Truenergy Briefing

TRUenergy Briefing

29 September 2006 2

Outline

Introduction Richard McIndoe Business Model and Strategy Richard McIndoe Australia Energy Markets Tracy Stevens Break TRUenergy Overview Richard McIndoe Retail Richard McIndoe Operations and Construction Duncan Black Portfolio Management and Tracy Stevens Risk Management Break Ownership and Capital Structure Duncan Black Financials Duncan Black Summary and Outlook Richard McIndoe

TRUenergy Briefing 29 September 2006 Introduction 4

What is TRUenergy?

• Integrated, diversified energy business

• Generation and retail

• Electricity and gas

• ~A$4.5bn assets, well capitalised

• 4th largest generator in market with ~4,000MW across states and fuels

• 5th largest retailer in market ~1.1m customers

• Excellent platform for organic growth and acquisition

TRUenergy Briefing 29 September 2006 5

TRUenergy and CLP

• 100% owned by CLP Holdings

• Owns all CLP’s assets in Australia, except Roaring 40s’ wind farms

• CLP Holdings’ largest single investment outside Hong Kong

• Represent 22%¹ of CLP Holdings’ consolidated assets, and 8%² of consolidated profit before financing and tax

• Significant synergies between TRUenergy and CLP Power

• Senior management drawn from CLP Power Asia

• Board of Directors drawn from CLP Holdings Board and CLP Holdings senior management

• Sir Rod Eddington is independent, non-executive Chairman

TRUenergy Briefing 1: As at 30 June 2006 29 September 2006 2: For 6 months ended 30 June 2006 6

What is it important for you to know…..?

• Australian energy market structure

• TRUenergy’s business model

• Our existing asset base

• Our strategy

• Growth potential and opportunities

• Risk management

• Financials

TRUenergy Briefing 29 September 2006 7

In the beginning……

• CLP established a presence in Australia with Yallourn Energy

– Power station and retail to large Queensland industrial customers

• Initially acquired ~73% Brisbane interest as part of South Australia

PowerGen acquisition New South Wales in 2000 Adelaide Sydney • By 2004, had bought out minorities Victoria and owned 100% Melbourne

Yallourn Energy

TRUenergy Briefing 29 September 2006 8 Acquired TXU MEB and merged with Yallourn…

• Acquired the TXU merchant energy business in May 2005 from Singapore Power

Queensland • Integrated Yallourn and TXU merchant energy businesses

Brisbane • Combined corporate and South Australia

portfolio management New South Wales functions Adelaide Sydney • Refinanced as corporate Victoria with A- credit rating Melbourne Torrens Island

SEAGas Iona Ecogen Yallourn Energy

TRUenergy Briefing 29 September 2006 9

And rebranded…

• We rebranded to TRUenergy in June 2005

Queensland

Brisbane South Australia

New South Wales

Adelaide Sydney

Victoria Melbourne Torrens Island

Yallourn SEAGas Iona Ecogen

TRUenergy Briefing 29 September 2006 10 TRUenergy rebranding advertisement

TRUenergy Briefing 29 September 2006 11 Organic growth into New South Wales….

• We expanded into New South Wales organically

• Organic mass market retail growth Queensland since mid 2005

Brisbane • Commenced construction South Australia of Tallawarra 400MW New South Wales CCGT power station in June 2006 Adelaide Sydney Victoria Melbourne Tallawarra Torrens Island Yallourn

SEAGas Iona Ecogen

TRUenergy Briefing 29 September 2006 12 Now planning Queensland market entry….

• We are seeking to grow our integrated business Queensland in Queensland Queensland • Mass market retail

contestability from Brisbane South Australia July 2007 New South Wales • Potential future generation opportunities Adelaide Sydney Victoria Melbourne Tallawarra Torrens Island Yallourn

SEAGas Iona Ecogen

TRUenergy Briefing 29 September 2006 Business Model and Strategy 14 The business today Generation assets

Site Comment MW Yallourn Brown coal-fired base load station 1,480 TIPS Gas-fired intermediate to peaking station 1,280 Ecogen Hedge agreement to 2019 966 Tallawarra CCGT under construction– – commercial 400 operation scheduled for late 2008

Retail assets

Retail footprint I&C Electricity customers customers Gas customers Mass market Electricity – approx. 600,000 customer accounts. and SME Primarily Victoria, developing NSW and SA Brisbane retail Gas – approx. 500,000 customer accounts. customers Primarily Victoria, developing NSW and SA

Other TRUenergy assets

Details Gas storage Largest gas storage facility in Victoria Adelaide Sydney facility Tallawarra SEAGas Torrens Island Foundation shipper agreement ( >50% pipeline Power Pipeline Power Station capacity) and 33% owner SEAGas Melbourne Station (TIPS) Multiple gas Gas contracts for the next 15 years from multiple Pipeline greenfield suppliers suppliers Yallourn Yallourn Supplies brown coal to Yallourn power station Gas Storage Ecogen mine Facility Hedge (up (12 PJ) to 966MW)

TRUenergy Briefing 29 September 2006 15

TRUenergy Briefing 29 September 2006 16

What is an integrated energy business…..?

• Unregulated

– Perceive more value and growth potential in unregulated sector, rather than regulated transmission and distribution

• Generation and retail

– Power generation as well as retailing to all types of customer

• Electricity and gas

– Integrated by retailing gas and electricity, gas fired generation

• Portfolio of assets

– Generation, retail and gas assets with complementary characteristics

TRUenergy Briefing 29 September 2006 17

Integrated Energy Business Model • Portfolio of gas supply contracts • Yallourn coal mine Upstream • Assets across value chain • Underground gas storage facility

provides earnings stability and • Yallourn, base-load coal-fired station opportunity • TIPS, gas/oil-fired peaking power station Generation • Ecogen hedge, gas-fired peaking station • Generation and retail focused • Tallawarra, site for gas-fired station

• Not focused on regulated T&D • 33% equity interest in SEAGas pipeline Transmission and rights to >50% of capacity • No equity in gas – currently source gas through long term • No assets Distribution contracts • ~500,000 mass market & SME gas

• ~600,000 mass market & SME electricity

Retail • Large I&C electricity customers

• Large I&C gas customers

TRUenergy Briefing 29 September 2006 18 Electricity Market Structure Overview

Forward Market Spot Market Grid

Generator

Connection Hedge $ Pool $ Charges $ Trader Futures Transmission Monopoly Exchange Pool Grid

Wholesale Hedge $ Pool $ Network Charges $ Distribution Retailer Network

Bill $

Retail End Use Customer

TRUenergy Briefing 29 September 2006 19

Vertical Integration - the issue… • Vertical integration between generation and electricity retail is a key feature of TRUenergy’s business model

• Generator - sells generation into electricity pool, hedges revenue in short to medium term in forward market

• Retailer - buys generation from electricity pool, hedges commodity cost in short to medium term in forward market • Earnings volatility for standalone generator or retailer a result of pool and contract market volatility, and hedging mismatches

• Vertical integration of generation and retail provides for optimal outcomes

TRUenergy Briefing 29 September 2006 20 $53 $51 $49 Vertical$47 Integration - the issue… $45 Victorian Electricity Forward Contract prices $55$43 CAL 02 $41 CAL 03 CAL 04 CAL 05 $39 12 MTHS (360 DAYS MOVING DAILY AVER A Regulated Retail CAL 06 $37 CAL 07 tariffs $35 (Indicative only) Indicative $33 Retail Margins

h $31 $29 $27 $25 W

$/M $23 12 month Generation $21 moving avg spot price Earnings $19 $17 $15 ay/2000 ay/2001 ay/2002 ay/2003 ay/2004 Feb/2000 Feb/2001 Feb/2002 Feb/2003 Feb/2004 Dec/1999 Nov/2000 Nov/2001 Nov/2002 Nov/2003 Nov/2004 M Aug/2000 M Aug/2001 M Aug/2002 M Aug/2003 M Aug/2004

• Retail tariffs relatively constant, to a large extent are regulated

• Retail margin has inverse correlation with generation margins

TRUenergy Briefing 29 September 2006 21

Vertical Integration - the benefits

• Internalise Margins - combining or internalising retail and generation margins, resulting in more stable cashflow/income stream than either standalone

• Reduced Risk – balancing generation output and retail load reduces earnings volatility

– Reduced cost of debt and equity - TRUenergy’s debt margins today are one third of Yallourn’s standalone

– Achieved A- credit rating - not possible for standalone generator or retailer

TRUenergy Briefing 29 September 2006 22 Competitors are vertically integrating

Upstream Relative Size to TRUenergy Generation Customers Gas Developments Cust (%) Gen MW (%)

Integrated portfolio is TRUenergy 100 100 being adopted by AGL 260 41 competitors

Origin AGL & Origin are key

Competitors 150 7 competitors Snowy 10 120 Snowy, International International Power and Santos Power 10 84 emerging as potential key competitors Contenders Santos ------Energy Qld retail sale Australia 140 --- potentially start of broader NSW/Qld re- Integral 73 --- structuring over next 3 – Country 5 yrs, driving further 67 --- consolidation Energex 105 --- Legend Large Ergon

Opportunities 57 --- Medium NSW Gen Co’s --- 80-130 Starting Qld Gen Co’s --- 60-90

TRUenergy Briefing 29 September 2006 23

Why target a 20% market share…..?

• Industry consolidating - since privatisation in Victoria, significant M&A activity resulted in industry consolidation, with players choosing either the regulated or unregulated space

• End Game - in generation / retail space, likely NEM will follow UK and New Zealand markets to consolidate to 4 or 5 large vertically integrated players

– AGL, Origin and TRUenergy key players to date

– Future privatisations in Qld and NSW key next steps

TRUenergy Briefing 29 September 2006 24

Current Position and Market Share Custs (m) AGL 3.0 • 5th largest retailer, 10% NEM share NEM Retail Market Share Origin 1.8

Energy 6% 6% 1.6 • 4th largest generator, 9% NEM share 25% Aus tralia 7% Energex 1.2 • Strong presence in VIC and SA 7% TRUenergy 1.1 Integral 0.9 10% Energy 15% Country 0.8 10% Energy 14% Ergon 0.7 Ergon Other 0.7 Qld

MW Enertrade Other 6800 Stanwell Energex NEM Generation Market Share CS-Energy Mac Gen 4900

4% Snowy 4450 SA Brisbane 6% 17% Tarong 7% Delta 4200 7% TRUenergy3700 NSW 12% Enertrade 3100 MacGen Energy 8% Int Power 3100 Delta Australia Eraring 8% 11% Eraring 2900 Sydney 9% 11% CS Energy2800 Adelaide Integral Energy Vic Tarong 2400 Country Energy Stanwell 1600 Melbourne

TRUenergy Briefing 29 September 2006 25

What do we need to achieve a 20% share…

Retail (customers) Generation (MW)

Current 1.1M 3,700

20% target 2.4M 8,000

The challenge 1.3M 4,300

TRUenergy Briefing 29 September 2006 26

The Opportunities

Market TRUenergy • Qld and NSW provide key Customers opportunities for 1.90M ³ Generation 11,498MW ³ TRUenergy

Market TRUenergy

Customers 4.20M ³ Generation 12,634MW ³

Market TRUenergy Market TRUenergy

Customers 1.06M Customers 4.08M Generation 3,836MW Generation 9,067MW

TRUenergy Briefing 29 September 2006 27 To summarise our strategy…

Stage 1 Stage 3 Single asset with Yallourn only Grow integrated asset base & extend footprint • Concentration of financial • text resources in one asset • Aim for 20% national market share • Single asset risks/value limitations • Extend business model to high (2001-05) growth NSW & Qld States (2006-08)

Stage 2 Stage 4 Acquire/merge with other Access local capital for growth retailers / generators • Combine step-wise acquisition • Hedge risks & diversify with local funding • Improve quality of business & • Potential local market listing earnings (2007/08) (2005)

TRUenergy Briefing 29 September 2006 Australian Energy Markets 29 Electricity Supply Chain

Generation Transmission Distribution Retailing 132kV - 500kV 415V - 66kV 240V ~40% ~10% ~40% ~10%

CompetitiveRegulated Natural Monopoly with Competitive “open access”

Competition where it is possible……. price regulation and open access where it isn’t

TRUenergy Briefing 29 September 2006 30 Electricity Fuel Supply

NEM generation by energy

Wind Other 1% Hydro 0% 8% Gas 6%

Black Coal Brown Coal 56% 29%

NEM Fuel type by capacity Wind Other 2% 2%

Hydro 17%

Black Coal Gas 52% 10% Brown Coal 17%

TRUenergy Briefing 29 September 2006 31 Gas Supply Chain

Production, Transmission Distribution Retailing Processing & (High Pressure) (Low Pressure) ~10% Storage ~5% ~35% ~50%

Competitive Partially Regulated Regulated Natural Competitive Monopoly

TRUenergy Briefing 29 September 2006 32 Australia has significant gas reserves

Papua New Guinea (PNG) 10Tcf Existing pipeline Timor Sea 25Tcf Bayu/Undan Browse Proposed pipeline Basin LNG 30Tcf Darwin Proposed PNG Pipeline Greater North 1Tcf=1068PJ West Shelf 90Tcf (Vic uses ~250PJ p.a.) NT Townsville Coal Seam QLD Methane Projects 2.6Tcf WA (potentially 5-10 Tcf) Cooper Gladstone Basin 1.8 Tcf Moomba Ballera Brisbane SA Gas Plant Wallumbilla NSW

Perth Sydney Adelaide Canberra Otway Gas Plant* VIC Basin Discovered Gas Resource TRUenergy Gas Storage Melbourne Orbost Gas Plant Minerva Gas Plant Kipper Field Gas Field - undeveloped or under development Minerva Field Gippsland Casino Field Yolla Gas Processing Plant Otway Field Basin Thylacine/Geographe 5 Tcf * Under construction Fields Basin 1.5 Tcf Longford Gas Plant Bass Gas Plant

TRUenergy Briefing 29 September 2006 33 Australian Energy Market Size 3% annual growth in gas NEM share of consumption AUSTRALIA Total NEM Australia (1PJ=936Mcf)

Population (m) 19.5 17.1 87% 2-3% annual growth in electricity Installed Capacity MW 45,330 36,700 81% consumption, 3-4% growth rates in GWh consumption 176,100 153,000 87% summer peak demand periods PJ consumption 1,000 610 61%

share of share of QUEENSLAND Australia NEM

Population (m) 3.7 19% 22% Installed Capacity MW 11,300 25% 31% Northern GWh consumption 40,000 23% 26% Territory PJ consumption 80 8% 13% share of WESTERN AUSTRALIA Australia Western Queensland Population (m) 1.9 10% NEW SOUTH WALES share of share of Australia & ACT Australia NEM Installed Capacity MW 5,300 12% South GWh consumption 12,000 7% New PJ consumption 370 37% Australia Population (m) 7.0 36% 41% South Installed Capacity MW 12,800 28% 35% Note: In WA gas is a significant source for Wales GWh consumption 63,000 36% 41% electricity generation. PJ consumption 140 14% 23% Victoria share of SOUTH AUSTRALIA share of NEM share of share of Australia VICTORIA Australia NEM Population (m) 1.5 8% 9% Tasmania Installed Capacity MW 3,700 8% 10% Population (m) 4.9 25% 29% GWh consumption 11,000 6% 7% Installed Capacity MW 8,900 20% 24% PJ consumption 140 14% 23% GWh consumption 39,000 22% 25% PJ consumption 250 25% 41%

TRUenergy Briefing 29 September 2006 Australian Energy Market - Consumption by State

100,000 LPG

90,000 Natural Gas Electricity 80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000 Consumption –Consumption equivalent GWh -

SA NT VIC QLD WA TAS

NSW & ACTNote: LPG=Bottled Propane Gas Note: Gas consumption has been converted from PJ to GWh

TRUenergy Briefing 29 September 2006 35

National Electricity Market in Australia

Key Characteristics

• NEM consists of South Australia, Victoria, New South Wales, Queensland and Tasmania • Single market operator - NEMMCO • Settled via ½ hourly gross pool, underlying 5 minute dispatch & pricing • Common clearing / spot / pool price • Generators offer price / volume packets of generation into the market • Maximum pool price A$10,000 / MWh (called Value of lost load (VoLL)) • Primarily a Capacity constrained market • Generators and retailers enter into derivative contracts to manage price risk • cash settlement, no physical delivery

TRUenergy Briefing 29 September 2006 36 Electricity Market Structure Overview

Forward Market Spot Market Grid

Generator

Connection Hedge $ Pool $ Charges $ Trader Futures Transmission Monopoly Exchange Pool Grid

Wholesale Hedge $ Pool $ Network Charges $ Distribution Retailer Network

Bill $

Retail End Use Customer

Note: Green arrows refer to regulatory fees, red arrows to settlement payments based on market outcomes

TRUenergy Briefing 29 September 2006 37

Retail electricity cost stack

‘Typical value’

Retail Margin A$5 - A$20/MWh Retail Retail Cost to Serve Portfolio Wholesale Energy A$30 - A$60/MWh Management Cost NEM Fees Pass Transmission & A$40 – A$50/MWh Through Distribution Cost

TRUenergy Briefing 29 September 2006 38 Without vertical integration, fluctuating wholesale costs create variable retail margins

$65 Wholesale Cost Included in Vic Retail Tariff $60

Cal 02 Flat Contract Prices $55

$50

$45

$/MWh $40 Cal 03

Cal 04 Cal 08 $35 Cal 05 Cal 07 Cal 06 $30

12 Month Moving Average $25 Spot Price Average

$20 Jul/2006 Oct/2005 Apr/2006 Jan/2006 Feb/2005 Feb/2004 Feb/2003 Feb/2002 Feb/2001 Feb/2000 Dec/1999 Nov/2004 Nov/2003 Nov/2002 Nov/2001 Nov/2000 Aug/2005 Aug/2004 Aug/2003 Aug/2002 Aug/2001 Aug/2000 May/2005 May/2004 May/2003 May/2002 May/2001 May/2000

TRUenergy Briefing 29 September 2006 39

Forward Trading Activity Manages Price Risk

• OTC or exchange traded • largely OTC, either via brokers or direct with counterparties • futures exchange traded

• Participants • Generators, Retailers & Traders (about 30 participants) • Relatively illiquid 3-4 years

• Common products • Swaps • Futures • Options – Cap or floor – Collars (combination cap and floor) – Swaptions – Asian options

TRUenergy Briefing 29 September 2006 40

Australian Gas Markets

Key Characteristics

• State based systems with integrated transmission system

• Victoria market carriage system

• Open access to transmission and distribution

• Monopoly producers dominate supply but sources of supply are increasing

• Long term supply contracts linked to CPI with price resets

• Currently daily pricing in Victoria

• Intra – day pricing from March 2007

TRUenergy Briefing 29 September 2006 41

Eastern Australia Gas Market Development 1960s, 70s and 80’s Late 1990s, to present

DARWIN

NORTHERN QUEENSLAND NORTHERN QUEENSLAND TERRITORY Townsville TERRITORY Townsville SW Qld (raw gas)

WESTERN WESTERN Cooper Cooper AUSTRALIA AUSTRALIA Basin Ballera Basin Moomba BRISBANE Ballera BRISBANE SOUTH MAPS Moomba NEW SOUTH WALES AUSTRALIA SOUTH NEW SOUTH WALES AUSTRALIA PERTH PERTH EAPL SYDNEY SYDNEY ADELAIDE CANBERRA EGP ADELAIDE CANBERRA VICTORIA VICTORIA MELBOURNE MELBOURNE Existing pipelines. Sale TGP Existing pipelines. Sale Iona Iona SEAGas TASMANIA TASMANIA HOBART HOBART - Immature market - Mature Victorian gas market, other states evolving - Monopoly producers (Gippsland Basin - Esso/BHP - Monopoly producers still dominate supply but new Billiton, Cooper Basin - Santos and others) > 90% sources competing eg Otway Basin, Queensland of supply Coal Seam Methane - Monopoly retailers (AGL in NSW, Origin in SA, Vic - Competitive retail market dominated by AGL, Origin Govt in Victoria) and TRUenergy - Single supply sources to market (Cooper Basin – to - Integrated network with alternative supply sources Adelaide and Sydney, Gippsland Basin to Victorian) to market created by SEAGas and EGP

TRUenergy Briefing 29 September 2006 42 Competition and Ownership State by State

Northern Territory • Electricity public Queensland • Market fully open • Gas industry privatised • No competition • PNG pipeline (possibility) • Mass market opening July 2007 • Electricity public • Electricity retail to privatise 2006

New South Wales & Snowy • Electricity public • Gas private • Gas & electric retail markets open • Retail price caps • Privatisation uncertain

Victoria • Fully privatised Western Australia • Market fully open & • Electricity public South Australia competitive • Gas privatised • Fully privatised • Retail price caps Closed • Competition • Retail fully open & beginning competitive Tasmania Partially Open • Retail price caps • Electricity public Open • Gas being developed • Basslink completed 2006 TRUenergy Briefing • No Retail competition 29 September 2006 43

Retail Energy Market Reform

• State markets have opened to retail competition in tranches

• Industry has driven the approach to Mass Market Systems capability

• Regulatory framework • Regulated pricing for mass market - negotiated multi year retail price paths in Victoria, New South Wales and South Australia • Regulated customer protection framework covers all retailing functions, for example billing, sales & marketing • Extensive but inconsistent compliance programs in place in each State to comply with varying State compliance and compliance reporting obligations

TRUenergy Briefing 29 September 2006 44 Major Areas of Continuing Retailer Regulation

• Consumer Protection • Minimum Terms for Customer Contracts (Retail Codes) • Hardship policies • Compliance and compliance reporting / audits • Ombudsman schemes provide independent arbitration and mediation between consumers and retailers • Market Rules, for example • National gas market development • Transmission Regulated prices to Australian Energy Regulator • Retail Pricing • Retail price caps and reviews • Greenhouse policy • Victorian Renewable Energy Target (VRET) • Emissions Trading Scheme consultation

TRUenergy Briefing 29 September 2006 TRUenergy Overview 46 TRUenergy Business Structure

TRUenergy business comprises functional areas: • Retail • Operations & Construction • Portfolio Management • Corporate – Finance – Information Systems – Legal & Corporate – Human Resources – Business Development – CLP Internal Audit

TRUenergy Briefing 29 September 2006 47 TRUenergy Business Structure

Government & Regulatory Affairs

Build and Business Information leverage Development Services relationships with Identify and analyse Deliver excellence in government growth opportunities information technology and regulators and manage solutions to meet investment business needs projects Planning, Human Accounting & Tax Resources Portfolio Ensure accurate and Retail Recruit, support, efficient finance/tax Management develop and planning and reporting Attract and retain Manage our access reward employees customers by to generation to delivering on meet customer our promise needs and Procurement Public Affairs to put TRUenergy vision: create value Manage customers through Ensure effective procurement of the first To be the leading wholesale communication with goods and services integrated energy trading of gas stakeholders and develop we need to run our business in Australia and electricity our corporate reputation business and I&C sales

Corporate Legal Finance Operations and Construction Provide corporate Deliver efficient and reliable production of Assist business to financing and cash gas and electricity from our power minimise legal risk management stations and gas plants and establish sound services governance Facilities structures and Market Risk Management processes Enterprise Provide robust risk Maintain our controls as well as Risk monitor and report facilities and for energy market Protect our business business premises activities and assets with appropriate insurance and effective incident management systems

TRUenergy Briefing 29 September 2006 48 Experienced Management Team

Managing Director Internal Audit Richard McIndoe

Chief Financial Dir. Portfolio Dir. Operations & General Counsel Dir. Business Dir. Information Dir. Human Dir. Retail Officer Management Constructions & Corp Sec. Development System Resources Karen Lowe Duncan Black Carlo Botto Michael Hutchinson Amanda Barnett Sam Bristow Phillip Nesci Margie Hill

• Financial • Retail • Electricity • Yallourn • Legal • Greenfield • IT Strategy & • Human Control Strategy Power Station Planning Resources and Devt • Gas • TIPS • Intellectual Development • Reporting Property • Business • Sales and • Physical • UGS • Acquisitions Solutions • Treasury Marketing • Company • I&C • Tallawarra Secretarial • Business • Tax • Commercial Customers Improvement Business • Corporate • Planning Segment • Regulatory Governance Affairs • Procurement • Customer • Facilities services Management • Risk Management • Public Affairs

TRUenergy Briefing 29 September 2006 Retail 50

Role of Retail

• To manage TRUenergy’s mass market and small business customer base with the aim of retaining existing customers and winning new customers whilst improving profitability and customer service

• To provide required back office services including call centre and billing

TRUenergy Briefing 29 September 2006 51

Overview of TRUenergy Retail

• Currently 1.1m customers • Majority located Victoria • Growing presence South Australia and New South Wales

• Strengths • Brand recognition • Successful migration of customers from Government Regulated Tariffs to Market Based Tariffs • Customer churn performance better than industry average • Customer complaints lower than industry average

• Opportunities • Queensland • Retail market opening 1 July 2007 • Further organic growth in South Australia and New South Wales

TRUenergy Briefing 29 September 2006 52 Victorian Market Churn Since Deregulation

Gas - Per Month Elect - Per Month 60,000

27% 50,000

22% 40,000

30,000

20%

Transfers per month Transfers 20,000

13% 10,000

- 2002-1 2002-7 2003-1 2003-7 2004-1 2004-7 2005-1 2005-7 2006-1 2006-7

TRUenergy Briefing 29 September 2006 53 Trends in the Market

Discounts in the market

Average Market Victoria South New South Discounts* Australia Wales

2003 5% 5% 3%

2004 5% 5% 3%

2005 7% 7% 5%

2006 8% 10% 6%

* Include upfront incentive

Number of Players in the market

2002 2003 2004 2005 2006 VIC 3 5 7 8 11 SA 3 5 5 8 8 NSW 4 4 4 7 11

TRUenergy Briefing 29 September 2006 54

Retail Market Levers

Retail competitors are using a myriad of marketing and pricing tools to win and retain customers, such as

• Strategic – Loyalty rebates – Tiered exit fees (years 1 to 3) – Fixed price contracts – 1, 2 and 3 year contracts – Usage and supply discounts (ranging from 5%-12% currently in the market) – Product bundling (gas / electricity / insurance etc.)

• Tactical incentives – DVDs, shopping vouchers, memberships – Direct debit discounts – Pay on time discounts – Loyalty rewards (eg Frequent Flyer Points)

TRUenergy Briefing 29 September 2006 55 TRUenergy speed dating advertisement

TRUenergy Briefing 29 September 2006 Operations and Construction 57 Asset Overview

Generation assets Site Comment MW Yallourn Brown coal-fired base load station 1,480 TIPS Gas-fired intermediate to peaking station 1,280 Ecogen Hedge agreement to 2019 966 Tallawarra CCGT under construction– – commercial 400 operation scheduled for late 2008

Brisbane Other TRUenergy assets

Details Gas storage Largest gas storage facility in Victoria facility

SEAGas Foundation shipper agreement ( >50% pipeline Pipeline capacity) and 33% owner Adelaide Sydney Multiple gas Gas contracts for the next 15 years from multiple Tallawarra suppliers suppliers Torrens Island Power Yallourn Power Station Melbourne Supplies brown coal to Yallourn power station SEA Gas Station mine (TIPS) Pipeline greenfield Yallourn Gas Storage Ecogen Facility Hedge (up (12 PJ) to 966MW)

TRUenergy Briefing 29 September 2006 58 Yallourn provides up to 1,480MW of cost competitive base-load generation

Yallourn Power Station — Overview Yallourn Power Station Location • Yallourn is a 1,480MW power station and coal mine located in the Latrobe Valley • Coal mine adjacent to power station providing a secure, low cost source of fuel

– Reserves for power station needs to 2032 ` – Mine operation and maintenance through alliance contract with RTL, a joint venture between Roche, Thiess and Linfox • Yallourn is a key generation asset – Provides ~23% of Victoria’s electricity needs

– Average availability since privatisation 89% Technical specifications Technical specifications – Multi-skilled workforce Availability – New digital control system Installed (June 2006 Asset capacity Details ytd) – Operated by TRUenergy, maintenance by Yallourn 1,480MW 2x360MW 91.9% alliance contract with Siemens/Thiess JV 2x380MW

TRUenergy Briefing 29 September 2006 59 Yallourn - Significant Improvement Projects

Control & Instrumentation Upgrade New Mining Method

Improvement

• Commenced: 2002 • Dredger mining operations replaced with dozer Timing Timing • Scheduled completion: 2008 mining system in 2002/3

• Project to modernise power station • New method uses dozers (D11 Cat) and control & instrumentation systems feeder-breaker technology • New central control room and power • Upgrade of coal handling, conveying systems plant simulator • 3 of 5 dredgers now decommissioned, one Details • Units 3 & 4 operational maintained for ongoing overburden removal • Supplied under alliance with ABB and one for emergency coal supply

• Improvements relating to availability • Improved capability, reliability at lower cost Benefits • Improved control related run-up costs – Production per man hour more than doubled – Coal supply reliability increased to 99.9%

TRUenergy Briefing 29 September 2006 60

Yallourn - Significant Improvement Projects

Improvement Diversion of Morwell River Industrial Relations Improvements • Commenced: October 2000 • Continuous change since October 2001 Timing • Completed: May 2005 • New EBA signed in August 2004 without dispute

• Design, supply and construction • AIRC made an MX Award in Oct 2001 after contracted to RTL failed EBA negotiations • Contract value A$116m • Delivered a team based culture, enabled • Project planned over 4 dry seasons reduction in manning levels and (November to June) introduction of new technology providing • Completed on schedule and to budget significant flexibility and right to manage Details • Scope of work • Subsequent major changes implemented – 11 million cubic metres of earthworks. without industrial action – 3.5km of clay lined watercourse. • Outsourcing of mine O&M to Alliance – 1,246m of conveyor tunnels through • Power station maintenance reorganisation embankment • I&C, new mining method, MRD

• Enables mining of East Field extension • Resulted in competitive advantage for to 2010 and Maryvale Field beyond Yallourn Benefits 2010

TRUenergy Briefing 29 September 2006 61 South Australia peaking/mid-merit capacity provided by Torrens Island Power Station

TIPS Overview TIPS Location • Located on Torrens Island, approx 15 km northwest of Adelaide • Consists of two plants, TIPS A and TIPS B • 1,280MW from 8 gas fired steam turbines • Largest generation plant in South Australia ` providing ~40% of capacity • TXU acquired the 99-year lease of TIPS from the South Australian government in 2000 for A$295m • Historically, TIPS was supplied with gas from central Australia, but now gas sourced mainly from Victoria through SEAGas Pipeline Technical specifications TIPS A TIPS B Capacity 480MW 800MW Units 4x120MW 4x200MW Market Role Peaking Intermediate Fuel Type Gas/Oil Gas/Oil Commissioned 1967-71 1975-1980

TRUenergy Briefing 29 September 2006 62 Additional peaking plant capacity provided under the Ecogen Master Hedge Agreement (MHA)

Overview of Ecogen MHA Ecogen Generation Plant Rated • Ecogen MHA provides 966MW of capacity over a Asset capacity Details 20 year period Newport 500 MW Single turbine Gas/steam generator • Ecogen plant - Newport and Jeeralang gas-fired Located south-west of Melbourne Jeeralang 466 MW 7 units peaking power stations Gas generator • The MHA is a contract between TRUenergy and Located in the Latrobe Valley east of Melbourne Ecogen – TRUenergy has no ownership or operational control – Contract commenced on 6 May 1999 and runs for 20 years until 6 May 2019 – Ecogen dispatches plant into market – TRUenergy receives pool revenue and provides for guaranteed return of operating costs and return of capital – TRUenergy supplies gas to Ecogen

TRUenergy Briefing 29 September 2006 63 Gas Storage facility providing the ability to manage portfolio gas position Underground Gas Storage (“UGS”) - overview Iona gas storage reservoir-technical parameters

• Gas storage and processing facility near Port • 260TJ/day withdrawal deliverability Campbell in south west Victoria • 100 TJ/day of injection deliverability – Commissioned in 1999 - capacity of 12 PJ • 12 PJ of storage capacity – Plant capacity represents ~25% of peak-day Victorian retail gas demand UGS schematic

• Connected directly to Victorian gas North Paaratte 50 TJ/d Wallaby Ck SWP transmission system and SEAGas Pipeline 70 TJ/d 260 TJ/d 90 TJ/d Heytesbury • TRUenergy must make certain storage 50 TJ/d Iona gas Iona processing plant compression capacity available to other participants (320 TJ/d) facilities 125 TJ/d Santos offshore 165 TJ/d • Underground storage capacity 320 TJ/d Max

Iona reservoir 250 TJ/d SEAGas – Reduces supply shortage risk to TRUenergy (12.2PJ cap) 100 TJ/d gas customers and generation assets – Allows TRUenergy additional supply flexibility to that under gas supply contracts • Gas processing for nearby gas fields in addition to storage services

TRUenergy Briefing 29 September 2006 64 SEAGas pipeline capacity provides flexibility for gas business, equity interest stable cashflows

Overview of SEAGas Pipeline SEAGas Location • 685km pipeline from near Melbourne to Adelaide, operational from January 2004 South Australia • JV together with International Power and Origin — TRUenergy New South 33.3% equity interest Wales

Adelaide • Project financed, non recourse to owners Sydney Canberra SEAGas pipeline Victoria • Provides an alternative in South Australia to Cooper Basin gas Melbourne • Gas switching flexibility in Victoria / SA • TRUenergy has rights to > 50% of capacity for 15 years—390 TJ/day capacity • SEAGas pipeline secures additional supply option for TIPS and provides significant flexibility to TRUenergy gas strategy • 33.3% equity interest provides stable return

TRUenergy Briefing 29 September 2006 65 The combined portfolio well integrated across merit order to support business’ retail load

Victoria and South Australia generation merit order Commentary

150 Average Off Peak Average Peak Combined portfolio a good combination of assets to 50 TRUenergy owned / contracted Jeeralang 468MW support retail business 40 Torrens A 380MW

Torrens760MW B EB generation assets provide Newport 475MW

30 Dry Ck/Mintaro 238MW Ladbroke Grove 78MW Grove Ladbroke TRUenergy with diversification Osborne 171MW by fuel, units, states and across Northern (Flinders)514MW 20 Anglesea 135MW

Marginal Cost (A$/MWh) the merit order Morwell (Energy Brix)176MW Southern Hydro 469MW

10 Hazelwood 1,440MW Loy Yang B 920MW Yallourn 1,320MW Loy Yang A 1,840MW Generation portfolio has significant presence in Victoria 2,000 4,0006,000 8,000 10,000 and SA Cumulative capacity (MW Traded) Victoria capacity South Australia capacity

Snuggery/ Morwell Port Lincoln Ladbroke Grove 3% (Energy Brix) Anglesea Mintaro GT 3% Torrens Island A 15% 2% 2% 3% Southern Hydro Yallourn 7% 18% Dry Creek GT 5%

Total TRUenergy Pelican Point Total TRUenergy Hazelwood Newport 16% 20% 7% capacity capacity 31% 40% Torrens Island B Jeeralang 25% 6% Thomas Playford 7%

Loy Yang B Osborne 6% 13% Northern 17% Loy Yang A 25%

TRUenergy Briefing 29 September 2006 66

Tallawarra Summary

• 400MW A$400m CCGT in construction in NSW, TRUenergy Balance Sheet financed

• EPC Contract with Alstom, issued Notice to Proceed in early June 2006

• Commercial Operations Date scheduled for late 2008 to hit summer peak

• Constructed on site of former coal-fired power station, acquired from NSW govt

• Access to cooling water, close to gas transmission, connection to electricity transmission

TRUenergy Briefing 29 September 2006 67 Tallawarra Overview

• NSW largest market in the NEM • NSW forecast to require new generation supply in 2008/9

• Tallawarra lowest cost new entrant by virtue of site benefits • Key contributor to NSW Greenhouse Gas Abatement Scheme (NGAC) • Strong source of incremental earnings growth for TRUenergy

• Growing TRUenergy retail business provides natural hedge to generation

• 600Ha site provides property development upside

TRUenergy Briefing 29 September 2006 Portfolio Management and Risk Management 69

Integrated Wholesale Portfolio

Fuel Generation Wholesale Retail

I & C Gas Mass Market Long Term Underground And Market Gas Storage Small Business Supply and Transportation Wholesale Agreements

TIPS / MHA Pool Mass Market Electricity And Yallourn Coal Yallourn Market I & C Small Business

Liquid Fuel Tallawarra Wholesale

TRUenergy’s comprehensive wholesale portfolio extracts value across the energy value chain

TRUenergy Briefing 29 September 2006 70 Role of Portfolio Management

• Portfolio Management’s objective is to protect and enhance the value of TRUenergy’s assets

• Generation/Gas Supply and customer usage/load

• As TRUenergy is a vertically integrated energy company, Portfolio Management’s core role is managing the residual position between physical supply and customers’ demand by:

• Contracting supply or hedging asset cash flow to optimise earnings • Bidding and dispatching/scheduling generation and gas to monetise asset value

• Portfolio Management’s wholesale market expertise provides a platform for TRUenergy to contribute to the development of Australia’s energy markets

• Portfolio Management engages with industry and government stakeholders to develop sustainable energy policy

TRUenergy Briefing 29 September 2006 71

TRUenergy’s Risk Management Framework

TRUenergy’s energy trading activities are conducted within a strong governance framework • Comprehensive Risk Management Policies • Strong oversight of operations by Risk Management and Audit • Functional and organisational separation of front, middle and back office energy trading activities • Systems and processes minimise operational risk • Portfolio risk measures provide early warning indicators around cash, contribution and value TRUenergy’s risk management policies, procedures and systems were reviewed in early 2006 by Protiviti, a US-based consultant, which found risk management at TRUenergy to be “fit for purpose” whilst identifying a number of areas for improvement which are currently being pursued

TRUenergy Briefing 29 September 2006 72

Risk Management Framework - Segregation

Governance & Oversight Audit

Executive Risk Management Group Committee Committee Internal Audit

Managing Risk Consultative Internal Audit Director Committee

Front Director Portfolio Management Middle Office

Office Execution Strategy - forward market, bidding, stakeholders Risk

Counterparty & customer relationship management RMP & procedures Compliance Operational infrastructure management Development Credit management Physical Markets Large Customer Electricity Portfolio Gas Portfolio Forward curve Portfolio Bid development & Counterparty Counterparty Position Monitoring & submittal Customer relationship relationship relationship Reporting development development development Market & asset Valuation monitoring & re- Product development Position monitoring & Position monitoring & bidding management management Account management, Co-ordination with including billing Forward transaction Contract asset management enquiries, network execution management and plant operations and market Back Office information Contract pricing & Contract pricing & Operational liaison information gathering information gathering Settlements Plant with NEMMCO & Customer information Pool Settlements VENCorp and business process Contract Settlements Operations management Contract Confirmation

I&C Billing Customer transfers Metering data Commercial Counterparties Billing NEMMCO/VENCorp & Industrial Counterparties and Brokers Customers

TRUenergy Briefing 29 September 2006 Ownership and Capital Structure 74

TRUenergy Group

CLP Holdings

CLP Power Asia Ltd

CLP Australia Holdings Pty Ltd

TRUenergy Yallourn CLP Australia Pty Ltd CLP Australia Energy Finance Pty Ltd Holdings Pty Ltd

• Finance • Yallourn Company Power Station TRUenergy CLP Australia • Syndicated Australia Pty Ltd Pipelines Pty Ltd Bank Debt • Yallourn Mine • Investment • Aust MTN in SEAGas

TRUenergy SA TRUenergy Gas TRUenergy Pty Generation Pty Storage Pty Ltd Ltd Ltd

• UGS • TIPS • Retail Business • Ecogen MHA • Gas Supply Contracts

TRUenergy Briefing 29 September 2006 75

TRUenergy borrowing structure

Ownership and borrowing structure Ownership and borrowing structure

• CLP Australia Holdings Pty Ltd is holding Equity company for the Australian operating CLP Australia Perpetual notes subsidiaries: Holdings Shareholder loans • TRUenergy Yallourn Pty Ltd (Yallourn Power Station and Mine) • CLP Australia Energy Holdings Pty Ltd (owns business acquired from Singapore Power in May 2005) CLP • CLP Australia Finance Pty Ltd CLP TRUenergy Australia • The borrowing structure for the senior debt Australia Yallourn Energy has the following terms Finance Pty Ltd Holdings • Negative pledge - no security interests Pty Ltd over assets of the guarantor group other than permitted security interests • Subordination - Senior indebtedness to Operating Subsidiaries rank ahead of all other indebtedness Senior • Requirement to hedge interest rate debt exposure A$2,300m • The following financial covenants will be tested semi-annually: • Interest Cover • Debt to Total Capitalisation

TRUenergy Briefing 29 September 2006 76

Senior Debt - Capital Structure

•• SyndicatedSyndicated A$1,600mA$1,600m seniorsenior bankbank debtdebt facilityfacility (syndicate(syndicate ofof 1414 banks)banks) •• ComprisesComprises ofof twotwo tranches:tranches: A$1,600m senior debt 33 yearyear A$650mA$650m revolverrevolver facility;facility; andand facilities •• •• 55 yearyear A$950mA$950m revolverrevolver facilityfacility •• TheThe termsterms ofof bothboth tranchestranches alloalloww forfor earlyearly repaymentrepayment andand redrawredraw •• MarginMargin basedbased onon aa pricingpricing grgridid linkedlinked toto creditcredit ratingrating

•• AustralianAustralian domesticdomestic A$A$ MediumMedium TermTerm NoteNote issuanceissuance onon A$2A$2 billionbillion programprogram A$700m Australian •• ComprisesComprises threethree tranches:tranches: MTN •• 77 yearyear A$325mA$325m FixedFixed RateRate NotesNotes •• 77 yearyear A$325mA$325m FloatingFloating RateRate NotesNotes •• 1010 yearyear $50m$50m FloatingFloating RateRate NotesNotes

•• InIn additionaddition toto thethe basebase capitalcapital ststructure,ructure, aa A$250mA$250m workingworking capitalcapital A$250m working capital facility facilityfacility isis inin placeplace toto meetmeet guguaranteearantee requirementsrequirements andand supportsupport intra-periodintra-period workingworking capitalcapital fluctuationsfluctuations

TRUenergy Briefing 29 September 2006 77

Debt Maturity Profile

1000 950

900

800 650 700 7yr MTN

600 Facility B 500 650 Facility A 400

300 600 Un- 200 drawn 50 100 10yr MTN 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Maturity Date Facility A 22/08/2009 Facility B 22/08/2011 7yr MTN 16/11/2012 10yr MTN 16/11/2015

TRUenergy Briefing 29 September 2006 78

Financing Capacity

Senior Debt Facilities

Facility Facility Drawn • CLP Australia Holdings and Amount Amount TRUenergy rated A-/stable by (A$m) (A$m) Standard & Poor’s 3yr Bank Loan 650 50 • Conservative gearing <40% 5yr Bank Loan 950 950 providing significant financial 7yr Fixed AUD MTN 325 325 flexibility 7yr Floating AUD MTN 325 325 • A$600m of undrawn committed 10yr Floating AUD MTN 50 50 debt facilities

Total 2,300 1,700

TRUenergy Briefing 29 September 2006 Financials 80

2006 Interim Results

CLP Australia Holdings • High mass market electricity and gas Period ended 30 June 2006 sales volumes resulting from hot summer and cold winter despite strong retail competition Income Statement HK$m • Electricity sales volumes ~ 30% higher than 1H 2005 Electricity Portfolio 2,007 • Gas sales volumes ~ 20% higher than Gas Portfolio 233 1H 2005 Total Gross Margin 2,240 • 2H earnings usually ‘flatter’ than 1H Profit before financing and taxation 628 • Focus on operating expense synergies Earnings for the period 287 • Debt repayment reducing interest costs

TRUenergy Briefing 29 September 2006 81

Seasonality of Earnings

Electricity Volumes • Earnings profile is seasonal • Electricity greater determinant of earnings than gas GWh • Electricity customer consumption typically higher over southern hemisphere summer, particularly Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec January & February • Gas customer consumption peaks Gas Volumes in southern hemisphere winter due to demand for heating • 2H earnings usually ‘flatter’ than TJ 1H; summer & winter ‘peaks’ impact largely felt in 1H

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

Note: Indicative only

TRUenergy Briefing 29 September 2006 Summary and Outlook 83 The business today Generation assets

Retail assets

Other TRUenergy assets

Details Gas storage Largest gas storage facility in Victoria Adelaide Sydney facility Tallawarra SEA Gas Torrens Island Foundation shipper agreement ( >50% pipeline Power Pipeline Power Station capacity) and 33% owner SEAGas Melbourne Station (TIPS) Multiple gas Gas contracts for the next 15 years from multiple Pipeline greenfield suppliers suppliers Yallourn Yallourn Supplies brown coal to Yallourn power station Gas Storage Ecogen mine Facility Hedge (up (12 PJ) to 966MW)

TRUenergy Briefing 29 September 2006 84

TRUenergy SWOT

Strengths Opportunities • Vertically integrated business with diverse • Greenfield power station developments, for assets example Tallawarra • Strong position Vic & SA – retail and • Qld retail market opening generation, low cost base load generation • NSW retail growth • Brand recognition • Potential NSW privatisation • Robust Risk Management practices • Retail growth delivers reduced cost–to-serve • A- credit rating, significant funding capacity

Weaknesses Threats

• Lack of NSW & Qld presence • Customer appetite for churn • Lack of retail scale • Irrational pricing by government owned • Large brown coal generator competitors • Age of plant • Market consolidation and acquisitive nature of competitors • No upstream gas investment • Regulatory policy, for example, emissions trading potential impact on greenhouse intensive generation

TRUenergy Briefing 29 September 2006 85 To summarise our strategy…

TRUenergy Briefing 29 September 2006 86

Strong pipeline of growth opportunities….

• Organic growth - well positioned to grow organically into NSW, Qld – Generation - proven development capability, gas availability – Retail - strong retail capability, strong branding and products, customer growth provides scale to reduce cost to serve • Acquisition - demonstrated ability to acquire and integrate businesses, in short to medium term a number of opportunities – Qld Retail - privatisation of retail businesses in Qld ongoing – NSW Retail - potential future privatisation of 3 retailers – Generation Privatisation - potential future in Qld and NSW – Others - acquisition of niche retailers, gas assets

TRUenergy Briefing 29 September 2006 87

TRUenergy Vision

• Vision to be the leading integrated energy business Queensland in Australia Queensland • Grow from strong VIC and

SA position into NSW and Brisbane South Australia QLD New South Wales • Target 20% national market share in retail and Adelaide Sydney Victoria generation Melbourne Tallawarra Torrens Island Yallourn

SEAGas Iona Ecogen

TRUenergy Briefing 29 September 2006