We aim to live our corporate values every day. Our values express who we are and all that They underpin everything we do as a company we aspire to be. They are the foundation and articulate what we see as most important. for our reputation and success.

PUT DELIVER IMPRESS SAFETY BALANCED OUR FIRST RESULTS CUSTOMERS We are committed We are passionate and disciplined Servicing our customers to achieving an about achieving our targets to ensure a injury free workplace to deliver sustainable performance positive experience

RESPECT BE SET & SUPPORT A TEAM A GREAT EACH OTHER PLAYER EXAMPLE We value each We operate as a team We create an environment other’s views to achieve and leverage and learn that encourages people to grow, success together from each other achieve goals and lead the way Powering Lifestyles Forever – articulates our vision, our people and technical capabilities to deliver network reinforces our strategic direction and provides performance that achieves legislated Minimum Service a reference to guide both strategic planning and Standards (MSS), Guaranteed Service Levels (GSLs), day-to-day business operations. The purpose supports and associated network standards. our transition to becoming a customer-centric and sustainable business that delivers sustainable energy Linked with this goal is a focus on ‘lifestyles’ which solutions and balanced commercial outcomes. refl ects our growing need to understand the changing lifestyle, business and economic preferences of our Our purpose represents the three core areas upon customers and the implications this has for the way which we must focus to deliver our vision. A focus on in which we deliver power. From a forward or ‘forever’ ‘powering’ describes the core network that we own perspective, we must produce results that ensure the and operate, and the need for the corporation to use future sustainability of our network and corporation.

By 2015 we will transform ENERGEX into a customer- We will support our customers’ 21st century lifestyle centric organisation providing sustainable energy aspirations and partner with the community to solutions. Our skilled and capable people will see us build sustainable economic growth in South East as an employer of choice as we create new customer Queensland. In alignment with our shareholders we solutions and opportunities. will be a safe, effi cient, environmentally sustainable and commercial organisation.

ENERGEX ANNUAL REPORT 2009/10 about this report

At ENERGEX, effective stakeholder The aim of this report is to provide accurate and relevant information communications and reporting are to meet the needs of our stakeholders, who include but are not limited to: key components to our corporate ■■ shareholding Ministers and Government social responsibility position. We aim for continual improvement ■■ customers and community through accountability, transparency ■■ employees and employee unions and relevance of information. ■■ electricity retailers The ENERGEX Annual Report ■■ electricity transmission companies (this report) provides a review ■■ electricity generators of our operational and financial ■■ regulators performance during the 2009/10 ■■ suppliers. financial year against our strategies, objectives and targets as detailed in For further information on our stakeholder engagement processes please refer our Statement of Corporate Intent to page 71. (SCI) (pages 10-13). It demonstrates that we are building and maintaining The theme of this report is ‘Living Our Values’. It reflects how we use our values a robust and sustainable business in everyday activities to achieve our strategic objectives and vision. A particular to service the energy needs of South example used throughout this report, and photographed on the outside cover, East Queensland, and how we plan is our new headquarters in Newstead, Brisbane. Relocations will take place to continue this into the future. in late 2010 (page 95). To assist in communicating how we live our values, the operational review is categorised according to these values, with each section including a case study. Sustainability is an important issue which we believe warrants extensive coverage across the key aspects of our business. We have developed the ENERGEX Sustainability Report which can be accessed on our website www.energex.com.au. To avoid duplication, detailed information regarding sustainability across the key areas is included in our Sustainability Report. This report has been designed to complement the Sustainability Report which follows the Global Reporting Initiative (GRI). To assist in reading this report, we have included a glossary of terms and index (pages 107-109). This report also includes our corporate governance framework (pages 29-31) – the systems by which the organisation is directed and managed – as well as our risk management processes (pages 26-27). We welcome your comments as they will assist us in improving future communication with our stakeholders. Feedback can be provided via [email protected]. This report and previous reports can also be accessed at www.energex.com.au or via the Corporate Communications team on 13 12 53.

© Energex Limited 2010 ENERGEX Limited Corporate Office Enquiries 150 Charlotte Street Telephone: 13 12 53 ® ENERGEX and ENERGEX POSITIVE GPO Box 1461 Hours: 8.00am – 6.30pm ENERGY are registered trademarks BRISBANE QLD AUSTRALIA 4001 Monday to Friday of ENERGEX Limited. Telephone: +61 7 3407 4000 Email: [email protected] © 2010 ENERGEX Ltd and Sentis Facsimile: +61 7 3407 4609 For more information on any of the initiatives, Pty Ltd. This document contains projects, products and services mentioned intellectual property of Sentis Pty Ltd, ENERGEX Limited in this report and more, visit the ENERGEX including registered trademarks. ABN 40 078 849 055 website at www.energex.com.au

Thank you Thank you to all the staff and colleagues who contributed to this report. allows us to complete projects safely and effi and offi safely projects corporate new our complete to us allows ciently; signifi to aims ce footpri carbon our reduce cantly teamwork to committed aworkforce powerlines; around planting safe encourages campaign Safetree our Trees from Pictured: – photos Cover key responsibilities. their and ENERGEX behind team executive The Executive team community. Queensland East South the for refl CEO Our Offi Executive Chief and organisational structure. framework governance corporate our is Included direction. organisation’s our govern that processes various the of reporting and performance strategies, Our governanceCorporate members. Board our of overview An profi ofDirectors' Board decade. past the over progress our and 2009/10 of refl Chairman Our Chairman’s report targets. and objectives areas, key result corporate our against performance Our highlights Intent ofCorporate Statement Financial highlights Highlights and challenges Our profi contents le ects on how we are working working weare how on ects 3 onects the achievements business 34 14 cer’s report 8

les 6

10 32 20 16 preparation for and response to the summer period. summer tothe response and for preparation our and 2009/10, for network our of capacity and reliability of overview an includes also It considerations. social and environmental and aservice, providing between abalance achieved awaythat in Queensland East South in demand electricity wemet How community. the and employees our of wellbeing and safety health, the toensure activities and approach our of overview An value. corporate one number Our review operational –our values our Living Index abbreviations and Glossary fi our Includes Additional reporting corporate businesses. other and community the for example agreat set also but industry, electricity the in way the lead only tonot weaim programs, development and research and initiatives, environmental our Through development. staff and performance staff initiatives, workplace our are Included about. all is choice’ of ‘employer an being what are people byour day every demonstrated and held values team strong The support. and communication effective through relationships our wemaintain how and Refl hospitality expenses. notifi and directions Respect and support each other each support and Respect Put safety first first safety Put Deliver balanced results results balanced Deliver Be a team player player ateam Be Impress our customers customers our Impress Set a great example example agreat Set ects on our role with customers and the community, community, the and customers with role our on ects 109 nancialfi cations and our travel and and travel our and cations ve-year summary, ministerial 107 104 90 38 46 62 78 nt. CONTENTS 1 ENERGEX ANNUAL REPORT 2009/10 ENERGEX ANNUAL REPORT 2009/10 2 our profi le

Who we are OUR PROFILE ENERGEX provides network services and infrastructure to distribute electricity into the homes and businesses of 2.9 million people in South East Queensland.

We are a Queensland Government Owned Corporation Diagram 1: The ENERGEX network (GOC) with two shareholding Ministers, The Honourable Andrew Fraser MP, Treasurer and Minister for Employment and Economic Development; and The Honourable Stephen Robertson MP, Minister for Natural Resources, Mines and Energy and Minister for Trade. For further information on our corporate governance and business structure refer to pages 29-31.

At the core of the business are high performing distribution assets worth more than $8.8 billion, the expertise of more than 3,800 employees and a drive Gympie to provide customers with energy solutions that are economically, socially and environmentally acceptable and sustainable. This is underpinned by technological Noosa innovation and advanced management systems which drive effi ciency, quality and safety. Many of these are nationally or internationally certifi ed or benchmarked to Nambour Maroochydore international standards. We also place sustainability and corporate responsibility high on our corporate agenda Caloundra through progressive environmental and social practices.

Our distribution area of 25,000 square kilometres Kilcoy Woodford stretches to Gympie in the north, Gatton in the west and Toogoolawah Caboolture Coolangatta on the New South Wales border. It includes more than 53,000 kilometres of overhead powerlines and Redcliffe underground cables, enough that if lined up end-to-end Esk would stretch more than three times the distance from Brisbane to London. Fernvale BRISBANE Our underground network has continued to rise to meet Gatton the needs of South East Queenslanders with an average Ipswich of seven kilometres of new underground cables being Beenleigh installed into the network for every kilometre of overhead powerline. Underground cables now total more than 16,500 kilometres. Our network also includes more than 600,000 power poles, some 43,000 transformers Beaudesert Surfers Boonah Paradise and almost 300,000 street lights. ENERGEX ANNUAL REPORT 2009/10 Pictured: Put simply, our employees are ENERGEX. 3 4 ENERGEX ANNUAL REPORT 2009/10 PROFILE OUR TRANSMISSION Network Supply Industry 2: Electricity Diagram transmission, distribution andretail. like links in achain the which connect separate elements of generation, in which supply ENERGEX industry operatesThe electricity isorganised Our network Queensland), another GOC. another Queensland), Powerlink as (trading Limited Corporation Transmission Electricity Queensland bythe operated and owned is that network transmission ahigh-voltage through by the Australian Energy Market Operator (AEMO). Operator Market Energy Australian by the managed is pool This demand. tomeet scheduled and pooled centrally is electricity all generator, its todistinguish branded or stored be cannot electricity As Market. Electricity National the in it tosell compete GENERATION and homes. tobusinesses it deliver and voltages low and high into network transmission the from electricity We convert Queensland. East South in network distribution DISTRIBUTION power stations GENERATION Electricity generator Various Various – Generators produce electricity and and electricity produce –Generators – Electricity is supplied to ENERGEX toENERGEX supplied is –Electricity

– We own and operate the electricity electricity the operate and – We own RNMSINRETAIL TRANSMISSION transmission Electricity Powerlink Qld and cables and Powerlines substations Bulk supply DISTRIBUTION Distributed generation Transformers of electricity to the customer. tothe electricity of delivery the with toassist retailers the with relationships effective ongoing tomaintain We aim retailer. their choose to customers all allowing Queensland in introduced later was competition retail Full AGL. and to Origin 2007 in Government Queensland bythe sold was business of the ENERGEX part billing. and This accounts their customers. of behalf on byretailers requested when network electricity tothe businesses and homes connecting and readings meter for responsible also We are community. Queensland East South tothe supply electricity reliable and asafe delivering and network electricity the maintaining and building for responsible primarily CUSTOMERS RETAIL Substations Zone – Electricity retailers sell and manage customer customer manage and sell retailers – Electricity substations Distribution – As the electricity distributor, we are weare distributor, electricity the –As Electricity retailers CUSTOMERS CUSTOMER Sustainability Report and Carbon Management Plan. Management Carbon and Report Sustainability Strategy, Environmental our enhanced and revisited recently We also have emissions. carbon offsetting and revegetation recycling, involving program comprehensive a managing into funds sponsorship and works capital signifi We channel improved. continually toand adhered are systems practice best and environment to ensure our operations have minimal impact on the work specialists environmental of team Our environment. the on have may business our future, and current It is to our responsibility be aware of the impact, both Our environment community. wider tothe commitment our of indication $1.4Our is an program sponsorship million annual community. our in role active an playing citizen, corporate agood being byalso and needs energy their manage they how in choice greater with customers providing by this achieve We will organisation. customer-centric a into transform tofurther is focus long-term Our exceeded. or met are customers our of needs lifestyle the toensuring committed weare network, electricity to the organisation commercial alarge connecting or enquiry asimple it’s answering Whether service. customer and performance network of levels high through customers our of expectations service the todeliver is aim Our Our customers andcommunities as well as business objectives. goals career own their realise staff tohelping conducive conditions working excellent providing while dignity with and fairly team our We treat value. one number our is community the and staff our of Safety reliable. and robust safe, is supply electricity Queensland’s East South ensure to strives workforce Our managers. and professionals administrators, cadets, and apprentices designers, and technicians engineers, electrical tradespeople, qualifi from extending roles, specialised of base skill adiverse across employees 3,800 than more We employ team. ENERGEX the of part integral an as valued truly member every and each with committed, and skilled highly are They ENERGEX. are staff our put, Simply Our people cant operational, ed conservation and demand management program (page 52). (page program management demand and conservation energy multi-streamed our is needs, modern-day to meet supply electricity aworld-class for expectation increasing to balance the pricing impacts with the community’s undertaking weare Akey initiative manner. a sustainable in toact responsibility the and expectations, community impact of future technologies, changing customer and the costs, energy of pressure the include to address, continue wewill which industry, the facing Challenges national approach to generation. electricity atruly delivering (AER), Regulator Energy Australian the fi the For community. and customers our of needs the address and provide to wecontinue ensure year, will this (AER) Regulator Energy Australian bythe approved proposal, funding fi our growth, forecast and To current meet tocontinue. predicted are use electricity in increase and surge population This time. this in doubled than more has capacity network’s electricity the aresult As conditioners. air as such appliances intensive energy in increase tothe due largely ago, 10 years just than electricity more cent to70 50 per between using now is household Queensland East South average the rise, this to Adding demand. energy overall in rise a consequent and customers ENERGEX of number the in growth cent per a30 with increased, dramatically has Queensland East South of population the 10 years, past the In Our direction frameworks. governance strict within out carried is community the and tostakeholders commitment our toensure works Board The Board. ENERGEX bythe overseen also are operations business Our Conduct. of Code our in out set as sensitivities, environmental and economical social, account into take they toensure decisions business our of forefront the at are ethics Our responsibilities. these understand levels, all at staff, our ensure that processes maintaining while honestly and transparently business the of affairs the on report and toconduct community tothe commitment alongstanding We maintain ethicsOur business rst time we will be regulated by by regulated be wewill time rst ve-year ve-year

OUR PROFILE OUR 5 ENERGEX ANNUAL REPORT 2009/10 highlights and challenges

HIGHLIGHTS AND CHALLENGES

Highlights

■ Reduced our Lost Time Injuries to seven (2008/09: 16) ■ Achieved a solid after tax profi t of $185.2 million and Lost Time Injury Frequency Rate (LTIFR) (2008/09: $128.5 million). Page 8 to 1.00 (2008/09: 2.34). Page 40 ■ Our Contact Group continued to deliver award ■ Targeted investment of $1.24 billion in building, winning service. Page 64 operating and maintaining our network ensures ■ Established Queensland’s fi rst Energy Conservation a safe and reliable electricity supply to the growing Community. Page 76 South East Queensland community (2008/09: ■ Achieved a Corporate Responsibility Index score $1.1 billion). Page 48 of 75.32 per cent for 2008/09 (2007/08: 58.5 per cent). ■ Achieved better than minimum service standards Page 72 for network reliability and security. Page 51 ■ Approval of our fi ve-year funding proposal by the Australian Energy Regulator (AER), including $5.78 billion ($2009/10) for capital investment and $1.63 ($2009/10) billion to maintain and operate the network. Page 57 ENERGEX ANNUAL REPORT 2009/10 6 Challenges

■ Continued to support South East Queensland ■ Operating under a new national economic regulatory communities through a $1.4 million sponsorship framework. Our Business Performance Strategy will program. Page 73 address this challenge by improving the effi ciency ■ Maintained a high employee motivation score of our existing operations so we can deliver an of 65.87 (2008/09: 65.7). Page 85 increasing program of work. ■ Nationally recognised for our energy conservation ■ Increasing demand for electricity will place further and demand management initiatives including pressure on rising energy costs. Our Transformation the trials of a public lighting monitoring device and Strategy will help our customers understand their a Pool Filtration Demand Management device (PFDM) energy consumption and provide ways to infl uence – winning awards on two separate occasions. their electricity usage in times of peak demand. Page 93 and 102 ■ Continued to offset our carbon emissions. Page 92 ■ Implemented an Indigenous Apprentice Program in conjunction with the Department of Employment, Economic Development and Innovation, and the Electrical Trades Union. Page 86 ENERGEX ANNUAL REPORT 2009/10 7 FINANCIAL highlights

FINANCIAL HIGHLIGHTS Net Profi t after Tax Total Revenue

$M $M

200 3,000

$185.2 2,500 160 $163.4 $2,546.9 2,000 $140.8 120 $128.5 $122.8 1,500 $1,467.9 $1,403.0 80 $96.5 $1,336.2 $1,261.0 1,000 $1,099.8 40 500

0 0 2010 2009 2008 2007 2006 2006 2010 2009 2008 2007 2006 2006 Restated Restated

In 2009/10, ENERGEX exceeded its profi t target, Total revenue in 2009/10 increased by 9.8 per cent agreed with our shareholders in our Statement of compared to the previous year, with the majority of the Corporate Intent, delivering a Net Profi t after Tax (NPAT) revenue being regulated by the Queensland Competition of $185.2 million and Earnings before Interest and Tax Authority (QCA) under a revenue cap form of regulation. (EBIT) of $485.2 million. This result has enabled The increase in revenue for the year refl ects the revenue a proposed dividend of $148.2 million to be declared profi le as determined under the QCA Determination, to our shareholders. There were a number of one-off applicable for the fi ve year period ending 30 June 2010. items which were outside of the ‘business-as-usual’ results, however the underlying fi nancial result remained Total Assets favourable to target. $M

Capital Expenditure 10,000

$M 8,000 $ 8 ,811.6 $8,011.0 $7,400.5 $7,683.7 1,200 6,000 $6,624.0 $6,624.0 1,000 $1,026.4 4,000 800 $871.0 $771.2 $820.4 $820.4 2,000 600 $722.3 0 400 2010 2009 2008 2007 2006 2006 200 Restated

0 2010 2009 2008 2007 2006 2006 The value of total assets increased by 10.0 per cent Restated across the year, predominantly due to the growth in property, plant and equipment resulting from continued Throughout the year, we continued to invest signifi cant signifi cant CAPEX relating to development and expansion capital expenditure (CAPEX) to improve the performance of the electricity network to support the increasing and capacity of the network, ensuring that customer electricity demand of customers. demands continue to be met in the delivery of a safe and reliable electricity supply. The total investment of $1,026.4 million in CAPEX included $910.8 million directed specifi cally at the electricity supply network.

The total level of CAPEX fell slightly short of our target due to a decline in customer-requested work, with an offsetting increase in the level of infrastructure work to support developments across South East Queensland. ENERGEX ANNUAL REPORT 2009/10 8 During the year, ENERGEX continued to position itself in readiness for the implementation of the new national regulatory framework under the jurisdiction of the Australian Energy Regulator (AER) for the next fi ve years commencing 1 July 2010. This involved divestment of some non-core assets as the organisation lays the platform for the future, with the AER approving ongoing capex allowances.

FINANCIAL Return on Average Total Assets Earnings before Interest, Tax, Depreciation HIGHLIGHTS and Amortisation Interest Cover %

7.0 Times

6.0 4.5 6.0% 5.0 5.8% 4.0 4.2 5.0% 5.2% 5.0% 3.5 4.0 4.4% 3.5 3.0 3.2 3.3 3.0 3.0 2.5 2.8 2.0 2.0 1.5 1.0 1.0 0 0.5 2010 2009 2008 2007 2006 2006 0.0 Restated 2010 2009 2008 2007 2006 2006 Restated While the value of average total assets increased by 9.2 per cent across the year, there was a larger increase The Earnings before Interest, Tax, Depreciation and in the level of EBIT (increase of 25.0 per cent). The Amortisation (EBITDA) Interest Cover ratio improved in combined effect of these movements has led the Return 2009/10. This is due to as a result the increase in operating on Average Total Assets to increase to 5.8 per cent for performance refl ected in EBITDA, offset slightly by 2009/10. increased borrowing costs required to fund the ongoing CAPEX program. Debt / Debt + Equity

%

70 60 62.8% 61.4% 59.1% 50 57.3% 57.3% 52.0% 40 30 20 10 0 2010 2009 2008 2007 2006 2006 Restated

The growth in the level of debt (increase of 6.5 per cent), predominantly a result of funding requirements for the ongoing signifi cant investment in the electricity network, has been partially offset by a dividend reinvestment from the shareholders. The 2008/09 dividend of $102.8 million has been reinvested as part of equity support from our shareholders.

Notes 2005/06 results have been restated to exclude discontinued operations to provide a comparison. Please refer to page 104 for our fi nancial fi ve-year summary. ENERGEX ANNUAL REPORT 2009/10 9 STATEMENT OF corporate intent highlights

STATEMENT KEY OF CORPORATE KEY RESULT ACTUAL OBJECTIVE PERFORMANCE INTENT AREA PERFORMANCE2 MEASURES HIGHLIGHTS 2009/10 2009/10 SAFETY ENERGEX will achieve an injury-free workplace and LTIFR 1.00 will develop a workplace culture where employees take personal responsibility for their safety. Safety risk will be reduced through a targeted and structured approach to safety that delivers legislative compliance and best practice business operations. CCFRS 2.99

FINANCIAL ENERGEX will deliver its regulated fi nancial targets OPAT 185.2 PERFORMANCE in a sustainable manner, through improved productivity ($M) and the cost effective delivery of electricity to retailers, and services to customers. ENERGEX will pursue a series of reforms and initiatives to meet the fi nancial expectations of its shareholders, in addition to working proactively with industry regulators to facilitate network funding outcomes that support core business operations. Statutory 5.8 ROA (%)

NETWORK ENERGEX will continue to improve network MSS PERFORMANCE performance and emergency response to meet customer expectations for reliability and deliver on MSS.1 ENERGEX’s long-term aspiration is to operate an intelligent connective network and provide best practice energy solutions to customers. SAIDI – CBD 1.19 SAIDI – Urban 88.48 SAIDI – Rural 215.73 SAIFI – CBD 0.08 SAIFI – Urban 1.20 SAIFI – Rural 2.41

Notes 1 Minimum Service Standards (MSS). 2 More details of our outcomes and targets are provided in each operational section. ENERGEX ANNUAL REPORT 2009/10 10 At ENERGEX we document our corporate objectives, strategies, targets and actions for each fi nancial year in our Statement of Corporate Intent (SCI). As a GOC, this document forms part of our performance agreement with our shareholding Ministers.

STATEMENT TARGET OF CORPORATE PERFORMANCE REVIEW FUTURE CHALLENGES AND TARGETS MEASURE INTENT HIGHLIGHTS 2009/10 2009/10 2010/11 Key Result Areas < 1.80 We experienced 7 Lost Time injuries (LTIs) We will focus on safety as our fi rst value giving an LTIFR outcome of 1.00, which is in and recognise that everyone has a personal the industry best practice range of 1.0-1.5. responsibility for safety, as we progress This result demonstrates progress this year, towards an injury-free workplace. as there were 16 LTIs in 2008/09 and 25 LTIs in 2007/08. < 4.40 There were 69 lost days due to LTIs for 2009/10, compared to more than 320 days in each of the previous three years.

>174.9 We delivered a strong fi nancial result with We will deliver our regulated fi nancial targets Operating Profi t after Tax (OPAT) being in a sustainable manner, through improved above target. There were a number of productivity and the cost effective delivery one-off items which were outside of the of electricity to retailers and services to “business as usual” results, however customers. We will pursue a series of reforms the underlying fi nancial result remained and initiatives to meet the fi nancial expectations favourable to target. of its shareholders, while working within the regulatory allowances provided under the >5.5 AER Determination. Non-regulated businesses that integrate with and leverage the core business will be pursued where profi table opportunities exist.

Favourable We delivered reliability outcomes with all We will deliver network performance and to target measures being better than MSS. Further emergency response that achieves customer signifi cant investment in the maintenance expectations for reliability and service and development of the network resulted in obligations. Our developing intelligent the improved outcome. connective network will provide best practice < 20 mins energy solutions to customers. < 110 mins < 220 mins < 0.33 < 1.32 < 2.50

Key to symbols: Page Legend: Put safety fi rst 38 9 Achieved Deliver balanced results 46 » On track Impress our customers 62 + Action required Respect and support each other 78 Be a team player 78 Set a great example 90 ENERGEX ANNUAL REPORT 2009/10 11 12 ENERGEX ANNUAL REPORT 2009/10 HIGHLIGHTS INTENT OF CORPORATE STATEMENT ENVIRONMENT OPERATIONAL EXCELLENCE CUSTOMERS COMMUNITY KEY RESULT PEOPLE AREA minimise harm to the environment. tothe harm minimise that practices business and activities compliance environmental position through implementing asustainable achieve and Plan Management Carbon its within commitments deliver will ENERGEX learning. and innovation promote will and values bycorporate driven be will culture focused customer and performing high ENERGEX’s requirements. business ENERGEX’s deliver to capability and skills the possesses workforce its that ensure will of. ENERGEX apart tobe want employees its that organisation an and choice of employer an tobeing committed is ENERGEX network. its of delivery and planning the in community the engage will ENERGEX sustainability. in aleader and citizen corporate a good as community bythe recognised tobe aims ENERGEX key retailers. with relationships constructive and network connective intelligent an of operation through options choice increased customers’ support will ENERGEX needs. energy their manage they how in choice greater with customers provides that organisation acustomer-centric into totransform is aspiration long-term ENERGEX’s expectations. customer exceed or tomeet improvements service customer and outcomes performance network achieving on focus its maintain will ENERGEX obligations. governance corporate and compliance legal, its on deliver will ENERGEX stakeholders. of satisfaction the and network distribution ENERGEX’s of growth and operation continued the toensure (SPP) Plan Preparedness Summer and (NMP) Plan Management Network its in outlined commitments deliver will ENERGEX initiatives. and plans associated and vision strategic its of delivery tosupport systems and processes skills, practice best develop will ENERGEX OBJECTIVE Management Plan PERFORMANCE Carbon reduction reduction Carbon Energy Supply Supply Energy Regard IndexRegard Performance Performance MEASURES Key projects Delivered to to Delivered Key projects CAPEX Plan CAPEX Community Community per Carbon OPEX Plan EMPI tally 091 2009/10 2009/10 Service Service (NMP) (NMP) score Index Index KEY PERFORMANCE delivered toplan delivered toplan delivered Key physicals physicals Key physicals Key milestones ACTUAL ACTUAL Tracking Tracking to plan 65.9% 85% 64% 70% 2 Key to symbols: delivered favourable delivered favourable Key physicals physicals Key Key physicals physicals Key Delivered to MEASURE milestones TARGET TARGET Tracking Tracking 2009/10 2009/10 2010/11 Key Result Areas Result Key 2010/11 2009/10 2009/10 to plan to plan to plan 66.5% >63% >70% >70% e ra xml 90 78 62 78 46 example agreat Set player ateam Be other each support and Respect customers our Impress results balanced Deliver fi safety Put rt38 rst The staff survey resulted in an ENERGEX ENERGEX an in resulted survey staff The We continue to make strong progress on on progress strong tomake We continue We continued to provide targeted targeted toprovide We continued directed were efforts our 2009/10, In CAPEX arecord delivered We again the Federal Government as required. as Government Federal the to report the submitted and Footprint Carbon 2008/09 our We completed travel. air and consumption electricity reduced carbon emissions in our fl our in emissions carbon reduced with track on remains Plan Management Carbon Our initiatives. environmental our support. to ENERGEX broad maintain community allowing events, community of sponsorship timeframes. required within completed successfully being requests work electrical of number the in improvement a notable with interactions, customer at attention our directed We also consumption. changing nature of customer electricity the understanding on emphasis an with at refi 11kV151 additional feeders. and feeders 33kV 21 additional capacity, 275 substation zone MV.A of additional in network capability comprising an increase an delivered investment The network. the of capacity and $910.8 million to improve the performance including investmentprogram, of encouraging. is change considerable of ayear in score motivation staff overall the of maintenance the achieved, not was target the While cent. per 66.5 of atarget against cent) 65.7 per (2008/09: cent per 65.9 of score tally EMPI ning our customer strategies, EFRAC EIWFUTURE CHALLENGES AND TARGETS PERFORMANCE REVIEW Page eet, Legend: environment. tothe harm minimise that practices business environmental compliance and implementing sustainable environmental a achieve and Plan Management Carbon our within commitments deliver We will a leader in sustainability. in a leader and citizen corporate agood as community bythe recognised tobe We aim assets. our of use tothe relation in neighbour’ a ‘good tobe strive and network our of delivery and planning the in community the engage We will key retailers. with relationships positive and network connective intelligent an through choice, greater for demand customers’ our tosupport improvements service customer and outcomes performance network achieve We will corporate governance obligations. and compliance legal, our on deliver and partnerships joint optimise network, distribution our tomanage us allow and operation, effi an toproduce systems and processes skills, practice best develop We will to success. business contribution their encourages and staff engages that aworkplace support will effectiveness leader and team individual, of development The fl and productivity skills, the with workforce performing ahigh tobuild continue We will 9 » exibility to deliver strong business results. results. business strong todeliver exibility + Action required On track Achieved position by ensuring cient business cientbusiness OF CORPORATE HIGHLIGHTS STATEMENT INTENT 13 ENERGEX ANNUAL REPORT 2009/10 CHAIRMAN’S report

“The past is behind, 2009/10 marks a decade since I joined the ENERGEX Board as a director and this milestone learn from it; presents an opportunity to refl ect on the past, scan the current state of the organisation and to look forward into the The future is ahead, decade ahead. prepare for it; Recently I took the opportunity to revisit the 1999/00 Annual Report which outlined the state of play this organisation was in at the turn The present is here, of the 21st Century. The ENERGEX of 1999/00 is both very different, yet in many ways, live it.” much the same as today’s organisation as it heads into the second decade of the millennium. American Bishop In 1999/00, ENERGEX was a distributor and retailer of natural gas, Thomas S Monson LPG and electricity and had expanding business interests both interstate and overseas. The overriding goal was to leverage the broad portfolio to be “a leading Australian energy company, delivering a world-class range of expertise, products and services throughout Australia and overseas”. On the electricity front, during 1999/00 the company invested $135 million on network capital projects (CAPEX) and a further $123 million on maintenance and operation (OPEX) of local power grid. Urban SAIDI was 142 minutes and urban SAIFI was an average of 1.80 interruptions. ENERGEX ANNUAL REPORT 2009/10 14 Safety of the community and staff was a key feature Network peak electricity demand has transformed from in 1999/00, with the certifi cation of ENERGEX’s safety winter records to summer maximums. The summer peak management systems under the Australian Standard record in January 2000 of 2,713 megawatts (MW) has a highlight. The Lost Time Injury Frequency Rate (LTIFR) increased by almost 75 per cent with the peak demand was 8.4 and the injury severity (LTISR) 56. record of 4,768MW on 15 February 2010. During 1999/00, the ENERGEX Customer Contact Group While peak demands are a stark challenge for all, the was recognised as one of the three best in Queensland. community’s requirements for power has also continued The company also joined the worldwide web when the to rise well above national averages with total energy www.energex.com.au Internet site went live, which soon use rising from 15,770 gigawatt hours (GWh) in 1999/00 became regarded as among the best utility websites to 22,005 GWh in 2009/10 – up almost 40 per cent. in the world. Much of this is driven by a surge in domestic air conditioning installations and other household appliances. CHAIRMAN’S Today’s ENERGEX Air conditioning levels alone make a stark reading – REPORT ENERGEX has changed in many ways in the past 10 years. in 1999/00 around one quarter of SEQ homes had one We have divested our retail electricity and gas businesses, air conditioner. That fi gure is now closer to 75 per cent, as well as the natural gas network and a range of operations while the average family now has two systems and some in New Zealand and interstate. 80,000 homes in the region have four or more. The ENERGEX of today is focused on our customers and Looking ahead distribution system here in South East Queensland where Given the changes in the past 10 years, it would be folly our total asset base has risen from $3.2 billion in June 2000 to think anyone could realistically see all the changes and to $8.8 billion in June 2010. challenges ahead, but I am sure that ENERGEX is well- Our network reliability continues to improve with urban placed to face those. SAIDI at 88, an improvement of 62 per cent in 10 years, There are predictions of a near 50 per cent increase in and urban SAIFI at 1.2 improving by 67 per cent in the same population in the South East Queensland region in the next period. Our CAPEX is almost in a different league with more 20 years which in itself brings its own issues. It is clear the than $910 million invested in 2009/10– almost six times the community is expecting us to continue to improve electricity amount invested 10 years ago – while maintenance and reliability and provide power in different, more sustainable operating funding has more than doubled. ways. Gone are the days where we can simply deliver major projects without community input. Our Customer Contact Group remains one of the best in the country – regularly winning State and national awards; The expectation of an increase in underground power is a the website remains one of the best in the industry with prime example and it is interesting to note that already some close to a million visits received each year. 31 per cent of our local network is via underground cables and the forecasts are that we will be close to 50 per cent The achievement of the transformation outlined above can in 20 years time. be credited in no small way to the staff of the organisation. This applies not only to those who have stayed with us The fi ve-year determination handed down by the Australian for the last decade, but also the many who have joined us Energy Regulator (AER) in May this year gives the during that period. In June 2000 there were some 2,950 staff organisation the fi nancial surety to meet the community’s working in the various divisions of ENERGEX, and incredibly, expectations for service delivery. half (1,472) of those people are still with the organisation Key features of that decision are that we are aiming for today. I record my thanks to the ongoing support from all of a 40 per cent increase in network capacity – including those staff members, and when we consider that ENERGEX 60 new substations – improved network reliability, and today has more than 3,800 staff, that means that some a continued strong focus on safety and service delivery. 2,300 people have joined the organisation in that time. However the AER decision is purely a blueprint that Safety of our staff and the community remains at the outlines and sets the targets we are expected to meet – forefront of all our considerations. Despite the growing and some of them are not going to be easily reached. workforce, the company’s LTIFR has improved from In many ways it is just words on a page and it will be up 8.4 in 10 years to just 1.0 in the 2009/10 period, and the to our staff, in their many and varied roles and with their LTISR improved from 56 to 9.8. An outstanding achievement broad range of professional experience and expertise, and a credit to all involved. Again, the support from staff to deliver this with the support of our shareholders, the in achieving these goals is commendable. Directors and management. While ENERGEX has changed in the past decade, the Without doubt, ENERGEX staff are our biggest asset community around us – and we are all part of that – has and through them I am sure we will achieve the lofty changed the way it expects this company to service its goals we have set ourselves. energy needs. In the past 10 years around 290,000 additional homes and businesses have been connected to ENERGEX’s South East Queensland (SEQ) electricity network which has grown from 42,000 kilometres of overhead powerlines and underground John Dempsey cables to more than 54,000 kilometres. ENERGEX Chairman ENERGEX ANNUAL REPORT 2009/10 15 BOARD OF DIRECTORS’ profi les

BOARD OF DIRECTORS’ PROFILES

John Dempsey Maj. Gen. (Retired) CHAIRMAN Peter Arnison AC, CVO ENERGEX LIMITED BOARD DIRECTOR ACIS, PNA, Grad Dip Acctg and Fin Mangt, BEcon, D Laws UQ, D Univ QUT, D Univ Grad Dip Ag Econ, GAICD Griffi th, D Letters USQ, D Univ SCU, FAICD

In June 2008, John Dempsey was appointed Peter Arnison was appointed a non-executive Chairman after acting in the position since Director of the ENERGEX Limited Board 1 January 2007. in December 2004. He chairs the Network and Technical Committee and is a member John Dempsey was fi rst appointed as of the Audit and Compliance Committee. a non-executive Director of the ENERGEX Limited Board in July 1999. He is a member Peter served for 37 years in the Australian of the Board’s Audit and Compliance Army in a variety of Infantry command Committee and a member of the appointments, retiring as Land Commander, Corporate Development Committee. Australia, in June 1996. Following a year as Executive Director, Allied Rubber Products, John is also Chairman of Allconnex Water, he was appointed Queensland’s 23rd Governor, a Director of Ceramic Fuel Cells Limited serving from July 1997 to July 2003. and Chairman of its Audit Committee. Formerly Deputy Mayor of the City of Cairns, He is Chancellor of Queensland University he contributed to the development of the of Technology; Chairman of The Centre for Management of the Wet Tropics World Heritage Military and Veterans’ Health; and a Director Area listing as Chairman of the Community of the Australian Multicultural Foundation. Consultative Group. He has had extensive experience in the Queensland rural industry and was an inaugural member of the Sugar Industry Tribunal in 1991, where he served for six years. Until recently John conducted a public accountancy practice in Brisbane, and has more than 30 years’ experience in the fi eld. He is an Associate of the Institute of Chartered Secretaries and also holds postgraduate diplomas in Accounting and Financial Management and in Agricultural Economics, and is a Graduate of the Australian Institute of Company Directors. ENERGEX ANNUAL REPORT 2009/10 16 BOARD OF DIRECTORS’ PROFILES

Mary Boydell Emeritus Professor DIRECTOR Mat Darveniza AO, FTSE BCom, FCA, MAICD DIRECTOR BEng, PhD, DEng, Hon DSc, FIEAust, FIEEE, LIVA

Mary Boydell was appointed a non-executive Mat Darveniza was appointed a non-executive Director of the ENERGEX Limited Board Director of the ENERGEX Limited Board in in July 2005. Mary chairs the Remuneration December 2004. He is a member of the Network Committee and is a member of the Network and Technical Committee and the Remuneration and Technical Committee. Committee. Mat’s career in electrical engineering commenced with the Southern Electricity She is a Chartered Accountant with extensive Authority of Queensland. He was appointed board experience in the private and public to the University of Queensland as an academic sectors, combined with senior management in 1959. He progressed to Professor in Electrical roles in commerce and the accounting and Engineering in 1980, and in 1998, was appointed legal professions. Professorial Research Fellow (fractional) until Mary is currently Commissioner of the 2008 and Emeritus Professor. Queensland Water Commission, Chairperson He has been active in professional committees of the Gladstone Area Water Board and on power systems, lightning protection and a Board Member of the CSIRO. Mary has engineering education, including the Electricity previously served as the Chairperson of the Supply Association of Australia, Standards Rural Industries Research & Development Australia, International Electrotechnical Corporation, as a Director of the Australian Commission, International Council of Large Trade Commission (Austrade), Burnett Water Electrical Systems (CIGRE), the Institute of Pty Ltd and BSES Limited, Board Member Electrical and Electronic Engineers (IEEE), of the Queensland Bulk Water Supply Authority and Engineers Australia. and as an external adviser to Board Audit Committees in the public and private sectors. Mat has served on a number of Boards, She is a former Chairman and Member of the including UniQuest Pty Ltd (1988–1993), Queensland Regional Council of the Institute National Association of Testing Authorities of Chartered Accountants in Australia. Australia (NATA) (1989–1995), Australian Academy of Technological Sciences and Engineering (ATSE) (1992–1995), UniSyd Pty Ltd (1992–1993) and Rotary Club of Brisbane Inc (2001–2003). He is the former Chairman of Lightning and Transient Protection Pty Ltd. ENERGEX ANNUAL REPORT 2009/10 17 BOARD OF DIRECTORS’ PROFILES

John Geldard Ron Monaghan Kerryn Newton DIRECTOR DIRECTOR DIRECTOR BCom, BEng, CPA FAICD BA LLM, MBA, MA, Grad Dip (Applied Finance and Investment), FAICD, AFAIM

John Geldard was appointed Ron Monaghan was appointed Kerryn Newton was appointed as a non-executive Director of the a non-executive Director of the a non-executive Director of the ENERGEX Limited Board in July ENERGEX Limited Board in May ENERGEX Limited Board in October 2005. He is Chairman of the Audit 2008. Ron is Chairman of the 2008. She is a member of the Audit and Compliance Committee Corporate Development Committee and Compliance Committee and the and a member of the Corporate and a member of the Remuneration Network and Technical Committee. Development Committee. Committee. Kerryn was admitted as a solicitor John has extensive experience within Ron has extensive experience of the Supreme Court of Queensland the private and public sectors in the in industrial relations and is the in 1991 and has worked in various manufacturing, mining and energy General Secretary of the Queensland legal and management roles in the industries and has been involved Council of Unions. Ron has private and public sectors. Her roles with electricity industry reform in previously been a Director of Intrust have included extensive experience Queensland and Western Australia. Super and is currently a Director as a lawyer and advisor for the of both Sunsuper and WorkCover Queensland Parliament and its Previously, John has held executive Boards and a member of the parliamentary committees. positions at ENERGEX, including ACTU Executive. Chief Executive Offi cer between Currently Kerryn is Managing March and December 2000, and Director of a governance consulting Chief Financial Offi cer from July fi rm and advises organisations 1997 to April 2001. Prior to this, on a wide range of governance John served as the Chief Financial and management issues. In addition, Offi cer for the Queensland Kerryn is a Commissioner of the Transmission and Supply Queensland Gaming Commission Corporation. and chairs the board of a large community housing company. John is a Director of Electricity Supply Industry Superannuation (Qld), and is a previous Deputy Member of the Queensland Treasury Corporation Board. ENERGEX ANNUAL REPORT 2009/10 18 BOARD OF DIRECTORS’ PROFILES

Terry Effeney Michael Russell Marnie White CHIEF EXECUTIVE OFFICER EXECUTIVE GENERAL MANAGER, SECRETARIAT AND GOVERNANCE BEng (Hons), BEcon, MEng, GAICD, CORPORATE GOVERNANCE AND MANAGER, COMPANY SECRETARY RPEQ GROUP COMPANY SECRETARY BA, LLB, Grad Dip LP, BEng, MBA, Grad Dip AppCorpGov, Grad Dip AppCorpGov, ACIS GAICD, ACIS, MIEAust, CPEng

Terry Effeney was appointed Chief Michael Russell has been a company Marnie White was admitted as Executive Offi cer of ENERGEX secretary for the ENERGEX Group a solicitor of the Supreme Court on 8 January 2007. Prior to joining Companies since March 2004, of Queensland in July 2000 and ENERGEX, Terry held the role fi rstly in the position of Corporate practiced in a national law fi rm of Chief Operating Offi cer of Ergon Affairs Manager (Assistant Company before joining ENERGEX as Legal Energy for three years and was Secretary) and from October 2004 Counsel Network in May 2005. an Executive Manager of Ergon as Acting Group Company Secretary. She was appointed as Secretariat Energy and its predecessor and Governance Manager (Assistant organisations for more than In October 2007 he was appointed Company Secretary) in December 10 years. as General Manager Corporate 2007. Governance. Throughout his career, Terry has In 2009, she completed the Graduate gained extensive experience in Michael joined the organisation Diploma in Applied Corporate senior line management at both when it was operating as SEQEB Governance through Chartered operational and strategic levels, in 1984, and has held various Secretaries Australia. including roles in network and engineering and management fi eld operations management positions. In the past 10 years, and business development. Since his expertise in corporate commencing his career with the governance has been developed Capricornia Electricity Board, through responsibilities that included Terry has held numerous engineering the management of signifi cant and strategic development roles ENERGEX investments in a listed throughout Queensland. telecommunications company and in Ceramic Fuel Cells Limited. Terry is Deputy Chair of Energy Networks Association (ENA) and Chair of ENA’s Smart Networks Committee. ENERGEX ANNUAL REPORT 2009/10 19 ENERGEX ANNUAL REPORT 2009/10 20 Pictured: Crews worked safely and effi ciently in Rosewood’s town centre to complete an extensive replacement of power poles. poles. ofpower replacement effi and extensive an safely complete to worked centre town Crews inRosewood’s Pictured: ciently fi whether staff allour to applies offi or eld framework governance corporate Our worker. ce staff. for programs training and amendments policy processes, compliant of introduction the including framework, governance toits amendments through changes legislative tothese responded has ENERGEX Act 2001 Misconduct as defi Offi suspected of CMC the tonotify obligation an Offi Executive Chief ENERGEX The in investigationsincluding ENERGEX, it is conducting. GOCs, over jurisdiction has now (CMC) Commission Misconduct and 2010, Crime the 1January From public interest to do so. tothe contrary is it balance, on unless, information to access toprovide required is legislation, the defi agency agovernment now ENERGEX, the repealing 2009, 1July on commenced (which legislation Privacy Information and toInformation Right the of introduction the with Queensland, in environment legislative changing tothe response in framework governance our to improvements year, weimplemented the During approach to governance. improvement acontinuous of adoption the through standards, these with accordance in framework, the refi tosupport continue management senior and Board The on their corporate governance arrangements. including to ENERGEX, develop, implement, review andreport and Recommendations, andprovide the framework for all GOCs, The Guidelines reference the ASX Corporations (the Guidelines), by issued Government. the Queensland against the Corporate Governance As aGovernment Corporation Owned (GOC), ENERGEX reports governance CORPORATE nement of our evolving corporate governance governance corporate evolving our of nement . Freedom of Information Act 1992 Act Information of Freedom ned in the the in ned Crime and Misconduct Misconduct and Crime cer (CEO) has has (CEO) cer ned under under ned ). ). cial Corporate Governance Principles Guidelines for Government Owned framework through: During 2009/10, we enhanced our governance HIGHLIGHTS ■ ■ ■ ■ ■

support business management business andsupport decision making. to framework governance the enhancing further legislation as applicable to ENERGEX Integrity and Privacy Information Information, to Right new the to implement frameworks our updating through change tolegislative responding of Interest Best Practice Guide Confl and Conduct of Code the with compliance amending our Confl ENERGEX’s governance framework document tocomprehensively website Governance Corporate ENERGEX the updating and expanding responsibilities Offi and Directors support Offi and Directors’ the as Manual Governance Corporate the reissuing ict of Interest Policy for for Policy Interest of ict cers’ Handbook to to Handbook cers’ cers in their governance governance their in cers icts icts GOVERNANCE CORPORATE 21 ENERGEX ANNUAL REPORT 2009/10 22 ENERGEX ANNUAL REPORT 2009/10 GOVERNANCE CORPORATE framework. Authority of Delegation Board-approved the and key duties and responsibilities of these roles. these of responsibilities and key duties Offi and Directors’ the as 2009/10 during reissued and revised was Handbook the Manual, Governance Corporate the Formerly processes. self-evaluation and operations Board facilitates also It senior in managers their governance responsibilities. and Directors supports and systems governance defi Handbook The process. induction the of part integral an as used is and Directors to new Offi and Directors’ Our BOARD HANDBOOK defi is role committee’s each and ENERGEX of governance the tosupport committees of anumber established also has Management 30-31. pages on out set is memberships, and roles their of asummary including Committees, Board of register The BOARD COMMITTEES defi management. Management’s re of oversight effective and company the for guidance strategic of matters on focus which meetings monthly holds Board Our tomanagement. delegated are which matters the and Directors, individual and Board the of responsibilities and roles the between delineation a clear provides website, our on available Charter, Board Our BOARD CHARTER HIGHLIGHTS Principle 1–Foundations of management andoversight ■

ned through job profi job through ned these roles. these on conferred responsibilities and duties the on Offi and “Directors’ the as reissued was Manual Governance Corporate The cers’ Handbook is distributed distributed is Handbook cers’ les, performance agreements cers’ Handbook to focus on the the on tofocus Handbook cers’ cers’ Handbook” to focus tofocus Handbook” cers’ sponsibilities are well ned in aCharter. in ned nes the Board Board the nes the business (for further information, see Principle 8). Principle see information, further (for business the program, Power to Perform, will be introduced across management 2010, performance 1July From anew goals. personal and commercial corporate, involving (KPIs), Indicators Key Performance and (KRAs) well-defi of achievement the on based agreements performance executive individual included regime The 2009/10. during conducted was management senior and CEO the for regime evaluation performance management formal and A comprehensive PERFORMANCE ASSESSING SENIOR MANAGEMENT actively in management decision making. and fully toparticipate opportunity, earliest the at them, to allow executives senior tonew extended was process induction the 2009/10, During expectations. corporate and business our and Director ENERGEX an as responsibilities and roles their tounderstand Directors the assists induction The functions. Committee and Board the on information and operations our of overview an with them toprovide session induction an attend Directors New DIRECTORS’ INDUCTION ned Key Result Areas Areas Key Result ned are also set out in the Financial Report. Financial the in out set also are meetings Committee and Board at attendances Their Report. Financial the in out set are expires appointment Director’s each date the including report, this of offi of terms The 16-19. pages on out set are position totheir relevant expertise and experience skills, Directors’ of Details 2009/10). during enhanced was process (this undertaken also is interests personal Directors’ of review annual an of the the of 195(2) section in exclusions (the matter the in interest personal amaterial declared have they where matter, a on voting and deliberations all including a meeting, from themselves absent must aDirector that provides Constitution The Constitution. Limited ENERGEX and Directors’ obligations under the the under obligations Directors’ with accordance in interest that declare will Director the Board, bythe considered being amatter in interest personal amaterial or interest an has aDirector Where Recommendations and Principles the in status) independence affecting (relationships thresholds materiality to the reference with Director, each of independence ongoing the assesses continually Board Our Board. the of size the or directors selecting in role aformal play not does Board the such, As Act). (GOC with the accordance in Governor-in-Council bythe appointed are Directors Our Directors. non-executive independent, all are Chairman, the including Directors, of Board Our OUR DIRECTORS Principle 2–Structure the Boardto addvalue Corporations Act 2001 Act Corporations Government Owned Corporations Act 1993 1993 Act Corporations Owned Government ce held by each Director at the date date the at Director byeach held ce ASX Corporate Governance Governance ASX Corporate do not apply). In addition, addition, In apply). not do Corporations Act 2001 Act Corporations (2nd edition). (2nd

Ministers outlining the results of the evaluation. evaluation. the of results the outlining Ministers shareholding tothe provided be will report A written committees. Board the of one of role the clarifying and engagement stakeholder Directors, new for process induction the as such areas in opportunities improvement identifi review The manner. effective an in duties its out tocarry skilled appropriately and cohesive committed, highly is Board the that showed model, Board performance ahigh on based evaluation, The consultant. 2010 independent June byan in completed Our biennial evaluation Board performance was PERFORMANCE BOARD ASSESSING experience. and knowledge skills, their enhance and update tomaintain, training, and education tocontinuing access has also Board The a Director. as duties their out tocarry them toassist expense, company’s the at advice, professional independent seek may Directors that provides Charter Board The AND TRAINING DIRECTORS’ ACCESS TO ADVICE ed some minor GOVERNANCE CORPORATE 23 ENERGEX ANNUAL REPORT 2009/10 24 ENERGEX ANNUAL REPORT 2009/10 GOVERNANCE CORPORATE business practices, including the Code of Conduct. of Code the including practices, business ethical on training induction receive employees New intranet. staff the on available readily is and employees new and existing toall provided is Conduct of Code Confl and Conduct of Code the with align tofurther reviewed being presently is Conduct of Code Our making. decision ethical in toassist scenarios and examples includes Code Our Wales). South (New Corruption Against Commission Misconduct Commission (Queensland) and Independent with Confl and Conduct of Code Our policies. associated and values corporate objectives, social ethics, business with accordance in operate we how for standard the sets Conduct of Code Our CODE OF CONDUCT and Offi Directors’ the and Charter Board ENERGEX the in out set are Directors of obligations Additional management. senior and Board byour approach down atop through advocated are and personnel all and Board toour apply policies These Manual. Purchasing ENERGEX the and Policy, Policy Purchasing and Policy, Gifts Reportable Policy, Confl Authority of Delegation Policy, Compliance of Conduct, Fraud Policy, Control Code the include These framework. this to establish policies governance of asuite place in have and making decision responsible and toethical committed We are POLICIES GOVERNANCE KEY HIGHLIGHTS Principle 3–Promote ethical making andresponsible decision – Guidelines and Toolkit, and – Guidelines ■ ■

Best Practice Guide for GOCs. for Guide Practice Best Confl and Conduct of Code the with Our Confl 72). (page 2008/09 for cent per 75.32 of score Index Responsibility aCorporate We achieved Managing Confl icts of Interest Best Practice Guide. A copy of the the of Acopy Guide. 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Attendance at at 16-19. pages on Attendance les nancial cerwith cations nancial reporting nancial corporate_governance.html our website at www.energex.com.au/about_energex/ on available is policy disclosure our of A summary Ministers. to shareholding briefi regular In addition to submissions on specifi Rules. Listing ASX the under companies to listed apply which obligations disclosure continuous to the FINANCIAL STATEMENTS auditors on an annual basis. external the of performance the reviews Committee Compliance and Audit The subsidiaries. its and Limited ENERGEX for auditor external the is General Auditor- Queensland the Act, GOC the of provisions the with accordance In Committee. Compliance and Audit tothe submitted ultimately reports the with Group, Audit Internal the with conjunction in out carried were reviews of year, arange the During Plan. Audit Internal ENERGEX the out carrying for services contracted with supported was Group Audit Internal the 2009/10, During Plan. Audit Internal the of status the on toreport meetings Committee Compliance and Audit the attends Audit Internal Manager Group Our processes. these of improvement management’s supports and by 31 December 2010. by 31 December Profi Operating of cent per 80 was recommendation dividend 2009/10 The 131 Act. 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1974 2009 Act Planning Sustainable 2001 Act Misconduct the as such topics covering delivered was program training legal in-house Extensive 2009 the toGOCs), applicable Act 1974 the under laws cartel the particular, in effectively, implemented was legislation New risk management across the business. fi of oversight further toprovide established was Committee Management Risk Financial The Employment, Economic Development and Innovation. of Department the Solutions, SPARQ Energy, Ergon ENERGEX, involving 2009/10 Plan Preparedness Summer ENERGEX the of part as conducted successfully was exercise emergency A joint pandemic context. National and aState within ENERGEX for event a signifi managing in competence demonstrated Team Management Emergency Corporate The exercise. adesktop through tested was scenario toapandemic response strategic ENERGEX’s planning process. Impact Analysis tool incorporated into business Business Group’s Compliance and Risk Corporate decisions. business all of course the throughout retained is management risk of context the that toensure planning business with integrated fully were activities management Risk consistently across ENERGEX. management compliance credible and robust providing for initiatives key foundation delivered successfully Plan Compliance Corporate The managers. senior our at targeted initially Compliance and Risk in Fundamentals in course training atertiary-accredited piloted and developed Group Compliance and Risk Corporate ENERGEX’s and contract law. contract and and the the and , the , the Crime and Misconduct Act 2001 Act Misconduct and Crime Information Privacy Act 2009 Act Privacy Information , Right to Information Act 2009 Act toInformation Right Right to Information Act Act toInformation Right , Trade Practices Act Act Practices Trade cant risks and Trade Practices Practices Trade Crime and . nancial (newly (newly cant , (a) Our Board maintains oversight of the ERM ERM the of oversight maintains Board Our (a) below: explained are Framework (ERM) Management Risk Enterprise the within Accountabilities managed by each division. Registers Risk in out set are place in controls of type the and risks those of Details risks. commercial fi network, includes wemanage risks of multitude The identifi are obligations compliance and risks material toensure organisation the throughout implemented been has standard This frameworks. management enterprise-based risk management and compliance the following categories: following the in objectives organisation’s the of achievement the todesigned provide reasonable assurance regarding is which ENERGEX, within framework control internal overall the for responsible is Board Our FRAMEWORK CONTROL INTERNAL ■ ■ ■ Group, Compliance and Risk Corporate Our (c) Risk its Team and Management Executive Our (b) ■ ■ ■ ■ nancial, operational, people, strategic and

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Power to Perform, was implemented on 1 July 2010. 1July on implemented was toPerform, Power program, management performance new Our risks. those of management of effectiveness the and operations our affecting matters material any of manner, atimely in aware, made are Board the and Management Executive that ensure also procedures These practice. of codes withaccordance relevant legislation, regulations and in conducted being are organisation the of affairs the toensure processes auditing and training compliance including procedures and policies wedisclose. information of quality the guarantee to and implemented effectively are procedures that Offi Audit Queensland the with work auditors internal Our procedures. governance and fi management, risk improved support to approach disciplined and systematic independent, an provides which Group, Audit Internal our c key criteria. xed and variable variable and xed to achieve a a toachieve ce to ensure nancialcontrol the leader. and employee the between conversations development and performance continual promotes framework new The strategy. safety and people toour critical is which culture focused aperformance towards strives and ENERGEX across practices and processes management performance toimprove aims toPerform Power business. the across introduced be will toPerform, Power program, management 2010, performance 1July From anew KPIs. and KRAs nine against success through Purpose and Vision our of achievement the towards progress wemeasured 2009/10, During KPIs. and KRAs to our linked is which scheme pay performance monthly a six weoffer culture, performance-based our To reinforce ASSESSING PERFORMANCE Report. Financial the in disclosed is remuneration Directors’ company’s Constitution. the with accordance in meeting ageneral in company bythe approved is and Ministers shareholding by the Directors’ remuneration is established independently guidelines). government and rules accounting with accordance (in Report Financial the in disclosed is remuneration executive Senior guidelines. GOC with accordance in practices remuneration togovern policies and procedures of suite acomprehensive have We also ■ ■ ■ ■ ■

(for notifi (for Offi suspected or fraud) suspected as (such law the of breaches or policies) corporate supporting its (and Conduct of Code the of breaches conduct, unethical regarding concerns any report can employees bywhich ameans is Line Disclosure The Line. Disclosure 24 hour operated independently The and protocols. Misconduct) investigation capabilities, standards Offi suspected and corruption (including Fraud fraud. of allegations investigating and recording reporting, for processes the including activities, control fraud of coordination and monitoring ongoing for processes the out setting as well as prevention identifi fraud for obligations establish which Standard Control Fraud and Policy Control Fraud behaviour. toethical relation in obligations establish which policies governance supporting and Conduct of Code of suspected Offi suspected of CMC the tonotify obligation his out tocarry CEO the Liaison Offi CMC adedicated including processes, Reporting Crime and Misconduct Act 2001 Act Misconduct and Crime cation to the CMC). tothe cation cer who manages the obligations under under obligations the manages who cer cialMisconduct. cial Misconduct to enable the the toenable cationand cial GOVERNANCE CORPORATE 27 ENERGEX ANNUAL REPORT 2009/10 28 ENERGEX ANNUAL REPORT 2009/10 GOVERNANCE CORPORATE We operate in accordance with various laws and regulations, the most signifi most the regulations, and laws various with accordance in We operate Legislative framework ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

2004 (Qld) 2004 and 1993 (Qld) Act Corporations Owned Government (Cth) 2009 Act Work Fair Regulation 2000 (Qld) Environmental Protection (Waste Management) (Qld) 2008 Regulation Protection Environmental 1994 (Qld Act Protection Environmental 1997 Act (Queensland) Scheme –National Electricity (Qld) 2008 Edition 4th Code Industry Electricity 1994 (Qld) Act Electricity Regulation 2002 (Qld) (Qld) 2002 Act Safety Electrical 2001 (Qld Act Management Safety Goods Dangerous 2001 (Qld) Act Misconduct and Crime 2001 (Cth) Act Corporations (Qld) 2004 Act Payments Industry Construction and Building 1991 Act (Qld) Anti-Discrimination 1999 (Cth) Tax Act Services) and (Goods Tax System A New 2009 (Cth) 2009 (Qld) 2006 Government Owned Corporations Regulation Regulation Corporations Owned Government

(Qld) and and and and Fair Work Regulations Regulations Work Fair Electricity Regulation Regulation Electricity and and Electrical Safety Safety Electrical ) and ) and

) ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

Property Law Act 1974 Act Law (Qld) Property 1988 (Cth) Act Privacy 2007 (Cth) Act Reporting Energy and Greenhouse National 1992 (Cth) Act Conservation Nature 2010 35 Version Rules Electricity National the National Electricity (Queensland) Regulations 1996 Act Australia) (South tothe schedule the in out set as Law (Queensland) Electricity National (Qld) 2009 Act Privacy Information 1997 Act (Cth) Tax Assessment Income 1936 (Cth) Act Tax Assessment Income Workplace Health and Safety Regulation 2008 (Qld) 2008 Regulation Safety and Health Workplace 1995 (Qld) Act Safety and Health Workplace 1999 (Qld) Act Management Vegetation 1974 Act (Cth) Practices Trade (Qld) 2009 Act Planning Sustainable (Qld) 2009 Act toInformation Right 2007 (Qld) and 1997 Act (Qld) Authority Competition Queensland 1991 Act (Qld) Authority Services Building Queensland National Electricity (South Australia) Act 1996 Act Australia) (South Electricity National Queensland Competition Authority Regulation Regulation Authority Competition Queensland cant of which are listed below: below: listed are which of cant National Electricity Electricity National and under

Individual staff roles are defi are roles staff Agreements. Individual Profi inJob ned Performance inIndividual out set are goals and les plan. business ENERGEX defi corporate the linkto with plan which KPIs and abusiness has Areas Result division Key Each ned framework. ofauthority delegation the through policies and strategies Board’s the Team implements Management Executive The Our corporate governance framework andorganisational structure Management Structure Board Committees ENERGEX Shareholding Limited Board Ministers Committee and the Board. Board. the and Committee Compliance and Audit the to advice legal and audit) external and internal (including services assurance independent provides division Governance Corporate the control, of framework the of part As COMPLIANCE Network COMMITTEE

Performance & AUDIT

Network

Programming SUBSIDIARY

& Procurement BOARDS DEVELOPMENT CORPORATE Energy Delivery COMMITTEE Business oversight

Human Resources SHAREHOLDING MANAGEMENT EXECUTIVE EXECUTIVE MINISTERS ENERGEX ENERGEX OFFICER LIMITED BOARD

CHIEF Delegation TEAM

Strategy & Regulation accountability & Assurance

Corporate Finance & TECHNICAL COMMITTEE & Performance NETWORK operations. governing into input as committees function specialist and Team meetings Management Executive the attend division each from Managers General Executive and CFO CEO, The basis. day to aday on business fi including framework acontrol through management, and CEO the to authority delegated has Board The (including CFO) ■ ■ 2010 June 30 were: at as Ministers, shareholding Our Queensland. of State the of behalf on shares the hold who shareholders two has ENERGEX

remaining 50 per cent of the voting shares. voting the of cent per 50 remaining the holding Trade, for Minister and Energy and Mines Resources, Natural for MP, Minister Robertson Stephen Hon. The and shares; non-voting Bclass the of cent per 100 and shares voting A class the of cent per 50 holding Development, Economic and Employment for Minister and MP, Treasurer Fraser Andrew Hon. The

Customer the operate to limitations, nancial Services

Corporate REMUNERATION COMMITTEE Governance

SPARQ Solutions Pty Ltd Ergon Energy. and to ENERGEX services IT providing venture company, ajoint is SPARQ arrangements. key governance responsibilities and and Committee’s Board each and Directors of details for 30-31 Committees on pages and of Boards Register the to Refer GOVERNANCE CORPORATE 29 ENERGEX ANNUAL REPORT 2009/10 30 ENERGEX ANNUAL REPORT 2009/10 GOVERNANCE CORPORATE Register of Boards and committees and Boards of Register Our corporate governance framework andorganisational structure Committee meetings by way of standing invitation. standing bywayof meetings Committee attend auditors external and internal The Board. Limited ENERGEX the of Chairman bythe held not is Chairman Committee Compliance and Audit the of role The directors. non-executive independent, are Chairman, the including Directors, All ■ ■ ■ ■ Committee Compliance and Audit ■ ■ ■ ■ ■ ■ ■ ENERGEX Limited ■ ■ ■ Committee Remuneration ■ ■ ■ ■ Committee Technical And Network ■ ■ ■ Corporate Development Committee General Manager).General Executive one and CFO CEO, the cases, most (in Team Management Executive the from Directors Executive of comprised are Boards subsidiary The Subsidiary Boards

Mr Ron Monaghan Darveniza Mat Prof. Emeritus Chair) (Committee Boydell Mary Ms Ms Kerryn Newton Ms Boydell Mary Darveniza Mat Prof. Emeritus Chair) (Committee Arnison Peter Gen. Maj. Mr John Geldard Mr John Dempsey Chair) (Committee Monaghan Ron Mr Ms Kerryn Newton Arnison Peter Gen. Maj. Mr John Dempsey Chair) (Committee Geldard John Mr Ms Kerryn Newton Mr Ron Monaghan Mr John Geldard Darveniza Mat Prof. Emeritus Ms Boydell Mary Arnison Peter Gen. Maj. Mr John Dempsey (Chairman) EBRHPKEY ACCOUNTABILITIES MEMBERSHIP ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

of ENERGEX’s unregulated business activities. activities. business unregulated ENERGEX’s of anumber tomanage established were companies Subsidiary specifi other and management CEO, tothe authority of delegations formal Provides fi and performance fi operations, the of Ministers shareholding Informs fi and environmental, safety, Monitors oversight management and leadership governance, effective Oversees Plan Management Demand and Plan Management Network Plan, Corporate Intent, Corporate of Statement the of approval Provides corporation the of direction strategic overall the Provides Act GOC the of 88 section under Responsibilities – Directors’ skills, induction program and performance reviews. performance and program induction skills, Directors’ – ENERGEX’s obligations in relation to remuneration, superannuation – The senior executive succession planning – Board including matters employment and remuneration Strategic – on: Board tothe recommendations and oversight provides Committee Remuneration The supply. electricity effective cost and safe areliable, toprovide Plan Management Network the under fulfi ENERGEX’s of oversight Provides innovation technological and standards tonetwork approach ENERGEX’s of oversight Provides issues technical and network on Board tothe approaches and strategy Recommends subsidiaries. its and ENERGEX of ventures business unregulated Reviews initiatives development corporate of control cost and prioritisation the on advises and Considers Board tothe presentation totheir prior proposals to,signifi relation in recommendations makes of, and appropriateness the Considers integrity. and ethics – management risk business – –legal–fi in relation to: obligations its meeting compliance properly is Limited ENERGEX that Board the to assurances provides Committee Compliance and Audit The

and employment matters under law and government policy. policy. government and law under matters employment and frameworks agreement workplace and remuneration, and policies approved nancial integrity ed offi nancial position of the corporation and subsidiaries and corporation the of position nancial cant and complex corporate development development corporate complex and cant cers. nancial performance lment of its commitments commitments its of lment nancial ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

– Senior executive succession planning and recruitment. and planning succession executive Senior – initiatives. maintenance and operating Network – – Development of the revised performance management management performance revised the of Development – Demand Management, Network the of Preparation – Australian tothe proposal regulatory our of Preparation – treasury, ENERGEX’s of effectiveness the Assessing – activities audit external and Internal – – Review of employment policies and frameworks, aligned aligned frameworks, and policies employment of Review – Oversight of: Joint and strategy and vision network the of Development – Oversight of: Strategic review of remaining unregulated businesses, – Oversight of: Financial Limited ENERGEX the of preparation The – –TheOversight of: fi 2010). June 30 at as (pending Ltd Pty Industries Beak of Deregistration assets non-core of Divestment Victoria in operations Varnsdorf the of down Winding offi Newstead the to, relocation of, and completion the for process the of Oversight Summer Preparedness Plan and Plan Management Demand Plan, Management Network Plan, Corporate Intent, Corporate of Statement the of Approval Certifi Board including Regulator, Energy Australian tothe submission proposal regulatory the of Oversight Statements Financial 2008/09 the of approval the fi company’s the of Oversight authority of CEO’s delegation the exceeding contracts procurement and projects network of approval the including Work, of Program the of Oversight performance environmental and safety ENERGEX’s of Oversight COMMITTEE RECOMMENDATIONS AND OVERSIGHT

process, Power toPerform Power process, Plans Preparedness Summer and Management Regulator.Energy policies. governance and compliance management, risk with legislative and GOC policy requirements. policy GOC and legislative with Energy) Ergon (with to2030 Outlook Vision Network as appropriate processes transition and divestments including approval for Statements, including endorsement to the Board (in addition to standing Committee responsibilities) Committee tostanding addition (in SIGNIFICANT MATTERS DURING 2009/10 KEY GOVERNANCE ARRANGEMENTS GOVERNANCE KEY 2009/10 DURING MATTERS SIGNIFICANT nancial performance of the company the of performance nancial KEY BOARD DECISIONS ce building. nancial including performance, cations Charter including a Directors’ Code of Conduct. of Code aDirectors’ including Charter Board and aConstitution has Board Limited ENERGEX The Financial Report. the in section Report Directors’ the in presented is Board the of meetings at Directors the of attendance The ■ ■ ■ ■ ■ Committee Governance: wound up or deregistered. or up wound voluntarily are subsidiaries required, longer no and dormant If Board. the of behalf on businesses these of oversight maintains Committee Development Corporate The standards. Limited ENERGEX the with aligns governance Subsidiary

Report in the Financial Report. Financial the in Report Director’s the in presented is meetings at attendance their profi Directors’ the in presented The qualifi qualifi suitably byengaging duties their out carrying in assistance seek may Committees Committee the of discretion the at meetings toCommittee invited Offi Executive Chief The arrangements tospecifi relation in Board, to,the recommendations of, and behalf on oversight specifi the out set Charters governance.html http://www.energex.com.au/about_energex/corporate_ at website ENERGEX the on available is and Committee each for annually) (reviewed place in is A Charter cations of each Committee member is is member Committee each of cations cer and senior executives are are executives senior and cer c matters) and governance governance and cmatters) c duties (to provide provide (to cduties les on pages 16-19, and ed external advisers GOVERNANCE CORPORATE 31 ENERGEX ANNUAL REPORT 2009/10 CHIEF EXECUTIVE OFFICER’S report

The past 12 months have been what could be referred to as a platform year for ENERGEX. We have seen a lot of preparation work laying the foundations for the future for which we have received a signifi cant budgetary increase to assist us keep pace with South East Queensland’s growing reliance on energy. ENERGEX ANNUAL REPORT 2009/10 32 Being granted somewhat of a reprieve from extended The program delivered $1.24 billion in network building periods of severe weather during the 2009/10 fi nancial and maintenance which included 16 new and upgraded year has allowed us to focus on this platform through zone substations to increase capacity and 409 kilometres network growth and enhancement. It has also enabled of new 33 and 11kV powerlines to improve reliability. us to continue our customer focus fi rmly on providing It was pleasing to see the completion of large projects leading energy solutions to the community through such as Myrtletown to Nudgee, the ENERGEX cutting edge technology and education programs. commitment within Airport Link Northern Busway and 20 other upgrades on the major tasks list. We have also seen a signifi cant amount of preparatory work as the organisation readies itself to move to the The completion of these projects can only be realised new corporate headquarters at Newstead. This move with the cohesion of every department within ENERGEX will be the largest migratory move in terms of staff and and with the understanding of the community. This year CHIEF technology the organisation has undertaken and see our fi eld crews and administration teams worked with the EXECUTIVE OFFICER’S many arms from within the business come under the community to ensure any social impacts were minimised REPORT one roof for the fi rst time. Not only do we save money by and environmental challenges responsibly managed. exiting our CBD premises, the new facility will assist us This is a fi ne balance we continue to manage and to work more effi ciently and allow us to better service the one I believe has helped mould ENERGEX into one needs of the South East Queensland community. of the country’s most trusted brands. This is not to The past year has been an exciting period in the energy say we will rest on yesterday’s successes. ENERGEX delivery industry and I sincerely thank each of our staff for is an organisation that will continue to lead the industry their commitment to this vital service. However, this is just through innovation, achievement and commitment. the beginning of what can only be described as the next era of delivering energy services to our customers in SEQ. The future and our responsibilities The Australian Energy Regulator (AER) has entrusted Safety ENERGEX with a signifi cant budget to deliver high quality Safety is the fi rst value for ENERGEX and this year has electricity services to South East Queensland. been one of which we can all be proud. The AER’s decision sets the framework for expenditure The Zero Incident Process program continued its roll over the next fi ve years and gives certainty to ENERGEX’s out and was linked to the Personal Big 5 concept. This operations. concept asked us to identify the fi ve most important things We need to remain accountable in our program of in our lives and to consider them before undertaking tasks works and as the custodian and administrator of this at work to give us further motivation to work safely. budget, it is incumbent on us to meet, deliver and where It has been a sobering concept reminding us that possible exceed the high quality community and network remaining safe at work is not only important from a outcomes expected of us. personal perspective, but also for those who we go home ENERGEX will continue to maintain and improve its to at night and has been a primary driver in achieving core business of delivering safe and reliable electricity. such a successful safety record this year. As a member of the greater South East Queensland We have achieved our lowest ever number of Lost Time community and mindful of the challenges our industry Injuries and Lost Time Injury Frequency Rates over the faces, such as changing electricity pricing, we will past 12 months and I commend all staff, especially our continue to be a responsible corporate citizen in the way safety teams, for establishing and maintaining safe work we conduct our business. practices and work places. The network’s future form is also factored into this budget While our goal will always be zero workplace injuries, in terms of research and development. ENERGEX has the following statistics are proof we are working positively always been an industry leader and we will continue to toward this achievement. In 2007/08 ENERGEX recorded transform the network allowing for emerging technological 961 days lost to injury and 398 the following year. changes in the e-commerce sector, emerging electricity This year 69 days were lost due to injury – a vast generation and storage capabilities, electric transportation reduction and a signifi cant improvement. and climate change. Service delivery and our customers ENERGEX is committed to providing the best possible service delivery within budget while remaining aligned to community sentiment and expectations.

This year we have met customers’ energy requirements by delivering an extensive program of works through the Terry Effeney Program of Works Improvement Program (PoW IP). ENERGEX Chief Executive Offi cer ENERGEX ANNUAL REPORT 2009/10 33 EXECUTIVE team

EXECUTIVE In September 2009, a new division Strategy and Michael Russell TEAM Regulation was established, headed up by Executive EXECUTIVE GENERAL MANAGER General Manager Kevin Kehl. This division provides CORPORATE GOVERNANCE a single focal point for coordination of ENERGEX’s BEng, MBA, Grad Dip AppCorpGov, GAICD, ACIS, MIEAust, CPEng business and regulatory strategies and ensures the future business challenges are identifi ed and managed Areas of responsibility: Legal, Internal Audit, Secretariat consistent with our vision and values. and Governance, and Corporate Risk and Compliance. At ENERGEX, we are committed to applying the highest standards of corporate governance to create and maintain Terry Effeney a positive and ethical culture. Michael and his division ENERGEX CHIEF EXECUTIVE OFFICER are responsible for ensuring we conduct our business in accordance with the best practice standards of Darren Busine corporate governance, with a focus on legal compliance, ethics, accountability and corporate social responsibility. CHIEF FINANCIAL OFFICER They manage the Board of Directors’ activities, ensuring BEcon, FCPA, FFin, GAICD processes run smoothly and effectively. They coordinate the corporate governance practices to help improve Areas of responsibility: Commercial and Finance, the performance of the company for the benefi t of all Financial Control, Performance Management, stakeholders, ensuring economic growth. To achieve this, Strategic Change and Program Management, they work within a corporate governance framework Taxation and Treasury. which includes management standards, reporting, The Corporate Finance and Performance (CF&P) Division external accountability, and risk management. provides leadership to ENERGEX in the delivery of balanced commercial outcomes. To support this objective, the division provides a combination of centralised fi nancial management functions and commercial business partnering support through its operational groups. In 2010/11, Darren and his division will continue to take a leadership role in the delivery of ENERGEX’s Business Performance Strategy and attainment of balanced and sustainable outcomes for ENERGEX. This means that ENERGEX will deliver its outcomes in line with its Regulatory Determination. We will achieve this by continuing to drive improved effi ciencies to meet our increasing Program of Work and associated business objectives, whilst managing costs.

Executive team members, left to right: Terry Effeney, Darren Busine and Michael Russell. ENERGEX ANNUAL REPORT 2009/10 34 Our Executive Team brings a complementary mix of skills and experience in the energy, resources, fi nance, legal and engineering sectors. Each division plays a vital role in working to meet our current and future challenges.

Chris Arnold Susan Kehoe EXECUTIVE TEAM EXECUTIVE GENERAL MANAGER EXECUTIVE GENERAL MANAGER NETWORK PERFORMANCE HUMAN RESOURCES BEng (Elec), Post Grad Dip Bus Management, GAICD, BSocWk, BA, MBus MIE Aust, CPEng, RPEQ, GAICD Areas of responsibility: People Strategy, Workforce Areas of responsibility: Corporate Occupational Health Planning, Organisational and Leadership Development, and Safety, Network Capital Planning, Network Asset Remuneration and Benefi ts, Industrial Relations, Employee Management, Systems Engineering, Environmental Health and Wellbeing, Human Resource Operations and Management, Network Property Data and Coordination, Systems, Staff Communications, and Human Resources and Demand and Risk Management. Consultancy Support. Chris and his division are responsible for the strategies Susan and her team play an active role in supporting and plans which enable us to build and maintain the managers to make ENERGEX a great place to work as ENERGEX network. well as acting as advocates for our people. They are The division maintains a focus on the future, developing responsible for ensuring we have the right mix of people plans for several years down the track. They place a and the right mix of skills to achieve our business goals. high priority on understanding how population growth This is done through planning, recruitment, training and changing customer needs are driving infrastructure and development, a positive workforce culture, staff development. This allows us to keep pace with growth engagement and effective management of people’s and be proactive when it comes to sustainability. performance. A high priority is placed on gathering staff While this is a challenging process, it ensures we feedback and acting on it to improve ENERGEX both develop our infrastructure in line with as a business and as a place to work. This process occurs the needs of our customers on a regular basis to ensure a positive in South East Queensland. working environment where people can do their best everyday and where valuable With the recent approval contributions can be made of ENERGEX’s fi ve-year to our company. Network Management Plan by the Australian Energy One of their biggest challenges is Regulator (AER), a key supporting managers and staff in focus for the division dealing with people issues across will be to implement the all levels of ENERGEX. To do this AER strategies including they provide both strategic and capital and operating operational support to managers plans, Service Target to help bring out the best in Performance Incentive their people and to create a Scheme (STPIS), constructive and collaborative and a new connection working environment. Some of the process. key projects include the Power to Perform, Workforce Composition and the Wellness Program.

Executive team members, left to right: Chris Arnold and Susan Kehoe. ENERGEX ANNUAL REPORT 2009/10 35 36 ENERGEX ANNUAL REPORT 2009/10 TEAM EXECUTIVE ENERGEX expects to face in the longer term. longer the in toface expects ENERGEX that tochallenges focus organisation’s the extended that 2015”, Beyond –Moving adocument Direction “Strategic approved Board ENERGEX the 2009 November In activities. regulatory toour external and within both opportunities business responsible for the identifi also is division The customers. toour services provide and network the togrow, maintain capacity to our fundamental is funding our Securing approach. and framework regulatory our and direction strategic our between link fundamental the and corporation regulated a as ENERGEX of key operations the recognises division the of makeup The regulation. and strategy of areas the in capability and leadership organisational toprovide is key role division’s his and Kevin framework. regulatory national the with aligned tobe analysis strategic robust for need the and years coming the in face will signifi the of recognition in established was Division Regulation and Strategy The Initiatives. Strategic and Strategy Corporate Affairs, Regulatory Strategy, Revenue Areas of responsibility: responsibility: of Areas Eng Supp Elect Cert Grad (Hons), BEng REGULATION STRATEGY AND MANAGER GENERAL EXECUTIVE Kehl Kevin Executive team members, left to right: right: to left members, team Executive cation and assessment of new new of assessment and cation Strategy and Development, cant challenges ENERGEX Kevin Kehl and Bill Lyon. Bill and Kehl Kevin effi the improving at aimed 2008/09, in began which (PoW IP), Program Improvement Work of Program the of implementation the tosupport continue will 2010/11, In division his operations. and Bill network and transmission, services, customer network operations, fi including work, of scope avast has Delivery Energy Delivery. byEnergy delivered and scheduled is it programmed by Network Programming and Procurement, and Performance byNetwork developed PoW is the While targets. time and hours cost, scope, to program according (PoW), Work of Program ENERGEX’s delivers Specifi network. ENERGEX’s operating effi and bysafely needs energy customers’ to provide The Energy Delivery Division’s key responsibility is Contract Delivery. Operations, Improvement and Delivery Support, and Network Projects, Major Services, Field Management, Areas of responsibility: of Areas AssocDipEE CertMgt, BBus, ENERGY DELIVERY MANAGER GENERAL EXECUTIVE Bill Lyon ciency and effectiveness of our PoW process. our of effectiveness and ciency and maintaining ciently designing, constructing,

Design, Projects and Works Works and Projects Design, cally, the division eld Alternative Control Services. Control Alternative (PoW IP), Joint Workings and Work Improvement Program of Program the of deployment the include will NPP for 2010/11,In projects major network. the for support generation mobile and embedded and subdivision developers, to materials of provision information, and metering including provide services non-regulated businesses regulated revenue. These non- togenerate skills core ENERGEX’s leverage which non-regulated businesses the of management and Energy; Ergon with initiatives customers; Joint Workings commercial large of management contract and with relationship the include: and outcomes commercial improved delivering on focused are activities These ENERGEX. of on behalf activities commercial key other manages also Peter across the business. services and materials for chain supply procurement end of fl provision training, technical of delivery and development fi planning; resource supporting and PoW program the of provision the for: responsibility has NPP relationship, this In customers. our to safely energy toprovide delivery, for Division Delivery Energy and planning, for Division Performance Network the with closely partners NPP outcome, successful To a achieve activities. delivery and programming planning, effective on focused process end-to-end effi an requires ENERGEX PoW for the To deliver leveraging skills. core fi of delivery the and (PoW), Work of Program the of programming and resourcing effi and safe the are key accountabilities Peter’s portfolio. divisional (NPP) Procurement and Programming Network the within activities of range adiverse has Peter Business Performance, and Procurement. Management Offi Program Network Workings, Joint Dynamics, Areas of responsibility: of Areas BEng (Hons), MEng Sc PROCUREMENT AND PROGRAMMING NETWORK MANAGER GENERAL EXECUTIVE Price Peter eet and safety tools and equipment; and the end-to- the and equipment; and tools safety and eet ce, Commercial and Compliance, eld support services, including the the including services, support eld

Field Support, Metering Metering Support, Field nancial results through through results nancial cient cient cient cient and the construction functions. They also play a a play also They functions. construction the and work of planning and designing the between a key link is and business, the within functions administrative and network the for services support provides division The performance. service our toimprove continue we that and expectations community and statutory meet standards service our ensuring is focus The stakeholders. and customers our with relationships key the managing for responsible is division the groups, incorporated our of management consistent the Through of System (DUOS) revenue. Use Distribution for processes tocash’ ‘meter of control the and services; property commercial and business of provision the stakeholders; and customers our and ENERGEX between interface primary the responsibilities: key three has Division Services Customer The Services. Property and Relations, Government Services, Market Energy Advocacy, Customer Communications, Corporate Group, Contact Customer Areas of responsibility: of Areas FAICD MBA, BCom, CUSTOMER SERVICES MANAGER GENERAL EXECUTIVE Weaver Peter signifi

Business Support Services, Services, Support Business retail market by providing retailer requested connection connection requested retailer consumption data. This role role This data. consumption includes the management management the includes metering services, cant role in the energy energy the in role cant infrastructure and meter and Peter Weaver. Peter and Price Peter right: to left members, team Executive of the retailer/Australian retailer/Australian the of Joint Workings. Program of Work Property StrategyProperty and Project, Quality Data ENERGEX Corporate Corporate ENERGEX offi Improvement, Newstead Connections Process Customer Strategy, Energy Market Operator (AEMO) interface and and (AEMO) interface ceaccommodation, the energy market market energy the Improvement, settlement. settlement. In 2010/11, major to Cash Process Process to Cash include the Meter Meter the include will projects EXECUTIVE TEAM 37 ENERGEX ANNUAL REPORT 2009/10 Think safe, work safe, home safe. We are committed to achieving an injury-free workplace. ENERGEX ANNUAL REPORT 2009/10 38 put safety fi home SAFE. safety –think SAFE, work SAFE, a whole-of-life approach to andsupport Encourage non-negotiables. safety Follow ENERGEX’s and suggestimprovements. upaboutsafety Speak injuries. to and situations that could lead behaviours andcorrect Identify and in all situations. of other fi people Put oursafety WHAT DO WE is on-site for all work carried out. carried allwork for on-site is observer asafety standards, safety ofour accreditation external and safety to commitment ofour part As Pictured: LIVING OUR VALUES andthe safety at allrst times, concerns concerns rst

OPERATIONAL PUT SAFETY SAFETY PUT REVIEW FIRST 39 ENERGEX ANNUAL REPORT 2009/10 40 ENERGEX ANNUAL REPORT 2009/10 FIRST SAFETY PUT REVIEW OPERATIONAL 2009/10 OUTCOMESKEY safety, health and wellbeing FIRSTPUT SAFETY – ■ ■ ■ ■ ■

against our peers. our against systems and strategies safety our tobenchmark Continued the business across consistency to ensure safety communications strategy internal new the Implemented Health and Wellness Consultant aspecialist of appointment the Wellness including Program Employee new the Launched 2.34) 1.00 of (2008/09: (LTIFR) Rate Frequency Injury Time Lost and 16) (2008/09: seven of total (LTI) Injury Time Lost budget within and time on Plan Strategic Safety fi our of initiatives year second Delivered ve-year Health and focus on reducing these risks. these reducing on focus the tocontinue implemented 17 saw plan projects the of year second The safety. behavioural and processes, and systems activities, risk moderate activities, risk high key areas: four under activities operational our with associated risks the toreducing approach astructured provides plan The Plan. Strategic Safety and fi our from seen being now results bythe demonstrated company, the throughout shift apositive been has year, there this However We have long upheld a safety-fi environment work safe a Maintaining network. electricity an operating with come that risks inherent the controlling or reducing eliminating, at aimed initiatives targeted of implementation the signifi tomake wecontinued year This community. wider the as well as workplace our within injuries zero is goal Our business. tothe driver underpinning an is and company the of part every across extends tosafety commitment Our community. the and contractors staff, our of safety the than value greater no is there At ENERGEX becoming a core tool for measuring performance and identifying safety trends. safety identifying and performance measuring for tool acore becoming with ENERGEX-specifi progressed also data, audit and incident torecord used database eSafe The intervention. early of result the are that claims those from todifferentiate 14 duration, than days greater claims compensable measures rate new This (CCFR). Rate Frequency Claims Compensable the replacing (CCFRS), Severity Rate Frequency Claims Compensable the 2009/10, in introduced was measure performance safety additional An progress. achieving weare injuries, zero of goal ultimate our reached yet not wehave While programs. and strategies intervention our of Table in 1, shown reaffi have results, These cent. LTISR per by84 and cent LTIFR per by58 cent, per by56 reduced has LTI Our record. on (LTISR) Rate Severity Injury Time Lost (LTIFR) and Rate Frequency Injury Time (LTI), Lost Injuries Time Lost of number ever lowest our We achieved signifi Achieving key safety milestones cant safety performance milestones this year including including year this milestones performance safety cant c customisations being implemented. The database is is database The implemented. being ccustomisations rst culture throughout ENERGEX. ENERGEX. throughout culture rst cant progress towards this goal through through goal this towards progress cant thermed positive impact ve-year Health Health ve-year Table 1: Workplace key safety indicators OPERATIONAL REVIEW KEY SAFETY PERFORMANCE INDICATORS 2007/08 2008/09 2009/10 PUT SAFETY FIRST Lost Time Injury Frequency Rate (LTIFR) – total number of lost time injuries 3.62 2.34 1.00 per million hours worked during the year Lost Time Injury Severity Rate (LTISR) – days lost per million hours worked 139.12 58.20 9.81 in the year Compensable Claims Frequency Rate Severity (CCFRS) ––2.99 Lost Time Injuries (LTIs) – number of work-related injuries with: defi ned onset, a medical certifi cate of incapacity, one or more whole days lost and an accepted 25.00 16.00 7.00 WorkCover claim Days lost to LTIs 961.00 398.00 69.00

Maintaining external accreditation Since implementation, more than 2,000 employees have attended the program with further sessions scheduled for Our safety management system retained its accreditation the coming year. to AS/NZS 4801 Occupational Health and Safety Management Systems and the Electrical Safety Offi ce One of the key components of the ZIP process this year requirements set out in the Electrical Safety Act 2002. involved the Personal Big 5® concept – the fi ve most Additionally, to ensure adherence to the requirements important things that motivate staff to return home safely of the legislation and safety management system, at the end of the day. The aim is to help staff better a risk-based internal auditing process was conducted. understand their attitudes towards safety. Safety isn’t This audit identifi ed opportunities to improve our safety just about protecting us from something – it’s about performance. protecting us for something, like our families.

A contemporary risk management process, aligned with the requirements of AS/NZS ISO 31000: 2009 Risk Keeping our contractors safe Management, continued to be used throughout the We see our contractors as an extension of our own business to accurately identify risks associated with workforce, and their safety is equally important as the operational activities. This process is at the forefront safety of our staff and the community. During the year, of contemporary risk management science and has we continued to implement the new safety management attracted the interest of external safety and risk peers. system for contractors which began in December 2008. The new system involves a thorough reporting framework, Empowering to change behaviour extending audit training to contractors, extending our ZIP safety behaviour knowledge to contractors, and providing This year we continued to roll out our cognitive behavioural regular, open and transparent safety information sessions safety program, the Zero Incident Process (ZIP®). to also facilitate relationship improvements. Following ZIP focuses on providing employees with the information implementation of the new system, 2009/10 core and skills needed to make safe choices at work. It is contractor LTIs were reduced by 50 per cent from the about empowering people to take control of their personal previous year. By June 2010, 17 LTIs had been recorded safety and has been considered a major contributor to the for core contractors (2008/09: 34 LTIs). success of our safety performance this year. ENERGEX ANNUAL REPORT 2009/10 41 42 ENERGEX ANNUAL REPORT 2009/10 FIRST SAFETY PUT REVIEW OPERATIONAL workplace testing. random involve and counselling and support offer will It impact of alcohol and other drugs in the workplace. the on focused staff, all for program awareness and education an involve will initiative The place. in already policy our tosupplement formalised be will Standard Drugs Other and Alcohol an (EUCA), Agreement Collective Union ENERGEX the and environment working toasafe commitment our with line In workplace. the in drugs other and alcohol with associated impairment manage and toidentify program testing and awareness arigorous todevelop continuing We are risks Managing safety illnesses. and injuries work-related non and work-related both covers which program, rehabilitation workplace our a fl and Fun Run toBrisbane Bridge the including participants for events sporting of arange into entry classes, exercise including health, improving at aimed programs of arange topromote continued wehave addition, In for improvement. plans develop and status health current their to review opportunity the taking employees 1,500 approximately with year this completed were assessments health initial The health. their improving in staff to assist interventions targeted of aseries and staff all for available assessments health individual includes which period trial year two initial an involves program The Consultant. &Wellness Health aspecialist of appointment the including Program, Wellness Employee anew launched ENERGEX health, their managing with employees toassisting commitment our of part as year This service. of level high acontinued with customers provides and culture safety our supports morale, employee boosts also but injuries, prevents and risks health reduces only not workforce and lifestyle ahealthy We believe Improving ourhealth andwellbeing u vaccination program. We assist employees through through employees We assist program. u vaccination developed to deliver these programs. these todeliver developed also was materials educational of Arange safety. electrical and falls, and trips slips, safety, road tasks, manual including business, the across injuries of causes common the on Topics focused environments. home and work tothe relevant campaigns safety corporate quarterly with Safe’ Home Safe, Work Safe, ‘Think themed program safety the year, wecontinued This functions across the business. work tovarious relevant are campaigns education all that and theme, safety aconsistent delivering are divisions all toensure business the across campaigns safety streamlining on focuses strategy The behaviours. safety improved on families their and staff ENERGEX toeducate designed strategy communications internal an developed has ENERGEX results, the on Based campaigns. education and communication safety corporate future for approaches torecommend and initiatives safety towards attitudes employee toexplore company research external an engaged ENERGEX 2009/10, In Think safe, work safe, homesafe Method. Analysis Cause Incident the using process investigation internal an and Framework, Support and Review Continuous the via supervisors for support coaching tostaff, skills and experience of transfer asolid toensure framework auditing tier in-fi external, and internal both activities, risk high all auditing on priority places which system arisk-based involving framework auditing tier athree hazards, potential to catalogue registers risk divisional included risks to manage organisation the throughout used methods Other workplace. our at safety waytoenhance another as Unions the and management ENERGEX byboth supported is program This industries. various among practice best as regarded widely policies exposure sun our with strategy, safety ofour akeyaspect is sun inthe safe Staying cancer. ofskin awareness raise to and reminder acontinual as Day inSunSmart participated Employees partnership. ofatwo-year part as December in Queensland Council Cancer to donated $25,000 was safety, sun to commitment To ongoing our show Pictured: eld coaching aligned to the three three tothe aligned coaching eld electrical assets. near when environment a safe maintain they to ensure tobusinesses mail-outs including communication direct and groups, community with sessions education safety electrical and consultation included year this Key activities behaviours. safer facilitates turn, in which, businesses amongst and community the in education and awareness electrical increased is framework safety community the of outcome primary The and data. have been identifi opportunities and key messages category, each Within partnerships. and collaboration and network, electricity reliable and asafe tosafety, committed a workforce awareness, business and community including key areas across direction provides which framework safety community our is plan the Within programs. awareness and education community successful of development and monitoring analysis, the supports which Plan Safety Community our year, weupdated This safety. toelectrical comes it when community the toeducate a responsibility wehave community, Queensland East South the of member atrusted As areas. public in and school, work, home, –at lifestyles our of aspects many the among safety community of aculture building in toplay arole have We all responsibility. shared of avalue on built is tosafety approach ENERGEX’s Educating safety aboutcommunity at the July 2009 Leaders’ Forum. Leaders’ 2009 July the at colleague awork with live it performed and values ENERGEX the on based song asafety penned who employee an from seen was enthusiasm Further milestone. safety this toachieving keys the are mateship and work team believe They free. LTI 10 years achieved who team underground Maroochydore the and LTI 12 free, years achieved who Depot Esk the included examples Outstanding safer. and healthier workplace the tomake bit their doing were who organisation the across individuals and teams the highlighting and byfocusing week the worker’. We celebrated safer and – healthier workplaces safer and ‘Healthier theme the with campaign Week Australia Work Safe national the in involved was ENERGEX 2009, October In Celebrating safety ed through the evaluation of research research of evaluation the through ed and may have the greatest include: impact. These identifi been have which opportunities and risks safety electrical those address programs education community Our on 31 March 2010. 31on March adopted SAHV updated the and place taken already fi the with group reference standing the by annually reviewed be will procedures SAHV The organisations. three the across apparatus electrical HV the toaccess place in now policies and procedures benefi signifi SAHV. The the toas referred commonly Apparatus, Electrical (HV) Voltage toHigh Access Safe for Procedures Entity Electricity Queensland the adopted Powerlink and Energy Ergon ENERGEX, 2009, 1May On minimised. is to electricity, related community, tothe risk the toensure groups Offi Safety Electrical the with closely work and incidents, electrical community-related as well as performance safety in trends We monitor Improving oursafety standards (2008/09: 94 per cent, 2007/08: cent). 71 per cent, per 94 (2008/09: powerlines fallen awayfrom tostay others tell will they indicating cent 97 per and cent), 2007/08: per 66 cent, per 96.7 (2008/09: campaign our of aresult as powerlines fallen awayfrom tostay likely more are they indicating respondents of cent 91 per with strong, remained powerlines fallen of dangers tothe relation in results The effectiveness. their demonstrated campaigns safety community our of results awareness public The ■ ■ ■ ■ ■ ■ ■ ■ ■

rural safety. sponsoring safety community your in on going what’s kids safety safetree home electrical safety dig you before dial live and up look severe weather ts of this arrangement are the consistent consistent the are arrangement this of ts ed through an analysis of incidents and accidents, accidents, and incidents of analysis an through ed ce, industry and community community and industry ce, rst review rst having cant OPERATIONAL PUT SAFETY SAFETY PUT REVIEW FIRST 43 ENERGEX ANNUAL REPORT 2009/10 44 ENERGEX ANNUAL REPORT 2009/10 FIRST SAFETY PUT REVIEW OPERATIONAL ■ ■ ■ ■ ■ ■ ■

OUTLOOK 2010/11 to encourage employees to focus on the safety elements they can control while at work. at while control can they elements safety the on to focus employees to encourage involving electricity. incident safety acommunity of occurrence the of likeliness the in reduction and improvement ongoing toachieve program, and Strategy Safety Community our progress and toreview continue We will contractor safety. managing for systems ENERGEX the and process management risk on-site the review We will home. and work at lifestyle healthy abalanced, reach employees our assist will Program Wellness Employee our of assessment and development Further measures. appropriate implement and risks potential identify to accurately refi tobe continue will process auditing and management risk Our requirements. Offi Safety Electrical the and toAS/NZS4801 accreditation external our toretain seek We will testing. random and counselling, and support pilot, awareness and education an involve will project This employees. our for environments working safe toensure Standard Drugs Other and Alcohol our of out roll and development the continue We will my50%? ‘What’s the out roll We will progress. this tocontinue us assist will program, ZIP focused behavioural the including Plan, Strategic Safety and Health our of year third the Executing LTIs LTIFR our and tozero. reducing of journey our continuing on focus year, wewill coming the In ® ’ campaign to employees, as part of the ZIP safety program, program, safety ZIP the of part as toemployees, ’ campaign ned and used used and ned ce communities, includingcommunities, fi within their activities response and mitigation undertake brigades the toassist resources and equipment of arange in resulted has agreement sponsorship new This capacity.support and operational their toenhance regions East South and Brisbane the in brigades tothe sponsorship a $75,000 weprovided appreciation, our toshow year, tocontinue fi rural the supported long We have through. communities our pull tohelp crews response emergency and volunteers community dedicated our of efforts the takes it and affected be can Everyone fi local the support the bushfi tomanage responsibility our wesee At ENERGEX, organisations band together. emergency our when reached is outcome what and is it important how seen We also have lifestyles. people’s bushfi We have all the seen devastating impact a blazing Bushfi grant partnership. equipment Service Fire Rural ENERGEX ofthe launch the for together came crews QFRS and ENERGEX year This QFRS. the to support ongoing Weprovide Pictured: relationships with key organisations. to bushfi commitment our demonstrates and 2007 August since place in been also has (QFRS) Service Rescue and Fire Queensland the with Understanding of A Memorandum we fulfi toensure programs and key strategies plan, mitigation abushfi implemented wehave ENERGEX, Within fi a further to equipment essential containing trailers to provide offi tothe addition In dams. portable and chainsaws re can have on the community, environment and and environment community, the on have can re l our responsibility to bushfi re management and the effective working working effective the and management re re risk associated with our assets and and assets our with associated risk re ve brigades within South East Queensland. East South within ve brigades re safety –everyone’s responsibility re brigades as apriority. as brigades re cial partnership, wecontinued partnership, cial rst aid and defi and aid rst remanagement. re brigades and this this and brigades re brillator kits, kits, brillator re ■ ■ ■ ■ avoid conductors clashing. to spacers voltage high and low of installation the for overhead powerlines, and $2.2and semi-rural million rural of kilometres 15,000 around inspecting of patrols growing powerlines, $1.2 near million for our helicopter trees of trimming the involving program management of investments $66.7annual million for the vegetation Our bushfi ■ ■ ■ ■ this year include: undertaken initiatives safety, community of interests the In

industry practice standards good and practice of code our with accordance vegetationUndertook management practices in as fi rated were they toensure basis aregular on assets electricity other and powerlines poles, Inspected updated and monitored continually were plans These assets. network risk high and bushfi toindicate plans Developed subcommittee training IDC and subcommittee (IDC) Committee Interdepartmental regional acombined on represented is ENERGEX plans. management risk bushfi todevelop councils local and organisations service emergency Queensland’s with closely Worked workshop bushfi addressing Networks Rural National the at group working (ENA) Australia Networks Energy an in Participated vegetation and powerlines overhead with associated hazards fi about community tothe information Provided abushfi initiate not do used vehicles and fi our Educated spacers midspan or constructions wider conductors, from clashing, including the installation of insulated them toprevent actions necessary took and areas bushfi high in powerlines overhead Assessed re-safe re management plan is supported by by supported is plan management re eld staff to ensure their work practices practices work their toensure staff eld rerisk. re prone areas areas prone re re re risk rerisk re re 45 ENERGEX ANNUAL REPORT 2009/10 We are passionate about achieving ENERGEX’s set of performance targets. We deliver sustainable performance. ENERGEX ANNUAL REPORT 2009/10 46 deliver balanced results Focus onoutcomes, on solutions, not just problems. Take responsibility on agreed priorities. focus Keep arelentless outcomes. with the aim of achieving improved current thinking andpractices Have courage the context whenmaking decisions. Take into account set new standardsof excellence. Focus WHAT DO WE and maintain the electricity network in South East Queensland. Queensland. East inSouth network electricity the maintain and build to day every $3.4 million than more spent we year This LIVING OUR VALUES onachieving results that to challenge the broader – focus not just tasks. OPERATIONAL BALANCED BALANCED RESULTS DELIVER REVIEW 47 ENERGEX ANNUAL REPORT 2009/10 DELIVER BALANCED results

OPERATIONAL KEY OUTCOMES As the owner and operator of South East Queensland’s distribution electricity REVIEW network, we are committed to providing a safe and reliable supply that is DELIVER 2009/10 economically, socially and environmentally sustainable. Our network is one of BALANCED the fastest growing in Australia, providing supply to a population of 2.9 million RESULTS ■ Targeted investment of $1.24 billion in building, including 1.3 million residences. operating and maintaining Over the past 10 years, the population of South East Queensland has dramatically our network increased, with a 30 per cent growth in the number of ENERGEX customers and a consequent rise in overall energy demand. Adding to this rise, the average ■ Approval of our fi ve-year South East Queensland household is now using between 50 and 70 per cent funding proposal by the AER, more electricity than just 10 years ago. This growth in the overall energy demand including $5.783 billion is predicted to continue. for capital investment and Our ultimate goal is to improve the balance between supply-side management $1.634 billion to maintain and demand-side solutions. This involves meeting demand through capacity into and operate the network the system, while at the same time focusing on reducing demand through energy ■ Launched a multi-million dollar effi ciency and a range of demand-side management initiatives. powerline improvement scheme Delivering to meet demand ■ Delivered a $460 million Summer Preparedness Plan We currently manage electricity assets valued at $8.8 billion (illustrated in Table 2) and have more than 3,800 employees working towards delivering an electricity ■ Achieved better than minimum network that supports our customers’ lifestyle aspirations and sustainable service standards for network economic growth. More than $1.24 billion was invested this year to build, operate reliability and security and maintain the electricity network (2008/09: $1.1 billion). This largely refl ects ■ Delivered effi ciencies and the increasing demand for electricity in South East Queensland, illustrated cost savings through in Graph 1, driven by the soaring domestic use of energy intensive appliances and the continuing population surge. Joint Workings initiatives with Ergon Energy. Graph 1: South East Queensland energy consumption

22,500

22,000

21,500

21,000

20,500

20,000 Energy consumed (GWh)

19,500

2005/06 2006/07 2007/08 2008/09 2009/10

Almost $910.8 million was invested in the network system Capital Program, resulting in signifi cant network improvements and increased capacity through the region. During the year we: ■ commissioned four new zone substations and upgraded capacity at 12 zone substations, resulting in a 275 MV.A net increase in capacity (illustrated in Graph 2) ■ constructed or augmented 21 x 33kV powerlines and 151 x 11kV powerlines to improve reliability ■ installed or replaced 1,015 new distribution transformers via the maximum demand program ■ replaced 274 ring main units (11kV) to improve safety and network reliability. ENERGEX ANNUAL REPORT 2009/10 48 Similarly, $326.8 million was invested in the network Graph 2: Zone substation capacity OPERATIONAL maintenance program to improve reliability and complete REVIEW 10,000 customer requested work. In the past year we: DELIVER 9,278 9,553 8,000 BALANCED ■ trimmed vegetation along 14,728 km of 11kV 8,670 MV.A MV.A 8,155 MV.A RESULTS powerlines to maintain established clearance zones MV.A 6,000 6,544 ■ inspected 123,848 poles to ensure ongoing MV.A 4,000 serviceability of the network 2,000 ■ installed 5,354 spacers on low voltage open

powerlines and replaced 12,627 cross arms 0 to improve safety and reduce interruptions June 2006 June 2007 June 2008 June 20091 June 2010 ■ replaced neutral clamps on 3,265 low voltage Notes services to improve safety and reliability. 1 The June 2009 zone substation capacity has been revised up by 3 MV.A, from previously reported, due to a data recording error.

Table 2: ENERGEX electrical assets

ASSETS 2005/06 2006/07 2007/08 2008/09 2009/10 Total overhead and underground (km) 48,688 50,044 51,176 52,361 53,256 Lines – length of overhead (km) Total 35,897 36,200 36,349 36,490 36,607 LV1 14,702 14,720 14,732 14,736 14,742 11 kV 17,504 17,709 17,843 17,953 18,032 33 kV 2,059 2,091 2,136 2,161 2,175 132/110 kV2 1,632 1,680 1,638 1,640 1,658 Cables – length of underground (km) Total 12,791 13,844 14,827 15,871 16,649 LV 8,135 8,592 9,083 9,612 9,978 11 kV 3,666 4,207 4,657 5,099 5,469 33 kV 905 942 981 1,053 1,092 132/110 kV 85 103 106 107 110 Other equipment (qty) Bulk supply substations 34 36 37 37 38 Zone substations 200 207 213 219 223 Poles 596,770 612,638 622,064 630,259 638,982 Distribution transformers 40,826 42,261 43,420 44,613 45,456 Street lights 260,605 296,849 306,892 314,008 324,111 Customers Residential 1,101,455 1,126,875 1,148,270 1,167,885 1,187,665 Other 115,005 117,685 110,670 110,315 111,125 Total 1,216,460 1,244,560 1,258,940 1,278,200 1,298,790

Notes 1 LV overhead line lengths between 2007/08 have been reduced by 173 kilometres from previously reported values, following data validation improvements. 2 The increase in 132/110 kV line length in 2006/07 over previous reports is due to a data redefi nition. ENERGEX ANNUAL REPORT 2009/10 49 Table 3: Top 20 PoW projects1

$ SPEND PROJECT NAME PROJECT DESCRIPTION (million) Victoria Park – Airport Link Northern Busway Network relocations for transport infrastructure 33.6 Myrtletown 110/33kV substation 18.2 OPERATIONAL Merrimac 110/11kV substation 13.6 REVIEW Hays Inlet to Brendale 110kV powerline 11.2 DELIVER Sandgate Bulk supply substation and 110kV powerlines 10.8 BALANCED Coomera to Hope Island Second 33kV powerline 10.8 RESULTS Pimpama East 33/11kV substation 9.3 Enoggera to Grovely Upgrade 33kV powerlines 8.5 Spring Creek Upgrade substation 8.5 Cornubia 33/11kV zone substation 8.5 Jimboomba Bulk supply substation 8.4 Kalbar to Boonah Second 33kV powerline 7.5 North Springwood Upgrade substation 7.0 Bundamba Upgrade substation 6.5 Palmwoods to Woolooga Upgrade 132kV powerlines 6.4 Nudgee – Airport Link Northern Busway Network relocations for transport infrastructure 5.8 Yandina 33/11kV substation 5.6 Cooroy Upgrade substation 5.6 Jindalee to Darra Replace 33kV powerline 5.6 Woodford Upgrade substation 5.5

Notes 1 Project selection based on total spend during 2009/10.

Improving our Program of Work Supporting infrastructure growth Over the year, we continued working towards improving in South East Queensland the processes and systems we use to deliver our Program In addition to distributing electricity to homes and of Work (PoW). businesses, we also provide support for large corporate Our Program of Work Improvement Program (PoW IP) organisations and government projects. has been designed to assist us meet an ever increasing Key projects we supported throughout 2009/10 and will demand for electricity within the funding arrangements continue to in the coming year, include the Clem Jones set by the AER. This will be achieved by updating our Tunnel (CLEM7), Airport Link Northern Busway and process model to simplify the day-to-day delivery of our Airport Roundabout projects, and the Water Grid. PoW and improve forward planning for how we use our For these projects, we carry out work to ensure a staff, contractors and material resources. reliable supply of electricity is provided for construction, The improvements we are pursuing are focused on our relocate any electrical assets which may confl ict with the end-to-end process for planning, programming and the construction, and also provide supply to the project for delivery of our PoW. This includes changes to the design its ongoing operation once construction is completed. and estimation process, the scheduling and delivery of All of this work is done while ensuring a continual work, and system refi nements to improve the quality of safe and reliable supply of power to the homes and data and support new performance measures. businesses in the surrounding areas. In coming years, we will be involved in infrastructure During the past year, key outcomes included: projects including the Northern Link Tunnel, the $8.2 billion ■ structural alignment of Distribution Planning Cross River Rail Tunnel and the next stage of the Ipswich and Design to provide clarity of accountability Motorway widening from Rocklea to Darra. ■ consolidation of design functions. This work will continue in 2010/11. ENERGEX ANNUAL REPORT 2009/10 50 Ensuring a reliable network Overall, the electricity network performed well, particularly when results are normalised to exclude extreme weather events.

In the past year we performed favourably against all reliability Minimum Service Standards (MSS), as set out in Table 4. OPERATIONAL REVIEW DELIVER BALANCED Table 4: Reliability performance RESULTS 2005/06 2006/07 2007/08 2008/09 2009/10 2009/10 actual actual actual actual actual MSS1

SAIDI (mins) CBD 4.10 0.00 4.00 3.10 1.19 <20.00

Urban 104.00 80.00 84.70 91.20 88.48 <110.00

Rural 306.00 203.00 242.10 228.00 215.73 <220.00

SAIFI (events) CBD 0.02 0.00 0.04 0.06 0.08 <0.33

Urban 1.41 1.00 1.05 1.05 1.20 <1.32

Rural 3.29 2.33 2.71 2.56 2.41 <2.50

Notes 1 Industry MSS are updated annually to refl ect industry changes and encourage improvement. Only this year’s results should be compared to the MSS for 2009/10.

Vegetation management we have been able to deliver benefi ts to the community, Vegetation management is a major preventative strategy including less disruption, as well as cost savings used to improve community safety and reduce interruptions to both organisations. We are also continuing to during storms and high winds. The program continued work cooperatively with other local councils through over the past year with total expenditure of $66.7 million. established Memoranda of Understanding to remove Vegetation was maintained along 14,728 kilometres of and replace risk trees with powerline friendly trees from 11kV powerlines and 1,251 kilometres of 110/132kV our Safetree program. In some instances where removal powerlines to improve network reliability, particularly during or trimming is considered undesirable by the local severe weather events such as storms and strong winds. community, alternative solutions are being used including Our trimming techniques ensure we balance the aesthetic realignment or insulation of the overhead network. component of the trees with the responsibility to ensure We also undertook other initiatives to enable a balanced a safe and reliable electricity supply. approach to vegetation management, particularly This year, we continued the collaborative approach in sensitive areas. As a result of the installation of to carry out the program, working with local councils photoelectric cells, more than 500 kilometres of to combine our planned trimming efforts with their dedicated overhead street light powerlines were removed routine street tree pruning. By using the one contractor from the network, reducing the amount of vegetation and scheduling our programs simultaneously, clearing required near these powerlines. ENERGEX ANNUAL REPORT 2009/10 51 52 ENERGEX ANNUAL REPORT 2009/10 RESULTS BALANCED DELIVER REVIEW OPERATIONAL remains unused – but still must be maintained and paid paid and maintained be must still –but unused remains capacity this year the of rest ayear. The 100 hours than fewer for occurs only that energy for a demand to is built of supply ENERGEX’s network billion $8.8 13 cent per Approximately times. these during capacity investmentcapital to required suffi maintain tothe due exercise acostly is demand peak Meeting on. switched are conditioners air when – particularly afewhours ayear, for days afew hot on occurs demand peak Queensland, In demand. peak as known is This time. same the at electricity using people with busy very is network energy the when times peak also are there roads, our like Just built. tobe need cables underground and powerlines more energy, more use people as means, highway. That amulti-lane like is network electricity The Demand management a demand management capability. effi energy of asuite implement and network, our of reliability and utilisation capacity, the in toinvest is effi more asmarter, for avision wehave At ENERGEX, network for the future Working towards asustainable keeping is ENERGEX ways many the of one is It deterioration. pole of detection early for allows network $1.2powerlines. The of survey the million overhead aerial and poles of kilometres 15,000 around inspecting year, this continued patrols helicopter annual Our patrolsgive abird’sChopper eye view ofthenetwork ciency and distribution initiatives to encourage toencourage initiatives distribution and ciency strategy Our by2025. network electricity cient you won’t even know we’re there. The other 364 days days cient cient (demand growth). (demand times peak at demand in increase tothe compared growth) (energy network our across consumption energy overall in increase the 3illustrates Graph prices. network effi through consumers toelectricity passed be benefi the assets, network of utilisation better day. achieving By summer’s anormal on Coast Sunshine the on used power the of third one of equivalent –the forecasts demand current from 144 megawatts fi next the over reductions demand peak real toachieve is target Our Government. Queensland the from assistance funding following initiatives targeted year, signifi This strategy. management demand and conservation energy our in byinvesting approach aproactive taking are we forecast, demand peak the reduce toproactively and effi more asmarter, for vision our of part As future. the for network asustainable wedeliver ensuring in key challenges our of one remains growth this toreduce use energy customers’ infl 10 years, next the over cent per to60 40 between togrow expected demand peak With environment. the or customers for approach sustainable most the not is this times, peak these for tocater network the toexpand continue wecould While bycustomers. for fl the areas some In area. their patrolling to helicopters prior well-informed kept were Customers patrols. foot and vehicle byextensive supplemented reliable, and safe areas semi-rural and rural in supply electricity the ight path was altered at the request of residents. of request the at altered was path ight cant progress was made implementing our our implementing made was progress cant ts can ultimately ultimately can ts ve years totalling totalling ve years cient network uencingour cient cient Our demand-side initiatives include: initiatives demand-side Our Coast refer to page 76. topage refer Coast Sunshine the on program ECC the on information further year. For coming the in Queensland East South across communities toother out rolled and expanded be will program ECC The community. their for future sustainable amore tocreate action collective and individual take to opportunity the with residents the toprovide able weare together, working By Downs. Sippy and Creek fi Queensland’s launched Council, Regional Coast Sunshine the with conjunction in 2010, ENERGEX, March In programs. and services products, sustainability other or saving energy of arange towards funding for to apply groups community and schools local enables fund The benefi environmental ECC toan contribution $50 a and services conservation energy of a range an incentive receiving residents package including eligible with voluntary is program the of Membership times. these during network electricity the on demand reducing subsequently days, summer hot on cycled be to appliances energy-intensive the enable will devices These pumps. pool and/or conditioners air residents’ eligible on devices conservation energy installing we are program, ECC the Through programs. and initiatives ideas, conservation toenergy relating information and technology with areas selected in residents to provide (ECC) Communities Conservation Energy we launched year this Queensland, East South in authorities local and Government Queensland the with partnership In Project: Energy Conservation Communities growth demand and 3: Energy Graph rst ECC covering the suburbs of Mooloolaba, Mountain Mountain Mooloolaba, of suburbs the covering ECC rst Per cent 10 20 30 40 50 60 0 010 020 030 040 050 060 070 080 2009–10 2008–09 2007–08 2006–07 2005–06 2004–05 2003–04 2002–03 2001–02 Energy Growth (%) t fund. fund. t initiatives. future shaping in akey role play and structures pricing tonew responding in bycustomers faced challenges the highlight electricity, their use customers when and how understand volunteers trial and Energy Ergon ENERGEX, help will RBT costs. these manage them help to tools the desiring and costs electricity their of drivers the understand tobetter seeking customers many with trials, upcoming the in interest customer indicated has research Pre-trial periods. price low into usage discretionary toshift incentives strong offer and periods peak during consumption their tolimit how consider tocarefully users compel investigation under tariffs The summer and continue past summer 2011/12. 2010/11 the in tocommence expected are Trials periods. peak and day of time the on dependent prices electricity willing and able to to, respond and benefi are state the across volunteers whether to identify seeks RBT Brisbane, and Toowoomba Cairns, in out carried tobe trials With levels. satisfaction customer tomaintain and times peak during network electricity the on demand toreduce is structures pricing these of the impact of pricing The aim structures. new electricity tostudy Energy Ergon and ENERGEX between project ajoint is initiative (RBT) Tariffs Based Rewards The Tariffs Initiative Rewards Based Project: Demand Growth (%) t from, differing differing t from, Peak demand 15 February 2010 OPERATIONAL BALANCED BALANCED RESULTS DELIVER REVIEW 53 ENERGEX ANNUAL REPORT 2009/10 54 ENERGEX ANNUAL REPORT 2009/10 RESULTS BALANCED DELIVER REVIEW OPERATIONAL also worked hand-in-hand with the landscapers to deliver a professional and cost-effective result. result. cost-effective and aprofessional deliver to landscapers the with hand-in-hand worked also fi Our project. the for outcome staff eld practical and affordable most the achieve to Council the with closely worked staff design Our area. inthe climate and amenity the improving and shade providing streets, in the planted be to trees mature allowed This Streets. Queen and Short Lowe, along cables underground with powerlines overhead the replacing Project, Improvement Domain Public Nambour Council’s Coast Sunshine the assisted we year Nambour. This Street, Lowe Pictured: curtailment. load and shifting load switching, fuel customer generation, cogene including generation distributed cooling, and ventilation effi energy include typically Options facilitate implementation. toproactively expertise demonstrate and develop and models, commercial as well as solutions, technology cost-effective most the toidentify aims initiative The conservation and demand ma energy tofacilitate customers business with working involves initiative (C&I) Industrial and Commercial Our Industrial and Commercial Project: network. ENERGEX the and community benefi (2015–2030) of signifi fi critical the tobe considered is RTI 102. topage refer information effi use electricity to owners toassist households Queensland East South across devices and processes management energy implementing for ablueprint provide will projects These times. off-peak fi bypool used energy the shifting at aimed device (PFDM) Management Demand Filtration aPool of trial the with 2009/10, in expanded was initiative This times. peak at units conditioning air customers’ cycling 2007/08, was initiated to the impacts of assess effi of summer the in introduced trial, Change Cool Our peak demand. residential driving now are which appliances the for replicated be can systems water hot electric residential with success historic ENERGEX’s how on focuses (RTI) Initiative Targeted Residential T33). T31 and tariffs appliances fi of costs energy toreduce potential the with residents provided has and demand electricity peak to reduce helped has This Queensland. East South throughout systems water hot electric residential of load the manage to technology communications controlled remote used successfully has ENERGEX years, 30 than more For TrialCool Change Targeted Residential Project: Initiative – cant medium-term (2010–2015) and long-term long-term (2010–2015) and medium-term cant tted with energy management (through (through management energy with tted ciently within their homes. For further further For homes. their within ciently ts to both the South East Queensland Queensland East South the toboth ts ration and tri-generation, nagement based solutions. cient lighting, heating, heating, lighting, cient rst step in the delivery delivery the in step rst lters to lters ciently ciently for all of Queensland. Queensland. of all for aunifi provides vision network joint- This services. and processes products, innovative new of development the encouraging and network the wemanage how about differently tothink distributors electricity driving are needs customer Growing meter. electricity the beyond solutions toidentify customers with collaboratively the benefi tomaximise efforts co-ordinates vision shared the path, this along progressed have Energy Ergon and ENERGEX both While customers. and distributors companies, transmission generators, between co-ordination and automation connectivity, increases network intelligent An intelligent network. an towards movement the explore tofurther We propose future. the into sustainable not is distribution electricity of management traditional that recognises document The environment. demanding amore in Queenslanders of expectations future tomeet direction provides approach landmark This Queensland. in infrastructure electricity for vision network ashared to2030, Outlook Vision Network wereleased year this Energy, Ergon with partnership In network A smart curtailment. load and generation embedded involving negotiated fi The project. the todeliver place in put strategies and recruited, team aproject approved, was plan management project and case year, abusiness past the During Tariff pilot. Tariff Based aRewards of implementation the and supplier, one to accountabilities (ICT) Technology Communication asset management plans, a transition of Information fi organisations, two the between tender joint fi the included key milestones Some investment. become more effi organisations both tohelp delivered initiatives 50 than more year, with this up toramp continued Energy Ergon with initiatives Workings Joint of Implementation Delivering effi ts from new technologies while working working while technologies new from ts rst round of customer contracts have been been have contracts customer of round rst ciencies through JointWorkings through ciencies cient and reduce duplication of of duplication reduce and cient ed development outlook outlook development ed rst joint rst rst Community powerline improvement initiative

As part of our commitment to deliver balanced outcomes As we continue to expand the electricity network in between meeting our customers’ energy needs, a community focused and sustainable way, this year sustainability and the environment, this year we launched we also reached a major milestone with more than a new $8 million annual powerline improvement scheme 31 per cent of our network supplied to customers via to enhance the look of electricity infrastructure in sensitive underground cables. areas. We are now installing an average of around seven Developed in conjunction with local councils, the kilometres of underground cable for every one kilometre Community Powerline Enhancement Program (CPEP) of overhead powerline. The CPEP integrates and focuses on undergrounding or bundling existing enhances our current powerline practices making them powerlines in sensitive locations including major street more transparent and open to scrutiny by all South East shopping precincts, sensitive environmental and Queensland councils. heritage areas, locations with signifi cant vegetation, Project applications from local councils across the region high pedestrian or vehicular areas, and in communities have been assessed. Seven projects will commence abutting bays, rivers and coastlines. in 2010/11, including Brisbane, Ipswich, Moreton Bay, The CPEP is the fi rst of fi ve segments in a planned Sunshine Coast and Gold Coast. $100 million, fi ve-year program aimed at reducing The CPEP is a subsidy scheme which, in conjunction with the visual impact of existing overhead powerlines. the required 50 per cent funding by the local government The other elements include a blackspot program targeting authority, will provide annual funding for projects worth electricity poles and powerlines consistently damaged up to $8 million each year for lower voltage powerlines during traffi c accidents. up to 11kV.

An independent community committee will administer the program and prioritise the projects. The remaining four components of ENERGEX’s new integrated powerline improvement program are also expected to commence during 2010/11. ENERGEX ANNUAL REPORT 2009/10 55 New designs deliver a balanced outcome

The need to build electricity substations is news that most The shift in approach refl ects the process change over recent neighbourhoods do not always accept enthusiastically. years, with the design stage now completed in-house. This task is becoming easier thanks to the innovative “We have more control of the entire process. Our team substation designs being created by the architects in the engages and gathers feedback from a number of key bodies Network Engineering team, who are focused on good including the community, local councils, government, local urban design. businesses and other key stakeholders,” Phil said. Principal Architect Phil Scorey said, “Gone are the days With the new Sustainable Planning Act 2009 introduced in where a ‘one design fi ts all’ approach is used for every December 2009, replacing the Integrated Planning Act 1997, substation in every location”. there has been a greater focus on providing more information up front to local councils and communities, and ensuring “We are not only designing reliable, functional buildings designs are environmentally sustainable. which are cost-effective, but they also have a more aesthetically pleasing exterior that contributes to, “After carrying out extensive research in the community and rather than detracts from, the surrounding environment. area, we draft the fi rst sketches which start to address the Standard designs are adopted in compatible relevant codes. These are presented to the local council and environments to reduce construction time,” he said. residents, and modifi ed where possible while continuing to meet ENERGEX electrical standards.” “Along with the electrical and safety requirements, there are a number of aspects we take into consideration and “We ensure we select materials which have a long life span, can manipulate to ensure compatibility with the local are environmentally sustainable and are low maintenance,” neighbourhood. Phil said. “We aim to continue to enhance the current streetscape As well as drawing architectural impressions to give and local amenity through the scaling and detailing of the stakeholders an indication of the fi nished product, Phil and building, selection of colours, style, vertical and horizontal his team also carry out sun and shade diagrams to ensure design elements, light and shade elements, noise the community, high-use areas and other buildings are reduction features and landscaping to reduce the overall minimally affected by shading. mass of the buildings. The character of existing homes “We try to minimise potential impacts from overshadowing and buildings is respected and complemented through through the careful arrangement of electrical equipment and the selection of building materials and architectural the articulation of varied external design elements,” he said. design,” Phil said. In 2009, Phil sat on the jury for the Public Architect Awards for South East Queensland. He said it is “forums and events like these that allow us to stay up-to-date with architectural trends and to lead the way in making our electrical infrastructure more acceptable to the community”. It is clearly evident from looking at just a few of the recent designs that these almost ‘habitable’ substations are defi nitely setting a great example.

Pictured: Architectural sketches of Springfi eld Central Substation (top), Coorparoo Substation (centre) and Merrimac Substation (bottom). ENERGEX ANNUAL REPORT 2009/10 56 – peak demand. demand. – peak days summer hot on use electricity rising rapidly targeting energy conservation and demand management program amulti-streamed included also model funding The fi next the over network the $1.634a further billion ($2009/10) to and operate maintain $5.783 ($2009/10) billion investment and for capital is determination AER approved the in Included of demand. electricity management the in assist that alternatives non-network sustainable economically of development the support will and Queensland East South in infrastructure electricity in investment future for certainty provided has It fi the for The fi Queensland. East South of environment operating changing the address and assets, replace and renew security, and reliability growth, meet to wecontinue toensure developed proposal, funding fi ENERGEX’s 2010, approved May In AER the funding Future nal determination sets out the allowed revenue revenue allowed the out sets determination nal ve years from 1 July 2010 to 30 June 2015. 2010 June 1July to30 from ve years ve years. years. ve ve-year ve-year allocation guidelines. cost new of adoption and services ENERGEX’s of areclassifi schemes, incentive performance three of implementation the see will distributors electricity of regulation the in consistency tonational move The Rules. Electricity National the under established framework, regulatory national tothe ENERGEX of regulation economic the of transition successful the in milestone AER’s fi The increase in OPEX. with the previous fi compared when CAPEX, required in increase cent per a 58 refl revenue increased The sound. tobe management and planning tonetwork approach ENERGEX’s found AER the proposals, regulatory ENERGEX’s reviewing In revenue approved to 2015. the into factored also were materials and labour of cost in increases real and standards reliability higher capacity, for demand population, in growth Continued decade. the in earlier growth strong following networks distribution toaugment tocontinue ENERGEX for need the recognise AER’s fi the in for allowed revenues The power upgrades for the Kelvin Grove community. Grove Kelvin the for upgrades power nal determination also marked a signifi marked also determination nal ve-year period, and a 41 per cent a41 cent and per period, ve-year Pictured: Our fi Our Pictured: undertaking crews eld nal determination determination nal cation cant ects OPERATIONAL BALANCED BALANCED RESULTS DELIVER REVIEW 57 ENERGEX ANNUAL REPORT 2009/10 58 ENERGEX ANNUAL REPORT 2009/10 RESULTS BALANCED DELIVER REVIEW OPERATIONAL 1 ENERGEX’s Summer and Network Preparedness Plans are available at the ENERGEX website website ENERGEX the at available are Plans Preparedness Network and Summer ENERGEX’s 1 fi the in crews their supporting about and out tobe able were Coordinators Resource the aresult, As work. the issuing hubs individual awayfrom ashift Department, Despatch a Central Signifi out. carried was waywork the in a change saw season 2009/10 the decades, in periods weather severe most the of one as regarded widely was which season, summer previous the of review operational the Following approach A centralised delivery: service of areas major four on focused plan 2009/10 The events. weather tosevere response our and network the of resilience the toimprove Plan Preparedness we season, invested million our through Summer $460 summer 2009/10 the for preparation In network. power signifi cause can winds high and fl storms, including events weather Severe preparedness Summer preparedness program our through conducted work to the due largely achieved was result performance network apositive this, Despite total. in customers 250,000 than more affected which of lightning strikes, fl strikes, lightning of thousands hailstones, brought that storms included These affected. were customers 5,000 than more where events weather had impact. In localised total, there were seven major which Queensland East South across events of number a were there season, storm year’s this in experienced not was north, Brisbane’s hit which storms of line 2008 asignifi While ■ ■ ■ ■ ■ ■ ■

(www.energex.com.au/network/electricity_network.html). required. revisits and rework of amount the in a reduction regions all across use resource better enabled which priority work of view’ a ‘global work fault of dispatch the for accountability of point a single during summer. issues supply electricity of informed customers keep potential to impact on customers’ supply electricity the have that to emergencies respond and identify events on customers’ supply electricity manage and minimise the impact of weather extreme supply electricity customers’ of outages to minimise summer upcoming the for network supply the prepare cantly, all emergency jobs were dispatched from from dispatched were jobs emergency all cantly, cant weather event such as the November November the as such event weather cant eld. Further benefi ashfl 1 . ooding and damaging winds, winds, damaging and ooding cant damage to any toany damage cant tsincluded: oods,heat of storm season. storm of commencement tothe prior FFA jobs ‘dummy’ practice of issuing the and crews, standby for training refresher system of provision the FFA, through work managing and issuing for process astandardised of application and development the of FFA of aresult is use the in increase year’s This (GPS). system positioning a global and mapping network road using route possible fastest the along guided and job tothe dispatched tobe crew available closest the allow facilities navigation satellite The vehicles. totheir hubs the from directly orders of batch next their of details receive Crews computers. linked satellite via communication instant FFA allows “Toughbooks”. (FFA) or Automotion Force Field via network the tomaintain work (OPEX) expenditure operating our toissue year, wecontinued This Telling toughbooks on us to the community. the to assistance and information for a‘one-stop-shop’ is Centre Communication Mobile Command Forward Our Pictured: locally. working crews ENERGEX for ahub and basic amenities, emergency mobile power generation, advice, safety data, computer-based of arange including community, tothe assistance and information provided it frontline, the on Used season. summer previous the of review operational an from key of learnings aresult as developed initiative an was facility purpose-built The Queensland. East South hits event weather a major when response possible best the with community the provides which Centre, Communication Mobile Command Forward new the welaunched 2009, July In centre New mobile to homes and businesses affected by severe weather events. weather bysevere affected businesses and homes to fi power Our Pictured: restore to clock the around worked crews eld 59 ENERGEX ANNUAL REPORT 2009/10 60 ENERGEX ANNUAL REPORT 2009/10 Pictured: Our fi Our Pictured: Grove. inKelvin pole apower replacing crews eld ■ ■ ■ ■ ■ ■ ■ ■ ■

OUTLOOK 2010/11 for 2011/12.for projects of aschedule develop and proposals assess councils, local from Interest of Expressions for call Bay. We will Moreton in one and Brisbane in two Coast, Sunshine and Coast Gold the on three including The fi 2010. by 31 August Plan Preparedness Summer and Plan 2010/11 the Management release Network and develop We will and strategic procurement and logistics areas. areas. logistics and procurement strategic and management asset the in 2010/11 in initiatives including implemented be will phase next The savings. cost effi toachieve continue will Energy Ergon with relationship and project Workings Joint The continue. will PoW IP under initiatives Improvement tariffs. electricity for direction and policy future on position our inform help will trial the from gathered Data signals. pricing todifferent respond customers how explore 2010 late in to atrial launch wewill 53), page on (detailed initiative Tariff Based Rewards the of part As effi energy and tri-generation cooling, and ventilation heating, curtailment, load customer including requirements, business individual meet which solutions facilitate 54), wewill page on (detailed initiative Industrial and Commercial the Through times. peak during use energy manage and conserve help which solutions energy tofacilitate customers industrial and commercial with together towork continue We will continue. will device PFDM the of trial the and Council, Shire Redlands the including established, be will Communities Conservation Energy Further consumption. their toreduce customers assisting and growth demand future the in areduction towards working Strategy, Management Demand our of part as initiatives management demand and conservation energy todeliver tocontinue We plan to$342 and operate million-plus the maintain network. In 2010/11, we to plan invest $1.02 around and a further network, to billion on upgrades the electricity 2011/12. PoW for adetailed prepare and 2010/11 budget, the within deliver and We will time PoW on MSS. industry the exceeding security, and reliability network for standards service our toimprove aim We will rst seven selected projects under the Community Powerline Enhancement Program will commence, commence, will Program Enhancement Powerline Community the under projects selected seven rst cient lighting. cient ciencies and ciencies OPERATIONAL BALANCED BALANCED RESULTS DELIVER REVIEW 61 ENERGEX ANNUAL REPORT 2009/10 We fi nd ways of impressing our customers at every opportunity so they tell others about their positive experiences. ENERGEX ANNUAL REPORT 2009/10 62 impress our customers to with dobusiness us. Make it easy relevantand information. Provide customers only have to askonce. as amatter of urgency –customers Own andrespond shoes. –putourselves inand need their Anticipate customers. to ENERGEX deliver onitspromises outof ourwayGo would expect. smile –provide we the service ways Find WHAT DO WE exceeding customer expectations in service and energy supply. and energy in service exceeding customer expectations or meeting to committed Weare focus. our are Customers LIVING OUR VALUES to make ourcustomers what customers want for customers to problems to help help to with timely IMPRESS OUR OUR IMPRESS OPERATIONAL CUSTOMERS REVIEW 63 ENERGEX ANNUAL REPORT 2009/10 IMPRESS our customers

OPERATIONAL KEY OUTCOMES As a customer-centric organisation, we strive to maintain open, honest REVIEW and regular communication with our customers and communities. IMPRESS OUR 2009/10 Enduring and positive relationships will ensure we proactively understand CUSTOMERS ■ Established Queensland’s and respond to customers and their energy related choices. By working fi rst Energy Conservation together we can create sustainable long-term solutions. This is how we will Community impress our customers.

■ Contact Group continued to deliver award winning service Award winning customer service

■ Maintained high customer In July 2009, our Customer Contact Group was once again recognised for satisfaction levels achieving its award winning service at the Australian Teleservices Association Awards, a Community Regard Index taking out Contact Centre Manager of the Year and Best Customer Service of 64 per cent (2009/10 target: Representative. The awards recognise achievements of the highest level 63 per cent) within the call centre industry. Our four-year consecutive state and national success demonstrates the quality of service, support and customer care ■ Held 47 community provided to the community. consultation events In total we responded to 419,000 customer enquiries via telephone, email, ■ Achieved a Corporate letter and fax (2008/09: 390,000). We exceeded the target of 70 per cent of Responsibility Index score all calls to our general enquiries number being answered within 20 seconds, of 75.32 per cent for 2008/09 reaching almost 75 per cent. In addition, our Customer Contact Group (2007/08: 58.5 per cent) received more than 436,000 loss of supply calls (2008/09: more than 500,000) ■ Continued to support South and more than 43,000 emergency calls (2008/09: 38,000). East Queensland communities While we continue to achieve these high standards, ongoing improvement through a $1.4 million remains a focus. The Customer Contact Group began trialling a new initiative sponsorship program called Remote Response which will see Contact Group standby staff being ■ Continued to advocate able to log in and work from home when called upon during storms or large alternative sources of energy scale outages. The overall benefi t to our customers would be shorter waiting in our communities, including times during the early stages of a high call volume event. solar power which saw a connection increase of 500 per cent.

Pictured: Our commitment to customer service has resulted in many accolades for our Customer Contact Group. ENERGEX ANNUAL REPORT 2009/10 64 OPERATIONAL Customer satisfaction remains high ■ Service performance – as demonstrated in Graph 4, REVIEW service performance highlights customers who have To keep our fi nger on the pulse of our customers’ needs IMPRESS OUR had direct contact with us have a signifi cantly higher and aspirations, we engage an independent research CUSTOMERS company to assess customer satisfaction, perception perception of our performance than the greater regarding our delivery of service to customers who have community. direct contact with us, and the community’s perception ■ Community Regard Index – is our key performance of ENERGEX acting as a “good corporate citizen”. This measure for community, included in our Statement research assists us to understand and improve our of Corporate Intent on page 12. This index considers performance and service delivery. a broader set of community and sustainability related factors used to track our overall performance Our three measures include: for community and customer related matters. For ■ Reputation – as demonstrated in Graph 4, customer 2008/09, we achieved a Community Regard Index satisfaction levels over the past two years have of 64 per cent (2009/10 target: 63 per cent). remained consistently strong with reputation again rating near the top 10 per cent of utilities. Understanding what our customers expect now and in the future plays a signifi cant part in our strategic planning. For further information on our customer research refer to page 100.

Graph 4: Customer satisfaction results

100

90

80

70

60

50

Per cent 40

30

20 63%: 51%: 43%: 10 Top 10% Top 33% Mean utilities utilities utilities 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010

Reputation Service performance

Notes Benchmarking applies to reputation only. The questions used to derive results between reputation and service performance vary slightly. However, it does indicate direct contact leads to a higher engagement score with customers. Source: Taylor Nelson Sofres (TNS) research company ENERGEX ANNUAL REPORT 2009/10 65 10 years of customercare The responsiveness focus encouraged customer feedback at each of our service interactions, either In 2010 ENERGEX’s customercare program celebrated through our Customer Contact Group or following service its 10th anniversary following a decade of developing, visits. A new Customer Feedback Card available from encouraging and recognising excellent customer fi eld staff and contractors was introduced to encourage service in ENERGEX. In keeping with previous years, the customers to provide feedback. OPERATIONAL customercare program emphasised a number of attributes REVIEW of our service brand and the focus for 2010 was in the The Customer Contact Group continued to use our IMPRESS OUR areas of training, consistency and responsiveness. formal complaint system and the results were formulated CUSTOMERS monthly to guide service improvement initiatives. A focus The training focus saw an emphasis on customercare of the program was the use of positive feedback as a tool induction training for new employees, apprentices and for reinforcement of good behaviour. This complemented contractors, and refresher training for existing customer our existing program driven by the correction of customer service employees. complaints. More than 100 apprentices and 390 contractors completed We continued to reward and recognise staff and this training which was well received, with some of the contractors who provided capable, progressive attendees advising: and caring customer service. Approximately “The subject matter was great and will be 200 customercare award recipients were invited to an excellent tool to use.” the 10th annual awards event to celebrate exceptional “It has already made me think more in the way internal, external and contractor customercare. I deal with customers.” “Examples are used during session to help me ustom r busines At ENERGEX we value our customersaluable in andimproving recognise ou that to understand the importance of customercare the customer feedback is most valuable in improving for our business. plaints areAt ENERGEXessential we valued our our customers and recognise that out what we (an to our business.” Both compliments and complaintscan lea arecustomerrn abessential feedback for the is most valuable in improving our business. ENERGEX business so weENERGEX) can learn about are doingwhat wewell (and and ouralso Both compliments and complaints are essential for the contractors who represent ENERGEX) are doing well and also ENERGEX business so we can learn about what we (and our The focus on consistency ensured the standard of complaint what we can improve upon. pliment or l com contractors whoy via represent emai ENERGEX) are doing well and also or alternaalternativelytivel via email ENERGEX customer service continued to meet both our To register your feedback,13 12 compliment2 53 what orwe complaint can improve upon. please contact us on om.au To register your feedback, compliment or complaint [email protected] internal and external standards. Each and every customer please contact us on 13 12 53 or alternatively via email interaction with ENERGEX should be consistent and meet [email protected]

our customers’ expectations. Effectiveness of this program 8060 23.02.2009 was supported through our customer survey, and the 8060 23.02.2009 employee and contractor audit program. The analysis of Pictured: Customer Feedback Card – A focus of the program these results enabled us to respond to problem areas and was the use of positive feedback as a tool for reinforcement to constantly improve and maintain our service levels. of good behaviour. ENERGEX ANNUAL REPORT 2009/10 66 are not met: not are standards service following the if customer Table tothe 5) afi topay required We are customers. bysmall received service of timeliness to the relation in provide must specifi Code) (the Code Industry Electricity Queensland The Guaranteeing goodservice categories. eight the across awards quality received suppliers year, seven This contractors. and suppliers byour achievement outstanding recognise and 21 years for running been have Awards Quality Supplier ENERGEX The paper. photocopy tosupplying network the maintaining and building from everything with us toassist services and goods of suppliers 2,000 around on We rely tous. aservice supply that organisations external of arange from assistance effective requires service acustomer-focused Providing top our suppliers Recognising 1 “Planned interruptions” for business and residential this year was categorised under customer service related matters matters related service customer under categorised was year this residential and business for interruptions” “Planned 1 Notes ■ ■ Table 5: GSL claims paid by category and entity source Table entity and by 5: paid category claims GSL

GSL EVENT S OA ,1 5 ,2 3 3325 93 325 633 93 1,724 631 958 1,817 1,724 956 1,817 GSL TOTAL Total customer service –residential interruption Planned alr orcnet124216292 193 1 131 26 26 41 289 137 162 146 1,414 126 482 138 293 172 1,440 167 Planned interruption – business Missedto attend failure complaint– water Hot toreconnect Failure Wrongful disconnection connection New Customer Service TotalReliabilityReliabilityReliability scheduled reliability appointment – – interruption interruption 020200 15151515 0 0 frequency duration 020200 000000 rather than reliability as in the previous year. The 2008/09 total fi total adjusted. 2008/09 year. The been have previous the in gures as reliability than rather not connecting or reconnecting electricity on time on electricity reconnecting or connecting not acustomer with appointment an keeping es Guaranteed Service Levels (GSLs) that we that (GSLs) Levels Service Guaranteed es nancial rebate (detailed in in (detailed rebate nancial 1 1 Total GSL claims paid ENERGEX related Retailer related Retailer related ENERGEX paid claims GSL Total 080 091 080 091 080 2009/10 2008/09 2009/10 2008/09 2009/10 2008/09 12 12 0 0 26 21 26 21 222200 000000 and 325 to the retailers. 325 tothe and toENERGEX attributed 633 with stakeholders relevant the between apportioned been have claims All two. remaining the initiated matters reliability and claims GSL 956 generated issues related service Tablein 5.Customer displayed as paid were claims GSL 958 of atotal year this During retailer. or distributor bythe caused was error the whether of regardless program GSL the of administration the for accountable are distributors Electricity ■ ■ ■ ■ ■

customers, in one fi rural for 16 interruptions than more or customers, urban or CBD for 10 interruptions than more customers CBD for hours eight or customers, rural or urban for 18 hours than more of toelectricity interruption interruption power aplanned of notice days business two least at togive failing agreed) otherwise (unless day business one within supply water hot toreconnect failing acustomer disconnecting wrongfully nancialyear. IMPRESS OUR OUR IMPRESS OPERATIONAL CUSTOMERS REVIEW 67 ENERGEX ANNUAL REPORT 2009/10 68 ENERGEX ANNUAL REPORT 2009/10 CUSTOMERS OUR IMPRESS REVIEW OPERATIONAL Code will be implemented on 1 July 2010, 1July including: on implemented be will Code tothe changes major three (QCA), Authority Competition Queensland bythe program GSL the of areview Following stakeholder letters, media releases and advertising. advertising. and releases media letters, stakeholder fl newsletters, including Queensland, East South across 150 projects almost on communications public essential and effective with (PoW) Work of Program expanding our supporting in bar the toraise We continued and upgrades maintenance network Communicating and engagement. experience customer’s the toenhance designed –all feedback and generation ideas discussions, for aplatform provides dialogue two-way The communications through channels such as YouTube. our Twitter, disseminate as and such forums online in involved actively now weare phones, mobile for Protocol Application Wireless and presence online toour Adding communities. digital and media social the reach to further This year we have expanded our communication channels create. may work any inconvenience the possible, as much as minimise, and benefi amutually toproduce community the with relationships toestablish endeavour work, our of aspects all through communications, Our proximity. close within living communities the on have can activities aware of the impact our maintenance and construction weare businesses, and lifestyles community’s the power to network electricity Queensland’s East South maintain and toconstruct weneed While neighbour. agood to be aim and community the of apart as ourselves We see Engaging ourcommunity joint approach. aconsistent toensure Energy Ergon with closely working been We also have Code. tothe amendments tofulfi required changes technology information and process people, the deliver will project this of scope The changes. these of implementation timely the toensure 2009 November in ENERGEX at commenced project GSL Auto an requirements new To these meet ■ ■ ■

for processing claims. processing for limit time month aone have entities distribution aclaim tolodge limit time month athree have customers automatically, paid not is aGSL where paid automatically identifi be should GSLs of types seven all cialoutcome edand l the the l yers, yers, previous projects in the area. the in projects previous or health impacts, stage, project political climate and environmental social, perceived scale, project sensitivity, by assessing various elements including environmental needed tools and engagement of level the We evaluate participation. active and consultation – information, engagement of levels distinct three recognises model engagement our stakeholders, and communities our with interaction desired To the achieve requirements. statutory minimum our exceed also but consultation, of level appropriate the provide only wenot ensure to Manual the in out set processes our improving on wefocused year This projects. infrastructure community around communication effective toensure standards or legislation State and policies key of ENERGEX number a integrates Manual Consultation Community Our achieved. were goals common and stage early an from involved were parties affected all that toensure groups organised and providers, infrastructure other councils, local representatives, elected including key stakeholders other engaged We also designs. landscape and revegetation in assisting also and poles specifi the negotiating example, for process, design the into input had Communities Table in 6. shown projects infrastructure major several on undertaken were events, 47 public than more including activities, Consultation needs. community with line in program infrastructure an todeliver commitment our of part are efforts consultation Our substations. and powerlines voltage high new tobuild required often weare expansion, regional rapid and consumption power domestic and commercial byincreasing driven demand, customer in growth with step in tokeep order In 69. Table in page 6, detailed as more community consultation programs than ever before, out We carried undertaken. was stakeholders relevant all with engagement in-depth proactive, that to ensure Queensland East South across activities consultation community our westepped-up 2009/10 In community. their regarding decisions in involved and well-informed tobe expectations increasing customers’ appreciate As a responsible organisation, we recognise and infrastructure major on Consulting c location of power power of c location and feedback, from any engagement on an ongoing basis. outcomes discussions, including data, access and record to organisation the across users enables database The program. database engagement stakeholder a new on trials initial wecommenced year this activities, consultation and engagement our record and To monitor engaged. regularly were stakeholders toensure year the throughout used were tools engagement of 71, arange page Table in 7on illustrated As relationship. or aproject of life entire the throughout enhanced and tracked monitored, tobe stakeholders various across communication enables strategy and approach Management Stakeholder Our Focusing onourstakeholder relationships Table 6: 2009/10 projects consultation major RJC OSLAINATVTE PROJECT STAGE CONSULTATION ACTIVITIES 110kV circuit single Lockrose to Abermain PROJECT 110kV circuit double Inlet to Hays Southpine circuit 132kV double Project SunCoast Power 110kV circuit double to Tugun Mudgeeraba 110kV circuit single Jimboomba Loganlea to ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

approval. Community Infrastructure Designation Meetings with landowners Public feedback periods days information Community Stakeholder briefi (IAR) Report Assessment Initial Group. Reference Community Meetings with landowners (ongoing) Public feedback periods 2010) April 2008; May and (March days information Community Stakeholder briefi (ongoing). Group Reference Community Meetings with landowners (ongoing) Public feedback periods 2010) April 2008; May and (March days information Community Stakeholder briefi Meetings with landowners (ongoing). Public feedback periods 2010) March 2009; (May days information Community Stakeholder briefi Meetings with landowners (ongoing). (November 2009) days information Community Stakeholder briefi ngs ngs(ongoing) ngs(ongoing) ngs ngs(ongoing) range of opinions, needs and expectations. and needs opinions, of range the board on taking expectations, and concerns issues, community current on company tothe advice on-going provides and discussion for aplatform enables ECCC The organisations. justice social and government state planners, industry, government, local of representatives together bringing (ECCC) Committee Consultation Community ENERGEX the established wealso year This stage. some at stakeholder that with contact have will who people our of all across expectations and relationships of status the on awareness of level a consistent enables It ■ ■ ■ ■ ■ ■ ■

community and stakeholder feedback. stakeholder and community following route proposed alternative on commence will Report Assessment Initial feedback. public for (IAR) Report Assessment Initial Final of Release community feedback. incorporating Report Assessment Initial Completed Supplementary 2010.August released tobe feedback public for Environmental Impact StudyDraft (EIS) Construction activities commenced. activities Construction powerline. new the of construction the toundertake Contractor Principal the Transfi fi for ofReadvertising land designations nal position of proposed route. proposed of position nal eld Services appointed as as appointed Services eld IMPRESS OUR OUR IMPRESS OPERATIONAL CUSTOMERS REVIEW 69 ENERGEX ANNUAL REPORT 2009/10 70 ENERGEX ANNUAL REPORT 2009/10 at the Royal Queensland Show, provides further opportunities to engage with residents. with engage to opportunities further Show, provides Queensland Royal the at Arena Community ENERGEX the including events, community Queensland East ofSouth sponsorship Our Pictured: kept informed throughout the transition. the throughout informed kept and 2009 December throughout Portal Web new to the transferred successfully 2were Form Online the utilised previously who contractors Electrical Portal. Web new the on up set accounts their and provided was training where contractors electrical to10 selected made were submission. of As part our engagement plan, site visits 2 Form Online former the replacing 2009, December early in released was Portal Web EWR new The Portal. Web (EWR) Request Work Electrical the of release the as well as processes toour changes in them byengaging contractors electrical with relationship working astrong maintain and tobuild continued team Management Stakeholder Contractor Electrical The contractor stakeholderElectrical management achieved. to be goals common enables that one and activity essential an is ofstakeholders range our with ofrelationships maintenance and development The Notes Table 7: Stakeholder engagement 2009/10 ei Media briefi Media briefi changes industry and Network Our employees including environmental groups community, and Customers stakeholders Community Briefi customers Large contractors and Suppliers Powerlink generators, electricity and distributor transmission Electricity retailers Electricity Business customers Energy Ombudsman – 2009/10 Plan Corporate and 2009/10 Intent Corporate of Statement AER, –QCA, Regulators 2009/10 DURING ENGAGEMENT OF METHODS KEY and councils Government departments Ministers Shareholding Government stakeholders STAKEHOLDERS interstate visits, teleconferences, satisfaction surveys. satisfaction teleconferences, visits, interstate days, weekly group meetings. group weekly days, group division and TeamShare including updates divisional emails, intranet, organisation, entire tothe open presentations topical surveys, workshops, consultants, other and supervisors managers, via communications forums, leaders’ newsletters, group and article Connections including newsletters update, CEO email, Board’ ‘Bulletin daily including updates Regular Committee. Consultation Community ENERGEX conversations, verbal and centre call forms, feedback and surveys consultations, face-to-face and forums meetings, sponsorships, presentations, tools, media website/social letters, fl newsletters, Community communications. written and verbal Awards. Quality Supplier briefi and workshops Meetings, communications. and planning joint issues, network and planning regarding communications written and face-to-face Verbal, Ombudsman Group. Energy the on represented is ENERGEX responses. written providing and meetings face-to-face attending forums, public at presenting manner, transparent and open an in consultants its and AER the with engaged actively ENERGEX process, regulatory the Throughout determination. to2010–15 respect in AER tothe proposals regulatory Submitted issues. relevant on QCA tothe reporting ongoing and submissions Provided ENERGEX CommunityConsultation Committee. communication, verbal and letters organisation, each of levels various at briefi and meetings Understanding, of Memoranda days, Information CEO. and Chairman the with meetings including key issues on briefi regular reports, performance 2014/15, quarterly ngs, meetings, written agreements, policies, letters, quarterly quarterly letters, policies, agreements, written meetings, ngs, ngs, meet-and-greet days, media releases/alerts, interviews. releases/alerts, media days, meet-and-greet ngs, the Web Portal offers. Portal Web the benefi the bycommunicating contractors electrical those toengage continuing ENERGEX with fax, via submitted been have EWRs of cent 24 per remaining The received. EWRs all of cent 76 per contractors, byelectrical Portal Web the via submitted been have EWRs 28,000 than more implementation, its Since information. up-to-date with clients their toprovide them allows also and updates for us tocontact need the minimises information tothis access Having SMS. and/or email via updates status receiving as well as tracked tobe jobs their enabling work, their effi an to be proving contractors by accepted widely been has technology new This yers, brochures and fact sheets, advertisements, advertisements, sheets, fact and brochures yers, ngs, letters, contract development, contract ngs, letters, ngs, workshops, meetings, cient way to manage waytomanage cient ngs and updates and ngs ngs ts IMPRESS OUR OUR IMPRESS OPERATIONAL CUSTOMERS REVIEW 71 ENERGEX ANNUAL REPORT 2009/10 72 ENERGEX ANNUAL REPORT 2009/10 CUSTOMERS OUR IMPRESS REVIEW OPERATIONAL 1 Further information can be found in our current Sustainability Report at www.energex.com.au/about_energex/sustainability_repo at Report Sustainability current our in found be can information Further 1 framework. tothe transition the through customers these with toliaise continue will and changes, tothe regard in information toprovide correspondence, direct and forums customer through customers, affected customer’s ongoing network charges. We have engaged the of part as than rather upfront, customer bythe for paid be will connection the of cost the Also, provider. service adifferent or connection, their to construct ENERGEX touse choice the have 1MV.A will than greater demand maximum or annum per 4GWh over consumption with customers particular, In network. toour customers large connecting when ENERGEX for changes of anumber 2010, 1July involves from apply to AER, the from determination regulatory new The customers large withour Communicating cent. per 65 of level satisfaction target its above slightly scored ENERGEX survey, latest the In performance. ENERGEX’s on opinions retailers’ togauge ayear twice conducted also is survey Asatisfaction changes. process proposed in retailers engage toactively teleconferences periodic and retailers, and byENERGEX faced being issues major the todiscuss visits interstate quarterly including retailers, with contact regular maintains ENERGEX period. asix-month over conducted were planning and meetings joint The connections. 40,000 approximately identifi participant retailer the changing involved This (CIS). System Information Customer new to their system alegacy from customers of migration the in AGL year, weassisted the During customers. of 12 cent per approximately with retailer largest next the is Energy Integral area. distribution ENERGEX’s in operating retailers largest the tobe continue AGL and Origin appropriately. handled were Jackgreen involving transfers and orders service open that and Origin to transferred seamlessly were customers ensure provisions.Resort Signifi Last of Retailer the under Energy toOrigin transferred consequently all were who suspension, their of time the at area distribution ENERGEX’s in 17,000 customers approximately had Jackgreen 2009. 18on December Market Electricity National the in trading Ltdfrom Pty (AEMO)suspension of Jackgreen (International) Operator’s Market Energy Australian the was year the of signifi most However, the entrants. small new of anumber including 2009/10, during retailers electricity with towork continued ENERGEX with retailers relationships effective Maintaining cant effort was involved to to involved was effort cant cant retailer event eron to oversee the sustainability framework and strategy and framework sustainability the to oversee Committee Steering Sustainability the and improvements, monitor and torecommend business the of areas all from byrepresentatives formed Group, Working Responsibility and Sustainability aCorporate of formalisation the included year the throughout implemented initiatives Supporting cent). per (2007/08: 58.5 cent per 75.32 of score aCRI achieved ENERGEX year This (GRI). Initiative Reporting Global the and (CRI) Index Responsibility Corporate –the strategy business the with line in performance responsibility corporate improve and tomeasure programs two uses ENERGEX Currently, stakeholders. and communities customers, toour service sustainable and abetter toprovide –ultimately practices business our toimprove feedback and guidelines provide which programs reporting and measuring in participates ENERGEX operations, business our improve and todeliver continue we To ensure strategies. term long and operations daily our of heart the at lies outcomes balanced and sustainable Delivering citizen. corporate agood as community the in role our in pride wetake organisation, acustomer-centric As social responsibility Focusing oncorporate standards. service customer and reliability planning, investment as such areas in processes making decision business informs ultimately research The choices. related energy their and customers understand to better data valuable tocapture us allow will strategy the within Initiatives sustainability. network increased achieving in toassist decisions investment and planning network drivers, customer between link aclear provides which Strategy Customer our toexecute wecontinued year This Strategy Customer our Executing helicopter patrols and careers in the electricity industry. industry. electricity the in careers and patrols helicopter ENERGEX Safetree, environment, the and ENERGEX energy effi safety, electrical industry, tothe changes and electricity of history the including subjects numerous on present who experts industry 18 We have now ENERGEX Queensland. East South throughout groups tocommunity charge of Program celebrated fi Speakers Community ENERGEX The sustainability. and electricity around issues various on knowledge valuable on bypassing is communities our wesupport ways the of One Educating the community ciency, renewable energy, work in the community, community, the in work energy, renewable ciency, ve years of providing speakers free free speakers providing of ve years 1 rt.html . South East Queensland receiving the online newsletter. online the receiving Queensland East South over all from members registered year, with this recorded been have visits site 230,000 than More children. for website On Switched popular our is used tool education key another sponsorships, targeted and activities, engagement and consultation website, our as well As more sustainable network. asmarter, achieve ENERGEX tohelp trials and initiatives targeted several supports This times. peak during electricity on demand the reduce ENERGEX to help community the encouraging demand, peak of issue the fi our delivered We also locations. key geographic in audiences high-risk toinfl aim the with network, the around safety for approach atargeted tobuild Queensland associated with incidents electrical in South East fi the For powerlines. fallen away from tostay and prepared to be need the reinforcing summer, with associated dangers real the tohighlight Brisbane northern in storms 2008 November the used campaign education preparedness summer Our advertising. our through community the weengage how in approach afresh saw also year This councils. local and to businesses groups community and children school from audiences of toarange given were year, 25 presentations This provided an opportunity for community and stakeholder discussions and feedback. and discussions stakeholder and community for opportunity an provided Festival Inlet Hays the at stand information Acommunity Pictured: rst time, ENERGEX was able to utilise statistics statistics toutilise able was ENERGEX time, rst rst public education campaign addressing addressing campaign education public rst uenceknown and the Ipswich Hospital Foundation. Hospital Ipswich the and Ambulance John St Foundation, Health Coast Sunshine Foundation, Children’s Starlight the included have sponsorships these of Some organisations. charitable and groups community local of sponsorship with assist to Queensland East South of regions different in staff operational and hubs our toencourage We continue working in. weare areas the in investment community to ensure projects local with aligned closely more be will structure funding sponsorship year, our this AER bythe Plan fi our of approval Following effectiveness. their toensure budgets and sponsorships existing monitors and proposals key sponsorship discuss to month second every meets committee The business. the across from managers senior of consisting and Offi Executive Chief byENERGEX’s led Committee Sponsorship byour monitored closely is policy The effi environment/energy and education safety, communities, local around initiatives targeted towards investments our wefocus policy, Sponsorship our in outlined As with an investment of $1.4communities million. Queensland East toSouth support and funding to provide continued program sponsorship our 2009/10, Throughout the community Supporting ciency, as listed in Table 8, page 74. Table in page 8, listed as ciency, ve-year Network Management Management Network ve-year cer IMPRESS OUR OUR IMPRESS OPERATIONAL CUSTOMERS REVIEW 73 ENERGEX ANNUAL REPORT 2009/10 We’re proud to be part of your community. ENERGEX understands the importance of local organisations within your community. That’s why the ENERGEX sponsorship program is supporting the following local groups: OPERATIONAL ENERGEX Playasaurus Place Reflect on the beginnings of life REVIEW on this planet and how you can make smart energy choices for IMPRESS OUR the future. www.southbank.qm.qld.gov.au CUSTOMERS

For more information about the ENERGEX sponsorship program and how we’re helping communities, energex.com.au www.landcareonline.com.au visit

ENX0129_02

Pictured: We sponsor a range of initiatives focused around local communities, safety, education, environment and energy effi ciency.

Table 8: Sponsorship activities for 2009/101

LOCAL COMMUNITY ENERGY EFFICIENCY/ SAFETY EDUCATION INITIATIVES ENVIRONMENT

■ Lord Mayor’s ■ Queensland Cancer ■ Bright Futures program ■ Earth Hour 2010 Community Trust Council: SunSmart – sponsoring high Day – raising awareness school students’ and funds to fi ght skin attendance at cancer Committee for the Economic Development of Australia (CEDA) forums

■ Ipswich Festival ■ Rural Fire Service ■ Queensland Museum – ■ SEQ Catchments ENERGEX Playasaurus Place

■ Dingo Creek Festival – ■ Sunshine Coast ■ Queensland University ■ ENERGEX Junior supporting SIDS and Helicopter Rescue of Technology Landcare Activity Days KIDS Queensland Service

■ St Vincent De Paul ■ Volunteer Marine ■ Premier’s Sustainability Rescue Awards

■ Royal Queensland ■ State Emergency ■ Lord Mayor’s Business Show 2009 Service Awards (Brisbane EKKA)

■ The Starlight Children’s ■ International River Foundation Foundation (Bremer River Forum)

■ Sunshine Coast Health Foundation (Give Me 5 for Kids)

■ Hays Inlet Festival

Notes 1 Sponsorships of $5,000 or more ENERGEX ANNUAL REPORT 2009/10 74 makes the search and rescue work for the volunteers more effi more volunteers the for work safer. and cient rescue and search the makes 1 Sandgate ENERGEX the and ofVMRB sponsorship ENERGEX’s Pictured: waterways. our of most the making are people when holidays, public and weekends on to5.00pm 6.00am from manned room radio the keep who volunteers 350 has it Currently Queensland. of coast sea the along communities the for services rescue and search marine volunteer provides Queensland, of Association Rescue Marine Volunteer of asquadron (VMRB), Brisbane Rescue Marine Volunteer rescuers. marine working hard tothe support our weextended time was it year This Museum. Queensland the at garden adinosaur redeveloped and to grow habitats koala helped helicopters, We’ve sponsored ENERGEX Sandgate 1 Showing onthe water our support – on the way to the pontoon and the craft,” said Simon. said craft,” the and pontoon waytothe the on gear rescue tothe access easier and quicker allows This equipment. emergency tostore clubhouse their at room equipment anew building and hats shade including necessities byproviding out helped has “ENERGEX organisations”. yachting and SES, the Guards, Coast other Authority, Brisbane of Port the Service, Ambulance Queensland Police, Water by the also but rescues, public only not for on called regularly is 1 Sandgate “ENERGEX said Middap Simon Management Program and Change Strategic Manager Group ENERGEX 75 ENERGEX ANNUAL REPORT 2009/10 76 ENERGEX ANNUAL REPORT 2009/10 CUSTOMERS OUR IMPRESS REVIEW OPERATIONAL a good thing,” he said. thing,” he a good it’s home, own our within use power day-to-day the reducing or times, peak at consumption energy to cut community the of rest the with we’re working “Whether to participate. residents other encouraged and it, about heard they as soon as ECC tothe up tosign decided they said Robert consumption during peak times. electricity their reduce help will which conditioner air their on installed adevice had have Coast Sunshine the from Hayman Ruth and Robert residents Connected use. electricity totheir relation in life wayof sustainable amore achieve communities help wecan technology, and knowledge the With fi the being Coast Sunshine –the tocommunities opportunity this to deliver Government’s Offi Queensland the and councils local with Working network during peak times. electricity the on demand and consumption energy adopt energy effi actively residents help will initiative (ECC) Communities A fi conservation. energy and demand peak electricity of awareness topromote launched project sustainability and engagement community large-scale innovative and exciting an saw year This Innovative community project afi rst in Queensland, the Energy Conservation Conservation Energy the Queensland, in rst ciency methods in the home to reduce toreduce home the in methods ciency rstregion. ce of Clean Energy, we are able able weare Energy, Clean of ce air conditioners and pool pumps. pool and conditioners air devicesenergy-conservation on appliances such as use and to$800, up worth package a conservation including energy, conserve them tohelp solutions residents offer will Communities Conservation Energy times. peak of outside used or needed isn’t capacity extra the as approach sustainable most the isn’t this demand, growing this to manage network electricity the toupgrade continue wecan While week. every installed being systems new 1,500 around with Queensland, East South in installed systems are nowThere more than one million air conditioning national trends. fi of average an by Queensland East South in demand electricity peak boosted have decade past the over appliances intensive energy- of uptake rapid the and growth Population 8.00pm. and 4.00pm between typically time, same the at appliances high-energy their use businesses and households Queensland East South of number alarge when temperature, extreme of days on occurs usually demand Peak said. he difference,” areal make we could initiative the in part totake up joined everyone “If in Queenslandrst ve to seven per cent a year – well above above –well ayear cent per ve toseven of Queensland’s fi Communities. of Queensland’s Conservation Energy rst fi the amongst apart were Hayman become to Ruth and customers Robert rst residents Coast Sunshine Pictured: ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

in the neighbouring communities which may be impacted upon. community receives the appropriate level of communication and engagement for our major work projects. projects. work major our for engagement and communication of level appropriate the receives community refi be will Manual Consultation Community Our effi energy education, safety, initiatives, community local on focused program, 2010/11 our through sponsorship community the support We will position on future policy and direction for electricity tariffs. electricity for direction and policy future on position our inform help will trial the from gathered Data signals. pricing todifferent respond customers how 2010 late in toexplore atrial launch wewill 53), (page initiative Tariff Based Rewards the of part As lighting. effi energy and tri-generation cooling, and ventilation heating, curtailment, load customer including requirements, business individual meet which solutions targeted facilitate 54), wewill (page initiative Industrial and Commercial the Through times. peak during use energy manage and conserve help which solutions energy tofacilitate customers industrial and commercial with together towork continue We will customer our joining Awards, Excellence ENERGEX the launch We will improvement. toachieve results year’s this from plans action of development the through journey, Responsibility Corporate our on continue We will Benefi Community anew trialling be We will integrated. being functionality feedback acustomer and system, new the under tocustomers paid being fi systems, current toour changes and (CSI) Investigations Service Customer called system complaint customer GSL anew of implementation the including: stages three involve will This GSLs. process and identify toautomatically us allow will which Project GSL Auto the execute We will constructively through common issues. byworking and interaction regular through retailers the with relationships stronger building on focus We will stakeholders. of range our with relationships the managing in effectiveness its todetermine assessed be and continue will database engagement stakeholder new the of trial Our surveys. research ongoing our through tracked tobe continue will attitudes community and Customer out. carried be also will expansion further for Assessment Queensland. East South in councils local other two into program Communities Conservation Energy the expand We will consumption. power their reduce community the and customers our tohelp initiatives conservation energy on information provide and toadvocate continue We will experience. online their of centre the at customer the put ultimately and usability, improve “dialogue”, enable intuitive, fresh, innovative, be will website new The customers. our of expectations and needs with aligns it to ensure research user extensive involved has which project –atwo-year website ENERGEX new the launch We will environment, customer performance, innovation, safety, in excellence for recognised be will contractors and Staff scheme. OUTLOOK 2010/11 care and projects. projects. and ciency and the environment. ts Fund linked to four specifi tofour linked Fund ts ned as part of the bi-annual review process, ensuring the the ensuring process, review bi-annual the of part as ned care c major work projects, investing investing projects, work c major program and staff recognition recognition staff and program rst GSL payments payments GSL rst cient cient IMPRESS OUR OUR IMPRESS OPERATIONAL CUSTOMERS REVIEW 77 ENERGEX ANNUAL REPORT 2009/10 We respect and support each other. We value each other’s view. Together we create ENERGEX’s success. ENERGEX ANNUAL REPORT 2009/10 78 respect and support eachrespect and other support achievements. efforts Recognise anywhere andanyone. believing goodideascomefrom improve outcomes, business input Seek them. affect informed Make well peopleare sure and empathy. straight Talk to the business. and the value diversity brings expertise andperspectives Acknowledge constructively. the other andrespond person attentively Listen treated. be to others Treat WHAT DO WE 3,800 staff want to be a part of. apart be to want staff 3,800 our that a workplace creating and workforce committed acapable, building on focuses Strategy People Our Pictured: LIVING OUR VALUES about issues thatabout issues from people tofrom people asyou would like –with honesty eachother’s to understand and AND SUPPORT SUPPORT AND TEAM PLAYER TEAM OPERATIONAL EACH OTHER OTHER EACH AND BE A BE AND RESPECT REVIEW 79 ENERGEX ANNUAL REPORT 2009/10 We operate as a team and leverage and learn from each other. ENERGEX ANNUAL REPORT 2009/10 80 be ateam player continuous improvement occurs. continuous environment where learning and Value diversity celebrating achievements. Strengthen team spirit individuals. respecting challenge andideas, whilst issues Engage to help ENERGEX achieve itsgoals. knowledge, experience andideas contribute Actively in it. part asawhole,business not just our Focus WHAT DO WE to effi projects. complete ciently day every other each support crews Field Pictured: LIVING OUR VALUES onwhat isbestfor the in ‘healthy debate’ – and foster an our by by AND SUPPORT SUPPORT AND TEAM PLAYER TEAM OPERATIONAL EACH OTHER OTHER EACH AND BE A BE AND RESPECT REVIEW 81 ENERGEX ANNUAL REPORT 2009/10 RESPECT AND SUPPORT EACH OTHER and be a team player

OPERATIONAL KEY OUTCOMES Building the workforce of the future REVIEW RESPECT 2009/10 We recognise an adaptable organisation with engaged people is a key AND SUPPORT foundation for business success. This year, we continued to deliver on our ■ Recruited 243 new staff EACH OTHER People Strategy to build a sustainable, adaptable and engaged workforce. AND BE A ■ Implemented a revised This will ensure we have the people, skills, culture and performance required TEAM PLAYER Workplace Learning Program to deliver our business objectives now and in the future. and a new suite of leadership This year we recruited more than 243 new staff (2008/09: 450), taking our workshops end of year total to 3,849, as demonstrated in Table 9. As we move towards ■ Designed and tested an our vision of a customer-centric organisation providing sustainable energy improved approach to solutions, we will need to continually develop the skills of our existing and managing staff performance new people to keep pace with our customers’ lifestyle aspirations and changing environment. ■ Maintained a high level of employee motivation Table 9: Staff numbers by employment category1 – achieving an Employee Motivation and Performance EMPLOYEES EMPLOYEES EMPLOYMENT CATEGORY Index tally score of 65.87 2008/09 2009/10 (2008/09: 65.7) Administrative/clerical 714 728

■ Implemented an Indigenous Apprentice 325 338 Apprentice Program Electrical systems design advisor 91 88 in conjunction with the Executive 130 147 Department of Employment, Para-professional 333 332 Economic Development and Power worker 192 186 Innovation and the Electrical Professional managerial 556 596 Trades Union Supervisor 317 337 ■ Introduced a Wellness Program Systems operator 67 67 for employees Technical serviceperson 1,002 1,018 Trainee/cadet 11 11 ■ Conducted a pilot workforce Casual 1 1 planning project. Other contract employees 5 0 TOTAL 3,744 3,849

Notes 1 Includes all full-time, part-time and casual ENERGEX staff as at 30 June 2010. ENERGEX ANNUAL REPORT 2009/10 82 OPERATIONAL Developing our employees’ capabilities These programs provide participants with TAFE training REVIEW to gain an Advanced Diploma of Electrical Engineering, In 2009/10, we continued to invest in a range of RESPECT development programs including apprenticeships, which helps to build capability in these employees to fi ll AND SUPPORT para-professional cadetships, graduate development future para-professional roles across the organisation. EACH OTHER and staff development. These programs assist to develop Our graduate programs are designed to attract recent AND BE A TEAM PLAYER employees’ skills, knowledge and experience needed engineer, business and fi nance university graduates. to not only enhance their future, but also to keep building Graduates are able to rotate through relevant and maintaining South East Queensland’s electricity departments, applying their studies and also learning network. about different facets of our business. All participants We own and operate a Registered Training Organisation receive personal development and mentoring from our (RTO), EsiTrain, which provides the trade and post-trade senior employees. There are currently 23 participants technical training required to work on low and high in the engineer development program and three in the voltage overhead powerlines, underground cables fi nance program. and substations, including safety and rescue training. A revised Workplace Learning Program was also EsiTrain courses are nationally accredited in line with launched in May 2010, offering employees access the Australian Quality Training Framework (AQTF). to over 50 development courses in the areas of leadership This year we expanded our training services, which are fundamentals and business acumen. now open to external organisations within the industry, Building effective leaders including mining and electricity distribution companies Building strong and effective leadership in the offi ce and high voltage customers. Our specialised instructors and fi eld environments is paramount to a well-balanced are trained to a Diploma level in Training and Assessment workplace and ensures business objectives are and have a wealth of experience within and external to achieved. Over the past year, more than 350 leaders ENERGEX. This year more than 136,691 student contact have participated in ENERGEX’s leadership development hours (a measure of training delivery) were provided programs. through EsiTrain. During the year all leadership programs were reviewed At the end of June 2010, we had 338 apprentices to ensure alignment with our leadership capability employed in a range of trades including electrical fi tter framework and emerging leadership needs. As a result, mechanics, overhead linespersons and cable jointers. a new suite of leadership workshops was introduced to In 2009/10, 95 new apprentices started their qualifi cations meet immediate business needs and build the desired (2008/09: 101). capabilities in ENERGEX leaders. The Employee in Cadetships combine study and on-the-job training. Charge and Frontline Leadership programs were At ENERGEX there are currently six para-professional redesigned and tailored to refl ect the ENERGEX values cadetship programs running, two starting in 2009/10, and environment, and a new Executive Leadership with 77 employees taking part. Program was designed and implemented in partnership with Mt Eliza Melbourne Business School. To date, 26 senior leaders have participated. ENERGEX ANNUAL REPORT 2009/10 83 84 ENERGEX ANNUAL REPORT 2009/10 considered healthy for an organisation. an for healthy considered is turnover of level Some choice. of employer an as ENERGEX topromote initiatives our of effectiveness the highlights rate turnover low Our cent). per 5.3 (2008/09: cent 4.6per was rate turnover staff our year This delivering an upgrade project for the Kelvin Grove community. Grove Kelvin the for project upgrade an delivering keyin the be to proved culture teamwork Our Pictured: include: strategy this of part as achieved Outcomes objectives. business our todelivering element avital is people right the retain and weattract Ensuring choice. of employer an as ENERGEX demonstrate and promote year, tofurther this implemented was project branding and strategy Offer Employment ENERGEX new The staff quality Attracting 2010. April in began sessions information of out roll and launch the preparation, In leaders. and employees of expectations and framework clarifi The ability. their of best tothe perform and skills their todevelop need they that feedback and coaching guidance, the with employees byproviding business the and byindividuals performance better enable will It work. at performance about leaders their and employees between conversations day-to-day continuous support to designed been has toPerform Power industry, the among externally and surveys, staff including internally, investigation and research extensive on Based incommenced July 2010. which toPerform, Power process, management tofi We continued performance Powering ■ ■ ■ ■

communicates the key aspects of the employment offer. offer. employment the of key aspects the communicates which website micro careers a new of delivery applications job of number the in increase an aresult, as and choice of employer an as ENERGEX of awareness improved processes on-boarding and induction recruitment, during employees tonew offer employment the communicating when toutilise managers ENERGEX for materials advertising and tools information, Proud toFeel Power The and Ideas, New on to Switch Power Together, toWork The Power The to Connect, Power The toPerform, Power The included This market. tothe offer employment compelling and aclear tocommunicate to…’ Power ‘The campaign es the different roles, responsibilities responsibilities roles, different the es nalise our new performance community and stakeholder expectations. stakeholder and community customer, meet and objectives strategic its to achieve capability and capacity people maintains it toensure plan workforce strategic 2010/11, its update will ENERGEX and reduce the impacts of an ageing workforce. In transfer knowledge toencourage initiatives workforce maturing implement and knowledge, of areas and roles critical in people and leaders for methodology program, establish a business program, expand the para-professional cadetship engineer graduate the expand engineers, for development structured 2010, provide wewill Throughout risks. the tomitigate developed were strategies and exposed were risks of anumber aresult, As years. seven next the for supply and demand labour our toforecast markets labour external and internal examining involved This 2009/10. in conducted was pilot planning workforce a strategic market, labour achanging in capacity and capability workforce maintain and growth To sustainable achieve Proactively managingwo overseen by Internal Audit. Audit. byInternal overseen and company external byan operated line, disclosure independent an through complaints or concerns their tovoice able also are year, employees the Throughout strategies. business our and changes industry tounderstand employees toallow forums organising and communication, internal our improving implementing senior leadership development programs, system, management performance our improving Work, the cultural which aspects impact on our Program of continuing into the coming year, assessing included are which survey, staff previous the from Actions feedback. and results survey level local on based needed actions required the determine to managers and staff for aforum provide workshops RODA The team. and department every for workshops (RODA) Act Discuss, Own, Receive, in used be will survey 2010 the staff from results year, the previous the in As 65.7). 100 (2008/09: of out 65.87 of score tally overall an indicated results survey The work. at commitment and satisfaction interest, employee tomeasure (EMPI) Index Performance and Motivation Employee the use Hinds cent). per 84 (2008/09: cent per 85 of rate aresponse representing heard to be opportunity the took staff 3,200 than More research. the conducting company the Research, Workforce Hinds to according stable, are levels motivation employees’ our indicated survey 2010 the staff from Results Listening to ourstaff -wide planning succession rkforce sustainability rkforce AND SUPPORT SUPPORT AND TEAM PLAYER TEAM OPERATIONAL EACH OTHER OTHER EACH AND BE A BE AND RESPECT REVIEW 85 ENERGEX ANNUAL REPORT 2009/10 86 ENERGEX ANNUAL REPORT 2009/10 PLAYER TEAM A BE AND OTHER EACH SUPPORT AND RESPECT REVIEW OPERATIONAL 1 For further information regarding our workforce profi workforce our regarding information further For 1 confi for (EAP) Program Assistance Employee ENERGEX’s access also may Employees informally. EEOmatters toresolve attempts their in toemployees information toprovide available Offi Contact Employee trained of network a has ENERGEX procedures, formal and informal both includes which system handling toacomplaint addition In 2011 July the in intake apprentices as participants these of anumber toemploy weplan completion, a successful Following setting. goal and communication team-building, numeracy, literacy, including topics covers and complete to 20weeks take will program The apprenticeship. linesperson electrical an toundertake them enable to youth indigenous local toup-skill is program the of aim The Program. Apprenticeship Indigenous an toimplement Union Trades Electrical the and Innovation and Development Economic Employment, of Department the with closely worked wehave year This cent). per 79.1 20.9 cent: per (2008/09: 4:1 or 21.3 cent, cent: per 78.7 per approximately at averages industry with line in is employees female to male of ratio our 2009/10 in bymales, dominated been traditionally has which industry an in particular, In census. the in toparticipate elect who employees those to limited is information this of collection so discretion, 1992 Act Employment Public in Opportunity Employment Equal the of requirements with line in Census Employment Equal an tocomplete employees new all We ask groups. minority from people and balance gender the measuring by workplace our in diversity employment We track merit. individual their on based company the within toopportunities access equal enjoy employees potential and employees All harassment. and discrimination of free is workplace our to ensure action continual and commitment our demonstrates strategy and EEOPolicy Our industry. energy the in akey focus is (EEO) Opportunity Employment Equal opportunities Creating employment equal Conduct. of Code our support and frameworks compliance and fraud existing the to enhance is aim Its matters. illegal or unethical and fraud suspected Audit, the confi Internal or manager general manager, supervisor, their with issues todiscuss encouraged are employees While at www.energex.com.au/about_ener . Provision of this information is at the employees’ employees’ the at is information this of . Provision dential disclosure line is available to report toreport available is line disclosure dential dential and professional support. support. professional and dential gex/sustainability_report.html cers who are are who cers le please refer to our latest Sustainability Report Report Sustainability latest toour refer please le 1 . with actions linked to the improvement areas identifi areas improvement tothe linked actions with strategies, of planning future the in used be 2010 will and late in organisation the throughout communicated be will results The average. Australian the than higher ENERGEX, at communication tointernal regards in satisfaction, fi Research research. the in participated employees 703 total, In objectives. business toachieve staff support and toinform used tools current of effectiveness the and satisfaction staff to assess conducted, was audit communication 2010,In internal an updates. email fortnightly via and program visits aworkplace through CEO the from directly heard also staff Our results. and progress strategy, and direction organisation’s the about speakers guest and managers CEO, other our from directly hear to year the during times several held are which Forums Leaders’ at together come also have leaders Our information). 41 further to page for (refer 5’ employees toall Big Personal ‘My as such programs (ZIP) Process Incident Zero of out roll the and Week Safe Work National for initiatives new of introduction the with year this strengthened been has messages and themes key of safety Communication to fi employees for quicker and easier it making tool, business a as intranet the of functionality the improved further has features 2010 design in new and engine search Google anew of launch The month. each requests page on average 3.375 receiving of information, source million important an tobe continued also intranet Our Board. Bulletin electronic adaily and Connections newsletter staff monthly the through information regular received year, staff past the In company. the in happening is what with up-to-date keep and suggestions, and input provide productively, jobs their toperform employees our to assist activities and tools communication of arange We used an organisation achieve its objectives. business helps that performance of alevel celebrates and inspires unites, motivates, it best, Atits information. sharing simply than more about is communication internal Effective Communicating with ourstaff nature. employment or related family apersonal, of problems face who families, immediate their of members and employees for consulting and counselling professional short-term through assistance provides EAP The nd the information they need. need. they information the nd ndingsbenchmarked ed. and business in one of the cyclone-affected communities, Proserpine. communities, cyclone-affected ofthe inone business and homes to power restore to Energy Ergon assisted crews Our Pictured: said. in,” Uren Mr versed we’re well something are responses weather wild Queensland, East South in based are crews ENERGEX “Although Queensland. North of people the toassist able tobe pleased were crews his said Uren Brian manager response ENERGEX days. several for power without businesses and homes 55,000 around 2010 leaving 21 on March coast the crossed Ului Cyclone Tropical Energy. Ergon owner network toelectricity hand helping a tolend year this Queensland North ravaged cyclone to headed members crew 27 of ENERGEX A team when wild weather hits ourSupporting regional cousins strong team work and supporting culture. supporting and work team strong ENERGEX’s of illustration another was it said Uren Mr at Ergon.” cousins regional our and community Queensland North the tohelp able tobe pleased equally we’re also and weather wild after power community’s own our restoring when accomplishment of asense always “There’s fl Wales South New Northern the and 2006 in Larry Cyclone as such disasters natural in assisted have crews our of many Queensland, East South in storms decent of share fair our weget do only “Not oods last year. 87 ENERGEX ANNUAL REPORT 2009/10 88 ENERGEX ANNUAL REPORT 2009/10 in the Brisbane to Gold Coast Cycle Challenge, an annual event we support. we event annual an Challenge, Cycle Coast Gold to Brisbane in the employees ENERGEX (centre) joins Effeney CEO Terry ENERGEX important. is staff ofour wellbeing and health The Pictured: within Australia. industries of range the meet which conditions award of net’ a‘safety tocreate system Federal the in Awards all modernising and rationalising reviewing, involved it process, Modernisation Award the as Known Australia. in system Award the of arationalisation undertook Commission Relations Industrial Australian the reforms, relations labour Government’s Federal the of part As conditions and wages Determining improvement. for plans develop and status health current their toreview opportunity the took employees 1500 approximately year This Consultant. Wellness and Health aspecialist of appointment the including Program, Wellness Employee anew launched ENERGEX health, their managing with employees toassisting commitment our of part year, as This service. of level high acontinued with customers provides and culture safety our supports morale, employee boosts also but injuries, prevents and risks health reduces only not workforce and lifestyle ahealthy We believe Improving ourhealth andwellbeing ■ ■ ■ ■ ■ ■ ■

performance and projects. projects. and performance including customer awards existing of anumber together tobring Scheme Recognition Staff revised the launch We will 2011. October in expiring agreement workplace existing the with progress will renegotiations EUCA work. at while control can they elements the on tofocus employees toencourage my 50%?” campaign “What’s the including program, safety ZIP three-year the toemployees communicating continue We will specifi and results division’s their todiscuss workshop aRODA in part totake opportunity the have will Employees plans. action toform used and released be will survey 2010 the staff from Results School. Business Melbourne Eliza Mt with program development leadership the including capable, and skilled remains workforce our toensure progress will training and leadership people in Investment objectives. overall organisation’s toour contributes role their how understand employees and based, performance and equitable is promotion leaders, their and employees between communication open and ongoing ensure will framework The staff. our of performance and development the wemanage how toimprove program toPerform Power three-year our of one year execute We will working environment. new tothe transition easy an ensuring in assist will 2009/10 throughout undertaken communication and offi city current our Offi Newstead the of part As

OUTLOOK 2010/11 ce and several other depots to the new headquarters in Newstead. The engagement engagement The Newstead. in headquarters new tothe depots other several and ce care , innovation and safety, and introduce new awards covering environment, environment, covering awards new introduce and safety, and , innovation ce Accommodation Project, we will transition affected employees from from employees affected transition wewill Project, Accommodation ce Consultants and union offi union and Consultants Relations Industrial our between bi-monthly held are Forums Issues Relations Industrial consultation. and communication effective through unions industry with relations workplace constructive promote and toencourage we continued strategies, Relations Industrial and Relations Employee our of part As development. path career for structure and increases wage penalties, allowances, leave, paid for terms the determines Agreement The Award. Modern the overrides which agreement athree-year 2008, (EUCA) Agreement Collective Union ENERGEX bythe governed currently are employees Our ENERGEX. within conditions 2010 does not have any impact direct on employment Award Industry Power Electrical the of introduction The 2003. –State Award Supply and Transmission Generation, Electricity The Award, based Queensland 2010 replaced and 1January on effective became Award This 2010Award developed. was Industry Power Electrical the industry, electricity the For cials. c future plans. c future AND SUPPORT SUPPORT AND TEAM PLAYER TEAM OPERATIONAL EACH OTHER OTHER EACH AND BE A BE AND RESPECT REVIEW 89 ENERGEX ANNUAL REPORT 2009/10 We ‘live’ our corporate values every day. We create an environment that encourages people to grow and achieve and show courage in making changes for the better. ENERGEX ANNUAL REPORT 2009/10 90 set agreat example Show each other Show eachother as learning experiences. Deal with who ‘live’ ourvalues. andrewardRecognise people. in Show trust Encourage changes for the better. to make courage necessary commitment the Show passionate aboutourbusiness! outwork taskson carrying –be positive energy Demonstrate ENERGEX values. Behave consistently WHAT DO WE monitoring and reporting. and monitoring initiatives, environmental developing on focuses Green Jan Dr –Sustainability Advisor Environment Senior Pictured: LIVING OUR VALUES reasonable mistakes reasonable others to excel. and confi that we care. dence with the the with and people people

OPERATIONAL SET A GREAT AGREAT SET EXAMPLE REVIEW 91 ENERGEX ANNUAL REPORT 2009/10 SET A GREAT EXAMPLE environment

OPERATIONAL KEY OUTCOMES At ENERGEX, our commitment to sustainability and the environment goes REVIEW beyond responsible management of our daily operations and future planning. SET A GREAT 2009/10 EXAMPLE We believe our role extends to educating and setting a great example for ■ Exceeded the Queensland customers, the community and business. Government’s fi ve-year This year we have continued to promote energy conservation through targeted greenhouse gas emissions initiatives and trials, implementing strategies to reduce our own environmental reduction target footprint and working with key bodies across South East Queensland to ■ Purchased NSW Greenhouse progress in environmental best practice. Gas Abatement Certifi cates (NGACs) to offset our 2008/09 Delivering a consistent approach fl eet carbon emissions to environmental management ■ Nationally recognised for our trials of public lighting A new fi ve-year Environment Strategy was developed and implemented to monitoring devices and pool oversee and provide strategic direction across all key environmental areas. pump fi lters – winning awards The strategy focuses on: on two separate occasions ■ our Environmental Management System

■ Installed a further 11 rainwater ■ sustainability collection tanks across our ■ biodiversity management major sites, increasing our ■ cultural heritage capacity to collect water ■ pollution management by 31 per cent ■ water, waste and energy management ■ Construction continued on our ■ systems compliance new headquarters in Newstead ■ environmental communication and training. ■ Implemented the new Environment Strategy The strategy is supported by our Environment Policy, Environmental Offsets and reviewed our Carbon Policy, Carbon Management Plan, Sustainable Procurement Policy, and the Management Plan. Environment Operational Plan which states our performance indicators as set out in the Statement of Corporate Intent (pages 10-13). Offsetting our emissions Since joining the Australian Government’s Greenhouse Challenge in 1996, we have planted almost 300,000 native trees to offset our carbon emissions. As part of this program, this year we purchased, through Eco Fund, Federal Government approved New South Wales Greenhouse Gas Abatement Certifi cates (NGACs) to offset our fl eet and air travel carbon emissions for 2008/09. This scheme allows the abatement certifi cate providers to carry out activities on our behalf, decreasing greenhouse gases. This can be achieved through generating electricity in a way that reduces the greenhouse gas emissions per megawatt hour, or reducing the consumption of electricity. In our case, the certifi cates are generated by burning biomass in Queensland generators, thus reducing waste to landfi ll and the resultant carbon emissions. Refer to Table 11 on page 98 to view a summary of our greenhouse gas emissions. ENERGEX ANNUAL REPORT 2009/10 92 We also carried out project specifi c offsets including Working towards sustainability in procurement OPERATIONAL REVIEW revegetation and rehabilitation to ensure environmental Our sustainable procurement strategy focuses on SET A GREAT areas are sustained. This year we provided marine plant ensuring the balance between environmental, ethical EXAMPLE offsets as part of the Queensland Government’s approval and value outcomes. This framework offers benefi ts for a powerline project from Southpine to Hays Inlet. for business performance, risk management as well Marine couch was relocated to a nominated rehabilitation as the environment. In line with the Queensland State site at Rothwell. Other key revegetation projects included Government Procurement Policy, we are progressively almost 1,000 plants to Springbrook Landcare and integrating the practice of sustainability into the 500 native trees to provide food, habitat and corridor procurement of goods, services and construction. connectivity along the Bremer River. To achieve this, procurement decisions encompass the Sustainable streetlighting trial consideration of goods and services which have a lower nationally recognised environmental and social impact than competing goods and services from suppliers, and which are ethically and This year we received the inaugural Energy Supply socially responsible. This is achieved by: Association of Australia (ESAA) Industry Innovation Award ■ strategies to avoid unnecessary consumption and in recognition of our trial of public lighting monitoring manage demand, consideration of the potential for devices in newly installed energy effi cient globes. reduced waste through less packaging, provision of Public lighting is the single largest source of local a packaging take-back, products made from recycled government’s greenhouse gas emissions, accounting for or re-manufactured materials or the use of renewable up to 70 per cent of their corporate emissions. While they resources are necessary, the current lights result in more than one ■ strategies to minimise the environmental impacts million tonnes of carbon dioxide emissions each year in of the goods and services through improved design South East Queensland alone. or manufacturing

The trial, coordinated in partnership with the Queensland ■ the supplier’s socially responsible practices including Government’s Offi ce of Clean Energy and fi ve local compliance with legislative obligations to employees councils, involves the use of sophisticated measuring ■ value for money over the whole-of-life of the goods devices on 288 sites to collect data on performance such and services including end of use management, as light output, power usage, temperature and resilience rather than just the initial cost. to vibration and voltage surges. It will ultimately inform a ENERGEX has a dedicated team to examine the end- strategy to reduce the environmental impact by replacing to-end recovery of materials with a view to identifying the mercury vapour streetlights with more energy- opportunities to recover and recycle, thereby improving effi cient lights. end of use management and optimising sustainability. The three-year trial is the fi rst of its kind in Australia and, Our Environmental Management System is included in with approximately two million public lights across the all our contracts with suppliers, ensuring the sustainability country, has great potential to inform how our industry criteria, related to key performance indicators, are can reduce public streetlight energy consumption. progressively implemented as procurement activities are undertaken. In early June 2010, we also won the Innovation in ClimateSmart Technologies Award for our energy conservation Pool Filtration Demand Management (PFDM) device (page 102). ENERGEX ANNUAL REPORT 2009/10 93 94 ENERGEX ANNUAL REPORT 2009/10 EXAMPLE AGREAT SET REVIEW OPERATIONAL available this year. this available not is years toprevious analysis acomparable reporting, of method toarevised Due involved. toall delivered are benefi and process connection friendly energy organisations to ensure an end-to-end customer clean and installers photovoltaic solar government, with actively towork wecontinued rate unprecedented an at growing sources energy renewable small-scale of type and size number, the in increase the With network. tothe exported energy for rebates in 2009/10 in tocustomers paid was grid. More million than $3.3 back into the electricity generated power excess the toexport customers allowing homes, of roofs the on stations power mini essentially are systems ‘green’. These going Queenslanders East 19,144 than more saw alone South 12 months past the in which, connections these facilitate and promote to 2010. We continued April in installed connection photovoltaic solar 20,000th the with milestone a major –reaching network electricity our across distributed systems, solar or sources, energy renewable embedded small-scale of number the in rise adramatic saw year This energy sources renewable embedded Supporting footprint. carbon their reduce and stakeholders all for outcomes their vision to help organisations achieve sustainable promotes and framework business their of part serious a as sustainability embeds that acompany with partner to proud weare organisation, an As consumption. fuel our concerning processes and systems to document approach its of aresult as award supplier Sustainability’ announced the winner of the ENERGEX ‘Innovations in was Fleet SG suppliers. our of achievements exceptional the torecognise opportunity industry an Awards, Quality Supplier annual its hosted 2010, ENERGEX March In benefi business sustainable in result will that initiatives and decisions management business todevelop suppliers and partners industry our with proactively collaborates ENERGEX ts to both ENERGEX and the supplier. the and ENERGEX toboth ts cialoutcomes earlier this year. this earlier published was 2008/09) (for Report Sustainability based fi Our strategy. and framework sustainability the tooversee Group Working Sustainability the and sustainability, and responsibility implement and monitor improvements in corporate to business the of areas all from by representatives formed Group, Working Responsibility Corporate the weformalised year This company. the of levels all at demonstrated is tosustainability commitment Our environment. the toprotect taken be could action where areas and levels all at Team looks Green The Tanzania. in orphanage an for shoes recycling and emails via information useful tosending roster, a recycling and audits bin weekly encouraging stationery, reusable promoting From home. and workplace the –in footprint own their reduce can individual each ways innovative and creative with up Team tocome Green own very their formed also staff enthusiastic of Agroup cent. 10 per byapproximately business the across activity printing our 2010, wereduced toMarch 2009 March From reduced. waste and saved paper of amount the in results great saw which initiative an was Lean’ Print Green, ‘Go home. the in and work at energy and water, waste toreduce how on information and practice good issues, environmental EnviroNews newsletter, Aquarterly initiatives. supporting and campaign anew through employees with communication environmental internal our improved We also training. online the completed had offi fi the in responsibilities our and environment the of understanding abetter with employees our provides course The EsiLearn. called format online an by supplemented and year this updated was course training Awareness Environmental ENERGEX The among ourpeople Building environmental awareness ce. By the end of April 2010, 97 per cent of staff staff of 2010, cent 97 per April of end the By ce. , was distributed to all staff discussing topical topical discussing staff toall distributed , was rst Global Reporting Initiative (GRI) (GRI) Initiative Reporting Global rst eldand sustainable features and technologies including: technologies and features sustainable smart house will building the completed, When annually. road the from 520 cars toremoving –equivalent year 2,100 each than tonnes bymore emissions carbon reducing at aimed technology green cutting-edge boast will development Riverpark offi designed sustainably and environmental a world-leading as Australia of Council Building Green bythe Accredited spread over fi previously provider, technology and information our SPARQ, and ENERGEX of 1,650 employees than more for hub acentralised be will Riverpark Newstead ENERGEX year. this later Newstead, at V2’ building offi corporate our relocate wewill objectives, responsibility corporate our achieving and footprint carbon our toreducing commitment ENERGEX’s of part As New world-leading green home for ENERGEX ■ ■ after our environment. our after look to can allwe doing and example, impressing our customers agreat ofsetting values core our live we ofhow demonstration aclear is building new Our

ce, the six-level campus-style building in Newstead’s Newstead’s in building campus-style six-level the ce, Offi in Star Green Star ‘Six new tothe ce and three spacious atriums spacious three and internal daylight levels with fl enhanced for allowing façade high-performance annually cent per 38 by consumption our toreduce expected irrigation, landscape and toilets tosupply tank rainwater litre a200,000 including system harvesting a water ve separate locations. ve separate oor-to-ceilingwindows ceDesign, and the environment. the and community the employees, our for outcomes sustainable toproviding committed company energy a world-class offi our design, people-focused and ideas energy-saving technology, smart its With being. well toenhance terraces air open and union credit library, club staff gymnasium, a including facilities balance work-life of standard offi corporate ENERGEX new The employees. between communication effective and interaction promotes and information of exchange rapid enables which layout, plan open an supports design building The the building. signifi reduced be will consumption electricity anticipated is it Additionally, ■ ■ ■

reduce waste tolandfi waste reduce substantially will which systems management waste no recirculation and rates change air high with Standards, Australian the above cent 150 per rates at air fresh providing system conditioning air beam chilled active an building the throughout movement of ease allowing atriums, the in tosix two levels to fi ground from escalator an with complemented lifts six rstfl oor and inter-connecting stairs between between stairs inter-connecting and oor cantly by the new technology within within technology new bythe cantly ll. ce is afi is ce ce also offers a high ahigh offers also ce tting symbol for tting 95 ENERGEX ANNUAL REPORT 2009/10 96 ENERGEX ANNUAL REPORT 2009/10 EXAMPLE AGREAT SET REVIEW OPERATIONAL awarded to Eatons Hill State School. State Hill toEatons awarded was which Award Community School ClimateSmart the of sponsors proud the also We were learning. experimental on focusing days activity of aseries of part as creeks the in invertebrates count and identify and quality water test also Students catchments. local their in towaterways next trees byplanting dirty hands their get to chance the students age primary give and education environmental through communities local to support opportunity the provides program The Queensland. East South across schools 10 primary involving year this program Landcare Junior our We continued 52. topage refer energy conservation and dema our on information further For electricity. tosave take they actions about tothink them encouraged campaign the stated respondents of cent 73 per that found also survey independent The results. positive were awareness prompted for cent per 65 and awareness unprompted for cent 37 of per results advertising campaign, anew As and consequentlyelectricity gas greenhouse emissions. on demand reducing at aimed campaigns education management demand and conservation energy new weimplemented year This consumption. energy their reducing in play can they role the about customers our in awareness toraise responsibility our acknowledge we industry, electrical the in organisation aleading As sustainability andenergy effi Educating the about community nd management initiatives ciency and Industrial program. Commercial the and Tariffs Based Rewards Communities, Conservation Energy included programs 52. These page on detailed as programs management demand and conservation energy our todeliver key stakeholders with worked We also estate. national the in conducted work for Areas Protected on Works Electricity for Agreement of Deed the and habitats, koala protecting offsets, environmental for Understanding of Memoranda the implement and torevise Management Resource and Environment of Department the with towork continued we community, the and councils local with we undertake activities to rehabilitation and In addition the revegetation and government industry with Working school. bytheir consumed energy total the students to the understand impact of their activities on allowed This internet. the via data consumption electricity bysupplying schools state Queensland with to work continued Dynamics, Metering ENERGEX, within A group Hour. Earth during cent per two around of use electricity in areduction showed suburbs western and CBD year, Brisbane’s This data. consumption energy detailed providing and messages effi energy of promotion the through (WWF) Foundation Wildlife World the supporting campaign, Hour 2010 the in Earth role amajor played We again sustainable future. sustainable region’s inour role active an play and learn to people young allows program Landcare Junior ENERGEX The Pictured: by37.1 reduced has cent. per years four past the over usage water total our 2005/06, of year baseline the Since cent. per bytwo year this consumption water our reduced wefurther aresult, As Strategy. Water Portfolio Corporate our with accordance in initiatives effi water several toimplement We continued effi Water in 2009/10.received notices infringement no year, with this again proven was strategy this of effectiveness The providers. service our of any or byus caused incidents environmental of risk the toreduce wecontinue ensures also Strategy Environment 14001). (ISO Use The for Guidance with – Requirements Systems Environmental Standard Zealand New Australian certifi remained System Management Environmental year, our Last responsibilities inthe workplace Delivering onourenvironmental ciency and waste reduction and ciency ed against the 2004 version of the the of version 2004 the against ed ciency ciency ENERGEX. within begun also has batteries phone mobile recycle to 73-74). project topages trial refer Anew activities sponsorship further (for program activity Landcare Junior ENERGEX the and Queensland Landcare Catchments, SEQ including projects environmental We sponsored recycled. were timber of 14,824 and oil of metres litres $6.75 3,317 million. Around tonnes of 603,680 metal, than more raised timber and oil cable, metal, recycle to program the 2009/10, In Queensland. East South in partnerships environmental towards going raised money the of aproportion with assets, decommissioned and products waste our torecycle We continued 2009. September in contract waste new tothe wetransitioned while collected, data actual of 10 the months using analysis, assumption-based of months two includes waste of amount total The recycled. was cans) aluminium and paper plastic, including symbol arecycling with marked (items wastes co-mingle of tonnes 9.23 and green) and cardboard concrete, (predominately waste of tonnes 284.63 this, Of 4,188.15 2009/10, For collected. was waste of tonnes 2010/11. in available be will analysis atrend such, As size. the than rather measured is waste of weight exact the ensures This totonnage. metres cubic in reported being from changed process collection data waste our reporting, in accuracy and transparency our To increase 1.7 per cent from 2008/09. 2008/09. from 1.7 cent per approximately of adecrease represents which (kWh), hours 17,600,000 kilowatt approximately was depots and offi our at used electricity total the 2009/10 In savings. cost and opportunities reduction energy potential identifying in tool apivotal is collected data The sub-meters. electricity and data account electricity of recording the through received are sites corporate ENERGEX all across use energy of reporting and tracking Remote consumption. energy our manage and tomonitor wecontinue initiative, ClimateSmart Government Queensland tothe aligned is which (SEMP), Plan Management Energy Strategic our of part As effi Energy we: 2009/10 Throughout ■ ■ ■

water tanks. water to connected bays wash new seven installed sites corporate our of majority the across 26meters totalling installed, 13 meters additional an with system monitoring water our doubled year previous tothe compared cent by 31 per water tocollect capacity our increasing hoses, purpose general and toilets bays, wash in use for fi at 11 tanks water afurther installed ciency ve locations locations ve ces,hubs in Tablein 10. fl our Work, of Program our of delivery the tosupport To continue budgets. operating and capital within use vehicle tomaximise programs vehicle fl our extended We also initiative. ClimateSmart Government’s Queensland tothe commitment our of part as emissions, carbon reduced of delivery the tosupport category vehicle each in vehicles green-rated improved topurchase wecontinued year This design. vehicle heavy of innovations the harnessing and vehicles distribution management, offi head our of relocation the is consumption energy our toreduce expected projects key corporate our of One corporate sites. our all for Power Green cent per 40 to purchasing committed year, wealso year. This base 2005/06 to the compared increase a1.7 and cent per to 2008/09, compared decrease cent per a0.5 represents use energy fi additional these When tracked. previously not were which control our under towers communication several toinclude data reportable our expanded wehave Additionally, period. same the over cent by2.8 per growing population staff our despite performance improved of indicator an is decrease This a 20 per cent reduction in energy consumption by2015. consumption energy in reduction cent a 20per of target Government’s Queensland the meet us help will move this underway, already initiatives workplace key our with together Australia, of Council Building Green bythe 2010. late in Rated building V2’ accredited unavailable. is to 2008/09 prior analysis trend revised the so years, two past the in extensively more categories our We developed Notes Table 10: ENERGEX’s Fleet effi the improved years fl toasustainable committed We are Fleet improvements ev eilsoe ,0k 4 237 cranes, EWPs mounted truck borers, lifters, 515 980 2009/10 – totrucks attached Plant 245 2008/09 forklifts, backhoes, bobcats Miscellaneous fl 529 986 9,000kg over vehicles Heavy up trucks Medium to 9,000kg to3,500kg up vehicles Light VEHICLE TYPE ce to the new ‘Six Star Green Star in Offi in Star Green Star ‘Six new tothe ce eet – trailers, –trailers, eet ciency of our fl our of ciency gures are included, our overall overall our included, are gures introducing more fuel-effi eet and over the the over and eet eet through weight weight through eet eet is detailed 3 330 335 1 427 418 ceDesign, eetpool cient cient OPERATIONAL SET A GREAT AGREAT SET EXAMPLE REVIEW REVIEW 97 ENERGEX ANNUAL REPORT 2009/10 98 ENERGEX ANNUAL REPORT 2009/10 EXAMPLE AGREAT SET REVIEW OPERATIONAL 1 Only 50 per cent of SPARQ Solutions’ emissions are included, as SPARQ Solutions is jointly owned by Ergon Energy. byErgon owned jointly is SPARQ Solutions as included, are emissions ofSPARQ Solutions’ cent per 50 Only 1 Notes Table 11: Summary (2008/09) Footprint Carbon ENERGEX’s Energy level. benchmark 2005/06 the reduction in gas greenhouse emissionsby 2010 from afi of target Government Queensland the year, weachieved this observed was increase an While year. benchmark our is which emissions 2006/07 on (1,426,107 a12.1 however decrease tonnes), cent per 2007/08 on 1.6 of cent per increase aslight represents This CO2-e. of tonnes 1,448,224 was 2008/09 for emission carbon total Our future. the for strategies and targets appropriate guide and performance environmental current of line abase to establish emissions dioxide Tablein carbon 11, our calculates shown Report, Summary 2010/11. Footprint Carbon The for updated being currently Plan, Management Carbon our toimplement data the use and footprint carbon our wemeasure year Each seriously. very wetake a task Managing and reducing our emissionsis greenhouse Reducing ourcarbonfootprint SPARQ solutions emissions Employee air travel air Employee emissions 3–Indirect Scope Street lighting Network losses fl bus City Garden for gas natural tocompress Electricity buildings ENERGEX in used Electricity of electricity use the with associated 2–Emissions Scope Employee taxi travel Employee taxi NSW Gas Greenhouse Abatement Certifi purchased power Green measures Reduction 1+23 Scope fuels transport and stationary for cycle fuel Full disposed Waste Net carbon footprint carbon Net MSIN ORE Consumption SF6 from switchgear refrigerants conditioner Air electricity of –production Diesel and steam landfi and gas Natural fl transport –‘on road’ combustion Mobile EMISSIONS SOURCES Mobile combustion – heavy load transport fl transport load –heavy combustion Mobile emissions 1–Direct Scope eet ll gas – production of electricity electricity of –production gas ll 1 ve per cent cent ve per cates eet eet (>4.5t) eet and improving the sustainability of our operations. our of sustainability the improving and for responsibility gas reducing greenhouse emissions tosharing committed are and understand we also requirements, compliance our meeting is emissions gas Although a signifi 2010. October of end the at submission next our following website our on published be will period, this for summary emissions our Review, including Technical Footprint Carbon 2009/10 2. Our 1and Scopes involved this and 2009, October was NGER for period reporting fi The thresholds. reporting exceeds level of emissions produced from its activities business the means operations business ENERGEX’s of extent the Queensland, East toSouth distributor electricity the As bycorporations. production and consumption system for gas greenhouse emissions, energy reporting ActReporting (2007) the 2008, July Since 78782kh16,214 kWh 17,817,812 ,3,6 J9,105 GJ 2,232,264 ,1,1 W 3,293 kWh 3,618,913 ,3,4 J89,208 GJ 1,931,047 ,1,1 m225 Km 1,910,518 9,0 W 730 kWh 794,000 2,3 m31 km 125,933 197tne 13,152 tonnes 11,957 ,4 L9,810 kL 3,640 ,4 L9,455 kL 3,940 ,0 W 1,183,000 GWh 1,300 ,0 g2,151 Kg 1,309 0 L1,087 kL 405 5 W 138,320 GWh 152 7k 893 kg 37 Consumption cant driver for greenhouse reporting units (NGER Act) established a national anational established Act) (NGER National Greenhouse and Energy / 319 N/A 1,338,264 1,448,224 1,473,701 (tonnes) CO2-e CO2-e 1,0 7.64% 112,604 22,833 25,477 22,184 rstmandatory emissions % of total total % of 100.00% 90.81% 80.27% 6.05% 0.00% 0.05% 0.06% 0.02% 0.02% 0.62% 0.89% 0.15% 0.67% 0.07% 0.64% 9.39% 1.55% 1.10% 2009/10 OUTCOMESKEY research and development AGREATSET – EXAMPLE ■ ■ ■ ■ ■ ■

scholarships. future engineers through industry’s our of development the tosupport Continued events keyindustry in Involved program Suburbs Smart Energy – Change Cool our Expanded technology poolconservation pump energy our for Award TechnologiesClimateSmart in Innovation the Awarded planning future for data valuable capturing Survey, Queensland Household Energy Commissioned an extensive Energy Ergon with collaboration Vision Outlook to 2030 the of release the including network, asmart of vision our towards Progressed Network , in , in key bodies. industry with workings joint of effectiveness the demonstrate and area the in progress signifi mark innovations These distributors. byother conducted trials the from knowledge gain year, wewill this grant the receive not wedid While energy. green clean, of source areliable as worth their proving grids, power fi will that applications with cells photovoltaic solar of coupling the and generation, electricity future for it tostore sun the from heat capturing pilot, technology storage thermal asolar include technologies future Possible geography. and climate lifestyle, Australian to the applied successfully be can technologies new promising how toshow aimed Offi Government’s Queensland the with Together bid. City Smart Grid, Smart Government’s Australian tothe asubmission developed we year, as this further expanded Energy Ergon with partnering effective Our a unifi provides vision joint-network This services. and processes products, innovative new of development the encouraging and network the wemanage how about differently tothink distributors electricity driving are needs customer Growing meter. electricity the beyond solutions toidentify customers with collaboratively working while technologies benefi the tomaximise efforts co-ordinates vision shared the path, this along progressed have Energy Ergon and ENERGEX both While customers. and distributors companies, transmission generators, between co-ordination and automation connectivity, increases network intelligent An an intelligent network. towards tomove is response our distributors, energy other the with alignment In future. the into sustainable not is distribution electricity of management traditional that recognises document The environment. demanding amore in Queenslanders of expectations future tomeet direction provides approach landmark This to 2030 wereleased year this Energy, Ergon with partnership In network. the on installed currently arrays photovoltaic solar of quantities monitoring of the network has increased, to the impact of assess signifi quality Power initiatives. network smart future for capacity the provides network fi The commenced. also has substations all between network communication fi optic an of Installation outage. anetwork after supply of restoration faster through reliability network improve will which switches, network of control remote toallow year this installed was network communication radio A mesh network’. a‘smart for vision its towards moving progressively is ENERGEX network A smart sustainability. environmental and values social technology, being vision, network the for drivers the support efforts development and research Our requirements. environmental and community customer, increasing meeting while business the for outcome commercial most the delivers which network ‘participative’ a future toachieve aims vision long-term Our customers. and communities Queensland East bySouth used toand delivered is electricity how shaping and leading in role akey weplay Queensland, in organisation and provider electricity amajor As ed development outlook for all of Queensland. of all for outlook development ed , a shared network vision for electricity infrastructure in Queensland. Queensland. in infrastructure electricity for vision network , ashared ce of Clean Energy, we we Energy, Clean of ce Network Vision Outlook ts from new t them into modern modern into t them cant cant bre bre OPERATIONAL SET A GREAT AGREAT SET EXAMPLE REVIEW REVIEW 99 ENERGEX ANNUAL REPORT 2009/10 Queensland household energy survey

In 2009, ENERGEX, in partnership with Ergon Energy ■ Personal comfort is the strongest motivation for buying and Powerlink Queensland, commissioned an extensive air conditioners, followed by cost. Environmental Queensland Household Energy Survey to gather research considerations rate lower, with 98 per cent of on household energy use, energy-saving attitudes and respondents stating climate change/environmental awareness, and household appliance data and the future impacts were not a primary motivator to change their intention to purchase. energy use

The survey of almost 3,500 home owners across the ■ Around one third of Queenslanders with air state – the most comprehensive snapshot in Queensland conditioning or electric heating are willing to change – found Queenslanders are generally more interested in their behaviour with pricing strategies to reduce peak their own comfort, entertainment and lifestyle rather than electricity demand use the environment. Residents are increasingly fi lling their ■ 68 per cent of Queensland homes now have at homes with air conditioners and a raft of high energy least one LCD or plasma screen television with this consuming appliances. expected to rise to almost 100 per cent within the next fi ve years Key information from the survey indicated that: ■ A quarter of South East Queensland homes have ■ About 75 per cent of households in South East a swimming pool or spa and nearly 10 per cent of Queensland are expected to own air conditioners survey respondents that did not have a pool or spa by 2011 and 81 per cent in fi ve years indicated they intended to install one in the next fi ve ■ Households looking to buy their fi rst air conditioning years. Just 21 per cent of SEQ pools have heat-saving unit are less likely to have insulation or ceiling fans pool blankets. which are a much lower cost form of cooling than air The valuable data will be used in the development of conditioning network and capital planning, and public communication ■ Households with existing air conditioning units that strategies. It reinforces the forecasted signifi cant increase are looking to add more systems are generally using in peak demand for South East Queensland, projected at air conditioning effi ciently, but 22 per cent of potential 40 to 60 per cent over the next 10 years, a rate well above buyers do not have ceiling or wall insulation national averages. To proactively reduce this forecast, we continued to invest in our energy conservation and demand management strategies during 2009/10 (page 52).

Our customers’ energy needs and choices impact the development of our electricity network. ENERGEX ANNUAL REPORT 2009/10 100 OPERATIONAL REVIEW SET A GREAT EXAMPLE

Pictured: Our purpose-built trucks assist us to complete our work safely and effi ciently.

Vehicles of the future Infl uencing key industry events ENERGEX has identifi ed the emergence of electric This year we were active participants in several key vehicles as a signifi cant factor in the development of the industry events, including: the Annual Queensland electricity network for the future. In recognition of the Energy Conference 2010, Queensland Power and Gas potential widespread adoption of electric vehicles, which Conference, The Premiers Climate Change Council, and provide a reduction in greenhouse gases, and tempering the International Electricity and Gas Networks Energy the impact of tightening oil supplies, ENERGEX is working 21C Conference and Exhibition. In addition to a number with government and industry bodies to overcome of our employees from operational roles and management challenges and prepare the electricity infrastructure for attending and presenting at these and various other their use in the community. events, our Chief Executive Offi cer, Terry Effeney, also presented and took part in discussions on topical issues Preliminary research indicates that, based on existing including the role of ‘smart networks’, the importance residential circuits, the recharging of an electric vehicle of versatility in an evolving Queensland energy market, is likely to result in two to fi ve kilowatts of electricity sustainability and demand management. demand. As electric vehicles increase in popularity, ENERGEX recognises the need to be well-positioned to ensure electricity is available and the reliability and quality Supporting our future leaders of supply for all network users is maintained. Market This year, a sponsorship of $65,000 was granted to analysis and modelling of user data on the network will Queensland University of Technology’s Faculty of Built be undertaken to understand the likely impact electric Environment and Engineering as part of our ongoing vehicles will have in South East Queensland. commitment to support the future of our industry. As part of this analysis, we will consider issues The money will be used to support students to achieve associated with the recharging of vehicles, in the home their full potential through the: or at future public charging stations, in terms of maintaining safety and the capacity required by local area ■ establishment of an ENERGEX Electrical Engineering networks. The viability of utilising electric battery storage Scholarship as a distributed energy resource to feed electricity into ■ contribution towards the perpetual establishment of the the grid will also be assessed. Monique Cramer Memorial Fund, recognising the need In addition, tariff structures will be examined to provide to support high achieving women in engineering incentives to customers to recharge during off peak ■ contribution to the Textbook Loan Scheme to help times, optimising the productivity of electricity assets. students with genuine fi nancial diffi culties. ENERGEX ANNUAL REPORT 2009/10 101 102

ENERGEX ANNUAL REPORT 2009/10 to not fi lter during peak hours, and with the device we can do this without even noticing,” Suzanne and Wayne Cooley said. Cooley Wayne and noticing,” Suzanne even without fi this do not to can we device the with and hours, peak during lter sense makes It trial. the upto sign to keen were “We community. intheir savings energy to contribute can device PFDM ofthe use how see to trial Pump Pool Change Cool year’s inthis participated Hills ofArana Family Cooley The Pictured: same period. the in cent per 33 byaround risen has population while 10 years, past the in cent to70 by50 per risen has fi pool and conditioners air as such appliances, energy tohigh due network electricity the on placed demand maximum the is This Queensland. East South across demand electricity peak toreduce abid in developed initiatives coordinated of anumber of one is program Change Cool The program. Suburbs Smart –Energy Change Cool ENERGEX’s of part as conducted previously trial conditioning air an of success the on built was initiative The in theparticipating trial. homes Brisbane North 430 around with 2009 November in began device purpose-built the of Installation Queensland. East South across demand electricity peak sky-rocketing addressing at aimed is device (PFDM) Management A fi technology. pump pool conservation energy our for Premier’s Innovation Technologies in ClimateSmart Award afi In Innovative pool pump device nationally recognised rst in Australia, the Pool Filtration Demand Demand Filtration Pool the Australia, in rst eld of 39 fi 39 of eld nalists, this year we were awarded the the awarded wewere year this nalists, lters. Energy use in the region region the in use Energy lters. technology has turned it off during peak times. peak during off it turned has technology fi pool the to use ability the owners give will button override manual The override button. amanual and disconnection, easy for plug electrical timer, unique inbuilt an including features with pumps, Pool owners will benefi pool fi fi easily be can Team, and Change Cool ENERGEX bythe developed was technology The pool fi by used energy toshift aims and program Change fi pool new The 2007/08 the summer. in recorded drop power peak a17 cent followed per which demand, energy in reduction cent a20per was there showed 2009 early in conducted trial the of Results levels. 30 minutes without impacting on homeowners’ comfort every to10 minutes seven for compressor conditioner’s air the cycle toremotely ENERGEX allowed device The homes. local 2,000 almost in conditioners toair a device retrofi the involved initially trial voluntary The lters while being compact and weather proof. times. tooff-peak lters lter trial is an extension of the Cool Cool the of extension an is trial lter lter for up to an hour, if the ENERGEX ENERGEX hour, the if toan up for lter t from added value to their pool pool totheir value added t from tted to most existing existing tomost tted tting of tting ■ ■ ■ ■ ■ ■ ■ ■ ■

OUTLOOK 2010/11 reduction campaign. printing our of progression the includes This reductions. energy and water waste, achieve employees assist to advice ongoing provide and ENERGEX throughout continue will sessions training environmental The by2015 respectively. 2020 cent and per 33 and cent 20per of targets reduction continue to achieve reductions in our gas greenhouse meeting emissions, the Government Queensland to us assist will This Plan. Management Carbon revised the 2010/11,In implement and deliver wewill electricity industry.electricity the in issues topical on recommendations and input toprovide holds organisation our experience and knowledge of depth the using events, key industry in involved actively tobe continue We will undertaken. be will network the on data user of modelling and analysis Market vehicles. electric of use the regarding investigation the progress We will customers in Queensland. benefi term long the for management demand and conservation energy both promote will which initiatives regulatory and policies recommending (QEMP) Plan Management Energy Queensland Offi tothe areport contribute and prepare wewill Energy, Ergon with Together also be developed. will system management load residential control’ water ‘hot existing ENERGEX’s of operation future the residential appliances including greenhouse-effi for products management energy generation new of out roll the for produced be will plans Detailed 2030. year tothe up network electricity the and homes Queensland within required technologies electrical the about picture aclearer tocreate customers and government industry, with working be wewill Initiative, Targeted Residential the of part As demand. peak and use energy customers’ reducing in effectiveness their assessing initiatives, management demand and conservation energy todeliver continue We will issues. related customer and infl and decisions business toprovide information this use and tools, data and segmentation knowledge, customer of development the including Strategy Customer the todeploy continue We will by2017. cent by2012 per 50 cent and by25 per emissions fl light toreduce aiming Plan Action SMART Climate QFleet the towards progress We will 14001). (ISO Use for Guidance with –Requirements Systems Environmental Standard Zealand certifi tomaintain seek We will cation of our Environmental Management System against the Australian New New Australian the against System Management Environmental our of cation cient electric hot water. Recommendations on improving improving on water. Recommendations hot electric cient ce of Clean Energy’s Energy’s Clean of ce eet greenhouse greenhouse eet t of all electricity electricity all t of uencenetwork OPERATIONAL SET A GREAT AGREAT SET EXAMPLE REVIEW REVIEW 103

ENERGEX ANNUAL REPORT 2009/10 ADDITIONAL corporate reporting

ADDITIONAL CORPORATE Table 12: Financial fi ve-year summary REPORTING AS AT 30 JUNE 2010 2009 2008 200712 2006 2006 Restated13 Profi t and loss ($M) Total revenue 1,467.9 1,336.2 1,403.0 1,261.0 1,099.8 2,546.9 Cost of sales1 (345.7) (306.9) (303.6) (255.8) (248.8) (1,511.7) Employee expenses (212.1) (208.1) (232.5) (212.6) (175.3) (196.3) Depreciation (236.0) (232.2) (220.6) (200.0) (190.5) (198.2) Amortisation (2.7) (4.5) (20.9) (23.2) (21.0) (21.1) Impairment (3.8) 1.3 (14.2) (9.0) (4.0) (7.2) Borrowing costs (224.7) (212.5) (196.2) (169.1) (129.5) (131.3) Other operating expenses (182.4) (197.6) (215.9) (205.9) (188.8) (244.8) Operating profi t before 260.5 175.7 199.1 185.4 141.9 236.3 income tax Income tax equivalent (75.3) (47.2) (58.3) (62.6) (45.4) (72.9) Net profi t 185.2 128.5 140.8 122.8 96.5 163.4 Earnings before interest 485.2 388.2 395.3 354.5 271.4 367.6 and tax (EBIT) Earnings before interest, 727.7 623.6 651.0 586.7 486.9 594.1 tax and depreciation adjusted (EBITDA)2 Capitalised interest 17.3 12.1 6.6 9.7 10.1 10.1 Balance sheet ($M) Total assets 8,811.6 8,011.0 7,400.5 7,683.7 6,624.0 6,624.0 Total debt 3 4,094.2 3,872.5 3,344.9 3,268.5 2,762.9 2,762.9 Total shareholders’ equity 2,574.9 2,293.1 2,315.1 3,016.0 2,060.1 2,060.1 Capital expenditure ($M) Property, plant and 1,026.4 871.0 722.3 771.2 820.4 820.4 equipment and intangibles Share information Number of shares 875,532,774 875,532,773 875,532,773 875,532,773 921,000,000 921,000,000 on issue at year end Dividends per share (¢)5 16.9 11.7 108.2 57.1 13.3 13.3 Dividends ($M)4,5 148.2 102.8 946.9 500.0 122.6 122.6 Dividends/net profi t (%)5 80.0 80.0 672.5 407.2 127.1 75.0 Ratios Earnings per share (¢) 21.2 14.7 16.1 12.8 10.5 17.7 Weighted average 875,532,773 875,532,773 875,532,773 960,348,120 921,000,000 921,000,000 shares on issue Return on total operating 12.6 9.6 10.0 9.7 8.8 6.4 revenue (%)6 Return on average 7.6 5.6 5.3 4.8 4.9 7.4 shareholders’ equity (%)7 Debt/equity (%) 159.0 168.9 144.5 108.4 134.1 134.1 Debt/(debt + equity) (%) 61.4 62.8 59.1 52.0 57.3 57.3 Return on average total 5.8 5.0 5.2 5.0 4.4 6.0 assets (%)8 Current ratio (%)9 121.7 183.4 155.2 655.6 237.4 237.4 EBITDA interest cover 3.0 2.8 3.2 3.3 3.5 4.2 (times)10 Statistical information Maximum demand (MW) 4,768 4,499 4,142 4,289 N/A 4,131 Number of employees 3,784 3,733 3,794 3,863 N/A 3,798 ENERGEX ANNUAL REPORT 2009/10 at year end11 104 Continued on following page Notes ADDITIONAL 1 Cost of sales refers to transmission use of system charges and materials and consumables. CORPORATE REPORTING 2 Adjusted for total depreciation, amortisation and impairment. 3 Debt consists of long-term borrowings and the QTC working capital facility. 4 Dividends shown represent amounts provided for in the year and also include dividends that have been provided and paid in the same year. 5 Dividend Paid in 2007 relates to an interim dividend of $500 million resulting from the sales of Allgas, Sun Retail and Sun Gas. Dividend Paid in 2008 relates to fi nal dividends for 2007 ($98.2 million), fi nal dividends for 2008 ($112.6 million) and a fi nal dividend resulting from the sales of Allgas, Sun Retail and Sun Gas ($736.1 million). 6 Net profi t / total revenue. 7 Net profi t / average of opening and closing shareholders’ equity. 8 EBIT / average of opening and closing total assets. 9 Current assets / current liabilities. 10 EBITDA / (borrowing costs + capitalised interest). 11 Full time equivalents. 12 2007 amounts include continuing operations results only. 13 2006 fi gures have been restated to exclude discontinued operations to provide a comparison.

Table 13: Corporate entertainment and hospitality

EVENTS OVER $5,000 DATE TOTAL COST $

2009 ENERGEX Apprentice of the Year Awards function 4 Sep 2009 27,712 Supplier Quality Awards function 25 Mar 2010 6,003 ENERGEX Customercare Awards function 16 Apr 2010 84,348 2010 ENERGEX Apprentice of the Year Awards function 18 Jun 2010 30,004 25 Year Service function 23 Jun 2010 15,056 TOTAL 163,123

Ministerial directions Ministerial notifi cations During 2009/10, there were no written directions given to On 6 October 2009, the shareholding Ministers notifi ed the ENERGEX Limited Board in accordance with section the ENERGEX Limited Board that the Queensland 115 of the GOC Act. Government Sport and Recreation Sponsorship Policy applies to ENERGEX Limited and its subsidiaries, in accordance with section 114 of the GOC Act. The notifi cation was published in the Queensland Government Gazette on 23 October 2009. ENERGEX ANNUAL REPORT 2009/10 105 ADDITIONAL International travel expenditure 2009/10 CORPORATE REPORTING International travel is undertaken for approved business The Travel Policy is approved by the Board. purposes in accordance with the Government Owned Summarised in Table 14 is the international travel Corporations Air Travel Policy. ENERGEX also has a expenditure costs incurred by the ENERGEX Group Travel Policy for overseas and domestic travel, consistent of Companies for 2009/10. with public expectations of accountability.

Table 14: International travel expenditure

No. of Expenditure Subtotal REGION COUNTRY PURPOSE visits ($) ($) Pacifi c Rim New Zealand To attend CIGRE meeting as ENERGEX’s representative. 1 1,126 To witness investigations into the failure mode of ring 34,470 main units and to develop a long term solution. To develop a remote operating system with supplier for 22,065 7,661 SafeLink Ring Main Units. Asia Malaysia Attendance and delivery of presentation at the Metering 11,8411,841 and Asia Utility Conference and visit to the Singapore Singapore manufacturing facilities of a major metering equipment supplier. Europe United Attendance and delivery of presentation at Network 235,603 Kingdom 2010 Conference and visit to UK utilities to discuss smartgrids and sustainable network strategies. Visit GE factory and UK utilities on distribution 230,443 management systems related software development and implementation. Spain, UK Attendance and delivery of paper at the European 19,41675,462 and Republic Group for Organization Studies (EGOS) Colloquium of Ireland together with industry visits and research. Europe Europe, Study Tour (ENA) and research into smart networks, 243,585 Canada Canada smart metering, renewable energy, energy conservation and USA and USA and demand management. Germany, To review capital works programming, project and 238,066 81,651 Belgium, works management processes and systems to support France, transformational change. UK, Canada and USA USA Attendance and delivery of paper at 2009 Itron Users 18,547 conference and visits to USA utilities and suppliers of metering and communication solutions. Attendance at CEATI Distribution Asset Lifecycle 114,42422,971 Management Interest Group (DALCM) general meeting to identify benefi cial projects and information. USA USA Attendance and delivery of paper at the CEATI 126,07226,072 and and Distribution Planning Workshop to identify benefi cial Canada Canada projects and information. Utility and vendor visits. TOTAL $215,658 ENERGEX ANNUAL REPORT 2009/10 106 GLOSSARY AND abbreviations

GLOSSARY AND Australian Energy Market Operator (AEMO): From End-to-end process: The end-to-end Program of Work ABBREVIATIONS 1 July 2009, AEMO replaced NEMMCO with a broader process starts with planning and ends with delivery. national focus on delivering an array of electricity and gas Delivery may be through internal resources or an external market, operational, development and planning functions. contractor. These functions incorporate management of the National Equal Employment Opportunity (EEO): Requires Electricity Market (NEM) electricity grid system. that all employees have equal access to employment Australian Energy Regulator (AER): From 1 July 2010, opportunities, employment decisions are made on the basis the Australian Energy Regulator is responsible for our of the individual merit and requirements of the role, and the economic regulation under the provisions of the National workplace is managed to ensure absence of harassment. Electricity Rules (NER). Gigawatt hour (GWh): Unit of electrical energy equal Capital Expenditure (CAPEX) Plan: A measure of how to one billion watt hours and one thousand megawatt effectively ENERGEX is completing the program that is hours (MWh). identifi ed in the Network Management Plan. Global Reporting Initiative (GRI): Sets a standard Capital Program of Work (Capital PoW): Investment in framework, including principles and indicators, for new network infrastructure or improving existing network companies to report on organisational activities infrastructure. encompassing economic, environmental and social performance. Corporate Responsibility Index (CRI): An index used to measure our corporate responsibility and sustainability Government Owned Corporation (GOC): An entity performance across environment, community/social, created by a government to undertake commercial activities workplace, marketplace and business conduct, and on behalf of an owner government. ethical governance. Guaranteed Service Level (GSL): Defi ned by the Code, Customer: A party that consumes services or electricity distributors and retailers must adhere to stipulations and has a contract with a retailer and a connection regarding the timing of reconnecting and disconnecting contract with a distributor. A customer can be supply to the electricity network. categorised in the market as follows: Initial Assessment Report (IAR) and Final Assessment Large customer: > 100MWh consumption per annum. Report: A detailed investigation of the potential environmental and social impacts of a proposed project, Small customer: < 100MWh consumption per annum. to support the application for Community Infrastructure Demand (side) management: Activities which seek to Designation. infl uence the patterns of energy consumption, including Key Result Area (KRAs): Key Result Areas are the amount and rate of energy use, the timing of energy organisation wide objectives that measure business use and the source and location of energy supply. performance. There are currently eight KRAs covering Distributor: A party who manages an electricity Safety, People, Financial Performance, Network distribution network (e.g. ENERGEX). Regulations defi ne Performance, Operational Excellence, Customers, a distribution entity as the party who provides customer Community and Environment. connection services to a customer at an electrical Key Performance Indicators (KPIs): Key Performance installation or premise. The term Distributor may also be Indicators are a set of measures that are agreed by the used interchangeably with the term Network. A Distributor organisation to best indicate whether we have or have not is also known as a ‘Network Service Provider’. met our KRAs. Electricity Industry Code (EIC or the Code): Under the kV: Kilovolts (kV): 1000 volts. authority of the Electricity Act 2004, the Regulator issued the code to prescribe requirements relating to industry Lost Time Injury (LTI): Instances where permanent staff planning, reporting and service standards. suffered a physical injury as a result of a safety incident, which resulted in those staff taking time off work. ENERGEX ANNUAL REPORT 2009/10 107 GLOSSARY AND Lost Time Injury Frequency Rate (LTIFR): Calculated Program of Work Improvement Program (PoW IP): ABBREVIATIONS as the number of lost time occurrences of injury Aims to improve the PoW process. or disease for every one million hours worked over Queensland Competition Authority (QCA): a 12 month progressive period. An independent statutory authority charged with LV: Low voltage implementing competition policy and funding approval for electricity companies in Queensland. Funding Megavolt amperes (MV.A): The product of voltage approval from 1 July 2010 will be via the AER. and current multiplied by one million. Retailer: The party from which a consumer has National Electricity Market (NEM): A wholesale market contracted to purchase electricity. for the supply of electricity to retailers and end-users in Queensland, New South Wales, the Australian Capital Sectionalising: Restoring power to one section Territory, Victoria, South Australia and Tasmania. of a feeder (powerline) at a time after an interruption to isolate the cause of a fault. National Electricity Market Management Company (NEMMCO): The previous body which operated and Smart meter: A general class of meter which will not administered the National Electricity Market (NEM). only measure kilowatt hours but also ‘quality of supply’ Since 1 July 2009, NEMMCO has been replaced by the functions. It is capable of being read remotely. Australian Energy Market Operator (AEMO). Social media: Media disseminated through social National Meter Identifi er (NMI): Identifi es a customer’s interaction using various forms of technology and electricity meter separately to all other meters. It is used transforms people from content consumers into content when customers transfer from one retailer to another. producers. Forms can include, but not limited to, internet forums, weblogs, social blogs, wikis, podcasts, pictures, Network Management Plan (NMP): The plan is instant messaging and social media services including prepared annually to explain how ENERGEX is managing FaceBook, YouTube, Twitter, MySpace and LinkedIn. the network to meet customer and shareholder aspirations. The NMP is a requirement of the state Statement of Corporate Intent (SCI): ENERGEX’s government’s Electricity Industry Code (EIC or the Code). annual strategic planning document.

Operational Expenditure (OPEX) Plan: A measure of System Average Interruption Duration Index (SAIDI): how effectively ENERGEX is completing its maintenance The average duration (in minutes) of the long duration program as identifi ed within the Network Management (more than one minute) outages. Plan. System Average Interruption Frequency Index Peak Demand: The maximum amount of electricity (SAIFI): The average number of long duration used at one time. Each day, electricity peaks in the (more than one minute) outages experienced by early evening, as people start returning home and activity a customer over a period of time. in the home starts. Once or twice a year, electricity peaks Zero Incident Process (ZIP): ENERGEX’s workplace at summertime and winter. safety awareness program that focuses on the ‘person’ Program of Work (PoW): Taking plans for new network component of the Safety Culture Model. It gives investments and plans for ongoing network maintenance participants an insight into the way their brain works, from the concept stage (design) through to delivery, their thinking, their attitudes and how this drives their ensuring the projects are delivered on time and within behaviour. It is designed to empower people to take budget by achieving best practice in the project control of their personal safety by becoming more management. effective within the systems they work in. ENERGEX ANNUAL REPORT 2009/10 108 n nrygot 53 4 101 structure industry electricity growth energy and 64-66 demand electricity vehicleselectric 65 25, dividends service customer 100 64-65, satisfaction customer customer research engagement 104 See also stakeholder engagement and education 72 customer and community 105 corporate social responsibility corporate offi compliance 21-31 corporate governance, 41, 26, 66-67, 71 and 55 hospitality corporate entertainment contractors Enhancement Program 5,21, 24 Community Powerline 45 43, 72-73 safety electrical community Conduct of Code and demand management See also energy conservation 92-98, 99 101, 14-15 climate change response 23 32-33 report Offi Executive Chief 16-19 Chairman’s report bushfi 29-31 49 Board structure Directors of Board 3-5 102 Board committees funding 57 Australian Energy Regulator, asset base 82-83 apprentices, cadets, trainees about us index r aey 45 re safety 72-73 c 95 ce cer’s

68-69 n rgas 102 and demand management See also energy conservation Energy Conservation Communities 52-54 76 92-98 and programs approach our and education management, demand and 5,82-83 energy conservation people our employees, 94 awareness employee, environmental 86 85 83, 85-86 leadership and development employee training, satisfaction employee communication and employee engagement rga fWrs 50 28 10-11,Standards 54 10-13 Minimum Service Works of Program – projects major 106 regulations and laws 25, 29-31 14-15 3, 51 areas key result joint working travelinternational audit internal 67 our history, Guaranteed Service Levels response change climate and See environmental performance gasgreenhouse emissions fl fi 8-9, expenses 34-37 72 86 team management executive Conduct of Code also See ethical businesspractice diversity workforce and equal employment opportunities 92-98 104 environmental performance 96 System 92, Environmental Management education conservation and energy effi 96 nancial summary 8-9, 104 8-9, summary nancial et u 97 our eet, ciency ciency

76, 76, 102

workforce sustainability 82, 85, 101 85, 82, 51 sustainability workforce 42, 89 cover effi waste and water vegetation management 92-98 52-54, corporate our values, agreement and union consultation 56 ENERGEX at 58-59 sustainability 67suppliers summer preparedness 5 (i), substation design 10-13 68-73 Intent Corporate of Statement engagement and education See also stakeholder our stakeholders, 89 40-45, and consultation stakeholder engagement sponsorships 73-75, wellbeing and safety, health 40-41measures 101safety performance 94 compliance 26-27 66-67, 85 risk management and recognition and reward revenue 8-9, 50 renewable energy cover Report Financial also See 27remuneration our vision, and purpose 93 29 Works of Program 104 procurement, sustainability organisational structure 48-51 network, profi 51-52 supply of quality and reliability network performance, 4, 57 network investment Market Electricity National le of our 3, 49 3, our of le cec 96-97 ciency

INDEX 109

ENERGEX ANNUAL REPORT 2009/10

ENERGEX FINANCIAL REPORT 2009/10 Annual fi nancial report for the year ended 30 June 2010 © Energex Limited 2010 ENERGEX Limited Corporate Office Enquiries 150 Charlotte Street Telephone: 13 12 53 ® ENERGEX and ENERGEX POSITIVE GPO Box 1461 Hours: 8.00am – 6.30pm ENERGY are registered trademarks BRISBANE QLD AUSTRALIA 4001 Monday to Friday of ENERGEX Limited. Telephone: +61 7 3407 4000 Email: [email protected] © 2010 ENERGEX Ltd and Sentis Facsimile: +61 7 3407 4609 For more information on any of the initiatives, Pty Ltd. This document contains projects, products and services mentioned intellectual property of Sentis Pty Ltd, ENERGEX Limited in this report and more, visit the ENERGEX including registered trademarks. ABN 40 078 849 055 website at www.energex.com.au

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DIRECTORS’ The Board of Directors of ENERGEX Limited (ENERGEX or the Company) is pleased to submit this annual fi nancial REPORT report of the Company and the consolidated entity (the Group) for the fi nancial year ended 30 June 2010. To comply with the provisions of the Corporations Act 2001, the Directors report as follows:

Directors The names of the Directors in offi ce at any time during, or since the end of, the year are: ■ John Patrick Dempsey – Chairman ■ Peter Maurice Arnison ■ Mary Stuart Boydell ■ Mat Darveniza ■ John Geldard ■ Ronald William Monaghan ■ Kerryn Lee Newton These Directors have been in offi ce since the start of the fi nancial year to the date of this report, unless otherwise stated. Please refer to the Board of Directors profi les’ section of the ENERGEX Annual Report 2009/10 for details of Directors’ qualifi cations, experience and special responsibilities.

Principal activities The principal activities of the Group during the fi nancial year were the design, construction, operation, maintenance and management of the South East Queensland electricity distribution network.

Operating results The consolidated profi t of the Group, after providing for income tax, amounted to $185.2 million (2009: $128.5 million).

Review of operations A review of the consolidated entity’s operations during the fi nancial year and the results of those operations are contained in the ENERGEX Annual Report 2009/10.

Changes in state of affairs The Australian Energy Regulator (AER) released its Final Determination on 6 May 2010 which sets the revenue allowances for the regulatory control period from 1 July 2010. With the transfer from state-based to national regulation, ENERGEX has been preparing to operate under the new national framework. There have been signifi cant changes to ENERGEX’s service classifi cations and pricing, and three new schemes have been introduced. ENERGEX is well placed to meet its obligations under the new national regulatory framework. ENERGEX has been undergoing a review of its investment in non-core assets and as such the exit of the following investments are in progress or complete: ENERGEX’s subsidiary, Varnsdorf Pty Ltd (Varnsdorf), held contracts and extensions associated with cogeneration activities undertaken with certain Victorian hospitals. Under an extension arrangement, Varnsdorf was required to leave the cogeneration plant in situ at the end of 30 June 2010 and sell the facility works assets to the relevant hospitals for $1. In return for the extension the hospitals exercised their option to acquire the plant. All necessary steps have been taken to ensure the wind down is appropriately conducted. ENERGEX FINANCIAL REPORT 2009/10 2 An asset sale agreement was fully executed and completed on 24 July 2009 for Beak Industries Pty Ltd’s (Beak DIRECTORS’ Industries) main operating assets, resulting in the assets being transferred to the purchaser for $1. A Deed of Surrender REPORT and Termination was also executed on the same date over the site located at Sunshine Energy Park, Victoria releasing Beak Industries from its obligations in relation to the site. Approvals were obtained from the relevant Boards to wind up or deregister the company as appropriate. Finalisation entries were processed in May 2010, including a $1 million debt forgiven by ENERGEX. Beak Industries is currently undergoing a voluntary deregistration process. In June 2010, ENERGEX’s subsidiary Energy Impact Pty Ltd issued Request for Proposal documentation to certain respondents in relation to the sale of assets relating to three landfi ll gas sites (Sleeman, Wyndham and Mornington). At 30 June 2010, various parties indicated their intention to submit a proposal and have commenced due diligence and site inspections. Sale approval and closure is anticipated to occur during 2010/11. The landfi ll gas business does not have a material impact on the Group’s overall result. No other signifi cant changes in the Group’s state of affairs occurred during the fi nancial year.

Events after the reporting period No matters or circumstances have arisen since the end of the fi nancial year which signifi cantly affected or may signifi cantly affect the operations of the Group, results of those operations or state of affairs of the Group in future fi nancial years.

Future developments Disclosure of information regarding likely developments in the operations of the consolidated entity in future fi nancial years and expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Accordingly, this information has not been included in this report.

Environmental regulations The Group’s operations are subject to environmental regulations under both Commonwealth and State legislation. The ENERGEX Board maintains oversight of key environmental risks and obligations and is committed to achieving a high standard of environmental performance. The Board has established appropriate governance arrangements in relation to environment, which includes an environment council consisting of management representatives who regularly reviews environmental issues and reports to the Audit and Compliance Committee and Board. The Group’s environment council is responsible for the regular monitoring of environmental exposures, review of incident trends, environmental initiatives, endorsement of recommendations for environmental improvement policies, programs and investments, as well as compliance with environmental regulations. To enable it to meet its responsibilities the environment council meets monthly to receive progress reports on approved environmental action plans and environmental status reports. Based on the results of enquiries made, the Board is not aware of any signifi cant breaches during the period covered by this report. For further environmental performance information, refer to the ‘Environment’ section of the ENERGEX Annual Report 2009/10.

Dividends Dividends paid or declared by the Company since the end of the 2008/09 fi nancial year were:

Type Cents Total amount Franked/ Date of shares per share $ M unfranked of payment Final 2010 dividend – operating profi ts Ordinary 16.93 148.2 Unfranked Declared and unpaid Final 2009 dividend – operating profi ts Ordinary 11.74 102.8 Unfranked 30 December 20091 1 Refer to Note 20 of the fi nancial statements for details of dividends paid. ENERGEX FINANCIAL REPORT 2009/10 3 DIRECTORS’ REPORT

Share options There are no share options in existence at this time.

Directors’ shareholdings At the time of publication, no Directors held any benefi cial interest in the shares of the Company. The shareholding DIRECTORS’ Ministers on behalf of the Queensland Government hold all issued shares. REPORT Directors’ benefi ts and interests in contracts Between 30 June 2009 and 30 June 2010, no Director has received or become entitled to receive a benefi t, other than those benefi ts disclosed in Note 28 of the fi nancial statements.

Indemnifi cation of Directors and offi cers Indemnifi cation of Directors of the Company The Company has agreed to indemnify John Dempsey, Peter Arnison, Mary Boydell, Mat Darveniza, John Geldard, Ronald Monaghan and Kerryn Newton, being current Directors of the Company, and other former Directors of the Company, against all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as a Director of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith or liability against which the Company is not permitted by law to exempt or indemnify the Director in accordance with the Constitution of the Company. The ENERGEX Limited Constitution stipulates that, subject to its terms and the exceptions above, the Company will meet the full amount of any such liabilities, including costs and expenses.

Indemnifi cation of Directors of the Company’s controlled entities The Company has agreed to indemnify Darren Busine, Terence Effeney, Susan Kehoe and Peter Weaver, being current Directors of the Company’s controlled entities, and other former Directors1 of the Company’s controlled entities, for all liabilities to another person (other than the Company or a related body corporate) that may arise from their position as a Director of the Company’s controlled entities, except where the liability arises out of conduct involving a lack of good faith or liability against which the Company is not permitted by law to exempt or indemnify the Director. The deed of indemnity stipulates that, subject to its terms and the exceptions above, the Company will meet the full amount of any such liabilities, including costs and expenses. The indemnity continues for a period of seven years following a Director’s resignation from their position.

Indemnifi cation of ENERGEX Directors and offi cers appointed to external boards and committees The Company has agreed to indemnify any Directors or offi cers who are nominated by the ENERGEX Board to represent the Company on external boards and committees to the extent as follows: ■ A deed of indemnity was provided to John Dempsey for his role as an ENERGEX representative Director on the Board of Ceramic Fuel Cells Limited. Effective 28 August 2009, he ceased holding the position as the ENERGEX representative Director. ■ Indemnities provided to former ENERGEX representative Directors continue for seven years following their resignation from that position, in accordance with the terms of the deed of indemnity. ■ Other offi cers appointed to external boards and committees are indemnifi ed in accordance with the terms of the ENERGEX Directors’ and Offi cers’ Liability insurance policy.

Insurance premiums Premiums have been paid on policies of insurance for former and current Directors and offi cers. Disclosure of the nature of the liability covered by and premiums paid under these contracts of insurance is prohibited by the terms of the insurance contracts.

1 Effective 2 July 2010, Thomas Bloxsom resigned as a Director of Service Essentials Pty Ltd and Metering Dynamics Business Support Pty Ltd. ENERGEX FINANCIAL REPORT 2009/10 4 Directors’ meetings The numbers of meetings of the Company’s Board of Directors and of each Board Committee held and attended by each Director during the year ended 30 June 2010 were:

Committee meetings ENERGEX Limited Board meetings Audit and Corporate Network and compliance development technical Remuneration DIRECTORS’ REPORT Directors Attended Held Attended Held Attended Held Attended Held Attended Held John Dempsey (Chairman) 12 12 5 5 3 3 – – – – Peter Arnison 10 12 4 5 – – 4 4 – – Mary Boydell1 12 12 – – – – 4 4 5 5 Mat Darveniza 12 12 – – – – 4 4 5 5 John Geldard2 11125523–––– Ronald Monaghan3 10 12 – – 3 3 – – 5 5 Kerryn Newton 12 12 5 5 – – 4 4 – – 1 Ms Mary Boydell resigned from the Corporate Development Committee at the Board meeting held on 24 August 2009. 2 Mr John Geldard resigned as Chairman of the Corporate Development Committee at the Board meeting held on 24 August 2009. 3 Mr Ronald Monaghan was appointed as Chairman of the Corporate Development Committee at the Board meeting held on 24 August 2009.

Remuneration of Directors and executives Refer to Note 28 of the fi nancial statements for details of Directors’ and executives’ remuneration.

Rounding of amounts The parent entity is a company of the kind specifi ed in Class Order 98/100 dated 10 July 1998, issued by the Australian Securities & Investments Commission. In accordance with that class order, amounts in the fi nancial report and Directors’ report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6. This report is made in accordance with a resolution of the Directors.

John Dempsey Chairman ENERGEX Limited 23 August 2010 Brisbane, Queensland ENERGEX FINANCIAL REPORT 2009/10 5 AUDITOR’S INDEPENDENCE declaration

AUDITORS’ To the Directors of ENERGEX Limited INDEPENDENCE DECLARATION This auditor’s independence declaration has been provided pursuant to section 307C of the Corporations Act 2001.

Independence Declaration As lead auditor for the audit of ENERGEX Limited for the year ended 30 June 2010, I declare that, to the best of my knowledge and belief, there have been – a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit.

G G POOLE FCPA Queensland Audit Offi ce Auditor-General of Queensland Brisbane ENERGEX FINANCIAL REPORT 2009/10 6 INCOME statements for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY INCOME STATEMENTS 2010 2009 2010 2009 Note $ M $ M $ M $ M

Revenue from rendering of services 2.1 1,300 .7 1,154.0 1,290 .4 1,134.5 Revenue from sale of goods 2.1 46 .5 48 .0 32.7 33 .1 Government grant revenue 2.1 27 .6 33 .3 24.5 29.1 Other revenue 2.1 93 .1 100.9 92.7 92.8 Total operating revenue 1,467.9 1,336 .2 1,440 .3 1,289.5

Materials and consumables (59 .7) (60.3) (47.4) (47.4) Transmission use of system charges (286 .0) (246 .6) (286 .0) (246 .7) Employee benefi ts expense (212 .1) (208.1) (205.8) (203.0) Depreciation, amortisation and impairment expense 2.2 (242.5) (235 .4) (237 .7) (235 .2) Contractors and consultants (135 .4) (144 .1) (132.8) (140.1) Finance costs 2.2 (224 .7) (212 .5) (225 .5) (213.5) Forgiveness of related party receivable 2.2 – – (1.0) – Other operating expenses (47.0) (53.5) (42.8) (46.5) Total operating expenses (1,207 .4) (1,160 .5) (1,179.0) (1,132 .4) Profi t before income tax equivalent 260.5 175 .7 261.3 157.1 Income tax equivalent 3.1 (75 .3) (47.2) (75 .7) (42 .5) Profi t for the year 185.2 128 .5 185.6 114.6 Profi t attributable to non-controlling equity interest – – – – Profi t attributable to members of the parent entity 185 .2 128 .5 185.6 114.6

The accompanying notes form part of these fi nancial statements. ENERGEX FINANCIAL REPORT 2009/10 7 STATEMENTS OF comprehensive income for the year ended 30 June 2010

STATEMENTS OF CONSOLIDATED PARENT ENTITY COMPREHENSIVE 2010 2009 2010 2009 INCOME Note $ M $ M $ M $ M

Profi t for the year 185.2 128 .5 185.6 114.6

Other comprehensive income Gain on revaluation of property, plant and equipment, net of tax 18.1 167 .9 21 .9 167 .9 21 .9 Changes in the fair value of cash fl ow hedges, net of tax 18.3 0.3 (0.2) 0.3 (0.2) Changes in the fair value of available-for-sale investments, net of tax 18.4 (13.1) (5.5) (13.1) (5.5) Exchange differences on translation of foreign operations 18.2 – (0.4) – (0.4) Actuarial losses on defi ned benefi t plans, net of tax 19 (13.1) (63.5) (13.1) (63.5) Other comprehensive income for the year, net of tax 142.0 (47.7) 142 .0 (47.7) Total comprehensive income for the year 327.2 80 .8 327 .6 66 .9

Total comprehensive income for the year is attributable to: Owners of ENERGEX Limited 327 .2 80 .8 327 .6 66 .9 Non-controlling interest 21 – – – – 327 .2 80 .8 327 .6 66 .9

The accompanying notes form part of these fi nancial statements. ENERGEX FINANCIAL REPORT 2009/10 8 BALANCE sheets as at 30 June 2010

CONSOLIDATED PARENT ENTITY BALANCE SHEETS 2010 2009 2010 2009 Note $ M $ M $ M $ M

ASSETS Current assets Cash and cash equivalents 6 162 .0 304 .3 156 .1 301.7 Trade and other receivables 7 311 .2 262.2 304.5 253.3 Inventories 8 89 .3 106 .5 88 .2 105 .7 Derivative fi nancial instruments 23.2 – 0.3 – 0.3 Assets classifi ed as held for sale 4.2 – 14 .8 – 14 .8 Other current assets 12 25 .1 29.9 25 .0 29.8 Total current assets 587.6 718.0 573 .8 705 .6 Non-current assets Trade and other receivables 7 66.2 89 .3 66.2 89 .3 Other fi nancial assets 9 – 6.3 – 6.4 Property, plant and equipment 10 8,021.8 7,054 .0 8,010.4 7,037.9 Deferred tax assets 3.4 126.6 135 .6 122.2 134 .2 Intangible assets 11 9.4 7.8 9.4 7.8 Total non-current assets 8,224.0 7,293.0 8,208.2 7,275.6 TOTAL ASSETS 8,811 .6 8,011 .0 8,782.0 7,981 .2 LIABILITIES Current liabilities Trade and other payables 13 181 .7 182.6 177 .3 178.5 Current tax payable 3.2 – (3.6) – (3.6) Provisions 15 186.8 136 .8 182 .8 133 .3 Derivative fi nancial instruments 23.2 – 0.3 – 0.3 Other current liabilities 16 114.2 75 .5 114.2 75 .5 Total current liabilities 482.7 391.6 474.3 384.0 Non-current liabilities Trade and other payables 13 – – 23 .1 19.8 Long-term borrowings 14 4,094.2 3,843 .1 4,094.2 3,843 .1 Defi ned benefi t fund 25.3 70.3 73.1 70.3 73.1 Deferred tax liabilities 3.5 1,394 .6 1,255 .4 1,394 .6 1,258.2 Provisions 15 173.4 151 .2 173.4 151 .2 Other non-current liabilities 16 21 .5 3.5 21 .5 3. 4 Total non-current liabilities 5,754.0 5,326 .3 5,777.1 5,348 .8 TOTAL LIABILITIES 6,236.7 5,717 .9 6,251.4 5,732 .8 NET ASSETS 2,574.9 2,293.1 2,530.6 2,248 .4 EQUITY Contributed equity 17 746.4 643.6 746.4 643.6 Reserves 18 1,339 .9 1,194.5 1,339 .9 1,194.5 Retained earnings 19 488 .6 455 .0 444 .3 410 .3 Parent interest 2,574 .9 2,293.1 2,530.6 2,248 .4 Non-controlling interest 21 – – – – TOTAL EQUITY 2,574 .9 2,293.1 2,530.6 2,248 .4 The accompanying notes form part of these fi nancial statements. ENERGEX FINANCIAL REPORT 2009/10 9 STATEMENTS OF changes in equity for the year ended 30 June 2010

STATEMENTS Attributable to owners of ENERGEX Limited OF CHANGES IN EQUITY Non- Contributed Retained controlling Total equity Reserves earnings Total interest equity Consolidated $ M $ M $ M $ M $ M $ M

Balance at 1 July 2008 643 .6 1,220 .4 451 .1 2,315 .1 – 2,315.1

Profi t for the year – – 128 .5 128 .5 – 128.5 Other comprehensive income – (25.9) (21 .8) (47.7) – (47.7) Total comprehensive income for the year – (25 .9) 106 .7 80.8 – 80.8 Transactions with owners in their capacity as owners: Dividends provided for or paid – – (102.8) (102 .8) – (102 .8) Balance at 30 June 2009 643 .6 1,194 .5 455 .0 2,293.1 – 2,293.1

Balance at 1 July 2009 643 .6 1,194 .5 455 .0 2,293.1 – 2,293.1

Profi t for the year – – 185 .2 185 .2 – 185.2 Other comprehensive income – 145.4 (3 .4) 142 .0 – 142.0 Total comprehensive income for the year – 145 .4 181 .8 327 .2 – 327.2 Transactions with owners in their capacity as owners: Contributions of equity – dividend reinvestment 102 .8 – – 102.8 – 102.8 Dividends provided for or paid – – (148.2) (148.2) – (148.2) Balance at 30 June 2010 746.4 1,339 .9 488 .6 2,574 .9 – 2,574.9

The accompanying notes form part of these fi nancial statements. ENERGEX FINANCIAL REPORT 2009/10 10 STATEMENTS Attributable to owners of ENERGEX Limited OF CHANGES Contributed Retained IN EQUITY equity Reserves earnings Total Parent Entity $ M $ M $ M $ M

Balance at 1 July 2008 643 .6 1,220.4 420 .3 2,284.3

Profi t for the year – – 114 .6 114 .6 Other comprehensive income – (25.9) (21 .8) (47 .7) Total comprehensive income for the year – (25.9) 92.8 66.9 Transactions with owners in their capacity as owners: Dividends provided for or paid – – (102.8) (102 .8) Balance at 30 June 2009 643 .6 1,194.5 410.3 2,248.4

Balance at 1 July 2009 643 .6 1,194.5 410.3 2,248.4

Profi t for the year – – 185 .6 185 .6 Other comprehensive income – 145.4 (3.4) 142 .0 Total comprehensive income for the year – 145.4 182.2 327 .6 Transactions with owners in their capacity as owners: Contributions of equity – dividend reinvestment 102.8 – – 102.8 Dividends provided for or paid – – (148.2) (148.2) Balance at 30 June 2010 746.4 1,339.9 444 .3 2,530.6

The accompanying notes form part of these fi nancial statements. ENERGEX FINANCIAL REPORT 2009/10 11 CASH FLOW statements for the year ended 30 June 2010

CASH FLOW CONSOLIDATED PARENT ENTITY STATEMENTS 2010 2009 2010 2009 Note $ M $ M $ M $ M

Cash fl ows from operating activities: Receipts from customers (GST inclusive) 1,455 .4 1,282.8 1,442.3 1,263.0 Payments to suppliers and employees (GST inclusive) (678 .2) (699.0) (667.4) (680 .1) 777 .2 583 .8 774.9 582 .9 Finance costs paid (214.1) (212 .2) (215.0) (213.2) Income taxes (paid)/received 3.6 9.8 3.6 10. 3 Government grants received – 45 .0 – 45 .0 Net cash provided by operating activities 6.2 566.7 426 .4 563.5 425 .0 Cash fl ows from investing activities: Payment for property, plant and equipment, and intangibles (961.9) (835 .6) (961.9) (835 .1) Payments for capitalised interest (17.3) (12.1) (17 .3) (12.1) Loan to related parties (6.3) – (6.3) – Proceeds from sale of land 20.1 – 20.1 – Proceeds from sale of property, plant and equipment 8.0 13 .2 8.0 13 .2 Proceeds from sale of investments and business operations 6.2 7.9 5.0 7.9 5.0 Interest received 6.2 17.9 33 .2 17.8 33 .1 Net cash used in investing activities (931.6) (796.3) (931.7) (795.9) Cash fl ows from fi nancing activities: Proceeds from borrowings 251.1 498.2 251.1 498.2 Repayable deposits received/(paid) 0.9 (1 .2) 0.9 (1 .2) Dividends paid to the Company’s shareholders 20 (102.8) (210 .8) (102.8) (210 .8) Proceeds from issue of shares 17.2 102 .8 – 102 .8 – Net cash provided by fi nancing activities 252.0 286 .2 252.0 286 .2 Net decrease in cash and cash equivalents (112.9) (83 .7) (116.2) (84.7) Cash and cash equivalents at start of year 304.3 359.0 301 .7 357.4 Queensland Treasury Corporation working capital facility (29 .4) 29.4 (29 .4) 29.4 Effect of exchange rate changes on cash and cash equivalents – (0.4) – (0.4) Cash and cash equivalents at end of year 6.1 162 .0 304 .3 156 .1 301.7

The accompanying notes form part of these fi nancial statements. ENERGEX FINANCIAL REPORT 2009/10 12 NOTES TO AND FORMING PART OF THE fi nancial statements for the year ended 30 June 2010

1 S ummary of signifi cant accounting policies NOTES TO AND FORMING 1.1 General information PART OF THE ENERGEX Limited (ENERGEX or the Company) is a company domiciled in Australia. The consolidated fi nancial report FINANCIAL of the Company for the year ended 30 June 2010 comprises the Company and its subsidiaries (together referred to as STATEMENTS the consolidated entity or the Group) and the consolidated entity’s interest in associates and jointly controlled entities. The fi nancial statements were authorised for issue by the Directors on 23 August 2010.

1.2 Statement of compliance The fi nancial report is a general purpose fi nancial report that has been prepared in accordance with Australian Accounting Standards, Urgent Issues Group (UIG) Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board, the Corporations Act 2001 and the provisions of the Government Owned Corporations Act 1993 (GOC Act). The consolidated fi nancial report of the Group and the Company complies with all applicable Australian Accounting Standards. The accounting policies have been consistently applied, unless otherwise stated. The fi nancial report includes the consolidated fi nancial statements of the Group and the parent entity fi nancial statements in accordance with the Australian Securities & Investments Commission (ASIC) Class Order 10/654, issued on 26 July 2010.

Early adoption of Australian Accounting Standards The Group has assessed the Australian Accounting Standards issued or amended but not yet effective for the annual reporting period ended 30 June 2010 and elected not to early adopt any standards under section 334(5) of the Corporations Act 2001.

Australian Accounting Standards not yet applicable and not early adopted The potential impact of Australian Accounting Standards issued or amended that are not yet effective and not elected to be early adopted has been assessed. They are not expected to result in signifi cant accounting policy or disclosure changes and are shown below (those Australian Accounting Standards that have been assessed to result in no impact or minimum impact are not included in the table):

Application Application date of Impact on the Group’s date for Reference Title Issued standard1 fi nancial report the Group AASB 9 Financial Instruments December 1 January 2013 Potential impact on the Group for 1 July 2013 2009 the classifi cation of fi nancial assets carried at amortised cost and carried at fair value. AASB 124 Related Party December 1 January 2011 No signifi cant impact on the Group 1 July 2011 Disclosures 2009 as the exemption for government related entities is only a partial exemption and would not affect current disclosures. 1 Applicable to reporting periods beginning on or after the given date. ENERGEX FINANCIAL REPORT 2009/10 13 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

1.3 Bas is of preparation Historical cost convention The consolidated fi nancial statements have been prepared on the basis of historical cost, except the following assets and liabilities, which are stated at their fair value: available-for-sale fi nancial assets; fi nancial assets and liabilities (including derivative instruments); and supply system assets.

NOTES TO Functional and presentation currency AND FORMING These consolidated fi nancial statements are presented in Australian dollars, which is the Company’s functional currency PART OF THE and the functional currency of the Group. FINANCIAL STATEMENTS Critical accounting estimates and judgements The preparation of consolidated fi nancial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates. Estimates and underlying assumptions are revised on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in relevant future periods affected. The estimates and assumptions that have a potential signifi cant effect are discussed below.

Regulated revenue Various assumptions are used in the recognition of the Group’s regulated revenue and associated assets and obligations. These assumptions are described in Notes 1.6, 1.13, 1.23 and 1.26. During 2009/10 the methodology for calculating transmission use of system (TUOS) under- or over-recoveries was revised to take into account the previous year’s under- or over-recovery. The previous methodology adopted was consistent with the Queensland Competition Authority (QCA) approach. However, during 2009/10 this methodology was reviewed and changed by the QCA. The impact of the change on the 2009/10 fi nancial statements is an adjustment decreasing TUOS revenue by $6.0 million and reducing 2008/09 TUOS over-recovery by $7.6 million. As the amount of TUOS recoveries is dependent on actual TUOS revenue and TUOS expense, it is impractical to estimate the effect on future periods resulting from the change in accounting estimate.

Impairment of property, plant and equipment, and intangibles The Group assesses impairment at the end of each reporting period by evaluating conditions specifi c to the Group that may lead to indicators of impairment of assets. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifi able cash fl ows which are largely independent of the cash infl ows from other assets or groups of assets (cash-generating units). Key estimates and assumptions made in determining the recoverable amount of assets, in the absence of quoted market prices are discussed in Notes 10 and 11.

Supply system assets valuation Supply system assets including associated land and buildings are carried at fair value. Fair value is estimated using an income approach based on discounted future cash fl ows. Key assumptions are made in assessing fair value and are discussed in Note 10.

Dismantled assets valuation In addition to the income based approach applied to supply system assets to ensure they are carried at fair value, the unit rates used to estimate the value of dismantled assets were reviewed and have been amended to align with the assets valuation approach. The amended valuation methodology applied to dismantled assets from 1 July 2009. The impact of the change on the 2009/10 fi nancial statements is estimated to be a $4.6 million decrease in profi t after tax. As the value of the dismantled assets is dependent on the volume of dismantled assets, it is impractical to estimate the effect on future periods resulting from the change in accounting estimate. ENERGEX FINANCIAL REPORT 2009/10 14 Defi ned benefi t superannuation fund obligations Actuarial assumptions used in the calculation of the Group’s defi ned benefi t superannuation fund obligations are described in Note 25.

Employee entitlements The Group recognises a long service leave liability based on accrued employment entitlements. The liability recognised for employee entitlements is based on assumptions described in Note 1.22. NOTES TO AND FORMING 1.4 Pri nciples of consolidation PART OF THE The consolidated fi nancial statements of the Group include the fi nancial statements of ENERGEX and all entities FINANCIAL in which it had a controlling interest during the year ended 30 June 2010. STATEMENTS

Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the fi nancial and operating policies of an entity to obtain benefi ts from its activities. The balances and effects of transactions between entities are eliminated in preparing the consolidated fi nancial statements. Non-controlling interests in the results and equity of controlled entities are shown separately in the consolidated income statements and balance sheets respectively. Where control of an entity commences or ceases during a fi nancial year, the profi ts or losses are included in the consolidated income statements from the date control commenced to the date control ceased. Investments in controlled entities are carried in the fi nancial statements at the lower of cost and recoverable amount.

Associates Associates are entities the Group has signifi cant infl uence over, but no control over the fi nancial and operating policies. Investments in associates are accounted for in the consolidated fi nancial statements using the equity method and are carried at the lower of cost and recoverable amount. Under this method, the consolidated entity’s share of the post-acquisition profi ts or losses of associates is recognised in the consolidated income statements, and its share of post-acquisition movements in reserves is recognised in consolidated reserves. The cumulative post-acquisition movements are adjusted against the cost of the investment.

Jointly controlled entities The Group has a 50 per cent interest in the jointly controlled entity, SPARQ Solutions Pty Ltd. This investment is accounted for in the fi nancial statements using the equity method. Refer to Note 26 for further details.

1.5 For eign currency translation Foreign currency transactions are initially translated to Australian currency at the rates of exchange prevailing at the dates of the transactions. Amounts receivable and payable in foreign currencies at the end of the reporting period are converted to Australian dollars at the rates of exchange prevailing at that date. Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses in the fi nancial year in which the exchange rates change. ENERGEX FINANCIAL REPORT 2009/10 15 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

1.6 Revenue Revenue is measured at the fair value of the consideration received and receivable net of the amount of goods and services tax (GST). Revenue is recognised when the amount can be reliably measured and it is probable that future economic benefi ts will fl ow to the entity. Revenue is recognised for the major business activities as follows:

NOTES TO Rendering of services AND FORMING Regulated revenue PART OF THE ENERGEX is subject to regulation under the National Electricity Law, the National Electricity Rules, and by the QCA FINANCIAL to 30 June 2010 under a revenue cap and price cap form of regulation. The revenue cap is comprised of an allowance STATEMENTS for distribution use of system (DUOS) charges and capital contributions, and a price cap applies to certain ancillary distribution services (refer to service charges section below). ENERGEX is subject to economic regulation under the Australian Energy Regulator (AER) effective from 1 July 2010. Regulated network use of system (NUOS) prices are determined based on the allowed revenue cap plus a passthrough of regulated TUOS charges levied by transmission network service providers. Regulated revenue is comprised of actual billed energy consumption, estimated unbilled energy consumption, capital contributions and a provision for under- or over-recovery of regulated network prices and other allowances. Any current period under- or over-recovery results in an adjustment which may increase or decrease prices in the succeeding periods. Where over-recoveries result in an obligation, they are brought to account as a liability in the period in which they are over-recovered. Where there is suffi cient certainty regarding the recoverability of under-recoveries, they are brought to account as an asset in the period in which they are under-recovered.

Service charges Revenue is received for the provision of other electricity-related services including additions and alterations to meters and service connections, ancillary metering services and temporary supply services. Some of these services were subject to a price cap by the QCA. However, the price charged for some of these services was capped under schedule 8 of the Electricity Regulation 2006 (Qld). Revenue is recognised when the service is provided.

Non-refundable capital contributions The Group fi nances part of its capital works program through non-refundable capital contributions which are applied to the cost of these works. Capital contributions form part of the regulated revenue for the electricity network. Non- repayable capital contributions, in-kind capital contributions and in-cash capital contributions are initially recognised as unearned revenue in the balance sheet. These contributions are subsequently recognised as revenue from ordinary activities when the associated assets are brought into commercial operation.

Sale of goods Revenue from the sale of goods is recognised when the signifi cant risks and rewards of ownership of the goods have been passed to the buyer, effective control over the goods has been passed to the buyer and the amount can be measured reliably.

Revenue from billed recoverable works Recoverable works represent customer requested works and work resulting from damage to ENERGEX property. Revenue is recognised when the work has been completed.

Interest revenue Interest revenue is recognised as it is earned.

Government grants When there is reasonable assurance the Group will comply with all conditions attached to government grants and the grants are received, they are recognised in the balance sheet as unearned revenue. Grants that compensate the consolidated entity for expenses incurred are recognised as revenue in the income statements. This occurs on a systematic basis as the conditions of the grants are fulfi lled. ENERGEX FINANCIAL REPORT 2009/10 16 1.7 Goods and services tax Revenues, expenses and assets are recognised net of GST except where the amount of GST incurred is not recoverable from the Australian Taxation Offi ce (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash fl ows are presented in the cash fl ow statements on a gross basis where major classes of gross cash receipts and gross cash payments are disclosed inclusive of GST. The GST component of cash fl ows arising from investing and NOTES TO fi nancing activities which is recoverable from, or payable to, the taxation authority, is classifi ed as operating cash fl ows AND FORMING on the basis that the GST receivable/payable is operating in nature. PART OF THE FINANCIAL 1.8 Finance costs STATEMENTS Borrowings are initially recognised at fair value including transaction costs incurred and are subsequently measured at amortised cost, using the effective interest rate method. Following initial recognition, no principal repayments are made and fi nance costs are charged by the lender at a rate inclusive of administration fees, capital market fees, a competitive neutrality fee and interest on the principal (refer Note 1.24). Interest costs are calculated by Queensland Treasury Corporation (QTC) in accordance with its book rate methodology, which equates with amortised cost using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the fi nancial instrument. Borrowing costs, which includes interest calculated using the effective interest method and administration fees, are expensed in the period in which they arise. Finance costs directly attributable to the construction of assets that take more than 12 months to prepare for their intended use are added to the cost of those assets. Where the present value of a provision differs materially to its future expected settlement value, the provision is recorded at its present value. The increase in the provision due to the passage of time is recorded as a fi nance cost and is referred to as the unwinding of the discount (refer Note 1.23). All other fi nance costs are recognised as an expense in the period in which they are incurred.

1.9 Income tax Income tax equivalents The Group is required to make income tax equivalent payments to the Queensland Government pursuant to subsection 129(4) of the GOC Act. These payments are administered by the ATO under the National Tax Equivalent Regime (NTER). The NTER broadly utilises the provisions of the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and associated legislation, as well as rulings and other pronouncements by the ATO, to determine the tax payable by the Group (refer Note 3.2). The entities are not required to maintain a franking account.

Income tax equivalent accounting The charge for current income tax expense is based on the profi t for the year adjusted for any items that are non- assessable or non-deductible in relation to the current tax year. It is calculated using the tax rates that have been enacted or substantively enacted by the end of the reporting period. Current tax payable is the expected tax payable on the taxable profi t for the year, at tax rates applicable to the income tax year, less any instalments paid. Deferred tax assets and liabilities are calculated by comparing the carrying amounts of assets and liabilities in the balance sheets with the tax bases of assets and liabilities determined in accordance with the relevant taxation legislation. Deferred tax is calculated at the tax rates expected to apply when the differences reverse. Deferred tax is recognised as income or an expense in the income statements except for items that may be credited/ (charged) directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred tax assets are recognised to the extent that it is probable that future tax profi ts will be available against which deductible temporary differences can be utilised. ENERGEX FINANCIAL REPORT 2009/10 17 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset deferred tax balances, those balances relate to the same taxation authority and the intention is to settle on a net basis or realise the asset and settle the liability simultaneously. The amount of benefi ts brought to account or which may be realised in the future is based on the assumption no adverse change will occur in income taxation legislation. It also anticipates the Group will derive suffi cient future assessable income to enable the benefi t to be realised and comply with the conditions of deductibility imposed NOTES TO by the law. AND FORMING Income tax consolidation PART OF THE FINANCIAL The Group implemented the tax consolidation legislation as of 1 December 2002 and is therefore taxed as a single entity STATEMENTS from that date. ENERGEX is the ‘head-entity’ in the tax-consolidated group and makes income tax payments on behalf of wholly-owned subsidiaries. However, in accordance with UIG Interpretation 1052 Tax Consolidation Accounting, wholly-owned Australian subsidiaries in the tax-consolidated group continue to account for their own current and deferred tax amounts. These amounts are measured as if the subsidiary continued to be a stand-alone taxpayer in its own right.

Tax funding agreement Entities within the ENERGEX tax-consolidated group existing at 30 June 2010 have signed a tax funding agreement designed to bind all entities within the tax-consolidated group. The tax funding agreement applies from 1 July 2005. Under the terms of the tax funding agreement, each of the subsidiary entities in the tax-consolidated group have agreed to pay or receive a tax equivalent payment to or from the head entity, based on the current tax liability or current tax receivable asset of the subsidiary entity. Such amounts are refl ected in amounts receivable from or payable to the head company in the tax-consolidated group. ENERGEX has elected the ‘stand-alone taxpayer approach’ under UIG Interpretation 1052 Tax Consolidation Accounting in accounting for the tax effect balances of reporting entities within the ENERGEX Group. Under this approach, each entity in the tax-consolidated group measures its current and deferred taxes as if it continued to be a separate taxable entity in its own right.

1.10 Earnings per share Basic earnings per share is determined by dividing profi t after tax attributable to members of the parent entity by the weighted average number of ordinary shares on issue during the fi nancial year. The weighted average number of shares on issue (also referred to as shares outstanding) during the fi nancial year is calculated by applying a time weighting factor to shares issued or redeemed throughout the year.

1.11 Dividends A provision is made for the amount of any dividend declared by the Board on or before the end of the fi nancial year but not distributed at the end of the reporting period. A liability for dividends payable is recognised in the reporting period in which the dividends are declared for the entire undistributed amount.

1.12 Cash and cash equivalents Cash and cash equivalents include cash on hand, cash at bank, call deposits and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheets and are included as a component of cash and cash equivalents for the purpose of the cash fl ow statements. ENERGEX FINANCIAL REPORT 2009/10 18 1.13 Trade and other receivables Trade and other receivables are recognised at nominal amounts due at the time of sale or service delivery. Trade receivables are due for settlement within 10 to 30 days of the customer being billed. Other receivables are due in accordance with their contractual terms. Collectibility of trade receivables is reviewed on an ongoing basis. A provision for impairment of receivables is raised when the collection of the full amount of the debt is no longer probable. Bad debts are written off when identifi ed. Movements in the provision are recognised in the income statement. NOTES TO AND FORMING Regulated revenue under-recoveries PART OF THE A separate current asset is recognised for the net balance of regulated revenue under-recoveries to be released over FINANCIAL the next 12 months where the net balance is an asset. A separate non-current asset is provided for any current year STATEMENTS under-recovery of regulated revenue, on the basis there is suffi cient certainty over its recoverability in future years but the timing of the release is yet to be approved by the regulator.

1.14 Financia l instruments Initial recognition and measurement Financial instruments are initially measured at fair value when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below.

Subsequent measurement Financial assets or fi nancial liabilities at fair value through profi t and loss are measured at fair value at the end of each reporting period, subsequent to their initial recognition. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the profi t or loss when incurred, unless hedge accounting is applied. Loans and receivables are stated at amortised cost subsequent to their initial recognition, using the effective interest method less provision for impairment. The effective interest rate is the rate that discounts estimated future cash fl ows over the life of the asset. Available-for-sale fi nancial assets are measured at fair value at the end of each reporting period, subsequent to their initial recognition. Fair value movements are recognised in a reserve account and transferred to the income statement upon sale or derecognition, where the fi nancial asset is not held for trading purposes. Other non-derivative fi nancial liabilities are recognised at amortised cost subsequent to their initial recognition, comprising original debt less principal payments and amortisation.

1.15 Inventories The majority of ENERGEX inventories are generally used in maintenance and construction of electricity supply system assets. Some inventories are sold to contractors for the development of subdivisions. Inventories are measured at the lower of cost and net realisable value.

1.16 Other fi nancial a ssets Interests in listed and unlisted securities, other than controlled entities in the consolidated accounts, are classed as available-for-sale fi nancial assets where the interests are not held for trading purposes. Fair value movements are recognised in a reserve account and are transferred to the income statement upon sale or derecognition (refer Note 1.14). ENERGEX FINANCIAL REPORT 2009/10 19 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

1.17 Property, plant a nd equipment Each class of property, plant and equipment is carried at fair value or cost, less where applicable, any accumulated depreciation and impairment losses. Fair value is defi ned as the amount for which an asset could be exchanged between knowledgeable, willing parties in an ‘arm’s length’ transaction. Supply system assets are measured at fair value using an income approach based on discounted future cash fl ows. Valuations are undertaken annually to ensure that the carrying value of the assets does not differ materially from that NOTES TO which would be determined using fair value at the end of the reporting period. AND FORMING PART OF THE Land and building assets include properties utilised for warehousing and logistics purposes, training and pole depot FINANCIAL facilities, and fi eld response activities. These properties are equipped with specialised facilities to meet the specifi c STATEMENTS needs of the network fi eld operations. As these land and building assets are integral in supporting the operation of the electricity network and form part of the regulated asset portfolio subject to the same revenue cap form of regulation, they were reclassifi ed as supply system assets as at 30 June 2010. At 30 June 2009, these land and buildings were recognised as a separate asset class and the Directors determined their fair value ($136.7 million) by reference to independent property valuations based on commercial market information. The 2008/09 land and building balances have been reclassifi ed as supply system assets for comparative purposes as at 30 June 2010. Other property, plant and equipment, and work in progress are carried at cost. The carrying amount for these assets at cost should not materially differ from their fair value.

Acquisition of assets All assets acquired are recorded at their cost of acquisition plus incidental costs directly attributable to the acquisition.

Asset recognition threshold Individual items with a purchase price of $1,000 or greater are recorded in the fi nancial statements as property, plant and equipment. Items between $100 and $999 in value which have a life greater than 12 months are recorded as pooled assets. All other items are expensed.

Non-current assets constructed by the Group The cost of non-current assets constructed by the Group includes the cost of materials, direct labour, other costs directly attributable to the assets and where appropriate, borrowing costs.

Repairs and maintenance Items of property, plant and equipment are maintained on a regular basis. The costs of such maintenance are expensed as incurred. Where the costs extend the useful life of the asset or upgrade the asset beyond its originally designed function or capacity, such costs are capitalised.

Gains and losses on disposal A gain or loss on disposal is recognised in the income statement and is the difference between the net sale proceeds and the carrying amount of the asset at the time of disposal.

Depreciation Depreciation is calculated on a straight-line basis using the estimated useful life of each item of property, plant and equipment within the same asset class. Depreciation is provided for from the time units of property, plant and equipment commence operation. Estimates of the remaining useful lives of property, plant and equipment are reviewed annually. When changes are made, adjustments are refl ected prospectively in current and future periods only. The electricity supply system is treated as a complex asset. A complex asset is a physical asset capable of disaggregation into identifi able components that are subject to regular replacement. These components are assigned useful lives distinct from the asset to which they relate and are depreciated accordingly. The estimated useful lives used for each class of depreciable assets are:

Supply system 12 – 70 years Other property, plant and equipment 3 – 35 years ENERGEX FINANCIAL REPORT 2009/10 20 Asset revaluation reserve If an item of property, plant and equipment is revalued, the entire class to which that asset belongs is revalued on a consistent basis. The electricity supply system is treated as a complex asset for the purposes of revaluation increments and decrements, such that increments and decrements can be offset. Revaluation increments, net of tax, are recognised in the asset revaluation reserve. This is except for amounts reversing a decrement previously recognised as an expense, which are recognised in the income statement. Revaluation decrements are only offset against revaluation increments applying to the supply system, and any excess is recognised NOTES TO as an expense. AND FORMING PART OF THE Where an asset is sold, dismantled or scrapped, any remaining revaluation amount held in the asset revaluation reserve FINANCIAL is transferred directly to retained earnings. STATEMENTS

1.18 Non-current assets held for sale and disposal groups Non-current assets and disposal groups classifi ed as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classifi ed as held for sale if their carrying amount will be recovered through a sale transaction rather than continuing use. This condition is met only when the sale is highly probable, the asset or disposal group is available for immediate sale in its present condition and the sale is expected to be completed within 12 months from the date of classifi cation. Non-current assets classifi ed as held for sale and the assets/liabilities of a disposal group classifi ed as held for sale are presented separately from other assets/liabilities in the balance sheet and comparatives are not restated.

1.19 Intangible assets Contractual rights Contractual rights represent the Group’s right to future economic benefi ts and are initially recorded at net realisable value using discounted cash fl ow analysis undertaken at the time of purchase. Contractual rights are amortised on a straight-line basis over the life of the contract.

Computer software The cost of internally generated computer software includes the cost of all materials and direct labour used during development of the software and other costs directly attributable to the asset. Capitalisation commences from the point of Board approval and ceases when the software is available for use. Other computer software is carried at cost.

Research and development Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify the project will deliver future economic benefi ts and these benefi ts can be measured reliably. Development costs have a fi nite life and are amortised on a straight-line basis over the useful life of the project.

Amortisation Intangible assets are amortised on a straight-line basis over the estimated useful lives of intangible assets. The estimated useful lives for intangible assets with defi nite lives are as follows:

Computer software 2.5 – 7 years

The useful lives of intangible assets are reviewed annually and are altered if estimates have changed signifi cantly. The residual value is assumed to be zero unless there is a commitment by a third party to purchase the asset at the end of its useful life, or there is an active market for the asset in which its residual value can be determined and it is probable that such a market will exist at the end of the asset’s useful life. ENERGEX FINANCIAL REPORT 2009/10 21 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

Derecognising intangible assets Intangible assets are derecognised on disposal or when no future economic benefi ts are expected to arise from continued use of the assets. Gains and losses on the disposal of intangible assets are determined as the difference between the net disposal proceeds and the carrying amount of assets, and are recognised in the income statement.

1.20 Impairment NOTES TO At the end of each reporting period, the Group reviews the carrying value of the assets of its cash-generating units AND FORMING (CGUs) to determine whether there is any indication of impairment. PART OF THE FINANCIAL An impairment loss is recognised whenever the carrying amount of an asset or a CGU exceeds its recoverable amount. STATEMENTS The recoverable amount is the higher of an asset’s fair value less costs to sell and value-in-use. Fair value less costs to sell is best determined by reference to a price in a binding sales agreement. However, where there is no binding sales agreement and an asset is traded in an active market, fair value is an asset’s market price. Where neither of these valuations exists, the net selling price is based on the best information available to refl ect the amount that an enterprise could obtain in an arm’s length transaction. Value-in-use is the present value of future cash fl ows expected to be derived from an asset or CGU. Impairment losses are recognised in the income statement, unless an asset has previously been revalued. In this case the impairment loss is treated as an adjustment to the asset revaluation reserve (refer Note 10.1). Impairment losses are reversed when there is an indication the impairment loss may no longer exist and there has been a change in the estimate used to determine the recoverable amount. An impairment loss is reversed only to the extent that an asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.21 Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the fi nancial year and payment has not been made. Trade and other payables are recognised when the Group has a legal or constructive obligation to pay. Trade and other payables are recognised at cost, which approximates their fair value. Trade payables are unsecured and payment is normally made by the end of the month following ENERGEX’s receipt of the supplier’s invoice. Other payables are settled in accordance with their contractual terms.

1.22 Employee benefi ts A liability is recognised for benefi ts accruing to employees for wages and salaries, annual leave, long service leave and vesting sick leave when it is probable that settlement will be required and they are capable of being measured reliably. Liabilities recognised for employee benefi ts expected to be settled within 12 months are measured at their nominal value using remuneration rates expected to apply at the time of settlement and include related on-costs. Liabilities recognised for employee benefi ts which are not expected to be settled within 12 months are measured at the present value of the estimated future cash fl ows to be made by the Group for services provided by employees up to the end of the reporting period. These cash fl ows are discounted using rates attaching to government bonds at the end of the reporting period which most closely match the terms of maturity of the related liabilities.

Superannuation plans Defi ned contribution plans Contributions to defi ned contribution superannuation plans are expensed when incurred.

Defi ned benefi t plans The cost of providing benefi ts for defi ned benefi t plans is determined using the projected unit credit method. Defi ned lump sum benefi ts based on years of service and fi nal average salary are provided in Note 25. Post-employment benefi t obligations are discounted using market yields at the end of the reporting period on government bonds, with terms to maturity and currency of the bonds that match, as closely as possible, to the estimated term of the benefi t obligations. ENERGEX FINANCIAL REPORT 2009/10 22 Any defi ned benefi t obligation recognised in the balance sheet represents the present value of the defi ned benefi t obligation, net of the fair value of the plan assets. Any asset resulting from this calculation is limited to past service costs, plus the present value of available refunds and reductions in future contributions to the plan. The present value of the defi ned benefi t obligation is based on expected future payments which arise from membership of the fund to the end of the reporting period, calculated by an independent actuary. Actuarial valuations are carried out at each reporting period. Actuarial gains and losses are recognised in full, directly in retained earnings, in the period in which they occur and presented in the statement of comprehensive income. NOTES TO Consideration is given to future wage and salary levels, experience of employee departures and periods of service. AND FORMING PART OF THE Past service cost is recognised immediately in the income statement to the extent that benefi ts are already v ested, FINANCIAL and otherwise amortised on a straight-line basis over the average period until the benefi ts become vested. STATEMENTS 1.23 Provisions Provisions are recognised when the Group has a legal or constructive present obligation, as a result of past events, where it is probable that an outfl ow of economic benefi ts will result and that outfl ow can be reliably measured. Refer to Note 15 for further details. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account risks and uncertainties. Where a provision is measured using the cash fl ows estimated to settle the present obligation, the carrying amount is the present value of those cash fl ows. Where some or all of the present obligation is expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain the recovery will be received and the amount can be measured reliably. Any expensed amount relating to the provision is presented net of the reimbursement. Provisions are reviewed on an annual basis and adjustments made where appropriate. Where the adjustment relates to a change in an estimate the amount is taken to the income statement prospectively. Write-backs against the provision are allowed only when the expenditure relates to the purpose of the provision. A provision which is not expected to be settled within 12 months is discounted to present value where the impact of discounting is material. The discount rate used refl ects the risks specifi c to the liability.

Provision for site restoration/rehabilitation A provision is raised for the obligation to restore sites in the future, on expiration of associated contracts or when the obligation arises in the course of business. The provision is determined with reference to an independent estimate of the cost to restore, repair, dismantle or rehabilitate the site.

Provision for public liability insurance A non-current provision is raised to cover the Group’s excess on any public liability insurance claim where the cumulative claim value per incident is more than $0.05 million and less than $1 million. Any amount more than $1 million is paid by ENERGEX’s liability insurers if ENERGEX is deemed legally liable. The provision is maintained for up to six years as public liability claims have a statutory limit of six years for property claims, and three years for personal injury claims. This provision is based on a biennial independent actuarial valuation, and is also internally assessed annually at the end of each reporting period for suffi ciency and appropriateness. Due to the inability to obtain a reliable estimate of the appropriate split between the current and non-current portions, the entire provision is classifi ed as non-current.

Provision for regulated revenue over-recoveries A separate non-current provision is recognised for the over-recovery of regulated revenue where there is suffi cient certainty over its release in future years, but the timing of the release is yet to be approved by the regulator or the release will occur in a period beyond 12 months. The over-recovery of regulated revenue to be released over the next 12 months is recognised as a current liability (refer Note 1.26). The non-current provision is escalated by the weighted average cost of capital (WACC) as determined by the regulator and discounted to refl ect the present value of the amount required to settle the obligation at the end of the reporting period (refer Note 15). ENERGEX FINANCIAL REPORT 2009/10 23 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

1.24 Borrowings Borrowings are initially recognised at fair value including transaction costs incurred and are subsequently measured at amortised cost, using the effective interest rate method. Following initial recognition, no principal repayments are made and interest is charged by the lender at a rate inclusive of administration fees, capital market fees, a competitive neutrality fee and interest on the principal. Principal repayments are not required for the long-term debt funding with QTC under the terms and conditions NOTES TO of the loans. The working capital facility is short-term in nature with the outstanding balance paid down regularly. AND FORMING PART OF THE Forward start loans FINANCIAL The Group enters into forward start loans with QTC where it agrees to borrow specifi ed amounts in the future at STATEMENTS a pre-determined interest rate. The forward start loans are entered into with the objective of minimising interest rate volatility. It is the Group’s policy to recognise forward start loans at fair value when the loan is drawn. Net receipts and payments are recognised as an adjustment to interest expense.

1.25 Leases Lease payments for operating leases, where substantially all of the risks and benefi ts remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. The Group is not subject to any fi nance lease payment obligations but is entitled to receive amounts under fi nance lease receivable arrangements. Finance lease receivables are recognised as receivables at the present value of minimum lease payments receivable, plus the present value of any unguaranteed residual expected to accrue to the benefi t of the Group at the end of the lease term. The asset is reduced by the principal component of lease receipts. The interest component is credited to profi t from operations.

1.26 Other liabilities Regulated revenue over-recoveries A separate current liability is recognised where the net balance of regulated revenue over-recoveries to be released during the next 12 months is a liability. Where the timing of a release is yet to be approved by the regulator, or a release will occur in a period beyond 12 months, a non-current provision is recognised (refer Notes 15 and 16).

1.27 Share capital Ordinary shares Ordinary shares are classifi ed as equity.

1.28 Rounding of amounts The parent entity has applied the relief available to it under ASIC Class Order 98/100 dated 10 July 1998 therefore amounts in the fi nancial report and Directors’ report have been rounded to the nearest hundred thousand dollars, unless otherwise stated.

1.29 Comparatives Comparative fi gures have been adjusted to conform to changes in presentation for the current fi nancial year. ENERGEX FINANCIAL REPORT 2009/10 24 2 Profi t from operations 2.1 Revenue CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M NOTES TO Revenue from operations consisted of the following items: AND FORMING PART OF THE Revenue from rendering of services FINANCIAL Network use of systems (NUOS) 1,260 .1 1,094.9 1,260 .1 1,094.9 STATEMENTS Corporate service charges – – 0.5 0.1 Service charges – other parties 40 .6 59 .1 29.8 39 .5 1,300 .7 1,154.0 1,290 .4 1,134.5 Sale of goods revenue from operating activities Sale of goods 27 .1 26 .1 13.3 11 .2 Billed recoverable works 19 .4 21 .9 19 .4 21 .9 46 .5 48 .0 32.7 33 .1 Government grant revenue1 27 .6 33 .3 24.5 29.1 Other revenue Non-refundable capital contributions 50 .3 45 .5 50 .3 45 .5 Interest revenue – related parties 29.1, 29.2 9.1 7.5 9.1 7.6 Interest revenue – other parties 8.8 25.8 8.7 25.6 Sundry revenue 24.9 22 .1 24.6 14 .1 93 .1 100.9 92.7 92.8 Total operating revenue 1,467.9 1,336 .2 1,440 .3 1,289.5 1 A state government grant of $27.6 million (2009: $33.3 million) was recognised as income by the Group during the year. The nature of the grant represents funds for the purposes of meeting legacy expenses incurred by ENERGEX that relate to the sale of the retail businesses during 2006/07 and other expenses associated with approved energy market reform initiatives.

2.2 Expenses Expenses consisted of the following signifi cant items:

Finance costs: Related parties – – 0.8 1.0 Other parties – QTC 217 .6 206.9 217 .6 206.9 Competitive neutrality fee 12.0 17 .7 12.0 17 .7 Finance charges – unwinding discount 15.1 12.4 – 12.4 – Less: capitalised borrowing costs 10.2 (17 .3) (12.1) (17 .3) (12.1) Total fi nance costs 224.7 212.5 225.5 213 .5 Depreciation, amortisation and impairment expense: Depreciation Supply system assets1 10.1 223.6 216 .7 223.6 216 .7 Other property, plant and equipment 10.1 40 .8 38.8 39.7 37 .3 Less: capitalised depreciation expense 10.1 (28.4) (23 .3) (28.4) (23 .3) Total depreciation expense 236 .0 232 .2 234.9 230.7 Amortisation Computer software 11.1 2.7 4.3 2.7 4.3 Contractual rights 11.1 – 0.2 – – Total amortisation expense 2 .7 4.5 2.7 4.3 1 Depreciation expense on buildings has been aggregated with depreciation expense on supply system assets for 2009/10 and 2008/09 (refer Note 1.17). ENERGEX FINANCIAL REPORT 2009/10 25 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

Impairment loss/(reversal) Plant and equipment1 10.1 3.8 (1 .3) – – NOTES TO Other fi nancial assets 9 – – 0.1 0.2 AND FORMING PART OF THE Total impairment loss/(reversal) 3.8 (1 .3) 0.1 0.2 FINANCIAL Total depreciation, amortisation and STATEMENTS impairment 6.2 242 .5 235 .4 237 .7 235 .2 1 2008/09 plant and equipment impairment expense includes a reversal of prior year impairment of $4.0 million. Refer to Note 10.1 for further details.

Net expense including: Loss on disposal of property, plant and equipment 6.2 12.5 8.4 12.4 8.4 Write-down of property, plant and equipment 6.2, 10.1 – 0.5 – 0.5 Provision for impairment of receivables 6.2 4.4 (0.2) 4.6 0.2 Provision for impairment of related party receivables 6.2 – – (0.8) (0.5) Provision for inventory obsolescence 6.2 (0.7) 1.5 (0.3) 0.7 Forgiveness of related party receivable 6.2, 29.1 – – 1.0 – Operating lease rental expense 11 .6 12.5 10 .4 10.2 Defi ned contribution plan expense 20.0 16 .1 20.0 16 .1

3 Income tax 3.1 Income tax reported in the inco me statements

Current income tax: Current income tax charge 6.7 (14.8) 6.9 (16.2) Adjustments for current income tax of previous years 0.4 (0.7) 0.4 (1 .3) Movement in capital loss previously unbooked 1.1 (1 .3) 1.1 (1 .3) Deferred income tax: Relating to origination and reversal of temporary differences 68.2 68.9 68.2 65 .5 Adjustments for deferred income tax of previous years (1.1) (4 .9) (0.9) (4 .2) Income tax equivalent reported in the income statements 75.3 47.2 75.7 42 .5 ENERGEX FINANCIAL REPORT 2009/10 26 CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

The aggregate amount of income tax equivalent attributable to the fi nancial year differs from the amount calculated on the operating profi t. The differences are reconciled as follows:

Profi t before income tax equivalent 260.5 175 .7 261.3 157.1 NOTES TO Income tax equivalent calculated at 30% AND FORMING (2009: 30%) 78 .2 52.7 78 .4 47.1 PART OF THE Equivalent tax effect on non-temporary FINANCIAL differences: STATEMENTS Bad debts – 3.3 – 3.4 Impairment loss – 0.1 – 0.1 Other non-assessable income (3.7) – (3.7) – Other non-deductible expenses 0.4 (2 .3) 0.4 (1 .3) Income tax equivalent adjusted for non-temporary differences: 74.9 53.8 75.1 49 .3 Over provision of prior year (0.7) (5.6) (0.5) (5.5) Current year losses for which no deferred tax asset was recognised – 0.3 – – Current year capital losses for which no deferred tax asset was previously recognised/ (recouped) 1.1 (1 .3) 1.1 (1 .3) Income tax equivalent reported in the income statements 75.3 47.2 75.7 42 .5

3.2 Current tax balances

Current tax payable/(receivable) 22.8 (8 .6) 22 .8 (8 .3) Less: tax instalments – (3.6) – (3.6) Less: unused tax losses for which deferred tax asset has been recognised/(recouped) (22.8) 8.3 (22.8) 8.3 Less: unused tax losses for which no deferred tax asset has been recognised/(recouped) – 0.3 – – Total current tax payable/(receivable) – (3.6) – (3.6)

Income tax equivalent attributable to: Parent entity – (3.6) – (3.6) Total current tax payable/(receivable) – (3.6) – (3.6)

3.3 Income tax equivalent reported in t he statement of comprehensive income

Deferred income tax related to items charged or credited directly to equity: Property, plant and equipment revaluations 18.1 71 .5 9.8 71 .5 9.8 Available-for-sale investment reserve 18.4 6.8 (2 .4) 6.8 (2 .4) Actuarial movements on defi ned benefi t plans 19 (5.6) (27.2) (5.6) (27.2) Hedge reserve 0.1 (0.1) 0.1 (0.1) Income tax equivalent reported directly in equity 72 .8 (19.9) 72 .8 (19.9) ENERGEX FINANCIAL REPORT 2009/10 27 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

3.4 Deferred tax assets The balance comprises temporary differences attributable to: NOTES TO AND FORMING Amounts recognised in the income PART OF THE statements: FINANCIAL Provisions and accrued expenditure not currently deductible 87.8 64.3 86 .3 62 .9 STATEMENTS Unearned revenue in relation to government grant 5.0 13 .3 5.0 13 .3 Unused tax losses for which deferred tax asset has been recognised 9.8 36 .0 9.8 36 .0 Reclassifi cation from deferred tax liabilities 2.9 – – – Amounts recognised directly in equity: Financial liabilities – cash fl ow hedges – 0.1 – 0.1 Defi ned benefi t fund defi cit 21 .1 21 .9 21 .1 21 .9 Gross deferred income tax assets 126.6 135 .6 122.2 134 .2

Movements in deferred tax assets: Balance at start of year 135 .6 80 .4 134 .2 77.3 Credited to the income statement 8.4 17 .7 8.4 20 .0 Credited to equity 5.6 27 .2 5.6 27 .2 Under/(over) provision of prior year (2.0) – (2.1) (0.6) Unused tax losses for which deferred tax asset has been recognised/(recouped) (23.9) 10.3 (23.9) 10.3 Reclassifi cation from deferred tax liabilities 2.9 – – – Balance at end of year 126.6 135 .6 122.2 134 .2

3.5 Deferred tax liabilities The balance comprises temporary differences attributable to:

Amounts recognised in the income statements: Difference in depreciation and amortisation of property, plant and equipment for accounting and tax purposes 1,307.6 1,238 .1 1,310 .7 1,241.1 Expenditure currently deductible for tax but deferred and amortised for accounting purposes 12.6 14 .2 12.4 14 .0 Reclassifi cation to deferred tax assets 2.9 – – – Amounts recognised directly in equity: Financial assets – cash fl ow hedges – 0.1 – 0.1 Revaluation of property, plant and equipment 18.1 71 .5 9.8 71 .5 9.8 Investment – Ceramic Fuel Cells Limited – (6 .8) – (6 .8) Gross deferred income tax liabilities 1,394.6 1,255 .4 1,394 .6 1,258.2

Movements in deferred tax liabilities: Balance at start of year 1,255 .4 1,167 .0 1,258.2 1,170.8 Charged to the income statement 58 .6 80 .0 58 .7 78 .9 Charged to equity 78 .4 7.3 78 .4 7.3 Under/(over) provision of prior year (0.7) 1.1 (0.7) 1.2 Reclassifi cation to deferred tax assets 2.9 – – – Balance at end of year 1,394.6 1,255 .4 1,394 .6 1,258.2 ENERGEX FINANCIAL REPORT 2009/10 28 4 Discontinued operations and non-current assets held for sale 4.1 Discontinued operations In June 2010, E NERGEX’s subsidiary Energy Impact Pty Ltd issued Request for Proposal documentation to certain respondents for the sale of assets relating to three landfi ll gas sites (Sleeman, Wyndham and Mornington). At 30 June 2010, various parties indicated their intention to submit a proposal and have commenced due diligence and site inspections. Sale approval and closure is anticipated to occur during 2010/11. The landfi ll gas business NOTES TO does not have a material impact on the Group’s overall result. AND FORMING During 2010 ENERGEX’s subsidiary Beak Industries Pty Ltd (Beak Industries) commenced a wind down of operations. PART OF THE An asset sale agreement was fully executed and completed on 24 July 2009 for Beak Industries’ main operating assets, FINANCIAL resulting in the assets being transferred to the purchaser for $1. A Deed of Surrender and Termination was also executed STATEMENTS on the same date over the site located at Sunshine Energy Park, Victoria releasing Beak Industries from its obligations in relation to the site. Approvals were obtained from the relevant Boards to wind up or deregister the company as appropriate. Finalisation entries were processed in May 2010, including a $1 million debt forgiven by ENERGEX. Beak Industries is currently undergoing a voluntary deregistration process. ENERGEX’s subsidiary, Varnsdorf Pty Ltd (Varnsdorf), held contracts and extensions associated with cogeneration activities undertaken with certain Victorian hospitals. Under an extension arrangement, Varnsdorf was required to leave the cogeneration plant in situ at the end of 30 June 2010 and sell the facility works assets to the relevant hospitals for $1. In return for the extension the hospitals exercised their option to acquire the plant. All necessary steps have been taken to ensure the wind down is appropriately conducted.

4.2 Non-current assets classifi ed as held for sale CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

Land – 14.8 – 14.8

In 2008/09 the Directors of ENERGEX approved the sale of vacant land surplus to operational requirements. Settlement of the sale contract occurred in the 2009/10 year.

5 Earnings per share (EPS) 5.1 Operations CONSOLIDATED Note 2010 2009

Total basic earnings per share (cents) 21.15 14.67

$ M $ M

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows: Profi t attributable to members of the parent entity 19 185.2 128.5

Number Number

Weighted average number of ordinary shares used in the calculation of basic earnings per share 5.2 875,532,773 875,532,773 ENERGEX FINANCIAL REPORT 2009/10 29 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

5.2 Calculation of weighted average number of ordinary shares used in the calculation of basic earnings per share

Number Weighted Number of days Number average of shares shares of days number Note on issue issued in year of shares NOTES TO 2010 AND FORMING PART OF THE 1 July 2009 – 30 June 2010 875,532,773 365 365 875,532,773 FINANCIAL B Class share issue: 2 June – 30 June 2010 17.2 1 29 365 – STATEMENTS Total shares for 2010 17 875,532,774 875,532,773

2009 1 July 2008 – 30 June 2009 17 875,532,773 365 365 875,532,773 Total shares for 2009 17 875,532,773 875,532,773

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

6 Cash and cash equivalents

Cash on hand and at bank 16 .6 8.2 10 .7 5.6 Short-term deposits 23.5 145 .4 296.1 145 .4 296.1 Total cash and cash equivalents 162.0 304 .3 156 .1 301.7

Cash at bank earns interest at fl oating rates based on daily bank deposit rates. Short-term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Group. The average effective interest rate on short-term bank deposits was 4.0 per cent (2009: 5.4 per cent) inclusive of fees charged.

6.1 Reconciliation of cash

Cash at the end of the fi nancial year as shown in the cash fl ow statement is reconciled to items in the balance sheet as follows: Cash and cash equivalents 162 .0 304 .3 156 .1 301.7 Cash and cash equivalents 162.0 304 .3 156 .1 301.7 ENERGEX FINANCIAL REPORT 2009/10 30 CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

6.2 Reconciliation of net profi t after tax to net cas h fl ows from operations

Profi t after income tax 185.2 128 .5 185.6 114.6 NOTES TO Adjustments for non-cash and other income and expense items: AND FORMING PART OF THE Depreciation, amortisation and impairment 2.2 242 .5 235 .4 237 .7 235 .2 FINANCIAL Write down of non-current assets 2.2 – 0.5 – 0.5 STATEMENTS Loss on sale of property, plant and equipment 2.2 12.5 8.4 12.4 8.4 Provision for impairment of receivables 2.2 4.4 (0.2) 4.6 0.2 Provision for impairment of related party receivables 2.2 – – (0.8) (0.5) Provision for inventory obsolescence 2.2 (0.7) 1.5 (0.3) 0.7 Interest revenue classifi ed as investing activities (17 .9) (33 .2) (17 .8) (33 .1) Unwinding discount on regulated revenue recoveries 12.4 – 12.4 – Net change in derivative fi nancial instruments 0.2 (0.4) 0.2 (0.4) Forgiveness of related party receivable 2.2 – – 1.0 – Sale of business operations and investment proceeds recognised in investing activities (7 .9) (5.0) (7 .9) (5.0)

Changes in operating assets and liabilities: (Increase)/decrease in trade and other receivables (43 .6) 8.5 (46.9) (3.4) (Increase)/decrease in inventories 17.9 (25.2) 17.8 (25.1) (Increase)/decrease in other current assets 4.9 7.5 4.8 7.7 (Increase)/decrease in deferred tax assets 9.0 (55.2) 12.0 (57 .0) (Decrease)/increase in trade and other payables 8.6 1.5 12.6 21.1 (Decrease)/increase in current tax payable 3.6 5.3 3.6 4.9 (Decrease)/increase in provisions 26 .8 36 .8 26 .4 44 .9 (Decrease)/increase in deferred tax liabilities 67.8 78 .5 65.0 77.6 (Decrease)/increase in other liabilities 41 .0 33 .2 41 .1 33 .7 Net cash provided by operating activities 566 .7 426 .4 563.5 425 .0 ENERGEX FINANCIAL REPORT 2009/10 31 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

7 Trade and other receivables

NOTES TO Current AND FORMING Trade receivables 210 .6 198 .9 207.4 194. 1 PART OF THE FINANCIAL Provision for impairment of receivables (3.9) (1 .2) (3.9) (1 .2) STATEMENTS Finance lease receivables 7.2 2.0 1.9 2.0 1.9 Other receivables 50 .1 37 .0 46 .6 32 .9 Amounts receivable from: – provision for impairment of related party receivables1 29.1 – – – (1 .1) – related parties 29.1 – – – 1.1 – associates 52.4 25.6 52.4 25.6 Total current trade and other receivables 311.2 262.2 304.5 253.3

Non-current Finance lease receivables 7.2 2.3 3.8 2.3 3.8 Other receivables – other parties 1.2 1.5 1.2 1.5 Amounts receivable from: – provision for impairment of related party receivables1 29.1 – – (1.1) (0.8) – related parties 29.1 – – 1.1 0.8 – associates 62.7 84.0 62.7 84.0 Total non-current trade and other receivables 66.2 89 .3 66.2 89 .3 1 In 2009/10 the parent reversed its provision against its non-current related-party receivable from Beak Industries Pty Ltd as part of the forgiveness of this receivable. The provision against its non-current related-party receivable from Service Essentials Pty Ltd is $1.1 million (2009: $1.1 million classifi ed as current). The movement in these provisions are shown in other expenses in the income statement of the parent.

7.1 Finance lease receivables are reconciled to the investment in fi nance leases as follows:

Aggregate of minimum lease payments and unguaranteed residual values Not later than one year 2.3 2.2 2.3 2.2 Later than one year and not later than fi ve years 1.1 4.0 1.1 4.0 Later than fi ve years 3.0 – 3.0 – Total 6.4 6.2 6.4 6.2

7.2 Future fi nance revenue

Not later than one year (0.3) (0.3) (0.3) (0.3) Later than one year and not later than fi ve years (0.7) (0.2) (0.7) (0.2) Later than fi ve years (1.1) – (1.1) – Total (2.1) (0.5) (2 .1) (0.5)

Net fi nance lease receivables1 4.3 5.7 4.3 5.7 Reconciled to: Current receivables 7 2.0 1.9 2.0 1.9 Non-current receivables 7 2.3 3.8 2.3 3.8 Total fi nance lease receivables 4.3 5.7 4.3 5.7 1 Includes unguaranteed residual amounts. 0 .1 1 .8 0 .1 1 .8

The Group has entered into various fi nance lease arrangements as a lessor, as part of its commercial activities. In 2008/09 a fi nance lease receivable arrangement was entered into with Ergon Energy Corporation Limited (Ergon Energy). ENERGEX FINANCIAL REPORT 2009/10 32 CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

7.3 Past due but not impaired As at 30 June 2010, trade and other receivables of $5.2 million (2009: $7.1 million) were past due but not impaired. The ageing analysis of these trade and other receivables is as follows: NOTES TO AND FORMING Up to 30 days 4.1 2.8 4.1 2.3 PART OF THE 31 to 60 days 0.2 0.4 0.2 0.3 FINANCIAL Later than 60 days 0.9 3.9 0.4 3.9 STATEMENTS Total past due but not impaired 5.2 7.1 4.7 6.5

The method of calculating any provisional impairment for risk is based on past experience, current and expected changes in economic conditions and changes in client ratings.

8 Inventories

Maintenance and construction stocks – at net realisable value 87.1 102.2 86 .7 102.2 Work in progress – at cost 2.2 4.3 1.5 3.5 Total inventories 89.3 106 .5 88 .2 105 .7

9 Other fi nancial assets

Non-current Shares in controlled entities1 – – – 0.1 Shares in other corporations – available-for-sale fi nancial assets2 – 6.3 – 6.3 Total other fi nancial assets – 6.3 – 6.4 1 The carrying amount of the parent’s investment in its subsidiary, Beak Industries, was impaired by $0.1 million (2009: $0.2 million) to refl ect its fair value less costs to sell. 2 Shares in Ceramic Fuel Cells Limited were fully disposed of in the current fi nancial year. ENERGEX FINANCIAL REPORT 2009/10 33 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

10 Property, plant and equipment NOTES TO Supply system1 AND FORMING PART OF THE At Directors’ valuation 11,140.5 10,063 .4 11,140.5 10,063 .4 FINANCIAL Less: accumulated depreciation (3,933.9) (3,626 .9) (3,933.9) (3,626 .9) STATEMENTS 7,206.6 6,436.5 7,206.6 6,436.5 Other property, plant and equipment At cost 390 .7 386 .6 335 .6 329.4 Less: accumulated depreciation (177.0) (159.3) (159.0) (140.8) Less: accumulated impairment losses (25.7) (22 .7) – – 188.0 204.6 176.6 188.6 Work in progress At cost 627.2 412 .9 627.2 412 .8 Total property, plant and equipment 8,021.8 7,054 .0 8,010.4 7,037.9 1 Land and building assets have been aggregated with supply system for 2009/10 and 2008/09 (refer Note 1.17).

Supply system assets ENERGEX’s supply system assets are carried at fair value. An income approach to valuation was undertaken by ENERGEX at 30 June 2010 using the following key assumptions and approach:

■ ENERGEX’s supply system assets are subject to regulation in the form of a revenue cap and it is assumed that they will continue to be subject to regulation in the future. ■ Cash fl ows have been projected based on forecasts of prudent and effi cient operating costs and revenue consistent with: – The building block methodology outlined in Chapter 6 of the National Electricity Rules; and – The Australian Energy Regulator’s (AER) May 2010 Final Decision on Queensland Distribution Determination 2010-11 to 2014-15 (AER Final Determination). ■ Revenue cash fl ows for the 2010-15 regulatory period assume a rate of return of 9.72 per cent which is consistent with the WACC determined by the AER in its Final Determination. ■ Future capital expenditure has been included in the cash fl ows as it is assumed that future capital expenditure is required to ensure the security and reliability of the electricity network. ■ Post-tax cash fl ows have been projected over a fi ve year term and on a basis consistent with the AER’s approach, whereby the tax deductibility of debt, capital raising costs and imputation credits are refl ected in the projected cash fl ows, rather than the discount rate. The projected cash fl ows have been discounted at a rate of 9.72 per cent. ■ The residual value at 30 June 2015 has been determined using the best information available to estimate future cash fl ows and assumes that throughout the remaining useful life of the supply system assets, the regulator will be in alignment with the market view as to both the required rate of return and the costs of operating the supply system. It has also been assumed that any form of future regulation will ensure an owner of these assets will receive a suffi cient return on equity after repayment of debt.

Asset retirements ENERGEX has plant and equipment with a gross carrying amount of $605.2 million (2009: $422.3 million) and a written down value of nil. During the period, ENERGEX undertook an assessment of assets in use and retired assets with a gross carrying amount of $95.6 million (2009: $540.9 million) that were no longer in use and have since been replaced or retired. The impact of these retirements has been a transfer of $9.7 million (2009: $41.7 million) from the asset revaluation reserve to retained earnings (refer Note 18.1). ENERGEX FINANCIAL REPORT 2009/10 34 Other Capital Supply plant and works in system1 equipment progress Total $ M $ M $ M $ M

10.1 Movements in carrying amounts

Consolidated NOTES TO Year ended 30 June 2010 AND FORMING Carrying amount at start of year 6,436.5 204.6 412.9 7,054.0 PART OF THE Additions – – 976.5 976.5 FINANCIAL Capitalised depreciation – – 28.4 28.4 STATEMENTS Capitalised interest – – 17.3 17.3 Disposals (18.3) (7.4) – (25.7) Depreciation (223.6) (40.8) – (264.4) Revaluation increment/(decrement) 239.4 – – 239.4 Transfer between classes – (0.1) – (0.1) Transfer from work in progress 772.4 35.5 (807.9) – Reversal of asset write-down 0.2 – – 0.2 Impairment losses for year – (3.8) – (3.8) Carrying amount at 30 June 2010 7,206.6 188.0 627.2 8,021.8 1 Land and building assets have been aggregated with supply system for 30 June 2010 reporting (refer Note 1.17).

Other Capital Supply plant and works in system1 equipment progress Total $ M $ M $ M $ M

Year ended 30 June 2009 Carrying amount at start of year 5,911.0 199.5 335.9 6,446.4 Additions – – 835.7 835.7 Capitalised depreciation – – 23.3 23.3 Capitalised interest – – 12.1 12.1 Disposals (12.0) (10.1) – (22.1) Depreciation (216.7) (38.8) – (255.5) Revaluation increment/(decrement) 31.7 – – 31.7 Transfer between classes (5.6) 5.3 – (0.3) Transfer from work in progress 743.4 50.7 (794.1) – Write-down of assets (0.5) – – (0.5) Impairment losses for year – (2.7) – (2.7) Reversal of impairment loss – 4.0 – 4.0 Transfer to trade and other receivables – (3.3) – (3.3) Assets classifi ed as held for sale (14.8) – – (14.8) Carrying amount at 30 June 2009 6,436.5 204.6 412.9 7,054.0 1 Land and building assets have been aggregated with supply system for 30 June 2009 reporting (refer Note 1.17). ENERGEX FINANCIAL REPORT 2009/10 35 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

Other Capital Supply plant and works in system1 equipment progress Total $ M $ M $ M $ M

Parent Entity Year ended 30 June 2010 NOTES TO Carrying amount at start of year 6,436.5 188.6 412 .8 7,037.9 AND FORMING Additions – – 976.2 976.2 PART OF THE Capitalised depreciation – – 28.4 28.4 FINANCIAL STATEMENTS Capitalised interest – – 17.3 17.3 Disposals (18.3) (7.3) – (25.6) Depreciation (223 .6) (39 .7) – (263.3) Revaluation increment/(decrement) 239 .4 – – 239.4 Transfer between classes – (0.1) – (0.1) Transfer from work in progress 772.4 35 .1 (807.5) – Reversal of asset write-down 0.2 – – 0.2 Carrying amount at 30 June 2010 7,206.6 176.6 627.2 8,010.4 1 Land and building assets have been aggregated with supply system for 30 June 2010 reporting (refer Note 1.17).

Other Capital Supply plant and works in system1 equipment progress Total $ M $ M $ M $ M Year ended 30 June 2009 Carrying amount at start of year 5,911.0 183.8 335 .8 6,430.6 Additions – – 835.1 835.1 Capitalised depreciation – – 23.3 23.3 Capitalised interest – – 12.1 12.1 Disposals (12.0) (10.0) – (22.0) Depreciation (216 .7) (37.3) – (254.0) Revaluation increment/(decrement) 31 .7 – – 31.7 Transfer between classes (5 .6) 5 .3 – (0.3) Transfer from work in progress 743.4 50 .1 (793 .5) – Write-down of assets (0 .5) – – (0.5) Transfer to trade and other receivables – (3.3) – (3.3) Assets classifi ed as held for sale (14.8) – – (14.8) Carrying amount at 30 June 2009 6,436.5 188.6 412.8 7,037.9 1 Land and building assets have been aggregated with supply system for 30 June 2009 reporting (refer Note 1.17). ENERGEX FINANCIAL REPORT 2009/10 36 If property, plant and equipment were stated on a historical cost basis, the carrying amount at the end of the reporting period would have been: CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

Supply system1 5,264.3 4,592.4 5,264.3 4,592.4 NOTES TO 1 Land and building assets have been aggregated with supply system for 2009/10 and 2008/09 (refer Note 1.17). AND FORMING PART OF THE Property, plant and equipment and impairment FINANCIAL STATEMENTS An impairment review across all of ENERGEX’s CGUs has resulted in property, plant and equipment impairment losses of: $3.8 million (2009: $2.7 million) for the Group; and nil (2009: nil) for the parent. There were no reversals of prior year impairment losses in 2009/10 (2009: $4.0 million) for the Group; nor the parent (2009: nil). These impairment losses and reversals are included within the depreciation, amortisation and impairment expense item in the income statement, which are detailed as follows:

Landfi ll gas generation The landfi ll gas generation CGU operates landfi ll gas sites in Queensland and Victoria. A review of the value-in-use assessment of this operation resulted in an impairment loss on plant and equipment of $3.8 million (2009: $2.2 million). The value-in-use assessment was based on forecast cash fl ows and a discount rate of 13.38 per cent (2009: 12.65 per cent) was used to calculate the recoverable amount.

Embedded generation The embedded generation CGU operates generation capacity that is installed to provide demand side management for the network and capacity to third parties. A review of the value-in-use assessment of this operation was undertaken and resulted in there being no impairment loss on plant and equipment in 2009/10 (2009: impairment reversal of $4.0 million). The value-in-use assessment was based on forecast cash fl ows and a discount rate of 13.38 per cent (2009: 12.65 per cent) was used to calculate the recoverable amount.

Beak Industries Beak Industries CGU operated singular natural gas fi red electric generators in Victoria. In 2008/09, the residual values of the assets of the CGU were reviewed in light of the probability that the assets would be sold at scrap value. This resulted in an impairment loss on plant and equipment of $0.5 million in 2008/09. Fair value less costs to sell, based on an estimate provided by an independent qualifi ed quantity surveyor, was used to calculate the recoverable amount. No impairment test was carried out in 2009/10 as the CGU assets had been sold.

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M 10.2 Capitalised borrowing costs

Borrowing costs capitalised during the fi nancial year 2.2 17.3 12.1 17.3 12.1 Weighted average interest rate on funds borrowed generally 5.78% 6.20% 5.78% 6.20% ENERGEX FINANCIAL REPORT 2009/10 37 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

11 Intangible assets NOTES TO Computer software AND FORMING PART OF THE At cost 52.4 51.9 52.3 51.9 FINANCIAL Less: accumulated amortisation (47.0) (44.5) (46.9) (44.5) STATEMENTS Software work in progress 4.0 0.4 4.0 0.4 9.4 7.8 9.4 7.8 Contractual rights At cost 13.1 13 .1 – – Less: accumulated amortisation (12.2) (12.2) – – Less: accumulated impairment loss (0.9) (0.9) – – – – – – Total intangible assets 9.4 7.8 9.4 7.8

11.1 Movements in carrying amounts

Computer Contractual software rights Total $ M $ M $ M

Consolidated Year ended 30 June 2010 Carrying amount at start of year 7.8 – 7.8 Amortisation (2.7) – (2.7) Additions/(disposals) 4.2 – 4.2 Transfer between classes 0.1 – 0.1 Carrying amount at 30 June 2010 9.4 – 9.4

Year ended 30 June 2009 Carrying amount at start of year 13.9 0.5 14.4 Amortisation (4.3) (0 .2) (4.5) Additions/(disposals) (0.1) (0.3) (0.4) Transfer between classes 0.3 – 0.3 Transfer to trade and other receivables (2 .0) – (2.0) Carrying amount at 30 June 2009 7.8 – 7.8 ENERGEX FINANCIAL REPORT 2009/10 38 Computer Contractual software rights Total $ M $ M $ M

Parent Entity Year ended 30 June 2010 Carrying amount at start of year 7.8 – 7.8 NOTES TO Amortisation (2.7) – (2.7) AND FORMING Additions/(disposals) 4.2 – 4.2 PART OF THE FINANCIAL Transfer between classes 0.1 – 0.1 STATEMENTS Carrying amount at 30 June 2010 9.4 – 9.4

Year ended 30 June 2009 Carrying amount at start of year 13.8 0.3 14.1 Amortisation (4.3) – (4.3) Additions/(disposals) – (0.3) (0 .3) Transfer between classes 0.3 – 0.3 Transfer to trade and other receivables (2 .0) – (2.0) Carrying amount at 30 June 2009 7.8 – 7.8

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

12 Other assets

Current prepayments 25 .1 29.9 25 .0 29.8

13 Trade and other payables

Current Trade payables 138.9 115 .8 134 .5 111 .7 QTC working capital facility – 29.4 – 29.4 Accrued wages and salaries 25 .3 20 .6 25 .3 20 .6 Refundable deposits 4.5 3.5 4.5 3.5 Amount payable to: – associates 29.2 13.0 13 .3 13.0 13 .3 Total current trade and other payables 181.7 182.6 177 .3 178.5

Non-current Amount payable to: – related parties 29.1 – – 23 .1 19.8 Total non-current trade and other payables – – 23 .1 19.8

14 Long-term borrowings

Non-current QTC loans – unsecured 4,094.2 3,843 .1 4,094.2 3,843 .1 Total non-current borrowings 4,094.2 3,843 .1 4,094.2 3,843 .1 ENERGEX FINANCIAL REPORT 2009/10 39 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

15 Provisions NOTES TO Current AND FORMING PART OF THE Dividends 20 148.2 102.8 148.2 102 .8 FINANCIAL Employee benefi ts 33.1 30.8 32.4 29.9 STATEMENTS Site restoration/rehabilitation 1.7 2.7 0.3 – Redundancy provision 1.8 – – – Other provisions 2.0 0.5 1.9 0.6 Total current provisions 186.8 136 .8 182 .8 133 .3

Non-current Site restoration/rehabilitation 0.6 0.6 0.6 0.6 Public liability insurance 3.1 2.6 3.1 2.6 Employee benefi ts 79.5 69 .7 79.5 69 .7 Regulated revenue recoveries 90.2 78 .3 90.2 78 .3 Total non-current provisions 173.4 151 .2 173.4 151 .2

15.1 Movements in carrying amounts

Carrying Transfer to Carrying amount at Unwinding other amount at start of year Additions Utilised Reversal of discount liabilities end of year $ M $ M $ M $ M $ M $ M $ M Consolidated Dividends 102.8 148 .2 (102 .8) – – – 148.2 Regulated revenue recoveries 78.3 58 .6 – – 12.4 (59.1) 90.2 Site restoration 3.3 0 .4 – (1 .4) – – 2 .3 Public liability insurance 2.6 1 .0 – (0 .5) – – 3.1 Employee benefi ts 100.5 46.2 (33 .9) (0.2) – – 112.6 Redundancy provision – 2.2 (0.4) – – – 1.8 Other 0.5 1.9 (0 .4) – – – 2.0 Total 288.0 258 .5 (137 .5) (2 .1) 12.4 (59.1) 360 .2

Parent Entity Dividends 102.8 148 .2 (102 .8) – – – 148.2 Regulated revenue recoveries 78.3 58 .6 – – 12.4 (59.1) 90.2 Site restoration 0.6 0 .3 – – – – 0.9 Public liability insurance 2.6 1 .0 – (0 .5) – – 3.1 Employee benefi ts 99.6 45 .9 (33.4) (0.2) – – 111.9 Other 0.6 1 .3 – – – – 1.9 Total 284.5 255 .3 (136.2) (0 .7) 12.4 (59.1) 356.2 ENERGEX FINANCIAL REPORT 2009/10 40 CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

15.2 Analysis of total provisions

Current 15 186.8 136 .8 182 .8 133 .3 NOTES TO Non-current 15 173.4 151 .2 173.4 151 .2 AND FORMING Total provisions 360 .2 288 .0 356.2 284 .5 PART OF THE FINANCIAL 16 Other liabilities STATEMENTS

Current Regulated revenue recoveries – net 59 .1 7.3 59 .1 7.3 Unearned revenue – government grant1 11 .6 44 .4 11 .6 44 .4 Unearned revenue – other 43 .5 23 .8 43 .5 23 .8 Total current other liabilities 114.2 75 .5 114.2 75 .5

Non-current Unearned revenue 16 .4 3.5 16 .4 3.4 Unearned revenue – government grant 5.1 – 5.1 – Total non-current other liabilities 21 .5 3.5 21 .5 3.4 1 ENERGEX received a $125 million government grant over 2007/08 and 2008/09 to cover legacy costs associated with the sale of its energy retail business, and energy market reform initiatives. The grant is initially recorded as unearned revenue and is recognised as revenue when the conditions of the grant have been met (refer Note 2.1).

CONSOLIDATED AND PARENT ENTITY 2010 2009 2010 2009 Note Number Number $ M $ M

17 Contributed equity

A Class ordinary shares – voting 17.1 122,600,006 122,600,006 122.6 122.6 B Class ordinary shares – non-voting 17.2 752,932,768 752,932,767 623 .8 521 .0 Total contributed equity 5.2 875,532,774 875,532,773 746.4 643.6

17.1 A Class ordinary shares

Movements: Beginning of fi nancial year 122,600,006 122,600,006 122.6 122.6 Share movement – – – – End of the fi nancial year 17 122,600,006 122,600,006 122.6 122.6

17.2 B Class ordinary shares

Movements: Beginning of fi nancial year 752,932,767 752,932,767 521 .0 521 .0 Share movement 5.2 1 – 102 .8 – End of the fi nancial year 17 752,932,768 752,932,767 623 .8 521 .0 ENERGEX FINANCIAL REPORT 2009/10 41 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

18 Reserves NOTES TO Asset revaluation reserve 18.1 1,339 .9 1,181 .7 1,339 .9 1,181 .7 AND FORMING PART OF THE Foreign currency translation reserve 18.2 – – – – FINANCIAL Hedge reserve 18.3 – (0.3) – (0.3) STATEMENTS Available-for-sale investment reserve 18.4 – 13 .1 – 13 .1 Total reserves 1,339.9 1,194.5 1,339 .9 1,194.5

18.1 Asset revaluation reserve (ARR)

Balance at start of year 1,181 .7 1,201 .5 1,181 .7 1,201 .5 Revaluation increment (gross) – supply system1 10.1 239 .4 31 .7 239 .4 31 .7 Deferred tax effect on revaluations 3.3 (71 .5) (9 .8) (71 .5) (9 .8) Transfer ARR to retained earnings for disposed assets 19 (9.7) (41 .7) (9.7) (41 .7) Balance at end of year 1,339.9 1,181 .7 1,339 .9 1,181 .7 1 Revaluation on land and building assets has been aggregated with supply system revaluation for 2009/10 and 2008/09 (refer Note 1.17).

18.2 Foreign currency translation reserve

Balance at start of year – 0.4 – 0.4 Net exchange differences on translation of foreign-controlled operations – (0.4) – (0.4) Balance at end of year – – – –

18.3 Hedge reserve

Balance at start of year (0.3) (0.1) (0.3) (0.1) Movement for the year 0.4 (0.3) 0.4 (0.3) Deferred tax effect on amortisation (0.1) 0.1 (0.1) 0.1 Balance at end of year – (0.3) – (0.3)

18.4 Available-for-sale investment reserve

Balance at start of year 13.1 18.6 13.1 18.6 Revaluation – gross 3.0 (7.9) 3.0 (7.9) Divestment (9.3) – (9.3) – Deferred tax effect on revaluations 3.3 (6.8) 2.4 (6.8) 2.4 Balance at end of year – 13 .1 – 13 .1

18.5 Nature and purpose of reserves Asset revaluation reserve The asset revaluation reserve is used to record increments and decrements on the revaluation of non-current assets, as described in Note 1.17.

Foreign currency translation reserve In 2008/09, exchange differences arising on translation of the ENERGEX New Zealand branch operations were taken to the foreign currency translation reserve (FCTR) (refer Note 1.5). The FCTR balance was transferred from equity to the income statement (miscellaneous expense) on the sale and wind down of the ENERGEX New Zealand branch operations in 2008/09. ENERGEX FINANCIAL REPORT 2009/10 42 Hedge reserve The hedge reserve records the portion of the gain or loss on a hedging instrument in a cash fl ow hedge that is determined to be an effective hedge (refer Notes 1.14 and 23.2). Available-for-sale investment reserve Changes in the fair value and exchange differences arising on translation of investments, such as equities, classifi ed as available-for-sale fi nancial assets, are taken to the available-for-sale investments revaluation reserve (refer Note 1.16). NOTES TO CONSOLIDATED PARENT ENTITY AND FORMING PART OF THE 2010 2009 2010 2009 FINANCIAL Note $ M $ M $ M $ M STATEMENTS

19 Retained earnings

Retained earnings at start of year 455.0 451 .1 410.3 420.3 Gross actuarial gains/(losses) on defi ned benefi t plans (18 .7) (90 .7) (18 .7) (90 .7) Deferred tax on actuarial gains/(losses) on defi ned benefi t plans 3.3 5.6 27 .2 5.6 27 .2 Transfer from asset revaluation reserve – net of tax 18.1 9.7 41 .7 9.7 41 .7 Net profi t attributable to members of the parent entity 6.2 185.2 128 .5 185.6 114.6 Total available for appropriation 636.8 557.8 592 .5 513 .1 Dividends provided at 30 June 2009 20 – (102.8) – (102.8) Dividends provided at 30 June 2010 20 (148.2) – (148.2) – Retained earnings at end of year 488.6 455 .0 444 .3 410 .3

CONSOLIDATED AND PARENT ENTITY 2010 2010 2009 2009 Cents per Cents per share $ M share $ M

20 Dividends

Dividends on ordinary shares Dividends declared during the year: Final unfranked dividend 16 .93 148.2 11 .74 102.8 Total dividends declared during the year 16.93 148.2 11 .74 102.8 Dividends paid during the year: Final unfranked dividend declared in prior fi nancial year and paid in current fi nancial year 11 .74 102.8 12.86 112 .6 Final unfranked dividend declared in 2008 relating to 2007 continuing operations profi t and paid in 2009 – – 11 .22 98.2 Total dividends paid during the year 11.74 102.8 24.08 210.8

A fi nal dividend of $148.2 million for the 2009/10 year (2009: $102.8 million) was declared and provided for on the basis of 80 per cent of net profi t after income tax equivalent in consultation with the shareholding Ministers. The 2008/09 dividend of $102.8 million was paid in the 2009/10 year. The shareholding Ministers reinvested the 2008/09 dividend of $102.8 million in the 2009/10 year. This was treated as an equity injection by ENERGEX with one B Class non-voting share being issued to the shareholding Minister (refer Note 17.2). During 2008/09 a dividend of $112.6 million was paid on the basis of 80 per cent of 2007/08 net profi t after income tax equivalent. An additional dividend of $98.2 million was paid in 2008/09 relating to continuing operations profi ts from the 2006/07 year. ENERGEX operates under the National Tax Equivalent Regime where income tax equivalent payments are made to the Queensland Government. As ENERGEX is a Queensland government owned corporation, with all shares owned by the shareholding Ministers on behalf of the Queensland Government, dividend payments are unfranked. ENERGEX FINANCIAL REPORT 2009/10 43 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

21 Non-controlling interests Ergon Energy has a 10 per cent shareholding interest in Service Essentials Pty Ltd to the value of 11 cents (refer Note 27).

22 Financial risk management objectives and policies NOTES TO Financial risk management is carried out by ENERGEX’s Treasury Department (ENERGEX Treasury) under policies AND FORMING approved by the Board of Directors. ENERGEX Treasury manages the cash fl ow needs of the Group on a net basis and PART OF THE ensures a consistent approach to managing the fi nancial arrangements and their associated risk across the business. FINANCIAL The ENERGEX Treasury Risk Policy Manual applies to all of the entities within the Group and its intention is to ensure STATEMENTS compliance with the Code of Practice for Government-Owned Corporations’ Financial Arrangements. The Group’s principal fi nancial instruments, other than derivatives, comprise QTC loans. The main purpose of these fi nancial instruments is to raise fi nance for the Group’s operations. It is the Group’s policy that fi nancial instruments are not to be used for speculative purposes. The Group holds foreign exchange derivatives entered into in the 2008/09 year to hedge USD currency exposures arising in the normal course of its operations. Other fi nancial assets and liabilities include trade receivables, trade payables, provisions, short-term deposits and unearned revenue which arise directly from the Group’s operations. Details of the signifi cant accounting policies and methods adopted, including criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, for each class of fi nancial asset, fi nancial liability and equity instrument are disclosed in Note 1.14. The Group is exposed to the following fi nancial risks: ■ credit risk: the risk of a fi nancial loss if a counterparty to a transaction does not fulfi l its fi nancial obligations (also called default risk). ■ commodity risk: the risk that contract prices will move as a result of adverse movements in market prices. ■ funding risk: the risk that the Group will be unable to refi nance existing debt or raise additional debt. ■ liquidity risk: the risk of insuffi cient funds to fulfi l the Group’s cash fl ow obligations on a timely basis. ■ interest rate risk: the risk that a fi nancial instrument’s value will fl uctuate as a result of changes in market interest rates. ■ operational risk: the risk resulting from inadequate internal processes and systems or from external events. ■ capital structure risk: the risk of the Group ineffectively structuring its balance sheet resulting in suboptimal returns to the shareholders.

Credit risk The Group minimises concentrations of credit risk with its network customers and counterparties by ensuring, as far as possible, suffi cient letters of credit or bank guarantees are in place.

Commodity and foreign currency risk The Group is also exposed to commodity price risk and foreign currency risk in the normal course of its operations. The Group minimises foreign currency risks by entering into foreign currency forward contracts where the quantum and timing of the exposure can be accurately measured. Commodity price risk movements are managed where possible through contractual arrangements with suppliers. Consideration may be given in the future to alternative strategies to manage exposure to commodity price volatility if appropriate.

Funding risk ENERGEX’s debt, provided exclusively by QTC, is interest only in perpetuity with no set repayment date. This debt portfolio is structured to refl ect a fi xed-term loan to correlate with the regulatory period and, as such, has been refi nanced during 2009/10 in anticipation of the new regulatory period which commenced on 1 July 2010. QTC is responsible for refi nancing the Group’s debt when it becomes due. To ensure the Queensland public sector entities are able to meet their debt funding obligations as and when they fall due, the QTC borrows in advance of requirements. ENERGEX FINANCIAL REPORT 2009/10 44 Interest rate risk The cost of ENERGEX’s debt is comprised of a competitive neutrality fee (CNF), administration fee, capital market fee and a book interest rate on the debt portfolio calculated periodically by QTC. The CNF is charged by the State of Queensland to ensure ENERGEX does not obtain an economic benefi t from funding at a lower cost through QTC than could be achieved by a private sector operator. The repricing of the CNF has occurred in concurrence with the regulator’s rate setting period, 1 February 2010 to 26 March 2010. The new CNF will be effective from the 1 July 2010. NOTES TO AND FORMING The Group’s borrowings are subject to annual repricing following a book rate review of the debt portfolio undertaken PART OF THE by QTC. The Group was exposed to book interest rate movements when it refi nanced its existing debt or when future FINANCIAL debt requirements were locked in. Additionally, the Group will be exposed to interest rate movements when new debt STATEMENTS is drawn outside of the Group’s forward start loans program. The book interest rate for ENERGEX’s debt portfolio was dependent on the market interest rates at the time the debt portfolio was refi nanced.

Liquidity risk To manage the Group’s liquidity risk, the Group has a $150 million working capital facility with QTC. This facility operates as an overdraft arrangement which is used to cover temporary funding defi cits. Any outstanding balance is repaid at the earliest opportunity. The facility is repayable on demand.

Operational risk The Group recognises operational risk, inclusive of information risk and business continuity, as a signifi cant risk category and manages it within acceptable levels. The Group continues to develop and expand its guidelines, standards, methodologies and systems to enhance the management of operational risk.

Capital risk The Board’s policy is to maintain a strong capital base so as to preserve investor, creditor and market confi dence and to sustain future development of the business. Part of this process is ensuring the right quantitative and qualitative factors exist to support at a minimum a BBB+ credit rating. The Group monitors the return on capital, which is defi ned as net operating income divided by total shareholders’ equity. The Group also monitors the level of dividends to ordinary shareholders. The Group seeks to maintain a balance between the higher return on equity that might be possible with higher levels of borrowings, and the advantages and security offered by a sound capital position through appropriate injections of equity from time to time to balance the funding sources of the Group. The weighted average interest expense on interest-bearing borrowings in 2009/10 was 5.75 per cent (2009: 6.18 per cent).

23 Financial instruments 23.1 Fair value of fi nancial assets and liabilities The fair values of fi nancial assets and fi nancial liabilities, other than derivative fi nancial instruments, are determined as follows: ■ the fair value of fi nancial assets and fi nancial liabilities with standard terms and conditions and traded on active liquid markets is determined with reference to quoted market prices; and ■ the fair value of other fi nancial assets and fi nancial liabilities is determined in accordance with generally accepted pricing models based on discounted cash fl ow analysis. The fair value of derivative fi nancial instruments represents the value of the cash fl ow (either negative or positive) which would have occurred if the rights and obligations arising from that instrument were closed out in the market place at the end of the reporting period. Any gains or losses arising from changes in the fair value of derivatives, except for those that qualify for hedge accounting as cash fl ow hedges, are taken directly to the income statement for the year. The Group considers the carrying amount of fi nancial assets and fi nancial liabilities recorded in the fi nancial statements approximates their fair value, excluding borrowings. Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost with any difference between cost and the redemption amount being recognised in the income statement over the period of the borrowings on an effective interest basis. The Group has not designated any fi nancial instruments as at fair value through profi t or loss. ENERGEX FINANCIAL REPORT 2009/10 45 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

23.2 Derivative fi nancial instruments As at 30 June 2010, the hedged transactions in place included cash fl ow hedges as detailed below:

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M NOTES TO AND FORMING Current assets PART OF THE Forward exchange contract – cash fl ow hedge – 0.3 – 0.3 FINANCIAL Current liabilities STATEMENTS Forward exchange contract – cash fl ow hedge – 0.3 – 0.3

Varnsdorf has an agreement for the receiving of maintenance services payable in USD. To protect against exchange rate variations in the AUD/USD spot rate, the Group entered into a forward exchange contract (FEC). Under the FEC, the Group is required to pay a fi xed AUD amount and receive a fi xed USD amount per month until 31 July 2010. The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity. The ineffective portion is recognised in the income statement immediately. The FEC was determined to be effective for the year ended 30 June 2010 and resulted in no net loss (2009: nil).

23.3 Credit risk exposure The credit risk on fi nancial assets of the Group which have been recognised on the balance sheet is generally equal to the carrying amount net of any provisions for impairment of receivables. Refer to Note 22 for related risk management policies and procedures that are in place to minimise credit risk. With the introduction of full retail contestability on 1 July 2007, ENERGEX is exposed to the credit quality of licensed retailers for NUOS payments. The standard co-ordination agreement between the Company and every retailer operating in ENERGEX’s distribution area allows the Company to request a retailer to provide an unconditional bank guarantee if it does not have a BBB- or better credit rating, or have its payment obligations guaranteed by another party that has at least this credit rating. ENERGEX actively manages the provision of credit support in accordance with the provisions of the standard co-ordination agreement. ENERGEX FINANCIAL REPORT 2009/10 46 23.4 Liquidity risk exposure The Group’s exposure to liquidity risk is set out in the following table:

Carrying Contractual 1 year 1 to 5 More than amount cash fl ows or less years 5 years Note $ M $ M $ M $ M $ M

NOTES TO Consolidated AND FORMING As at 30 June 2010 PART OF THE Financial liabilities FINANCIAL Derivative 23.2 – – – – – STATEMENTS Trade and other payables 13 177.2 (177.2) (177 .2) – – QTC working capital facility13 – – – – – Refundable deposits 13 4 .5 (4.5) (4 .5) – – Borrowings – QTC unsecured1 14 4,094 .2 (5,437.5) (282.0) (1,128.8) (4,026.7) Total fi nancial liabilities 4,275 .9 (5,619 .2) (463.7) (1,128 .8) (4,026.7) 1 Market value of the borrowings as at 30 June 2010 as advised by QTC was $4,207.3 million.

As at 30 June 2009 Financial liabilities Derivative 23.2 0 .3 (0 .3) (0 .3) – – Trade and other payables 13 149.7 (149.7) (149 .7) – – QTC working capital facility 13 29.4 (29.4) (29.4) – – Refundable deposits 13 3 .5 (3.5) (3.5) – – Borrowings – QTC unsecured1 14 3,843 .1 ( 5 ,118.3) (221.6) (887 .8) (4,008.9) Total fi nancial liabilities 4,026 .0 (5,301.2) (404.5) (887 .8) (4,008.9) 1 Market value of the borrowings as at 30 June 2009 as advised by QTC was $3,889.3 million.

Parent Entity As at 30 June 2010 Financial liabilities Derivative 23.2 – – – – – Trade and other payables 13 172.8 (172.8) (172 .8) – – QTC working capital facility13 – – – – – Trade and other payables – related parties, controlled 13 23.1 (23.1) – (23.1) – Refundable deposits 13 4 .5 (4.5) (4 .5) – – Borrowings – QTC unsecured1 14 4,094 .2 (5,437.5) (282.0) (1,128.8) (4,026.7) Total fi nancial liabilities 4,294 .6 (5,637.9) (459 .3) (1,151 .9) (4,026.7) 1 Market value of the borrowings as at 30 June 2010 as advised by QTC was $4,207.3 million.

As at 30 June 2009 Financial liabilities Derivative 23.2 0 .3 (0 .3) (0 .3) – – Trade and other payables 13 145.6 (145.6) (145 .6) – – QTC working capital facility 13 29.4 (29.4) (29.4) – – Trade and other payables – related parties, controlled 13 19.8 (19.8) – (19.8) – Refundable deposits 13 3 .5 (3.5) (3.5) – – Borrowings – QTC unsecured1 14 3,843 .1 ( 5 ,118.3) (221.6) (887 .8) (4,008.9) Total fi nancial liabilities 4,041 .7 (5,316 .9) (400.4) (907.6) (4,008.9) 1 Market value of the borrowings as at 30 June 2009 as advised by QTC was $3,889.3 million. ENERGEX FINANCIAL REPORT 2009/10 47 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

23.5 Interest rate risk exposure Sensitivity analysis The following interest rate sensitivity analysis depicts the outcome to profi t and loss if interest rates change by +/- 1.0 per cent for cash funds (2009: +/-1.0 per cent) from the year-end rates. With all other variables held constant, the Group would have a surplus/(defi cit) of $1.5 million (2009: $2.7 million).

NOTES TO Carrying (1.0)% (1.0)% 1.0% 1.0% AND FORMING amount Profi t Equity Profi t Equity Note $ M $ M $ M $ M $ M PART OF THE FINANCIAL 2010 interest rate risk STATEMENTS Short-term deposits 6 145.4 (1.5) – 1.5 –

2009 interest rate risk Short-term deposits 6 296.1 (3 .0) – 3.0 – QTC working capital 29.4 0 .3 – (0.3) –

The above sensitivity percentages were based on offi cial cash rate movements.

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

23.6 Financing arrangements

The Group has access to the following lines of credit: Total facilities available – unsecured loans 4,244 .2 3,993.1 4,244 .2 3,993.1 Facilities used at the end of the reporting period – unsecured loans 4,094.2 3,872.5 4,094.2 3,872.5 Facilities not used at the end of the reporting period – unsecured loans 150 .0 120.6 150 .0 120.6

Approved borrowings under the state borrowing program (SBP) for 2009/10 were $366.9 million (2009: $499.5 million), of which $250.0 million was drawn during the year (2009: $496.4 million). The unused funds of $116.9 million (2009: $3.1 million) expired on 30 June 2010. The 2009/10 borrowings drawn under the SBP were funded through ENERGEX’s loan account with QTC. The Group has interim approval under the SBP for the 2010/11 year of $825.9 million, which includes a $50.0 million increase to the existing working capital facility. The Group had future loan commitments represented by undrawn forward start loans of $2,229.9 million with QTC as at 30 June 2010. At the time of settlement the future loan commitment was classifi ed as a borrowing and measured at book value. The 2009/10 future loan commitments with QTC are set out below. There were no future loan commitments for 2008/09.

Book 1 year 1 to 5 More than value or less years 5 years Total $ M $ M $ M $ M $ M Contractual undiscounted cash fl ows as at 30 June 2010 Future loan commitments 2,229.9 20.4 477.2 2,229 .9 2,727.5

The above table represents the future undiscounted cash fl ows relating to future loan commitments. For 2009/10 the future loan commitment book value of $2,229.9 million represented total undrawn forward start loans as at 30 June 2010 and the total of $2,727.5 million represented total undiscounted interest and principal cash fl ows. The actual repayment profi le of long-term debt is interest only with no fi xed repayment date for the principal component. However, the above simulation assumes the debt is repaid in the ‘more than fi ve years’ period with the amount shown being equal to the principal and one month of interest. The benefi t of the forward start loans was that the Group had been able to effectively lock-in the interest rate on all or part of a known future borrowing requirement. This provided greater certainty of the borrowing costs on known future borrowing requirements. ENERGEX FINANCIAL REPORT 2009/10 48 These loans have been effective in minimising the risk of rising interest rates. As at 30 June 2010, this difference was favourable to the Group by $40.3 million (2009: nil).

23.7 Guarantees Guarantees held The Group holds bank guarantees from customers and suppliers totalling $32.8 million (2009: $45.6 million), relating to subdivision works and construction of capital assets for customers and procurement guarantees from suppliers. NOTES TO AND FORMING Guarantees issued PART OF THE The parent entity has provided guarantees via its banker in respect of its trading activities. The amount of these FINANCIAL guarantees is $0.1 million (2009: $8.4 million). STATEMENTS ENERGEX warrants that unlimited suffi cient fi nancial support will be provided to Beak Industries Pty Ltd, Queensland Energy Services Team Pty Ltd, and Service Essentials Pty Ltd to ensure the companies are able to pay their debts as and when they fall due. ENERGEX warrants that suffi cient fi nancial support up to a limit of $10,000 will be provided to Metering Dynamics Business Support Pty Ltd to ensure that business is able to pay its debts as and when they fall due.

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ M $ M $ M $ M

24 Commitments for expenditure 24.1 Capital and other expenditure commitments

Commitments for capital and other expenditure contracted for at the end of the reporting period but not recognised as liabilities payable: Not later than one year 305.7 227.0 303.4 223.9 Later than one year and not later than fi ve years 64 .1 – 64 .1 – Later than fi ve years – – – – Total capital and other expenditure commitments 369 .8 227.0 367 .5 223.9

These commitments consist of open purchase orders and are valued at price levels and foreign currency exchange rates as at the end of the reporting period.

24.2 Operating lease commitments

Commitments in relation to operating leases contracted for at the end of the reporting period but not recognised as liabilities payable: Not later than one year1 21 .3 17 .5 21 .2 17 .3 Later than one year and not later than fi ve years1 99.4 76 .5 99.3 76 .5 Later than fi ve years1 169.4 – 169.4 – Representing: non-cancellable operating leases 290 .1 94.0 289 .9 93 .8 1 ENERGEX will commence a 15 year lease at Newstead from September 2010 for the purpose of corporate offi ce accommodation.

25 Defi ned benefi t obligations The Group contributes to an industry multiple employer superannuation plan, the Electricity Supply Industry (ESI) Superannuation Fund (Qld). Members, after serving a qualifying period, are entitled to benefi ts from this fund on retirement, resignation, retrenchment, disability or death. The defi ned benefi t account of this fund is a funded plan which provides defi ned lump sum benefi ts based on years of service and fi nal average salary. Employee contributions to the fund are based on various percentages of their gross salaries. ENERGEX FINANCIAL REPORT 2009/10 49 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 % % % %

25.1 Key assumptions used

NOTES TO Discount rate (post tax) 4.3 4.7 4.3 4.7 AND FORMING Expected return on plan assets 6.0 6.0 6.0 6.0 PART OF THE Future salary increases FINANCIAL Salary increase rate year one 4.5 4.5 4.5 4.5 STATEMENTS Salary increase rate year two 4.5 4.5 4.5 4.5 Salary increase rate year three 4.5 4.5 4.5 4.5 Salary increase rate thereafter 4.5 4.5 4.5 4.5

The expected return on plan assets has been calculated based on the current asset allocation to each of the major asset classes and the expected future investment return for each of the asset classes.

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

25.2 Reconciliation of amounts recognised in the income statement

Current service cost 17.4 16 .2 17.4 16 .2 Interest cost 17.9 18.3 17.9 18.3 Expected return on plan assets (20 .0) (22 .8) (20 .0) (22 .8) Net expense recognised in year 15.3 11 .7 15 .3 11 .7 Past service cost – – – – Total included in employee benefi ts expense 15.3 11 .7 15 .3 11 .7

25.3 Reconciliation of amounts recognised in the balance sheet

Present value of funded obligations (442.7) (394 .4) (442.7) (394 .4) Fair value of plan assets 383.0 332 .3 383.0 332 .3 Surplus/(defi cit) (59.7) (62 .1) (59 .7) (62 .1) Provision for contributions tax (10 .6) (11 .0) (10 .6) (11 .0) Net liability in the balance sheet 25.4 (70 .3) (73.1) (70 .3) (73.1)

2010 2009 2008 2007 2006 Note $ M $ M $ M $ M $ M

25.4 Historical analysis of defi ned benefi t obligations of the consolidated and parent entity

Present value of defi ned benefi t obligation 25.5 (453.3) (405.4) (351.1) (326.5) (319.7) Fair value of plan assets 25.6 383.0 332 .3 357.1 404.3 348 .5 Surplus/(defi cit) of the plan 25.3 (70 .3) (73.1) 6.0 77 .8 28 .8

Experience adjustments arising on plan assets 15 .9 (46.9) (69.5) 29.4 29 .4 Experience adjustments arising on plan liabilities (5.5) (20 .3) (4.9) 21.3 (29.1) ENERGEX FINANCIAL REPORT 2009/10 50 CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 Note $ M $ M $ M $ M

25.5 Reconciliation of movements in the defi ned benefi t obligation

Opening defi ned benefi t obligation 405.4 351.1 405.4 351.1 NOTES TO Current service cost 17.4 16.2 17.4 16.2 AND FORMING Interest cost 17.9 18.3 17.9 18.3 PART OF THE FINANCIAL Contributions by fund participants 5.2 4.8 5.2 4.8 STATEMENTS Actuarial (gains)/losses 24.1 38.1 24.1 38.1 Benefi ts payments and tax (16.7) (23.1) (16.7) (23.1) Closing defi ned benefi t obligation 25.4 453.3 405.4 453.3 405.4

25.6 Reconciliation of movements in the fair value of plan assets

Opening fair value of plan assets 332.3 357.1 332.3 357.1 Expected return on plan assets 20.0 22.8 20.0 22.8 Actuarial gains/(losses) 15.9 (46.9) 15.9 (46.9) Contributions by the employer 26.3 17.6 26.3 17.6 Contributions by fund participants 5.2 4.8 5.2 4.8 Benefi ts payments and tax (16.7) (23.1) (16.7) (23.1) Closing fair value of plan assets 25.4 383.0 332.3 383.0 332.3

25.7 Cumulative amount recognised in the statement of comprehensive income

Cumulative amount of actuarial (gains)/losses at beginning of year 81.8 (3.1) 81.8 (3.1) Loss in year 8.2 84.9 8.2 84.9 Cumulative amount of actuarial losses at end of year 90.0 81.8 90.0 81.8

25.8 The major categories of plan assets as a percentage of total plan assets are as follows:

Cash 5% 7% 5% 7% Fixed interest 15% 16% 15% 16% Australian shares 28% 21% 28% 21% Alternatives 20% 20% 20% 20% International shares 22% 21% 22% 21% Property 10% 15% 10% 15% Total 100% 100% 100% 100%

The actual return on plan assets for 2009/10 was a profi t of $35.9 million (2009: $24.1 million loss).

25.9 Net fi nancial position of plan The superannuation plan computes its obligations in accordance with AAS 25 Financial Reporting by Superannuation Plans which prescribes a different measurement basis to that applied in this fi nancial report, pursuant to AASB 119 Employee Entitlements. Under AAS 25, and in accordance with the Occupational Superannuation Standards Regulation, the ESI Superannuation Fund is required to undertake actuarial investigations at least every three years. The last reporting period for the ESI Super Actuarial Report for ENERGEX was 30 June 2008. ENERGEX FINANCIAL REPORT 2009/10 51 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

Surplus/(defi cit) The following is a summary of the most recent fi nancial position of the ESI Superannuation Fund (with respect to both defi ned benefi t and accumulation members for the Group’s participation in the Fund) calculated in accordance with AAS 25:

Last reporting period $ M NOTES TO Accrued benefi ts 30/06/2008 (569.0) AND FORMING Net market value of plan assets 30/06/2008 552.1 PART OF THE FINANCIAL Net defi cit 30/06/2008 (16 .9) STATEMENTS Contribution recommendations For the fi nancial year ended 30 June 2010, the Group paid 32 per cent (2009: 10 per cent) of defi ned benefi t members’ salaries. The plan actuaries have not recommended additional contributions beyond the current contributions level be made (2009: $7.9 million of additional funding was recommended and paid). Funding recommendations are made by the actuaries based on their forecast of various matters including: future plan assets performance, interest rates, and salary increases. ENERGEX will assess this contribution rate in the future to ensure it remains appropriate. The Group expects to make a contribution rate of 32 per cent (2009: 32 per cent) to the defi ned benefi t plan during the next fi nancial year. Accordingly, the Group expects to contribute $29.9 million to its defi ned benefi t plan in 2010/11.

Funding method The method used to determine the employer contribution recommendations at the last actuarial review was the aggregate method. The method adopted affects the timing of the cost to the employer. Under the aggregate method, the future contribution rates are determined, and are expected to be suffi cient to fund the difference between the value of the future benefi ts for existing defi ned benefi t members, and the value of plan assets attributable to defi ned benefi t members, over the future working lifetime of existing defi ned benefi t members. An aggregate fi nancing method can be expected to produce a higher level of volatility in recommending employer contribution rates, particularly as the defi ned benefi t membership ages and reduces in size. Variations between actual and expected experience have a greater fi nancial effect on future employer contribution rates as the future working lifetime of the existing defi ned benefi t members reduces. Principal economic assumptions adopted for the last actuarial review (as at 30 June 2008) of the Fund include:

% Expected rate of return on plan assets in year one (13.0) Expected rate of return on plan assets thereafter 7.0 Expected salary increase rate 5 .0

Nature of asset/liability The ESI Superannuation Fund does not impose a legal liability on the Group to cover any defi cit that exists in the Fund. If the Fund were wound up, there would be no legal obligation on the Group to make good any shortfall. The Trust Deed of the Fund states that if the Fund winds up, after the payment of all costs and member benefi ts for the period up to the date of termination, any remaining assets are to be distributed by the Trustee of the Fund, acting on the advice of the actuary, to participating employers. The Group may at any time by notice to the Trustee terminate its contributions. The employer has a liability to pay the monthly contributions due prior to the effective date of the notice, but there is no requirement for an employer to pay any further contributions, irrespective of the fi nancial condition of the Fund. The Group may benefi t from any surplus in the Fund in the form of a contribution reduction or contribution holiday. Any reduction in contributions would normally be implemented only after advice from the Fund’s actuary. The Company is committed under the terms of its union collective agreement to keep the Defi ned Benefi t Fund open for the current fund members for the life of the agreement. The union collective agreement has an expiry date of 13 October 2011 but will continue after its nominal expiry until such time as it is replaced or terminated. ENERGEX FINANCIAL REPORT 2009/10 52 26 Investments in associates Investments in associates are accounted for in the consolidated fi n ancial statements using the equity method of accounting (refer Note 1.4). Information relating to the associates is set out below:

Name of entity Principal activities Ownership interest 2010 2009 % % NOTES TO AND FORMING SPARQ Solutions Pty Ltd Information technology services provider 50.0 50.0 PART OF THE FINANCIAL 2010 2009 STATEMENTS $ M $ M Summarised presentation of share of aggregate assets, liabilities and performance of associates Assets 125.1 111 .2 Liabilities 127.3 113 .3 Net assets/(liabilities) (2 .2) (2 .1) Share of net liabilities equity accounted – – Revenues 69 .8 58 .2 Profi t/(losses) from ordinary activities after tax – –

2010 2009 $ M $ M

Movements in net liabilities of associates Beginning of the fi nancial year (2 .1) (0.6) Share of profi ts/(losses) from ordinary activities after tax – – Net expense directly recognised in equity – defi ned benefi t plan (0.1) (1 .5) End of the fi nancial year (2.2) (2 .1)

The consolidated entity has not recognised actuarial losses on defi ned benefi t plans relating to SPARQ Solutions Pty Ltd amounting to $0.1 million for the 2009/10 year (2009: $1.5 million).

Share of associates’ expenditure commitments Operating lease commitments Within one year 1.3 0.6 Later than one year and not later than fi ve years 4.8 5.0 Later than fi ve years 1.0 2.1 Capital commitments Within one year 0.1 0.3 Later than one year and not later than fi ve years – 0.1 Other commitments Within one year 8.8 7.4 Later than one year and not later than fi ve years 4.8 0.2 Total 20.8 15 .7

No contingent liabilities or accumulated unrecognised losses exist in relation to the associated entity at 30 June 2010 (2009: nil). ENERGEX FINANCIAL REPORT 2009/10 53 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

27 Investment in controlled entities Interests are held in the following controlled companies:

Country of Name Note incorporation Shares Ownership interest 2010 2009 NOTES TO % % AND FORMING PART OF THE Queensland Energy Services Team Pty Ltd Australia Ordinary 100 100 FINANCIAL Metering Dynamics Business Support Pty Ltd 27.3, 27.5 Australia Ordinary 100 100 STATEMENTS Energy Impact Pty Ltd 27.1 Australia Ordinary 100 100 Varnsdorf Pty Ltd 27.1 Australia Ordinary 100 100 VH Energy Holdings Pty Ltd 27.1, 27.2 Australia Ordinary 100 100 VH Operations Pty Ltd 27.1, 27.2 Australia Ordinary 100 100 VH Finance Pty Ltd 27.1, 27.2 Australia Ordinary 100 100 Beak Industries Pty Ltd 27.4 Australia Ordinary 100 100 Service Essentials Pty Ltd 21 Australia Ordinary 90 90

27.1 These companies entered into a deed of cross guarantee (DOCG) dated 13 March 2003 with Queensla nd Energy Services Team Pty Ltd (QEST). The DOCG provides that QEST will guarantee the payment in full to each creditor, of any debt of these companies, on the winding up of any company within the DOCG. As a result of Class Order 98/1418, ASIC granted approval on 24 April 2003 for these companies to be relieved from the Corporations Act 2001 requirement for preparation, audit and lodgement of fi nancial statements for fi nancial years ending on or after this date.

27.2 These companies are relieved from the requirements for preparation, audit and lodgement of annual fi nancial statements with ASIC as they are small proprietary companies. As these companies are parties to the DOCG as detailed in Note 27.1 above, Class Order 98/1418 would also provide ASIC reporting relief in the event they were classifi ed as large proprietary companies.

27.3 Metering Dynamics Business Support Pty Ltd is a small proprietary company and is therefore relieved from the requirement for preparation, audit and lodgement of annual fi nancial statements with ASIC.

27.4 During 2009/10 approvals were obtained from the relevant Boards to wind up or deregister Beak Industries as appropriate. Beak Industries is currently undergoing a voluntary deregistration process. Refer to Note 4.1 for further details.

27.5 Metering Dynamics Pty Ltd changed its name to Metering Dynamics Business Support Pty Ltd on 23 October 2009. ENERGEX FINANCIAL REPORT 2009/10 54 Profi t/ Total Total Total (loss) assets liabilities revenue before tax Subsidiary name Purpose of entity $’000 $’000 $’000 $’000

30 June 2010 Queensland Energy Services Parent entity of QEST Consolidated Team Pty Ltd (Consolidated) Group 52,690 8,163 33,866 (1,197) NOTES TO Queensland Energy Services Parent entity of Energy Impact AND FORMING 1 Team Pty Ltd Pty Ltd and Metering Dynamics PART OF THE Business Support Pty Ltd 4,411 2,322 – – FINANCIAL Beak Industries Pty Ltd Undergoing a voluntary STATEMENTS deregistration process – – 292 1,445 Service Essentials Pty Ltd Operations have been wound down – 1,063 – – Energy Impact Pty Ltd1 Provides generation services and operates landfi ll gas sites 26,350 19,257 12,151 60 Metering Dynamics Business Support Pty Ltd1 Dormant entity – – – – Varnsdorf Pty Ltd1 Holds contracts for cogeneration activities with Victorian hospitals 29,549 2,186 19,563 (928) VH Energy Holdings Pty Ltd1 Holding company (1 ) (1 ) – – VH Operations Pty Ltd1 Holds employees associated with the Varnsdorf Group 3,765 2,791 7,521 (389 ) VH Finance Pty Ltd1 Financing vehicle for the Varnsdorf Group 19,431 14,523 59 59 1 These entities form the QEST Consolidated Group.

30 June 2009 Queensland Energy Services Parent entity of QEST Consolidated Team Pty Ltd (Consolidated) Group 51,688 6,323 51,614 18,393 Queensland Energy Services Parent entity of Energy Impact Pty Team Pty Ltd1 Ltd and Metering Dynamics Pty Ltd 3,493 1,762 – – Beak Industries Pty Ltd Operates natural gas energy peaking plant 840 2,147 1,202 (454 ) Service Essentials Pty Ltd Billing, meter reading, credit and payment management services 1 1,063 (317 ) – Energy Impact Pty Ltd1 Provides generation services and operates landfi ll gas sites 26,358 19,326 20,269 (7,872 ) Metering Dynamics Pty Ltd1 Dormant entity – – – – Varnsdorf Pty Ltd1 Holds contracts for cogeneration activities with Victorian hospitals 32,189 3,898 29,245 9,024 VH Energy Holdings Pty Ltd1 Holding company 2 2 – – VH Operations Pty Ltd1 Holds employees associated with the Varnsdorf Group 2,500 1,138 7,350 (542 ) VH Finance Pty Ltd1 Financing vehicle for the Varnsdorf Group 19,372 14,523 258 201 1 These entities form the QEST Consolidated Group. ENERGEX FINANCIAL REPORT 2009/10 55 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

28 Key management personnel 28.1 Compensation principles Directors All remuneration of Directors, including Directors’ fees and Boar d committee fees, is established by the shareholding Ministers. Directors do not receive any performance-related remuneration. The remuneration policy is to ensure the NOTES TO remuneration package properly refl ects the Directors’ duties and responsibilities, taking into account the nature and AND FORMING complexity of the business. PART OF THE FINANCIAL Director Term of appointment Appointment expiry date STATEMENTS John Dempsey 3 years 4 months 30 September 2011 Peter Arnison 2 years 30 September 2010 Mary Boydell 3 years 30 September 2011 Mat Darveniza 2 years 30 September 2010 John Geldard 2 years 30 September 2010 Ronald Monaghan 3 years 4 months 30 September 2011 Kerryn Newton 3 years 30 September 2011

Senior executives The following are Directors of controlled entities and received no remuneration from their roles as executive Directors: ■ Terence Effeney ■ Darren Busine ■ Peter Weaver ■ Tom Bloxsom – resigned on 2 July 2010 ■ Susan Kehoe The senior executive remuneration strategy and practices of the Group are designed to assist the Company to attract, retain and motivate high calibre individuals in senior executive positions. This is achieved by providing an appropriate combination of competitive fi xed and variable remuneration components. Shareholder guidelines and policies on executive remuneration are followed. The fi xed component of remuneration is linked to an assessment of the job size and value based on independent market evaluation. The fi xed remuneration on appointment is up to market median for the position size in accordance with Offi ce of Government Owned Corporations guidelines. Annual increases are in accordance with recommendations approved by the Board in line with the governance arrangements for chief and senior executives provided by the government. A variable component of remuneration is provided to members of the senior executive as described in Note 28.5.

Senior executive employment contracts Remuneration and other terms of employment for each senior executive are formalised in executive employment contracts. Each of these contracts makes a provision for fi xed remuneration and performance pay.

Application to Executive General Manager Customer Services Where employment is terminated due to the employer’s operational requirement, a severance payment is payable based on the total fi xed remuneration for the greater of 26 weeks or three weeks per year of service, together with a proportionate amount for an incomplete year of service. The minimum and maximum payment will be three weeks and 75 weeks respectively. An early separation incentive payment of 13 weeks may be paid where applicable, as well as a long service leave payment of 1.3 weeks for each completed year of service up to the date of termination. The Executive General Manager Customer Services is on a tenured agreement. ENERGEX FINANCIAL REPORT 2009/10 56 Application to Executive General Manager Network Performance, Executive General Manager Network Programming and Procurement, Executive General Manager Human Resources and Executive General Manager Energy Delivery Where employment is terminated by the employer on the basis of the employer’s operational, technological or economical requirements, and no other suitable position for redeployment of the senior executive is able to be identifi ed and offered, the senior executive is entitled to: a service payment based on two weeks salary per year of continuous service with a minimum of four weeks and a maximum of 52 weeks; and a separation payment of 20 per cent of the residual of the contract, that is between the termination date and the completion date of the initial three years or of the NOTES TO subsequent two years of the contract as the case may be. AND FORMING These executive general managers have fi xed term contracts that provide for four weeks notice or equivalent payment PART OF THE on termination. FINANCIAL STATEMENTS Application to Chief Financial Offi cer and Executive General Manager Corporate Governance and Company Secretary Where ENERGEX terminates the executive’s employment prior to the termination date, or for unsatisfactory performance or incapacity, ENERGEX will pay to the executive upon termination: a service payment, equal to the greater of four weeks salary or two weeks salary per year of continuous service up to a maximum 52 weeks salary; and a separation payment, equal to 20 per cent of the salary the executive would have earned had the employment continued from the day after the notice period ceased until the termination date. These executives have fi xed term contracts that provide for three months notice or equivalent payment on termination.

Application to the Executive General Manager Strategy and Regulation Where ENERGEX terminates the executive’s employment prior to the termination date, or for unsatisfactory performance in accordance with any policy of ENERGEX relating to performance management or incapacity, ENERGEX will pay to the executive: a service payment, equal to the greater of 12 weeks total fi xed remuneration or two weeks total fi xed remuneration per year of continuous service up to a maximum 52 weeks total fi xed remuneration; and a separation payment, equal to 20 per cent of the total fi xed remuneration the executive would have earned had the employment continued from the day after the notice period ceased until the termination date. The Executive General Manager Strategy and Regulation is on a fi xed term contract that provides for three months notice or equivalent payment on termination.

Application to the Chief Executive Offi cer (CEO) Where employment is terminated immediately upon notice in writing prior to the completion date in circumstances not otherwise provided for in the agreement or based on the employer’s operational requirements, the CEO is entitled to: a service payment based on two weeks pro-rata of the total fi xed remuneration package per year of continuous service subject to a minimum payment equivalent to 13 weeks and a maximum payment equivalent to 52 weeks; and a separation payment of the greater of an amount equivalent to 13 weeks pro-rata amount of the total fi xed remuneration package or 20 per cent of the balance of the total fi xed remuneration package in this agreement up to the completion date. The CEO has a fi xed term contract that provides for six months notice or equivalent payment on termination. All remuneration component amounts are reviewed annually by the Remuneration Committee and the Board. All amendments to the remuneration policy for senior executives are reviewed by the Remuneration Committee for endorsement prior to submission to the Board and shareholding Ministers. ENERGEX FINANCIAL REPORT 2009/10 57 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

Other major provisions of the agreements relating to remuneration are set out as follows:

Position Term of contract Contract expiry date

Chief Executive Offi cer 3 years fi xed term 1 July 2012 Executive General Manager Network Performance 2 years fi xed term extension 29 February 2012 NOTES TO Executive General Manager Energy Delivery 2 years fi xed term extension 29 February 2012 AND FORMING Executive General Manager Network Programming PART OF THE and Procurement 2 years fi xed term extension 29 February 2012 FINANCIAL Executive General Manager Corporate Governance STATEMENTS and Company Secretary 2 years fi xed term extension 2 October 2012 Chief Financial Offi cer 2 years fi xed term extension 28 October 2012 Executive General Manager Human Resources 2 years fi xed term extension 29 February 2012 Executive General Manager Customer Services Tenured Executive General Manager Strategy and Regulation 3 years fi xed term 30 August 2012

28.2 Compensation disclosures by category – Directors and executives

2010 2009 $ $

Short-term employee benefi ts 3,322,320 3,212,684 Non-monetary benefi ts 33,371 26,100 Post-employment benefi ts 257,171 235,396 Other long-term benefi ts 78,999 76,799 Termination benefi ts – – Total compensation 3,691,861 3,550,979

28.3 Compensation – Directors

Non- Short-term monetary Post Name benefi ts benefi ts employment Total $$$$

2010 John Dempsey 80,983 3,393 7,288 91,664 Peter Arnison 37,792 – 3,401 41,193 Mary Boydell 38,370 – 3,453 41,823 Mat Darveniza 36,442––36,442 John Geldard 37,985 – 3,419 41,404 Ronald Monaghan 37,599 – 3,384 40,983 Kerryn Newton 36,442 – 3,280 39,722 Total 305,613 3,393 24,225 333,231

2009 John Dempsey 79,007 2,610 7,111 88,728 Peter Arnison 36,870 – 3,318 40,188 Mary Boydell 40,820 – 3,674 44,494 Mat Darveniza 35,553––35,553 John Geldard 38,187 – 3,437 41,624 Ronald Monaghan 37,924 – 3,413 41,337 Kerryn Newton (appointed 1 October 2008) 26,150 – 2,353 28,503 Total 294,511 2,610 23,306 320,427

The service and performance criteria set to determine remuneration are included in Note 28.1. ENERGEX FINANCIAL REPORT 2009/10 58 28.4 Compensation – executives

Non- Post Other Short-term monetary employment long-term Termination Name benefi ts 1 benefi ts 2 benefi ts 3 benefi ts 4 benefi ts Total $$ $$ $$ 2010 Chief Executive Offi cer 526,450 3,393 51,823 14,291 – 595,957 NOTES TO AND FORMING Executive General Manager Network Performance 332,319 3,393 33,013 9,093 – 377,818 PART OF THE FINANCIAL Executive General Manager Energy Delivery 342,968 3,393 14,323 9,093 – 369,777 STATEMENTS Executive General Manager Network Programming and Procurement 332,320 3,393 33,013 9,093 – 377,819 Executive General Manager Corporate Governance and Company Secretary 239,618 3,393 14,803 6,451 – 264,265 Chief Financial Offi cer 364,467 3,393 14,323 9,464 – 391,647 Executive General Manager Human Resources 281,524 3,393 14,803 7,168 – 306,888 Executive General Manager Customer Services 346,221 3,393 33,889 9,328 – 392,831 Executive General Manager Strategy and Regulation5 250,820 2,834 22,956 5,018 – 281,628 Total 3,016,707 29,978 232,946 78,999 – 3,358,630

2009 Chief Executive Offi cer 477,348 2,610 47,172 12,992 – 540,122 General Manager Network Performance7 296,974 2,610 31,118 8,574 – 339,276 General Manager Energy Delivery 347,339 2,610 13,731 8,574 – 372,254 General Manager Network Programming and Procurement7 310,178 2,610 31,118 8,574 – 352,480 General Manager Corporate Governance and Company Secretary7 228,386 2,610 14,210 6,173 – 251,379 Chief Financial Offi cer 349,545 2,610 13,731 8,916 – 374,802 General Manager Human Resources 281,133 2,610 14,063 6,859 – 304,665 General Manager Customer Services 335,633 2,610 32,737 9,012 – 379,992 Acting General Manager Commercial Developments6 291,637 2,610 14,210 7,125 – 315,582 Total 2,918,173 23,490 212,090 76,799 – 3,230,552 1 Short-term benefi ts include all payments made to the offi cer during the year adjusted for the following: ■ Excluding at-risk performance payments (these are included in aggregate in Note 28.5); ■ Deducting annual leave and long service leave taken; ■ Including the annual leave entitlement accrued during the year; and ■ If leave taken exceeds leave accrued in the same year, the excess is deducted from short-term benefi ts as this is not an expense recognised by the Company in the current year. 2 Non-monetary benefi ts represent the value of car parking provided to the offi cers. 3 Post employment benefi ts represent superannuation contributions made by the employer to the superannuation fund at the rates prescribed in the executives’ employment contracts. Some offi cers are members of the defi ned benefi t superannuation fund to which the Company made contributions at a rate of 32 per cent during the 2009/10 fi nancial year (2009: 10 per cent). This additional 22 per cent employer contribution has been made at the recommendation of the actuary to fund a defi cit on the superannuation fund, and is not refl ected in the post employment benefi ts reported above. Refer to Note 25 for further information on the defi ned benefi t obligations of the Group. 4 Other long-term benefi ts represent long service leave benefi ts accrued during the year. 5 Position commenced on 31 August 2009. 6 Position ceased on 30 June 2009. 7 Comparatives for short-term and long-term benefi ts were updated to refl ect methodology outlined in footnotes 1 and 4 above, that is, deducting all annual and long service leave taken from short-term benefi ts and including leave accrued during the year.

The service and performance criteria set to determine remuneration are included in Note 28.1. ENERGEX FINANCIAL REPORT 2009/10 59 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

28.5 At-risk performance compensation

Performance payments to employees Number of employees Aggregate at-risk Total fi xed salaries and receiving performance Financial year performance remuneration wages payments 1 payments $$ NOTES TO 2010 15,842,790 364,333,480 3,821 AND FORMING 2009 12,605,456 339,784,660 3,490 PART OF THE 1 Amounts shown above include capitalised employee benefi ts not shown in the income statement. FINANCIAL STATEMENTS Key management personnel and other executives A variable component of remuneration is provided to members of the executive team through an annual performance payment scheme. This scheme is designed to effectively reward a combination of key behaviours, capability and performance aligned with business goals and targets of the Group. The maximum funds made available for such payments are 15 per cent of total fi xed remuneration. Actual performance payments are based on performance measured against predetermined key performance indicators, as detailed in the annual statement of corporate intent (which is approved by the shareholding Ministers) and the senior executive’s performance agreement. Senior executive performance agreements comply with the format approved by the shareholding Ministers. Senior executive performance payments recommended by the CEO are submitted to the Remuneration Committee for endorsement and recommendation to the Board for approval. Performance payments for the CEO are based on a review led by the Chairman, submitted to the Remuneration Committee for endorsement and recommendation to the Board for approval. The shareholding Ministers are advised of the actual performance payment within one month of payment. The grant date for both senior executives and executives 2009/10 performance pay was 3 September 2009 (2009: 24 September 2008).

Non-executive contract employees and employees covered by awards The Group’s performance pay scheme provides for the establishment of action plans and performance indicators against which performance is assessed for performance pay purposes. Employees develop performance agreements with their managers for a performance pay period (normally six or 12 months), with assessments for performance payments being conducted on completion of the assessment period. All employees are eligible to participate in the scheme (including casuals, temporary staff, apprentices and trainees). Participation in the scheme is voluntary. To be eligible for payment, the employee and the manager have a discussion to develop agreed targets which must be documented in the performance agreement. This agreement must be signed by both parties. The employee must also be employed at the end of the performance pay period to be eligible. The size of the pool at the end of each period to enable payment of performance pays is at the discretion of the CEO. There will be a maximum pool of six per cent for award employees. The grant dates for the 2009/10 performance pay were 11 March 2010 and 3 September 2009 (2009: 25 February 2009 and 24 September 2008).

28.6 Transactions with related parties of key management personnel A number of key management persons (that is Directors and senior executives), or their related parties, hold positions in other entities that may result in them having control or signifi cant infl uence over the fi nancial or operating policies of those entities. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-related entities on an arm’s length basis. Transactions with related parties of key management personnel that occurred during the fi nancial year are noted below. The related party disclosures are those in connection with ENERGEX and the related parties of ENERGEX Directors, as follows: ■ John Geldard is a Director of ESI Superannuation Fund. ENERGEX contributed to the fund based on actuarial advice and the total payments for the year were $69,780,583 (2009: $55,288,645). ■ Ronald Monaghan is a Director of WorkCover Queensland. During the year, premiums paid by ENERGEX to WorkCover Queensland were $2,248,602 (2009: $2,452,298). ■ Professor Mat Darvenzia is a Director of Lightning and Transient Protection Services Pty Ltd. In 2009/10 Professor Mat Darvenzia was engaged under this company to undertake work for ENERGEX following all relevant approvals with the shareholding Ministers. The nature of the work related to the evaluation of weather normalisation of network reliability statistics and amounted to $18,000. ENERGEX FINANCIAL REPORT 2009/10 60 Related party transactions between ENERGEX and its wholly-owned entities and associates are disclosed in Notes 29.1 and 29.2.

29 Related parties 29.1 Wholly-owned Group The wholly-owned Group consists of ENERGEX and its wholly-owned controlled entities as set out in Note 27. NOTES TO Transactions between ENERGEX and other entities in the wholly-owned Group include: AND FORMING (a) Services provided to (expenses) and provided by (revenue) ENERGEX. During the year transactions were undertaken PART OF THE between the Company and a number of its related parties. FINANCIAL STATEMENTS (b) Intragroup loans and interest charges. Aggregate amounts included in the determination of the parent entity’s operating profi t before income tax equivalent that resulted from transactions with entities in the wholly-owned Group:

Note 2010 2009 $ M $ M

Corporate services charge 2.1 0.5 0.1 Interest revenue 2.1 – 0.1 Interest expense 2.2 (0.8) (1 .0) Debt forgiveness – Beak Industries 2.2 (1.0) –

Aggregate amounts of the parent entity receivable/payable from other entities in the wholly-owned Group at the end of the reporting period:

Current receivables 7 – 1.1 Provision for current receivables 7 – (1 .1) Non-current receivables 7 1.1 0.8 Provision for non-current receivables 7 (1.1) (0.8) Non-current trade payables 13 23 .1 19.8

29.2 Other related parties Transactions and balances between the Company and other related entities (non-wholly-owned entities and associates) consisted of the following:

Revenues/(expenses) Tolling charges to Service Essentials Pty Ltd – 0.3 Contractor charges paid to SPARQ Solutions (37 .5) (37 .9) IT service charges (asset usage fee) paid to SPARQ Solutions (30.9) (26 .4) Interest received from SPARQ Solutions 2.1 9.1 7.5

Aggregate amounts receivable from/(payable to) related entities at the end of the reporting period:

Assets/(liabilities) Current receivables from SPARQ Solutions 52.4 26 .7 Non-current receivables from SPARQ Solutions 62.7 83 .9 Current trade payable to SPARQ Solutions 13 (13.0) (13 .3)

ENERGEX has agreed to cover its share of obligations of SPARQ Solutions to protect against insolvency. ENERGEX FINANCIAL REPORT 2009/10 61 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS for the year ended 30 June 2010

29.3 Key management personnel Disclosures relating to key management personnel are set out in Note 28.

29.4 State-owned parties ENERGEX is a Queensland government owned corporation, with shares held by the shareholding Ministers on behalf of the State of Queensland. All State of Queensland controlled entities meet the defi nition of a related party of ENERGEX. NOTES TO AND FORMING The following relates to transactions with state-owned entities: PART OF THE 2010 2009 FINANCIAL $ M $ M STATEMENTS Revenues and expenses TUOS expense 286 .0 246.7 Interest expense – QTC 217 .5 204 .8 Other expenses 76 .6 71 .8 Government grant revenue 27 .6 33 .3 Other revenue 22 .5 32 .4

Aggregate amounts receivable from/payable to state-owned entities at the end of the reporting period:

Short term deposits 145 .4 296.1 Other assets 1.9 11 .4 Current trade payables 26 .3 58 .8 Current tax payable/(receivable) – (3.6) Other liabilities – 11 .0 Government grant unearned revenue liability 11 .6 44 .4 Dividend provision 148.2 102.8 Long-term borrowings – QTC 4,094.2 3,843 .1

No provision for impairment of receivables was raised for any outstanding balances and no expense was recognised for bad or impaired debts due from state-owned entities.

29.5 Guarantees Other than the fi nancial support provided to Beak Industries, QEST, Metering Dynamics Business Support Pty Ltd, Service Essentials Pty Ltd (refer Note 23.7), and SPARQ Solutions (refer Note 29.2), there are no other guarantees with other related parties at the end of the reporting period.

Terms and conditions Intragroup loans are available from the parent entity in a rolling facility and reviewed on a regular basis. The loans are interest-bearing at the 30 day bank bill swap rate plus two per cent. There are no fi xed terms for the repayment of loans between the parties. The terms of the tax funding agreement are set out in Note 1.9. Transactions with other state-owned electricity entities were made on normal commercial terms and conditions and at market rates. Outstanding balances are unsecured and are repayable in cash. ENERGEX FINANCIAL REPORT 2009/10 62 30 Contingent assets and liabilities 30.1 Legal proceedings A number of common law claims are pending against the consolidated entity. In each case a writ has been served and the consolidated entity is at various stages of defending the actions. Liability is not admitted and all claims will be defended. The known amount claimable due to litigation and associated legal fees is $0.1 million (2009: $0.3 million). NOTES TO 30.2 Environmental remediation AND FORMING The Group provides for all known environmental liabilities. While the Directors believe that, based upon current PART OF THE information, its current provisions for environmental remediation are adequate, there can be no assurance that new FINANCIAL material provisions will not be required as a result of new information or regulatory requirements with respect to known STATEMENTS sites or identifi cation of new remedial obligations at other sites.

30.3 Billing disputes In the normal course of operations, billing disputes arise. ENERGEX is currently investigating disputes in relation to prior period retailer accounts. Any adjustment to retailer accounts may give rise to an under- or over-recovery of ENERGEX’s regulated revenue cap as outlined in Note 1.6.

CONSOLIDATED PARENT ENTITY 2010 2009 2010 2009 $ $ $ $

31 Auditor’s remuneration

Remuneration for audit of the fi nancial statements of the parent entity or any entity in the Group: Audit by the Auditor-General of Queensland: Annual fi nancial statements 500,100 589,400 456,500 546,250 Regulatory reporting statements 70,000 68,100 70,000 68,100 Total auditor’s remuneration 570,100 657,500 526,500 614,350

The 2008/09 fi gures have been updated for actual audit costs incurred.

32 Events after the reporting period There are no matters or occurrences that have come to the Group’s attention up to the time of signing which would materially affect the fi nancial report, or are likely to materially affect the future results or operations of the Group. ENERGEX FINANCIAL REPORT 2009/10 63 DIRECTORS’ declaration for the year ended 30 June 2010

DIRECTORS’ The Directors declare that the fi nancial statements and notes: DECLARATION (a) comply with Australian Accounting Standards, the Corporations Regulations 2001, the Government Owned Corporations Act 1993, other mandatory professional reporting requirements; and (b) give a true and fair view of the Company’s and consolidated entity’s fi nancial position as at 30 June 2010 and of their performance, as represented by the results of their operations and their cash fl ows, for the fi nancial year ended on that date. In the Directors’ opinion: (a) the fi nancial statements and notes are in accordance with the Corporations Act 2001; (b) there are reasonable grounds to believe that the Company and its controlled entities will be able to pay their debts as and when they become due and payable; and (c) as at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Groups identifi ed in Note 27 will be able to meet any obligations or liabilities to which they are, or may become, subject to by virtue of the Deed of Cross Guarantee as described in Note 27. The declaration is made in accordance with a resolution of the Directors.

JOHN DEMPSEY Chairman ENERGEX Limited 23 August 2010 Brisbane, Queensland ENERGEX FINANCIAL REPORT 2009/10 64 INDEPENDENT auditor’s report

To the Members of ENERGEX Limited INDEPENDENT AUDITOR’S Matters relating to the Electronic Presentation of the Audited Financial Report REPORT The auditor’s report relates to the fi nancial report of ENERGEX Limited for the fi nancial year ended 30 June 2010 included on ENERGEX Limited’s website. The directors are responsible for the integrity of the ENERGEX Limited’s website. I have not been engaged to report on the integrity of the ENERGEX Limited’s website. The auditor’s report refers only to the statements named below. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of the fi nancial report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited fi nancial report, available from ENERGEX Limited, to confi rm the information included in the audited fi nancial report presented on this website. These matters also relate to the presentation of the audited fi nancial report in other electronic media including CD Rom. Report on the Financial Report I have audited the accompanying fi nancial report of ENERGEX Limited, which comprises the balance sheets as at 30 June 2010, and the income statements, statements of comprehensive income, statements of changes in equity and cash fl ow statements for the year ended on that date, a summary of signifi cant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the fi nancial year.

Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation and fair presentation of the fi nancial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the fi nancial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility My responsibility is to express an opinion on the fi nancial report based on the audit. The audit was conducted in accordance with the Auditor-General of Queensland Auditing Standards, which incorporate the Australian Auditing Standards. These auditing standards require compliance with relevant ethical requirements relating to audit engagements and that the audit is planned and performed to obtain reasonable assurance whether the fi nancial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial report. The procedures selected depend on the auditor’s judgement, including the assessment of risks of material misstatement in the fi nancial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the fi nancial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the fi nancial report. I believe that the audit evidence obtained is suffi cient and appropriate to provide a basis for my audit opinion. ENERGEX FINANCIAL REPORT 2009/10 65 INDEPENDENT AUDITOR’S REPORT

Independence The Auditor-General Act 2009 promotes the independence of the Auditor-General and all authorised auditors. The Auditor-General is the auditor of all Queensland public sector entities and can only be removed by Parliament. The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which audit powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the INDEPENDENT Auditor-General’s opinion are signifi cant. AUDITOR’S REPORT In conducting the audit, the independence requirements of the Corporations Act 2001 have been complied with. I confi rm that the independence declaration required by the Corporations Act 2001, provided to the directors of ENERGEX Limited on 20 August 2010, would be in the same terms if provided to the directors, as at the date of this auditor’s report.

Auditor’s Opinion In my opinion the fi nancial report of ENERGEX Limited is in accordance with the Corporations Act 2001, including – (i) giving a true and fair view of the company’s and consolidated entity’s fi nancial position as at 30 June 2010 and of their performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

G G POOLE FCPA Queensland Audit Offi ce Auditor-General of Queensland Brisbane ENERGEX FINANCIAL REPORT 2009/10 66