2006 ANNUAL REPORT 2007 CONTENTS

2006/2007 in Perspective...... 1 Financial Performance...... 10 Corporate Governance...... 37 About CS Energy...... 2 Operations...... 13 Directors’ Profiles...... 43 Business Strategy...... 3 New Business...... 22 Management Team Profiles...... 44 Chairman’s Review...... 6 Major Projects...... 24 Financial Report...... 45 Chief Executive’s Review...... 9 Organisation Development...... 30 Glossary...... 92

Scope and Purpose of the Annual Report The Annual Report is written to provide information to CS Energy Limited’s (CS Energy’s) stakeholders including Ministerial shareholders, customers, community, partners, unions, industry, employees, suppliers, environmental groups and the media. The report is also available on-line at (www.csenergy.com.au).

The Callide Oxyfuel Project gained major funding support for demonstrating clean coal technology.

Image Inside the furnace of unit four at Callide A Power Station, which will be retrofitted with oxyfuel technology. 2006|2007 in perspective

s e n e r g y is a q u e e n s l a n d g o v e r n m e n t o w n e d electricity generator with more than 550 employees, four power stations and a generating capacity of 3,210 megawatts. It Cmeets approximately 30 per cent of Queensland’s electricity demand and uses a fuel mix of coal, natural gas, coal seam methane and landfill gas. This year CS Energy improved its performance in its priority areas of safety, reliability and environmental responsibility. The Company also made strong progress towards meeting long- term strategic goals for growing its portfolio and diversifying fuel sources. This annual report is the third to outline progress against the Company’s 10-year plan and covers the 2006/2007 financial year.

People • Recruited and established the operational team for • Signed an $11 million gas farm-in deal with Australian Kogan Creek Power Station. energy company Metgasco to establish 2P gas re- • Rolled out the second phase of the Company’s serves at their fields in northern New South Wales. leadership development program to managers and • Recorded a 13.7 per cent increase in reliability at supervisors at all sites. Callide C Power Station. • Introduced high visibility and flame retardant clothing • Implemented major water-saving measures at at all sites to increase staff and contractor safety. Swanbank Power Station that resulted in a 45 per • Appointed Bill Andrew as General Manager of Organ- cent reduction in town water use and significant raw isation Development. water savings. • Developed industry first post-graduate qualifications in • Successfully demolished the old Swanbank A Power power generation in partnership with other generators Station’s three, 122 metre high concrete chimneys and three universities. and progressed the overall demolition project to near completion. Operations • Progressed the $1.2 billion, 750 megawatt Kogan Finance Creek Power Project to almost 99 per cent completion • Returned a $43 million net profit after tax for and commenced commissioning activities. 2006/2007. • Achieved four years without a lost time injury at Mica • Generated 13,996 gigawatt hours of electricity and Creek Power Station on 3 January 2007. achieved record electricity sales of $616.3 million. • Received a $50 million funding offer for the Callide • Created $34.3 million in revenue from Gas Electricity Oxyfuel Project from the Federal Government’s Low Certificates from the Company’s gas-fired plant. Emissions Technology Demonstration Fund. • Spent $17.6 million on overhauls of existing assets.

Lost time injury frequency rate Total energy sent out GWh Profit after tax $000 4.6 5.1 3.36 12,494 13,110 13,996 40,630 56,468 43,300

2004/05 2005/06 2006/07 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

Employee numbers Reliability % Return on productive assets % 461 530 559 94.74 93.4 95.5 5.2 7.3 3.7

2004/05 2005/06 2006/07 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

Greenhouse intensity per Leadership principles training energy sent out tCO2e/GWh Qld average pool price $/MWh 22 460 66 855 851 829 28.99 28.12 52.14 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

Apprentice, trainee & graduate no.s Significant environmental incidents Gearing % 39 41 47 0 0 0 40.9 39.3 69.3 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07 2004/05 2005/06 2006/07

1 CS Energy Annual Report 2006|2007 About CS ENERGY

s e n e r g y ’s m i s s i o n is t o develop the Company into a large, low cost, multi-fuel generator, operating across the National Electricity Market. Our long-term vision is to be the leading generator in the Australian energy market. CTo achieve this, we are developing the skills of our people, providing the technology and systems to support their work and fostering a corporate environment with six key values: safety, commercial approach, environmental responsibility, teamwork and mutual trust, innovation and creativity, and integrity.

Key

1 Mica Creek Power Station, Mount Isa 2 Callide Power Station, Biloela 3 Kogan Creek Power Station, Chinchilla 4 Swanbank Power Station, Ipswich

CURRENT OPERATIONS (AT 30 JUNE 2007)

Plant Fuel Total capacity CS Energy owned (MW) capacity (MW) In Operation Swanbank Swanbank B Coal-fired 480 480 Swanbank E Gas-fired1 385 385 Callide Callide A2 Coal-fired 120 120 Callide B Coal-fired 700 700 Callide C Coal-fired 900 450 Mica Creek Mica Creek A (Units 1,2,3,4) Gas-fired 132 132 Mica Creek A (Units 5,6,7) Gas-fired1 103 103 Mica Creek B Gas-fired 35 35 Mica Creek C Gas-fired1 55 55 Under Construction Kogan Creek Power Project Kogan Creek3 Coal-fired 750 750 Total capacity 3,660 3,210

1 Combined cycle 2 Callide A is in storage for future use in the Callide Oxyfuel Project 3 Kogan Creek Power Project is commissioning and due for commercial handover in late 2007

Image (above right) General Manager Organisation Development, Bill Andrew, is one of almost 20 mentors who ensure graduates such as Melissa Evans have job diversity and skills development opportunities. 2 CS Energy Annual Report 2006|2007 BUSINESS STRATEGY

s e n e r g y h a s a 10-y e a r plan to achieve its mission of being a significant, multi-fuelled electricity generator in the National Electricity Market by 2014. Each year, the Company sets targets that support the strategies in this Cplan and measures progress against them.

The business is Key people… T Targets 2006/07 O Outcomes 2006/07 P Plans 2007/08

SAFETY T Develop safety action plans for all sites, rollout high visibility and flame retardant clothing to operations sites, introduce Chairman’s reward program for safety milestones and start random drug and alcohol testing at all sites. O Safety plans in place at all sites, commenced rollout of high visibility and flame retardant clothing, developed safety reward program concept and extended consultation on drug and alcohol program. P Finish rollout of high visibility and flame retardant clothing, complete drug and alcohol program development, introduce fatigue management plan, rollout out consistent confined space procedure at all sites and implement safety awards.

STRUCTURE T Consolidate performance review system, introduce document management system, final- ise procurement review and implement changes, and conduct ongoing improvements to ensure the structure supports the organisation. O Enhanced performance review system, completed first phase of document management system, finalised procurement review, conducted review of support services and built Portfolio Services team. P Establish Portfolio Services as a separate division and implement outcomes of support services review.

LEADERship T Induct new staff in Leadership Principles, conduct second round of training for leaders and audit program effectiveness. O Delivered Leadership Principles training for all new staff, introduced Leadership in Practice training for site management and designed audit process. P Evaluate the leadership program implementation, respond to audit findings and develop the next phase.

TRAINING T Complete operator and frontline management training programs for Kogan Creek and other site staff. O Forty-six Kogan Creek and other site staff graduated from frontline management and operator training programs, and developed and launched joint power generation skills program. P Conduct second intake of frontline management training for supervisors, and review technical training across the Company.

3 CS Energy Annual Report 2006|2007 BUSINESS STRATEGY

…SECURING FOUNDATIONS… maintenance T Complete scoping work for Callide B mid-life refit, apply asset management framework to Kogan Creek and operational sites, and complete building Portfolio Services team. O Identified priority refurbishments at Callide B and scheduled into upcoming overhauls, completed Kogan Creek Asset Management Strategy and Portfolio Services team in place. P Conduct overhauls at Callide B, Swanbank E and Mica Creek; implement Kogan Creek Asset Management Strategy. availability T Achieve Business Plan availability targets, including improved availability from Callide C. O Improved Callide C availability of 94.4 per cent and decreased generation at Swanbank B due to water restrictions. P Continue high availability of Callide C, receive recycled water at Swanbank and achieve planned availability from Kogan Creek in first year of operation. fuel T Finish building New Business team, progress Kogan Creek Mine and continue to secure management competitively priced gas. O Finalised New Business team, commenced operations at Kogan Creek Mine and signed Metgasco gas farm-in deal. P Fund further gas appraisal work at Metgasco’s field to secure 2P reserves and investigate other potential coal and gas supplies. water T Commission Kogan Creek as an air-cooled unit and prepare Swanbank to receive re- cycled water. O Kogan Creek commissioning commenced, substantial water efficiency improvements at Swanbank and preparations made to use recycled water. P Incorporate air cooling in new and existing projects where feasible and use recycled water at Swanbank.

Image (above) A rigger inside the Swanbank B2 A coal mill during a major overhaul.

Image (above right) Contractor Craig Cudahy ties control cables on the inline rising coal conveyor at Kogan Creek Power Station.

4 CS Energy Annual Report 2006|2007 BUSINESS STRATEGY

…FOR GENERATIONS TO COME. financial T Examine finance options to support future projects. strength O Put additional finance facilities in place to meet volatile market conditions. P Continue to examine finance options to continue portfolio development. environment T Pending Low Emissions Technology Demonstration Fund (LETDF) funding, execute joint venture agreement between Callide Oxyfuel Project partners and complete detailed design to enable construction in April 2007; arrange external audits of Callide and Mica Creek power stations to maintain ISO 14001 certification. O Secured LETDF and coal industry funding for Callide Oxyfuel Project, conducted plant condition assessment of Callide A, continued design work and moved construction date to early 2008; Callide and Mica Creek recertified to ISO 14001 standards. P Execute joint venture agreement between Callide Oxyfuel Project partners, commence con- struction, finalise geosequestration site; and maintain ISO 14001 certification at all sites. community T Maintain communication channels with the community on power station operations and new projects such as Callide Oxyfuel Project, Swanbank A demolition and Kogan Creek. O Initiated Callide Oxyfuel Project newsletter, increased community information on Swanbank water use and sponsored Moving Opera! workshops in Biloela and Chinchilla. P Manage Kogan Creek’s transition from construction to operations, communicate and consult on new and existing projects and develop a staff Workplace Giving program. growth T Complete joint feasibility study with Australian Gas Light Company into expansion of Mica Creek Power Station. O Developed preliminary plant options for Mica Creek expansion and held commercial discussions with customers. P Secure sufficient power purchase agreements and competitively priced gas to progress Mica Creek expansion and review market conditions for expansion at Swanbank and Kogan Creek.

Key T Targets 2006/07 O Outcomes 2006/07 P Plans 2007/08

5 CS Energy Annual Report 2006|2007 chairman’s review

t t h e e n d o f t h i s year CS Energy celebrated CS Energy, as a Queensland Government its first 10 years of operation and it has owned corporation, has anticipated the need A been instructive that, when we sat down for clean coal technology through its Callide to consider the Company’s performance over the Oxyfuel Project. CS Energy, and its project last year, we put 2006/2007 within this 10 year partners, progressed this clean coal project Image (right) perspective. significantly in the last year, and, in Stephen Lonie, Back on 1 July 1997, CS Energy October 2006, welcomed a funding Chairman. commenced its new life with coal- offer of $50 million from the Federal fired plants at Swanbank A and B Government’s Low Emissions Techno- and Callide A and B. Ten years on, logy Demonstration Fund. CS Energy’s portfolio has changed • The need to secure long-term eco- significantly, noting: nomic supplies of coal and gas fuel • The closure of the old Swanbank has continued to be a major challenge A and Callide A plants, for the Company, evidenced through • The development of the new, supercritical coal- the recent upward trend in gas prices in the fired Callide C, in a joint venture with the pri- Australian market. vate sector, • The commencement of full retail contestability in • The current development of Australia’s largest Queensland from 1 July 2007, which will bring coal-fired, air-cooled power station at Kogan new challenges as the Company strives to Creek, near Chinchilla, compete against vertically integrated partici- • The development of Swanbank E—one of Aus- pants that own retail and generation assets. tralia’s newest gas-fired power stations, com- bined with the underpinning of the development How the Company performed CS Energy delivered of the coal seam industry in Queensland, and some significant outcomes for its stakeholders • The acquisition and subsequent expansion of in 2006/2007: the Mica Creek Power Station at Mount Isa. • The Company’s lowest lost time injury frequency It has been a significant programme and it is rate in more than five years—which is 3.36 for important that the people who have contributed so all sites. much to CS Energy over the period are recognised. • Record generation and strong reliability, which, coupled with the volatile market conditions, The challenges this year The challenges that the enabled CS Energy to achieve record electricity Company faced this year were significant, with the sales of $616.3 million in 2006/2007. key issues being: • The Company’s overall profit of $43 million, • The long-running drought in south-east Queens- which was lower than its 2005/2006 result land, which resulted in CS Energy reducing due to accounting adjustments for derivative generation at its Swanbank B Power Station contracts entered into in previous years. near Ipswich in the winter of 2007. At a national • Construction of the $1.2 billion Kogan Creek level, the dry weather, and corresponding short- Power Project entered its peak phase and, by age of water for power generation across much year-end, the plant was producing electricity of eastern Australia, drove wholesale electricity into the national grid. The plant will transition to market prices up. commercial operations in time for the summer • Power generators were also in the spotlight of 2007/2008. through public debate about climate change, particularly after the Queensland Government released its new climate change strategy.

6 CS Energy Annual Report 2006|2007 chairman’s Review

CS Energy also progressed specific initiatives to Any organisation is only as good as its people and secure the Company’s longer term future, including: it remains a significant challenge for CS Energy to • The continuing focus on the performance of the be an employer of choice and many initiatives being Company’s plant portfolio through the develop- implemented by the Company are manifestations ment of its Portfolio Services expertise and the of this important focus, including: management of a comprehensive and ongoing • Improved trainee, apprentice and graduate train- plant maintenance regime. ing programs; and • The recent gas farm-in agreement with Metgas- • Ongoing leadership and management develop- co, to support CS Energy’s fuel diversifica- ment programs, particularly supporting front- tion strategy and expan- line supervisors, as part of Image (left) sion plans, in particular, the a process to enable these Metgasco commenced test-drilling near Swanbank F project plan- key people to implement the Casino in January ned for the old Swanbank Company’s safety, operations 2007 following a gas farm-in deal A site. and maintenance plans. with CS Energy. • The upcoming major refit of Callide B Power Station, Conclusion We can draw which will ensure one of a close to year 10 of the Company’s most re- CS Energy’s short history by liable stations is able concluding that life is no dif- to continue to perform ferent for CS Energy today. satisfactorily for the re- The Company still seeks mainder of its extended to be one of Australia’s lead- economic life. ing generators and, as such, • The pursuit of the redevel- will continue to identify the opment of the Mica Creek key issues on the horizon and Power Station, with plan- address them—to ensure ning now well advanced that it delivers reliable for progressively replacing electricity generation safely, older units on site with at a high level of efficiency. newer, more efficient gas- I would like to close by fired plant, dependent acknowledging the efforts of upon customer support. the many dedicated people that make CS Energy work, including staff and People In May 2007, former CS Energy Chief my fellow Directors, and to acknowledge the Executive, Mark Chatfield, resigned after making a continuing support that the Company enjoys from voluntary disclosure to the Board about the acqui- its shareholding Ministers. sition of shares. Following his resignation, on the advice of the Board, the Company’s shareholding Ministers appointed Tony Andersen, General Man- ager Major Projects as Acting Chief Executive. I would like to acknowledge Tony’s important con- Stephen Lonie tribution in the months since. Recruitment of a Chairman permanent Chief Executive is currently underway.

7 CS Energy Annual Report 2006|2007 CHIEF EXECUTIVE’S REVIEW

14 70 VIC QLD NSW SA TAS 12 60

10 50

8 40

6 30

4 20

2 10

2002/03 2003/04 2004/05 2005/06 2006/07 2002/03 2003/04 2004/05 2005/06 2006/07

Lost time injury frequency rate Time weighted average pool price by region ($/MWh)

14,000 920

13,500 900

13,000 880

12,500 860 12,000

840 11,500

820 11,000

10,500 800

2002/03 2003/04 2004/05 2005/06 2006/07 2002/03 2003/04 2004/05 2005/06 2006/07

Energy sent out (GWh) Greenhouse intensity per energy sent out (tC02e/GWh)

79.4% 20.6%

98

Energy sent out by fuel type 2002/2003 (MWh) 96 Coal Gas and renewables 94

92

90

70.7% 29.3% 88

86 Energy sent out by fuel type 2006/2007 (MWh) 84 Coal Gas and renewables 82

80

2002/03 2003/04 2004/05 2005/06 2006/07

Reliability (%) For all CS Energy plant

8 CS Energy Annual Report 2006|2007 CHIEF EXECUTIVE’S REVIEW

t r o n g p r o g r e s s in s a f e t y , reliability and growth large, drought proof generator close to the south- defined the 2006/2007 financial year for east corner. SCS Energy. The significantly improved perform- CS Energy and InterGen transitioned to more ance of the 900 megawatt Callide C Power Station, streamlined operating structures to support the together with the continuing reliability of Mica jointly owned Callide C station. This new structure Creek and Swanbank, helped deliver has the Callide Power Station Site Image (left) Manager reporting directly to the Tony Andersen, a reliability rate of 95.5 per cent for Acting Chief Executive. the portfolio—our best performance joint venture owners, reflecting the in three years. owners’ confidence in CS Energy as The number of lost time injuries the operator of the plant. to staff and contractors decreased Like most employers, CS Energy by six compared to the previous year, is faced with the challenge of resulting in an overall lost time injury maintaining a skilled workforce in a frequency rate (LTIFR) of 3.36. While competitive and expanding market. this LTIFR is the lowest in more than five years, With more than 60 per cent of our staff in remote CS Energy considers any injury unacceptable and areas, where the resources sector has major remains committed to achieving a workplace free operations, attraction and retention remains a of injury. Mica Creek Power Station led the way priority. CS Energy is meeting this challenge by for safety, achieving four years without a lost time providing leadership and skills development oppor- injury, an outstanding result. The highest number of tunities for its people, with an increasing focus on LTIs was at the Kogan Creek Power Project site and, succession planning. while a decrease on last year, it was still an issue we I would like to thank the executive and all staff actively managed with the principal contractors. for their efforts during the year. 2007/2008 The drought in south-east Queensland brought promises to be a milestone year for the Company. challenges and benefits. For much of the year, On 1 July 2007, CS Energy celebrated the tenth Swanbank Power Station, near Ipswich, implemented anniversary of its formation. Many of our staff have a major program of water efficiency improvements, been with the Company throughout the last decade which resulted in a 45 per cent reduction in town and we held events at all sites to celebrate the water usage and substantial raw water savings. meritorious achievements of our first 10 years. The onset of level 5 water restrictions in April 2007 Kogan Creek joins our growing portfolio in resulted in a 25 per cent reduction in Swanbank’s 2007/2008. The Company will also begin the raw water allocation until 1 September 2007, when first stage of a major upgrade of the 20-year-old recycled water will be delivered to the site. Callide B Power Station. A busy overhaul schedule To achieve the necessary reduction in water is in place to support the ongoing reliability of our use between April 2007 and September 2007, fleet of 20 generators. Finally, the Callide Oxyfuel Swanbank reduced generation at the older coal- Project will move to the construction phase in 2008, fired Swanbank B and rescheduled its overhauls. making it the most advanced clean coal project in The newer, more water efficient Swanbank E gas- the country. CS Energy continues to grow under our fired combined cycle plant operated as normal. The ‘generations ahead’ banner and I am honoured drought forced several of CS Energy’s competitors to help steer the Company, with a very competent in Queensland and interstate to also reduce executive group, until a permanent Chief Executive generation, creating volatile market conditions and is appointed. higher pool and contract prices. CS Energy delivered another solid profit; $43 million for the year, which is down on last year’s result due to accounting adjust- ments. The dry-cooled Kogan Creek Power Tony Andersen Station will commence commercial operations Acting Chief Executive in 2007/2008, providing Queensland with a

9 CS Energy Annual Report 2006|2007 Financial performance

Progress and looking forward

2006/2007 • Recorded a net profit of $43 million. • Achieved record electricity sales of $616.3 million.

1 2007/2008 • Commence commercial operations of Kogan Creek Power Station in the national electricity market. • Integrate Collinsville Power Purchase Agreement into CS Energy’s portfolio following August 2007 transfer.

CORPORATE PERFORMANCE CS Energy recorded a profit of $43 million in the operating cashflow to fund capital investment 2006/2007 year. Although the reported profit in the new Kogan Creek Power Station, which is down on the previous year, underlying profit is currently undergoing commissioning and is ex- from operations (before accounting adjustments pected to make a strong contribution to CS Energy’s associated with the financial instruments financial results in 2007/2008. accounting standard) actually rose significantly CS Energy achieved record generation of almost from $56 million to $110 million. 14,000 gigawatt hours from its portfolio of plant The main driver of this improvement in underlying across Queensland. A major component of this profit was the higher electricity pool prices in the generation was the significantly improved reliability second half of the financial year. The introduction of Callide C, up 13.7 per cent on the previous of water restrictions in south-east Queensland year. In combination with the high pool prices, this in April 2007 resulted in reduced generation at generation output resulted in record electricity CS Energy’s Swanbank B Power Station, as well as sales of $616.3 million. some competitors’ plants. This improved result was also reflected in the Outlook The continuing water shortage in Queens- strong operating cashflow for the year with cash land is likely to be the most significant factor generated from operations rising from $208.3 in CS Energy’s financial outlook for 2007/2008. million to $253.6 million. CS Energy used this The air-cooled Kogan Creek Power Station will

FINANCIAL HIGHLIGHTS

2006/07 2005/06 2004/05 2003/04 2002/03

PAT $000 43,300 56,468 40,680 30,397 39,716 ROPA % 3.7 7.3 5.2 5.3 6.8 Gearing % 69.31 39.3 40.9 30.6 52.7 Assets $M 3,262 2,121 1,734 1,620 1,610 TWA pool price $/MWh 52.14 28.12 28.99 28.19 37.54 Green energy products $000 34,266 23,024 11,133 1,799 0 Total electricity sales $000 616,349 505,131 456,229 444,314 460,428 Costs (excl interest) $000 562,648 434,011 398,529 394,860 380,536 Dividends payable $000 34,640 40,170 29,151 28,877 37,730 Capital investment in power stations $000 373,163 490,795 248,696 46,655 61,813

1 Gearing for 2006/2007 adjusted for the impact of mark to market on financial instruments is 51.8%.

10 CS Energy Annual Report 2006|2007 financial performance

commence commercial operations during the year of previous years due to milder summer weather. and will be a key asset in the Company’s portfolio. Pool prices increased considerably from April The delivery of recycled water to Swanbank Power 2007 when the drought in eastern Australia Station in September 2007 will further support the prompted the introduction of Level 5 Water Company’s ability to operate in a water-constrained Restrictions in south-east Queensland. Swanbank environment. B Power Station reduced its generation and re- As a result of a decision by the Queensland scheduled overhauls to help conserve water and Government, the Collinsville Power Purchase Agree- comply with the new restrictions. ment (formerly held by the State owned entity, The drought resulted in some competitors, Enertrade) and associated including Tarong Energy and Figure (left) arrangements were trans- some interstate generators, CS Energy’s CS ENERGY OTHERS percentage of ferred to CS Energy in August also reducing their genera- Queensland coal-fired 2007. While these arrange- tion and the resulting decline power generation in 20.9% 2006/2007. ments could have a negative in supply placed upward impact on cashflow, balance pressure on prices. sheet strength, and possibly The 2006/2007 time future earnings, CS Energy weighted average pool price will be seeking to integrate in the Queensland region Collinsville into its broader of $52.14/MWhr was al- portfolio, to minimise these 79.1% most double the 2005/2006 negative impacts as far average of $28.12/MWhr. as possible. The connection of Swanbank to the Western Corridor MARKET PERFORMANCE Recycled Water Project in September 2007 is ex- CS Energy receives its revenue from selling elec- pected to reduce pressure on Wivenhoe Dam and tricity into the National Elec- aid in ensuring the station’s Figure (left) tricity Market (NEM) and to summer availability. CS Energy provided CS ENERGY OTHERS over half of the gas- off-grid customers. The Com- A similar pattern occurred fired power generation pany’s NEM-connected power in the contract market during in Queensland during 57.7% 2006/2007. stations are Swanbank and the year. In mid 2006, market Callide and the new Kogan prices were depressed as a Creek, which is being com- result of a mild winter and missioned. Mica Creek Power ample plant availability. As Station, near Mount Isa, is the drought continued into the main source of electricity early 2007, and water short- for the remote north west 42.3% ages began to impact on Queensland region. generation across the NEM, forward contract prices Performance in NEM rose to unprecedented lev- CS Energy earns its revenue though selling elec- els, reflecting uncertainty in water supply tricity into the NEM through the spot market, and the probability of the drought continuing. where prices are calculated every five minutes The period from early 2007 onwards also saw and settled half hourly, and trading in the contract significant increases in trading on the futures market where it enters into contracts that lock in and brokers’ markets, which further impacted on a firm price for electricity. volatility and price uncertainty. As the contracts In the spot market, 2006/2007 began with relate to supply in the long-term, the impact of this continuing low NEM pool prices reflecting high plant activity will be more apparent on CS Energy’s future availability. Demand over the traditional summer financial position than in the year just completed. peak period was steady, but did not reach the highs During the year, CS Energy entered into several

11 CS Energy Annual Report 2006|2007 financial performance

Image (right) CS Energy’s Market Trading team achieved record electricity sales of $616.3 million in 2006/2007.

new and innovative contracts and provided prod- Kogan Creek Power Station commissioning com- ucts that aided in ensuring sound and reliable menced in the first quarter of 2007 and is expected commercial outcomes. These included new cap to start commercial operations in time for the and option products and the successful issuing 2007/2008 summer, which will further assist in and finalisation of a derivative contracting tender, meeting demand. The commissioning of this station which realised a better than market value outcome is significant in the current water constrained en- for CS Energy. vironment as it is dry-cooled, resulting in 90 per With almost a quarter of its portfolio gas-fired, cent less water use than a conventional wet-cooled CS Energy continued to support the Queensland station of similar capacity. Government’s 13 per cent Gas Scheme. The The introduction of full retail contestability in scheme requires retailers to source at least 13 per July 2007 has resulted in increased contract dis- cent of their electricity from gas-fired generation cussions with new retail entrants. and has resulted in a supplementary revenue source for CS Energy. This revenue is expected to Off-grid activities Mica Creek Power Station increase following the Queensland Government’s had a 99.2 percent reliability for 2006/2007 announcement in June 2007 that it would increase and continued to perform to meet its customer the gas-fired target to 18 per cent by 2020. obligations throughout the year. In the lead up to the introduction of full retail Looking ahead, CS Energy expects to continue contestability on 1 July 2007, CS Energy held dis- to work with existing and new customers to cussions with several new entrants to the retail meet potential new load requirements through electricity market about potential contract sales in new contractual arrangements and the planned the new financial year. redevelopment of Mica Creek Power Station. For more information on the Mica Creek Renewal Outlook In the absence of significant and sustained Project, please turn to page 22 of this report. rainfall, the current market prices are likely to continue in 2007/2008. The delivery of recycled water to Swanbank in September 2007 will aid in ensuring its continued availability over the summer peak demand period.

12 CS Energy Annual Report 2006|2007 Operations

progress and looking forward

2006/2007 • Mica Creek Power Station achieved four years without a lost time injury. • Swanbank Power Station implemented water efficiency improvements and pre- pared to receive recycled water. • Callide C recorded a 13.7 per cent increase in reliability compared to 2 2005/2006.

2007/2008 • Begin using recycled water at Swanbank Power Station. • Conduct first refurbishments in Callide B mid-life refit program. • Commence commercial operations at Kogan Creek Power Station.

SWANBANK POWER STATION Swanbank Power Station made a strong contribution overall town water consumption by 45 per cent. to CS Energy’s generation output in 2006/2007, Swanbank also sources raw water from Wiven- despite worsening drought conditions in south-east hoe Dam and the Warrill Scheme. In late 2006, Queensland. Located near Ipswich, the Swanbank Swanbank began increasing the number of times site comprises the 480 megawatt coal-fired B raw water was recycled through its cooling water station, built in the early 1970s, and the 385 MW system, which saved up to two megalitres per day. gas-fired E station opened in 2002. With the introduction of Level 5 Water Restrictions During the year Swanbank made major water in April 2007, the Queensland Water Commission efficiency improvements at B and E stations to reduced Swanbank’s allocation from Wivenhoe help conserve this increasingly scarce resource Dam by 25 per cent from 10 April to 1 September and comply with local and State Government 2007. From 1 September 2007, Swanbank is due requirements. This involved installing more water to receive recycled water from the Western Corridor efficient technology, greater reuse of onsite water Recycled Water Project. and, when necessary, reducing generation. To achieve the necessary reduction in water At Swanbank B, ash-quenching sprays were con- use, Swanbank struck a balance between re- verted from town water to recirculated water, saving ducing generation, while still continuing to up to 200 kilolitres per day. At E station, 50 kL/day support electricity system demand in south- was saved after steam turbine drain valves were east Queensland. Swanbank B operated at re- replaced and the heat recovery steam genera- duced capacity for part of the 2007 winter and tor water sampling points were changed from con- scheduled two overhauls from 28 April–1 June tinuous to controlled blowdown. Swanbank also 2007(B1) and 16 July–17 August 2007(B2). began recycling the water used in its chemical These overhauls included further work to improve analysis ‘wet racks’ rooms, which saved up to B station’s water efficiency. The restrictions had 26 kL/day. no impact on Swanbank E as it is a newer, more As a major user of Ipswich town water, Swanbank water efficient plant. There were no job losses as was required to submit a draft Water Efficiency a result of the water restrictions. Management Plan to Ipswich Water by April 2007 As a water conservation measure, Swanbank outlining how it would reduce its usage by 25 per applied to the Environmental Protection Agency cent. Swanbank achieved this target three months for amendments to its discharge limits during the early and has since made further cuts, reducing its drought period. If approved, this will result in a

13 CS Energy Annual Report 2006|2007 Swanbank Power Station rescheduled oveRhauls TO REDUCE GENERATION AND S AVE WATER.

14 CS Energy Annual Report 2006|2007 operations

small increase in the concentration of discharge to and owns C station in a 50/50 joint venture with Image (far left) Bundamba Creek but will not adversely impact on InterGen Australia. Welding superheater pipes in Swanbank’s the downstream environment. Callide C’s reliability improved significantly in B2 boiler. While the drought conditions resulted in 2006/2007 following improvements to furnace Swanbank B recording an availability rate of 90.06 cleaning and ash handling equipment in overhauls per cent for the year, it still achieved a strong the previous year. C station’s reliability for the year reliability figure of 97.5 per cent. Swanbank E was 94.4 per cent—an increase of 13.7 per cent stepped up its output to maintain a steady supply from 2005/2006. Unit C3 in particular performed to south-east Queensland and recorded a reliability well, passing 100 days of continuous operation rate of 96 per cent. in late June 2007. The modifications to unit C3’s There was only one lost time injury at Swanbank submerged chain conveyor (SCC) to reduce ash during the year, which was a reduction of two from spillage contributed to this improved performance 2005/2006 and a solid result considering the busy and similar modifications are planned for unit C4’s overhaul program. An increased focus on plant SCC in May 2008. walk-throughs to check for hazards and completing B station ran solidly for much of the year, but age- Job Safety Environment Analysis risk assessments related issues such as boiler tube repairs resulted helped achieve this improvement. in its lower reliability of 90.5 per cent. A mid-life Swanbank was one of several Ipswich business- review of Callide B was initiated in 2005/2006 es nominated for the Community Citizen of the and the first refurbishments are scheduled for an Year Award at the Ipswich Business Awards in overhaul of B1 in October 2007. The works include July 2006. For more information on the station’s replacing the boiler waterwall, installing new air community relations program, please see page 35 heater baskets and a generator rewind. The mid- of this report. life refit will continue with outages in 2008 and 2010 to install a new control system and carry Outlook After completing the B2 overhaul in mid- out other improvements. The refurbishments will August 2007, the Swanbank team will turn their ensure B station runs reliably for the remainder of attention to an outage at E station. The site will its economic life. also make final preparations to receive recycled CS Energy’s joint work with Sigma Energy Solu- water in its onsite storage, Swanbank Lake, from tions on cooling water system modifications at September 2007. B station garnered the companies an Australian Engineering Excellence Award in November 2006. CALLIDE POWER STATION The modifications were made using Sigma’s patent- Callide Power Station enjoyed a year of high gen- ed CondenserBoost and resulted in significant plant eration output in 2006/2007, with no major over- efficiency improvements. CondenserBoost works haul work and improved reliability at Callide C. This by diverting cooling water back into the condenser, strong performance was timely, as Swanbank B maximising heat transfer and recycling water. Power Station’s generation was constrained in In safety, Callide had one staff lost time injury the second half of the year by the drought in south (LTI) during the year and celebrated 1,000 days east Queensland. without an LTI to contractors. It was also the first The Callide site has a capacity of 1,720 mega- CS Energy site to introduce the SAFEmap Behaviour watts and comprises three power stations of Based Safety Training, which aims to improve par- varying ages and capacity. Built in the mid 1960s ticipants’ risk identification and response skills. and refurbished in the late 1990s, the 120 MW The station moved closer to having all units Callide A is in storage for future use in the Callide operating on dense phase ashing, with commis- Oxyfuel Project (see page 26 of this report). Callide sioning of the system on B station showing B was commissioned in 1988 and has a total promising results. There have been some technical capacity of 700 MW and the supercritical, 900 MW issues with the full implementation of the system, Callide C was commissioned in 2001. CS Energy however Callide is committed to dense phase ash- has 100 per cent ownership of A and B stations ing as it uses less water and increases the site’s ash storage capacity.

15 CS Energy Annual Report 2006|2007 operations

Callide hosts up to eight apprentices and also made the Mica Creek team determined to set trainees each year, and in May 2007 former staff a new LTI free record. member Tinita Wilson won the Trainee of the Year Mica Creek managed six overhauls during the category at the Gladstone district finals of the year, as well as several unscheduled plant outages Queensland Training Awards. The award recognised that occurred during the summer high load period. Tinita’s achievements while completing a Frontline The operation and maintenance team’s quick Management Traineeship at Callide. response to the forced outages contributed to the CS Energy and InterGen transitioned to new station’s strong reliability figure for the year. reporting structures under the operations and main- The 2006/2007 overhaul program began in tenance contract for the jointly owned C station. August 2006 with a combustor inspection of C1, The new structure removes a level of hierarchy, which ran well apart from some unscheduled cable resulting in the Callide Power Station Site Manager repairs that delayed its return to service until early reporting directly to the joint venture owners, September. A concurrent overhaul of C2 included reflecting the owners’ confidence in CS Energy as modifications to install an improved bearing design the operator of the plant. on the high pressure turbine. A generator rewind of B1 was completed in Image (right) Outlook Maintenance prior- October 2006 following Boiler engineer James ities for Callide in 2007/2008 the resolution of technical Dring inspects a section of the new are the B1 overhaul in October issues that had delayed Callide B1 waterwall, 2007, modifying the C4 sub- the unit’s return to service. which will be installed in October 2007. merged chain conveyor in The unit was brought back May 2008 and preparing for online in early November a two-month outage of B2 in after repairs to its exciter. late 2008. Callide will also During this period, summer aim to have both stations load requirements and the operating reliably on dense temporary unavailability of phase ashing and continue other units resulted in occa- its commitment to reliable sional load curtailment of and safe generation. large customers. Mica Creek worked with its large industrial MICA CREEK POWER STATION customers to manage demand, to ensure there Mica Creek Power Station recorded a system was no impact on supply to Mount Isa residents. reliability figure of 99.2 per cent for 2006/2007, A hot gas path inspection of A6 was successfully which was an excellent result considering the completed in December and Mica Creek ran reliably age of some units and technical issues managed over the next several months. An electrical failure during the year. Comprising 10 units built between on A7’s generator circuit breaker in February the 1960s and late 1990s, Mica Creek is gas-fired 2007 caused some short-term load curtailment and has a total capacity of 325 megawatts. It is an to customers while the unit was unavailable and off-grid station that supplies power to north west similar symptoms were found on one of the A6 Queensland’s mining industry and communities in breakers. Final overhauls for the year were a hot the region, including Mount Isa and Cloncurry. gas path inspection of A7 in March and overhauls The highlight of the year was Mica Creek of A1 and A2 in May and June respectively. reaching four years without a lost time injury (LTI) In August 2006, Mica Creek Power Station pass- on 3 January 2007. This result was unprecedented ed an external audit of its compliance with the ISO in CS Energy and achieved during a busy overhaul 14001 International Environment Management program that brought many contractors to site. Systems standard. The station also completed An effective safety induction program and regular improvements to the bulk acid handling system training for staff were key factors in this result. A that were initiated the year before to improve safety, minor LTI in March 2007 ended the record run, but minimise handling, and reduce spillage risks.

16 CS Energy Annual Report 2006|2007 operations

Other environmental work included a cleanup and KOGAN CREEK POWER STATION rehabilitation of part of the site, which resulted in a In parallel with the construction activity at Kogan huge visual improvement, with many hundreds of Creek Power Station (please see page 24), tonnes of surplus, redundant, and scrap materials the team that will work at the completed station removed and mostly recycled. underwent an intensive training and induction Mica Creek’s location in one of the most program. CS Energy recruited 38 staff for remote areas of Queensland makes attracting and the Kogan Creek team, including eight internal retaining skilled staff an increasing challenge. appointments and four from other Queensland In response, the station has adopted a strong power stations. training culture for apprentices and trainees In June 2006, 17 staff commenced a 12- and sponsored community events, such as month intensive operator training program to the Mount Isa Business Awards, to increase provide them with the skills to operate and its profile as an employer. maintain the new technology Image (left) For the second year, Mica at Kogan Creek. The training Valve maintenance on the A5 cooling tower Creek won the Large Host complemented participants’ at Mica Creek Power Trainer of the Year Award engineering or trade skills Station. at the Mount Isa Group and by June 2007 all had Apprenticeship Training and completed their Workplace Employment Awards. Health and Safety Boiler and CS Energy is planning to Turbine tickets. expand Mica Creek by up Following the finalisation to 50 megawatts to meet of the Kogan Creek Enterprise future demand and retire the Bargaining Agreement, the oldest units. During the year team moved out to site in discussions were held with October 2006. This involved existing and potential custom- relocating staff and their ers of Mica Creek to secure families to the nearby town power purchase agreements of Chinchilla and supporting to underwrite the expansion. them as they settled into a For more information on the new community. Mica Creek Renewal Project, As construction contract- please see pages 22 and 29 ors Siemens Hitachi ramped of this report. up commissioning in 2007, CS Energy staff worked along- Outlook There will be con- side them in an observer tinued emphasis on attraction of new employees capacity as part of their plant familiarisation. as well as retention of existing personnel through In June 2007, CS Energy staff transferred to a various initiatives. shift roster in preparation for the transition to Overhauls for the coming year include a major commercial operation in 2007/2008. inspection of unit A3 as well as a hot gas path inspection of C1. Additionally, there will Outlook In early 2007/2008, the Kogan Creek be combustor inspections of A6 and A7 and a team will finalise safety and security plans for minor inspection of unit C2 in conjunction with the site in readiness for commercial operation. C1’s overhaul. Their priority for the remainder of the year will be Site improvements will continue with the com- achieving maximum reliability from the plant and pletion of the integrated control and monitoring preparing for the first 8,000 hours overhaul in system upgrade, installation of the new raw water August 2008. tank and unit condition monitoring.

17 CS Energy Annual Report 2006|2007 operations

ENVIRONMENTAL PERFORMANCE As Kogan Creek Power Station neared com- CS Energy is committed to responsible environ- pletion during the year, the environment team mental management. The Company’s Environment continued to develop the site’s procedures for Policy guides all environmental decision-making commercial operation. An Integrated Environment- and work practices. All sites have an Environmental al Management System (IEMS) was submitted to Management System in place, certified to the the Environmental Protection Agency in February. international standard ISO 14001, and their CS Energy implemented an improved Environ- environmental performance is monitored using mental Issues Register (EIR) at all sites, to these systems. support the revised ISO 14001 standard. The EIR Environmental management at CS Energy is now demonstrates a clearer link between en- integrated with health and safety across vironmental legal requirements and the assess- common areas to promote an overall culture of ment of significant environmental aspects of corporate accountability. Regular training, briefings, CS Energy’s activities. Figure (right) staff newsletters and internal CS Energy’s water events such as environment Emissions In 2006/2007, use intensity in 2.5 2006/2007 was 1.9 improvement competitions all CS Energy celebrated 10 years megalitres per gigawatt contribute to increased staff of membership in the Fed- hour of energy sent out. This was an 8.2 awareness of the environment eral Government’s Green- per cent decrease and their responsibilities. house Challenge Program for on the previous year 2.0 and largely achieved reducing greenhouse emis- through a water Performance External audits sions. Over the last decade, efficiency program at Swanbank and of Mica Creek and Callide CS Energy has decreased increasing generation Power Stations in 2006/2007 1.5 its greenhouse intensity at the Company’s most water efficient resulted in their certification by 17.8 per cent through power stations. to meet the revised ISO actions such as:

14001 standard. Swanbank 2002/03 2003/04 2004/05 2005/06 2006/07 • increasing the proportion Power Station and the of gas-fired generation in its Brisbane corporate office had their certifications portfolio and using combined cycle configuration upgraded following audits the year before. in these plants CS Energy uses the Energy Supply Association • decommissioning older less efficient plant such of Australia’s Code of Environmental Practice for as Swanbank A rating its environmental performance. Each year • using landfill gas to supplement one unit at CS Energy’s performance is measured against the Swanbank B, and Code and benchmarked against other Australian • refurbishing cooling towers at all sites. generators. In 2006/2007, CS Energy scored 4.4 out of 5.

Table (right) CS Energy’s Inputs/Outputs 2005/2006 2006/2007 % change environmental performance summary Total energy sent out GWh 13,110 13,996 6.76% – two-year comparison Gas and renewables used TJ 31,454 37,885 20.45% Gas and renewables generation % 25.6 29.3 3.71% Renewable generation sent out GWh 30.0 31.5 5.12% Greenhouse gas intensity per

energy sent out tonnes CO2e/GWh 851 829 -2.60% Water consumption ML 28,117 27,796 -1.14% Ash sold tonnes 98,943 81,548 -17.58%

18 CS Energy Annual Report 2006|2007 operations

CS Energy’s greenhouse intensity for 2006/2007 Outlook Efficient water use will remain a priority was 829 tonnes of carbon dioxide per gigawatt in 2007/2008. Preparations will continue for the hour of energy sent out. Details of other emissions supply of recycled water to Swanbank site from the from CS Energy sites are published through the Western Corridor Recycled Water Project and the National Pollutant Inventory. environmental monitoring, approvals and review The Callide Oxyfuel Project aims to demonstrate processes which will accompany this significant low emission coal-fired electricity generation at milestone. Consolidation of the environmental CS Energy’s Callide A Power Station. This project management of Kogan Creek Power Station as progressed significantly during the year and is a CS Energy greenfield operating site will also be outlined in more detail on page 26 of this report. a priority. The ReOrganic Project involves the coal- fired Swanbank B using landfill gas piped from PORTFOLIO SERVICES the neighbouring Thiess Services Landfill as Portfolio Services coordinates the long-term asset a supplementary fuel. In management of CS Energy’s Image (left) Plant Inspection 2006/2007, Swanbank B portfolio of plant and assists Specialist Bob Hazard generated 31.5 gigawatt sites with plant performance inspects a new water efficient drain valve hours of renewable energy issues as they arise. Based at Swanbank B, sent out. in Brisbane, the team has one of almost 100 installed on the plant expertise in engineering, during the year. The Water Each CS Energy site environment, chemistry, and new equipment was part of a major water has water management stra- asset and overhaul man- efficiency program tegies in place to maximise agement and works in par- at the site, which resulted in B station efficiency of use of this key tnership with technical staff operating at half its input to power generation. at all sites. target town water consumption level. Highlights in 2006/2007 included: Overhaul Process 2006/ • Swanbank introduced 2007 saw the rollout of a water efficiency improve- new Overhaul Process across ments that resulted in a the portfolio. This process 45 per cent reduction in places more emphasis on its town water use and the planning and scheduling substantial savings in of overhauls to achieve raw water sourced from business results in the Wivenhoe Dam. (See page execution. Although the 13 for more detail) program is in its infancy, • Kogan Creek completed it is already improving construction of its air-cooled condenser for the overhaul process and the links between dry cooling, which will result in 90 per cent CS Energy and contractors providing services. less water use than a conventional wet-cooled As part of the Strategic Sourcing project, four power station. major overhaul providers were contracted on five- • Callide reduced its use of raw water for general year agreements. The contracts are based on hosing down of plant and equipment by reusing Australian Standards and will provide CS Energy with wastewater recovered from site storages. consistency and stability for overhauls for the next • Mica Creek cycles its cooling water up to 12 five years. For more information on the Strategic times through the power station to ensure Sourcing project, see page 21 of this report. maximum use of this valuable resource. Since 2004 the station has also provided all of its effluent water for reuse by nearby Xstrata mining operations, with a total of 438 megalitres supplied in 2006/2007.

19 CS Energy Annual Report 2006|2007 operations

Image (right) Senior electrical engineer Peter Hoerlein assesses plans for the upgrade of the Callide B control system, which is part of a major refurbishment of the 20-year-old station.

Callide B Refurbishment In 2006/2007 Portfolio National Electricity Rules Compliance Follow- Services continued scoping a major refurbishment ing changes to the National Electricity Rules, of Callide B near Biloela, which was commissioned CS Energy was required to re-register the technical in 1988 and comprises two 350 MW coal-fired performance standards for each of its gener- units. Callide B has been one of CS Energy’s ators with the National Electricity Market Manage- most reliable assets, but after almost 20 years of ment Company (NEMMCO). The National Electri- baseload operation is showing signs of age. The city Rules govern the operation of the National refurbishments will be scheduled in overhauls Electricity Market, which NEMMCO operates from 2007 to 2010 and will ensure the station and administers. runs reliably for the remainder of its life. CS Energy submitted its case for re-registration The priority plant refurbishments identified to to NEMMCO in February 2007. Following re- date are the boiler waterwall, air heaters, digital registration, CS Energy will implement a compliance- control system and generators. The B1 waterwall monitoring programme under the Rules, which and air heaters will be replaced during an overhaul will be monitored by NEMMCO. in October 2007. Commencing in October 2008, an overhaul of B2 will include a generator rewind and Outlook In 2007/2008, Portfolio Services will the first stage of installing a new control system. coordinate the first stage of refurbishments at In 2010, an overhaul of B1 will include the second Callide B, provide technical assistance to other stage of the control system installation and water- sites on overhauls and implement plans to comply wall, air heater and generator refurbishments. with the revised National Electricity Rules. In 2007/2008, Portfolio Services will priori- Contracting with the four major overhaul con- tise the remaining refurbishments required at tractors provides the platform to further develop Callide B and schedule them into the overhauls and roll out the Overhaul Process to achieve long- mentioned above. term results. In 2008 and beyond, CS Energy will be using the skills and knowledge base of Kogan Creek Asset Management Strategy In its contractors to assist in internal and external preparation for Kogan Creek Power Station com- benchmarking, and ensure best practice in mencing commercial operations in 2007/2008, overhaul execution. Portfolio Services developed an asset management strategy for the plant. The strategy outlines how OPERATIONS SUPPORT CS Energy will operate and maintain Kogan Operations Support ensures adequate systems Creek to ensure it runs reliably and economically and processes are in place to assist CS Energy and includes condition monitoring, preventative in meeting its business objectives. Its primary maintenance and overhaul plans. focus is the operations, maintenance and reporting systems at the Company’s power stations and the people who use them.

20 CS Energy Annual Report 2006|2007 operations

Information Management Following a review of participants will graduate with a Certificate IV in CS Energy’s performance reporting system in Power Generation. 2005/2006, Operations Support finalised the For information on other training and de- specifications for a new system that better supports velopment activities at CS Energy, please refer to decision making at all organisational levels. The aim page 33 of this report. is to deliver a system that provides more meaningful information on how the Company’s plant, people Outlook In 2007/2008, Operations Support will and business are performing. CS Energy’s Business implement the new performance reporting system, Process Support team will develop the system and coordinate new intakes of the supervisor develop- implementation is scheduled for 2007/2008. ment and operator training programs, and manage Operations Support also identified a need to the continuous improvement process across the improve reporting on plant and safety incidents. Company’s operations and maintenance systems. In response, the Incident Management Database was revamped to record more detailed information STRATEGIC SOURCING on incidents such as near misses, injuries and In 2006/2007, CS Energy continued a Strategic unplanned outages. New incident categories Sourcing Project to review the Company’s pur- of environment and security were also added chasing spend. The project was initiated in a to the system, which is integrated into SAP. response to the tightening contract labour market The new system is now in use and will enable and aimed to deliver long-term security and cost CS Energy to track trends, develop responses and savings to the Company. monitor improvements. In August 2006, CS Energy began inviting tenders for 80 per cent of its materials and services Training and Development In 2006/2007, Op- requirements. Suppliers were asked to submit erations Support rolled out two training programs proposals for five-year contracts that delivered to address skills gaps amongst existing and cost savings and benefits over time. At 30 June new operations staff. Both programs involved 2007, CS Energy had negotiated new contracts for engaging a registered training provider to tailor 40 per cent of its requirements in both services nationally recognised qualifications to meet the and materials, with Australian Standards Contracts Company’s requirements. used as the base documents. Some of the most The first program was a Supervisor Development significant contracts were for overhaul services at Program to provide operations and maintenance CS Energy’s power stations. supervisors with foundation skills in frontline Given the size of the Strategic Sourcing Project, management. The training was developed after CS Energy engaged the Queensland Audit Office receiving feedback that many CS Energy super- (QAO) to review the probity of the project and its visors had excellent technical skills but felt process for evaluating and selecting suppliers. The they needed more guidance on managing their QAO found all processes were fair and equitable teams. Twenty-two operations and maintenance and that all participants had been treated equally. supervisors completed the 12-month course The Strategic Sourcing team also developed and graduated with a Certificate IV in Business improvements to the day-to-day contract man- (Frontline Management) in June 2007. agement processes at corporate office and An operator training program was developed to sites to ensure CS Energy obtained maximum train Kogan Creek staff in the new technology at value for its purchasing spend. These include the station and provide interested staff at other quarterly meetings with suppliers and regular per- sites with the opportunity to build their skills. The formance evaluations. 12-month training program involved classroom and on-the-job training and by year-end, 17 Kogan Creek Outlook In 2007/2008, Strategic Sourcing will and four Callide staff attained their Workplace finalise contracts for materials and supplementary Health and Safety Boiler and Turbine tickets. At labour. The team will also implement process the completion of the next stage of the course, the improvements for contract management.

21 CS Energy Annual Report 2006|2007 new business

progress and looking forward

2006/2007 • Metgasco commenced test drilling near Casino following a gas farm-in deal with CS Energy. • Held commercial discussions with customers and investigated gas supplies 3 to support the Mica Creek Power Station expansion.

2007/2008 • Fund further appraisal work at Metgasco’s PEL 16 near Casino, to prove 2P gas reserves. • Secure sufficient power purchase agreements and competitively priced gas to move the Mica Creek expansion forward.

h e n e w b u s i n e s s t e a m w o r k s to secure Casino. Reserves of 1,123 (3P) had already been CS Energy’s long-term competitiveness established in the tenement and, in January 2007, T through business development, resources test drilling began as part of the CS Energy-Metgasco (fuel and water) acquisition and related functions. joint venture. Ten core wells have been drilled to Priorities for 2006/2007 were identifying new date in the farm-in area, with promising results. sources of gas supply, progressing the Mica Creek Work will continue in 2007/2008 with a pilot Image (right) Renewal Project, assessing appraisal program targeting Operators extract coal other potential generation selected coal seams. seam core samples at Metgasco’s field in developments and finalising Once the 2P reserves northern New South arrangements for receiving have been established, which Wales as part of the CS Energy funded recycled water at Swanbank is expected by July 2008, appraisal program. Power Station. CS Energy intends to invest a further $94.5 million in Metgasco farm-in deal developing the gas field and CS Energy signed a gas will earn an additional 35 farm-in agreement worth per cent of the farm-in area. $11 million with Australian Metgasco will continue to be energy company Metgasco the operator of the field and in December 2006. The goal is also the lead developer of the farm-in is to establish of the proposed pipeline to 540 petajoules(PJ) in 2P gas reserves (proven deliver gas to Ipswich by 2010/2011. and probable) at Metgasco’s coal seam methane The volume of gas potentially supplied through fields in northern New South Wales. If sufficient the Metgasco agreement would be enough to add reserves are established, 18 PJ per year will be an additional gas-fired plant to the Swanbank site. supplied to CS Energy’s Swanbank Power Station Feasibility planning for a second large gas turbine near Ipswich. at Swanbank continued during 2006/2007 and Under the farm-in agreement, CS Energy will progress is outlined on page 29 of this report. spend the $11 million in two stages, to earn an initial 15 per cent interest in the coal seam gas Mica Creek Renewal Project Developing a viable rights to three blocks in the tenement PEL 16, near renewal and expansion plan for Mica Creek Power

22 CS Energy Annual Report 2006|2007 new business

Image (left) CS Energy plans to progressively replace older units at Mica Creek Power Station in northwest Queensland.

Station near Mount Isa was one of CS Energy’s Australia on the potential use of Swanbank ash highest priorities in 2006/2007. The gas-fired dam material as a fill in construction projects at power station has a capacity of 325 MW and the Port of Brisbane. Cement Australia carried provides electricity to the region’s mining industry out compaction trials of the Swanbank ash during as well as Mount Isa, Cloncurry and surrounding the year that confirmed its suitability for use communities. In May 2006, CS Energy signed a as a landfill. Arrangements were also made to joint development agreement with Australian Gas supply Swanbank ash to Transpacific for use in Light Company (AGL) to investigate upgrading Mica composting products. Creek. CS Energy plans to replace older plant and Contracts are in place with Cement Australia, also expand the station’s capacity. Global Cement and Renewed Resources for the During the year CS Energy held commercial beneficial reuse of Callide B and C ash. discussions with existing and new customers to secure sufficient power purchase agreements Recycled Water at Swanbank While Swanbank (PPAs) to progress the expansion. As Mica Creek Power Station staff made technical preparations is not connected to the national grid, CS Energy to receive recycled water, the New Business team requires an appropriate level of customer negotiated the arrangements under which it would support before it orders and constructs new it be supplied. The Western Corridor Recycled plant. The Company also explored options for Water Project is scheduled to deliver recycled competitively priced gas supplies to support the water to Swanbank Lake from 1 September 2007. expansion project. The recycled water will supplement Swanbank’s CS Energy’s Major Projects team commenced other water supplies, which have been affected by front end engineering and design of suitable prolonged drought. For more information on the plant in 2006/2007 to ensure it was ready when technical preparations at Swanbank, refer to page the customer base for the project is finalised. 13 of this report. The Company hopes to secure sufficient PPAs by the first quarter of 2007/2008 to enable Outlook On completion of the gas appraisal pro- it to call for tenders for the supply of plant. For gram at Casino next year, CS Energy will decide by more information on design work for the Mica July 2008 whether to move to full development of Creek Renewal Project, please see page 29 of the field. this report. In 2007/2008, New Business will also assess other gas farm-in arrangements, new generation Ash Reuse Opportunities CS Energy continued to developments and new coal resources for existing progress options for the reuse of ash produced and new generation developments. at its coal-fired Swanbank B and Callide B and C power stations. The Company worked with Cement

23 CS Energy Annual Report 2006|2007 major projects

progress and looking forward

2006/2007 • Kogan Creek Power Project 98.9 per cent complete and in final commission- ing mode. • Callide Oxyfuel Project received funding offer of $50 million from the Low Emis- 4 sions Technology Demonstration Fund. • Swanbank A’s concrete chimneys successfully demolished.

2007/2008 • Complete Kogan Creek Power Project commissioning activities and start com- mercial operations. • Commence construction at Callide A for the Callide Oxyfuel Project and select final geosequestration site.

KOGAN CREEK POWER PROJECT At 30 June 2007, the Kogan Creek Power Project house and air-cooled condensers was completed was 98.9 per cent complete and in the final months by August 2006 and work began on installing the of commissioning. The site workforce peaked in electronic control and management system for the Image (right) October 2006 at 974 and power station. A total of $340 3.8 million hours had been Commissioning began in million was spent on construction activity worked since construction late 2006, early milestones at Kogan Creek Power began in September 2004. being the first firing of the Project in 2006/2007. A consortium of Siemens boiler on oil in December Hitachi is constructing the to test the main burner and power station on behalf igniters, and steam blow- of CS Energy, and Golding through in March 2007 to Contractors is developing clean and test the boiler and the adjacent coal deposit steam piping leading to the as an open cut mine. turbine. Kogan Creek Mine The power station has began delivering coal to the the largest single boiler, tur- power station in April and the bine and generator unit in boiler was fired on coal in the Australia and will produce enough electricity to same month. power one million homes. On 12 May 2007, Kogan Creek achieved synchronisation with the national grid, which Kogan Creek Power Station The final major marked the first time the power station produced components of the power station were installed electricity into the grid. Technicians then early in the year, starting with the 320 tonne gradually increased Kogan Creek’s generation generator stator in July 2006 and the high pressure until it reached its full load of 750 MW for the first and low pressure turbines the next month. The time on 22 June. steelwork on the boilerhouse was completed in the same period and hydrostatic testing Kogan Creek Mine CS Energy purchased the successfully conducted. Steelwork on the turbine Kogan Creek coal deposit as part of its strategy

24 CS Energy Annual Report 2006|2007 major projects

of acquiring low-cost fuel sources. The Kogan This reduction allows the plant to source water Creek Mine will deliver approximately 2.8 million from bores, ensuring the valuable water in the tonnes of coal to the power station per year via a Condamine River is available for other users. four kilometre overland conveyor. The high quality Kogan Creek also features supercritical steam of the Kogan coal will eliminate the need for pre- technology to achieve maximum thermal efficiency treatment such as washing, further conserving and one of the lowest environmental emissions for valuable local water supplies. a power station of its type. In early 2006/2007, the remainder of the overburden and coal mining fleet was delivered Community During the year CS Energy continued to the mine. First coal was uncovered in December its community activities, such as the Chinchilla 2006 and the mine became operational in April 2007 Community Benefits Trust and sponsoring the when coal was delivered to the power station for the biennial Chinchilla Melon Festival. For information, first time via the overland conveyor. By June 2007, please refer to page 35 of this report. 43 staff were working at the Image (left) The four kilometre mine and it was finalising Transition to operation CS overland conveyor its long-term operational Energy recruited 38 staff to connecting Kogan Creek Power Station pattern in readiness for the operate and maintain the and its mine was power station commenc- power station when it is completed during the year. ing commercial operations. completed. In October 2006 At the end of the period, this team moved out to coal from the M seam, the site to commence training, shallowest seam of the operational planning and three to be mined, had been plant familiarisation activ- removed and transported to ities. For more information the power station. Construct- on the Kogan Operations ion of the station stockpile team, please see page 17 had commenced. of this report.

Safety Kogan Creek’s safety Outlook In the lead-up to improved in 2006/2007 commercial operations, tech- compared to the previous nicians will conduct final year, however CS Energy commissioning tests to en- continued to closely monitor sure the power station runs standards and procedures reliably and efficiently. The on-site. There were seven station will also be fine-tuned lost time injuries (LTIs), to set the optimum operating which was a decrease of two on the previous conditions for making the most efficient use of year’s figure. The project team proactively managed inputs such as coal and water, and to ensure it safety with Siemens Hitachi to ensure there was operates within its environmental limits. adequate training and supervision of site workers. The Kogan Creek Mine will ramp up its output The frequency of LTIs decreased from January and finalise its long-term operational pattern. The 2007 onwards, with the majority occurring during power station will continue to produce electricity as the peak construction period in late 2006. part of commissioning activities. The project’s commercial handover date has shifted beyond Environment Kogan Creek Power Station’s ad- September 2007 following delays during con- vanced design incorporates dry cooling technology, struction due to a shortage of skilled workers which will result in 90 per cent less water use and commissioning issues with water treatment than conventional wet-cooled power stations. and coal handling plant.

25 CS Energy Annual Report 2006|2007 major projects

CALLIDE OXYFUEL PROJECT The Callide Oxyfuel Project progressed signifi- Technical highlights As Callide A has been in cantly in 2006/2007 to become one of the storage since January 2002, a plant condition most advanced clean-coal projects in Australia. assessment was undertaken in November 2006 It aims to demonstrate a combination of oxy- as part of the front-end engineering and design firing technology and carbon capture and storage for the project. On site for the inspection were to reduce greenhouse emissions from coal-fired more than 30 personnel from CS Energy, project electricity generation. partner IHI and contractors Clyde Babcock Hitachi, CS Energy has partnered with eight industry Siemens, Energen and Austpower. and research organisations on the $180 million The condition assessment found no unforeseen project. They are: JCOAL, JPower, IHI, the Australian issues with the plant and confirmed the key areas Coal Association, Xstrata Coal, Schlumberger, needing refurbishments were the control system the CO2CRC and the CRC for Coal in Sustainable and air heaters. In the same period, the project Image (right) Development. completed an initial design Callide A Power The project involves retro- review to clarify how new Station, where CS Energy and its fitting a boiler at CS Energy’s plant components will be project partners will Callide A Power Station with incorporated at site and to demonstrate oxy-firing technology. oxy-firing technology so it develop the necessary risk can burn coal in a mixture management strategies for of oxygen and recirculated the project. flue gas. This will create a In January 2007, CS Energy highly concentrated stream participated in the second of carbon dioxide suitable for Oxyfuel Combustion Work- storage underground using shop of the International En- geosequestration. ergy Agency’s Greenhouse The Callide Oxyfuel Pro- Gas Research and Develop- ject will be the first to retro- ment Programme. In March fit oxy-firing technology to 2007, CS Energy convened an existing power station. a workshop with its Callide CS Energy believes that creat- Oxyfuel Project partners to ing a clean coal solution that identify the priority geological can be retrofitted to current areas west of Callide suitable plant will minimise the lead- for further investigation for

time for future application CO2 storage. The partners by industry. also agreed on the criteria for selecting the final storage Demonstration funding In October 2006 the site to be used in the demonstration project. project secured a conditional funding commitment In June 2007, a geotechnical investigation of $50 million from the Australian Government’s was conducted to test the characteristics of soil

Low Emissions Technology Demonstration Fund where the oxygen plant, CO2 processing unit and (LETDF). The funding enabled the project to storage tank will be constructed at Callide A. Bore move ahead with plans for demonstrating oxyfuel holes will be drilled into the underlying rock in technology at Callide A. early 2008 as part of this geotechnical analysis Following this milestone, the project team and the results used to finalise the design for the negotiated a funding deed with the government’s piled foundations. AusIndustry agency, which is due to be finalised in Other highlights for the year included the early 2007/2008. Once the deed is finalised, the completion of an Environmental Impact Assessment project will execute a joint venture agreement with for the oxy-firing component of the project and the the partner organisations. publication of the project feasibility report.

26 CS Energy Annual Report 2006|2007 major projects

Image (left) Terutoshi Uchida from Callide Oxyfuel Project partner IHI Corporation inspects the unit 4 boiler drum during a condition assessment of Callide A in November 2006.

Outlook Priorities for 2007/2008 are finalising front CCSD progressed a handbook on biomass co-firing, end engineering design, commencing construction which will be published in 2008. at Callide A and selecting a suitable site for CS Energy also continued to work with CCSD geological storage of CO2. The project also plans and the ADAA on fly ash reuse opportunities. Fly to finalise the funding agreement with AusIndustry ash comprises up to 90 per cent of ash produced and the joint venture agreements. First electricity at a typical coal-fired power station and reuse generation from the oxyfuel process at Callide A is opportunities can include concrete additives, back- scheduled for 2010 and transport and geological fill and soil conditioners. In 2006/2007, CS Energy storage of CO2 planned for later that year. played an active role in the preparation of a CCSD/ ADAA handbook on coal combustion products, to OTHER RESEARCH AND DEVELOPMENT be published in early 2008. CS Energy also continued to support other research and development programs that focus on Improving power plant performance CS Energy’s more effective coal utilisation and improvement ongoing membership of EPRI has provided the in power generation technology. These programs Company with access to industry best practice, include work by the Cooperative Research Centre training and research input opportunities aimed at for Coal in Sustainable Development (CCSD), the enhancing the performance of coal and gas powered Ash Development Association of Australia (ADAA), generation plant. As part of its membership, and the United States based Electric Power CS Energy has sponsored research programs Research Institute (EPRI). that are of most relevance to its portfolio. In 2006/ 2007, CS Energy supported EPRI research into Coal Utilisation The CCSD concluded the sixth year improving plant performance in steam turbines, of its seven-year program to enhance the efficiency generators and balance of plant; heat recovery and environmental and economic performance of steam generators; boiler and turbine steam and Australian coals used for power generation, and cycle chemistry; and fossil plant maintenance. to facilitate the development of lower emission In addition, CS Energy sought EPRI expertise on technologies. In addition to the Callide Oxyfuel plant issues such as asset management, generator Project feasibility study carried out through this stator cooling corrosion, thermal fatigue corrosion program, CS Energy also played a key role in tech- and supercritical boilers. EPRI also ran training nical assessments of other clean coal technologies, workshops for CS Energy staff on steam turbine including co-firing of coal and biomass. Biomass is overhauls, condenser tube management and flow a renewable energy source. Examples of biomass accelerated corrosion. are organic matter such as sawmill or garden waste, and co-firing these materials with coal can reduce Outlook CS Energy will continue supporting these greenhouse and other emissions. During the year priority research areas in 2007/2008.

27 CS Energy Annual Report 2006|2007 The demolition of the old Swanbank A chimneys created 7,000 TONNES OF RUBBLE.

28 CS Energy Annual Report 2006|2007 major projects

SWANBANK A DEMOLITION As 2006/2007 drew to a close, the project to late 2006 were the most significant milestones Image (far left) demolish the 40-year-old Swanbank A Power Stat- apart from the chimney drop. Swanbank A‘s chimneys were ion was nearing completion. All remaining build- After peaking at a site workforce of 50 in safely demolished in ings and items of plant had been removed from 2005/2006, the number of workers in 2006/2007 August 2006 with no unintended effects on site, and site crews were in the final stages of averaged 14. Site safety continued to be a priority Swanbank B or the foundation removal. due to the scale of the demolition job. All plant was transmission system. Swanbank A was a 408 megawatt coal-fired dismantled and disposed of according to regulatory power station built in 1966. CS Energy engaged requirements and the site recorded zero lost time Trio Industries to demolish Swanbank A following injuries for the year. the station’s closure. Site works began in May 2005 and by 1 July 2006 the project was just Outlook The Swanbank A Demolition Project is passing its halfway point and entering its most expected to be completed in the first quarter of challenging phase. 2007/2008.

Chimneys demolished The spectacular demolition NEW PROJECTS of Swanbank A’s three 122 metre high concrete During 2006/2007, CS Energy continued front- chimneys in August 2006 was the culmination end engineering and design and environmental of months of planning. The chimneys’ size and impact assessments for potential developments location, adjacent to the operational Swanbank B at three of its sites: Power Station and transmission substations, made their demolition a highly complex exercise. Kogan Creek Expansion Exploratory drilling of Trio Industries, specialist sub-contractor Precision the Kogan Creek coal resource confirmed there is Demolition and staff from Swanbank and sufficient economic fuel for a second generating unit Powerlink worked together to ensure the demolition on the site. Design concepts currently include state- occurred safely and had no unintended side effects of-the-art high efficiency steam cycle technology, on Swanbank B or the transmission network. dry-cooling and carbon-capture readiness. At 9.20am on 19 August, the three massive chimneys fell in a ‘controlled collapse’ after Swanbank Expansion The site of the recently explosives were detonated at the base of each demolished Swanbank A station has been ear- of the structures. This method controlled the marked for redevelopment with modern gas-fired direction the chimneys fell to ensure they landed combined cycle plant of between 400 and 500MW on the safest ground position possible. Many capacity. This location has many advantages, staff and local residents gathered on high points including proximity to the major load centre, and around Ipswich to watch the historic moment and much of the necessary supporting infrastructure a one kilometre ‘exclusion zone’ was established already exists. around the station to ensure their safety. Once the chimneys were on the ground, site crews Mica Creek Renewal The ageing boilers and steam hosed down the area to control dust and began turbines, which were installed during the 1960s, the three-month job of clearing the 7,000 tonnes are planned to be progressively replaced with high of chimney rubble. efficiency gas-fired combined cycle plant. The first stage would result in a net increase of approximately Other highlights Remaining sections of Swanbank 50 MW to the station’s total installed capacity, to A removed during the year included the generator cater for expected growth in regional demand. stators, boilers, cooling towers, turbine building, auxiliary bay building, boilerhouse, and undergound Outlook Work on the timing and technical and pipes, drains, pits and foundations. The demolition economic feasibility of these projects will continue of the 150 metre long and 30m high turbine in 2007/2008. All of the proposed projects will be building and the adjacent auxiliary bay building in subject to shareholding Ministers’ approval.

29 CS Energy Annual Report 2006|2007 Organisation Development

progress and looking forward

2006/2007 • Introduced high visibility and flame retardant clothing at all sites. • Recruited and relocated the operational team for Kogan Creek Power Station. • Developed post-graduate qualifications in power generation in partnership with 5 other generators and three universities.

2007/2008 • Introduce health and safety management system at Kogan Creek Power Station. • Step up CS Energy’s training program to target priority skills areas and aid in attracting and retaining staff.

SAFETY CS Energy’s approach to health and safety is to create Safety Performance The safety highlight for the a culture of responsibility amongst staff, contractors year was Mica Creek Power Station achieving four and visitors. The Company’s aim is to achieve a work- years without a lost time injury (LTI) to staff or place free of occupational injury and illness. contractors on 3 January 2007—an unprecedented achievement within CS Energy. In April 2007 Health and Safety System CS Energy’s Occu- Callide Power Station also celebrated 1,000 days pational Health and Safety Management System without an LTI to its contractors. provides a uniform approach to safety at all sites and Across the Company, there were 10 LTIs in is designed to encourage continuous improvement. 2006/2007 and the corresponding Lost Time The system includes corporate policies, procedures, Injury Frequency Rate was 3.36. These figures audits and health and safety manuals. include staff and contractors at CS Energy’s three A key element of the system is the Permit to Work operational power stations, the Kogan Creek Power Manual, which is used to coordinate and control the Project construction site and the Swanbank A isolation of energised plant at all power stations. demolition site. None of the LTIs occurred during an Regular site inspections, job observations and overhaul and the overall total is a decrease of six toolbox talks encourage staff to take responsibility on the previous year. However, any lost time injury for health and safety in their area. is a concern and CS Energy will continue working The Safe Move awareness program is used towards zero LTIs. to increase staff awareness and understanding CS Energy and supplier ContainerWorks gained of CS Energy’s safety policies and procedures. a Highly Commended Award at the National Safety Safe Move promotes the most basic principle of Council of Australia Awards of Excellence in safety—to get people to think before acting. November 2006 in the category of Best Solution CS Energy’s health and safety system also to a Specific Workplace Risk. CS Energy and applies to contractors. Contractors must be prop- ContainerWorks designed an emergency escape erly inducted for the site they are working on, hatch that can be easily and cheaply installed in develop overhaul specific health and safety plans, shipping containers, removing the risk of workers meet certification requirements and complete all being accidentally locked inside. relevant job safety analysis documentation.

30 CS Energy Annual Report 2006|2007 Organisation Development

Image (left) Mica Creek Power Station integrated the ‘Permit to Work’ lock system with SAP in 2007. Health & Safety Advisor Ross McDermott checks a permit during a recent overhaul.

CS Energy has carried out a quarterly Safety CS Energy reviewed its electrical safety training Leadership Survey since 2005/2006 to report during the year to achieve a more consistent staff views of the safety focus of their manager. approach at all sites in compliance with the The survey is anonymous and is based on the Electrical Safety Act. The review identified areas principle that leaders set the example for safety in where skills development is needed and training the workplace. Survey results from 2006/2007 will be rolled out in 2007/2008. showed an increase in staff approval ratings of the Other safety training carried out in 2006/ safety performance of their supervisor. 2007 included: The Incident Management Database was re- • pandemic response training vised during the year to improve reporting on • Workplace Health and Safety Officer training for safety and other incidents. The improvements Superintendents and Supervisors at sites include more detail about incidents, which will • food safety training in site canteens enable CS Energy to better identify trends, develop • defensive driver training for staff who regularly responses and monitor improvements. travel to sites, and • crisis response simulations. High Visibility Clothing Following trials of high visibility and flame retardant clothing in 2005/2006, Fit for Duty As part of its Fit for Duty Policy, CS Energy began rolling out the clothing to sites in CS Energy began consulting with staff and unions May 2007. The clothing will reduce electrical and on a proposal to introduce drug and alcohol testing visibility risks and complies with changes to the at all sites. Random drug and alcohol testing Electrical Safety Act 2002. The rollout to staff will has become mandatory in the mining industry be completed in September 2007 and contractors in Queensland and CS Energy researched other will be required to wear the high visibility clothing companies’ testing approaches when developing from January 2008. a draft policy and procedure. Drug and alcohol testing will support the Fit for Duty Policy by helping Training Regular training forms an important part ensure employees do not pose an unacceptable of CS Energy’s approach to workplace health and risk to the safety of themselves or others, or plant safety. SAFEmap Behaviour Based Safety Training and equipment. In 2007/2008 CS Energy plans was delivered at Callide and Mica Creek power to complete consultations on the draft policy and stations during the year to complement the Safe procedure, implement education workshops to staff Move awareness program. The training improved and run a three-month introductory testing phase. employees’ ability to identify and assess risks and A Fatigue Management Procedure was also take appropriate action. developed during the year and training developed to help staff and contractors better manage their fatigue levels, particularly during overhauls and shiftwork.

31 CS Energy Annual Report 2006|2007 Organisation Development

Employee Health and Wellbeing CS Energy offers Outlook In 2007/2008, the Safety team will: a range of programs to promote a healthy lifestyle • revise its Asbestos Management Plan to match and support the physical and mental wellbeing of its the new Australian Standard employees. An Employee Assistance Program has • rollout a consistent Confined Space Procedure been in place for over five years to offer all staff free at all sites Figure (right) access to an independent, • finalise the Chairman’s CS Energy injury qualified counsellor. Safety Awards Program causes (including AA Not Applicable lost time injuries, Pre-employment medicals • wrap up consultations on Ash injuries and medical are conducted on all new the draft policy and pro- treatments) for Biological 2006/2007. power station staff and have Chemicals cedure for random drug proven successful in identi- Compressed air and alcohol testing fying current and developing Electrical • continue training in elec- health problems and managing Ergonomics trical safety, the SAFEmap them into the future. Each site Fugitive dust risk management ap- is also provided with fund- Gaseous air emissions proach to safety, pandemic Gravitational ing to implement additional response and fatigue man- Kinetic health and safety programs. Lime agement, and In 2006/2007 these includ- Mechanical • update safety induction ed fire extinguisher training Muscular materials at all sites. for staff family members Oil at Mica Creek, a women’s Pressure HUMAN RESOURCES health information session Thermal As Queensland’s largest elec- Unknown at Callide, a staff gym at tricity generator, CS Energy Vibrational Swanbank and free health employs around 560 people Water assessments for staff over Wind across five sites—Swanbank, 50 across the Company. Callide, Mica Creek and

5 10 15 20 25 30 35 40 45 Kogan Creek power stations Workers’ Compensation and and Brisbane corporate office. Rehabilitation An extensive rehabilitation program The workforce profile covers a broad range of is offered on a case-by-case basis to injured em- occupations and professions including engineering, Figure (right) ployees. The Rehabilitation technical and trades, contract Results from the Policy and Procedure is linked administration, project man- Safety Leadership Survey, which involves to the Employee Assistance 4.06 agement, workplace health 4.04 staff rating their Program, which is available and safety, finance, informa- supervisor’s safety 4.02 performance out to all employees. Claims 4.00 tion technology, procurement of five. for compensation totalled 3.98 and human resources. $15,885 in 2006/2007, 3.96 3.94 which represented an 84 per 3.92 Meeting the Skills Chal- cent reduction compared to 3.90 lenge Like most employers, the average annual payments 3.88 CS Energy is faced with the for the previous four years. 3.86 challenge of maintaining a 3.84 This improvement reflects 3.82 skilled workforce against a decrease in injuries and a very competitive and Sep 05 Mar 06 Mar 07 the impact of a concerted expanding market. With effort to forge closer links with injured staff and more than 60 per cent of our staff in remote their medical practitioners to achieve a smoother areas where the resources sector has major transition back to work. operations, attraction and retention is a priority. Although staff turnover has decreased and remains well below the national average of almost

32 CS Energy Annual Report 2006|2007 Organisation Development

13 per cent, CS Energy maintains a multi-faceted a readily accessible and active component of the approach to staff retention. work environment. The Company recognises that employee In late 2006 a comprehensive ‘Functional loyalty and commitment remains a key aspect Review’ was undertaken to critically assess the of workforce stability. Throughout the year the delivery and focus of internal support services. leadership development program continued as A key recommendation was to capitalise on the the cornerstone of CS Energy’s overall employee diverse skills and depth of experience that resided development framework. Combined with a review within CS Energy’s power stations. Although the of recruitment strategies and implementation of functional review concentrated on the support initiatives to encourage people to live and work in services of IT, Finance, Human Resources and remote areas, CS Energy continued to build on its Procurement, it was recognised that the whole of base of highly skilled and versatile employees— portfolio approach that had worked effectively in an essential component for achieving its vision the delivery of engineering services could be a of growing its share of the model for delivery of non-core Image (left) national electricity market. services to power station Callide Human Resources team The second phase of the operations. The review was members Rebecca leadership development pro- finalised in early 2007 and Purgar (left) and Owen Lawrence gram was rolled out to all its recommendations are workshop the training supervisors and managers being implemented gradually program for Business Administration trainee during the year. This stage, across all sites. Through Sara Saunders, known as ‘Leadership in the participation of internal who is one of 47 graduates, apprentices Practice’, provided a platform specialists, CS Energy will see and trainees across for participants to focus more streamlined structures, CS Energy. on and resolve issues in systems and processes. the workforce that impeded growth and engagement. Training and Development From each workshop, action In keeping with commitments plans were developed, along to build industry specific with a shared philosophy of skills, CS Energy joined continuous improvement and forces with Tarong Energy, empowerment. Stanwell Corporation and three Queensland uni- People Systems Over the versities to develop a post- last two years, CS Energy has graduate program for engin- implemented a consistent eers and para-professionals. and integrated performance Launched in early 2007, the review program across the organisation. The Power Generation Skills Development Program system linked with each staff member’s Role is offered through the University of Queensland, Purpose Statement and was designed to focus Central Queensland University and Queensland on the leadership principles of giving employees University of Technology. The program is designed room to grow and recognising contribution. to target priority skills areas, provide industry with Performance Management training was rolled out an increased pool of staff and give participants to assist managers and supervisors in actively professional development opportunities. Nine managing performance. In mid-2006 the move CS Energy staff completed the first semester of to the new version of SAP allowed the review the program. process to be conducted on-line. Later in 2007, on- The Company’s continuing sponsorship of the line functionality will be extended to include Role Queensland Electricity Transmission and Distri- Purpose Statements, to ensure that they remain bution Bursary Scheme helped support the next

33 CS Energy Annual Report 2006|2007 Organisation Development

generation of engineers. The program provides program currently includes nine staff who are financial assistance and vacation employment to employed across the Company’s five sites in the students undertaking engineering degrees in areas fields of engineering, health and safety, finance, relevant to the power industry. human resources, environment, and information In response to a need to continuously up-skill technology. CS Energy also has an active apprentice employees, CS Energy engaged training providers and trainee program. to develop and deliver two tailored training Twelve graduates and fourth year apprentices programs for operators and supervisors. Twenty- completed a five-day Outward Bound Program in two staff completed the first stage of an operator- October 2006 to develop their leadership, team- training course, attaining their Workplace Health work and problem-solving skills. The program Figure (right) and Safety Boiler and Turbine was initiated to build the The occupational tickets. At the completion profile of CS Energy’s capabilities of the next gen- workforce for of the next stage they will 140 eration of CS Energy leaders 2006/2007. graduate with a Certificate 120 and strengthen participants’ IV in Power Generation. The 100 transition from training or second program was a 12- 80 study to the workplace. A month Supervisor Develop- 60 further 12 graduates and ap- ment program, which saw 40 prentices will participate in 22 staff graduate with a 20 the program in August 2007. Certificate IV in Business Trades Support Technical (Frontline Management). New Operators Industrial relations review Engineering Utility Worker Utility Management

intakes of both programs are Market Trading An external review of CS planned for 2007/2008. Energy’s industrial relations Chemical/Environment CS Energy also conducted processes was conducted training for specific safety priorities, which are by PriceWaterhouseCoopers in December 2006 outlined on page 31 of this report. at the request of the shareholding Ministers. The Figure (right) review made a number of The age profile of Succession and Career recommendations regarding CS Energy’s workforce for 2006/2007. Planning With 18.3 per cent the documentation and op- of its workforce aged 55 180 eration of IR practices and years and above, succession 160 these are being progres- 140 planning remains an essential 120 sively actioned under the component of CS Energy’s 100 oversight of the Board. 80 long-term competitiveness. 60 Progress against the During the year the Company 40 action plan is reported developed a policy for en- 20 monthly to the full Board and suring a succession plan was to shareholding Ministers on

in place for critical roles in 15–19 20–24 25–34 35–44 45–54 55–59 60–64 65–69 70–74 a quarterly basis. the business. The ‘Manager- One-Removed’ process was Kogan Creek Team Final- also refined, to give staff twice-yearly sessions ised In 2006/2007, the Human Resources with their manager’s supervisor to discuss their team finished recruiting the operational team career paths. It is planned to rollout a number of for the new Kogan Creek Power Station. This supporting aspects of these two systems in the involved a major project to relocate and house latter part of 2007. the 38 employees and their families to the nearby CS Energy revised its graduate program and town of Chinchilla and surrounding areas on the the role of mentors to ensure the Company western Darling Downs. Also finalised during the was providing graduates with job diversity and year was the Kogan Creek Enterprise Bargaining skills development opportunities. The graduate Agreement intended to support the flexibility

34 CS Energy Annual Report 2006|2007 Organisation Development

and multi-skilling necessary to support the new program. Swanbank Power Station raised more technology of Australia’s newest and most complex than $1,800 for Leukaemia research through the single unit station. World’s Greatest Shave in March 2007.

Outlook In 2007/2008, the five-year Equal Community Relations CS Energy focuses on face- Opportunity plan expires and Human Resources to-face communication with its neighbours at operat- will complete another. The plan will complement ing sites. At Swanbank, the Community Reference many of the philosophies inherent in the Group (CRG) operated jointly with Thiess Services leadership development program. Work will also entered its seventh year. Its regular meetings continue on further attraction and retention initia- provide a vital link between the operations of tives and plan for enterprise bargaining agreement CS Energy and Thiess Services and local residents, negotiations at several sites. as increasing population pressure is placed on the Another focus area will be the implementation region. The group’s newsletter, Swanbank Talk, is of the Functional Review outcomes and a long term distributed to 8,000 local residents in conjunction strategic workforce planning framework intended with biannual public meetings. to position CS Energy for future proposed capital This model was replicated at Chinchilla, where investment and expansion. a CRG was established to facilitate two-way com- munication with residents affected by the Kogan COMMUNICATION Creek Power Station. With construction drawing With more than 550 staff spread across five to a close, the shape and focus of this group is Queensland locations, effective internal com- expected to change during 2007/2008. munication is essential to CS Energy’s success At Callide, briefings are held twice a year to as a business. The Company also places a high update residents and businesses on activity at priority on building strong relationships in the the power station. Work at the station can involve communities that host its operations—Ipswich, the influx of over 200 extra people in Biloela for Chinchilla, Biloela, Mount Isa and Brisbane. periods of up to six weeks, so it is important that local businesses are aware Image (left) Employee Relations CS Energy of the station’s timetable. CS Energy staff raised $3,700 for the uses a variety of media to This year, a complementary national ‘Movember’ communicate with its staff. process was set up between campaign to raise money for research A bimonthly newsletter, CS Energy and other large into prostate cancer quarterly briefings and email businesses to coordinate and male depression. updates from the Chief Ex- activities that may place ecutive keep staff informed pressure on local services of significant news, the like accommodation. Company’s performance and In Mount Isa, station staff future direction. These tools and businesses stay in touch are complemented by regular through organisations like site, team and work group the Mount Isa Chamber of meetings. Commerce. Although a small Fundraising activities are an important part of economic presence in this community, Mica Creek CS Energy’s employee relations strategy, as they Power Station is a major sponsor of the Mount Isa foster greater staff interaction and links with the Business Awards and several other local events. community. The Company targets cancer charities in particular as several CS Energy staff have a Partnerships CS Energy’s business philosophy family member or friend who has been affected encourages investment in the local economies that by the disease. In late 2006, staff raised $3,700 support its operations. Our community investments for research into prostate cancer and male also reflect this philosophy, with resources fo- depression by participating in the ‘Movember’ cused on projects in Biloela, Chinchilla, Ipswich and Mount Isa.

35 CS Energy Annual Report 2006|2007 Organisation Development

Image (right) Approximately 50 Kogan Creek and Brisbane staff participated in the CS Energy sponsored Chinchilla Melon Festival.

One of CS Energy’s flagship partnerships is the engage with its neighbours on water issues during Moving Opera! program, delivered in conjunction the current drought. with Opera Queensland. This five-day, intensive The Swanbank CRG and staff from both performance workshop was originally offered only to Swanbank Power Station and Thiess Services schools in the Brisbane area prepared to pay for the Swanbank Landfill celebrated Clean Up Australia program. Through its partnership with CS Energy, Day on 4 March 2007 with a working bee on Opera Queensland is able to offer the program, free Swanbank Road and around Swanbank Lake. of charge, to students in regional communities. Power station staff at all sites continue to During 2006/2007, the program travelled to embrace local causes. In Mount Isa, staff provided Biloela and Chinchilla. Students from the Biloela financial and in-kind support to a community child workshop visited Callide Power Station to perform care centre set up to meet increased demand in for staff, many of whom were related to the students, the area as the mining boom brings more families and take a tour of the power station. to the region. The program culminates in a fundraising The station also extended its long-term relation- concert by workshop participants and the Opera ship with the Laura Johnson Home for the Aged Queensland performers. An enthusiastic welcome by donating office equipment to assist the from the community of Chinchilla resulted in the best administration team at the not-for-profit facility. fundraising effort in the history of the program. Callide Power Station continued its support CS Energy, Siemens and Hitachi joined forces in for education in the region by contributing to the February 2007 as major sponsors of the Chinchilla establishment of Biloela State High School as a Melon Festival. The biennial festival makes a major technology hub school for the region. The hub, with contribution to the local economy and this year’s advanced design and manufacturing capabilities, festival was the largest ever, attracting visitors from was established to enable students to design, across the globe and coverage on Channel Nine’s construct and race their own F1 model cars. The Getaway program. program also helped Callide forge links between its As a major contributor to local economies engineers and the school. across Queensland, CS Energy supports Chamber of Commerce Business Awards in Mount Isa, Ipswich and Chinchilla. Water was topical in south-east Queensland, reflected in a partnership between Swanbank Power Station and the Boonah Arts Collective to deliver a water-themed Boonah Arts Festival in August. A water symposium accompanying the festival gave CS Energy a valuable opportunity to

36 CS Energy Annual Report 2006|2007 corporate governance

progress and looking forward

2006/2007 • Implemented recommendations of Board Evaluation Review. • Established a self-insurance company to manage the risks of the insurance market. 6 2007/2008 • Conduct first compliance and operations audit of Kogan Creek Power Station. • Evaluate the Strategic Sourcing project as part of CS Energy’s commitment to continuous improvement.

Corporate Governance Framework CS Energy was established in 1997 under the Team, monitoring corporate performance, man- Government Owned Corporations Act 1993 (GOC aging risk and upholding the Company’s Code Act) and is incorporated as a public company, of Conduct. subject to Corporations Law. Shares in CS Energy A key responsibility of the Board is reporting to are held by two State Government Ministers on shareholding Ministers on CS Energy’s perform- behalf of the people of Queensland. At 30 June ance against the objectives set out in its annual 2007 these Ministers were: Statement of Corporate Intent (SCI). • Deputy Premier, Treasurer and Minister for The Board meets monthly, and more frequently Infrastructure, Anna Bligh MP, and as required, to oversee CS Energy’s operations. • Minister for Mines and Energy, Geoff Wilson MP. Prior to amendments to the GOC Act in March Board Committees 2007, shares were also held by three non-voting The Board has established four committees to shareholding Ministers. These shareholdings were assist with the management of particular business subsequently transferred to Minister Bligh. areas and provide a forum for Directors and the CS Energy has a corporate governance frame- Executive Management Team to discuss more work to ensure it maintains the highest standards complex business issues. All four committees of ethics, efficiency and commercial performance. report to the Board. Central to this framework is a Corporate Govern- ance Charter that reflects the objectives of Audit Committee The Audit Committee assists good corporate governance in the ASX Corporate the Board in overseeing the reliability and integrity Governance Council’s Principles of Good Corporate of CS Energy’s financial reporting practices, ac- Governance and Best Practice Recommendations. counting policies, auditing and external reporting. Responsibility for ensuring the company practises The committee provides advice to the Board on good corporate governance rests with its Board. financial statements, financial systems integrity and business risks. It also helps ensure CS Energy The Board complies with all applicable laws, regulations and CS Energy’s Board comprises seven, independent, Company policies and that an adequate internal non-executive directors appointed by the Govern- control system is in place for areas such as or in Council under the GOC Act. The Board is business risk and safeguarding of assets. responsible for setting strategic direction, reviewing and approving plans by the Executive Management

37 CS Energy Annual Report 2006|2007 corporate governance

BOARD MEETING AND BOARD COMMITTEE MEETING ATTENDANCES FOR 2006/2007

Name Board Audit Board Risk Major Capital Staff and and Technical Remuneration

11 Meetings 4 Meetings 4 Meetings 11 Meetings 5 Meetings

Stephen Lonie 11 4 4 11 5 Tim Crommelin 9 n/a 3 n/a n/a Julie Leaver 11 4 4 n/a n/a Bob Henricks 11 n/a 4 11 n/a Tony White 10 n/a 4 10 5 Sarah Israel 11 4 4 n/a n/a Mark Bucknall 11 n/a 4 n/a 5

Image (right) The committee oversees development of the on projects and provide technical and commercial Pipe and cable Internal Audit Plan and the results of internal audit advice. Its members are Stephen Lonie (Chair), Bob installation work at the 90 metre level of activities and recommendations. It is also the Henricks and Tony White. the 160m high Kogan primary point of reference for CS Energy’s external The major focus of the Committee for the Creek Power Station chimney. auditor, the Auditor General of Queensland. The past 12 months was overseeing construction of committee accepts reports from the Queensland Kogan Creek Power Station. Other highlights for Audit Office and oversees progress on implementing 2006/2007 were: recommendations flowing from reports. • resolution of technical issues at Callide C The committee meets quarterly and its mem- • demolition of the old Swanbank A Power Station bers are Julie Leaver (Chair), Stephen Lonie and • planning for a second unit at Kogan Creek Sarah Israel. • overseeing the Callide Oxyfuel Project, and Highlights for 2006/2007 included reviews of • considering expansion options for Mica Creek. internal control frameworks, plant control system security, the Strategic Sourcing Project, plant Staff and Remuneration Committee The Staff maintenance, and year-end accounting issues. and Remuneration Committee provides advice on remuneration policies and practices. It makes Board Risk Committee As risk management is recommendations to the Board on negotiation a core responsibility of CS Energy’s Board, the parameters for enterprise bargaining agreements Company has a dedicated Board Risk Committee. as well as remuneration packages and other terms The committee oversees the Company’s risk man- of employment for the Executive Management agement system and ensures compliance with its Team. The committee ensures employees are fairly policies, procedures and legal obligations. The remunerated for their work and that the Company Board Risk Committee meets quarterly, comprises acts in the best interests of shareholders on all Directors and is chaired by Timothy Crommelin. remuneration matters. Each year, the committee Highlights for 2006/2007 included reviews of reviews executive remuneration against agreed per- pandemic response readiness, crisis and emergency formance measures. planning, the Insurance Placement Strategy, Callide The Staff and Remuneration Committee meets C joint venture governance arrangements, and key quarterly and its members are Tony White (Chair), risks for the organisation. Stephen Lonie and Mark Bucknall. Highlights for 2006/2007 included: Major Capital and Technical Committee As a • the annual salary review and performance pay- company with a significant capital development ments for employees on Alternative Individual program, the Major Capital and Technical Committee Agreements plays an important role in overseeing major projects. • the appointment of the General Manager Organ- The committee meets monthly to review progress isation Development

38 CS Energy Annual Report 2006|2007 THE MAJOR CAPITAL AND TECHNICAL COMMITTEE OVERSAW CONSTRUCTION PROGRESS AT KOGAN CREEK POWER STATION.

39 CS Energy Annual Report 2006|2007 corporate governance

• a review of progress on the Leadership Develop- and objectives for the next five years and their ment Program performance indicators. • renegotiation of the Corporate Office Certified • A Statement of Corporate Intent (SCI) outlining Agreement, and CS Energy’s goals and objectives for the next • establishment of the Kogan Creek Power Station financial year. Enterprise Bargaining Agreement. • Quarterly Reports of the Company’s progress meeting SCI targets and measures. Executive Management Team • An Annual Report on CS Energy’s performance The Board appoints CS Energy’s Chief Executive for each financial year. and other members of its Executive Management • Other periodic reports as required. Team after receiving prior written approval from shareholding Ministers. The Chief Executive is Performance accountable to the Board, and is responsible for The performance of the Board is periodically managing the performance of CS Energy’s business evaluated at a formal workshop facilitated by an and the Executive Management Team. independent corporate governance specialist. In 2006/2007, CS Energy implemented the Resignation of Chief Executive On 11 May 2007, recommendations of a Board Performance Mark Chatfield resigned as Chief Executive of Review finalised at the start of the financial CS Energy. The resignation occurred after Mr year. The review found CS Energy’s corporate Chatfield made a voluntary disclosure to the Board governance processes were sound and suggested about the acquisition of shares. As the share- improvements to executive succession planning, holding represented a potential breach of the key stakeholder communication processes and Company’s Code of Conduct, the Board had the Director professional development. matter investigated independently and sought legal advice. Risk and Assurance To ensure procedural fairness, the Board offer- CS Energy’s Board has ultimate responsibility for ed Mr Chatfield the opportunity to respond to managing risks for the Company and ensuring the investigation findings. Before responding, Mr it complies with relevant laws, regulations and Chatfield elected to resign with immediate effect. policies. CS Energy employs an internal Risk and He subsequently refuted that he had breached the Assurance function to oversee this activity and Company’s Code of Conduct in his response to report to the Board and management. The Risk and the Board. Assurance Team reviews the Company’s activities, CS Energy remains committed to the highest information and records to ensure that: standards of corporate governance. Following the • financial and operational information is reliable resignation of Mr Chatfield, Tony Andersen, General • compliance with laws, regulations, policies and Manager Major Projects, was appointed as Acting procedures occurs Chief Executive. Mr Andersen is a highly respected • business risks are identified and appropriate executive with more than 30 years of experience in management plans are adopted, and the energy sector, and has worked in management at • procedures are in place to safeguard assets and Tarong, Callide, Swanbank and Queensland’s hydro revenue, and ensure effective use of resources. power stations. CS Energy’s risk management framework is de- signed to ensure potential financial, operational Reporting and other risks are identified, assessed, monitored CS Energy’s Board regularly reports to its share- and reported to the Board. holding Ministers to ensure they are informed The Board Risk Committee oversees CS Energy’s about the operations, performance and financial risk management framework and its responsibilities position of the Company. CS Energy produces four are outlined earlier in this section. The Board’s documents to report on its performance: responsibilities in this area are facilitated by the • A Corporate Plan that outlines key strategies work of two management committees that report to

40 CS Energy Annual Report 2006|2007 corporate governance

the Board Risk Committee: the monthly Board meetings to report any conflicts • Risk Coordination Committee: meets on a by the Board or executive management. The Board quarterly basis to coordinate responses to and senior executives are also required to make market and operational risks as they arise. annual declarations of companies in which they hold • Market Risk Management Committee: monitors shares, or relationships that have the potential to market risk on a monthly basis and recommends lead to a conflict of interest. CS Energy commissions appropriate systems and controls. an external, independent check of these declarations CS Energy’s Risk Management Policy provides against publicly available databases. guidance for the Board and staff on the Company’s CS Energy encourages Directors and staff to risk management approach. report any conduct they observe that they believe Highlights for 2006/2007: is a potential breach of Company policies or extern- • Ernst and Young conducted an independent al regulations or laws. The CS Energy Procedure probity audit of CS Energy’s corporate governance for Pecuniary Interest, Conflict of Interests and processes, which were found to be sound. These Protected Disclosures outlines the process for external probity audits are conducted annually. responding to these disclosures and confidentiality • PriceWaterhouseCoopers reviewed CS Energy’s provisions for the individual making the disclosure. corporate governance systems and found the As a Government Owned Corporation, CS Energy Company’s corporate governance framework has an obligation to comply with the requirements was strong. of the Freedom of Information Act 1992 (the FOI • Establishment of a self-insurance company to Act). CS Energy is exempted under the FOI Act from manage the risks of the insurance market. disclosing documents relating to its commercial activities or its community service obligations Ethical and Responsible Behaviour under the GOC Act. CS Energy conducts all business activities with integrity, honesty and compliance with relevant Information and advice laws and standards. The Board and staff must Directors can seek independent professional advice act in accordance with the CS Energy Code of on matters before the Board after receiving approval Conduct, which outlines the Company’s principles from the Chair. CS Energy bears the cost of this for conducting its business in an ethical and external advice. Directors can also seek relevant responsible manner. The Board has also adopted information from CS Energy employees, subject to the Directors’ Code of Conduct from the Articles approval from the Chief Executive and attendance of Association of the Australian Institute of by a member of the Executive Management Team. Company Directors. To ensure compliance and prevent conflicts Remuneration of interest, CS Energy has a number of other Directors are remunerated at a level determined policies and procedures including a Share Trading by the Governor in Council and reimbursed for Procedure, Compliance Policy and a Procedure for reasonable expenses incurred while conducting Pecuniary Interest, Conflict of Interests and Pro- business on behalf of CS Energy. tected Disclosures. The Board, in consultation with shareholding The Share Trading Procedure provides guidance Ministers, approves the remuneration levels for the on the legal requirements of the Corporations Act Chief Executive and other members of the Executive 2001 with respect to inside information and insider Management Team. trading. The policy requires officers and directors Details of remuneration paid to Directors and to not engage in share trading transactions with Executive Management Team members during the companies with whom CS Energy has a contractual year appear in Note 31 of the Financial Statements. relationship and where the officer could be in pos- session of price-sensitive information or be placed Directions and notifications in a position of a conflict of interest. CS Energy received no directions from its share- CS Energy has a standing item on the agenda of holding Ministers during the year.

41 CS Energy Annual Report 2006|2007 THE CS ENERGY BOARD DRIVES PROGRESS AGAINST THE COMPANY’S GROWTH STRATEGY. DIRECTORS’ PROFILES

Stephen Lonie B Com, MBA, CA, ASIA, FIMCA, FAICD Sarah Israel B Bus, FCPA, FAICD Chairman Director since 1999 Stephen Lonie is an independent man- Director since 2005 Sarah Israel has extensive experience in agement consultant and company director, following over 30 years project finance, investment banking and regional development and experience with the major accounting and consultancy firm KPMG. currently has consulting roles in finance projects in Australia and He is currently Managing Director of public company Village internationally. Her experience also includes time in the mining and Life Ltd. Mr Lonie resigned as a non-executive Director of Charter minerals processing and oil and gas industries. Pacific Limited and Voxson Limited in October 2006. He chairs Ms Israel is a Director of Queensland Sugar Limited (QSL), CS Energy’s Major Capital and Technical Committee and is a Australian Biodiesel Group and ESI Superannuation. She is Chair of member of the CS Energy Audit Committee, Staff and Remuner- the Audit Committees of QSL, ESI Super and Australian Biodiesel. ation Committee and Board Risk Committee. She was previously a director of the Queensland Electricity Transmission Corporation (Powerlink). Ms Israel is a member of CS Timothy Crommelin B Com, ASIA, FAICD Energy’s Audit Committee and Board Risk Committee. Deputy Chairman Director since 1997 Tim Crommelin is Chairman Stockbroking of ABN Amro Morgans Limited, a Member Corporation Julie Leaver B Com, FCPA, MAICD of the Australian Stock Exchange. Mr Crommelin brings more than Director since 1999 Julie Leaver has held senior financial roles 35 years experience in investment, marketing, stockbroking and in the telecommunications and mining industries with companies capital raising to the Board. He holds a commerce degree from the listed on the Australian and New York stock exchanges. During University of Queensland. her 10 years with Telstra Corporation, Ms Leaver was responsible His directorships include Australian National University Super- for preparing the Group’s financial statements, annual reports and annuation Investment Fund, Australian Cancer Research Foundation, US prospectus. She was the Telstra Group coordinator of the US Brisbane Grammar School, Abney Hotels Limited and the Queensland prospectus for T2, the second tranche of the sale of the Federal Museum Foundation. Government’s interest in Telstra. Mr Crommelin is a member of the Senate, University of Queens- Ms Leaver’s experience also extends to 15 years with the land, and chairs CS Energy’s Board Risk Committee. former Mount Isa Mines Group (MIM), membership of the Australian Accounting Standards Board and project management and corporate Mark Bucknall LLB, BA, MAICD governance roles. Ms Leaver chairs CS Energy’s Audit Committee and Director since 2005 Mark Bucknall is the managing partner of his is a member of the Board Risk Committee. own legal practice. He came to CS Energy from the Energex Retail Board, where he chaired the Audit Committee and the joint Energex Tony White Dip Mech Eng, FIE Aust, Aus IMM, FAIM Remuneration Committee. He also served as inaugural chair of the Director since 1999 Tony White is a technical consultant for Itochu South-East Queensland Regional Electricity Council. Australia Ltd and a Director of Community and Corporate Financial Mr Bucknall’s other board appointments include a directorship of Services Pty Ltd and the Queensland Coal and Oil Shale Super- Queensland Cruising Yacht Holdings and membership of the Council annuation Fund. of the Brisbane North Institute of TAFE. Awarded a Commonwealth He is also Chairman of Copperform Holdings Pty Ltd and was sports achievement award for services to Australian Football, he is Chairman of CS Energy subsidiary Sigma Process Solutions until its an active community member and contributes professional support acquisition by Alstom Power Australia in 2003. Mr White has extensive to community legal centres and sporting organisations. experience in the resources sector, having previously been Executive Mr Bucknall is a member of CS Energy’s Staff and Remuneration General Manager, Coal, Copper and Metals Processing with the former Committee and Board Risk Committee. MIM Group, where he was able to combine his engineering experience with business development and financial management. Bob Henricks Queensland Certificate of Competency as Electrical Mr White chairs CS Energy’s Staff and Remuneration Committee Mechanic (Electrician) and is a member of the Major Capital and Technical Committee and Director since 1999 Bob Henricks brings more than 40 years of Board Risk Committee. experience to the CS Energy Board. Mr Henricks has served on the board of AUSTA Electric and chairs the Electricity Supply Industry Superannuation Fund, and two other superannuation funds. He is Image (left) also chair of Meanderham Pty Ltd, Electro Group Training Qld Ltd and CS Energy Board members (clockwise from front) Stephen Lonie (Chair), Electro Group Apprentices Qld Pty Ltd. Julie Leaver, Timothy Crommelin, Tony White, Sarah Israel, Mark Bucknall and Bob Henricks. Mr Henricks is a director of Qld Private Capital Group Pty Ltd. He chairs the Queensland Electrotechnology Industry Training Council, is past State Secretary and National President of the Electrical Trades Union and is also a member of the (Australian Government) Central Trades Committee. Mr Henricks, who took his apprenticeship at 15, is still a licensed electrician. He is a member of CS Energy’s Major Capital and Technical Committee and Board Risk Committee.

43 CS Energy Annual Report 2006|2007 Executive MANAGEMENT TEAM PROFILES

TONY ANDERSEN BE, MIE (Aust) PAUL HYSLOP MBA, BE (Hons), BA, Grad Dip (Applied Finance) Acting Chief Executive and General Manager Major Projects General Manager New Business Mr Hyslop gained over 16 years Mr Andersen has more than 30 years experience in the energy experience in the power industry working in the areas of system sector. He has worked in management at Tarong, Callide, Swanbank operation, marketing and trading, and business development at and Queensland’s hydro power stations. He was appointed as Acting companies such as Hydro Tasmania, Snowy Hydro and Edison Chief Executive of CS Energy on 24 May 2007. Mission Energy. More recently he worked for economics firm ACIL In his permanent role as General Manager Major Projects, Mr Tasman where he consulted to the electricity and gas industries. Andersen is responsible for the development of major projects, As General Manager New Business, Mr Hyslop is accountable including Kogan Creek Power Project, the Callide Oxyfuel Project and for the development of new business, including conceptualisation the Swanbank A Demolition Project. He is also a director of Callide and feasibility of new projects and the acquisition and management Energy Pty Ltd, Callide Power Management Pty Ltd and Kogan Creek of fuel and water. Power Project Pty Ltd. Bill Andrew BA RICHARD BOYS BCom, MBA, FCIS General Manager Organisation Development Mr Andrew has more Chief Financial Officer Mr Boys has more than 20 years experience than 20 years experience in organisational and individual development, in business management and administration in the resources and change management and strategic planning. He has worked with a energy sectors. range of public and private sector companies throughout Australia As Chief Finance Officer, Mr Boys is responsible for finance, and New Zealand in a consulting capacity, including BHP Billiton, information technology and business systems. He is also a director Brisbane City Council, Bougainville Copper and Tarong North. Most of various CS Energy subsidiary companies associated with Mica recently, he was based in Canberra as General Manager Organisation Creek Power Station, Callide Power Project, Kogan Creek Power Development, CSIRO Sustainable Ecosystems. Project and Swanbank E Project. In his role at CS Energy, Mr Andrew is accountable for the human resources, industrial relations, occupational health and safety, and CHRIS TURNBULL B Bus MAICD marketing and communication functions and has a wider role in General Manager Corporate Services and Company Secretary Mr organisation change and development. Turnbull has worked in the energy industry in the areas of business management and administration for more than 25 years. He is Deputy Chair of the Electricity Credit Union and a member of that Board’s Audit, Risk, and Staff and Remuneration committees. Mr Turnbull is also Company Secretary for the CS Energy group of companies. As General Manager Corporate Services, he is responsible for market operations, internal audit, legal and corporate administration.

Image (above) Mica Creek Power Station near Mount Isa.

44 CS Energy Annual Report 2006|2007