power and water corporation power and water corporation 2008 Letter to the Shareholder The Hon Delia Lawrie MLA Treasurer Legislative Assembly of the Northern Territory DARWIN NT 0800 Dear Minister On behalf of the Power and Water Corporation it gives us great pleasure to present the Corporation’s sixth annual report, for the year ended 30 June 2008, in accordance with the provisions of Section 44 of the Government Owned Corporations Act. Yours sincerely Neil Philip Chairman Andrew Macrides Managing Director 30 September 2008 Contents Chairman’s Report ..............................................................2 Managing Director’s Report ...........................................3 Highlights from 2007-08 ................................................4 Outlook for 2008-09 ........................................................ 4 our business About Us .............................................................................5 Power and Water Corporation ....................................7 Maps ....................................................................................9 our performance Services ..............................................................................12 Financial Management ...............................................14 Asset Management ......................................................15 Gas Supply ........................................................................18 Statistical Summary .................................................... 19 our sustainability Environmental ................................................................21 Social .................................................................................30 Economic .......................................................................... 35 our people Safety .................................................................................38 Development ..................................................................39 our governance Corporate Governance Principles ............................41 Financial Statements .....................................................45 Power and Water Corporation Annual Report 2008 Page 1 Chairman’s Report 2007-08 has been a transitional year for Power The NPAT result was achieved on the back and Water with our new Managing Director, of revenues totalling $600 million with Andrew Macrides, instituting a number of electricity, water and sewerage sales revenue developments and signifi cant changes to of $330 million, meeting expectations. Energy the way Power and Water does business. costs of $248 million comprise 57 per cent of total operating expenditure for the year of The Corporation commenced a major asset $431 million. Personnel costs were above investment program, restructured our expectations due to the new Union organisation, negotiated a new enterprise Collective Agreement. agreement, restored services in the wake of Cyclone Helen, responded to fuel supply New borrowings in 2007-08 of $87 million challenges and worked closely with both the lifted the Corporation’s overall level of debt Federal and NT Governments to deliver essential to $427 million, with interest expense up services in remote Indigenous communities. 11 per cent to $28 million. This work will ensure that the organisation is There will be a continued focus in the coming well placed to meet the external drivers that year on securing long term gas supplies, capital will have a big impact on our future business investment and maintenance, providing utilities activities, enable staff to deliver the $1 billion services in Indigenous communities and asset investment program over the next fi ve years minimising our impact on the environment. and improve both our safety and environmental I would like to thank Power and Water performance. management and staff for their contributions Our Net Profi t After Tax (NPAT) of $57 million was to another successful year. Their sense of dominated by the impact of a $50 million capital commitment shines through, especially in times contribution received from the Northern Territory of adversity such as the post Cyclone Helen Government (NTG) in June 2008. restoration efforts. I would also like to thank my fellow Board members Judith King, Peter Vines, The capital contribution was the fi rst tranche of Bob Neil, Margaret Gibson, Barry Chambers and up to $100 million in fi nancial assistance to be Linda Mackenzie. provided to the Corporation over two years. The assistance package supports the Corporation’s In concluding, this will be my fi nal report as fi ve year capital investment program. Investment Chairman of Power and Water, with my term totalled $172 million in 2007-08, up $59 million on expiring in April 2009. It is with pride that I look the previous year. back at the achievements of the Corporation over the past six years, and the role that the Board has played in helping shape the organisation. Refl ecting on the progress of the Corporation over the past six years, there have been a number of major achievements, but none as important as achieving and maintaining certifi cation of the three recognised International and Australian Standards for Occupational Health and Safety, Environmental Protection, and Quality of Products and Services since July 2006. While there are signifi cant challenges that lie ahead for the Corporation, including fi nancial sustainability, I am confi dent that Power and Water is well placed to overcome these challenges and emerge as a key business in the Territory, leading the way in the areas of service delivery, capital investment, safety and environmental performance. Page 2 Power and Water Corporation Annual Report 2008 Managing Director’s Report Power and Water is evolving. We are changing This year we have incorporated our Environment to meet the growing demands of doing Report as part of our Annual Report and reported business and delivering essential services on the Social aspects of our performance through in the Northern Territory. our work in the community. Minimising our impact on the environment and developing a Over the next fi ve years we will deliver an asset sustainable energy strategy are key objectives for investment program valued in excess of $1 billion. the Corporation over the coming year. This major investment program will not only benefi t customers through better delivery of Over time, Power and Water intends to reduce essential services, but it will signifi cantly benefi t average emissions per megawatt hour of Territory industry. Over the past year we have electricity generated by about 10 per cent. This restructured our organisation to ensure we have will be achieved by using the latest technology in the right structures and support in place for our our new power stations that will be more effi cient people to do their job. and produce fewer emissions than existing plant. Construction of the Bonaparte Gas Pipeline Key projects such as the Frances Bay Zone began in early 2008, and will be fi nalised in Substation in the Darwin CBD, Weddell and 2009. It will transport gas from the Blacktip Owen Springs Power Stations, undergrounding gas fi eld and supply over 95 per cent of the fuel power lines in Darwin and raising the height required to generate the Territory’s electricity. of the Darwin River Dam, all contribute to Securing our long term gas supplies remains an increasing the security of supply and reliability important commercial issue. That said, even if of water and electricity services for our customers. Blacktip is late, we have plans in place to ensure Power and Water had fewer Lost Time Injuries reliable electricity supplies. (LTIs) over the past year with 13 LTIs recorded, In light of the worldwide skills shortage, we down from 23 LTIs recorded last year. These results continue to build future skills by growing our refl ect that while we have come a long way, we own workforce through our apprentice, trainee, still have work to do. graduate and undergraduate programs. I am optimistic about Power and Water rising to meet the signifi cant challenges that lie ahead. I am confi dent of our staff strengths and expertise and proud of the ‘can-do’ spirit that shines through in times of adversity, such as post Cyclone Helen restoration efforts in January 2008. I believe Power and Water is a progressive organisation providing a diverse range of opportunities for staff. It is with regret that we will be farewelling our Chairman, Mr Neil Philip, who has been Chairman since the establishment of the Corporation in July 2002. Mr Philip will not be seeking reappointment as Chairman when his term expires in April 2009 but his positive legacy will be remembered. Power and Water Corporation Annual Report 2008 Page 3 Highlights from 2007-08 • 15 per cent increase in electricity generation capacity on the Darwin - Katherine system • Completed Frances Bay Zone Substation • Completed the Alice Springs Water Reuse facilities • Commenced a major project to improve asset management capability • Improved service reliability for electricity, water and sewerage • Delivered new asset investments of $156.1 million • Delivered repairs and maintenance of $41.3 million • Achieved a 52 per cent reduction on Lost Time Injuries • Successfully negotiated a new Union Collective Agreement • Achieved surplus of $57 million Outlook for 2008-09 • Improving fi nancial sustainability, through rigorously managing costs, increasing revenues and improving returns on investment • Securing fuel supplies, commencing Blacktip gas supply and establishing access