2010/11 THE YEAR IN REVIEW

ULTRA - FAST BROADBAND BID

TE UKU

WESTERN NETWORK UPGRADE

RAGLAN ZONE SUBSTATION

PHOTOVOLTAIC TRIAL

HEALTHIER HOMES

NEW NETWORK MANAGEMENT SYSTEM

RESIDENTIAL TRIAL

THE SWITCHIT DEVICE

COBHAM DRIVE ZONE SUBSTATION

SMART METERS AND THE SMART GRID

ENERGY MANAGEMENT AUDITS FOR SCHOOLS

PAM ROA ASPIRING DIRECTOR AWARD RECIPIENT FOR 2011

16 17 ULTRA-FAST BROADBAND BID

Hamilton Cambridge Te Awamutu Tauranga Tokoroa Hawera Wanganui

On the 7th of December 2010 the Minister of The WEL consortium was made up of WEL Networks Telecommunications, Steven Joyce, announced that the Limited, Waipa Networks Limited and the Hamilton Fibre WEL Networks consortium was the successful bidder Network (HFN). HFN is owned by the Hamilton City Council, for the $300 million contract to provide an ultra-fast Environment , Waikato Institute of Technology broadband network to the Waikato, Bay of Plenty and (Wintec), the University of Waikato and Velocity Networks. regions. This new business venture has resulted in WEL forming This contract represents a tremendous achievement for two new companies: WEL and the other consortium partners. It is expected that at the completion of the project WEL’s asset base will be • Ultrafast Fibre Limited (UFL) – a wholly double the current value. owned subsidiary of WEL Networks Limited, this company will undertake the construction of the The contract covers the main urban areas of; Hamilton, fibre network. Cambridge, Te Awamutu, Tauranga, Tokoroa, New Plymouth, Wanganui and Hawera with a population of The WEL Directors are all Directors of UFL. over 430,000 potentially being able to access ultra-fast broadband. • Ultrafast Broadband Limited (UBL) – a new company that has shares held by Ultrafast The project is part of the Government’s $1.5 billion ultra-fast Fibre Limited, Crown Fibre Holdings Limited, broadband plan to make high speed broadband available to the Government body charged with running 75% of New Zealanders over ten years. The initial focus will the ultra-fast broadband project, and the be on priority users such as businesses, schools and health Crown. The Board comprises: three Directors services. from WEL Networks Limited; Hon Richard Prebble, Julian Elder, and Mark Franklin; three Work commences on the construction programme for our Directors from Crown Fibre Holdings Limited; network in Hamilton, Tauranga and Wanganui from mid Keith Tempest, Graham Mitchell and Sean year, followed early in the new year by New Plymouth, Wynne, and is chaired by independent Chairman Hawera and Tokoroa. The network is planned to be fully Rodger Fisher. constructed in five years.

18 WIND FARM

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The Te Uku wind farm became fully operational on the 10th of March 2011 when the last of the 28 wind turbines was commissioned.

When operating at full capacity, the 28 wind turbines can generate up to 64.4 Megawatts of electricity, enough to power around 30,000 average homes.

Construction of the Te Uku wind farm began in November 2009 and is an alliance between Limited and WEL Networks Limited. The alliance with Meridian was extremely successful. WEL’s key role in the project was the delivery of a new 25 kilometre transmission line and the Western Network Upgrade components, which allowed for the connection of the wind farm to WEL’s network.

Additionally, with the wind farm now fully operational, its position in the central is helping to increase security of electricity supply within the Waikato region and throughout New Zealand. Its commissioning takes New Zealand’s total wind capacity to 606 Megawatts.

The opening ceremony for the Te Uku wind farm was attended by (left to right): Meridian Chief Executive Tim Lusk, WEL Chairman John Spencer, Prime Minister John Key, Meridian Chairman Chris Moller and WEL Chief Executive Julian Elder.

OPEN DAY

On Sunday 10th April 2011 Meridian held a wind farm open day. Over 2,000 people took the opportunity for a bus ride onto the wind farm site to view the turbines up close. The day also included a range of activities including kite flying at the Kopua Domain in Raglan.

20 WESTERN NETWORK UPGRADE

WEL is undertaking major upgrade work as an important part of our strategy to increase the reliability and security of supply in the greater Raglan area.

The work programme includes 11 separate projects, such as building new substations and upgrading others, upgrading existing lines and installing new lines both above and below ground. The western network upgrade began in 2005 and will be largely complete by 2013.

A major milestone was reached in October 2010 when WEL completed the construction of the new 25km 33kV electricity line, which connects the Te Uku wind farm near Raglan with local substations. An upgraded circuit for the wind farm was completed in Jan 2011.

The project included eight kilometres of undergrounding and was constructed in just 31 weeks. It is the largest new line build project ever undertaken by WEL and the largest line build project by an electricity distribution company in New Zealand in 2010.

The current work programme includes the construction of a new substation at Raglan.

THE NEW SUBSTATION RAGLAN ZONE SUBSTATION

The Raglan zone substation has been in concept form for many years as part of our long term planning to upgrade supply to our western network. The new substation project was brought forward as a result of the construction of the Te Uku wind farm and is designed to take load from the existing substation. The substation will increase security of supply to the area and will also improve the quality of that supply and provide for future load growth in urban, rural and lifestyle areas around the greater Raglan community.

The project started on the 22nd of February, 2011 and the expected end date is December 2011. The project cost is approximately $3.5 million and much of the substation fit out is being undertaken by WEL.

ARTIST’S IMPRESSION OF THE NEW RAGLAN SUBSTATION.

21 PHOTOVOLTAIC TRIAL

Raglan’s Community House and the Greenspace meeting venue in Hamilton have been chosen by WEL as the sites participating in a trial funded by the WEL Energy Trust to test the feasibility of distributed generation using small-scale solar technology. The 1.2 kilowatts photovoltaic systems were installed by WEL during November 2010.

The trial is one of the innovative ways WEL is looking at managing increasing demand on our network more efficiently. Alternative technologies such as solar distributed generation may assist with demand management without the need for costly network expansion and new infrastructure.

The photovoltaic system being trialled by WEL is a form of distributed generation, or generation of energy close to the point of use. Any excess power generated and not used by the occupants of the above sites, can be sold to their electricity retailer.

If the trials provide the anticipated advantages, rolling them out to the mass market could also help save customers money on their power bills while providing environmental benefits.

HEALTHIER HOMES

The WEL Energy Trust Healthier Homes Programme is managed by WEL and supported by the Energy Efficiency and Conservation Authority, Hamilton City Council, Sky City Hamilton Community Trust and DV Bryant Trust Board.

The programme is helping people in need or on low incomes who have health issues. It is delivering considerable benefits to the local community by ensuring inadequately insulated predominantly pre-2000 homes are brought up to today’s building insulation standards.

The home retrofit improvements included within the programme are: • Ceiling insulation • Under floor insulation • Ground moisture barrier • Hot water cylinder wraps • Cylinder pipe lagging

PHOTOVOLTAIC PANELS BEING INSTALLED ON RAGLAN’S COMMUNITY HOUSE. 22 NEW NETWORK MANAGEMENT SYSTEM

WEL has successfully implemented a new Network Management System (NMS). The NMS includes:

• SCADA (Supervisory Control and Data Acquisition)-providing the control for and showing the state of the network • DMS (Distribution Management System) shows the network (11 kilovolt and 33 kilovolt diagrams) and other tools including permitting and switching with advanced safety logic • OMS (Outage Management System) links the customer information with faults and deals with the outages PROJECT TEAM FOR THE IMPLEMENTATION • TCS (Trouble Call System) links dispatch OF THE NEW NETWORK MANAGEMENT SYSTEM and call centre functions • Load control to manage network peaks • Reporting to the business and other users

This has been a major project for the Company, commencing in 2007 and involving a wide range of WEL staff and external experts.

The new system will contribute to higher levels of safety, security and efficiency across the many facets of managing WEL’s network.

RESIDENTIAL WIND TURBINE TRIAL

The Raglan Area School was chosen by WEL to participate in a residential wind generation trial funded by the WEL Energy Trust. The trial is looking at the practicalities of small- scale wind technology as a form of distributed generation, or generation of energy close to the point of use. The 1.9 kilowatt Skystream turbine used for this trial is manufactured in the United States and has been especially designed for use in coastal regions and residential areas. It is the first installation of the technology into a school located in a residential area in New Zealand.

The wind generation trial is part of a programme at WEL that is looking at innovative ways to manage and reinforce our network to improve capacity and reliability. It is an opportunity for the public to have a look and learn more about the possibilities of small scale wind RAGLAN AREA SCHOOL PRINCIPAL, generation. MALCOLM COX, WITH THE SKYSTREAM WIND TURBINE.

23 SWITCHIT TRIAL

WEL identified that in approximately 2014 we will need to begin work on a new Grid Exit Point (GXP) to cover N-1 security of supply requirements. As part of the analysis it was identified that a continuous reduction in peak demand by 3 Megawatts would enable this to be deferred, thereby providing benefits to WEL and the end consumer. This has led the Company to look at innovative ways of engaging with all consumers to reduce peak demand. The SWITCHit programme focuses on our residential consumers.

The WEL Energy Trust provided funding to support us undertaking a trial project during the last quarter of 2010 with the SWITCHit, designed as an extension of WEL’s existing THE SWITCHIT DEVICE. ripple control system. 70 consumers took part in the trial and 200 devices were installed on fridges, freezers, dishwashers, dryers, washing machines, heaters and dehumidifiers.

A key part of this trial has been to understand the perceptions of consumers in terms of what they are prepared to do for the ‘common good’, and how much they are prepared to be inconvenienced as a result.

The trial was successful and consumption results from these devices have indicated that controlling them during peak times helped WEL avoid peak demand of approximately 170 kilowatts.

THE COMPLETED SUBSTATION. COBHAM DRIVE ZONE SUBSTATION

The new Cobham Drive zone substation was commissioned in October 2010. The substation was required to supply the increased load at Hospital and to increase security of supply to the Southern end of the Hamilton CBD.

The project included the installation of 33 kilovolt and 11 kilovolt cables for the supply to and from the substation, which has been built at the site of the existing Cobham Drive switching station, on the fringe of Hamilton’s CBD.

Projects of this scale have traditionally been outsourced but with the increase in expertise INSTALLATION OF TRANSFORMER AT THE at WEL, the complete electrical installation COBHAM DRIVE SUBSTATION. was performed in-house.

24 MAJOR STORMS IN SEPTEMBER 2010 SAW WEL FAULT STAFF RESPONDING TO A LARGE NUMBER OF OUTAGES. PICTURED IS FAULTMAN MARK SPICER ( PHOTO COURTESY OF WAIKATO TIMES)

SMART METERS AND THE SMART GRID

WEL has committed to deploying smart grid technology on The technology we are investigating would bring us the means its network. This entails the installation of a smart metering to improve our response to network outages, better understand device on every connection to our network and connecting where we have potential issues around power quality, and these to our control room through a meshed radio network. more importantly enable us to better use the network assets This system would eventually enable us to monitor the condition and optimise the timing of new investment to meet growth. and performance of the electricity network at each customer’s network connection, as well as providing the means to help The deployment will commence in our northern region and to customers manage their consumption and power bills. the west around Raglan, we expect this to start around August this year.

25 SCHOOL ENERGY END USE (MODELLED kWh) ENERGY MANAGEMENT AUDITS FOR SCHOOLS

WEL is doing its part to help Waikato school children keep warm and dry in their classrooms. The Company has received $35,000 of funding from its owner, WEL Energy Trust, to perform an energy efficiency study and review of 30 Waikato schools.

The first pilot study of ten Waikato schools took place during July and August 2010. This was a huge success and we have now received further funding for another 20 schools.

We benchmarked the schools’ energy use, did a walk-through energy audit and provided each school with a comprehensive report about what they can do to increase their energy efficiency.

The audit is a great starting point for schools to get an action plan together to tackle inefficiencies. Normally, this type of audit would cost a school around $2,500, so this is a wonderful chance to get a free assessment. COMPUTERS 41,488 OTHER 26,660 HEATING 56.043 FORCED AIR 1,500 Schools may then opt to invest in some LIGHTING 24,414 HOT WATER 5,466 initiatives recommended in the report to increase their energy efficiency.

A typical larlargege school may have energyenerg usage in line with the attached graphs:graphs:

PAM ROA ASPIRING DIRECTOR AWARD RECIPIENT FOR 2011

In 2010 the Waikato branch of the Institute of Directors launched an Aspiring Director Award with Pam Roa named as the inaugural recipient. One of the key components of the award is the opportunity for the aspiring Director to undertake Director development through serving with a sponsoring commercial Board for 12 months. The WEL Board was pleased to be the first Board to provide this opportunity. Pam is currently the co-founder and chair of Longveld Engineering Limited and of Vergence Limited, and is a current trustee of Trust Waikato and St Peters School Cambridge.

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