contact details Corporate office Level 12 Darling Park 201 Sussex Street Sydney NSW 2000 Telephone 02 9285 2700 Facsimile 02 9285 2777 Office Hours 8.30am – 5.00pm

Mt Piper power station 350 Boulder Road Portland NSW 2847 Telephone 02 6354 8111 Facsimile 02 6354 8112 Office Hours 7.45am – 4.00pm

Munmorah power station Scenic Drive Doyalson NSW 2262 Telephone 02 4390 1611 Facsimile 02 4390 1642 Office Hours 7.45am – 4.00pm

Vales Point power station Vales Road 08annual report Mannering Park NSW 2259 ’ Telephone 02 4352 6111 Facsimile 02 4352 6007 Office Hours 7.45am – 4.00pm Delta Electricity Wallerawang power station 1 Main Street Delta Wallerawang NSW 2845 Telephone 02 6352 8611 Facsimile 02 6352 8847 Re port a nn ua l E lectricity Office Hours 7.45am – 4.00pm

Delta Maintenance Scenic Drive Doyalson NSW 2262 Telephone 02 4390 1606 Facsimile 02 4390 1642 Office Hours 7.45am – 4.00pm

Website

http://www.de.com.au 2008 Community information line 1800 115 277 ISSN 1327-6557 Front Cover: Sugar cane growing The Hon. Eric Roozendaal, MLC in the sub-tropical north coast of Treasurer New South Wales. Sugar cane is Level 36 Governor Macquarie Tower considered to be carbon dioxide 1 Farrer Place Sydney NSW 2000 neutral, meaning CO emissions 2 The Hon. Joseph Tripodi, MP from the crop and those produced Minister for Finance, Minister for Infrastructure, during milling and energy generation Minister for Regulatory Reform, and Minister operations are balanced by CO 2 for Ports and Waterways accumulation by the crop. Level 31 Governor Macquarie Tower In a partnership between Delta 1 Farrer Place Sydney NSW 2000 ’08annual report Electricity and the NSW Sugar Delta Electricity Milling Co-Operative Limited units which use green sugar cane waste (bagasse) as fuel have been built at Condong dear and Broadwater sugar mills. index Cogeneration is the combined shareholders, production of power and heat. It is with pleasure that the Board of Delta Electricity a The steam produced drives two submits its Annual Report for the period of Apprentices 12 processes – low pressure steam 1 July 2007 to 30 June 2008 as required under Auditor-General’s Opinion 55, 72 is used for heating in the sugar the Annual Reports (Statutory Bodies) Act 1984. mill while high pressure steam b drives the turbine generators to The Annual Report covers the activities of Delta Board Committees 16 produce electricity and to run the Electricity for the year and contains the Statement Board Meetings 16 mill engines. All output will be sold of Accounts for the period ended 30 June 2008. Board of Directors 15 as renewable energy under the The Annual Report includes a letter of submission Balance Sheets 22, 56 Australian Government’s mandatory to the Voting Shareholders and was prepared in renewable energy accreditation c accordance with section 24A of the State Owned Chairman’s Report 2 scheme. Corporations Act 1989 and the Annual Reports Chief Executive’s Report 4 Delta Electricity is proud to be (Statutory Bodies) Act 1984. It is being submitted Community engagement 11 managing the largest baseload for presentation to Parliament. Consultants 18 renewable energy project in Yours faithfully, Cost of Reporting 19 Australia. Cash Flow Statements 25, 60 d Diversity 12 e Environment 8 Equal Employment Opportunity 12 Peter Young Chairman Ethnic Affairs Statement 14 Executive Committees 16 Executive Management Team 17 contents tables Exemptions 19 Inside front cover 7 table one: Key Performance f Letter to Voting Shareholders Indicators – Statistical Summary Financial Statements 23-72 1 Highlights 9 table two: Freedom of Information 20 2 chairman’s Report Environmental incidents Jim Henness Chief Executive 4 chief Executive’s Report 11 table three: New developments g 6 Profile 14 table four: Trends in the Governance 15-20 8 review of Operations Representation of EEO Groups 12 People 14 table five: Trends in the l 15 Governance Distribution of EEO Groups Letter to Shareholders Inside front cover 21 Financial Statements 2008 16 table six: Directors’ Meetings Locations 7 Inside back cover Index 17 table seven: Back cover Contact Details Executive Committees m 18 table eight: Mission 6 Executive Remuneration o Overseas Visits 19 communication objectives p Performance Summary 7 This Annual Report is a financial and compliance report, prepared to meet Profile 6 the requirements prescribed by the Annual Reports (Statutory Bodies) Regulation 2005. It takes into account exemptions granted by the Treasurer r in July 1997. Reporting Objectives Inside front cover Risk Management 14 The 2008 Sustainability Report will be prepared this year against the National Generator Forum standards derived from the Global Reporting s Index. This will be completed by December 2008 and made available on Safety 12 our website www.de.com.au. Statement by Members of the Board 54, 71 v Values 6 Vision 6

Designed and produced by Ross Barr & Associates Pty Limited As a major generator in the National Electricity Market, Delta Electricity has successfully put in place the strategies which will increase capacity, reduce emissions and prepare for the introduction of an emissions trading scheme.

financial performance development • Profit before tax of $132.1 million • Began construction at Colongra of low emission gas turbine plant and associated pipeline plant performance • Commenced commissioning of renewable energy plants • Record level of production achieved with at Condong and Broadwater 24,054 GWh sent out • Prepared environmental assessments for NSW gas turbine facilities at Marulan and at Bamarang plant improvements • Completed installation of fabric filters environmental management at Vales Point Power Station • Initiated pilot post combustion carbon capture research • Mt Piper Power Station boiler safety control project with CSIRO systems replaced and a new generator control • Retained ISO 14001 compliance assuring best practice system installed processes in environmental management • Second ash storage silo installed at Wallerawang, reducing noise impacts safety on community • Mt Piper Power Station staff achieved 900 days without a lost time injury • Maintained self insurance licence after meeting requirements of WorkCover safety audit people • Delta apprentice won Central Coast Apprentice of the Year for second consecutive year • New scholarship established for indigenous students at University of Newcastle Ourimbah campus

highlights 1 chairman’s Peter Young report

The past 12 months have been our business performance characterised by a focus on the NSW As a major generator, Delta Electricity has been implementing strategies to increase Government’s proposal to restructure the capacity, reduce emissions and prepare for the introduction of an emissions trading State’s electricity industry and associated scheme. We have also continued to operate an efficient energy generation business. activity and, equally, a focus on climate We achieved our highest level of production this year with 24,054 gigawatt hours change. In particular, we awaited the (GWh) sent out – sufficient to power three million homes – and we returned a before tax profit of $132.1 million. outcomes of an independent review by Professor Ross Garnaut, commissioned Plant availability was unacceptably low at 77.3%. This reduced our ability to sell on the by Australia’s Commonwealth, State and spot market and consequently this had an impact on our revenues. A comprehensive review of outage occurrences and remedies to improve plant performance has been Territory Governments in April 2007. implemented. The effectiveness of actions to improve availability will be monitored by the Board. It is recognised by the Board that availability needs to improve and The review was set up to examine effecting improvements will remain a high priority. the impacts of climate change on the Australian economy and recommend serving our market medium to long-term policies and policy Delta continues to position itself to meet the challenges of a tightening supply frameworks which will improve the market. We have a number of major projects underway to increase our generation prospects of a sustainable economic capacity enabling us to deliver increased base load and peaking capacity while environment. lowering the emissions intensity of our energy supply chain. The main capacity increase will come from a 667 megawatt (MW) gas turbine facility being built at Colongra near Munmorah Power Station. This $500 million power station will produce about 40% less greenhouse gas emissions per unit of output compared to coal-fired power plants. Colongra will be a power station operating at times of peak demand and is expected to be commissioned in early 2009. In another exciting development, Delta is constructing the largest baseload renewable energy project in Australia. Two 30 MW renewable energy co-generation facilities, one each at Condong and Broadwater sugar mills on the NSW North Coast, will be operating by the end of 2008. The $200 million project which saw extensive refurbishment at the sugar mills, was undertaken in a joint venture with the NSW Sugar Milling Co-Operative. Both plants will predominantly use sugar- cane based materials as fuel to ensure 24 hour a day, seven day a week, year round generation of baseload renewable energy. These projects will ensure the sustainability of our business as we deliver low emission and renewable energy 2 competitively into the National Electricity Market. The next year for Delta will be an exciting one. The need to meet growing energy needs in an ecologically sustainable manner is now beyond dispute.

our industry situation We are also supporting research on developing solar-thermal technology. Delta is The Owen Inquiry reported in September 2007 one of nine participants in a study focusing on technology selection, potential site on generation requirements for New South Wales. selection (including sites in NSW), network issues and cost estimates. A major finding was that the forecast rise in energy The widespread community concern for the environment has made power stations consumption in NSW will require considerable a target for activists seeking to draw attention to climate change issues. This has investment to meet projected demand. required us to further upgrade the tight security arrangements we have in place According to the Owen Report, forecast growth at all our plants. in electricity use implies a need to provide around 91,000 GWh of electrical energy in New South Wales environment in 2013/2014. This is around 10,500 GWh above During the year, the drought conditions that we have experienced over previous current annual consumption – equivalent to the years lessened. This reduced the direct pressure on Delta to find new sources of yearly output of the Mt Piper power station. Peak water although a number of options continue to be evaluated. The water shortages demand is currently at its highest in winter both in have helped us to focus on innovations such as purifying recycled water using NSW and in the National Electricity Market, however, reverse osmosis plant, reclaiming water from sewage treatment plants and treating summer maximum demand is growing faster than recovered mine water. These initiatives reduce our use of drinking quality water in winter maximum demand in all regions. industrial processes. Renewable energy and small-scale generation schemes, including wind, solar and wave, are our future forecast to provide over 1,500 GWh of the The next year for Delta will be an exciting one as we continue to generate a safe 10,500 GWh needed. The Owen Report advised and reliable supply of electricity. The need to increase power production, linked with that the remainder will need to be met by gas the focus on reducing carbon emissions, will see the electricity industry attract a lot or coal-fired generation. The growth in demand of interest. The need to meet growing energy needs in an ecologically sustainable could be impacted by the introduction of a carbon manner is now beyond dispute. emissions trading scheme. My thanks to all members of the Board, management and staff of Delta who have worked hard over this year to deliver the changes that the Government and the responding to emission community are seeking. reduction Delta’s progress towards developing a long term, sustainable footing requires us Electricity generators face the additional challenge to maintain a balance between meeting the demand from the community for reliable of a carbon-constrained environment. NSW is electricity supply and a requirement to minimise impacts from the production committed to reaching emission reduction targets of electricity. based on the national emission-trading scheme to be in place by 2010. We look forward to continuing to move our power generation business towards a sustainable future. Coal-fired power stations are one of the major contributors of carbon dioxide emissions along with the transport and agricultural sectors. There are clear implications for our business as our annual emissions are in the order of 20 million tonnes. Reduction in greenhouse gas emissions will be a major and costly reform. Over recent years Delta has been investigating, and is now trialling, Peter Young Chairman several innovative technologies in preparation for the introduction of emission reduction policies. Delta, with CSIRO, has constructed a $5 million pilot-scale research facility at Munmorah Power Station on the NSW Central Coast to capture up to 3,000 tonnes per year of CO2. The Munmorah pilot project will investigate post combustion carbon capture processes under Australian conditions. Additionally, Delta is participating in the NSW Clean Coal Working Group to develop low-emission coal technologies. With the other NSW power generators, we have assessed the viability of geo-sequestration of carbon dioxide in deep saline aquifers and coal seams. We have identified large-scale aquifers and coal seams that may be storage site options.

3 chief executive’s Jim Henness report

The Federal Government has commenced In anticipation of this period of transition to a low carbon emission future, Delta consultation for an emissions trading has been investing in both short and long term solutions. These include improving the efficiency of existing plant operations, investing in low emission gas turbine scheme to reduce the level of carbon technology and in renewable energy generation with both co-generation units and dioxide. The scheme is planned to through co-firing biomass at coal fired facilities. commence in 2010 and we will be While Delta currently uses a small amount of biomass in some of its coal fired power conveying the view to policy makers that stations, we have commenced investigation of using larger volumes of biomass for an emissions trading scheme must be electricity production. Post combustion carbon capture and sequestration which is executed in a manner that allows for an being demonstrated at several sites around the world offers a long term solution and orderly transition to a range of generation is being trialled at a number of Australian sites including our Munmorah Power Station. technologies and does not undermine the An equally important focus is the issue of availability which was below forecast viability of the industry. levels for 2007/2008. Following an extensive review, a number of actions to improve availability have been implemented as a matter of priority in order to ensure that acceptable availability levels for the plant in Delta’s portfolio are achieved. achievements We set a new production record with 24,054 GWh sent out. Mt Piper Power Station operated at its maximum capacity of 700 MW consistently while output from Munmorah has been the highest for 10 years. High standards of safety were achieved at all Delta sites, with substantial periods without any lost time injury. Periods ranged from 900 days for Mt Piper, 510 days for our Western Region maintenance staff, 467 days for Munmorah and one year for Wallerawang Power Station. These safety achievements are commendable and are due to all staff who strive for an ever higher standard of workplace safety. Their efforts were supported by a new Safety Excellence Program rolled out across the organisation and a renewed emphasis on inducting new staff into Delta’s strong culture of safety. Overall, we have seen a slight reduction this year in the number of lost time injuries with the total down to nine. Further reductions are sought as we continue to develop and implement best practice so that Delta staff go home safely at the end of the day.

4 Another initiative that gives expression to our vision of generating performance through innovation is a joint venture to develop the largest base load renewable project in Australia.

Delta posted a record high in sales revenue and an annual reduction of 400,000 tonnes of carbon dioxide per year. This is an important achieved a net profit before tax of $132.1 million part of Delta’s commitment to develop resources as the energy sector enters a period despite challenges in the electricity contract market of transition to a more diverse range of lower emission fuels. this year. The early part of the year was dominated by concerns about the impact of the drought across water management most regions in the market. The latter part of the Several water management initiatives have been taken on the Central Coast and in year was marked by concerns about the implications the Western Region to improve our capacity to withstand the impacts of prolonged of carbon trading on future sales. drought. Most significant is the innovative Vales Point water reclamation scheme The installation of fabric filter technology was finalised where treated sewage is piped to Vales Point for additional treatment to a standard at Vales Point Power Station. When it was built in that can be used in industrial processes to replace up to 230 million litres per year the 1970s, the power station was equipped with the of drinking quality water. best available methods for pollution reduction but Water for the Western Region power stations is sourced primarily from Delta’s new fabric filter technologies now remove 99.9% of own storages which comprise Lake Wallace and Lake Lyell on the Coxs River and particulate emissions. The upgrade cost $55 million Thomsons Creek Reservoir (an off-river storage filled by pumping from the Coxs and there are now virtually no visible emissions from system). Some water is also sourced from the Fish River system through Oberon Dam. the plant. The 12 week planned outage was also An additional supply is also secured from the nearby Springvale/Angus Place mines. used as an opportunity for maintenance work and significant upgrades which will extend the life of the Despite good rains at the end of 2007, which partially restored water systems and power station. storages, over the past 12 months, rainfall has been inconsistent. To address issues of salinity in these closed water systems, the capacity of a reverse osmosis plant at The establishment of a carbon capture project in Mt Piper will be increased. partnership with CSIRO at our Munmorah Power Station is a very important step, as it puts Delta at the cutting edge of low emission coal research. people Delta has been developing new recruitment and human resources (HR) processes If the technology is successful, it will ensure that to attract apprentices and graduates as well as to retain our current highly skilled coal can continue to be used for power generation workforce. Plentiful employment opportunities for young people with engineering in Australia. While Australia’s contribution to world or trades qualifications, coupled with the likely retirement of a high proportion of greenhouse gas emission is relatively small, our staff over the coming years, is putting increasing pressure on recruitment. development of carbon capture technology is a demonstration of Australia’s commitment to meet its We have also introduced a number of HR process improvements to ensure that global responsibilities. The additional benefit will be individual annual performance and development targets are consistent with the that we will be able to export our expertise to help broader business strategy. other countries with much higher rates of carbon dioxide emissions. community engagement Delta Electricity maintains close links with the local communities in which our power gas turbine projects stations are located and we seek people’s inputs into decision-making that will Good progress was made on the construction impact on their communities. Representatives of resident and community groups in of the Colongra Gas Turbine facility with foundations these two regions make up the CARE Forum on the Central Coast and the Western for the four generators poured by mid-year. Region’s Community Consultative Group which was established this year. Both A pipeline licence was granted and construction on community groups meet quarterly with senior Delta managers to share information, the preferred pipeline route commenced. This facility raise concerns and discuss measures to reduce impacts on our neighbouring will be an important addition to the NSW supply communities. sector, helping to meet the high level of demand occurring during peaking periods. It can also be acknowledgements and thanks brought into action in the event of an unexpected My thanks to the executive team and all staff for their contribution throughout capacity loss and thus will ensure reliability of supply a year which was dominated by uncertainty over the future structure of the industry. for the community. Work to secure approvals for the gas facilities at Bamarang and Marulan has also We had a number of challenges arising from this uncertainty but, overall, been progressing well. we approached our daily responsibilities with the same diligence as if it was a business-as-usual scenario. renewable energy I also thank our Board, especially Chairman Peter Young, for their careful Another initiative that gives expression to our vision of stewardship over the past year. generating performance through innovation is a joint venture to develop the largest base load renewable project in Australia. The two co-generation plants at Condong and Broadwater sugar mills, which use the waste from sugar cane milling as fuel, began commissioning in mid 2008. Production from these plants will be about 420 GWh per annum giving Jim Henness Chief Executive

5 profile

Delta Electricity is a State owned electricity Delta’s principal functions are to: generation corporation. We produce electricity from • establish, maintain and operate facilities for the generation of electricity and other several facilities using diverse energy sources such forms of energy; and as coal, water and biomass materials. • supply electricity and other forms of energy. Most of our electricity is generated at four coal-fired Guiding Delta in carrying out these functions are the following principal objectives: power stations in NSW. These are Mount Piper and 1. To be a successful business and, to this end, to: Wallerawang near Lithgow and Munmorah and (a) operate at least as efficiently as any other comparable business; Vales Point on the Central Coast. Generation from (b) to maximise the net worth of the State’s investment in Delta; and the portfolio is coordinated, helping Delta lower (c) to exhibit a sense of social responsibility by having regard to the interests production cost, and respond to market demand of the community in which it operates. and plant changes. 2. To protect the environment by conducting its operations in compliance with The capacity of Delta’s coal-fired plant is 4,320 MW the principles of ecologically sustainable development contained in section 6 (2) which provides some 12% of electricity for the market of the Protection of the Environment Administration Act 1991. covering all States and Territories except Western 3. To exhibit a sense of responsibility towards regional development and Australia and the Northern Territory. decentralisation in the way in which it operates. 4. To operate efficient, safe and reliable facilities for the generation of electricity. The remainder of Delta’s electricity production is 5. To be an efficient and responsible supplier of electricity. from renewable energy sources such as mini-hydro 6. To be a successful participant in the wholesale market for electricity. generators and co-firing biomass. Currently this is small but will grow significantly when new projects vision are completed. Generating performance through innovation. Delta Electricity operates under the Energy Services Corporations Act 1995 and the State Owned mission Corporations Act 1989. The organisation was formed To manage and grow the business in a safe, secure and environmentally responsible on 1 March 1996 as part of the NSW Government’s manner with reliable plant so that it generates consistent, superior dividends for the restructure of the State’s electricity industry. This Shareholders while recognising the interests of communities within which we operate. restructure was in response to large scale changes in generation, transmission and supply of electricity in values eastern Australia following the Federal Government’s We provide excellent customer service. program of competition reform. We live and work safely. We deliver outstanding business success. We promote high achievement. We behave with respect and integrity.

TWEED HEADS locations CONDONG Unit tOtal LISMORE Location Size Units Capacity Coal BROADWATER Mt Piper 700 MW 2 1,400 MW Vales Point 660 MW 2 1,320 MW Wallerawang 500 MW 2 1,000 MW Munmorah 300 MW 2 600 MW 4,320 MW

Hydro Mt Piper 350 kW 1 350 kW 110 kW 1 110 kW NSW Dungog Water Treatment Plant 110 kW 1 110 kW GLENNIES CREEK 570 kW CHICHESTER DUNGOG Biomass WINDAMERE VALES POINT Biomass operations at Wallerawang and Vales Point involve MT PIPER NEWCASTLE the addition of biomass materials to the coal being conveyed COLONGRA MUNMORAH BATHURST WALLERAWANG to the station for combustion. This activity does not change the capacity of the station. Output for 2007/2008 was 1.9 GWh. LITHGOW Sydney

WOLLONGONG Biomass planned Coal BAMARANG Gas planned Hydro MARULAN Hydro planned 6 key performance indicators

Table one: Key performance indicators – Statistical summary Unit 07/08 06/07 05/06 04/05 03/04 Financial Statistics Total Sales Revenue $m 1,008.4 874.1 839.4 802.4 724.2 Earnings before Interest and Tax $m 174.9 244.9 282.6 236.1 177.3 Net Profit before Tax $m 132.1 201.0 234.7 180.5 111.0 Net Profit after Tax $m 87.7 139.9 164.5 123.5 74.2 Total Debt $m 776.2 660.3 583.0 579.7 642.8 Total Equity $m 897.0 215.6 730.0 800.6 800.6 Return on Assets (EBIT/Assets) % 6.4% 7.6% 13.2% 12.5% 9.4% Return on Equity (NPAT/Equity) % 9.8% 64.9% 22.5% 15.4% 9.3% Gearing (Debt / (Debt + Equity) % 46.4% 75.4% 44.4% 42.0% 44.5% Interest Cover (EBIT/Interest) Times 4.1 5.6 5.9 4.3 2.7 Debt:Equity (Debt/Equity) % 86.5% 306.2% 79.9% 72.4% 80.3% Current Ratio (CA/CL) % 0.4 0.4 0.5 0.7 0.8 Operational Statistics Production GWh 24,054 21,952 21,948 21,740 21,308 Equivalent Forced Outage Factor % 7.1 9.0 3.9 4.5 1.7 Availability % 77.3 75.5 86.5 87.0 92.9 Thermal Efficiency % 35.0 35.2 35.0 35.4 35.5 Coal Stockpile Levels $m 69.8 61.5 41.4 36.9 32.7 Employee Statistics GWh/employee 33.1 30.8 30.8 29.9 29.0 Staff Numbers 726 713 713 728 735 Training Days/employee Days/employee 5.8 7.1 6.0 4.7 5.8 Sick Leave Days/employee Days/employee 10.8 9.4 8.0 8.3 8.0 Safety Frequency Rate Frequency rate 4.9 5.6 7.0 4.1 8.8 Environmental Statistics Licence Breaches Number 2 2 1 2 1 Financial statistics include the impact of Australian equivalents to International Financial Reporting Standards from 2005/2006.

7 review of operations

production water Delta set a new production record with 24,054 GWh Heavy rainfall in the Coxs and Fish River catchments during June 2007 afforded sent out. This is sufficient energy to power around some relief from the worst effects of the drought that had impacted on the three million homes for the year. Western Region power stations. Despite some high rainfalls, the Oberon Dam (Fish River supply) continued to fall and, by mid 2008, had reached an historical low. Mt Piper Power Station operated at its maximum capacity of 700 MW consistently while output from To ensure production can be maintained as required at our two Western Region Munmorah Power Station has been the highest for power stations, a reverse osmosis plant which treats water to reduce salinity was 10 years. Mt Piper operated at levels of efficiency installed temporarily at Wallerawang power station. A reverse osmosis plant built above the Generator Efficiency Standard. This to treat water at Mt Piper will be augmented to lift production from 2.4 million litres result, coupled with higher than forecast efficiency at a day to up to 6 million litres daily. This will enable more effective management of Wallerawang Power Station, resulted in a lower than water and salinity in the Western Region. forecast rate of greenhouse emissions for the year. Delta has provided Lithgow Council with plans and studies that assessed increasing Throughout the year, outages are planned for those pump-transfer of water from the Clarence coal mine to the Coxs River. Lithgow periods when demand is at its lowest so that plant Council plans to secure funding to proceed with the scheme. Delta may be able systems can be upgraded and major refurbishments to source some additional water once the transfer scheme is augmented. can take place. Delta has investigated the feasibility of sourcing additional water supplies from other On other occasions, unplanned or forced outages abandoned mines. Further treatment options have been assessed to reduce the arise, when an unexpected failure of a system salinity of the mine water being transferred from the Springvale mine. occurs. Unfortunately, plant experienced a higher On the Central Coast, the construction of a major water reclamation scheme than expected rate of forced outages for the year commenced. and this resulted in an availability factor of 77.3%. A working group was established to examine in detail It will initially supply 230 million litres of water a year, with the capacity to expand how best to ensure improved plant performance. to 500 million litres. These and other water saving measures at Vales Point have resulted in greatly reduced consumption of drinking quality water. During a planned outage, Mt Piper Unit 2 had the boiler safety control systems replaced using the latest technology and a new generator control system environmental impacts management installed, which along with other work completed, Delta is committed to complying with all statutory requirements set out in the will ensure that the power station continues to relevant legislation, regulations and licences issued by a number of government provide reliable supply to the National Electricity authorities. These cover the range of activities related to . Market. Units 7 and 8 at Wallerawang Power Station both underwent overhauls in preparation for the Delta sets its own targets which in many cases are more stringent. These winter months. organisational targets include targets to reduce fuel and water use and manage air and water emissions. We also undertake additional monitoring with the aim of Installation of fabric filters was completed at Vales reducing the impact of our operations on the environment and nearby communities. Point, increasing particulate emission capture rates of 99.5% to 99.9%. During the 12 week planned The ISO 14001 international standard outlines best practice processes to manage outage the opportunity was taken for major environmental impact. A recertification audit was carried out on the Central Coast and refurbishment of many other areas of the plant which the Western Region in 2008 and recertification was achieved. The auditor noted that: will provide a cost effective extension to the life of “we have been very impressed by Delta’s Environmental Management System’s this power station. Sufficient work was completed structure, contents and the level of compliance with ISO 14001”. to ensure that a major outage is not now required for another four years. Delta fully complies with the NSW Government’s Waste Reduction and Purchasing Policy (WRAPP). We aim to reduce landfill by about 10% each year in accordance A number of safety and environmental improvements with WRAPP. were completed at Munmorah during two periods of planned outage to ensure continued reliability of By consolidating all waste management into a single contract with a single service the plant. provider the following innovations and initiatives have been introduced to reduce landfill: A range of initiatives were also completed at several • Recycling of fluorescent tubes, most plastic items and a range of batteries instead sites, to ensure that noise would not cause problems of going to landfill. for our neighbours. High pressure steam, overland • Computers, monitors, keyboards, printers and photocopiers are recycled. conveyors and heavy vehicle movements can be sources of noise and/or dust which can impact on • A drum crusher has been installed to crush drums which attract a scrap residents living near power stations and Delta staff metal rebate. worked hard to ensure that these impacts were • Timber is being collected separately instead of going in the general waste bin minimised. and is then recycled for green waste at the local tip. • A compound has been constructed where the separation of scrap metal has commenced to sort out the different metals which attract a greater rebate.

8 In 2006, the Central Coast experienced severe water restrictions. While these have now eased, Delta put in place several initiatives to significantly reduce its use of drinking quality water.

Table two: Environmental incidents 2007/2008 Date Environmental Incident Authority Response July 2007 Cooling water discharged from Reported to Department of Corrected by lowering the control Wallerawang showed a slight Environment and Climate Change set point. exceedance of the upper pH limit. (DECC). December 2007 Total suspended solids discharged Reported to DECC. Removed sediment build-up from Wallerawang settling pond in the settling pond. exceeded limits. August 2007 Native bushland cleared. Reported to Wyong Council Contractor dismissed. and DECC. September 2007 Dust escaped from ash repository. Reported to DECC. Contract for ash management services, with emphasis on environmental management, put out to tender.

water

Case study 1 / Vales Point Water Reclamation Plant In 2006, the Central Coast experienced severe water restrictions. While these have now eased, Delta put in place several initiatives to significantly reduce its use of drinking quality water. As well as water efficiency measures and changing processes so that salt water could be used instead of fresh water, a major new water reclamation plant is being constructed that will deliver 230 million litres a year of recycled water. The project consists of a new microfiltration system to treat sewage effluent to a high level of purity, a pipeline to transport the reclaimed water from Mannering Park Sewage Treatment Plant to Vales Point and a reverse osmosis plant at Vales Point Power Station which treats the water further so it can be used in the power station’s boiler system. Michelle Moroney, general manager, Project Veolia Water PartnersSolutions in and delivering Glen Sherock, these water general efficiencies manager, are production, Wyong Central Coast. Council and Veolia Water Solutions, which won the tender to construct this important recycling project. L-R: Michelle Moroney, General Manager, Projects, Veolia Water Solutions and Glenn Sharrock, General Manager/ Central Coast Operations.

9 carbon

Case study 2 / Post combustion carbon capture pilot project Although the greenhouse emission rate from coal-fired generation technology is improving, to achieve deep cuts to these emission rates, it is necessary to capture and store carbon dioxide emissions. CSIRO and Delta Electricity have constructed a $5 million research scale pilot facility at Munmorah Power Station to investigate the potential to adapt a particular post carbon capture (PCC) process to Australian conditions. The research scale pilot plant is designed to capture up to

3,000 tonnes per annum of CO2 from the power station. The PCC pilot plant at Munmorah forms part of the CSIRO Energy Transformed Flagship PCC research program. It is hoped the Munmorah project will provide the foundation for a large-scale $150 million post combustion capture and storage demonstration project in NSW, planned for operation

by 2013, capturing up to 100,000 tonnes of CO2 each year. L-R: James McGregor, Energy Systems Manager, CSIRO Energy and Peter Coombes, Manager, Sustainability, Delta Electricity.

new capacity base load renewable energy The final report of the Owen Report into Electricity Construction of two 30 MW renewable energy facilities in partnership with Supply was released in September 2007. One of its the NSW Sugar Milling Co-operative nears completion. The co-generation facilities key findings was that NSW needs to be prepared for at Condong and Broadwater use sugar cane waste as fuel and are expected to be additional base load power supply by 2013/2014. operating by the last quarter of 2008. This will be the largest base load renewable energy project in Australia. In the past 12 months, Delta has continued developing options for delivering both base load and peaking capacity. These include investing low emission gas turbine facilities in the provision of base load renewable energy A gas-fired power station with a 667 MW capacity is being built at Colongra near and the construction of low emission gas turbine the existing Munmorah Power Station as an important enhancement to the State’s facilities. Building the gas turbine facility on the electricity system. The new environmentally friendly gas-fired plant will produce Central Coast near existing infrastructure is part of about 40% less greenhouse gas emissions compared to coal-fired power plant. Delta’s strategy to lower greenhouse gas emissions The gas turbine construction contract was awarded to international engineering while broadening its portfolio of generation to meet firm Alstom Limited, while Jemena, formerly Alinta, won the contract to build the growing demand. gas pipeline for this $500 million major infrastructure project. The construction of a gas pipeline and associated infrastructure to supply the turbines is being undertaken by Jemena (formerly Alinta). Regular consultation with local community members ensures impacts on local households are kept to a minimum. Delta was granted approval in early 2007 for a gas turbine power facility to be built at Bamarang near Nowra in two stages with project approval for stage one as a peaking plant and then concept approval for a stage two conversion to a base load plant. When the environmental assessment report was placed on exhibition, a number of issues were raised including the proposed use of water for cooling in stage two. In order to avoid the use of large volumes of water, the design was modified so that air, rather than water, would be used for cooling. The facility will still use water but considerably less than the initial design. This change meant that the infrastructure required for the facility changed slightly and thus the potential impacts on the environment changed. Accordingly, additional technical and other studies were conducted and a revised environmental assessment placed on exhibition in April/May 2008.

10 A community consultative group was established in the Western Region so that regular discussions can be held with local residents and others with an interest in our operations. A similar group on the Central Coast also meets quarterly.

It is hoped that project approval for stages one and two, and the pipeline and marketing associated infrastructure will be granted by the last quarter of 2008. Growth in demand for electricity continued to tighten Environmental assessments were conducted to support Delta’s proposal to build the supply demand balance in NSW. Spot prices a gas turbine plant in two stages on a site near the Marulan high voltage switchyard. were low compared to the previous year, failing to The site was preferred because it is adjacent to the existing TransGrid Marulan provide a signal to encourage timely investment in Switchyard and close to the Moomba to Sydney gas pipeline. Stage one consists new base load plant in NSW. of two open-cycle gas turbines. Stage two converts it to a combined cycle facility In the forward and futures electricity markets, the to generate electricity for intermediate/base load electricity demand. year was marked by considerable price volatility and On an adjacent site, EnergyAustralia proposes to build a second gas turbine facility low trading volumes for terms beyond June 2010. consisting of two open cycle gas turbines and the environmental aspects of these The early part of the year was dominated by proposals have been assessed individually, as well as cumulatively. Measures to concerns about the impact of the drought across mitigate impacts of gas turbine operations on the local community and ecology most regions of the market, as the majority of coal have been identified as part of the specialist studies conducted for the fired power stations rely on fresh water for cooling. environmental assessment. Both hydro and coal-fired stations experienced low Delta and EnergyAustralia will seek approvals to construct the two separate gas water storage levels. The prospect that these low turbine facilities on their adjacent sites. storages might feed into high spot prices drove up forward prices in the first half of the year. The second half of the year was affected by uncertainty around research and development the proposed carbon regulatory regime which Delta made a significant investment in research and development to support the substantially reduced trading activity for forward piloting of an innovative post combustion carbon capture technology at Munmorah years 2010/2011 and beyond. Power Station with CSIRO. Delta Electricity continues to play a constructive role Delta is also investigating Advanced Solar Thermal technology. The study will focus in the development of energy policy and regulation on technology selection, potential site selection (including sites in NSW), network through the industry consultation processes issues and costings. conducted by the AEMC, NEMMCO and other Delta was a member of the Cooperative Research Centre for Coal in Sustainable relevant bodies. Development which completed its term in June 2008. The Centre focused on low emission options for coal-fired plant for transition to a more sustainable generation base. Delta also retains its membership of the: • Electric Power Research Institute; • Welding Technology Institute of Australia; and • CRC for Integrated Engineering Asset Management.

TABLE three: New developments Project Description Status as at 30 June 2008 Colongra Gas Turbine 667 MW open cycle gas turbine. Construction well advanced. Peaking Plant Bamarang Gas Turbine Approximately 400 MW of combined cycle Development consent received. gas plant in two stages. Marulan Gas Turbine – Approximately 400 MW of combined cycle Environmental assessments being finalised. in two stages gas plant in two stages. Western Rail Coal Unloader Rail loop and unloading facility for coal for Mt Piper. Additional studies conducted as requested by Department of Planning. Now awaiting approval. Sugar Mill co-generation Two 30 MW biomass-fired co-generating plant. Performance testing commenced. joint venture at Condong and Broadwater

11 Equal employment principles remain a fundamental platform for our recruitment and work practices. These principles are reinforced through staff induction and ongoing training.

community engagement people A community consultative group was established safety in the Western Region so that regular discussions A new safety program, Safety Excellence, was successfully rolled out across the can be held with local residents and others with organisation with the aims of communicating and reinforcing Delta’s commitment to an interest in our operations. A similar group on the ensure that everyone is safe at work. One of the interventions, which aims to improve Central Coast, the CARE Forum also meets quarterly. safety in the workplace, saw an increased number of managers conducting safety These groups meet quarterly. At the meetings reports inspections with over 300 recorded for the year. are presented on operational and environmental DZIP (Delta’s Zero Incident Process), behavioural based safety program was matters and issues are raised by community introduced in 2003 to help improve safety at work and at home. It encourages safe representatives. Delta undertakes appropriate behaviours by looking at how people carry out their job and identifying safe and actions to address issues and reports progress back at risk behaviours, and having a conversation to reinforce the safe behaviours. to the groups. It continues to be an integral part of our safety system with: Each year in the Western and Central Coast • 97% employees trained as observers – with all newly appointed staff included; regions Delta supports activities and organizations • 174 hard barriers were removed this year; and that promote community development. Grants are • over 9,500 safety conversations recorded as part of DZIP observations. made to: Delta is required to undergo periodic audits by the NSW WorkCover Authority • local government to assist with improvements to continue to hold a self-insurer’s licence. A week-long audit was conducted in to local playing areas and park facilities; May 2008. We successfully met all requirements of the audit ensuring that our • local schools to sponsor annual prizes; licence to self-insure was renewed. • Landcare groups for their activities; and On each day of Safe Work Week 2007, information and advice on a specific safety • other community organisations that help support improvement topic was sent out to team leaders to deliver safety talks to staff. families, children and those with disabilities. Delta welcomed 49 new staff members this year. This is another large intake Staff are encouraged to donate to their preferred after the annual high of 50 new employees who joined last year. To ensure they charity through a payroll giving program and a understand and comply with Delta’s strong safety culture, an Occupational Health corporate policy has provided a dollar-for-dollar and Safety presentation was developed to introduce our safety policies and matching donation. Around $35,000 was donated practices to all new starters at all work sites. by staff and matched in this way during 2007/2008. For all new projects, a community consultation plan skills for the future is developed and implemented. In the past year Within the current labour market the demand and competition for skilled resources consulting with the community was undertaken as continues to increase. Delta also has undertaken a range of initiatives in 2008 to part of seeking approval for the following projects: help attract, retain and develop a skilled workforce. For example, sponsorship was • the construction of the co-generation facilities provided through training organizations to support 21 new apprenticeships. This at Condong and Broadwater sugar mills; support was split between the two regions where our power stations operate, with • construction of a gas turbine facility the costs for training and wages met by the Delta sponsorship. Currently, 49 people in the Bamarang area; at different stages of their apprenticeships are being supported in this way. • construction of a gas turbine facility in the Marulan area; Delta undertakes a range of activities to increase the number and quality of people studying engineering. Financial and practical experience has been provided for eight • the extension to an ash storage facility known students through formal scholarship programs with participating universities. as Kerosene Vale; • the construction of a gas pipeline to supply Delta also provides industrial experience placements of varying lengths for Colongra Gas Turbines; and graduates and undergraduates at several universities. A total of 26 students have • the construction of a rail coal unloader benefited from their involvement with the power industry. at Pipers Flat, near Lithgow. As a foundation member of the Australian Power Institute (API), Delta supports activities which aim to attract students to power engineering in order to boost the quality and number of graduates in the industry. The API now offers a bursary program to provide financial and industrial support to students and also provides development opportunities for professional staff within the power industry. employee health programs A free, confidential counselling service is available to all staff and their families with costs covered by Delta. Qualified counsellors provide assistance to help people deal with personal, family or work related issues. Delta continues its policy of offering influenza vaccinations to all staff. We also provide financial incentives to encourage staff to undertake activities to enhance their aerobic fitness.

12 human resource systems development While Delta supports and aligns itself with the EEO principles and targets set down by the NSW Human resource (HR) management depends on a variety of systems to help Government, low staff turnover has limited our ability support the effectiveness and well-being of staff. Delta has operated a performance to satisfy these targets. management system for many years which was improved by the introduction of an electronic performance management system in 2008. It allows for a greater Nevertheless there were performance improvements alignment between the establishment and reporting of goals. during the year: Work has also commenced to introduce an electronic leave system for annual and • the percentage of women employees increased long service leave. to 8%; • 16% of new recruits were women; workplace reform • two young women took up apprenticeship opportunities on the Central Coast and four were During the past 12 months a consultative forum was established with Unions offered administration traineeships which run for NSW and union representatives to discuss major initiatives and issues that may 12 months; and impact upon the workplace. This coincided with the negotiations to extend • a new 12 month traineeship for a person with the Delta Electricity Employees Enterprise Agreement for a further 12 months. a disability was established. equal employment opportunity Equal employment principles remain a fundamental platform for our recruitment and work practices. These principles are reinforced through staff induction and ongoing training. All policies and standards governing work are reviewed to ensure alignment with EEO principles. gas

Case study 3 / Colongra Gas Turbines In 2006, Delta gained approval to build a new gas fired power station near the existing Munmorah Power Station. With a capacity of 667 megawatts the new plant will produce about 40% less greenhouse gas emissions compared to coal-fired power plant. The gas turbine construction contract for this major infrastructure project was won by international engineering firm Alstom Limited. Building the gas turbine facility is part of Delta’s strategy to lower greenhouse gas emissions and broaden its generation portfolio. L-R: Paul Richards, Site Civil Engineer, Alstom; Rodney Ward, General Manager/Development, Delta Electricity; John Barben, Project Manager/Gas Turbines, Delta Electricity and Leo Cooper, Project Site Manager, Alstom.

13 While not a direct service provider, Delta draws its employees from the multi-cultural Australian community. We recognise the importance and benefits of cultural diversity to our organisation and the community in general. ethnic affairs priority major planned outcomes scheduled statement for 2008/2009 As required, our Ethnic Affairs Priority Statement Delta’s Ethnic Affairs Priority Statement forward plan includes programs to ensure (EAPS) identifies objectives and targets relating merit-based recruitment practices continue and that work arrangements are to social justice, community harmony and cultural sensitive to, and accommodate, cultural and religious differences. opportunities. Delta will continue to offer apprenticeship opportunities and reserve positions for While not a direct service provider, Delta draws suitable female and indigenous applicants. We will continue to explore new initiatives its employees from the multi-cultural Australian to ensure the employment of a workforce which reflects the cultural diversity of the community. We recognise the importance and Australian community. benefits of cultural diversity to our organisation and the community in general. risk management Our forward plan includes ensuring the continuance Delta Electricity’s Risk Management Plan was updated and conforms to the of merit-based recruitment practices and work Australian Standard AS/NZS 4360:2004 Risk Management. This encourages arrangements that are sensitive to and accommodate a proactive risk management culture with employees actively engaged in identifying cultural and religious differences as appropriate. and reporting potential risks. Key operational and strategic risks are reviewed and reported monthly at business support for local indigenous unit level and monitored quarterly by the Board of Directors. communities Risk management software has been enhanced to enable all staff to validate Delta has continued its support for the indigenous the effectiveness of risk control measures in their area of responsibility. community by providing apprenticeship opportunities for those with Aboriginal or Torres Strait Islander As part of our annual insurance renewal program, reviews and valuations of background. During 2008, two apprentices were risk exposures are undertaken. Each year presentations are made to insurance accepted under this program, bringing the total providers that assess risk exposures, risk management practices and progress number of indigenous trainees to four. in implementing the recommendations of loss prevention surveys routinely conducted at power station sites. In addition, a scholarship was sponsored for an Aboriginal student attending the Ourimbah Delta is cooperatively engaged with its insurance providers to reduce risk exposures campus of Newcastle University and sponsorship for key operating plant and equipment. was provided for annual NAIDOC events on the Central Coast and in the Western Region.

TABLE four: TRENDS IN THE REPRESENTATION OF EEO GROUPS1 % of total staff2 Whole of Government Benchmark EEO GROUP or Target 2008 2007 2006 2005 2004 2003 Women 50% 9% 8% 7% 7% 7% 7% Aboriginal people or Torres Strait Islanders 2% 0.7% 0.6% 0.6% 0.6% 0.4% 0.7% People whose language first spoken as a child was not English 20% 6% 5% 5% 5% 5% 6% People with a disability 12% 7% 8% 8% 7% 6% 9% People with a disability requiring a work related adjustment 7% 3% 3.4% 3.4% 3.3% 2.7% 4.1%

TABLE five: TRENDS IN THE DISTRIBUTION OF EEO GROUPS1 distribution index3,4 Whole of Government Benchmark EEO GROUP or Target 2008 2007 2006 2005 2004 2003 Women 100 93 93 98 98 99 98% Aboriginal people or Torres Strait Islanders 100 n/a n/a n/a n/a n/a n/a People whose language first spoken as a child was not English 100 106 109 113 112 112 110% People with a disability 100 99 101 102 100 100 99% People with a disability requiring a work related adjustment 100 n/a 93 95 93 n/a 94% 1. Staff numbers are as at 30 June 2008. 2. Excludes casual staff. 3. A distribution index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff. Values less than 100 mean that the EEO groups tend to be more concentrated at lower salary levels than is the case for other staff. The more pronounced this tendency is, the lower the index will be. In some cases, the index may be more than 100, indicating that the EEO group is less concentrated at lower salary levels. The distribution index is automatically calculated by the software provided by ODEOPE. 4. The distribution index is not calculated where EEO group or non-EEO group numbers are less than 20.

14 governance report

the structure and Mr Peter Young AM, BSc, MBA Chairman and Director composition of the board Mr Young was first appointed on 1 June 2004 and subsequently reappointed Appointment of Directors to the Board is governed for a period ending 31 May 2010. by the State Owned Corporations Act 1989 and the Constitution. The Board of Delta Electricity is Mr Warren Phillips FCPA, FCIS, Dip Comm composed by the following method: Director • the Chief Executive Officer; Mr Phillips was first appointed on 1 March 2000 and subsequently reappointed for a period ending 31 August 2008. • one Director appointed by the Voting Shareholders on the recommendation of a selection committee Ms Sandra Moait comprising: Director a. two persons nominated by the Portfolio Ms Moait was first appointed 18 September 2002 and subsequently reappointed Minister; and for a period ending 31 August 2008. b. two persons nominated by the Labor Council of NSW, being persons selected by the committee Mr Michael Knight AO from a panel of three persons nominated by the Director Labor Council; and Mr Knight was appointed on 20 March 2006 for a period ending 19 September 2008. • at least two and not more than five other directors Mr Paul Forward BComm, MComm, MSc, GAICD appointed by the Voting Shareholders, at their Director discretion. Mr Forward was appointed on 20 March 2006 for a period ending 19 September 2009. The Directors in office at 30 June 2008 are: Mr Loftus Harris BA, FAICD Director Mr Harris was appointed on 1 October 2007 for a period ending 30 September 2010.

Mr Jim Henness BSc, BE (Hons), MEngSc, MBA, FAICD Chief Executive Officer and Director Mr Henness was appointed Chief Executive and Executive Director from 1 March 1996.

Board of Directors L-R: Mr Loftus Harris, Mr Warren Phillips, Mr Michael Knight, Mr Paul Forward, Mr Jim Henness (Chief Executive), Ms Sandra Moait and Mr Peter Young (Chairman) 15 governance report

meetings of the board The Board of Delta Electricity meets monthly or as required and follows meeting guidelines set down to ensure all Directors are made aware of, and have available to them, all necessary information to participate in an informed discussion of all agenda items. Meetings are held either in the corporate office or at one of the power stations, allowing the Board to see the operation of the business. The attendance of Directors at these meetings is shown below. Committees of the Board meet quarterly or as required.

TABLE six: DIRECTORS’ MEETINGS B board board Environment, Board R remuneration Board Audit and occupational Health Meetings and Staff Committee finance Committee and Safety Committee A B A B A B A B Mr P Young 11 11 4 4 Mr W Phillips 11 9 5 5 Ms S Moait 11 11 4 4 4 4 Mr M Knight 11 11 5 5 Mr P Forward 11 11 5 5 3 3 Mr L Harris 8 8 2 2 Mr J Henness 11 11 4 4 Note: Column A is the number of meetings that a Director was entitled to attend. Column B is the number of those meetings attended.

Board Committees Board Remuneration and Staff Committee The three Board committees in place at the end The primary objectives of the committee are to: of the year were: • Provide advice to the Board on remuneration and associated issues. • Board Audit and Finance Committee; • Enhance the independence and objectivity of Board decisions on sensitive • Board Environment, Occupational Health commercial and personal issues related to the Executive Managers of the and Safety Committee; and Corporation. • Board Remuneration and Staff Committee. • Enable Corporate and Business Strategies and Plans, and remuneration strategy and policy to be effectively linked. The terms of reference for each Board committee • Review processes and controls relating to Delta’s remuneration strategy, policy were reviewed and approved by the Board in May and practices in relation to legal and taxation requirements, Corporation reporting 2008. The Board committees and their functions are obligations and overall Corporation policy and direction. listed below. Membership Board Audit and Finance Committee Peter Young (Convenor), Sandra Moait and Loftus Harris. The purpose of the committee is to provide a forum for communications between the Board, senior management and both the internal and external managing risks auditors. It also ensures the integrity of the internal Delta Electricity’s Risk Management Plan conforms to the Australian Standard audit function and that management practices and AS/NZS 4360:2004 Risk Management. The plan is structured to provide Delta and systems support the effective operation of Delta’s its employees with policy direction and a framework for identification, assessment risk management strategies, business continuity and and reporting of risk. fraud control plan. The committee further reviews Delta’s corporate risk management software supports a hierarchical framework the adequacy of Delta’s short and long-term finance which allows employees to identify, register and/or escalate risks to higher levels in and risk management strategies. the organisation for review, comment and action. The framework has been designed Membership to allow elevation of risk information from plant owners through to Executive members and to the Board if necessary. Key risks (operational and strategic) are Warren Phillips (Convenor), Michael Knight reviewed and reported monthly at business unit level and reported quarterly to and Paul Forward. Delta’s Board. Board Environment, Occupational Health In addition to risks and controls being identified and monitored on an ongoing basis, and Safety Committee strategies are formulated through the following: The primary objectives of the committee are to assist • annual planning conference and development of the annual Strategic Plan; the Board in discharging its responsibilities relating • annual planning process which forecasts a 10-year horizon; and to compliance with environmental and occupational • annual asset management reviews. health and safety policies and legislation. Membership Sandra Moait (Convenor), Paul Forward and Jim Henness.

16 governance report

Delta has a Corporate Governance and Legal Compliance Plan to ensure full executive compliance with obligations imposed on the organisation and its officers by all relevant legislation, including the following areas: management team • corporate governance; Jim Henness BSc, BE (Hons), MEngSc, MBA, FAICD • trade practices; Chief Executive • environmental law; Tim Baker BSc, BEng (Hons), MBA, GAICD • occupational health and safety; and General Manager/Marketing • equal employment opportunity. John Bund BEc (Hons) Delta’s corporate compliance management software supports the centralised General Manager/Human Resources oversight of the discharge of all legal, regulatory and compliance obligations. Greg Everett BComm, MBA, GAICD The system allows business units to register compliance obligations in a structured General Manager/Strategy format that includes escalation rules to ensure that non-compliances and overdue compliance tasks are elevated to Delta’s senior management. David Hogg BE, GAICD General Manager/Planning and Information Technology Internal procedures and controls over all commercial transactions are subject to regular review by internal and external auditing procedures. Both audit functions Chris Horner B Eng, provide Delta with a basis for assessing and updating controls that govern Marine Engineers Certificate, GAICD commercial risk exposures. General Manager/Delta Maintenance

As part of Delta’s annual insurance renewal program, reviews and valuations of Ray Madden BA (Hons), MBus, risk exposures are undertaken. Presentations are made to insurance providers Grad.Dip.AppCorpGov, GAICD, ACIS that assess risk exposures, risk management practices and Delta’s progress in Corporate Secretary implementing the recommendations of loss prevention surveys routinely conducted Stephen Saladine BE (Hons) at power station sites. Delta is cooperatively engaged with its insurance providers General Manager/Production to reduce risk exposures for key operating plant and equipment. Glenn Sharrock BSc, GCofM, GAICD Delta has developed a comprehensive suite of policies and procedures for the General Manager/Central Coast Operations management of risks associated with the National Electricity Spot Market and electricity contracting. Electricity Markets Risk Management (EMRM) Policies Richard Street BEc, CA, MBA, GAICD and Procedures are reviewed on a continuous basis to ensure that they effectively Chief Financial Officer manage Delta’s market related risks. Rodney Ward BEng (Hons), MBA, FAICD, ASA, CPA Business continuity risks have been identified and have action plans designed General Manager/Development to return the business to normal operations in an effective and efficient manner. Executive committees oversee the implementation of Board approved strategic and operational decisions and the day-to-day operation of the business. Table seven lists those committees and their membership.

TABLE seven: EXECUTIVE COMMITTEES Name and Title a b c d e f g H i J Henness Chief Executive X X X X X X X X X T Baker General Manager/Marketing X X X X X J Bund General Manager/Human Resources X X X X G Everett General Manager/Strategy X X X X X X X D Hogg General Manager/Planning and Information Technology X X X X C Horner General Manager/Delta Maintenance X X X X X R Madden Corporate Secretary X X X S Saladine General Manager/Production X X X X X X X X X G Sharrock General Manager/Central Coast Operations X X X X X X X X X R Street Chief Financial Officer X X X X X X X R Ward General Manager/Development X X X X J Della Bosca Occupational Health and Safety Manager X G Deans Manager/Environment X D Krallis Deloitte Touche Tohmatsu X (A) Executive Management Committee (D) Executive Occupational Health and Safety Committee (G) Market Strategy Steering Committee (B) Executive Environment Committee (E) Executive Information Technology Strategy Committee (H) Development Projects Steering Committee (C) Executive Audit Committee (F) Executive Human Resources Committee (I) Executive Project Evaluation Committee

17 governance report

Performance and numbers of executive officers The performance payments listed in Table Eight were made soon after the end of the 2007/2008 financial year. They were accrued into that year’s accounts. The 2007/2008 performance payments were made up of the following components. A payment based on one or more of the following: • the outcome of performance against a Delta overall balanced scorecard; • the outcome of performance against business-unit-specific balanced scorecards; • an individual performance payment based on: – individual performance (see criteria in table), and – individual management and leadership performance.

TABLE eight: EXECUTIVE REMUNERATION Total Performance Name and Time in Position Held as Fixed Remuneration Related Payment Position at 30 June 2008 2007/2008 2007/2008 Individual Performance Criteria Jim Henness Chief Executive $459,000 $70,502 Assessment of performance by the Board All of year against corporate performance indicators, including Delta’s profit and plant performance and maintenance of effective external relationships. Tim Baker General Manager/ $277,9 0 0 $53,607 Implementation of strategic marketing All of year Marketing initiatives and assessment against other performance agreement targets. Stephen Saladine General Manager/ $274,700 $49,199 Business unit financial management and All of year Production plant performance and assessment against other performance agreement targets. Greg Everett General Manager/ $269,500 $54,412 Contracted coal purchases and assessment All of year Strategy against other performance agreement targets. Richard Street Chief Financial Officer $255,200 $49,458 Management of financial projects and of All of year the financial and management accounting function and assessment against other performance agreement targets. Rodney Ward General Manager/ $249,000 $45,567 Implementation and management of All of year Business Development development projects and assessment against other performance agreement targets.

TABLE nine: NUMBER OF EXECUTIVE OFFICERS Number of Executive Officers Total Women Number of executive officers with remuneration equal to or exceeding 33 0 equivalent of SES Level 1 as at 30 June 2007/2008 Number of executive officers with remuneration equal to or exceeding 33 0 equivalent of SES Level 1 as at 30 June 2006/2007

18 governance report

annual reporting compliance Delta is required to report on a range of matters which are covered by various Acts, including the Annual Reports (Statutory Bodies) Act 1984, Regulations and Treasury and Premier’s memoranda. The following information is provided in accordance with these requirements.

Exemption from the Reporting Provisions Approval was given by the New South Wales Treasury under delegation from the then Treasurer, the Hon. Michael Egan, MLC to exempt Delta Electricity for the year ended 30 June 1997 and subsequent financial years from reporting on the following areas: • Budgets • Research and Development • Human Resources • Land Disposal • Payment of Accounts • Time for Payment of Accounts • Investment Management Performance • Liability Management Performance. Exemptions for the following annual reporting requirements were approved subject to the condition that comments and information relating to these items are disclosed in summarised form: • Summary Review of Operations • Management and Activities • Consumer Response • Report on Risk Management and Insurance Activities. Other exemptions were approved subject to specific conditions:

Consultants The total amount spent on consultants is required to be disclosed, along with a summary of the main purposes of engagements. In 2007/2008 expenditure on consultants totalled $1,213,430. The main purposes of these engagements were for environmental assessment services, engineering feasibility studies, finance, accounting and management services.

Human Resources Overseas visits with main purposes highlighted, are required to be disclosed. During the year the following officers went overseas.

OVERSEAS VISITS Name Date of Travel Purpose of Travel Tim Baker 24/10/2007 to 26/10/2007 Wellington – CIGRE C5 meeting Tim Baker 9/11/2007 to 19/11/2007 Rome – CIGRE C5 meeting Peter Tang 28/10/2007 to 7/11/2007 Tokyo – CIGRE C5 meeting Jim Henness 3/11/2007 to 9/11/2007 Paris – CIAB Congress Jim Henness 17/11/2007 to 22/11/2007 China – Government business delegation Jim Henness 19/5/2008 to 25/5/2008 Japan/China – Government carbon capture study tour Steve Saladine 22/2/2008 to 29/2/2008 Germany – Meeting with gas turbine manufacturer

Disclosure of Controlled Entities Names of the controlled entities are to be disclosed along with a summarised disclosure of the controlled entities’ objectives, operations and activities and measures of performance.

Financial Statements of Controlled Entities Exempt from preparing manufacturing and trading statements but required to prepare a summarised operating statement.

Cost of Annual Report The cost of producing this Annual Report was $44,890.00.

19 governance report

Freedom of Information No direct applications for information were received under the terms of the Freedom of Information Act 1989 although two applications for information were made to Delta by third parties which had received a request for information. Delta Electricity’s compliance with the Freedom of Information Act did not raise any major issues during the reporting period, nor did the compliance with the Act have any prominent impact on Delta activities.

Heritage Assets Delta’s heritage portfolio is registered with the Heritage Office and consists of: • Barton Park Cemetery • Coxs River Convict Stockade • Hospital Farm barn • Hospital cottage • Mary Slaven’s grave • Thompsons Creek sites and graves • Wallerawang A and B Power Station chimney stack • Wallerawang schoolhouse. We are committed to complying with the State Owned Heritage Management Principles and Guidelines and the Heritage Act 1977 and continues to work with the Heritage Office as part of our annual asset management review process. The aim of this process is to ensure that our heritage portfolio is integrated into Delta’s business management system and that all sites are effectively managed into the future.

Promotion The following publications are available. Information for the public: 1996 Annual Report Central Coast Operations 1997 Annual Report Discovery of Electricity 1998 Annual Report Electricity Generation 1999 Annual Report Electricity in New South Wales 2000 Annual Report Energy Expo 2001 Annual Report Fact Sheet – Delta Electricity 2002 Annual Report Fact Sheet – Colongra Gas Turbines 2003 Annual Report Fact Sheet – Munmorah Carbon Capture Pilot Project 2004 Annual Report Power from Coal 2005 Annual Report Selenium Facts 2006 Annual Report The History of Delta Electricity 2007 Annual Report Western Operations 1996-1999 Environment Report Sunshine Electricity – Co-generation Project 2000 Environment Review 2001 Environment Report 2005 Sustainability Report 2006 Sustainability Report 2007 Sustainability Report Information for Delta Electricity staff: Fact Sheet – Apprenticeships and Trainees Fact Sheet – Summer Internships Booklet – New employee handbook Booklet – Code of Conduct, 2008 Staff newsletter Deltanet Staff intranet Deltaweb Family Care Link

20 Front Cover: Sugar cane growing The Hon. Eric Roozendaal, MLC in the sub-tropical north coast of Treasurer New South Wales. Sugar cane is Level 36 Governor Macquarie Tower considered to be carbon dioxide 1 Farrer Place Sydney NSW 2000 neutral, meaning CO emissions 2 The Hon. Joseph Tripodi, MP from the crop and those produced Minister for Finance, Minister for Infrastructure, during milling and energy generation Minister for Regulatory Reform, and Minister operations are balanced by CO 2 for Ports and Waterways accumulation by the crop. Level 31 Governor Macquarie Tower In a partnership between Delta 1 Farrer Place Sydney NSW 2000 ’08annual report Electricity and the NSW Sugar Delta Electricity Milling Co-Operative Limited cogeneration units which use green sugar cane waste (bagasse) as fuel have been built at Condong dear and Broadwater sugar mills. index Cogeneration is the combined shareholders, production of power and heat. It is with pleasure that the Board of Delta Electricity a The steam produced drives two submits its Annual Report for the period of Apprentices 12 processes – low pressure steam 1 July 2007 to 30 June 2008 as required under Auditor-General’s Opinion 55, 72 is used for heating in the sugar the Annual Reports (Statutory Bodies) Act 1984. mill while high pressure steam b drives the turbine generators to The Annual Report covers the activities of Delta Board Committees 16 produce electricity and to run the Electricity for the year and contains the Statement Board Meetings 16 mill engines. All output will be sold of Accounts for the period ended 30 June 2008. Board of Directors 15 as renewable energy under the The Annual Report includes a letter of submission Balance Sheets 22, 56 Australian Government’s mandatory to the Voting Shareholders and was prepared in renewable energy accreditation c accordance with section 24A of the State Owned Chairman’s Report 2 scheme. Corporations Act 1989 and the Annual Reports Chief Executive’s Report 4 Delta Electricity is proud to be (Statutory Bodies) Act 1984. It is being submitted Community engagement 11 managing the largest baseload for presentation to Parliament. Consultants 18 renewable energy project in Yours faithfully, Cost of Reporting 19 Australia. Cash Flow Statements 25, 60 d Diversity 12 e Environment 8 Equal Employment Opportunity 12 Peter Young Chairman Ethnic Affairs Statement 14 Executive Committees 16 Executive Management Team 17 contents tables Exemptions 19 Inside front cover 7 table one: Key Performance f Letter to Voting Shareholders Indicators – Statistical Summary Financial Statements 23-72 1 Highlights 9 table two: Freedom of Information 20 2 chairman’s Report Environmental incidents Jim Henness Chief Executive 4 chief Executive’s Report 11 table three: New developments g 6 Profile 14 table four: Trends in the Governance 15-20 8 review of Operations Representation of EEO Groups 12 People 14 table five: Trends in the l 15 Governance Distribution of EEO Groups Letter to Shareholders Inside front cover 21 Financial Statements 2008 16 table six: Directors’ Meetings Locations 7 Inside back cover Index 17 table seven: Back cover Contact Details Executive Committees m 18 table eight: Mission 6 Executive Remuneration o Overseas Visits 19 communication objectives p Performance Summary 7 This Annual Report is a financial and compliance report, prepared to meet Profile 6 the requirements prescribed by the Annual Reports (Statutory Bodies) Regulation 2005. It takes into account exemptions granted by the Treasurer r in July 1997. Reporting Objectives Inside front cover Risk Management 14 The 2008 Sustainability Report will be prepared this year against the National Generator Forum standards derived from the Global Reporting s Index. This will be completed by December 2008 and made available on Safety 12 our website www.de.com.au. Statement by Members of the Board 54, 71 v Values 6 Vision 6

Designed and produced by Ross Barr & Associates Pty Limited contact details Corporate office Level 12 Darling Park 201 Sussex Street Sydney NSW 2000 Telephone 02 9285 2700 Facsimile 02 9285 2777 Office Hours 8.30am – 5.00pm

Mt Piper power station 350 Boulder Road Portland NSW 2847 Telephone 02 6354 8111 Facsimile 02 6354 8112 Office Hours 7.45am – 4.00pm

Munmorah power station Scenic Drive Doyalson NSW 2262 Telephone 02 4390 1611 Facsimile 02 4390 1642 Office Hours 7.45am – 4.00pm

Vales Point power station Vales Road 08annual report Mannering Park NSW 2259 ’ Telephone 02 4352 6111 Facsimile 02 4352 6007 Office Hours 7.45am – 4.00pm Delta Electricity Wallerawang power station 1 Main Street Delta Wallerawang NSW 2845 Telephone 02 6352 8611 Facsimile 02 6352 8847 Re port a nn ua l E lectricity Office Hours 7.45am – 4.00pm

Delta Maintenance Munmorah Power Station Scenic Drive Doyalson NSW 2262 Telephone 02 4390 1606 Facsimile 02 4390 1642 Office Hours 7.45am – 4.00pm

Website

http://www.de.com.au 2008 Community information line 1800 115 277 ISSN 1327-6557