ANNUAL REPORT 19 9 7 Delta* electricity Introduction
1996/97 Highlights
Profile 5 vm Introducing Delta Electricity 6
The Board 8 Hon M Eyn MLC Chairman's Report 10 The Treasurer. Minister lor Energy. Minister lor Police Minister for State and Regional Developmen Level 20. Averv Building Chief Executive's Report 12 and Minister Assisting the Premier 14-24 College Street Key Performance Indicators 14 Darlinghurst NSW 2010 l Farrcr Place Sydney NSW 2000 Review of Operations 17 Marketing 18 Generation 20
Maintenance Services 24 17th October. 1997
Environment 26 Dear Shareholders. Our People 30 It is our pleasure to submit to you the Annual Report ol Strategic Development 34 Delta Electricity for the year ending 30 June. 1997.
The Annual Report covers the activities of Delta Electricity in The Future 38 the \ ear and contains the Statement of Accounts for the period from 1 Julv. 1996 to 30 June. 1997
Financial Statements 41 The Annual Report was prepared in accordance with section 24A ol the state Owned Corporations Act 1989 and the Annual Reports Statutory Bodies I Act 1984. and is being sub- Statutory Information 53 muted for presentation to Parliament.
Yours sincerely
B MURPHY J HEXNESS CHAIRMAN CHIEF EXECUTIVE ^m tm
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INTRODUCTION
The financial year 1996/97 was one of the and a new approach to the business of most significant ever for the electricity industry generating electricity. in south-east Australia. As one of the largest electricity generators A State Electricity Market followed by the in Australia, Delta Electricity has met the integration of the New South Wales and challenges of the market head-on. Victorian energy markets meant that electricity generators and distributors faced dramatic new This 1996/97 Annual Report plots the strong circumstances in 1996/97. progress made in securing a pre-eminent position for Delta Electricity in the Australian A competitive market requires fresh and energy sector. innovative thinking — outside the square —
1996/97 highlights
Profit: $306 million Environment An excellent result given intense Entry in the Greenhouse Challenge. competition and low spot prices in the wholesale electricity market. Workplace safety Record milestones for days without a lost- Dividend: $180 million time injury achieved at Delta power stations. Met shareholder expectations and represents a return on equity of 11.8%. Training, adult traineeships Formal skills development training and Coal supply contracts enhanced maintenance capability. New coal supply contracts will ensure Delta's competitiveness for years to come. Information technology Streamlined technology and solutions Employee survey introduced to satisfy business requirements. Providing Delta with a better understanding of attitudes to communication, leadership, quality and job satisfaction. Quality Quality Plan and benchmarking established, and an application for a Quality Award Delta Electricity Award submitted. A Delta-specific Award recognising the flexibility required in the competitive electricity market and the need to Corporate relations adequately reward staff. Programs developed to position Delta with its key audiences.
Corporate identity A new name and corporate image. Shareholder Value Added A framework introduced to better measure the value contribution of Delta's business. Ethics Guidelines for Corporate Governance established, and a Code of Conduct Communication introduced for all staff. Internal communications improved with regular team briefings, presentations by the Chief Executive, and consultative committees. Staff reward and recognition More flexibility in recognising employee achievements. CORPORATE ORGANISATION STRUCTURE
Corporate Secretary Peter Mcllveen
Manager/ Internal Audit Barry Green
General Manager/ 3enera! Manager/ Strategy Development Greg Everett Mai Park David Hogg
ACCESS
Corporate Office Munmorah Power Station Wallerawang Power Station Level 15, 201-217 Elizabeth St Scenic Drive 1 Main Street Sydney NSW 2000 Doyalson NSW 2262 Wallerawang NSW 2845 Telephone: (02) 9285 2700 Telephone: (02)4390 1611 Telephone: (02) 6352 8611 Facsimile: (02) 9285 2777 Facsimile: (02)4390 1642 Facsimile: (02) 6352 8847 Office Hours: 8.30 a.m. - 5.00 p.m. Office Hours: 7.45 a.m. - 4.00 p.m. Office Hours: 7.45 a.m. - 4.00 p.m
Mt Piper Power Station Vales Point Power Station Maintenance Services 350 Boulder Road Vales Road Munmorah Power Station Portland NSW 2847 Mannering Park NSW 2259 Scenic Drive Telephone: (02) 6354 8111 Telephone: (02)4352 6111 Doyalson NSW 2262 Facsimile: (02) 6354 8112 Facsimile: (02) 4352 6007 Telephone: (02)4390 1606 Office Hours: 7.45 a.m. - 4.00 p.m. Office Hours: 7.45 a.m. - 4.00 p.m. Facsimile: (02)4390 1642 Office Hours: 7.45 a.m. - 4.00 p.m
http://www.de.com.au company profile
7 T troducing Delt
Delta Electricity was formed on 1 March, 1996, DELTA'S VISION. MISSION AND VALUES To be the supplier as part of the New South Wales Governments A vision, mission and set of corporate values restructure of the State's electricity industry. The were developed in a series of staff and business of first choice in the restructure was in response to the large-scale planning workshops held in May, 1996. changes in generation, transmission and supply of electricity market. electricity in eastern Australia following the Federal Delta's vision is: Government's program of competition reform. "To be the supplier of first choice in the Delta Electricity operates under the Energy electricity market." Services Corporations Act (1995) and the State PRINCIPAL FUNCTIONS AND This vision has given impetus to Delta's strategic Owned Corporations Act (1989). OBJECTIVES business plans and has focussed attention on Delta's total generating capacity is 4,240 MW, with core operational issues. Delta Electricity's principal functions are: four power stations in New South Wales: a) to establish, maintain and operate facilities Mt Piper and Wallerawang near Lithgow, and Delta's values represent those qualities that for the generation of electricity and other forms Vales Point and Munmorah on the Central Coast. are intrinsic to the success of its business. of energy; and The corporate office is located in Sydney. The values have already had a practical impact on the organisation by forming the basis for b) to supply electricity and other forms of energy a set of specific standards, including a Code of to other persons and bodies. Station Unit Size Total Capacity Conduct and ethics. (MW) Units (MW) Guiding Delta in carrying out these functions are Mt Piper 660 2 1320 Delta values: the following principal objectives: Vales Point 660 2 1320 • productive relationships with 1. To be a successful business, and to this end: Wallerawang 500 2 1000 colleagues, customers and suppliers; Munmorah 300 2 600 (i) operate at least as efficiently as any • provision of opportunity to participate, comparable businesses, Total 4240 contribute and improve; (ii) maximise the State's investment in Delta, • flexibility in responding to competitive (iii) exhibit a sense of social responsibility by Since it was formed, Delta has operated mainly markets, technological change and considering the interests of the community in the wholesale electricity market, selling to stakeholder requirements; and in which it operates; energy retailers and in some cases to very large • performance through pride in business industrial customers. 2. To protect the environment by conducting success, environmental commitment and operations in compliance with the principles of Careful attention to the structure of Delta's technical excellence. ecologically sustainable development contained business operations over the last 12 months Delta believes it will succeed in the electricity in section 6 (2) of the Protection of the has paid off. market by conducting its business in a safe, Environment Administration Act 1991; Delta has emerged as one of the lowest-cost coal- efficient and environmentally responsible manner. 3. To exhibit a sense of responsibility towards fired generators of electricity in the highly Delta's mission encapsulates the formula for regional development and de-centralisation in competitive National Electricity Market (NEM), achieving success: its operations; which integrates the energy markets of New South • marketing customised products; Wales, Victoria, the Australian Capital Territory 4. To operate efficient, safe and reliable energy and South Australia. Delta is recognised nationally • a co-operative and open work environment; generation facilities; as supplying electricity safely, efficiently and at a • honesty, integrity and tolerance; and 5. To be an efficient and responsible electricity competitive price, and its environment supplier; and management procedures are in line with • support of learning and innovation. environmental best practice. 6. To participate successfully in the wholesale electricity market. Mr B K Murphy Chairman and Director BScApp (Hons), BE(Chem), MBA, DipEnvironStud Appointed 1st March, 1996, re-appointed 1st March 1997 for period ending 29th February, 2000.
Ms B K Ward Director BEc(Qld), MPolEcon(Qld) Appointed 1st March, 1996, re-appointed 1st March 1997 for period ending 28th February, 1998.
Mr D J Asimus, AO Director BEc, HonDSc(NSW), Hon D.AGEc (Syd) Appointed 1st March, 1996, re-appointed 1st March, 1997 for period ending 28th February, 1999.
The Honourable B J Unsworth Director Appointed 1st March, 1996, re-appointed 1st March, 1997 for period ending 29th February, 2000.
Mr W Wider Director BA (Hon) (Syd), M Comm (NSW) Appointed 29th November, 1996, re-appointed 1st March, 1997 for period ending 28th February, 1999.
Mr N Rose Director Appointed 3rd May, 1996, re-appointed 1st March, 1997 for period ending 28th February, 1998. Executive Director Mr J Henness Chief Executive Officer and Director BSc, BE (Hons), MEngSc, MBA
Corporate Secretary Mr P Mcllveen Ind Rel Cert, Pers Admin Cert
Directors on the Delta Electricity Board are appointed by resolution of the Voting Shareholders, the Honourable Michael Egan MLC, Treasurer, and the Honourable Paul Whelan MP, Minister for Police.
ATTENDANCE BY DIRECTORS AT BOARD MEETINGS DURING 1996/97
ttended sent entitled apologies to attend
Mr B Murphy 12 12
Mr J Henness 12 12
Mr D Asimus, AO 12 12
The Hon B Unsworth 12 12
Ms B Ward 10 2 12
Mr N Rose 12 12
Mr W Hilder 7 7 chairman's report
During 1996/97, the pace of reform CORPORATE GOVERNANCE for the electricity industry in Australia Delta's governing legislation requires duties of its accelerated. Directors similar to those mandated in the Corporations Law. The duties mean that the Board, Restructuring of energy utilities continued in most and staff, must follow compliance programs. States as governments implemented competition A Corporate Governance and Legal Compliance reform. For Delta Electricity, 1996/97 was important Plan was adopted by the Board in 1996/97, to because it saw the integration of the New South guide relations with Delta management, and with Wales and Victorian electricity markets - known as Delta's shareholders and stakeholders. The Plan NEML Coupled with this integration was the rapid also assists the Board in complying with the Trade growth in the numbers of retail energy customers. Practices Act, environmental, anti-discrimination, The net result was that Delta faced a highly occupational health and safety, industrial relations competitive and dynamic commercial environment, and employment laws, and the principles of Equal but also a unique opportunity. Employment Opportunity. On 1 July, 1996, the fully competitive electricity The Board also approved a Code of Conduct market in New South Wales was only six weeks establishing relevant ethical standards expected old. By 30 June, 1997, competition for electricity of Delta employees. sales in NEM1 between New South Wales and Special emphasis was given during the year to Victorian generators was vigorous and intense. raising staff awareness of the importance of preventing, detecting and investigating fraud and PERFORMANCE corruption. Fraud awareness training was held for By almost any measure, Delta's performance within employees and managers to ensure they have the the environment of 1996/97 was exceptional. necessary tools and understanding to meet Following a robust program of cost reduction compliance requirements. and some innovative solutions to the challenges of market operations, Delta's share of wholesale MAJOR DEVELOPMENTS electricity sales rose strongly. During the year, Delta Electricity participated It is with great pleasure that I am able to report a in a United States cross border lease transaction before-tax profit of $306 million for 1996/97, which involving Mt Piper Power Station in response to a includes the proceeds of the Mt Piper cross-border request from its shareholder, the New South Wales lease explained below. With this profit Delta has Government. Under the terms of the transaction, been able to return a dividend of $180 million to its Delta Electricity retains full operational flexibility shareholders, the New South Wales Government. with respect to the power station and is indemnified by the New South Wales Government for any costs Other specific measures of Delta Electricity's incurred by the organisation over the duration of performance in 1996/97 are contained in the the lease arising from entering into the transaction. Statement of Corporate Intent, which defines business targets agreed between the Board of The transaction has resulted in a significant Delta Electricity and its voting shareholders. benefit to Delta Electricity and the New South All targets were achieved, with the exception of Wales Government through payments made to the sick leave taken. shareholder under Delta Electricity's financial distribution policy. CHOOSING A CORPORATE IDENTITY THE OUTLOOK In August, 1996 the Board adopted "Delta Electricity" Delta's success in 1996/97 is a solid foundation for as our new corporate identity to reflect our corporate strengthening the business and ensuring future vision and values. "Delta" is derived from the growth in the business. technical requirements for power generation, and Our aim is to generate sufficient profit to meet "Electricity" was added because it is, simply, our commercial objectives while also maintaining assets raison d'etre. in an economic operational condition. Astute asset, Delta is symbolised by a triangle, signifying the liability and risk management will continue to be relationship between our customers, the quality integral to Delta's management philosophy. of the organisation and our operations. The four The Board anticipates that competition in the smaller triangles embedded within this triangle electricity market will be even more intense in symbolise Delta's two regions, its staff and at 1997/98. However, Delta has shown it is capable of the core of the organisation - its environmental being a market leader, and I am confident that our responsibilities. Each part is integral to the structure, management, systems and most whole, and the overall symbol is one of corporate importantly, staff, will equip us to meet our strength through unity. performance targets.
KEY APPOINTMENTS The results for 1996/97 reflect the hard work and commitment of all Delta staff to making the Mr Warwick Hilder was appointed a Director organisation a leading electricity generator in on the Board on 29 November, 1996, and all Australia. other Directors were re-appointed. I invite you to read further Delta Electricity's In addition to regular Board meetings, several Annual Report for 1996/97. Board Committee meetings were held throughout 1996/97. A Board Remuneration Committee was created to consider a remuneration strategy and policy. In July, 1996, Mr Jim Henness was appointed as Chief Executive Officer. Mr Henness' understanding of the energy industry, knowledge of operations and leadership qualities have been pivotal in Delta's strong performance over 1996/97. B MURPHY Following the appointment of a CEO, a new CHAIRMAN executive management structure to meet the commercial imperatives of a competitive energy market was created. Appointments to senior positions in this structure were made throughout the year. As Chairman, I am grateful to my fellow Directors for their efforts and time on behalf of Delta Electricity over the year. The exceptional results Delta has recorded, and the strong foothold it now has in the electricity supply industry, are testimony to the sound strategic thinking of the highly capable executive team driving the business. chief executive's report
In recent years, the electricity industry specific market circumstances, the quality of die in Australia has been transformed contracts and the flexible arrangements secured leave us confident of our future success in the from a series of government owned, market. vertically integrated monopolies • Key asset management initiatives meant Delta could operating within State borders, record a healthy return on assets. The novel to discrete generation, transmission Shareholder Value Added framework has been and distribution/retail businesses applied to individual Business Units to help achieve able to supply energy interstate. sustainable improvements in asset management. • Contributing to strong asset performance In Victoria, government ownership of energy was the reliability of Delta's generation plant. utilities has been replaced with private ownership An international benchmark assessment found by local and international companies. Delta plant reliability to be consistent with the The financial year 1996/97 was marked by progressive North American average, and the 660 MW plants deregulation of the electricity market. As the levels of at Mt Piper and Vales Point as ranking among vesting contracts were reduced, electricity prices the world's best. dropped as competition to supply energy distributors • The move to a National Electricity Market requires and other retailers intensified. a comprehensive plan and approach to commercial risk. Delta's framework for monitoring risks is INNOVATIVE SOLUTIONS: THINKING outlined in the Board's Corporate Governance and AND ACTING OUTSIDE THE SQUARE Legal Compliance Plan, which will be supported in For Delta to perform so strongly in this environment 1997/98 by a formal risk assessment across all represents a very significant achievement. After areas of operations. excluding the impact of the Mt Piper cross-border • Another key challenge for the organisation has lease, Delta's before-tax 1996/97 profit of been to better match workforce skills with $131 million is 24% greater than the target set strategic and operational requirements. in the Statement of Corporate Intent. An important outcome from 1996/97 was die The reasons for this strong result are complex. improved responsiveness by Delta staff to the However, underpinning it is an early commitment rigours of the market, particularly on cost- by Delta management, in anticipation of the competitiveness and productivity. Delta's new evolving market, to thinking and acting "outside Enterprise Award recognises our competitive the square" to create solutions to the challenges environment and new approach to work. The Award that deregulation presented. contains flexibility provisions allowing for local This forward-thinking approach bore fruit in agreements on conditions - including shiftwork, 1996/97 in a series of innovative measures which overtime and standby - to help meet plant have positioned Delta's business well in the operational requirements. electricity market place for years to come. Key initiatives and outcomes for 1996/97 are Delta's new organisational structure was part of a summarised below: wider strategy for improving operational efficiency and cost management. The structure • The imperative for reducing costs in a competitive consolidates the marketing and trading functions market is irresistible. In response, Delta took the and replaces individual power station sites with initiative during 1996/97 to dramatically reduce its regional Business Units. This move has coal costs, which represent a major proportion of contributed to improved flexibility in work Delta's total operating costs. After grasping an practices. opportunity to negotiate coal contracts based on An innovative training scheme in which power • A strategic information technology plan, which workers can gain a trade qualification was supports Delta's operations in a competitive introduced. The scheme attracted many environment and improves management of applicants, with eighteen people accepted for the information, was adopted. Importantly, new program. Apart from giving these employees the information systems in the Marketing and Energy opportunity to enhance their job security and job Trading area have the potential to deliver Delta prospects, the scheme is also an investment by strategic differentiation and competitive advantage. Delta in a better skilled workforce. PROSPECTS FOR 1997/98 • Greater emphasis was put on internal communication to help develop a clearer understanding among staff Delta's primary goal for 1997/98 is to continue of Deltas market-focused role. developing a long-term sustainable foundation for the future of our electricity business. After an employee survey in late 1996 revealed that communication could be improved, Core focus areas for the corporation have been workplace consultative committees were identified, and careful attention to these areas established at all plant sites. Team leaders now will help guarantee Delta's future growth and regularly discuss specific operational issues with competitive advantage in a rapidly changing their staff and the executive management team industry. The areas are: make regular presentations on business • Sustaining a competitive cost advantage, with performance to Business Units. Subsequent strategic partnerships with coal suppliers a priority; research shows that most staff believe internal communications have improved in 1996/97. • Broadening Delta Electricity's business base, particularly with new developments in generation; • Delta continued its efforts to minimise the impact of its operations on the environment. As part of • Maintaining preferred supplier status in the Delta's Greenhouse Co-operative Agreement a wholesale electricity market; and plan for reducing carbon dioxide emissions was • Managing long-term environmental issues, submitted to the Greenhouse Challenge Office. including reducing greenhouse gas emissions by Several strategic environmental initiatives with optimising plant dispatch and efficiency. long-term benefit were taken in 1996/97. These Delta's achievements in 1996/97 leaves me include work to identify commercially viable confident that attaining these goals is well within options for using external waste products as fuel the capabilities and expertise of the people of for generating electricity. Delta also collaborated Delta Electricity. with universities, the CS1RO and the Black Coal Co-operative Research Centre on research into I would like to express my genuine and sincere new technologies for energy production, and to thanks to them for a very successful 1996/97. assist in reducing greenhouse gas emissions and generation costs. • Concrete steps illustrating Deltas commitment to continuous improvement were made in 1996/97. After establishing a Quality Steering Committee, Delta began work to prepare an application for an Australian Quality Award. Delta participated in a J HENNESS Utility Management Services benchmarking study CHIEF EXECUTIVE with power utilities from around the world. The study identified several opportunities for improving Delta's operations, which we are currently pursuing. T key performance indicators
Legeind : With the exception of Return on Equity Actual results for 1997 exclude proceeds and Return on Assets, all 1996 figures refer from the Mt Piper Cross Border Lease. Profit (before tax) to results for the period 1.3.96 to 30.6.96. NA • figures not available Return on Equity and Return on Assets figures for 1996 are annualised.
PROFITABILITY (including Mt Piper Cross Border Lease)
Maximise Delta Electricity's profitability through intelligent trading and sales in electricity markets 1996 1996/97 1996/97 ACTUAL ACTUAL TARGET
Equivalent Forced Outage Rate Availability ASSET MANAGEMENT
Develop asset management strategies to meet forecast market needs
1996 1996/97 1996/97 1996 1996/97 1996/97 ACTUAL ACTUAL TARQET ACTUAL ACTUAL TARGET
SHAREHOLDER RETURNS
Achieve cost reductions to enhance competitiveness, improve profitability and sustain market share
Capital Expenditure Return on Assets Return on Equity Sm 351
1996 1996/97 1996/97 1996 1996/97 1996/97 1996 1996/97 1996/97 ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET Sates Revenue Debt Gearing MARKET AND $m FINANCIAL RISK
Successfully manage market and financial risk in an environment of potentially volatile prices and large financial losses resulting from plant failure
1996 1996/97 1996/97 1996 1996/97 1996/97 1996 1996/97 1996/97 ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET
WORKFORCE Training Sick Leave days/employee/year days/employee/year Improve responsiveness to 10, market needs and cost competitiveness
Provide a work environment where teams can work safely and expand their autonomy and responsibility for work
1996 1996/97 1996/97 1996 1996/97 1996/97 1996 1996/97 1996/97 ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET
ENVIRONMENT FUEL
Address government objectives for the Develop a fuel strategy plan which reduction of greenhouse gas emission complements market operations
Thermal Efficiency Coal Stockpile levels
1996 1996/97 1996/97 1996 1996/971996/97 ACTUAL ACTUAL TARGET ACTUAL ACTUAL TARGET THE DEREGULATED ELECTRICITY MARKET Electricity in New South Wales is traded through a This unprecedented level of competition has led to common pool. a significant drop in the price of wholesale and retail electricity. In this system, generators are dispatched by a central Market and System Operator according to price. The For Delta, this dynamic new energy market has lowest priced generating unit is selected for operation meant a complete reassessment of operations. first, then the next cheapest unit, and so on. The last Restructuring has been driven by the imperatives of unit of electricity dispatched to meet demand sets the cost-competitiveness and the need for Delta to be price of the pool. flexible in response to changing customer service and energy needs. When the first regulatory structures of a deregulated market for energy were introduced The result is a sharper commercial focus on 10 May, 1996, most electricity sold in the State throughout the organisation, smarter work was subject to vesting contracts, effectively practices and a keen determination to achieve guaranteeing for suppliers short- to medium-term and maintain best practice in power generation. prices for energy. The remaining electricity has A summary of Delta's operational highlights and been sold by generators either at the spot price, initiatives follows. hedged by negotiated contracts with distributors, or directly to large industrial customers. However, as the deregulated market establishes itself, the amount of energy sold through these vesting contracts has fallen rapidly. This is in line with the timetable set by the Federal Government for introducing a truly competitive national energy market, in which consumers, provided they meet certain criteria, can purchase electricity from a retailer or generator of their choice. As vesting levels have declined, bilateral arrangements between generators, distributors/retailers and customers have taken on more importance. These arrangements now account for the majority of wholesale electricity sales. On 5 May, 1997, Stage 1 of the National Electricity Market (NEM1) was introduced when the energy markets of New South Wales and Victoria were integrated. From this time, electricity flow between and within each State has been based on competitive supply from generators in both States. By mid-1997 choice in electricity supply was available to some 60% of energy consumers in New South Wales and 50% of consumers in Victoria. In New South Wales an intensely competitive environment has been created, with 26 retailers competing to secure electricity from nine generators in both States, and in turn deliver it to energy consumers. review ation
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In an innovative new communications program. Delta operations and marketing staff meet regularly to discuss electricity market issues. The result is a greater commercial and customer focus
•'%, marketing throughout Delta.
ENERGY TRADING Delta is also currently developing an integrated MARKETING AND SALES trading system to manage trading, contract sales The Energy Trading team within Delta is Since its establishment on 1 March, 1996, Delta Communicating the and settlements. The system will be progressively responsible for co-ordinating power station has set about building a reputation as a flexible, introduced in late 1997. operations, bidding in the physical energy market customer-focused organisation. implications of a competitive and short-term contract trading. Communicating the implications of a competitive Delta values its relationships with its wholesale market to staff has been central to Delta's strategy for market to staff has been central In 1996/97 the Energy Trading team successfully market customers and is committed to working with building a market-focused culture throughout the consolidated Delta's program to achieve better them to better understand and meet their evolving organisation. An ongoing internal communication to Delta's strategy for building a cost-efficiency and improved plant performance. energy needs, and to devise solutions to these needs. program combined with the commitment and The four power stations in Delta's portfolio met dedication of maintenance and operational personnel By providing tailored solutions at competitive market-focused culture performance targets for the year. has realised market opportunities with financial and prices and a high quality of customer service, Delta Delta's pricing, bidding and reporting policies were operational dividends. is working to become the supplier of first choice to throughout the organisation. comprehensively reviewed following the much of the energy market. Further, as set out in integration of the Victorian and New South Wales its governing legislation, Delta is the direct market. Existing trading systems have been supplier to two of the largest energy consumers in improved and new analytic tools have been New South Wales and it looks forward to introduced to handle the greater information and continuing to meet such special needs. analytical requirements of the market. Already the signs are encouraging that Delta's competitive customer-focused approach is winning support in the market place. Delta is confident the approach will secure its position for years to come. •-C
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a more commercial focus and puts special emphasis Both units achieving improved levels of Western Operations on delivering Shareholder Value Added. In the performance and reliability. ...energy production, thermal restructure, separate production groups were Delta's Western Operations are at two power Other work at Wallerawang in 1996/97 included: created at Mt Piper and Wallerawang supported by efficiency, availability and stations, Mt Piper and Wallerawang, located near staff responsible for operations across the region, • construction of an upgraded coal handling plant; Lithgow, 160 km from Sydney. Both stations are including asset management, environmental forced outage rates at both Mt fired by coal mined from local reserves. • further dismantling of the decommissioned A & B management and staff development. Station plant and buildings; and Mt Piper, consisting of two 660 MW units, is the Piper and Wallerawang Driving operating and maintenance strategies at Mt newest plant in Delta's portfolio - "Unit 2" • upgrading of the Unit 8 pulverised fuel milling Piper and Wallerawang over 1996/97 were the was commissioned in April, 1993, and "Unit 1" plant, which will improve boiler combustion and exceeded the targets set. opening of competitive markets and negotiation of began generating a year later. Total capacity unit efficiency levels. new coal contracts. Principal objectives were to at Wallerawang is 1000 MW, provided by two achieve high unit reliability while also meeting 500 MW generating units. SAFETY market demand for energy and minimising costs. The safety system at Wallerawang maintained its By the end of June, 1997 a full review of the Total The operational performance of Western Four Star rating in the annual safety audit MAJOR INITIATIVES Quality Management Safety System at Mt Piper had Operations was excellent - energy production, conducted by the National Safety Council. A new umbrella regional management structure for almost been completed. The application of this thermal efficiency, availability and forced outage Western Operations was introduced in April, 1997. system in tandem with the Occupational Health & rates at both stations exceeded the targets set. THE ENVIRONMENT Safety Committee has contributed significantly to Delta's regional management framework in the 1996/97 marked the first full year of operation the high safety record at Mt Piper. Recycling of waste water was stepped up in Western area (which was mirrored in Delta's for Units 7 and 8 at Wallerawang after major 1996/97, as evident in the use of sewerage effluent Central Coast Operations by the merging of the rehabilitation works completed in May, 1996. for make-up water for cooling towers at Mt Piper. Vales Point and Munmorah facilities) is driven by Delta continued to make available to the public the surrounding grounds of both Munmorah and Vales Point
This system has allowed Delta to phase out one of MAJOR INITIATIVES its two licensed water discharge points. Vales Point and Munmorah power stations were A major environmental works program at successfully amalgamated into the Central Coast Wallerawang was completed in 1996/97. The works, regional business office in 1996/97. which began in 1992/93, now provide several levels Key to the integration is the introduction of a single of protection for the station's drainage system. management structure overseeing plant operations, asset management, commercial and administration COMMUNITY LINKS functions at both stations. Delta's commitment to the local community was The Vales Point units successfully met energy demonstrated by its ongoing support of district output requirements while consuming almost shows, its willingness to host work experience half a million tonnes of relatively wet coal from students and its support of the Young Achievers the station's long term stockpile. The low trip rates program. at Vales Point are an excellent result given the Links with schools are an important part of the relatively aged and weathered condition of this coal. community relations strategy for the Region, and Once the rundown of this coal stack is complete Delta staff gave several guest presentations to local (expected at the end of 1997), Delta will be in a high schools. position to make environmental upgrades to the The Region is also developing a unique coal plant at Vales Point. The rundown will also relationship with local aborigines by documenting leave Vales Point more competitive as the impact and preserving several known archaeological sites of wet weather on its coal supplies and capital on Delta land. requirements for coal stocks are reduced. The Mt Piper Energy Expo, now four years old, By rationalising warehousing at Vales Point and remains a popular regional attraction. The Expo Munmorah, Delta shaved $1 million off its expects to reach a significant milestone in July, inventory costs in 1996/97. 1997, with its 100,000th visitor. SAFETY Central Coast Operations Both Central Coast stations retained exemplary safety records, and were granted Five Star Safety Delta Electricity operations on the Central Coast are Award status by the National Safety Council for at the Vales Point and Munmorah power stations. the third successive year. The Vales Point fire Vales Point consists of two 660 MW units installed fighting team won the Power Industry Fire in 1978/79; Munmorah has installed two 300 MW Competition for the second successive year. generating units which were commissioned in 1967. Mandatory work skills training and individual personal development programs were maintained Both Central Coast stations at Vales Point and Munmorah. retained exemplary safety By 30 June, 1997, Vales Point had been operating for 700 days without a lost time injury. records, and were granted
THE ENVIRONMENT Five Star Safety Award status Delta's strong commitment to managing the impact of its Central Coast operations on the local by the National Safety Council environment was evident in its environment management program for 1996/97. for the third successive year.
Several initiatives addressed the critical issue of managing ash, including: • operating a return water system for the Vales Point Ash Dam; COMMUNITY LINKS • completing ash dam seepage pumping systems Deliberate efforts were made to strengthen and an ash dam saddle wall; relations with the Central Coast community • maintaining the sale of ash for projects such as during 1996/97. Delta was represented on several road building; local government and community-based committees looking at environmental issues. • rehabilitating ash dam areas; and Strong headway was made in explaining Delta's • developing a comprehensive ash dam responsible attitude toward the environment at management plan. these forums. Delta reinforced its environmental credentials by Delta maintained good links over 1996/97 with conducting studies of the impact of operations on local community groups and schools through the local flora and fauna, air and water quality and School Industry Link and Young Achievers program. noise levels. When combined with the Regular tours of Vales Point Power Station comprehensive environmental audits and risk continued, and visits from disabled and ethnic assessments conducted at Vales Point and groups and industry organisations were encouraged. Munmorah, these studies offer a solid body of Delta continued to make available to the public the research on which Delta can base its local surrounding grounds of both Munmorah and Vales environment management practices. Point in 1996/97. Munmorahs Koala Park has Central Coast staff were given environment hosted approximately 27,000 people during the awareness training over 1996/97. past 12 months. flMtHDM Am A^rifcM
HE S Q U A R I ectively, Delta must be able to draw on the best possible skills base. With high quality training, many maintenance staff now have the opportunity to achieve trade skills. This enhances their career prospects and ensures a better match between Delta's T skill needs and staff capabilities. maintenance services OPERATIONAL HIGHLIGHTS supplemented by regular presentations to staff by Delta Electricity's Maintenance Services Business maintenance staff, both to improve current Delta's Chief Executive and General Manager of Unit delivers critical maintenance and technical Among key Maintenance Services activities and business operations and to position Delta for Maintenance Services. The program has been support to Delta's power stations. It also offers a initiatives for 1996/97; future competition in the market. well received and highly commended by Labor similar service to Eraring Power Station on the • Five major outages at Munmorah, Mt Piper and Council representatives. • Maintenance Services successfully gained a Central Coast, operated by Pacific Power. Vales Point power stations were completed. Four Star Safety Award from the National Safety • Innovative solutions were used by the demolition Maintenance Services has expanded beyond Important milestones in this work were to Council of Australia. A key objective for 1997/98 team at Vales Point "A" in removing the its core activity of project maintenance, and establish a new work team at Mt Piper and for is to improve on this safety performance and remaining precipitators on the site. The team represents the largest group within Delta. Central Coast staff to complete major turbine and achieve industry best practice. boiler outage work at Mt Piper for the first time. came in well under budget in achieving project In 1996/97 the Business Unit's role incorporated: milestones. Work to demolish old buildings at • Overall, 1996/97 financial targets were exceeded, • The Business Unit strengthened its maintenance Wallerawang - scheduled for completion in mid- and the Business Unit is well prepared for providing • performing routine and defect maintenance; force at the Eraring Power Station, where it was 1998 - is now well advanced. improved maintenance service in the future. awarded a fully commercial contract including • site and project management services 1 complementing Delta's asset management strategy; two major unit overhauls. A new culture of Maintenance Services headquarters were relocated FUTURE DIRECTIONS from a portable office near Eraring power station organisational teamwork was achieved within the The imperative to deliver a competitive and value- • demolishing the Vales Point "A" and Wallerawang to permanent offices at Munmorah, offering an Business Unit in the delivery of Eraring outage added service to Delta power stations, and to build "A" and "B" decommissioned plants; and improved working environment for staff. contracts by combining the maintenance resources on its successful work at the Eraring power station to • training and development of trade based of Delta's Central Coast and Western regions, 1 In line with the Business Unit's drive for more develop an external customer base, is central to the apprentices and trainees. supplemented by specialist contracted staff. value-added maintenance, new trade traineeships future of the Maintenance Services Business Unit. were made available to staff. Eighteen people • A staff communication and consultation program Complementing the Business Unit with a were selected to enter this program. More was introduced, in which maintenance team proficient technician team in 1996/97 will assist in broadly, staff training programs in 1996/97 were leaders facilitated team briefings which were directed at developing the skill levels of Maintenance Services realising this vision.
25 OUTSIDE THE SQUARE
Harmonious relations with local communities are a hallmark of Delta's operations. By putting in place the latest technological developments in environmental safeguards, the impact of Delta's plant operations on the local environment is minimised. Delta has consistently performed above standard nvironment benchmarks for environment management.
ENVIRONMENTAL MANAGEMENT • operate in a safe, efficient and environmentally programs ensured that Delta did not commit an NEW LEGISLATION POLICY responsible manner; environmental offence under the Act in 1996/97. Several significant pieces of environmental In November, 1996, Delta Electricity formulated a • understand the potential for environmental Over July and August of 1996 heavy rainfall at legislation were either introduced or initiated in new Environmental Policy, stating that: impacts and avoid pollution; Wallerawang Power Station caused levels of 1996/97. These include: suspended solids in rainwater runoff to exceed the "Through the commitment and skills of our people, • minimise the consumption of resources and • a new Waste Minimisation and Management Act allowed limit in the licence. After considering the Delta Electricity will be a leader in caring for our production of wastes; and Regulation; matter, the EPA agreed that the licence runoff limit environment to ensure its preservation for future • minimise the impact of operations on the was inappropriate and it was removed from the • new draft Clean Air Regulations; and generations." environment and surrounding communities; and Wallerawang license in October 1996. • a new draft Protection of the Environment In line with the principles of the International • continually measure, review and improve Operations Bill. Standard ISO 14001 Environmental Management Voluntary environmental management system environmental performance. audits were completed at Wallerawang Power Systems, the policy is supported by common In addition, the EPA has refined further the Load Station, the Lyell Dam Construction Project, the Standards and Procedures. Based Licensing (LBL) protocols which are ENVIRONMENTAL COMPLIANCE Wallerawang A & B Station Demolition Project, the expected to be introduced in early 1998. Outlined in the policy are Delta's objectives in AND AUDITS Vales Point A Station Demolition Project, Mt Piper responsible environmental management, as follows: Delta generating stations operate under statutory Power Station, Vales Point Coal Handling Plant and In all cases Delta has made a constructive contribution in the community consultation • conduct operations in compliance with the licences issued by the Environmental Protection Fuel & External Services (Western Operations). processes for the above laws. principles of ecologically sustainable Authority under the Pollution Control Act, 1970. Following the audits Delta is undertaking several development; Comprehensive safeguards to minimise the impact measures which will improve Delta's environment of plant operations and environmental management management, principally by reducing risks to the environment. GREENHOUSE EMISSIONS emissions, ground level dust emissions and Deltas strong record on reducing greenhouse discharges to water. emissions continued in 1996/97. Emission rates All inquiries were investigated and the callers were reduced to 886 g/kWh, bringing the reduction advised of subsequent action whenever possible. in rate of emission since 1989/90 to 8%. Most calls concerned operations at Vales Point Power Station, which reflects the proximity of that Emission rate site to local urban areas, the level of activity at the site and the absence of a fabric filter plant.
SIGNIFICANT ENVIRONMENTAL ISSUES Following concerns about the health risks associated with contamination of local seafood by heavy metals, the Hunter Public Health Unit released a report into possible contamination of seafood from Lake Macquarie. Vales Point Power Station and Pacific Power's Eraring Power Station are located on Lake Macquarie. The study indicated that although the average level of selenium in fish from Lake Macquarie was Underlining Delta's commitment to reducing above levels recommended in the Food Standards greenhouse emissions is its participation in Code, this did not represent a health risk. Delta the Greenhouse Challenge Program. Delta's has moved to significantly reduce the level of Co-operative Agreement, which is expected to be discharge through improvements made to the ash signed in November 1997, outlines several dam in 1995. Delta is also investigating new initiatives for reducing emissions and undertakes technologies for removing selenium from ash, to report publicly on progress made in which should contribute to further reductions. implementing the initiatives.
COMMUNITY CONSULTATION In early 1997 Delta formulated plans to establish a trial of a regular forum for managing relations with the Central Coast community - the Community Access Regional Environment Forum. Over 1996/97 Delta received 43 telephone calls about the impact of power station operations. The most significant issues of community concern expressed in the calls were noise, stack dust Other major environment management Underlining Delta's developments in 1996/97 include: • At Mt Piper, Delta is investigating alternative commitment to reducing methods for disposing of brine from brine concentrators as there is limited space available greenhouse emissions is its for temporary storage. Options are joint disposal with fly ash and discharging brine into the ocean participation in the Greenhouse through sewage plant deep ocean outfalls. Challenge Program. • The Healthy Rivers Commission has begun investigating river flows in the Hawkesbury- Nepean catchment. Delta has assisted the Commission with its work on the Coxs River by making available the Lyell Reservoir Environmental Flow Study. Delta is working WASTE MANAGEMENT with the Commission to ensure that the Coxs Some 10% of the 1.7 million tonnes of ash Delta River downstream of Lyell Reservoir is produced in 1996/97 was recycled for cement protected while also guaranteeing a reliable manufacture, road building or other activities. water supply to the power stations. Usage is less than in previous years, mainly because construction of the Vales Point ash dam has been completed.
Other waste management initiatives in 1996/97 include: • further developing recycling programs at all sites; • closing all power station waste disposal tips; and • setting targets for recycling ash, fresh water and oil.
Significant volumes of recycled oil now replace A major outbreak of Blue-Green Algae occurred fuel oil at Mt Piper and Vales Point power stations. at Lake Lyell. The health risks of Blue-Green Algae are a major concern to Delta and the local community and Delta is discussing options for preventing or minimising future outbreaks with local authorities, government agencies and local community groups.
29 ». Eli*—• J2EI1ICH!
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I if - -• , '-.-:•• i li I II OUTSIDE THE
Operational flexibility is key to Delta's success as a commercial enterprise. In response to a survey of employee needs, the new Award offers greater employee choice in working arrangements and delivers the flexibility required for Delta to our people operate as a round-the-clock operation.
POLICIES Employee Relations Incorporated in the new Award were: The survey canvassed opinion on issues such as • significant changes to some shift work A review of policies on employee relations leadership, planning of information, management In December, 1996, after negotiations with the arrangements; continued over 1996/97. Delta's guiding principle of people, market and customer focus, quality, Labor Council and Unions, an Award specific to in developing these policies is to: organisational performance, everyday work-life • first-stage consolidation of allowances Delta was approved by the Industrial Relations and other subjects. (with a commitment to further consolidate • maintain a safe working environment; Commission of New South Wales. Survey results were discussed with staff in a series other allowances); • optimise the skills and abilities of staff; and The Award provided for an initial 4% salary increase, of team briefings and a survey summary report. • employee commitment to Delta's Vision and a further increase from March, 1997, of between • adequately reward employees for their Key issues arising from the survey were identified, and Values; 1% and 2%, with the latter increase based on the contribution. and action to address the issues was subsequently achievement of a business improvement measure. • flexibility provisions under which specified New policies include those on reward and taken. This action was directed at involving staff in (This target was subsequently achieved.) award clauses can be varied on a local basis. recognition, performance-based salary reviews and the business, improving communications and all major safety standards. promoting employee well-being. A follow-up POSITION EVALUATIONS survey will be completed at the end of 1997. A process for evaluating employee positions using EMPLOYEE SURVEY site staff and employee representatives, without the To better understand the issues important to staff need for external consultants, was established in and their work, a survey of all employees was held 1996/97. The new evaluation process is one of in late 1996. several measures introduced for ensuring that staff are rewarded for their contribution. CONSULTATIVE ARRANGEMENTS Occupational Health and Safety The service, which is operated by Families at Work, supports staff in selecting quality child-care New policies include those To facilitate employee relations, a system of for under school-aged children. Already Family Consultative Committees was set up and operated SAFETY CareLink has contributed to improved productivity on reward and recognition, throughout Delta in 1996/97. In line with the principles of Total Quality by reducing the time staff take to secure child care Regular meetings - quarterly or more frequent if Management a set of Safety Rules were developed and the stress associated with it. performance-based salary required — were held between Delta management in 1996/97 which set out unambiguous guidelines and representatives of the Labor Council and for developing and continually improving safe reviews and all major safety Unions to discuss the general impact on Delta work practices at Delta Electricity. standards. staff of issues such as organisation structure and The new set of Safety Rules aligns with legislative market position. requirements, is less complex than earlier Rules, Committees have also been established at Delta and can be applied consistently. They are sites to canvas local issues of importance to staff. supported with a computer system that provides an efficient mechanism for the request and approval of work under the Rules.
HEALTH AND FITNESS PROGRAM A voluntary Health Assessment Program for Delta staff - designed to assess current health and fitness and suggest improvements in lifestyle, diet and EQUAL EMPLOYMENT OPPORTUNITY nutrition - was introduced in 1997. The program (EEO) INFORMATION COLLECTION will be conducted over the next three years and SURVEY offers staff the opportunity to regularly review fitness and determine the benefits of any changes A voluntary EEO information collection made to lifestyle. questionnaire was issued to all employees in 1996/97. The data collected will be a valuable Workforce Diversity guide for Delta management in developing equitable policies and strategies. FAMILY CARELINK SCHOLARSHIPS In a forward-thinking approach to helping employees balance work and family commitments, Two Chief Executive Scholarships to attend Delta introduced a pilot Family CareLink Service the Public Sector Management Course for women in 1996/97. were offered to senior female Delta employees in 1996/97. e/e ctr >Oty
E»* ^6etf> Str,•e ef s yd."e y %l/y iOo0 acs'm,7 e o* A 928s ®tR or
strategic development
Delta Electricity is conscious that if it is to flourish calling of tenders for these critical supply contracts DEVELOPMENT Key projects initiated by the Development Group in a highly competitive energy market place, it presented an important opportunity for Delta to To guide Delta's strategic development beyond the in 1996/97 included: must focus now on making the structural changes significantly reduce these costs. next decade, a Development Group was established that will give Delta and its staff a competitive edge • a proposal to substitute coal with waste products In a carefully planned and executed series of in 1996/97. Core functions of this Group are to: well into the next century. as fuel for electricity generation; presentations Delta was able to give a clear picture • consider long term development opportunities Delta undertook several initiatives in 1996/97 of the new market environment for energy • installation of a small hydro-generator on the for Delta's four power stations; directed at the organisation's long-term strategic utilities to existing and potential coal suppliers. Mt Piper cooling water supplies; needs. These recognise that, with increasing Delta's rationale in the process was that suppliers' • evaluate technically and economically feasible • options for re-powering an existing competition in the electricity market, Delta will be interests were best served by ensuring they alternative development options; power station; under greater pressure to reduce costs and to seek understood fully the implications of the • commence approval processes for new opportunities to expand its core business. deregulated electricity market on Delta and • submitting a joint Expression of Interest with development projects; its partnership arrangements. Clough Engineering to operate and maintain FUEL • co-ordinate Delta's Research and Development Collie Power Station in Western Australia; and At the end of the process supply contracts were activity; Coal represents a major proportion of Delta's awarded to five companies. The quality of the • establishing a Minerals Processing Park at operating costs. The ability to provide contracts ensure that Delta should remain • pursue new business opportunities for Delta staff Wallerawang in conjunction with the Department competitively priced electricity in the market is, competitive in the electricity market place. and plant; and of State and Regional Development and Lithgow therefore, strongly dependent on sourcing coal Council. The proposal is to use the "buffer" zone Delta also tested several alternatives to distillate for • promote and co-ordinate continuous improvement supplies that provide Delta with a cost advantage around Wallerawang for industrial development boiler ignition at its power stations during the processes to ensure that Delta reaches its potential over other generators. suited to the region's attributes. year. In some cases, the alternatives were found to as a "Quality" driven organisation. In June, 1997, contracts to supply more than offer potential for savings between one third and 40% of Delta's coal requirements expired. The one half the cost of distillate.
35 Delta has commenced a review of the vulnerability of its major commercial and plant control systems to the "Millennium Bug"
The Development Group also plays an important Several key recommendations of the review are role in making good Delta's commitment to quality presently being implemented, including: management and operations. The Group is co • replacing the financial management systems; ordinating Delta's participation in an international benchmarking study of power station • upgrading the organisation's desktop operating management, operations and maintenance by the system; US-based Utility Management Services. • improving data management technology; and This study is a useful tool with which Delta can • migration to an 'open systems' platform. compare its performance with that of a range of international energy utilities striving to identify Delta has also commenced a review of the and achieve world's best practice in utility vulnerability of its major commercial and plant management. control systems to the "Millennium Bug" in the year 2000. Already the need to upgrade a number INFORMATION TECHNOLOGY of systems has been identified, with most of this work set to commence in 1997/98. A review of Delta's information technology services and strategic direction was conducted in 1996/97, CORPORATE GOVERNANCE to look at ways of harnessing the full potential of Delta's existing IT systems, identify possible system The Corporate Governance program developed risks and exploit a number of opportunities for and endorsed by the Board in 1996/97, sets out a improving systems. range of measures for complying with legislative requirements and defining employee accountability and responsibility.
Monitoring of Delta's actions is co-ordinated by respective Board Committees, which report to the full Board. Major Corporate Governance initiatives include:
Code of Conduct Copies of the Code of Conduct were sent to all employees after the Code was approved by the Board in February, 1997. Employees were given the opportunity to clarify issues around the Code in workshops prior to its approval by the Board.
36 Fraud Prevention Strategy The Fraud Prevention Committee, which is Delta must focus now on responsible for implementing Delta's Fraud Prevention Strategy, continued the strong fraud making the structural changes awareness and education program. that will give Delta and its staff a Legislative Compliance Delta must comply with a range of Trade Practices, competitive edge well into the Environmental, Occupational Health and Safety, Equal Employment Opportunity and Industrial next century. Relations laws, as well as Ministerial Orders, in conducting operations. Several initiatives in the Corporate Governance program are directed at educating staff about complying with regulations.
Delta has also effectively conveyed to staff their legal obligations, responsibilities and accountability under Delta's Environmental Management System.
Deft? M M
PREFERRED SUPPLIER STATUS
partnering with a major supplier REDUCED • increased value from focus on preferred long term contracts GREENHOUSE customers & partnering maintain competitive EMISSIONS • promotion of energy coal supply mark"* efficient uses of optimised plant dispatch electricity & efficiency J new developments to reduce greenhouse emissions close contact with regulators & policy makers
BROADER BUSINESS BASE
small scale, environmentally friendly development projects • operations & maintenance ^ service opportunities prepare for gas fired plant once this becomes
k economic t
38 T the future
MARKET DIRECTIONS The primary focus will be on Delta Electricity expects that for several more years the issue of excess supply will dominate the servicing the wholesale market National Electricity Market. Implicit in this scenario is the view that there will be continued and maintaining well-developed pressure on prices. Other factors affecting the NEM over the next five relationships with customers. years will be: • extension of the market to South Australia and Queensland; • new entrants into the market place; and • the expiry of vesting contracts. Increasing value from long-term coal supply contracts will be important to sustaining a cost In addition, several developments have been advantage and, to this end, Delta intends to mooted which could have a dramatic impact on develop partnerships with major suppliers to the shape of the market, including: share market risk. • connecting the New South Wales and South Delta's core expertise is currently generating Australian systems (Riverlink); electricity. To justify significant new investment, • including Tasmania in the market (Basslink); and such investment would need to result in a differentiated product capable of attracting a • increasing transfer capacities between New South premium on standard prices. One such product is Wales and Victoria. "environmentally friendly" energy. Increasingly, the Delta's approach in this dynamic environment community, Governments, and business in Australia will be to continue pursuing efficiencies and are seeking energy from alternative sources, and to improvements, and to add value to the some extent are prepared to pay extra for it. organisation. Delta's objective of becoming the preferred supplier will remain key. The primary focus will be on servicing the wholesale market and maintaining well-developed relationships with customers. The most pressing environmental issue facing Delta is that of greenhouse gas emissions.
Delta sees this market trend as an opportunity to PRIVATISATION diversify its commercial base. In initial efforts to On 22 May, 1997, NSW Treasurer The Hon. Michael position itself as a supplier of alternative energy, Egan released a discussion paper entitled "A Plan Delta is seeking to: for a Secure New South Wales". The Plan proposes • install a small hydro-generator at Mt Piper; that New South Wales electricity industry assets be sold to eliminate the State's debt, and fund the • use low calorific fuels from industrial sites as rebuilding of public infrastructure and public fuel in boilers; housing. • explore the use of coal mine methane as fuel; A Committee of Inquiry was subsequently • apply technology that consumes waste (known established and was due to report to the as refuse-derived fuel, or RDF); and Government by 18 August, 1997. • install combined cycle gas turbine (CCGT) plant, Delta's position throughout public discussion of or repower existing plant on gas. this issue has been "business as usual" - to remain focused on improving commercial processes and
ADDRESSING THE GREENHOUSE achieving efficiencies, and to consolidate the CHALLENGE strong progress the organisation has already made. In this way the integrity of the business, and its The most pressing environmental issue facing ability to sustain quality jobs, is maintained. Delta is that of greenhouse gas emissions. There is a strong possibility that government action on emissions, such as to introduce a tradeable emission credits scheme, could dramatically alter the purchasing requirements of electricity retailers. Delta intends to address this risk in any future developments it undertakes. financial statements
STATEMENT BY MEMBERS OF THE BOARD Pursuant to Section 41 of the Public Finance and Audit Act, 1983, and in accordance with a resolution of the Board of Delta Electricity, we declare on behalf of Delta Electricity that in our opinion: 1. the accompanying Financial Statements exhibit a true and fair view of the financial position of Delta Electricity as at 30 June, 1997 and transactions for the year ended 30 June, 1997. 2. the accompanying Financial Statements have been prepared in accordance with applicable accounting standards and other mandatory professional reporting requirements, the provisions of the State Owned Corporations Act, 1989, including Part 3 of the Public Finance and Audit Act, 1983, the Public Finance and Audit (General) Regulation, 1995, except where the Treasurers exemption has been granted. Further, we are not aware at this time of any circumstances which would render any particulars in the Financial Statements to be misleading or inaccurate. y~ B MURPHY J HENNESS CHAIRMAN CHIEF EXECUTIVE 17 October, 1997 17 October, 1997
TABLE OF CONTENTS
BALANCE SHEET 42
PROFIT AND LOSS STATEMENT 43
STATEMENT OF CASH FLOWS 43
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 44
AUDITOR GENERAL'S OPINION 52
BEGINNING OF THE FINANCIAL STATEMENTS AUDITED BY THE AUDITOR-GENERAL. BALANCE SHEET AS AT 30 JUNE. 1997 lote 1997 1996 $'000 $'000
Current Assets Cash 393 436 Receivables 5 56,101 148,950 Investments 6 147,453 18,947 Inventories 7 76,198 108,932 Other 9 17,450 3,724
Total Current Assets 297,595 280,989
Non-Current Assets Receivables 5 158 172 Property, Plant and Equipment 8 1,177,929 1,200,310 Other 9 19,752 -
Total Non-Current Assets 1,197,839 1,200,482
Total Assets 1,495,434 1,481,471
Current Liabilities Creditors and Borrowings 10 252,680 73,486 Provisions 11 112,511 27,132
Total Current Liabilities 365,191 100,618
Non-Current Liabilities Creditors and Borrowings 10 342,219 663,729 Provisions 11 76,646 41,422
Total Non-Current Liabilities 418,865 705,151
Total Liabilities 784,056 805,769
Net Assets 711,378 675,702
Equity Share Capital Kb) Reserves 13 675,292 671,301 Retained Earnings 36,086 4,401
711,378 675,702
The accompanying Notes form an integral part of these Financial Statements.
42 PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 30 JUNE, 1997 Period from 1 March Note 1997 1996 to 30 June 1996 $'000 $'000
Operating Revenue 2 700,792 220,343
Operating Profit Before Income Tax 3 305,636 29,339 Income Tax Attributable to Operating Profit 4 110,009 10,562
Operating Profit after Income Tax 195,627 18,777
Retained Earnings at commencement 4,401 Adjustment for Tax Effect Accounting KD 16,208 _ Total Available for Appropriation 216,236 18,777 Dividend 14 180,150 14,376
Retained Earnings at the End of the Period 36,086 4,401
The accompanying Notes form an integral part of these Financial Statements.
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE. 1997 Period from 1 March Note 1997 1996 to 30 June 1996 $'000 $'000 Inflows Inflows (Outflows) (Outflows)
Cash Flows From Operating Activities Cash Received in the Course of Operations 731,098 111,546 Interest Received 6,021 437 Cash Payments to Suppliers and Employees (440,247) (128,184) Interest and Other Finance Costs Paid (58,081) (20,438) Income Tax Paid (19,171) (2,286)
Net Cash Provided/(Used) by Operating Activities 18 219,620 (38,925)
Cash Flows From Investing Activities Proceeds from Sale of Property, Plant and Equipment 955 Payments for Property, Plant and Equipment (20,996) (16,729) Payments for Investments (45,583)
Net Cash Used by Investing Activities (65,624) (16,729)
Cash Flows from Financing Activities Proceeds from Borrowings 346,805 Repayment of Borrowings (489,378) Dividends Paid (99,834)
Net Cash Used by Financing Activities (242,407)
Net Increase (Decrease) in Cash Held (88,411) (55,654) Cash at Start of the Period 19,383 Establishment Cash 52,056 75,037 Cross Border Lease Receipts 174,404 Income Tax Paid on Cross Border Lease Receipts (62,786)
Cash at the End of the Period 18 94,646 19,383
The accompanying Notes form an integral part of these Financial Statements. Notes to and Forming Part of the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are a general purpose financial report performance for the period from commencement of the prepared in accordance with Australian Accounting Standards, entity at 1 March, 1996 to 30 June, 1996. Urgent Issues Group Consensus Views, and the requirements of the State Owned Corporations Act, 1989 (as amended). (d) Liability Management During the year. Delta Electricity actively managed its (a) Basis of Accounting liabilities against a neutral benchmark in accordance with The financial statements have been prepared on the basis both approved Board policies and the New South Wales of historical costs and except where stated do not take into Treasury Liability Management Guidelines. New South Wales account current valuations on non-current assets. Cost is Treasury Corporation stock, interest rate and currency swaps, based on the fair values of the consideration given in foreign exchange forward contracts, forward rate exchange for assets. agreements and futures and options are available as a Non-current assets are revalued from time to time as means of hedging Delta Electricity's interest rate exposures. considered appropriate by the directors and are not stated All gains and losses incurred in the use of these derivative at amounts in excess of their recoverable amounts. Except instruments are recognised in the Profit and Loss Statement where stated, recoverable amounts are determined using as incurred. discounted cashflows. (e) Depreciation Land and Buildings are valued at market value except that Property, plant and equipment, other than freehold land, land under infrastructure assets that is reserved for are depreciated over their estimated useful lives using the operating power station usage is valued at net realisable straight line method. value having due regard to the level of expenditure that would be required to get the land into saleable condition. (f) Assets Under Construction All valuations apart from opening system asset balances at Interest costs on borrowings specifically financing assets under 1 March, 1996, are determined by Delta Electricity and have construction are capitalised up to the date of completion of not been adjusted in respect of the potential effect of any each asset to the extent those costs are recoverable. capital gains tax. Overseas borrowings are stated at exchange rates prevailing (g) Discount on Loans at balance date (Note 1(m)). Discount on loans is in the nature of an additional cost of Investments are stated at market values prevailing at borrowing which is amortised over the term of the loans, the balance date. Associated hedging instruments are treated amount applicable to each year being included in the Profit the same as the underlying investment. Market values are and Loss Statement as part of Delta Electricity's financing calculated by Delta Electricity's treasury service provider by charges for that year. The borrowings amount appearing in discounting the expected future cashflows arising from the Balance Sheet is net of amortisation (Note 10). securities in the trusts to their present value using market yields appropriate to the securities. (h) Employee Entitlements Delta Electricity makes provision through its Profit and Loss (b) Share Capital Statement for its liability in respect of employee entitlements The Delta Electricity entity commenced operations on 1 March, for annual leave and long service leave. A calculation of the 1996. Under the terms of a Ministerial Order signed by the liability at balance date is made each year for employees' Honourable PC. Scully, Acting Minister for Energy, and dated 1 entitlements to long service leave and annual leave. March, 1996, staff, assets, rights and liabilities were transferred The basis of the liabilities and contributions are: from Pacific Power to Delta Electricity. The transfer process has (i) For annual leave, the liability represents the amount continued into the 1996/97 financial year and has resulted in which Delta Electricity has a present obligation to pay an increase in reserves of $3.9 million, reflected in the Share resulting from employees' services provided up to Premium Account (Note 13). balance date. The provision has been calculated at The State Owned Corporations Act, 1989 (as amended), nominal amounts based on current salary rates and requires Delta Electricity to have two voting shareholders; includes related oncosts. the Treasurer and another Minister, being the Minister for (ii) For long service leave, the liability is based on a short Police. Each shareholder holds one $1 share. hand measurement technique actuarially determined Schedule 1 of the Energy Services Corporations Act 1995 was which represents the present value of expected future amended via a Regulation to change the name of the entity payments for long service leave, including projected from First State Power to Delta Electricity. The name change remuneration rates. Associated oncosts are also included. took effect from 2 August, 1996. Note 15 provides details in relation to superannuation The emerging competitive energy market has created entitlements. inherent uncertainty in the valuation of system assets in the electricity generation sector. These uncertainties relate to (i) Investments future cashflows and leveraged risk factors adopted in the Income received from the investment of all funds is included valuation of the non-current system assets. as income in the Profit and Loss Statement.
(c) Prior Period Comparisons (j) Insurance Where prior period results are reported in these financial Delta Electricity is a self-insurer for certain risks, while others statements, the results represent the financial and operating are insured externally.
44 (k) Inventory Valuation determination of the amounts at which the transactions are Inventories of Stores and Materials are valued at the lower brought to account. All exchange gains and losses and costs of cost and net realisable value. Coal and Oil Stocks are relating to other hedge transactions are brought to account valued at the weighted average cost per tonne/litre. in the profit and loss account in the same period as the exchange differences on the items covered by the hedge (I) Taxation transactions. Costs on such contracts are amortised over the life of the hedge contract. Change in Accounting Policy
From 1 July, 1996 Income Tax has been brought to account (n) Segment Reporting using the liability method of tax effect accounting. This has Delta Electricity operates predominantly in one industry and resulted in an initial adjustment to retained earnings as at 1 geographical segment and is reported accordingly. July, 1996, consisting of an increase of $17,548,000 for the future income tax benefits and a decrease of $1,340,000 in (o) Operating Revenue respect of deferred tax liabilities. Income tax expense for the Sales revenue represents revenue earned from the sale of period from 1 March to 30 June, 1996 was calculated as 36% electricity. Other revenue includes interest income on of operating profit before tax based on an agreement with investments and miscellaneous income. New South Wales Treasury. Income tax payments are made to the New South Wales Office (p) Derivative Financial Instruments of State Revenue under the income tax equivalent regime. Delta Electricity has a portfolio of debt consisting of short, medium and long term borrowings. This debt is used to (m) Foreign Currency Translation service the asset structure and ongoing activities of the Transactions denominated in a foreign currency are organisation. Delta Electricity has identified interest rate converted at the exchange rate at the date of the risks associated with its debt portfolio. In managing the risks transaction. Foreign currency receivables and payables at in accordance with strict Board limits, the organisation will balance date are translated at exchange rates current at be and is involved in derivative financial instruments. balance date. Exchange gains and losses are brought to Derivative financial instruments including swaps, forward account in determining the profit or loss for the year. rate agreements, futures and forwards are used to alter and Exchange gains and losses and costs arising on forward modify the natural risks inherent in the Balance Sheet. Gains foreign exchange contracts entered into as hedges of and losses on derivative financial instruments are included in specific commitments are deferred and included in the the Profit and Loss Statement as they arise.
Period from 1 March 1997 1996 to 30 June 1996 $'000 $'000
2. OPERATING REVENUE
Sales Revenue 673,068 214,210
Other Revenue Interest Revenue 12,074 648 Proceeds from sale of non-current assets 723 232 Proceeds from other operations 6.458 2,157 Miscellaneous 8,469 3,096
Total Operating Revenue 700,792 220,343 Notes to and Forming Part of the Financial Statements
Period from 1 March 1997 1996 to 30 June 1996 S'000 S'000
OPERATING PROFIT WKKKHSBSSKBSSS/KHKKKttHK^
a) Operating Profit before Income Tax has been determined after:
Crediting Employer Superannuation Reserve Units interest and liability adjustment (advised by the Superannuation Administration Authority)
- State Authorities Superannuation Scheme 548 705 - State Superannuation Fund 6,646 (1,049)
Charging as Expense Depreciation - Buildings 5,683 1,662 - Plant and Equipment 36,378 11,268 - Motor Vehicles 560 161
Depreciated value of non-current assets sold 638 204
Provision for Employee Entitlements 11,988 2,147
Superannuation - State Authorities Non-Contributory Scheme 2 (1,543) - Superannuation Guarantee Levy 314 111
Financing Charges 55,141 19,920
b) Auditors' remuneration Amounts received, or due and receivable by the auditors for auditing the accounts 72
c) Fees Paid to Board Members Fees including superannuation benefits paid to Board Members other than salaries paid to full-time members 305 84
d) Abnormal Items Included in Operating Profit Before Income Tax Income received from the Cross Border Lease of Mt Piper Power Station 174,404
Income Tax applicable thereto 62,786
Delta Electricity has entered into three cross border lease transactions relating to the Mt Piper Power Station whereby the facility has been leased to the State of New South Wales and sub-leased (via various overseas parties) back to Delta Electricity. The effect of these arrangements is that Delta Electricity retains legal title to, beneficial ownership of, and continues to operate, the power station. Delta Electricity is prevented, however, from mortgaging or allowing any other lien to exist over the facility so as to create an interest which is not subject to that of the United States Lessors during the term of the leases. Delta Electricity has agreed to support certain of New South Wales's or New South Wales Treasury Corporation's representations and warranties under the transactions and in return New South Wales has indemnified Delta Electricity for its participation in the transaction other than in respect of operational matters.
All significant amounts receivable and payable by Delta Electricity have been prepaid and, accordingly, no lease assets or liabilities are reflected in the balance sheet.
e) Consultants' Fees 456
46 Period from 1 March 1997 1996 to 30 June 1996 $'000 S'000
». INCOME TAX The income tax on the operating profit differs from the amount prima facie payable on that profit as follows:
Prima facie income tax on the operating profit at 36% 110.029 10,562 Tax effect of differences which: Reduce tax payable due to: - Research and Development (23)
Increase tax payable due to non-deductible: - Entertainment Expenses 2 -Other 1
Prima facie tax adjusted for permanent differences 110,009
1997 1996 S'000 S'000
5. RECEIVABLES
Current Trade Debtors 54,967 103,275 Debtors other than trade 1,134 45,675
56,101 148,950
Non-Current Long term debtors 158 172
158 172
6. INVESTMENTS •••••n Current Cash Management Trust 95,610 Managed Funds 51,843 Interest Bearing Term Deposits, Bank Bills and 18,947 Negotiable Certificates of Deposit
147,453 18,947
7. INVENTORIES
Current Stores and Materials 36,805 41,081 Coal Stocks 37,952 65,839 Oil Stocks 1,441 2,012
76,198 108,932 Notes to and Forming Part of the Financial Statements
8. PROPERTY. PLANT AND EQUIPMENT
Cost Accumulated Written Down Value Depreciation
1997 1996 1997 1996 1997 1996 $'000 $'000 $'000 $'000 $'000 $'000
Land Infrastructure - at cost 5,650 5,634 - - 5,650 5,634
5.650 5,634 - - 5,650 5,634
Buildings Power Stations - at cost 184,158 182,431 7,318 1,661 176,840 180,770 Other Buildings - at cost 273 487 14 1 259 486
184,431 182,918 7,332 1,662 177,099 181,256
Plant and Equipment Power Stations - at cost 1,021.494 1,006,410 44,093 10,428 977,401 995,982 Other Plant & Equipment - at cost 21.866 18,434 4,087 996 17,779 17,438
1,043.360 1,024,844 48,180 11,424 995,180 1,013,420
Total Property, Plant & Equipment 1.233,441 1,213,396 55,512 13,086 1,177,929 1,200,310
1997 1996 $000 $'000
9. OTHER
Current Miscellaneous 393 Prepayments 17.057 3,724
17,450 3,724
Non-Current Future Income Tax Benefit 19,752
19.752 -
10. CREDITORS AND BORROWINGS
Current Accounts Payable 62,412 62,236 Current Borrowings 179,747 Other Creditors 10,521 11,250
252,680 73,486
Non-Current Non-Current Borrowings 342,119 663,330 Accounts Payable 100 399
342,219 663,729
Discount on domestic loans issued by New South Wales Treasury Corporation amounted to $2,083,008 ($67,170,000). (Refer Note 1(g).)
The following table summarises the broad maturity pattern of Delta Electricity's borrowings.
Up to one year 179,747 Over one and up to two years - 146,189 Over two and up to five years 194,721 51,386 Over five years 147,398 465,755
521,866 663,330 1997 1996 $'000 $'000
Current Income Tax 5,960 8,276 Dividends 94,692 12,672 Employee Entitlements 9,396 6,184 Insurance 2,463
112,511 27,132
Non-Current Employee Entitlements 21,164 21,422 Insurance 21,569 20,000 Provision for Deferred Income Tax 33,913
76,646 41,422
On 31 August, 1996 Delta Electricity obtained a Self Insurer's licence for Worker's Compensation. In accordance with the licence conditions Delta Electricity has a current provision of $720,000 and a non current provision of $3,285,000 for worker's compensation included in the Insurance Provision.
12. RETAINED EARNINGS
The movement in Retained Earnings is set out in the Profit and Loss Statement.
13. RESERVES
Share Premium Account 675,292 671,301
675,292 671,301
14. DIVIDEND
In accordance with the provisions of the Share Dividend Scheme, dividend payments in respect of the period ended 30 June, 1997, will total $180.1 million (1 March to 30 June 1996: $14.4 million).
15. SUPERANNUATION
Any unfunded superannuation liability is recognised as a liability in the balance sheet. Amounts representing prepaid superannuation contributions are recognised as an asset. Actuarial reviews of the superannuation liability of the various defined benefit schemes are carried out by the Government Actuary for the Superannuation Administration Authority. The date of the last triennial review was 30 June, 1994. In addition, the Government Actuary has undertaken a review of the key economic assumptions used at the last triennial review prior to calculating the gross superannuation liability of the various defined benefit schemes as at 30 June, 1997. The economic assumptions used are as follows:
1996/97 1997/98 1998/99 1999/00 Thereafter %pa %pa %pa %pa %pa
Investment Return 9.0 7.0 7.0 7.0 7.0 Salary Growth Rate 3.0 3.7 4.0 4.5 5.0 Consumer Price Index 4.0 2.1 2.5 3.0 3.5
Payments are made to the Superannuation Administration Authority to reduce the superannuation liability. These payments are held in Investment Reserve Accounts. The prepaid contributions disclosed in the balance sheet are composed of:
SASS(i) SANCS(ii) SSF(iii) 1996/97 1995/96 $'000 $'000 $'000 $'000 $'000
Gross Liability Assessed by SAA as at 30 June, 1997 27,360 7,533 48,756 83,649 80,402 Less: Investment Reserve Account Balance 32.832 10,504 57,359 100,695 83,803
Unfunded Liability/(Prepaid Contributions) (5.472) (2,971) (8,603) (17,046) (3,401)
(i) SASS - State Authorities Superannuation Scheme (ii) SANCS - State Authorities Non-Contributory Superannuation Scheme (iii) SSF - State Superannuation Fund
The prepaid contributions are included in Other Current Assets. Notes to and Forming Part of the Financial Statements
1997 1996 $'000 yooo
16. CAPITAL EXPENDITURE COMMITMENTS
Total capital expenditure contracted for at balance date but not provided for in the financial statements:
Payable no later than one year 4.514 713 Payable later than one, not later than 2 years 725 50 Payable later than two, not later than 5 years Payable later than 5 years
17. TREASURER'S EXEMPTIONS
In accordance with the requirements of the State Owned Corporations Act, 1989, the financial statements have been prepared to comply with Part 3 of the Public Finance and Audit Act, 1983, and the Public Finance and Audit (General) Regulation, 1995, except where the Treasurer's exemption has been granted. Exemptions have been granted by the Treasurer under Section 41 BA of the Public Finance and Audit Act and Section 15 of the Regulation so that the financial reporting requirements which apply are broadly consistent with Corporations Law reporting requirements, given that the entity is competing in the national electricity market. The following specific disclosures are not required to be made as a result of the exemptions: (i) Public Finance and Audit Act • Section 41B(1)(c)(ia) presentation of manufacturing and trading statements.
(ii) Public Finance and Audit (General) Regulation • Part 1, clause 2, "the amounts set aside for the renewal or replacement of fixed assets." • Part 1, clause 4, "the amounts set aside to any provision for known commitments." • Part 1, clause 6, "the amount appropriated for repayment of loans, advances, debentures or deposits or otherwise." • Part 1, clause 13, "a separate description and amount for all other material items of income and expenditure on a program or activity basis." • Part 3, clause 13, "non-current assets whose value exceeds the replacement cost, where adequate provision for writing down that asset is not made."
18. NOTES TO THE STATEMENT OF CASH FLOWS
(a)Cash For the purposes of the Statement of Cash Flows, cash includes cash on hand, deposits held at call with banks and investments in money market instruments, net of outstanding bank overdrafts and borrowings which are used in the cash management function on a day to day basis. It also includes investments held as part of the daily cash management function.
(b) Reconciliation of Cash Cash at the end of the period as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows: 1997 1996 $'000 $'000
Cash 393 436 Cash Management Trust 95,610 Liquid Investments 18,947 Bank Overdraft Borrowings (1.357)
Balance as per Statement of Cash Flows 94,646 19,383 1997 1996 $'000 $'000
(c) Dividends and Taxes No dividends were received during the period. Dividends and tax equivalents paid by Delta Electricity during the period amounted to $181.8 million ($2.3 million).
(d) Acquisitions and Disposal of Entities No entities were acquired or disposed of during the period.
(e) Financing Arrangements Facilities Available Bank Overdraft 2,000 2,000 NSW Treasury Corporation Loans 621,866 663,330
Total Available 623,866 665,330
Facilities Utilised Bank Overdraft NSW Treasury Corporation Loans 521,866 663,330
Total Utilised 521,866 663,330
Delta Electricity, with the exception of overdraft facilities, is required to borrow all new money through the NSW Treasury Corporation. The organisation has a $100 million draw down in place to be used on an as required basis. The facility is currently available until 30 June, 1999.
(f) Net Cash Flows Purchases and sales of investments have been presented on a net cash basis in the Statement of Cash Flows.
(g) Reconciliation of Net Cash Provided/(Used) by Operating Activities to Operating Profit Operating Profit after Income Tax 195,627 18,777
Add/(Less): Non-Cash Items Depreciation 42,621 13,091 Amortisation (2,551) (434) Inventory Adjustments 6,443 616 Assets Written Off 641 199
Add/(Less): Items classified as Investing/Financing Activities (Gain)/Loss on sale of Property, Plant and Equipment (113) Accounting (Gain)/Loss on Debt Re-financing 2,303
Less: Cross Border Lease Receipts (174,404) Add: Tax Paid on Cross Border Lease Receipts 62,786
Net Cash Provided by Operating Activities Before Changes in Assets and Liabilities 133,353 32,249
Net Changes in Assets and Liabilities During the Period
(lncrease)/Decrease in Trade Debtors 48,307 (103,275) (lncrease)/Decrease in Other Debtors 3.004 (10,690) (lncrease)/Decrease in Inventories 30,350 (6,827) (lncrease)/Decrease in Other Assets (11.894) (3,726) lncrease/(Decrease) in Creditors and Borrowings (4,521) 45,233 lncrease/(Decrease) in Income Tax Related Assets/Liabilities 28.052 8,276 lncrease/(Decrease) in Other Liabilities (7.031) (165)
Net Cash ProvidedZ(Used) by Operating Activities 219,620 (38,925) Notes to and Forming Part of the Financial Statements
BOX 12 GPO SYDNEY NSW 2001 »OUTH ++
INDEPENDENT AUDIT REPORT DELTA ELECTRICITY To Members of the New South Wales Parliament and Members of Delta Electricity Scope 1 have audited the accounts of Delta Electricity for the year ended 30 June 1997. The preparation and presentation of the financial report consisting of the accompanying balance sheet, profit and loss statement and statement of cash flows, together with the notes thereto, and the information contained therein, is the responsibility of the Board of the Corporation. My responsibility is to express an opinion on these statements to Members of the New South Wales Parliament and Members of Delta Electricity based on my audit as required by section 24A of the State Owned Corporations Act 1989 and sections 34 and 41C(1) of the Public Finance and Audit Act 1983. My audit has been conducted in accordance with statutory requirements and Australian Auditing Standards to provide reasonable assurance as to whether the financial report is free of material misstatement. My procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) and statutory requirements so as to present a view which is consistent with my understanding of Delta Electricity's financial position, the results of its operations and its cash flows. The audit opinion expressed in this report has been formed on the above basis. Audit Opinion In my opinion, the financial report of Delta Electricity complies with statutory requirements and presents fairly in accordance with applicable Accounting Standards and other mandatory professional reporting requirements the financial position of Delta Electricity as at 30 June 1997 and the results of its operations and its cash flows for the period then ended. Inherent Uncertainty Regarding Valuation of System Assets Without qualification to the opiniqn expressed above, attention is drawn to the following matter. As indicated in Notel(b) to the financial statements, it is disclosed that uncertainty currently exists concerning valuation of system assets. Until more discernible market conditions apply, the quantum of the financial effect of adjustments, if any, to the values is unclear.
Ofi^
A.C. HARRIS SYDNEY 17 October 1997
END OF THE FINANCIAL STATEMENTS AUDITED BY THE AUDITOR-GENERAL.
52 statutory information
TABLE OF CONTENTS
ANNUAL REPORT COSTS 54
CHIEF AND SENIOR EXECUTIVE OFFICERS 54
CODE OF CONDUCT 54
CONSULTANTS 55
CONSUMER RESPONSE 55
DISABILITY PLAN 55
ETHNIC AFFAIRS STATEMENT 55
EXEMPTIONS FROM THE REPORTING PROVISIONS 55
FREEDOM OF INFORMATION 56
GUARANTEE OF SERVICE 56
OVERSEAS TRAVEL 56
PROMOTION 56
RISK MANAGEMENT AND INSURANCE ACTIVITIES 56
SIGNIFICANT COMMITTEES OF DELTA ELECTRICITY AND NAMES OF COMMITTEE MEMBERS 57
SPONSORSHIPS AND DONATIONS 57
STATEMENT OF CORPORATE INTENT 57
TITLES AND NAMES OF SENIOR PRINCIPAL OFFICERS AND THEIR QUALIFICATIONS 58
WORKFORCE DIVERSITY 58
53 ANNUAL REPORT COSTS and impartial. In order to achieve this you must take care that your actions do not conflict with the proper carrying The Annual Report is Delta Electricity's major corporate out of your job. This includes personal interests of those publication to its shareholders, customers and other people close to you, including business partners or family stakeholders. Two thousand copies of the Report were members. produced at a cost of $21.00 each. When considering whether or not there is a possible conflict of interest, it is always important to think about how others CHIEF AND SENIOR EXECUTIVE OFFICERS would view your situation. In many cases only you will be aware of the potential for conflict. The onus is on you to Delta Electricity has not been included as a Declared notify your Manager/Team Leader of any possible conflict. Authority under Schedule 3 of the Public Sector Your Manager/Team Leader will discuss ways of resolving Management Act 1988 and, accordingly, the information the conflict with you. If your Manager/Team Leader required by the Annual Reports (Statutory Bodies) considers it appropriate, you may be required to make a Regulation is not applicable. disclosure in writing.
Acceptance of Gifts and Benefits CODE OF CONDUCT You should never accept a gift or benefit if you think that it For the financial year 30th June 1996, Delta Electricity is likely to influence the way in which you do your job. reported that it was in the process of developing a Code of Gifts and benefits may only be accepted if they are not likely Conduct, and had adopted Pacific Power's Code of Conduct to be seen to be compromising. in the interim. A Draft Code of Conduct was developed in October 1996. Through a series of training workshops, all Gifts and benefits which are considered to be more than staff were given the opportunity to clarify issues and raise token should be brought to the attention of your Manager. any areas of concern relating to the Code. Adjustments were Your Manager will assist to determine whether the gift or made to the Code following the completion of the benefit is acceptable. workshops, to address issues raised by staff. These Token gifts are gifts which are not offered on a regular basis adjustments were adopted by the Board and have been and may include things such as chocolates, bottle of wine, incorporated into the Code of Conduct, March 1997. diary and souvenirs. Non token gifts include tickets to sporting events and Purpose invitations to lunch or dinner. The purpose of this Code is to establish a framework and set If a substantial gift or benefit is offered to you to influence guidelines for decision making. This Code outlines what is the way you do your work, you are required to report this expected of you as a staff member of Delta Electricity and immediately to your Manager/Team Leader, in accordance for this reason it is important that decisions are made in with the procedure on Reporting of Corruption, accordance with this Code. Maladministration and Serious and Substantial Wastage. Performance of Duties Confidentiality of Information As a staff member of Delta Electricity you should: Some of the information which you have access to will be • Act honestly, fairly and to the best of your ability when confidential. Confidential information must be protected dealing with other colleagues, customers, suppliers, and not disclosed. members of the public and the community; Confidential information must not be used for personal • Contribute to an environment of enthusiasm, pride, benefit or for anyone else's personal benefit. teamwork and excellence; Information should not be given out unless: • Follow lawful and reasonable instructions; • You are required by law; or • Comply with Policies, Standards and Procedures; • Permission from your Manager has been given; or • Recognise and accept accountability for your actions. • The information is publicly available. If you are a Manager/Team Leader you should: You must not access confidential information unless the • Contribute to an ethical and equitable work environment, information is required in the performance of your duties. which provides a good example to staff; After ceasing employment with Delta Electricity you may use • Communicate to staff: job knowledge and skills gained during your employment - Requirements of the Code of Conduct, however information identified as confidential by Delta - What is expected of them, Electricity must not be released or used to benefit other businesses. - How you and your team can affect Delta Electricity's achievements; Use of Delta Electricity's Resources • Manage the business in a cost effective manner. Generally you cannot use any of Delta Electricity's equipment, materials or other resources for private reasons, Relationships with Colleagues, Customers & Suppliers or allow anyone else to do so. Within reason the use of You should treat colleagues, customers and suppliers fairly, telephones, faxes and photocopiers is acceptable, however openly and honestly. Everyone has the right to state their approval must be obtained from your Location Manager for case and receive unbiased and fair treatment. the use of other resources. Delta Electricity's resources and equipment must not be used, Conflicts of Interests in any circumstances, in relation to a second job or business. A conflict of interest arises when your interests or activities outside of work conflict directly or indirectly with your Other Employment or Business responsibilities to Delta Electricity. You may undertake paid employment or business activities It is important that colleagues, customers and suppliers are outside Delta Electricity provided that you disclose your confident that all decisions made by Delta Electricity are fair employment to your Manager. Any second job or business will be done in your own time, it CONSULTANTS will not adversely affect your normal work, not lead to a Delta Electricity spent $455,849.11 on consultants in conflict of interest; not lead a fair person to think that you 1996/97. The main purposes of the engagements relate to have a conflict of interest, not involve the use of the specific reviews of Delta's operations and performance and organisation's resources, and not involve the use of planning requirements associated with a competitive information obtained from Delta Electricity. electricity market. Drug and Alcohol Abuse You should not be at work whilst under the influence of CONSUMER RESPONSE drugs or alcohol that may impair your ability to do your job. Delta Electricity has established an account management Public Comment relationship with each of the electricity retailers in the National Electricity Market and its two direct supply Only the Chief Executive or a nominated representative may customers, BHP (steelworks at Port Kembla and Newcastle) make any public or media comment. and Capral Aluminium. Whilst as a member of the community you have the right to Through this relationship Delta Electricity is able to ensure enter into public debate on political and professional social that the needs and concerns of its customers are addressed issues, you will take care not to allow the impression to be expeditiously and at the most senior level. Delta meets gained that such comments are official comments made in regularly with its customers and these meetings provide the your capacity as a staff member of Delta Electricity. forum for airing of any concerns and to monitor progress and ensure that all issues are addressed and followed Reporting Corruption, Maladministration and Wastage through to resolution. You are not only required to act honestly but also to report any instances of possible corruption, maladministration or serious and substantial wastage. DISABILITY PLAN If you are unclear as to what constitutes corrupt conduct, A Disability Plan will be available by December 1997. maladministration or wastage refer to Delta Electricity's Procedure on Reporting Corruption, Maladministration and Wastage and/or seek advice from your Manager/Team ETHNIC AFFAIRS STATEMENT Leader or the Fraud Prevention Officer. Delta Electricity is committed to ensuring that the needs of Any suspected corruption, maladministration or serious and our culturally diverse community are reflected in our business substantial waste of public monies should be reported in operations. For example Delta Electricity Power Station tour accordance with the Procedure on Reporting either to your guide tapes are available to visitors in 12 languages. An Ethnic Manager/Team Leader, Fraud Prevention Officer or the Chief Affairs Statement will be available in 1998. Executive. If you receive any such reports as a Manager/Team Leader, you are required to pass them on to the Fraud Prevention Officer or Chief Executive. EXEMPTIONS FROM THE REPORTING You may also report suspected corruption to the PROVISIONS Independent Commission Against Corruption, Approval was given by the New South Wales Treasury maladministration to the Ombudsman, and serious and under delegation from the Treasurer, the Hon. Michael Egan substantial waste of public monies to the Auditor General. MIX, to exempt Delta Electricity for the year ended 30th If you make a report in accordance with Delta Electricity's June, 1997 and subsequent financial years from the Procedure you will be protected under the Protected following annual reporting requirements: Disclosures Act. Delta Electricity is committed to ensuring Budgets that employees are not victimised as a result of reporting corrupt conduct. Research and Development Land Disposal Breaches of the Code Payment of Accounts Delta Electricity is committed to the standards and principles Time for Payment of Accounts outlined in this Code. The Code is designed to attract the highest level of confidence from colleagues, our customers Investment Management Performance and suppliers, and also to protect our staff by providing Liability Management Performance guidelines on expected standards of behaviour. Exemptions for the following annual reporting Breaches of this Code of Conduct may constitute a breach of requirements were approved subject to the condition that discipline and may be treated as such. comments and information relating to these items are If anyone has any queries regarding the application of disclosed in summarised form: this code you should discuss the matter with your Summary Review of Operations Manager/Team Leader. Management and Activities
Related Information Consumer Response • Delta Electricity's Vision and Values; Report on Risk Management and Insurance Activities • All Delta Electricity's Policies, Standards and Procedures Other exemptions were approved subject to specific with particular reference to: conditions: - Reporting of Corruption, Maladministration & Human Resources - overseas visits with main purposes Serious and Substantial Wastage; highlighted, are required to be disclosed. - Disciplinary Action and Appeals Standard/Procedure. Consultants - total amount spent on consultants is to be disclosed along with a summary of die main purposes of the engagements. Disclosure of Controlled Entities - names of the controlled entities are to be disclosed along with a summarised disclosure of the controlled entities' objectives, operations Delta Electricity is aware of these risks and has and activities and measures of performance. implemented processes to measure, report and control these Financial Statements of Controlled Entities - exempt from risks. Delta's market trading and financial reporting systems preparing manufacturing and trading statements but are being developed to meet the need of an increasingly required to prepare a summarised Operating Statement. sophisticated market with trading instruments of increasing complexity. While these systems will improve Delta's analytical resources to measure, report and price risk, Delta FREEDOM OF INFORMATION will continue to trade and operate within defined and agreed risk criteria. During 1996/97, Delta Electricity did not receive any applications under the Freedom of Information Act. The nature and material impact of identified risks will vary as a fully competitive electricity market comes into effect. Delta Electricity's compliance with the Freedom of Delta Electricity is well positioned to respond and take Information Act did not raise any major issues during the advantage of these developments. reporting period, nor did compliance with the Act have any prominent impact on Delta Electricity's activities. Framework for Monitoring Risks Delta Electricity and its Directors are subject to a number of GUARANTEE OF SERVICE regulatory controls in relation to the functions to be exercised by the organisation, the manner in which those A Guarantee of Service is being developed as part of the functions must be carried out and the responsibilities on ongoing commitment to our customers and the community. individual Directors as imposed by legislation and the During the year, Delta Electricity took significant positive Memorandum and Articles of Association. steps to achieve our objective to be the supplier of first Delta Electricity has developed a "Corporate Governance & choice in the electricity market. This has been achieved Legal Compliance Plan" to ensure full compliance with through establishing closer partnerships with customers. obligations imposed on the corporation and its officers Delta Electricity values strong customer relationships and under legislation in the following areas: works closely with customers to better understand and meet their needs. The Board and senior managers have Corporate Governance maintained a strong customer focus addressing customers Trade Practices needs at the most senior level. This approach successfully Environmental Law positions Delta Electricity as supplier of first choice. Occupational Health & Safety Another significant achievement is the development and Equal Employment Opportunity implementation of a new Code of Conduct. Part of the implementation is to forward a copy of the Code of Business risks are monitored and assessed as part of Delta Conduct to our customers and suppliers. Electricity's business planning and performance management system. These include: 1. Board/Chief Executive/Business Group Managers OVERSEAS TRAVEL performance agreements and performance reporting. In the reporting period, Mr R Schmid, Chief Financial Officer, 2. Board Audit Committee, Board Remuneration Committee made three visits to the United States of America between and a Board Environment, Occupational Healdi and March. 1997 and May, 1997. All trips were associated with the Safety Committee. cross-border lease for Mt Piper Power Station. 3. Chief Executive and Business Group Managers' Monthly Business Reviews. PROMOTION 4. Executive Committees including:
The following publications are available and all were • Environment published during the year. • Safety Information for the Public • Business Review 1996 Annual Report • Information Systems Introducing Delta Electricity • Audit Information for Delta Electricity Staff 5. Management Systems including: Into the Future • Financial Management Information System Family CareLink Reporting Code of Conduct • Business Planning and Performance Management Deltanet • Environmental Management 6. Monthly Board Reports on Delta Electricity's Performance. RISK MANAGEMENT AND NSURANCE 7. Financial risks associated with treasury operations are ACTIVITIES managed by a combination of outsourcing to Treasury Risk management is an integral part of Delta Electricity's Corporation (TCorp) of treasury services and meetings. management philosophy and is structured to identify and Treasury operations are reported to the Board and analyse risks and prepare strategies to deal widi a range of Executive on a monthly basis and to the Chief Financial possible future outcomes. Officer on a weekly basis. Delta Electricity's business risks are identified and assessed in the context of its move towards competition in a national electricity market. Risk assessment takes into account the current developments in the industry and the extent of implementation of a national market. SIGNIFICANT COMMITTEES OF DELTA In addition to these three Board Committees, there are a ELECTRICITY AND NAMES OF COMMITTEE number of Executive Committees in place to review MEMBERS performance and set policy. These Executive Committees are: Board Audit Committee • Executive Management Committee The charter of the committee is to: • Executive Environmental Committee • oversee and appraise the quality of audits conducted by • Executive Audit Committee both Delta Electricity's internal and external auditors; • Executive Safety Committee • maintain, by scheduling regular meetings, open lines of • Information Technology Strategy Committee communication among the Board, the internal auditors and the external auditors to exchange views and • Fraud Prevention Committee information, as well as confirm their respective authority and responsibilities; SPONSORSHIPS AND DONATIONS • determine the adequacy of Delta Electricity's administrative, operating and accounting controls. Delta Electricity supports a range of community based organisations and activities through its sponsorship and Ms B Ward - Convenor Director donations program. In 1996/97, financial and non-cash Mr D Asimus AO Director distributions totalled $41,000. Major sponsorships Mr J Henness Chief Executive and Director included: Mr P Mcllveen - Secretary Corporate Secretary • Young Achievers Australia for the Young Achievers Program ($3,300) Board Environment, Occupational Health and • Apex Club of Swansea — Caves Beach — Belmont for the Safety Committee Newcastle Dance Eisteddfod ($3,000) The Charter of the Committee is to: • NSW Schools Triathalon Association for the Annual State • review and approve environmental and occupational Championships ($2,000) . health and safety policies and management plans to • Radio 2LT for driver safety announcements in key holiday implement these policies; periods ($2,000) • review and approve environmental policy changes and • Australian Quality Council for an E Team ($1,500) recommend to the Board; Smaller contributions were made to local schools and other • review and approve the program of environmental audits educational institutions, community based environmental and occupational health and safety audits; programs and local museums and historical societies. • require reports from senior management of any significant Corporate sponsorships of the Hunter Valley Research incidents and review managements' response; and Foundation ($7,000), Australia Day Council ($5,000), • evaluate the overall effectiveness of environmental and Workskill Australia Foundation ($5,000) and the Australian occupational health and safety policies and procedures Trade Union Program at Harvard Foundation ($5,000) were through regular meetings with senior managers. also undertaken. The Hon B Unsworth Director - Convenor STATEMENT OF CORPORATE INTENT Mr N Rose Director The State Owned Corporations Act, 1989, requires Delta Mr J Henness Chief Executive and Director Electricity to identify and set out reasons for departures Mr P Blume - Secretary Manager/ Employee Relations from the performance targets contained in the Statement of & Organisation Development Corporate Intent. Accordingly, the following points highlight the major Board Remuneration Committee departures from the Statement of Corporate Intent: The Charter of the Committee is to: • Actual operating results excluding the Mt Piper • examination of remuneration and associated issues; Cross Border Lease were 24% above target for Delta • enhance the independence and objectivity of Board Electricity, which equated to an increase in pre-tax decisions on sensitive commercial and personal issues profit of $25.3 million. related to the Executives of the Corporation; • Miscellaneous income was above target primarily due to • enable the corporate and business Strategies and Plans, and interest income earned from additional funds resulting remuneration strategy and policy to be effectively linked; from the Mt Piper Cross Border Lease. • ensure that the remuneration strategy, policy and practice • Network charges were above target due to higher than complies with legal and taxation requirements, corporation expected charges incurred during the year. reporting obligations, and overall Corporation policy and • Operating expenses were below target, due to cost direction. containment together with lower than expected Mr B Murphy - Convenor Chairman and Director expenditure on major operating projects and external Ms B Ward Director services. Mr W Hilder Director • Service contracts were below budget due to a combination of lower than expected use of Pacific Power services, Mr P Blume - Secretary Manager/ Employee Relations together with improved utilisation of internal resources. & Organisation Development • The level of sick leave taken was above target due to high levels of sick leave during the period of voluntary redundancy offers.
57 •Ki
TITLES AND NAMES OF SENIOR PRINCIPAL WORKFORCE DIVERSITY OFFICERS AND THEIR QUALIFICATIONS Delta Electricity's Workforce Diversity objectives are to enable individuals to realise their potential by encouraging Executive participation and contribution, taking into account the Chief Executive diversity of the workforce and providing an environment Mr J Henness BSc, BE (Hons). MEngSc, MBA that is free from discrimination and harassment. Our achievements to date have been: Central Coast Operations • Spokeswomen's Network and Aboriginal Employee's General Manager/Central Coast Network established; Mr P Smith BSc, BE (Hons) • Family Carelink which is a telephone information and Production Manager resource service. It assists employees to balance work and Mr R Hall BSc, BE (Hons) family commitments by providing, through Families at Western Operations Work, information and support about their best options; General Manager/Western Operations • Public Sector Management Course Scholarships for Mr F Mieszala BSc, BE (Hons), Grad Dip Mgl Female Employees; Production Manager/Wallerawang • Workforce Diversity Policies and Procedures; Mr M Gamble BE (Hons) (Mech), Grad Dip. Mgt • Harassment Prevention Training for Managers and Team Production Manager/Mt Piper Leaders; and Mr J Rensen. BE (Hons) (Mech) • EEO Data collection .
Maintenance Services Strategies for 1997/98 General Manager/Maintenance Services Delta Electricity has prepared a Workforce Diversity Mr P Jackson BSc, BE (Hon), MEM Management Plan for 1997/98 The Workforce Diversity Plan defines corporate imperatives for Workforce Diversity Corporate and focuses on establishing a framework for Equal Corporate Secretary Employment Opportunity which disseminates Mr P Mcllveen Ind Rel Cert, Pers Admin Cert responsibilities and accountabilities to Business Units. Manager/Internal Audit Mr B Green B Bus (Mgt). B Comm, FCPA Chief Financial Officer Mr R Schmid FCPA, Grad Aust Inst of Company Directors, General Manager/Strategy Mr G Everett BComm Manager/Employee Relations & Organisation Development Mr P Blume B Ec. Dip Lab Rel Law, Grad Cert Marketing General Manager/Marketing Mr R Ward BEng (Hons), MBA Manager/Information Technology & Communications Mr D Hogg BE (Civil) General Manager/Development Mr M Park BSc (Eng)
58 Total Staff Staff responding Women Aboriginal 81 People from People Whose People with People with (Number) to EEO data form Torres Strait Racial, Ethnic, Language a Disability a Disability (Respondents) Islander Ethno-Religious First Spoken Requiring
People Minority as a Child t Adjustment Groups was not English at Work
Level
<$21r995 31 34% 84% 16% 3.2% - 6% 3%
$21,995-$28,889 50 42% 90% 10% 4% 2% 2% 4% 2%
$28,890-532,295 262 44% 94% 6% 0.8% 3% 2% 8% 3%
$32,296-$40.869 299 57% 88% 12% 0.3% 4% 2% 8% 4%
$40,870-152,850 263 67% 94% 6% 1.5% 5% 5% 9% 3%
$52,851-$66,063 136 76% 96% 4% - 10% 10% 2r, 1%
>$66,063 50 92% 96% 4% - 6% 6% 8% 4%
Total 1091 644 1066 85 10 50 39 80 35
Table 1: Percent of Total Staff by Level
Total Staff Staff responding Men Aboriginal & People from People Whose People with People with (Number) to EEO data form Torres Strait Racial, Ethnic Language a Disability a Disability (Respondents) Islander Ethno-Religious First Spoken Requiring
People t Minority as a Child Adjustment Groups at Work
Permanent — Full-Time 58% 7% Permanent — Part-Time 50% 100% Temporary — Full-Time 100% 100% 25% Temporary — Part-Time
Senior Mgt/Contract 22 Casual Other
Total 50
EHBBHBHBBBi
Table 2: Percent of Total Staff by Employment Basis M Accounting Policies 44-45 Maintenance Services 24—25,39 Annual Report Costs 54 Marketing 13,18-19 Appointments 11 Mission 7 Asset Management 14 Mt Piper Power Station 4,6,20-22,29,40 Award 12,30 Cross Border Lease 10,46,57 Auditor-General's Letter 52 Munmorah Power Station 4,22-23,24
B N Balance Sheet 42 National Electricity Market — see Electricity Market Benchmarking ,13.35 Notes to the Statement of Cash Flows 50-51 Board 8-9 O Audit Committee 57 Objectives 7,20,26,39 Environment, Occupational Health & 57 Safety Committee Operations Remuneration Committee 11,57 Central Coast 22-23,24 Western 20-22,24 Operating Revenue 45 Capital Expenditure Commitments 50 Organisation Structure 4 Chairman's Report 10-11 Overseas Travel 56 Chief Executive's Report 12-13 Outlook 11,38-40 Coal Contracts 12,13,34-35,39 Code of Conduct 10,36,54-55,56 Performance Indicators 14-15 Communication 13,18,19 Policies 26,31 Consultative Committees 13,24,32 58 Team Briefings 13,24,31 Principal Officers 40 Community 22,23,28 Privatisation 3,10,12,46 Consultants 55 Profit 43 Corporate Governance 10,12,36-37,56 Profit and Loss Statement 56 Corporate Identity 11 Promotion 48 Creditors and Borrowings 48 Property, Plant & Equipment 49 Customer Service 19,55 Provisions Guarantee of Service 56 Q D Quality 13,32,35 Development Group 35-36 R Dividend 3,10,49 Receivables 47 Disability Plan 55 Research and Development 35,55 Retained Earnings 49 Equal Employment Opportunity 33,58,59 Reward/Recognition, Staff 30-31,33 Electricity Market 6,10,12,16,18,19,34,39 Risk 12,39,56 Employee Relations 12,30-33 S Energy Trading 13,18 Safety 15,21,22-23,25,31,32,37 Environment 15,20,21,22,23,26-29,37,39,40 Sales 16,19 Community Consultation 26,27,28,29 Scholarships 33,58 Compliance and Audits 26-27 Sponsorships and Donations 57 Greenhouse Challenge 13,28 Statement by Members of the Board 41 Ethnic Affairs Statement 55 Statement of Corporate Intent 10,12,57 Exemptions 50,55 Statement of Cash Flows 43 Strategic Development 34-37 Family Carelink 33 Statutory Information 53-59 Financial Statements 41-52 Superannuation 49 Fraud — see Corporate Governance Survey, Employee 13,31 Freedom of Information 56 T G Training 13,22,24,25 Generation 20-23 V Greenhouse Challenge —- see Environment Vales Point Power Station 4,22,23,24,25,28,29 I Values 7 Income Tax 47 Vision 7 Information Technology 13,36 W Inventories 47 Wallerawang Power Station 4,6,20-22,24,25,27,35 Investments 47 Waste Management 29 Workforce Diversity 32-33,58,59 Letter to Voting Shareholders Inside Front Cover
Designed by Michels Warren Corporate Design Photography: Chris Otto, Peepshow Printed by Link Printing Duncan Bourne Delta Electricity
Mudgee
A ~ Mt. Piper* Vales Point ^ .Orange r /*• Munmorah N. WallerawangA Pacific Highway
Lithgow Pacific Ocean
Great Western Highway
Sydney
New South Wales . , Sydney