraft (0.4) 1.1
Net debt 3,358.0 3,003.8 Total equity 1,586.2 1,450.7
Total capital 4,944.2 4,454.5
Gearing ratio 67.9% 67.4%
The entity’s agreed capital structure and range is reviewed every year as part of the Statement of Corporate Intent process. The purpose of such a review is to confirm whether or not the current capital structure and range continue to be appropriate and, if not, to negotiate revised arrangements between the Board and Shareholders.
(f) Energy price risk Energy price risk is the risk that Endeavour Energy’s cash flow will be adversely affected by movements in wholesale market electricity price. As part of the retail sale transaction on 1 March 2011, the Corporation transferred its open energy trading contract to the purchaser, Origin Energy. A number of energy trading contracts were unable to be novated to Origin Energy and are recorded in the Statement of Financial Position as at 30 June 2013. Non‑novated contracts held in Endeavour Energy’s name are matched to an equal and opposite position with Origin Energy. Endeavour Energy does not derive any benefit associated with cash flow but still bears residual legal and credit risks until the contract is novated or expired.
(g) Fair values (i) Valuation techniques and assumptions applied for the purposes of measuring fair value The fair value of financial assets and financial liabilities are determined as follows: The fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices. In the absence of quoted market prices, the price of the most recent transaction provides evidence of the current fair value. The fair values of other financial assets and financial liabilities (excluding energy derivatives) are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using maximum observable market input data which includes prices from observable current market transactions and dealer quotes for similar instruments.
Non‑novated energy derivatives Fair value of electricity derivatives was calculated either using readily observed market sources or internally adjusted market prices. The forward curve against which electricity derivatives are revalued is constructed from readily observed market sources. The inputs for this curve are sourced from a combination of available independent broker quotes as well as closing Sydney Future Exchange prices. For electricity derivatives where directly appropriate market price valuations were not available, the net fair value for such contracts has been calculated based on internally adjusted market price estimates for similar products or reasonable extrapolation of the last observed relative reference prices. Estimated future cashflows resulting from the valuation exercise were discounted to derive the relative net fair values as at balance date. The discount rates used were sourced from a zero coupon yield curve constructed by an independent content provider.
Interest‑bearing loans and borrowings Fair value is calculated based on discounted expected future principal and interest cash flows.
Trade and other receivables/payables For receivables/payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value.
Foreign exchange contracts The net fair value of foreign exchange contracts is calculated by reference to the current spot and forward market currency exchange rates.
62 FINANCIAL STATEMENTS 9
15 Financial instruments continued Deposits Deposits represent liabilities for contractors’ deposits which can be refunded at any time after the end of the financial year. The net fair value is the carrying value.
(ii) Fair values versus carrying amounts The carrying amounts and fair values of financial assets and liabilities at reporting date were:
2013 2012
Carrying Carrying amount Fair value amount Fair value Note $m $m $m $m
Financial instruments Financial assets carried at amortised cost Cash and cash equivalents 6 0.4 0.4 – – Trade and other receivables 7 110.3 110.3 136.5 136.5
110.7 110.7 136.5 136.5
Financial assets carried at fair value Energy derivatives 8 0.4 0.4 12.8 12.8 Treasury derivatives 8 0.5 0.5 0.9 0.9
0.9 0.9 13.7 13.7
Financial liabilities carried at amortised cost Borrowings 12 3,358.4 3,592.8 3,002.7 3,324.5 Trade and other payables 11 196.8 196.8 204.4 204.4 Bank overdraft 6 – – 1.1 1.1
3,555.2 3,789.6 3,208.2 3,530.0
Financial liabilities carried at fair value Energy derivatives 8 0.4 0.4 12.9 12.9 Forward exchange and commodity hedge contracts 8 – – 3.9 3.9 Treasury derivatives 8 5.1 5.1 6.1 6.1
5.5 5.5 22.9 22.9
(iii) Interest rates used for determining fair value The entity uses the government yield curve as at 30 June 2013 plus an adequate constant credit spread to discount financial instruments. The interest rates used were as follows:
2013 2012
Loans and borrowings 2.5% – 5.2% 3.0% – 4.3%
Endeavour Energy Annual Performance Report 2012–13 63 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
15 Financial instruments continued (iv) Fair value hierarchy The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable. • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). • Level 3 – Valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable input).
Level 1 Level 2 Level 3 Total $m $m $m $m
2013 Financial assets at fair value through profit or loss Treasury derivatives – 0.5 – 0.5 Energy derivatives – 0.4 – 0.4
– 0.9 – 0.9
Financial liabilities at fair value through profit or loss Treasury derivatives 5.1 – – 5.1
5.1 – – 5.1
2012 Financial assets at fair value through profit or loss Treasury derivatives – 0.9 – 0.9 Energy derivatives – 2.1 – 2.1
– 3.0 – 3.0
Financial liabilities at fair value through profit or loss Treasury derivatives 6.1 – – 6.1 Energy derivatives – 10.7 – 10.7 Forward exchange and commodity hedge contracts 3.9 – – 3.9
10.0 10.7 – 20.7
(h) Liquidity risk Liquidity risk is the risk of difficulty in ensuring the availability of sufficient funds to meet obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Endeavour Energy’s liquidity risks are managed with the availability of readily accessible standby facilities and other funding arrangements and by investing surplus funds in marketable securities and deposits (see Notes 1(g), 1(o), 6 and 12). The Corporation has obtained approval under the Public Authorities (Financial Arrangement) Act 1987 for a TCorp core debt borrowing limit of $3,611.0 million (2012: $3,166.0 million) of which $274.1 million was unused as at 30 June 2013 (2012: $168.6 million). There are also approvals for a TCorp Come and Go Facility limit of $100.0 million (2012: $100.0 million) and a bank overdraft facility limit of $2.0 million (2012: $2.0 million) to fund working capital. Planned future capital expenditure will be funded through TCorp borrowings. Future committed expenditure is disclosed in Note 20. While current liabilities are greater than current assets as at 30 June 2013, the Corporation continues to trade as a going concern. It is noted that the Corporation derives revenue from non-current assets. The TCorp Come and Go Facility had $78.5 million (2012: $94.7 million) unused and the bank overdraft facility limit had $2.0 million (2012: $0.9 million) unused as at 30 June 2013. During the current and prior years there were no defaults or breaches on any loans payable. No assets have been pledged as collateral. The Corporation’s exposure to liquidity risk is deemed insignificant based on prior periods data and current assessment of risk.
64 FINANCIAL STATEMENTS 9
15 Financial instruments continued The Corporation’s policy establishes limits on the amount of debt that can mature within set periods. The policy sets out that floating rate debt is not to exceed 25% of the total portfolio. Fixed rate debt is not to exceed 20% in yearly periods from less than 1 year to 10 years and will not exceed 25% in five yearly periods from 10-15 years onwards. As at 30 June 2013 the percentage of debt maturing in less than one year was 15.3% (2012: 15.2%). Endeavour Energy maintains a balance between continuity of funding and flexibility through the use of bank overdrafts and debt. The Corporation’s funding requirement and strategy is reviewed annually and monitored on an ongoing basis. The Corporation manages debt via a term to maturity approach. At 30 June 2013 the Corporation’s term to maturity duration was within the policy limit approved by the Board. During the current and prior year no assets have been pledged as collateral. The contractual maturity of Endeavour Energy’s fixed and floating rate financial liabilities and derivatives are shown in the following table.
Contractual Carrying cash flows More than amount Total 1 year or less 1-5 years 5 years $m $m $m $m $m
30 June 2013 Derivative financial liabilities Treasury derivatives 5.1 4.5 1.1 3.4 – Non derivative financial liabilities AUD fixed rate loans 2,329.7 3,179.9 321.8 1,520.2 1,337.9 AUD floating rate loans 423.5 426.3 326.3 100.0 – AUD inflation indexed loans 605.2 845.1 15.1 38.9 791.1 Trade and other payables 196.8 196.8 196.8 – –
3,560.3 4,652.6 861.1 1,662.5 2,129.0
30 June 2012 Derivative financial liabilities Energy derivatives 12.9 12.9 12.8 0.1 – Treasury derivatives 6.1 5.5 1.0 4.2 0.3 Forward exchange and commodity contracts 3.9 16.9 16.9 – –
Non derivative financial liabilities AUD fixed rate loans 2,302.1 3,148.4 308.4 1,375.0 1,465.0 AUD floating rate loans 382.3 384.9 284.9 50.0 50.0 AUD inflation indexed loans 318.3 556.8 12.6 37.9 506.3 Trade and other payables 204.4 204.4 204.4 – –
3,230.0 4,329.8 841.0 1,4 67.2 2,021.6
Note: The amounts disclosed above for loans are the contractual undiscounted cash flows. These disclosed contractually committed cash flows will not differ from the timing and amounts expected to be incurred for fixed rate loans, however these liabilities will change for floating loans and inflation indexed loans due to changes in market rates and CPI inflation rates.
Endeavour Energy Annual Performance Report 2012–13 65 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
15 Financial instruments continued The following table separately discloses the undiscounted contractual net cash inflows and outflows on derivative liabilities that settle on a net basis. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to projected prices as illustrated by forward curves at the end of each reporting period. Energy derivatives are subject to pass through provisions in the Purchase and Sale Agreement with Origin Energy, and consequently all cashflows are offset either against contra cashflows with either the original counterparty or Origin Energy.
Total Carrying contractual More than amount cashflows 1 year or less 1-5 years 5 years $m $m $m $m $m
Derivative financial liabilities Net settled: – Treasury derivatives 5.1 4.5 1.1 3.4 –
5.1 4.5 1.1 3.4 –
30 June 2012 Derivative financial liabilities Net settled: – Energy derivatives 12.9 12.9 12.8 0.1 – – Cashflows offset^ (12.9) (12.9) (12.8) (0.1) – – Treasury derivatives 10.0 22.5 18.0 4.2 0.3
10.0 22.5 18.0 4.2 0.3
^ Cashflows available under offset arrangements with Origin Energy. Cash flow hedges The following table indicates the periods in which the cash flows associated with derivatives that are cash flow hedges are expected to occur and the profit and loss impact.
Expected cash flows and Carrying profit & loss More than amount impact 1 year or less 1-5 years 5 years $m $m $m $m $m
30 June 2012 Forward foreign exchange and commodity hedge contracts – Liabilities 3.9 16.9 16.9 – –
Liabilities 3.9 16.9 16.9 – –
66 FINANCIAL STATEMENTS 9
16 Key management personnel Key management personnel comprise members of the Board of Directors, Networks NSW (NNSW) executive management team and the Corporation’s leadership management team. The following were key management personnel of the entity at any time during the reporting period, and unless otherwise indicated were key management personnel for the entire period.
Directors Mr Roger Massy‑Greene (Chairman) [appointed 1 July 2012] Dr Peter Dodd [appointed from 1 July 2012] Ms Penny Le Couteur [reappointed 1 July 2012 – 30 June 2013] – term expired and did not seek a further term Ms Barbara Ward [appointed 1 July 2012 – 31 December 2012] – term expired and did not seek a further term Ms Laura Reed [appointed 1 January 2013] Mr Philip Garling [appointed 1 January 2013] Mr Vince Graham (Chief Executive Officer) [appointed 1 July 2012]
Key management personnel remuneration In addition to their salaries, the entity also provides post employment benefits to key management personnel (see Notes 1(q) and 1(r)). The allocation of NNSW executive management team remuneration to Endeavour Energy is based on the proportion of customer numbers to the total customer numbers of Ausgrid, Endeavour Energy and Essential Energy combined. The key management personnel compensation included in “employee benefits expense” (see Note 3) are as follows:
2013 2012 $m $m
Short-term employee benefits 3.4 3.4 Long-term benefits 0.6 0.3 Post-employment benefits 0.2 0.2
Total 4.2 3.9
Endeavour Energy Annual Performance Report 2012–13 67 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
17 Related parties transactions (i) Networks NSW structure On 1 July 2012, the Networks NSW (NNSW) operating model commenced with Ausgrid, Endeavour Energy and Essential Energy (DNSPs) having separate Boards with common Directors, a common Chairman and common Chief Executive Officer (CEO). A Group Management structure is being implemented to assist the Board and the CEO in undertaking reform of the industry consistent with the objectives of NSW Government policy and in line with the Umbrella Cooperation Agreement (UCA). NNSW is not a legal entity and the personnel and associated costs of the group management have been captured by the individual DNSPs and equitably shared between the three DNSPs. The Umbrella Cooperation Agreement facilitates the management and cooperation of NNSW and each of the DNSPs. It enables the DNSPs to identify and implement reform measures and realise and share the initiatives through acting collectively and co-operatively. Subsequent to 30 June 2013 the Energy Services Corporations Amendment (Distributor Efficiency) Legislation was passed. The amendment legislation provides for the appointment of a single Board of Directors that is to be the Board of each of the energy distributors (Ausgrid, Endeavour Energy and Essential Energy) to act in the best interest of energy distributors as if they formed part of a combined operation. The legislation was proclaimed on 27 August 2013.
(ii) Joint venture Further to the Umbrella Cooperation Agreement, the DNSPs have entered into a joint venture agreement for the purpose of realising cost savings through joint procurement and service provision activities. A legal entity Networks NSW Pty Limited has been used as the vehicle for this joint venture. Networks NSW Pty Limited will not incur any costs in its own right or enter into any sourcing agreements. Endeavour Energy has a one-third ownership interest in Networks NSW Pty Limited.
(iii) Directors Some Directors of Endeavour Energy are also Directors of other companies or have an interest in other companies or entities that may have had transactions with Endeavour Energy during the financial year. A Register of Directors’ interests is maintained by the Board Secretary and updated as required during the year. In accordance with the Board Charter and company Code of Conduct, Directors’ have declared any potential conflicts of interest in matters discussed at the meetings. 18 Remuneration of auditor
2013 2012 $m $m
Amounts paid and payable to the Audit Office of New South Wales 0.3 0.3
68 FINANCIAL STATEMENTS 9
19 Contingent liabilities and contingent assets Contingent liabilities
2013 2012 $m $m
Self insurance 0.4 1.6 Sundry general claims 9.5 5.0
9.9 6.6
The contingent liabilities relate to injury claims (self insurance) and sundry general claims. The Directors do not expect the outcomes of any actions associated with the above contingent liabilities to have a material effect on the Corporation’s financial position. The Directors are of the opinion that provisions are not required in respect of these matters, as it is not probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable measurement.
Contingent assets
2013 2012 $m $m
Sundry general claims 7.3 8.2
7.3 8.2
The contingent asset relates to a contractual dispute and insurance claims. 20 Commitments
2013 2012 $m $m
Capital commitments Commitments for the acquisition of assets, plant and equipment contracted for at the reporting date but not recognised as liabilities payable (including GST) 196.0 203.2
GST credits 17.8 18.5
In addition, Endeavour Energy has two Power Purchase Agreements where Endeavour Energy remains the counterparty. However, through an on-sale agreement as part of the Retail sale, energy transferred to Endeavour Energy is automatically transferred to Origin Energy. Energy purchase commitments to be transferred through the on-sale agreement as at 30 June 2013 total $1,315.6 million (2012: $1,506.9 million).
Endeavour Energy Annual Performance Report 2012–13 69 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
21 Operating leases Leases as lessee
2013 2012 $m $m
Non-cancellable operating leases are payable as follows: Within twelve months 6.5 6.2 Twelve months or longer and not longer than five years 12.1 14.3 Longer than five years 2.0 5.6
Total (including GST) 20.6 26.1
GST credits 1.9 2.4
The entity leases property under operating leases expiring from one to seventeen years. Leases generally provide the entity with a right of renewal, at which time all terms are renegotiated. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals are based on either movements in the Consumer Price Index or operating criteria.
Leases as lessor The entity leases out its properties, including premises, land and communications towers, under operating lease agreements at market rentals, predominantly on a fixed term basis. The future minimum lease payments under non-cancellable leases are:
2013 2012 $m $m
Within twelve months 0.5 0.5 Twelve months or longer and not longer than five years 0.7 0.6
Total (including GST) 1.2 1.1
GST credits 0.1 0.1
During the year ended 30 June 2013, $0.7 million (2012: $0.4 million) was recognised as rental income in the Statement of Comprehensive Income in relation to these properties.
70 FINANCIAL STATEMENTS 9
22 Reconciliation of cashflows from operating activities
2013 2012 $m $m
Profit for the year 306.5 265.5 Add/(less) non-cash items Depreciation non-current assets 167.7 154.1 Amortisation non-current assets 16.7 15.7 Amortisation of discounts/premiums 6.3 9.1 Non cash additions including capital contributions (74.6) (95.7) Net (profit)/loss on disposal of property, plant and equipment (0.8) 3.7 Reserve movements 38.4 (161.0) Changes in assets and liabilities (Increase)/decrease in trade and other receivables 25.6 84.3 (Increase)/decrease in unread meters (1.1) (73.0) (Increase)/decrease in derivative financial assets 12.8 41.3 (Increase)/decrease in inventories (2.0) 2.7 (Increase)/decrease in other assets – 7.7 Increase/(decrease) in trade and other payables (39.7) (74.5) Increase/(decrease) in provisions (68.7) 148.6 Increase/(decrease) in current tax balances (7.7) 11.7 Increase/(decrease) in deferred tax liabilities 54.2 80.8 Increase/(decrease) in derivative financial liabilities (17.4) (35.6) Increase/(decrease) in other liabilities (0.8) (1.8)
Net cash from operating activities 415.4 383.6
23 Superannuation – Defined benefits plan Endeavour Energy has a defined benefit superannuation plan covering a significant number of employees, which requires contributions to be made to a separately administered fund.
(a) General description of the type of plan The Energy Industries Superannuation Scheme: Division B Division C Division D These Divisions are all defined benefit schemes – at least a component of the final benefit is derived from a multiple of member salary and years of membership. All the Divisions are closed to new members.
Endeavour Energy Annual Performance Report 2012–13 71 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
23 Superannuation – Defined benefits plancontinued (b) Summary of financial information The following tables summarise the components of net benefit expense recognised in the profit or loss, actuarial gains and losses recognised in other comprehensive income, and funded status and amounts recognised in the Statement of Financial Position.
Reconciliation of the assets and liabilities recognised in the Statement of Financial Position
2013 2012 $m $m
Present value of the defined benefit obligation at end of the year (420.0) (434.2) Fair value of fund assets at end of the year 308.5 276.7
Net asset/(liability) recognised in the Statement of Financial Position at end of the year (111.5) (157.5)
Reconciliation of the present value of the defined benefit obligation
2013 2012 $m $m
Present value of defined benefit obligation at 1 July 434.2 354.8 Current service cost 11.0 9.8 Interest cost 16.9 20.5 Contributions by fund participants 3.8 4.0 Actuarial (gains)/losses in other comprehensive income (19.2) 71.0 Benefits paid (26.7) (25.9)
Present value of defined benefit obligations at 30 June 420.0 434.2
Reconciliation of the fair value of fund assets
2013 2012 $m $m
Fair value of fund assets at 1 July 276.7 289.6 Expected return on fund assets 22.1 23.2 Actuarial gains/(losses) in other comprehensive income 18.6 (26.1) Employer contributions 14.0 11.9 Contributions by fund participants 3.8 4.0 Benefits paid (26.7) (25.9)
Fair value of fund assets at 30 June 308.5 276.7
Expense recognised in profit or loss
2013 2012 $m $m
Current service cost 11.0 9.8 Interest cost 16.9 20.5 Expected return on fund assets (net of expenses) (22.1) (23.2)
Expense/(income) recognised in profit or loss 5.8 7.1
72 FINANCIAL STATEMENTS 9
23 Superannuation – Defined benefits plancontinued Amounts recognised in other comprehensive income
2013 2012 $m $m
Cumulative amount at 1 July (186.1) (89.0) Actuarial gains/(losses) recognised 37.8 (97.1)
Cumulative amount at 30 June (148.3) (186.1)
(c) Fund assets The percentage invested in each asset class at the statement of financial position date (latest available):
2013 2012 $m $m
Description Title Australian equity 14 25 International equity 22 27 Property 7 7 Private equity 1 1 Infrastructure 9 6 Alternatives 18 17 Fixed income 20 13 Cash 9 4
100 100
All Scheme assets are invested by the Trustees at arm’s length through independent managers.
Expected rate of return on assets The expected return on assets assumption is determined by weighting the expected long-term return for each asset class by the target allocation of assets to each class. The returns used for each class are net of investment tax and investment fees.
2013 2012 $m $m
Actual return on fund assets Actual return on fund assets 40.7 (2.9)
Endeavour Energy Annual Performance Report 2012–13 73 9
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2013
23 Superannuation – Defined benefits plancontinued (d) Valuation method and principal actuarial assumptions (i) Valuation method The Projected Unit Credit (PUC) valuation method was used to determine the present value of the defined benefit obligations and the related current service costs. This method sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation.
(ii) Economic assumptions
2013 2012 $m $m
Salary increase rate (excluding promotional increases)* 3.50 3.50 Rate of CPI increase 2.50 2.50 Expected rate of return on assets 8.10 8.10 Discount rate 3.80 3.06
* Expected salary increase rates (excluding promotional increases) are 2.7% pa until 30 June 2014, followed by 3.5% thereafter.
(e) Historical information
2013 2012 2011 2010 2009 $m $m $m $m $m
Present value of defined benefit obligation (420.0) (434.2) (354.7) (329.8) (294.6) Fair value of fund assets 308.5 276.7 289.6 268.1 233.1
(Deficit)/surplus in fund (111.5) (157.5) (65.1) (61.7) (61.5)
Experience adjustments – fund liabilities (19.2) 71.0 13.0 12.1 3.5 Experience adjustments – fund assets (18.6) 26.1 ( 7.5) (8.6) (74.4)
(f) Employer contributions
2013 2012 $m $m
Expected employer contributions to be paid in the next reporting period 11.8 12.4
(g) Funding arrangements for employer contributions The following is a summary of the 30 June 2013 financial position of the fund calculated in accordance with AAS 25Financial Reporting by Superannuation Plans.
(i) Surplus/deficit
2013 2012 $m $m
Accrued benefits 311.0 296.3 Net market value of fund assets (308.5) (276.6)
Net (surplus)/deficit 2.5 19.7
74 FINANCIAL STATEMENTS 9
23 Superannuation – Defined benefits plancontinued (ii) Contribution recommendations Recommended contribution rates for the entity are: Division B = 1.9 x member contributions Division C = 2.5% x salaries Division D = 1.64 x member contributions Plus additional contributions of $5.2 million pa
(iii) Funding method The method used to determine the employer contribution recommendations was the Aggregate Funding method. The method adopted affects the timing of the cost to the employer. Under the Aggregate Funding method, the employer contribution rate is determined so that sufficient assets will be available to meet benefit payments to existing members, taking into account the current value of assets and future contributions.
(iv) Economic assumptions The economic assumptions adopted were: Weighted‑average assumptions Expected rate of return on fund assets 7.0% pa Expected salary increase rate 2.7% pa until 30 June 2014; 3.5% thereafter Expected rate of CPI increase 2.5% pa
(v) Nature of asset/liability If a surplus exists in the employer’s interest in the fund, the employer may be able to take advantage of it in the form of a reduction in the required contribution rate, depending on the advice of the fund’s actuary. Where a deficiency exists, the employer is responsible for any difference between the employer’s share of the fund assets and the defined benefit obligation. 24 Reserves (a) Asset Revaluation Reserve The asset revaluation reserve is used to record increments and decrements in the fair value of property, plant and equipment to the extent that they offset one another. The reserve can only be used to pay dividends in limited circumstances. Refer to the Statement of Changes in Equity for movements in the asset revaluation reserve during the year.
(b) Hedge Reserve The hedge reserve records revaluations of items designated as hedges. Refer to the Statement of Changes in Equity for movements in the hedge reserve during the year. 25 Events Subsequent to Balance Date The financial statements of Endeavour Energy for the year ended 30 June 2013 were authorised for issue in accordance with a resolution of the Directors on 13 September 2013. There are no known events that would impact the state of affairs of the entity or have a material impact on the financial statements up to that date.
End of audited Financial Statements
Endeavour Energy Annual Performance Report 2012–13 75 9
STATEMENT BY DIRECTORS FOR THE YEAR ENDED 30 JUNE 2013
Pursuant to Section 41C of the Public Finance and Audit Act 1983, we state that in the opinion of the Directors of Endeavour Energy: (a) The accompanying financial statements and notes are a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, the State Owned Corporations Act 1989, the Public Finance and Audit Act 1983, the Public Finance and Audit Regulation 2010 and Accounting Interpretations, and give a true and fair view of the financial position of Endeavour Energy as at 30 June 2013 and its financial performance for the year ended on that date; (b) At the date of this statement, there are reasonable grounds to believe that Endeavour Energy will be able to pay its debts as and when they become due and payable; and (c) We are not aware of any circumstances at the date of this statement that would render any particulars included in the financial report to be misleading or inaccurate. This declaration is made in accordance with a resolution of the Board of Directors.
Vince Graham Roger Massy‑Greene Director Chairman Sydney 13 September 2013 13 September 2013
76 10 APPENDICES
FOR THE YEAR ENDED 30 JUNE 2013
Five-year statistical table 78 Consultants 79 Credit card certification 79 Disclosure of approved exemptions 79 Equal employment opportunity statistics 79 Executive changes and remuneration 80 Funds granted to non-government organisations 83 Government Information (Public Access) Regulation 2009 83 Greenhouse gas emissions 86 Guaranteed Customer Service Standards 86 Investment performance 87 Land disposal 87 Liability management performance 87 Network prices 2012–13 87 Overseas travel 87 Public Interest Disclosures Act 88 Summary of legislative changes and judicial decisions 88 Glossary 90 Index 91 Location and contacts Inside back cover
Endeavour Energy Annual Performance Report 2012–13 77 10
Five-year statistical table
(1) 2008–09 2009–10 2010 –11 2011–12 2012–13
EFFICIENCY Employment (2) 2,871 2,888 2,925 2,824 2,635 Output/employee (GWh) (3) 6.2 6.0 6.0 5.7 5.9 Sales revenue ($m) (4) 1,852.0 2,133.9 1,936.2 1,225.0 1,299.2 Customer/employee ratio (5) 304.2 299.8 300.0 306.3 328.2 Operating cost/unit sold ($/MWh) (6) 32.5 33.8 34.0 34.7 34.0 Operating cost/customer ($/customer) (7) 660.3 681.6 683.1 651.3 607.5 System loss index (%) (8) 4.4 4.6 3.9 4.0 4.2 Days sick leave/employee 6.8 7.1 7.0 7.2 7.2 Lost time injury frequency rate (LTIFR) (9) 3.9 3.1 4.5 3.6 2.6
EFFECTIVENESS Output (GWh) (10) 17,426 17,411 17,5 01 16,506 16,001 Supply reliability (minutes) (11) 89.3 79.4 72.0 81.8 88.0 Customer service indicator (12) Target 82%–84% 82%–84% 82% 75% 75% Result 83% 80% 79% 76% 75%
FINANCIAL INDICATORS EBIT ($m) 355.7 439.3 546.9* 585.9 636.6 Operating profit after tax ($m) 142.2 179.0 244.7* 265.5 306.5 Revenue ($m) (13) 1,998.4 2,272.1 2,156.8 1,476.9 1,492.8 Return on assets (%) (14) 8.7 9.5 10.8* 10.6 10.3 Return on equity (%) (15) 14.6 17.3 20.5* 19.8 20.2 Asset base ($m) 4,305.7 4,940.6 5,159.1 5,936.4 6,400.8 Asset sales ($m) (16) 4.1 4.8 3.6 3.8 10.7 Financial distribution ($m) 167.1 215.3 266.4 302.3 340.9 Tax equivalent ($m) (17) 63.4 72.7 109.6 115.7 131.4 Dividend 103.6 142.6 156.8 186.6 209.5 Special Dividend 0.0 0.0 863.7 0.0 0.0 Gross external debt ($m) 2,264.4 2,414.3 2,617.5 3,003.8 3,358.4 Gearing ratio (%) (18) 71.3 67.7 68.0 67.4 67.9 Times interest earned (19) 2.4 2.3 2.9* 2.9 3.2
Prior year statistics may have changed in line with amendments to comparative financial statement disclosures and amended definitions, to ensure consistency on an annual basis. * Excludes the impact resulting from the gain on the sale of retail net assets amounting to $759.3m.
(1) All dollar amounts are reported in (7) Operating expenditure including (12) The Customer Service Indicator was based real dollars. depreciation and amortisation but on an index covering both Retail and (2) Full time equivalent staff as at 30 June. excluding finance costs, divided by the Network factors up to and including March average number of network customers. 2011. From 1 July 2011 the Customer (3) Network GWh sold per average number of Satisfaction Indicator was determined on FTE employees. (8) Energy imported less energy consumption, divided by energy imported. Network factors only, which means this (4) Sales revenue includes total electricity data is not comparable. sales and network use of system income (9) The LTIFR indicates how frequently lost time injuries have occurred per million (13) Revenue includes sales revenue and other only. Following the sale of the Retail net income, including capital contributions. assets on 28 February 2011, there have hours worked. It is calculated by taking the been no further sales of electricity. number of LTIs reported in the previous (14) EBIT divided by the average asset base. 12 months (multiplied by 1,000,000) and (5) Average network customers per average (15) Operating profit after tax divided by then dividing by the average number of average equity. number of FTE employees. employees for the previous 12 months (6) Operating expenditure including (multiplied by 2,000 hours worked (16) Total proceeds from asset sales. depreciation and amortisation but per FTE). (17) Defined as income tax expense per excluding finance costs, divided by (10) Network sales (GWh) including accruals NSW Treasury. number of units sold. and off peak bulk transfers. (18) Debt divided by debt plus equity. (11) Average minutes per customer per year (19) Times interest earned calculated by without supply for unplanned outages. adding the net interest expense to the profit before income tax and dividing by the net interest expense.
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Consultants In 2012–13 Endeavour Energy engaged three consultants for projects (equal to or greater than $50,000) totalling $0.43million, as detailed below:
Consultant Purpose Cost $m
Ernst & Young To provide technical advice in relation to National Energy Customer 0.29 Framework (NECF), AER Regulatory Submissions and Retailer Engagement Strategy.
Frontier Economics To provide technical advice in relation to review of the methodology 0.09 used in AER submissions, and review of energy forecasting processes.
National Institute of Economic & To provide technical consulting in relation to modelling of energy 0.05 Industry Research Pty Ltd demand forecasts.
Total 0.43
Endeavour Energy also engaged one consultant less than $50,000 during 2012–13 for a cost of $18,676 for provision of managerial and operational advice. Credit card certification Endeavour Energy’s corporate and purchasing card program is governed by approved policies and procedures that were developed having regard to the Treasury Circular 05/06 Credit Card Use – Best Practice Guide published in August 2005 (originally published in 1999), Treasurer directions and Premier’s memoranda. Disclosure of approved exemptions
Reference Comment s. 41B(c) PF&AAa Exemption from preparing manufacturing, trading, and profit and loss Financial statements statements. Endeavour Energy is required to prepare a summarised Operating Statement, summarising major categories of revenues and expenses. Schedule 1 ARSBR Statutory SOCs are not subject to the payment of accounts provision Payment of accounts in c13 of the Public Finance and Audit Regulation 2010. Schedule 1 ARSBR As above. Time for Payment of Accounts s. 7(1)(a)(ia) ARSBA Exemption from preparing manufacturing and trading statements. Financial Statement of Controlled Entities Endeavour Energy is required to prepare a summarised Operating Statement (i.e. summarising major categories of revenues and expenses). a Public Finance and Audit Act 1983; b Annual Reports (Statutory Bodies) Act 1984; c Annual Reports (Statutory Bodies) Regulation 2005 EEO statistics Trends in the representation of equal employment opportunity groups (% of total employees, excluding casual employees)
Benchmark or Target EEO Group (a) 2008–09 2009–10 2010 –11 2011–12 2012–13
Women 50% 20.7% 20.7% 20.0% 19.7% 17.3%
Aboriginal People and Torres Strait Islanders 2.6% 0.9% 1.0% 1.0% 1.1% 1.2%
People whose first language spoken as a child was not English 19.0% 7.7% 8.1% 8.8% 9.6% 9.9%
People with a disability N/A 3.9% 3.7% 3.6% 3.9% 4.2%
People with a disability requiring work‑related adjustment 1.5% 0.3% 0.2% 0.2% 0.3% 0.3%
(a) as set by the NSW Government
Endeavour Energy Annual Performance Report 2012–13 79 10
Trends in the distribution of equal employment opportunity groups (distribution index)
Benchmark or EEO Group Target 2008–09 2009–10 2010 –11 2011–12 2012–13
Women 100 105 106 105 105 104
Aboriginal People and Torres Strait Islanders 100 100 99 94 91 92
People whose first language spoken as a child was not English 100 116 113 115 115 114
People with a disability 100 103 104 104 103 103
People with a disability requiring work‑related adjustment 100 N/A N/A N/A N/A N/A
Note 1: A Distribution Index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff. Values less than 100 mean that the EEO group tends to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. In some cases the index may be more than 100, indicating that the EEO group is less concentrated at lower salary levels. Note 2: The Distribution Index is not calculated where EEO group or non-EEO group numbers are less than 20.
Executive changes Officers that report to the Chief On 24 April 2013, the Board approved Ausgrid, Endeavour Energy and Executive Officer are considered and an average 2.5% increase in the Essential Energy’s operations were approved by the Board. The Chief remuneration of Group Executive integrated into a single operating Executive Officer considers and Officers consistent with the NSW model called Networks NSW on approves those recommendations for Government Wages Policy. Endeavour 1 July 2012 as a result of the NSW Executives that report to the Chief Energy’s Chief Executive Officer Government’s reform of the NSW Operating Officer. subsequently approved the same electricity industry. increase for Executive Leadership Components of remuneration Team members. Under this operating model the Endeavour Energy Executive Officers Chairman, Board of Directors and Annual “at risk” payment Chief Executive Officers (CEO) are employed under performance- at Ausgrid, Essential Energy and based employment contracts. Total Annual “at risk” payments are made Endeavour Energy were replaced remuneration for Executive Officers to contract managers on the basis with a common Chairman, Directors consists of fixed remuneration, of individual performance assessed and Chief Executive Officer. ie the annual salary paid inclusive of against pre-agreed measures and superannuation contributions and targets aligned to Endeavour Energy’s On 1 July 2012, an interim all salary sacrificed benefits; and corporate plan and Statement of management structure at Endeavour an annual “at risk” payment that Corporate Intent (SCI). Energy was established as work represents the proportion of total Eligibility is contingent on a rigorous commenced to integrate the three remuneration that is “at risk” for each assessment of leadership performance network businesses. Endeavour Executive Officer. Energy’s senior management team and achievement of business targets for each manager during the course was finalised in October 2012. Fixed remuneration Changes are shown in the table over. of the year. The Board or the Chief As a condition of employment, Executive Officer as appropriate Executive remuneration remuneration of Executive Officers reviews these performance is reviewed in April each year in-line assessments and approves all General principles with market trends and is based on annual performance payments to for remuneration of rigorous performance assessments of Executive Officers. Executive Officers each Executive Officer. In approving increases to the remuneration of Endeavour Energy’s remuneration Executive Officers, the Board or the strategies are designed to attract Chief Executive Officer considers and retain Executive Officers who the outcomes of these performance drive business performance and assessments, advice from external who consistently demonstrate high remuneration specialists on Executive standards of behaviour consistent salary trends and contemporary with Endeavour Energy’s values and remuneration practices, movement in Code of Conduct. Remuneration the consumer price index and NSW recommendations for Group Executive State Wages Policy.
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Group Executive employed by Endeavour Energy An eight member Executive Leadership Group (ELG) was established to drive industry reform in October 2012. Each Group Executive is paid by a nominated business. Endeavour Energy is responsible for contractual payments to the following executives and these costs are then shared by the three network businesses.
Position at “At risk” Name 30 June 2013 Remuneration a payment b 2012–13 Performance criteria
V. Graham c CEO Ausgrid, $749,998 $84,375 Led the development of a consistent Safety Endeavour for period Management System and safety culture across the Energy and 1/7/12 to three network businesses. c Essential Energy 31/12/12 Drove the ambitious network reform program across $87,750 for the three network businesses resulting in no real network the period price increases for customers on 1 July 2013. 1/1/13 to Exceeded the NSW Government targets for efficiencies 30/6/13c and savings to fund support program for families and low income electricity customers. Maintained organisational focus on network reliability and sustainability during a period of significant change. Delivered common management structure and consistent strategies for the three electricity distribution networks.
D. Lucas d Group Executive $425,195 $55,000 Drove the processes to establish the Networks NSW People and business structures and recruitment to new roles. Services Led the establishment of a common Code of Conduct, Risk Management Plan and Fraud and Ethics Program across the three network businesses. Responsible for achieving savings through the common procurement process and programs. a excludes “at risk’ payment and legislated employer contributions to superannuation. b “at risk” payments are based on 2012–13 performance against key criteria, approved by the Board in September 2013. c Vince Graham was Endeavour Energy’s CEO prior to his appointment as interim CEO for Ausgrid, Endeavour Energy and Essential Energy from 1 July to 31 December 2012. Following a competitive selection process he was appointed Chief Executive Officer on 1 January 2013 for all three NNSW businesses: Endeavour Energy, Ausgrid and Essential Energy. d Daniel Lucas was Endeavour Energy’s Deputy CEO Corporate. Following a competitive selection process he was appointed Group Executive People and Services Networks NSW from 15 October 2012.
Endeavour Energy Annual Performance Report 2012–13 81 10
Network business Executive employed by Endeavour Energy
Position at “At risk” Name 30 June 2013 Remunerationa paymentb 2012–13 Performance criteria
R. Howard c Chief Operating $462,875 $71,000 Year on year improvement in safety performance. Led the Officer implementation of operating cost savings and control of network price increases of less than 1% from July 2013. Successful roll-off of Origin Energy Transition Services Agreement in January 2013. Effective leadership in the establishment of a new, customer focused management team.
J. Battersby d Chief Engineer $208,618 $41,000 Exceeded expenditure and safety observation targets. Led the roll-out of safety culture plans throughout the division and exceeded expectations with the identification and implementation of efficiency initiatives. Provided significant contribution to the implementation of engineering reform frameworks across Networks NSW.
T. Christopher e General $208,160 $40,000 Exceeded targets for the efficient delivery of program Manager milestones, the identification and implementation of Network efficiency opportunities and staff safety outcomes. Development Led the implementation of safety by design initiatives within new network projects.
M. Ghattas f General $178,667 $36,500 Delivered favourable outcomes in both operational Manager efficiency and compliance outcomes. Also facilitated the Finance organisation’s overall efficiency program and actively and Compliance participated in the renegotiation of the enterprise bargaining agreement. Contributed positively to the standardisation of financial frameworks across Networks NSW.
D. Neville g General $260,457 $30,000 Led an overall improvement in Endeavour Energy’s safety Manager performance with significant work undertaken on various Health, Safety & initiatives, including ‘The Call’, the Lifeguard program Environment and a revamped risk-based safety audit program, that will provide a platform for further improvement in future years. Actively contributed to the development of safety frameworks across Networks NSW.
I. Robinson h General $187,58 0 $30,000 Exceeded targets for identifying and implementing Manager IC&T operating efficiencies across the organisation in information technology applications. Also led a number of reform initiatives at Networks NSW level that will provide future operating benefits. Provided key support in the successful transitioning of the retail services over to Origin Energy.
B. Rowley i General $352,399 $51,000 Led the successful completion of the transitioning of Manager People retail activities to Origin Energy and the renegotiation & Services of the enterprise bargaining agreement. Also led the preparation for the implementation of the new National Energy Customer Framework. Exceeded targets for safety performance and operating efficiency.
S. Ryan j General $298,067 $49,000 Delivered strong safety and financial outcomes with Manager significant progress being made on the implementation Network of a safety culture at an operational level. Actively Operations participated in the renegotiation of the enterprise bargaining agreement and preparation of the organisation as a network only business.
a excludes “at risk” payment b “at risk” payments are based on 2012–13 performance against key criteria, and approved by the Board or Chief Executive Officer in September 2013. c appointed Interim COO on 1 July to 14 October 2012. Following a competitive selection process was appointed COO from 15 October 2012. d new member of the Executive Leadership Team appointed 15 October 2012. Remuneration is prorated. e new member of the Executive Leadership Team appointed 15 October 2012. Remuneration is prorated. f new member of the Executive Leadership Team appointed 1 November 2012. Remuneration is prorated. g previously General Manager Health & Safety. Environment responsibilities added 15 October 2012 h new member of the Executive Leadership Team appointed 15 October 2012. Remuneration is pro-rated. i previously General Manager Support Services on the Executive Leadership Team. j Acting Executive General Manager Network from 1 July – 31 October 2012 on the Executive Leadership Team. Appointed to Executive Leadership Team on 1 November 2012.
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Other changes to Endeavour company information and supports the In response to the formal access Energy’s Executive Leadership proactive release of information where applications that were finalised in Team during 2012–13 it is in the public interest to do so. 2012–13 (including one application from 2011–12), full access was provided Joseph Pizzinga, Chief Financial Officer Review of program for release on nine occasions. With respect to was seconded to the Network NSW of information the remaining access applications, Reform Program from 1 May 2012. one was granted in part and three He resigned from Endeavour Energy During 2012–13 Endeavour Energy’s received refunds due to the requested on 15 September 2012 due to his review of its program for release of information not being held. A variety appointment as the General Manager information, which was undertaken as of public interest considerations Finance and Compliance at Ausgrid on required by section 7(3) of the GIPA were taken into account in dealing 17 September 2012. Act, included the review of its policies with these applications and these and procedures regarding processing Irina White resigned as Endeavour are set out in Table E. In the course requests for access to government Energy’s Company Secretary and was of determining access applications Information; review and publication appointed Group Manager Corporate during the financial year Endeavour of its information guide; the training Governance Networks NSW on 1 Energy did not rely on any of the of staff in GIPA Act compliance; November 2012. Remuneration paid conclusive presumptions of overriding publication of contractual information until 1 November was $107,209. public interest against disclosure (as into a centralised database; a review of set out in Schedule 1 of the GIPA Act). Funds granted to its website and publication of relevant information regarding corporate non‑government governance and the network business. Statistical information about organisations In addition, Endeavour Energy access applications Endeavour Energy lends support received positive feedback from an As required by section 7 and schedule to selected community organisations independent review of the company’s 2 of the Government Information that reflect its obligations as a state- existing systems and processes for (Public Access) Regulation 2009 (NSW), owned corporation and align to its compliance with the GIPA Act and the following tables provide a summary Corporate Plan. implemented enhancements to of the responses to requests made GIPA templates. pursuant to the GIPA Act in 2012–13. Government Information (Public Access) Act 2009 Total number of access The Government Information (Public applications received during Access) Act 2009 (NSW) (GIPA Act) the year replaced the Freedom of Information Act 1989 (NSW) on 1 July 2010. In 2012–13 Endeavour Energy received The GIPA Act has established a 15 new formal access applications comprehensive system for public for information pursuant to the GIPA access to government information. Act. As at 30 June 2013, two access Endeavour Energy is subject to applications were ongoing. The formal the GIPA Act and is committed to access applications were received complying with the GIPA Act in a fair from members of the public, media, and objective manner when dealing private sector businesses, lawyers with external requests for access to and investigators.
Table A: Number of applications by type of applicant and outcome
Refuse to confirm/deny Access Access Access Information Refuse to whether granted granted refused Information already deal with information Application in full in part in full not held available application is held withdrawn
Media 3 – – – – – – –
Members of Parliament – – – – – – – –
Private sector business 4 – – 1 – – – 1
Not for profit organisations or community groups – – – – – – – –
Members of the public (application by legal representative) 2 1 – 1 – – – –
Members of the public (other) – – – 1 – – – 1
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Table B: Number of applications by type of application and outcome
Refuse to confirm/deny Access Access Access Information Refuse to whether granted granted refused Information already deal with information Application in full in part in full not held available application is held withdrawn
Personal information applications* – – – – – – – 1
Access applications (other than personal information applications) 9 1 – 3 – – – 1
Access applications that are partly personal information applications and partly other – – – – – – – –
* A personal information application is an access application for personal information (as defined in clause 4 of Schedule 4 to the Act) about the applicant (the applicant being an individual).
Table C: Invalid applications
Reason for invalidity Number of applications
Application does not comply with formal requirements (section 41 of the Act) –
Application is for excluded information of the agency (section 43 of the Act) –
Application contravenes restraint order (section 110 of the Act) –
Total number of invalid applications received –
Invalid applications that subsequently became valid applications –
Table D: Conclusive presumption of overriding public interest against disclosure: matters listed in Schedule 1 of the Act
Number of times consideration used
Overriding secrecy laws –
Cabinet information –
Executive Council information –
Contempt –
Legal professional privilege –
Excluded information –
Documents affecting law enforcement and public safety –
Transport safety –
Adoption –
Care and protection of children –
Ministerial code of conduct –
Aboriginal and environmental heritage –
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Table E: Other public interest considerations against disclosure: matters listed in table to section 14 of Act
Number of occasions when application not successful
Responsible and effective government –
Law enforcement and security –
Individual rights, judicial processes and natural justice –
Business interests of agencies and other persons 1
Environment, culture, economy and general matters –
Secrecy provisions –
Exempt documents under interstate Freedom of Information legislation –
Table F: Timeliness
Number of applications
Decided within the statutory timeframe (20 days plus any extensions) 13
Decided after 35 days (by agreement with applicant) –
Not decided within time (deemed refusal) –
Total 13
Table G: Number of applications reviewed under Part 5 of the Act (by type of review and outcome)
Decision Decision varied upheld Total
Internal review – – –
Review by Information Commissioner* – – –
Internal review following recommendation under section 93 of Act* – – –
Review by ADT – – –
Total – – –
* The Information Commissioner does not have the authority to vary decisions, but can make recommendation to the original decision-maker. The data in this table indicates that a recommendation to vary or uphold the original decision has been made. The two internal reviews relate to matters that were with the Information Commissioner at 1 July 2011 and were concluded in 2011–12.
Table H: Applications for review under Part 5 of the Act (by type of applicant)
Number of applications
Applications by access applicants –
Applications by persons to whom information the subject of access application relates (see section 54 of the Act) –
Endeavour Energy Annual Performance Report 2012–13 85 10
Greenhouse gas emissions
Consumption
Emissions Source Consumption Units Tonnes CO2 % Total SCOPE 1 EMISSIONS
Petroleum products combusted in transport vehicles 3,018 Kilolitres 7,6 8 4.0 4 1.21
Petroleum products combusted in stationary units (generators) 192.44 Kilolitres 516.26 0.08
HFC Losses 0 – –
SF6 89.00 2,130 0.34
Combusted petroleum based oils and greases 67.5 6 Kilolitres 73.13 0.01
Acetylene 74.80 0.15 –
Bottled LPG 34.00 52.34 0.01
Total Scope 1 Emissions 3,475.80 10,456 1.65
SCOPE 2 EMISSIONS
Electricity consumed by Endeavour Energy 14,5 07,179 kWh 12,766 2.02
Distribution Network Losses 693,050 MWh 609,844 96.33
Total Scope 2 Emissions 707, 557,179 kWh 622,650 98.35
EMISSION REDUCTIONS
Energy production 33,518 kWh – –
GreenPower 3,626,795 kWh – –
Total emission reduction 3,660,313 kWh – –
NET GHG EMISSIONS
Scope 1 + Scope 2 - Reductions 633,106 100
Note: some data has been estimated.
Guaranteed Customer Service Standards Endeavour Energy is required to meet the Guaranteed Customer Service Standards for domestic customers, set by the Australian Energy Regulator. If Endeavour Energy does not: • notify the customer a minimum two working days prior to the planned interruption • restore electricity supply on or before the notified time • notify the planned interruption • or interrupt electricity supply before the notified time we are required to pay the customer $20 on application. As at 30 June 2013, Endeavour Energy compensated 202 customers for a total cost of $4,040 for not meeting these service levels. A revised set of Guaranteed Customer Service Standards came into effect on 1 July 2013, as a result of the introduction of the National Energy Customer Framework (see page 21 for further information). Updated Customer Service Standards are available on our website www.endeavourenergy.com.au.
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Investment performance Network prices 2013–14 Consistent with the tariff strategy, Endeavour Energy is a net borrower Each June the Australian Energy Endeavour Energy’s network prices are in the marketplace and has disclosed Regulator (AER) is required to approve designed to: interest income of $155,000 in the Endeavour Energy’s proposed network • Constrain average distribution price audited Financial Statements Note 2 prices for the upcoming financial year. increases to no more than the rate page 48. This income is derived from On 31 May 2013 the AER advised of inflation for (at least) the next interest on our bank account being in that Endeavour Energy’s pricing six years; funds and the investment of average proposal was compliant with Part I of surplus funds of approximately the National Electricity Rules and the • Reflect the role of networks in $2.5 million over the reporting period. AER’s 2009 distribution determination providing capacity; and that all forecasts associated with • Align the largely fixed costs of the Land disposal the proposal are reasonable. The AER network and revenues; Endeavour Energy did not dispose approved 2013–14 network prices of any land worth more than $5 million effective 1 July 2013. • Provide outcomes that recognise the during the reporting year. impacts that pricing decisions have Endeavour Energy’s network tariff on our customers; Access to documents concerning strategy aims to move toward prices the details of properties disposed of that better reflect the underlying costs • Pass through the full cost of during the reporting year may be made of supplying network capacity while TransGrid’s transmission services in accordance with the Government constraining average distribution price and preserve transmission price Information (Public Access) Act 2009. increases to no more than the rate signals where possible; and of inflation. • Explore tariff based demand Liability management management opportunities, performance including voluntary time of use Information on Endeavour Energy’s tariffs, and tariffs that target network weighted average interest rate of constraints on a locational basis. various debt as at 30 June 2013 is detailed in the audited Financial Statements Note 12 pages 56–58. Information on Endeavour Energy’s finance costs are disclosed in Note 3 of the audited Financial Statements on page 48. Overseas travel
Date from Date to Name Destination Purpose
Inspection of power transformers 23 July 2012 25 July 2012 Peter Norrie Vietnam (supplier: ABB)
Factory Acceptance Testing of 4 August 2012 11 August 2012 Alex Pianca Vietnam power transformers (supplier: ABB)
Inspection of power transformers 7 November 2012 11 November 2012 Alex Pianca Taiwan (supplier: Fortune)
Inspection of power transformers 27 November 2012 6 December 2012 Peter Norrie Indonesia (supplier: PTCG)
Factory Acceptance Testing of power 16 December 2012 24 December 2012 Dejan Bajic Taiwan transformers (supplier: Fortune)
Inspection and testing of 11kV 7 April 2013 12 April 2013 Dejan Bajic China Auxiliary switchgear due to persistent quality issues (supplier: Schneider)
Inspection and Factory Acceptance 10 May 2013 17 May 2013 Peter Norrie Indonesia Testing of power transformers (supplier: PTCG)
Factory Acceptance Testing of power 30 June 2013 8 July 2013 Brian Bailie Indonesia transformers (supplier: PTCG)
Endeavour Energy Annual Performance Report 2012–13 87 10
Public Interest b. Economic regulation of network Privacy Act 1988 (Cth) Disclosures Act service providers – effective Significant amendments made to 29 November 2012, the AEMC In compliance with the Public Interest this Act via the Privacy Amendment changed the rules governing: Disclosures Act 1994 (PID Act), (Enhancing Privacy Protection) Act 2012 Endeavour Energy has a policy for (i) rate of return; (Cth) will commence in March 2014. receiving, assessing and dealing with Following are some of the matters of public interest disclosures. Through (ii) capital expenditure incentives; note arising from the amendments: the publication and distribution of (iii) capital expenditure and • Organisations will need to have a the Code of Conduct booklet and operating expenditure compliance policy that demonstrates in the roll out of ethics discussion allowances; and compliance with the legislation. sessions, employees have been informed of the contents of the policy (iv) regulatory process. • Each organisation must have and the protections available under c. Distribution network planning and documented procedures for the PID Act. expansion framework – effective complying with the legislation. During the financial year, Endeavour 1 January 2013, the rule implements • There is a new accountability regime Energy dealt with ten public interest an annual planning and reporting for personal information that is disclosures received from ten public process and a distribution project held offshore. officials. Nine of the matters received assessment process. The key • The implementation of procedures were in relation to allegations of components are: for dealing with complaints. corrupt conduct and the other (i) a distribution annual one was related to allegation of planning review; • There are restrictions on the maladministration. There were no collection and use of personal public interest disclosures received (ii) a distribution annual information for direct marketing. in relation to serious and substantial planning report; • The powers of the Privacy waste or government information (iii) demand side engagement Commissioner have been clarified contravention. As at 30 June 2013, obligations on and expanded. ten public interest disclosures have distribution businesses; been finalised. (iv) joint planning arrangements; Material changes to New South Wales legislation Summary of legislative (v) the regulatory investment test changes and judicial for distribution (RIT-D); and Energy Services Corporations Act decisions for 1 July 2012 1995 (NSW) to 30 June 2013 (vi) a dispute resolution process for the RIT-D. This Act was amended by the Energy Material changes to Services Corporations Amendment d. Distribution losses in expenditure (Distributor Efficiency) Act 2013, Commonwealth legislation forecasts – effective 1 January assented to on 3 June 2013. The 2013, distribution network service National Electricity Rules amended Act commenced on 27 providers are required to provide The AEMC has published a number August 2013. The amendment an explanation of how they take formally provides for a single board of final rule changes, including the cost of distribution losses into the following: of directors as the joint board of each account as part of the reporting of the energy distributors. The board a. Changes to normal voltage requirements under the new must act in the best interests of – effective 7 March 2013, the Distribution Annual Planning Report. all of the energy distributors as if Australian Energy Market Operator e. Cost pass through arrangements the individual businesses were a (AEMO) is required to publish for distribution service providers – combined operation. a notice notifying registered effective 2 August 2012, network participants that it has received The amendment also addresses the businesses may nominate additional cost of compliance with Ministerial a request to change the normal pass through events and may voltage level at a connection point directions. As a result of the recover their efficient costs if a amendment, a single distributor is and a further notice notifying cost pass through event occurs registered participants of the nature not entitled to be reimbursed for in the final year of a regulatory compliance costs if the Ministerial and reasons for the change in the control period. normal voltage level. direction is in the commercial interests of all three distributors combined, i.e. there is an overall net benefit for the distributors as a whole. Also, if a direction is not in the combined commercial interests of the energy distributors, any amount that a single distributor will be entitled to be reimbursed in connection with compliance is to be reduced by the amount of the net benefit accruing to any of the other distributors as a result of compliance.
88 APPENDICES 10
Environmental Planning and Work Health & Safety Act Assessment Act 1979 (NSW) 2011 (NSW) Effective 1 March 2013, this Act was Throughout the reporting period, amended by the Environmental the Work Health and Safety Act 2011 Planning and Assessment Amendment (WHS Act) and the related regulation Act 2012 to clarify the purpose, status were amended to: and content of development control a. clarify that WorkCover must be plans and how they are to be taken notified of notifiable incidents, into account during the development even if the incidents have also assessment process for achieving been notified under the Workplace environmental objectives, to give Injury Management and Workers more weight to development control Compensation Act 1998; instruments over development control plans, to require written contracts b. update the criteria relating for certification work and to extend to prohibited and restricted indemnification against possible carcinogens and hazardous copyright breaches of documents chemicals; and submitted by persons who do not have copyright where the documents c. allow WorkCover to share are publicly notified or made use of information it obtains under the under the Act. WHS Act with other persons to enable the administration of a Independent Commission Against range of other safety, criminal and Corruption Act 1988 (NSW) environmental Acts. Effective 19 April 2013, this Act Summary of significant judicial was amended by the Independent decisions, new codes of practice and Commission Against Corruption compliance exemptions Amendment (Disciplinary Proceedings) During the financial year, there were no Act 2013 to enable employers to take judicial decisions significantly affecting disciplinary proceedings against the operations of Endeavour Energy or public official employees on the basis the users of its services. of a formal finding of corruption by ICAC without the need for further investigation. It makes admissible in disciplinary proceedings evidence that may be self-incriminating. The public official must be given an opportunity to make a submission in relation to any proposed action following the determination of the disciplinary proceedings.
State Owned Corporations Act 1989 (NSW) Effective 3 June 2013, amendments through the State Owned Corporations Legislation Amendment (Staff Directors) Act 2013 have removed the mandatory requirement for staff directors to be appointed (including a union nominated director). Instead, merit-based appointments will be made as roles become vacant.
Endeavour Energy Annual Performance Report 2012–13 89 10
Glossary AASB Australian Accounting ICAC Independent Commission PESAP Public Electrical Standards Board Against Corruption Awareness Safety Plan AER Australian Energy Regulator ICAM incident cause PID Act Public Interest Disclosures ARSBA Annual Reports analysis method Act 1994 NSW (Statutory Bodies) Act 1984 I care! Endeavour Energy’s PUC projected unit credit ARSBR Annual Reports (Statutory workplace giving program RFP request for proposals Bodies) Regulation 1995 IPART Independent Pricing and SAIDI system average interruption BSP bulk supply point Regulatory Tribunal duration index CAPEX capital expenditure ISO International Organization SAMP Strategic Asset for Standardization CPI consumer price index Management Plan IT Information technology CEO Chief Executive Officer SCI Statement of kV kilovolt Corporate Intent DM demand management kVA kilovolt ampere SCADA Supervisory Control EBIT earnings before and Data Acquisition interest and tax kWh kilowatt hour SENI serious electrical EBITDA earnings before interest, LED light-emitting diode network incident tax, depreciation and LTI lost-time injury SF sulphur hexafluoride amortisation LTIFR lost-time injury 6 EEO equal employment frequency rate SNMP Strategic Network Maintenance Plan opportunity NPAT net profit after tax including ELT Executive Leadership Team capital contributions SOC State Owned Corporation EPA Environment NSW New South Wales TRI total recordable injuries Protection Authority NTER National Taxation TS transmission substation FBT fringe benefit tax Equivalent Regime TSA Transition Services FTE full-time equivalent ODRC optimised depreciated Agreement FWA Fair Work Australia replacement cost TUOS transmission use of system GRI Global Reporting Initiative OHS occupational health WACC weighted average and safety cost of capital GWh gigawatt hour OPEX operating expenditure ZS zone substation GST goods and services tax PCBU person conducting business or undertaking
90 APPENDICES 10
Index A construction projects 4, 9 electricity demand air conditioning 11, 14, 19, 27 building 9 growth 14 Annual Reports (Statutory Bodies) distribution 9 industrial 14 Act 1984 (NSW) 1 peak resourcing strategy 9 management 20 Apprentice of the Year awards 22 major works approved 14 peak 11, 14, 20, 87 approved exemptions 79 major works in progress 15–18 reduced 4, 14, 32 asbestos management system 8 consultants 70 electricity distribution network 2 assets 32 Consumer Price Index (CPI) reliability 5 inspections 11, 19 4, 6, 10, 13, 87 value 2 management 5 consumption electricity drawings 11 net 3, 78 see electricity demand Electricity Supply Act 1995 (NSW) 2 network 11 contact details inside back cover emergency response work 4, 19, 21 see also financial statements contractors 13, 24, 26 energy efficient lamps, streetlighting 19 Audit and Risk Committee 12, 29, 30, 31 controlled metering 11 energy rebate schemes 4, 6, 28 Auditor-General 31, 35 CoolSaver 20 Energy Services Corporations Ausgrid 4, 8, 12, 28, 30, 80 copper theft 24 Act 1995 (NSW) 2, 30, 88 Australia Day 25 corporate plan 12, 80, 83 Enterprise Agreement 5, 7, 13 Australian Energy strategic objectives 6, 7 Environment Protection Authority 26 Market Commission 88 corruption 89, 91 environment 3, 26–7, 89 Australian Energy Market Operator 88 anti-corruption initiatives 30 carbon policy 26 Australian Energy Regulator (AER) cost savings 7, 10, 22 compliance 26 4–5, 9, 86, 87 credit card certification 79 energy efficiency 27 ‘Better reform’ program 9, 24 Crime Stoppers 24 greenhouse gas emissions 3, 26, 86 network price approval 87 customer connection works 19 illegal dumping 26 transitional regulatory proposal 9 Customer Consultative Committee 25 landfill diversion 27 2014 submission to 5, 6, 7, 9 Customer Data into Banner project 7 minor incidents 26 Australian Fair Work Act 2009 5, 13 Customer Interaction Centres (CICs) 21 performance 26 B customer satisfaction 3, 5 renewable energy 25, 26 Black spot program 24 Customer Satisfaction Indicator 3 reportable incidents 3, 26 Blacktown 19 customer service 21 soil remediation 27 Blue Mountains 14, 25 Guaranteed Customer staff training 26 extreme weather conditions 4 Service Standards 86 strategy 26 Board Committees 29, 30 National Energy Customer timber pole recycling 27 meetings 29 Framework (NECF) 5, 21, 86 transformer oil recycling 27 Board of Directors 28, 29 Customer Value Improvement Plan 7 waste management 27 appointment, term and customers water savings 27 committee memberships 29 compensation paid to 86 Environmental Impact conflicts of interest 31 connections 3, 19 Assessment process 26 indemnity against engagement strategy 4–5, 9 Environmental Planning and certain liabilities 30 high-use 20 Assessment Act 1979 (NSW) new governance structure 28, 30 multicultural policies and services 25 amendment 89 role and responsibilities 30 number of 2 Essential Energy 4, 8, 12, 28, 30, 80 budget 4, 5, 9 rebates and assistance 4, 6 ethical standards 28, 30, 88 see also financial statements see also electricity demand Ethics Communication and bushfire risk 19, 24 D Engagement Strategy 30 business continuity 12 demand management 20, 87 Executive changes following reforms 80 business model, Demand Management Plan 20 Executive Leadership Team 28, 81 network-only 4, 7, 10, 25 projects for investigation 2012–13 20 external audit 35 C Department of Climate Change F capital expenditure 3, 4, 6, 9, 14, 33 and Energy Efficiency 3 Fair Work Australia 8 deferred 20 Dial Before You Dig 7, 11, 20 Fair Work Commission 13 carbon policy 26 number of enquiries per day 20 Family Energy Rebate scheme 4, 6 Ceramic Arc Metal Halide lamps 19 Directors feeder automation 11 Chief Executive Officer 1, 2, 4, 28, 30, 81 see Board of Directors field force automation 11 climate change disability reporting 79 finance see environment; greenhouse gas disaster recovery plans 12 assets and liabilities 32 emissions; weather conditions Distribution Electricity Supply debt 32, 33, 87 Climate Change Fund, Industry qualification 22 dividend 3, 32, 33 NSW Government 10 distribution network planning 88 investment performance 87 coal mining sector 21 distribution projects 4, 9 maintenance expenditure 19 Code of Conduct 28, 30, 88 dividend 3, 32, 33 major works approved 14 community drug and alcohol testing 4, 8 major works in progress 15–18 consultation/engagement 24 E profit results 3, 4, 32, 33 partnerships 25 education, community 24 sales revenue 3, 4 complaints 21 efficiency programs 4, 5, 10 summary 3 Compliance Plan, Strategic 31 Electric Energy Society of Australia 25 financial statements 34–76 fraud control 6, 30, 31 freedom of information 83 future plans 5, 6–7, 10, 25
Endeavour Energy Annual Performance Report 2012–13 91 10
G legislative changes 88–9 overhead lines GIS/CAD system 11 letter of transmittal 1 campaign to prevent line strike 24 glossary 90 LiDAR technology 19 inspections 19 governance 28–31 Lifeguard program 4, 8 P joint Board of Directors live line crews 11 Parramatta City Council 24 and common CEO 4, 28, 30, 80 Low Income Household Rebate, 4, 6, 28 PeakSaver 20 new arrangements 28, 30, 80–1 M Penrith 19 Government Information (Public maintenance 19 City Council 24 Access) Act 2009 (NSW) 83–5, 87 management structure 28 performance payments 80 access applications 83–5 Marsden park Zone Substation 14 performance 8–13 GPS technology 11 Master Builders’ Association 24 indicators 8, 10, 22 graffiti 24 metering work 19, 20 investment 87 grants 83 Metropolitan Strategy for summary 3, 4 Greater Western Sydney 14, 25 Sydney, draft 14 pilot projects/programs 19 greenfield development 14 Ministerial directions 88 pole greenhouse gas emissions 86 multicultural policies 25 ‘black spot’ program 24 GreenPower 26 MySafe 11 inspections 19 H N Power Quality and Reliability Centre 25 health and safety 8 National Electricity Rules power supply 2, 5, 14, 24 fatigue management 8 4, 6, 9, 20, 87, 88 Guaranteed Customer Incident Cause Analysis ‘screening test’ for projects Service Standards 86 Method (ICAM) 8 over $5million 20 prices 4, 5, 6, 7, 9, 10, 14, 24, 25, 87 injuries to staff 8 National Energy Customer primary school students 24 Lost Time Injury Frequency Framework (NECF) 5, 21, 25, 79, 86 Privacy Commissioner 88 Rate (LTIFR) 3, 4, 5, 6, 8, 78 National Greenhouse and Energy Privacy Act 1988 (Cth) 88 random alcohol and drug testing 4, 8 Reporting Scheme Determination 3 amendment 88 reportable incidents 5 network businesses amalgamation, profitability 3, 4, 5, 32 staff training 4 NSW Government 4, 80, 81 see also financial statements strategic objective 6 Network Electricity Project Challenge 4, 6, 10, 11 use of technology 11 Reform Program 6, 7 Project Compete 4, 6, 10, 11 see also public safety Network General Enquiries, Protection of the Environment Huntingwood head office 27 new telephone number 21 Operations Act 1997 (NSW) 26 I Network Operational Public Electrical Safety I care! 25 Readiness project 7, 12 Awareness Plan 24 Illawarra 14, 25 Network Reform Program 4, 10, 81 public safety 8, 24–5 independent auditor’s report 31, 35 Network Reliability Plan 6 education 24 Independent Commission Against network signage 25 Corruption Act 1988 (NSW) 89 ageing 14 purpose statement 2 Independent Pricing and Regulatory connections 3, 21 Q Tribunal (IPART) 46 expenditure 14 Queensland Government 15% industrial demand 14, 21 maintenance 19 Gas Scheme 26 infrastructure projects, government 21 major projects 15–18 R Injury Management 8 new connections 21 rail projects 21 inspections 11, 19 plan delivery 5 rebates and assistance insurance 31 prices 4, 5, 6, 7, 9, 10, 14, 24, 25, 87 to customers 4, 6, 28 liability and professional indemnity reform program 10 recycling 27 30 reliability 3, 5 reform program, state-owned Integral Energy 12 strategy 14–21 networks 4 internal audit 31 Networks NSW 4, 5, 28, 80 see also Networks NSW interpreter service 25 Community Partnership 4, 5, 25 regional employees 11 interruptions to power supply 10 shared management structure 28 Regional Illegal Dumping Squads 26 Guaranteed Customer Nominations Committee 29, 30 regulation of energy distribution, Service Standards 86 NSW & ACT Greenhouse Gas new framework 5 investment 5, 6, 9, 14, 33, 87 Reduction Schedule 26 reliability 3, 4, 5, 6, 10, 14 see also capital expenditure; network NSW 2021: A plan to make NSW technology assistance 11 iSafe 11 number one 26 remuneration 80 J NSW Energy Savings Scheme 26 renewable energy 25, 26 judicial decisions 89 NSW Public Lighting Code 19 residential demand NSW Training Awards 22 management programs 20 K NSW Treasury 32 key result areas 5 residential growth 3, 14 Kiama mini tornado 4, 21 O residential land 21 operating costs 3, 4, 78 retail transition to L see also financial statements Origin Energy 4, 7, 10, 12, 21, 22 land disposal 87 organisational structure 28 revenue 3, 4, 5, 9, 32, 78, 87 land remediation 27 Origin Energy 7, 21 see also financial statements Landcom 21 Transition Services Agreement 4, 7, 21 Large Scale Renewable outage management 10, 11, 19, 21 Energy Target 26 outcomes, future key 7 LED lighting 19, 27 outsourcing 7
92 APPENDICES 10 risk management 5, 6, 7, 12, 30 equal employment U incident management plan 12 opportunity 79–80 University of Wollongong 25 risk categories 12 Executive remuneration 80 UrbanGrowth 21 risk management plan 12 Indigenous 23, 79 V role and function, Board of Directors 28 leadership development 5, 7, 13 value for customers 2, 9, 10 rooftop photovoltaic systems 14 long-serving 23 values 2 Rooty Hill demand Mix and Match program 22 vegetation management 14 management program 11, 20 recruitment 22 vehicle tracking 11 superannuation 13 S W safety temporary 9, 22 total number 2, 3, 22 waste management 27 see health and safety; public safety weather conditions 10, 19 Safety, Human Resources and see also Enterprise Agreement; health and safety Blue Mountains 4 Environment Committee 29, 30 extreme events 4, 19, 21 Safety Strategic Plan 6 State Owned Corporations Act 1989 (NSW) 28, 30, 89 Kiama 4 security 11 temperature extremes 4, 14 electricity supply 14 amendment 89 Statement of Corporate website 83 field service centres address inside back cover and substations 24 Intent (SCI) 30, 32, 33, 80 statistics, five-year table 78 Western Sydney and Illawarra TAFE see also reliability Student Excellence Awards 25 Service Awards 23 Strategic Asset Management Plan (SAMP) 33 windstorms 4, 19, 21 Service Wire Replacement Program 11 Work Health & Safety shareholders 1, 2 Strategic Compliance Plan 31 Strategic Network Maintenance Act 2011 (NSW) 89 Shareholder Ministers 1, 30 Work Health and Safety (WHS) Shoalhaven 25 Plan (SNMP) 19 streetlighting 19 regulations 2011 8 Small-scale Renewable WorkCover NSW 8, 89 Energy Scheme 26 substations 3, 5, 11, 14, 20, 24, 29, 33 major projects approved 14 Workers Compensation smart grid 7, 11 Amendment Act 2012 8 solar energy 4 major projects in progress 15–18 summary of year activities 3 Workers Compensation 8 South Coast 2, 27 workforce 8, 9, 10, 22 Southern Highlands 25 System Average Interruption Duration Index (SAIDI) 5, 7, 10 see also staff Springhill Field Service Centre 26 workplace giving program 25 Springwood 11 T workplace relations 8 staff 22–3 tariff strategy 87 absenteeism 5 technology 7, 11 apprentices 22 The Ponds 19 awards 22, 23 training programs, emergency consultation 8 services and construction industry 24 diversity 23, 25 TransGrid 15, 87 drug and alcohol testing 4, 8 transmission and education and training 22, 26, 30, 83 distribution network 19 employee mobility team 22 travel, overseas 87 employment conditions 5, 7, 13
Endeavour Energy Annual Performance Report 2012–13 93 Notes Ausgrid
Kandos LOCATIONS AND CONTACTS Bowenfels
Windsor
Glendenning Katoomba Location, addresses, Kings Park phone numbers and Penrith Parramatta Huntingwood hours of operation Essential Energy Emergencies, streetlights out, Hoxton Park hot water hotline Narellan
Phone: 131 003 (24 hours) Picton Customer enquiries Moss Vale General enquires phone: 133 718 Coniston Springhill Head Office Shellharbour Phone: 131 081 or (02) 9853 6666 (8.00am - 5.30pm Monday to Friday)
Interpreter services Nowra Phone: 131 450
Fax Hoxton Park (02) 9853 6000 Field Service Centre 490 Hoxton Park Road Ulladulla Pacific Email Hoxton Park NSW 2171 Ocean endeavourenergy@endeavourenergy. com.au Hoxton Park Technical Training Centre Website 109 Jedda Road www.endeavourenergy.com.au Prestons NSW 2170
Ethics hotline Kandos Field Service Centre 1800 ETHICS (384 427) 16 White Crescent Kandos NSW 2848 Parramatta Field Service Centre Main office 84-86 Macarthur Street 51 Huntingwood Drive Katoomba Field Service Centre Parramatta NSW 2150 Huntingwood NSW 2148 27-29 Whitton Street PO Box 811, Seven Hills NSW 1730 Katoomba NSW 2780 Penrith Field Service Centre 96-120 Blaikie Road Bowenfels Field Service Centre Kings Park Field Service Centre Jamisontown NSW 2750 9-13 Cooerwull Road 10 Tasha Place Bowenfels NSW 2790 Kings Park NSW 2148 Picton Field Service Centre 94 Bridge Street Coniston Office Moss Vale Field Service Centre Picton NSW 2571 Corner of Bridge Street and 8-10 Old Dairy Close Old Springhill Road Moss Vale NSW 2577 Shellharbour Field Service Centre Coniston NSW 2500 Buckleys Road Narellan Field Service Centre Shell Cove NSW 2529 Glendenning Central 17 McPherson Road Logistics Facility Smeaton Grange NSW 2567 South Windsor Field Service Centre 49 Glendenning Road Corner Ham Street and Fairey Street Glendenning NSW 2761 Network Project South Windsor NSW 2756 Management Office Glendenning Civil Works Centre Levels 5 & 9 Westpoint Tower Springhill Field Service Centre 15 Belfast Place 17 Patrick Street 191-195 Five Island Road Glendenning NSW 2761 Blacktown NSW 2148 Unanderra NSW 2526
Glendenning Field Service Centre Nowra Field Service Centre Ulladulla Field Service Centre 43 Glendenning Road 20 Depot Road 18 Deering Street Glendenning NSW 2761 West Nowra NSW 2541 Ulladulla NSW 2539