Aspiring always to lead strategy performance growth

Sustainability Report 2011 Scope of report

Employees completing Origin’s defensive driver training course

CONTENTS Welcome to Origin’s 10th Sustainability Report. Since 2001, we 1 Our Compass have been reporting voluntarily on our success in meeting the 2 Managing Director’s Message 4 Company Profile commitments we make to our key stakeholders. 7 Our 5-Year Sustainability Objectives In this year’s Sustainability Report we once Our online Sustainability Report discloses our 8 Our Customers again report on how we are tracking against performance consistent with previous years 12 Our Communities the 5-Year Strategies we set out in our 2007 and is compiled using the Global Reporting 18 Our Employees report. A small number of case studies bring Initiative’s (GRI) G3 guidelines. It can be 23 Our Investors to life some of what we do each day. viewed at http://reports.originenergy.com.au 26 Origin Foundation and Community We have not set forward targets in this Unless otherwise stated, this document reports Investment year’s report as 2012 will be the final year on the sustainability performance of the 28 About this Report of reporting against our current 5-Year activities and assets operated by Origin for 29 Glossary of Terms Strategies. In the 2012 report we will the 12 months to 30 June 2011 and monetary communicate the next phase of Origin’s amounts are in Australian dollars. sustainability journey.

ORIGIN ENERGY LIMITED Cover: Ronald Thompson, Origin Land Management Supervisor at his property in the ABN 30 000 051 696 Queensland gasfields b Our Compass

What sets us apart at Origin is not what we do but how we do it. The Purpose, Principles, Values and Commitments contained in our Compass guide our actions and help us make better choices that appropriately balance the interests of all of our stakeholders.

OUR PURPOSE We aspire always to lead. We deliver today’s energy needs; and we search and innovate to create tomorrow’s energy solutions. We honour our principles and values, and they are evident in all we do. We live our commitments to our shareholders, to our customers, to our people, to our communities and to our business partners.

OUR PRINCIPLES OUR VALUES OUR COMMITMENTS Origin’s Principles provide guidance for making Origin’s Values describe good behaviour: Origin’s Commitments define the outcomes the right decisions: Caring. We care about our impact on that we strive to achieve for key stakeholders. – We conduct ourselves and our business customers, colleagues, the community, We commit to: with due care and in accordance with environment and shareholders. – Deliver market leading performance for relevant laws and regulations. We have an Listening. We listen to the needs of others, shareholders by identifying, developing overriding duty to ensure the health and knowing that an unfulfilled need creates operating and growing value-creating safety of our employees, and to minimise the best opportunities. businesses. the health, safety and environmental Learning. We constantly learn and implement – Create value for our customers, by impacts on our customers and the new and better ways, sharing information understanding their needs and delivering communities in which we operate. and ideas effectively. relevant and competitive energy solutions –We will add value to the resources that to meet those needs both today and into Delivering. We deliver on the commitments come under our control. the future. made in all areas of performance. – The value we create will be distributed to – Create a rewarding workplace for our stakeholders recognising the need to ensure people by valuing everyone’s contribution, the sustainability of our business, and its encouraging personal development, impact on the environment and the recognising good performance and communities in which we operate. fostering equality of opportunity. – We encourage diversity and expression of – Respect the rights and interests of the ideas and opinions but require alignment communities in which we operate, by with the Company’s Principles, Values and listening to them, understanding and Commitments and the policies established managing the environmental, economic to implement them. and social impacts of our activities. – When faced with choices, we make decisions – Respect the rights and interests of our knowing they will be subject to scrutiny. business partners, by working We should be able to demonstrate the collaboratively to create valued and soundness of our decisions to all rewarding partnerships. stakeholders.

Origin Energy sustainability report 2011 1 managing director’s Message

After a decade of continuous growth, major investment decisions in the 2011 financial year led to Origin’s emergence as a leader in both the Australian energy market and the fast-growing coal seam gas industry.

With this greater prominence will come greater interest and closer We also made progress on a range of longer-term renewable and gas scrutiny from many in the community about who we are, what we do opportunities, including exploration and development of geothermal and how we do it. We expect this, and we are confident in our ability resources in Chile and Indonesia, assessment and development of to respond. hydro resources such as the potential Purari Hydro Project in Papua It has always been important to us, but never more so than now, that New Guinea and exploration for gas in the Canterbury Basin in New we honour our principles and values and that we meet the commitments Zealand, South East Asia and Kenya. we make to our customers, our people, our communities, our business As well as leading in a commercial and development sense, Origin partners and our investors. takes great pride in how we go about our business – being particularly In this, our 10th Sustainability Report, we report our progress, and try focused on our customers and the communities in which we operate. to give a flavour of how we go about our business. More detail and a richer representation is available in our online Customer focus report. Underpinning our long-term success is the ability to foresee, understand and meet the changing needs of our customers, large and small. Taking a leadership position Our multi-year Retail Transformation program will deliver simpler In December 2010, Origin announced the acquisition of a portfolio of processes and an integrated billing and customer management energy businesses from the NSW government. Those acquisitions system, facilitating better customer service in the years ahead. were completed on 1 March 2011. Combining the acquired businesses Excellent progress through 2011 meant that at publication of this with our existing business, we have become Australia’s leading energy report all 2.6 million Queensland, Victorian, South Australian and retailer (33 per cent of customer accounts in the National Electricity directly-acquired NSW electricity and gas customers have been Market) and the owner of one of Australia’s largest and most flexible migrated to the new system. Acquired NSW customers of Country portfolios of electricity generation (12 per cent of available capacity). Energy and Integral Energy will be migrated to the new system over the next two years. In July 2011(1), Australia Pacific LNG, Origin’s incorporated joint venture with ConocoPhillips and Sinopec, made a Final Investment Decision Origin remains a leader in product innovation, servicing more than (FID) to proceed with a one-train, 4.5 million tonnes per annum Coal 370,000 GreenPower customer accounts and providing the only green Seam Gas (CSG) to Liquefied Natural Gas (LNG) project with gas product in the Australian market to more than 130,000 infrastructure to support a second LNG train. Origin is the operator of households. Revenue from Origin’s Retail Solutions business, which the gasfields and pipeline for Australia Pacific LNG. includes sales of solar photovoltaic (PV) panels, more than doubled to $445 million. Our tri-generation business won a number of major Since the close of the 2011 reporting period, binding agreements have contracts for energy-efficient power, heat and cooling services to large been signed with The Kansai Electric Power Company and Sinopec to buildings and was named lead partner in a project to deliver against complete the marketing of the second train. Sinopec also subscribed the City of Sydney’s Sustainability 2030 vision. Additionally, Origin has for additional equity in Australia Pacific LNG, which on completion will continued to invest in electric vehicle charging capability, business reduce Origin’s share to 37.5 per cent. Australia Pacific LNG possesses metering and energy efficiency solutions. Australia’s largest Proved plus Probable (2P) CSG reserves, which are reserves likely to be recoverable using standard technical and operating As these product areas mature, the system provided by Retail methods, making Origin a leading player in developing natural gas Transformation will help us provide next generation products and resources in Australia. services. As an example, in May 2011, US Vice President Joe Biden announced a partnership between Origin and Colorado technology Our leading retail and CSG positions are supported by a strong balance company Tendril to launch Australia’s first large-scale pilot of sheet and a range of longer-term growth options. world-class customer engagement technology for the energy sector. Statutory Profit for the 2011 financial year was $186 million, down from Origin will adapt and connect the technology into our new billing $612 million in the prior year. Underlying Profit increased by 15 per cent platform and provide the opportunity for customers to see their and Underlying EBITDA by 32 per cent, with Underlying Earnings Per consumption in real time, and therefore better manage their quarterly Share up 10 per cent(2) to 71 cents. Shareholders received 50 cents per power bills. Origin is committed to being the leading innovator in share in fully franked dividends and for the full year dividend were able providing this revolutionary capability. to engage in a Dividend Reinvestment Plan at a 2.5 per cent discount to the share price. Origin has undertaken a number of capital management activities, raising more than $5 billion in total, which positions us well to fund our share of the Australia Pacific LNG project and other committed projects.

(1) Activity took place after the close of the reporting period. (2) The 2010 EPS has been restated for the bonus element of the rights issues completed in April 2011.

2 Managing director’s message The community’s competing concerns about Our Compass cost, growth and the environment As a bigger company, working in industries of increasing public The cost of living is among the highest concerns of Australian interest, it is more and more important that our people be able and households, with energy cost being one component of that. Prices supported to make good decisions that are respectful of our have risen significantly in recent years, mainly due to the costs stakeholders. incurred by transmission and distribution companies in upgrading and One of the achievements in 2011 I am most proud of was the extending poles and wires networks. These costs make up more than re-consolidation of our Principles, Values and Commitments, alongside half of a retail customer’s bill, and are passed through to consumers a new Purpose Statement into a guiding Compass for the Company. by Origin and other retailers. It formed a major theme of our senior management conference last Wholesale electricity costs have been flat, but this is expected to year and I travelled to all of our major cities to meet with a range of change in the future as the prices of coal and gas as fuel inputs rise managers to discuss what our Compass means to them. in response to international demand and higher production costs. At Origin, we aspire always to lead, in the broad sense of that word. Additionally, the Commonwealth Government’s new carbon price will We make decisions knowing they cannot always be attractive to commence on 1 July 2012 and the price of Renewable Energy Certificates everyone, but that they effectively and appropriately balance the will increase in years ahead. Customers continue to subsidise a variety competing demands that exist for more and cleaner sources of energy of less efficient small-scale renewable and energy-efficiency schemes globally, and a changing social, environmental and technological at state and Commonwealth level. landscape. Our stakeholders can have faith in us that we will make For so long as most renewable technologies remain much more good choices, and we are confident that those choices will stand up expensive than fossil fuels, there will be an essential role for natural to scrutiny over time. gas to play in achieving Australia’s environmental goals. Not only does baseload gas generate electricity with approximately half the emissions of coal, it typically uses only two to three per cent as much water(1) and causes vastly less local air pollution. Australia’s traditional sources of natural gas – such as the Cooper Basin – are in decline. It is a boon for the country that we have a 15-year-old Grant King CSG industry that is capable not only of meeting Australia’s natural Managing Director gas requirements, but of meeting growing global energy demand for electricity generation at lower emissions than produced by coal-fired generation. Like all extractive industries, CSG can have an impact on local communities and the environment. We actively and continuously engage with landholders and communities around our operations in Queensland. Governments in that state have over time introduced strong regulatory regimes and consultation mechanisms to ensure the industry and communities can work together for mutual benefit. We welcome the Commonwealth’s efforts to ensure that all states develop similar processes. We are proud of the relationships we have built up over time with many local communities around our power stations, gas plants and wind farm assets across Australia. Today we have more than 600 land access agreements in place with local farmers. Overwhelmingly we have found that we have been able to work through any concerns with landholders and access the resource on good terms. Communication with unaffected communities around CSG has been more challenging. The CSG industry involves advanced precision engineering, with drilling taking place up to a kilometre below the ground. For those unfamiliar with the technical processes associated with gas extraction, including some media, it raises a number of potential issues and involves numbers and distances and volumes of water, salt and chemicals that can seem large to the uninitiated, but are actually commonplace and in some cases quite minor in the context of significant industries such as gas, mining or agriculture. Investment in communication, and in listening to those people most affected by and most interested in the industry, will always be a priority for Origin.

(1) The technology used cuts annual water consumption to around 200 megalitres, compared to 8,500 megalitres for conventional water-cooled coal-fired power stations.

3 Company Profi le business strategy: Delivering consistent performance and growth through integration

Origin’s strategic focus remains on the competitive segments of the Australian and New Zealand energy markets, with additional opportunities in fast-growing international energy markets.

FUEL GENERATION RETAIL

Origin’s integrated strategy provides a natural hedge against market risks and enhances the range of growth opportunities available to the business.

FUEL GENERATION RETAIL CONTACT ENERGY Origin’s Exploration and Origin has one of Australia’s Origin is Australia’s leading Origin owns a 52.8 per cent Production business targets largest and most flexible power energy retailer with 4.4 million(1) interest in Contact, one of gas resources close to markets generation portfolios with electricity, natural gas and LPG New Zealand’s largest integrated so the Company can quickly and 5,310 MW of owned and customers. Origin is one of energy companies and listed effectively develop and monetise contracted capacity. Origin is the Australia’s largest installers of on the New Zealand Exchange. any discovery. Origin is a leading largest owner and developer of rooftop solar systems and is also Contact has an integrated producer of gas in Australia and gas-fired electricity generation the market leader in green energy position, including an extensive through Australia Pacific LNG, in Australia and among its assets sales with more than half a million portfolio of gas supply holds a share in the country’s is the highly efficient combined GreenPower and green gas arrangements, gas storage, a largest 2P CSG reserves. Together cycle Darling Downs Power customers. Origin also continues diverse and flexible generation with its domestic operations, Station. Fuelled by CSG, Darling to develop new products and portfolio, and a strong retail Origin is working with Downs emits less than half of business lines to give customers position with approximately ConocoPhillips and Sinopec the greenhouse gas emissions of different and more efficient ways 563,200 customers(1) across the in the Australia Pacific LNG a typical coal-fired power station. of using energy, including smart North Island and South Island incorporated joint venture to Origin is also developing a home products and of New Zealand. develop one of Australia’s largest substantial portfolio of renewable business-2-business solutions. CSG to LNG export projects. energy opportunities including To Origin, fuel may also take the wind, geothermal, hydro and form of wind, geothermal, solar photovoltaic energy. hydro and solar resources.

(1) As at 31 December 2011.

4 company profile Business Snapshot as at 31 December 2011

by market S&P/ASX TOP 20 capitalisation

160,000+ shareholders

customers across 4.4 million Australia

green energy Market leading provider

owned and contracted 5,310 MW generation capacity

interest in Contact Energy, 52.8% New Zealand

5,600 employees(1)

RENEWABLE Australia, Chile, Papua New Guinea OPPORTUNITIES and Indonesia

(1) Excluding Contact Employees as at 31 December 2011.

Origin Energy sustainability report 2011 5 Map of assets and operations

Origin has an extensive portfolio of assets and operations in Australia and New Zealand, with additional opportunities in fast-growing international energy markets.

6 company profile Our 5-Year Sustainability Objectives

In 2007, we set ourselves a series of 5-Year Objectives to help deliver on the commitments we made to each of our key stakeholder groups at that time – customers, communities, employees and investors. We also laid out 5-Year Strategies to meet these objectives. Looking back over the fourth year of our journey, we report our progress against the strategies in four sections – Our Customers, Our Communities, Our Employees and Our Investors. In re-consolidating our Compass during 2011, we recognised the importance of our business partners as a key stakeholder. When we outline the next phase of our sustainability journey in 2012, we will include our business partners.

E IC NVI OM RON ON ME EC NT

Objective Objective To provide To reduce the sustainable greenhouse gas returns to intensity of our Origin’s key customers’ energy economic consumption. Objective stakeholders. S L O A To eliminate or I C C I A O manage hazards S S L and practices in our TOR VES IN C business that could US TO cause accident, injury M E R or illness to people, S damage to property or unacceptable Objective impacts on the To maintain environment. community support and goodwill for the Company’s

activities. S

Objective E E

To provide and Y

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L

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maintain a satisfying S

L

O

M

A

E

C

I and rewarding

I C

A

O work environment L S for all employees.

S IE IT N U M Objective M CO To take all feasible steps to eliminate or minimise any adverse Objective impact that our activities To reduce the have on the environment. greenhouse

E gas intensity of our N T V energy production N IR E O M N and distribution N M RO EN and non-producing I T NV assets. E

Origin Energy sustainability report 2011 7 Our Customers

Our Commitment: Create value for our customers, by understanding their needs and delivering relevant and competitive energy solutions to meet those needs both today and into the future.

With 4.4 million customers, Origin is now Australia’s leading energy retailer

8 our customers In the 2011 financial year, Origin became Australia’s largest energy retailer with 4.4 million customers, following the acquisition of the Integral Energy and Country Energy retail businesses. Origin also holds a 52.8 per cent interest in Contact Energy, which has more than 560,000 customers in New Zealand.

In 2007, we set ourselves two customer-related objectives for the ensuing five years: – To reduce the greenhouse gas intensity of our customers’ energy consumption; and – To maintain community support and goodwill for the Company’s activities. To deliver on these objectives, we laid out four 5-Year Strategies, which we report against in this section.

5-Year Strategies 1. Be recognised as the leading provider of green energy 2. Increase our sales of low carbon intensity products to 10 per cent products. of our total supply chain greenhouse gas emissions by 2012.(2) Origin is proud of its continued market leadership in providing green In the 2011 financial year, Origin improved sales of low carbon intensity energy solutions to Australians. At the close of the 2011 financial year, products as a proportion of total retail sales revenue by three per cent on Origin had approximately 505,000 green energy customer accounts, the prior year and we are recognised as genuine leaders in this market. three per cent less than the prior year – 373,000 GreenPower electricity The sales value of low carbon intensity products all increased – including customers and 132,000 green gas customers, noting Origin is the only GreenPower, green gas, solar PV systems and co-generated electricity, provider of a green gas product. The reduction in GreenPower while the sale of carbon offsets decreased. Growth was driven customer numbers reflects a contraction of the total GreenPower primarily by the solar business which doubled revenues to $440 million market as customers moved away from premium priced green energy and completed 36,840 installations, a 466 per cent increase on the options and towards discounted energy products, most likely as a 6,449 installations completed in the prior year. Origin is the largest result of carbon uncertainty, cost of living pressures and in particular, installer of solar PV in Australia. rising energy bills. Over the past four years, Origin has continued to grow the proportion Over the past four years, Origin has grown its GreenPower market of retail revenue represented by low carbon intensity products, which share almost every year and did so again over the past 12 months, has now significantly exceeded the target set in 2007. This is a result mainly due to the addition of new GreenPower customers acquired of the Company’s investment in innovation in this market and its through the acquisition of the NSW energy businesses. Origin’s commitment to helping customers develop a view of energy solutions GreenPower market share is almost four times that of our nearest beyond that of a basic commodity. competitor. Origin acknowledges that the growth of solar in particular has been Looking forward, Origin will seek to build further on its leadership stimulated by favourable state energy policies which provided in green energy solutions. In particular we will be working to better attractive feed-in tariffs to customers and that these have since been understand how green energy products continue to add value in a reduced or removed. Notwithstanding this lessening of support, Origin market where carbon is priced. continues to see strong medium and long-term growth in this market and continues to focus on innovation and product development to drive growth. (1) 58 18 48 15 38 33 10

30 Target 10% (1) 5 16

Nearest competitor 0.5

07 08 09 10 11 11 07 08 09 10 11

GreenPower market share (%) Retail revenue represented by low carbon intensity products (%)

(1) GreenPower market share for Origin and nearest competitor include customer (2) This target has been re-stated to focus on increasing the take up of low carbon accounts acquired through the sale of NSW energy assets. intensity product options by our customers.

Origin Energy sustainability report 2011 9 Our customers

3. Lead industry policy on access and hardship response. 4. Reduce Ombudsman complaints by 30 per cent from 2007 In the past year, there has been an increase in the number of levels by 2012 and proactively resolve customer complaints. customers who have contacted Origin to discuss difficulty in paying In 2011, customer complaints rose to 5.5 per 1,000 customers, up from their energy bill. At the close of the 2011 financial year, 8,537 customers 4.0 last year. This increase is consistent with the trend of rising were being financially supported under a specialised payment plan – a Ombudsman complaints across the energy industry, driven by factors significant increase on the 6,253 customers being similarly supported including an acute focus on energy prices, the smart meter rollout in in the prior year. Origin provided more than $2.8 million to customers Victoria and the large increase in solar PV installations nationwide. in payment support through a combination of payment plans and Complaints have consistently risen over the past four years, making energy efficiency programs. it increasingly unlikely that we will reach our five year target of We carried out 880 home energy audits during the year, almost 200 reducing Ombudsman complaints from 2.2 complaints per 1,000 more than the prior year, helping customers identify energy saving customers to 1.5 by 2012. Since the target was set in 2007, Origin has opportunities within their homes and providing more than $89,000 acquired large customer bases in Queensland (2008) and NSW (2011), worth of energy efficiency items as a part of this service. Participating and at the same time we have seen far greater interest and scrutiny customers saved approximately $335 off their energy bills annually. on the cost of living, including power prices, and the energy sector The increase in customers using payment support over the past few in general. years coincides with an increasing focus on cost of living pressures and Despite the recent trend, Origin remains committed to reducing the in particular, rising power prices. Despite the fact that the average number of complaints received over time. As well as seeking to reduce Australian household still spends the same percentage of household or eliminate the issues prompting customer complaints within our income on electricity today that it did 10, 20 and 30 years ago(1), we control, we continue to work to improve the overall customer recognise that some customers continue to experience genuine experience. Over the past few years we have invested in a major hardship and struggle to pay essential bills such as energy. transformation of our billing systems to enable us to deliver a more We will continue to offer support to those people through our streamlined and efficient service to our customers. We have made hardship program, Power On. significant progress since the close of the reporting period, with four Looking ahead, we will continue to work more closely with our large-scale customer migrations successfully completed to move community partners to help customers identify opportunities 2.6 million pre-NSW acquisition customers to the system. The to improve their energy efficiency and save on their energy bills, remaining acquired NSW customers will be migrated to the new particularly through carrying out energy audits. system over the next two years and following this, we expect to see improvements reflected in the number of complaints received. More specifically, we also have an aspiration to resolve our customers’ needs the first time they call. Our employees commit to getting it right the first time, by taking the time to understand the customer’s issues and ensuring they remain up to date with Origin’s products and solutions so they can do their best to resolve the customer’s enquiry. 5.5 4.0 3.9 2.2 2.2

Target 1.5

07 08 09 10 11

(1) Source ABS, 6 September 2011. Number of Ombudsman complaints per 1,000 customers

DISCOVER MORE ONLINE

Discover more about how we are working to deliver on our commitment by visiting our Sustainability Report online. See how we are: – Setting an example as Australia’s leading energy retailer; – Transforming our ability to deliver sustainable long-term improvements in customer service through our Retail Transformation project; and – Continuing to invest in new products to enable us to better meet the changing energy needs of our customers. Visit Origin sustainability reporting online at http://reports.originenergy.com.au

10 our customers CASE STUDY: Helping customers take charge of their energy bills

As power prices rise due to necessary investment in the poles and While smart home solutions and energy efficiency tips help many wires that transport electricity to homes and the impact of climate customers, there are others suffering financial hardship who need change policies such as the carbon price mechanism, many customers support to pay their energy bills. Origin offers industry leading are experiencing bill shock and some are genuinely struggling to pay financial hardship programs which help customers by developing their higher bills. payment plans, commissioning energy audits and aiding customers A study conducted by McCrindle Research for Origin during 2011 in accessing relevant government assistance. revealed that customers felt powerless about their rising bills and Reflecting increased cost of living pressures, over the past year, were struggling to see how making small changes to their behaviour the number of customers who have contacted Origin to discuss could reduce their energy consumption, and in turn, their bills. their difficulty in paying their energy bill increased and more than Origin is pursuing a number of initiatives to help customers better $2.8 million was provided in payment support. understand and manage their energy use. The Origin website is a great resource for customers wanting to learn how to save energy and money and reduce carbon emissions. Origin’s energy efficiency ambassador, Anne Armansin conducts at-home energy audits and provides practical, easy to understand energy advice online. Origin is also pioneering the development of home energy management solutions in Australia, signalling the beginning of a very different relationship between customers and energy retailers. Using Origin’s home energy management solution, home electricity usage can be read, measured and uploaded to an online portal, accessible remotely. Customers will be able to view in real time how much energy they are using and what it is costing them, and consequently make changes to their behaviour to keep consumption and bills down. The technology is currently being trialled in Victoria. Easier to read bills help customers manage their energy use

CASE STUDY: Origin set to deliver improved customer engagement

Origin’s retail business has grown significantly over the past 10 years, Retail Transformation will also deliver efficiency improvements, driven by both organic growth and acquisitions. In the past year alone, strongly positioning Origin for future growth. With 4.4 million Origin’s customer base increased by 1.6 million customers through the customers across Australia, implementation of Retail Transformation acquisition of the Integral Energy and Country Energy retail business presents significant technical and logistical challenges and has – in the process making Origin Australia’s largest energy retailer. This therefore been pursued in a staged manner. growth has brought with it both opportunities and challenges. In June 2011, 300,000 South Australia customers were transferred. For example, data collection and processes were inconsistent across Initial performance exceeded expectations with call centre average the businesses we acquired. This created challenges for call centre handling times consistent with, and in some cases less than, legacy operators who often needed to switch between different systems in systems. Business operations continue to be stable and there have order to resolve customer enquiries regarding natural gas, electricity been no significant customer or regulatory issues to date. We are now or solar bills. focused on training and up-skilling our staff to work with the new Recognising these challenges, Origin launched its Retail Transformation system and processes to ensure a smooth transition across all states. project in 2008. Retail Transformation focused on integrating all of By the end of the project, we will have trained more than 1,000 Origin’s customer relationship management processes and systems. support personnel, ensuring we have the capacity to meet our service A new state-of-the-art SAP-based system replaces outdated billing level targets. systems, as well as introducing more sophisticated, integrated, The project has an added benefit of driving better engagement of our customer friendly solutions that will improve business capability. call centre employees, with a recent survey revealing a 16 per cent The project underpins a major commitment to changing the way increase in engagement and a two per cent decrease in turnover rates. Origin engages with customers, in the process significantly improving UPDATE: Following the close of the 2011 reporting period, all Origin the experience we provide to them. The new system will deliver call customers in Queensland, Victoria, South Australia and a small centre staff relevant and more detailed customer information on a number in NSW were successfully migrated to the new system. single screen which will enable our team to respond more quickly and The 1.6 million customers acquired through the NSW acquisitions effectively to customer enquiries, and as much as possible, provide will be transferred to the new system over the next two years. solutions within the one call.

Origin Energy sustainability report 2011 11 Our communities

Our Commitment: Respect the rights and interests of the communities in which we operate, by listening to them, understanding and managing the environmental, economic and social impacts of our activities.

Origin’s broad range of activities bring it into contact with diverse stakeholder groups

12 our communities The breadth of Origin’s activities brings us into contact with a diverse range of communities. We engage with community representatives ranging from governments and media through to non-government organisations, local community groups and individuals.

In 2007, we set ourselves three objectives in relation to communities for the ensuing five years: – To take all feasible steps to eliminate or minimise any adverse impact that our activities have on the environment; – To reduce the greenhouse gas intensity of our energy production and distribution and non-producing assets; and – To maintain community support and goodwill for the Company’s activities. To deliver on these objectives, we laid out a series of 5-Year Strategies, which we report against in this section.

5-Year Strategies 1. Contribute to a policy and industry response to climate change 2. Reduce the greenhouse gas emissions intensity of our that delivers an effective pricing regime for carbon. electricity supply chain to 10 per cent less than the National In recent years there has been significant uncertainty in Australian Electricity Market by 2020. public policy matters, in particular carbon policy. Origin’s diverse and In 2011, the emissions intensity of our electricity supplied to customers integrated Australian business is well placed to manage policy was 4.9 per cent below the National Electricity Market (NEM), an uncertainty around carbon and we continued to advocate for policy improvement on the prior year’s result of 2.6 per cent.(1) The improvement certainty in this and other areas during 2011. was due to higher utilisation of Origin’s CSG-fuelled Darling Downs As a long time supporter of an emissions trading scheme, Origin Power Station. Origin is proud of the standard set by its combined welcomed in 2011 the passage of the bills necessary to make it happen. cycle Darling Downs Power Station, which is one of the cleanest The trading scheme at the heart of the Commonwealth Government’s baseload power stations in Australia, emitting less than half of the (2) Clean Energy Future package benefits from years of work by Australia’s greenhouse gas emissions of a typical coal-fired power station and (3) experts in designing a market based approach to reducing emissions. using roughly three per cent of the water . Origin contributed to this activity, particularly through representation This year we did not meet our predicted outcome of achieving supply by our Managing Director Grant King on the Government’s Climate chain emissions intensity nine per cent below the NEM, due to lower Change Business Roundtable advising on the design of a carbon price than expected production from Darling Downs and the impact of a mechanism. The scheme starts on 1 July 2012 with a fixed price period, large increase in total customers from the acquisition of the Country starting at $23 per tonne of carbon. Energy and Integral Energy retail businesses. We believe it is important that the clean energy transformation is Our progress since we established the target in 2007 has been pursued in an economically responsible manner with minimum significant, improving from a supply chain emissions intensity that market distortions. The effective implementation of the carbon price was 0.4 per cent below the NEM, to 4.9 per cent today, and taking us is central to achieving this aim and interventions such as the price almost half way towards our target by 2020. We have continued to floor in the floating price period and restrictions on the use of lower the emissions intensity of our generation sites despite a large international permits should be minimised to encourage efficient increase in production, and our emissions intensity has also been outcomes. Compensation for Emissions Intensive Trade Exposed impacted by the increased purchase of NEM electricity to meet the Industries should maintain international competitiveness, especially needs of a larger customer base through retail customer acquisitions important considering that global action on pricing carbon is in Queensland (2008) and NSW (2011). progressing slowly. Parts of the clean energy transformation other than the carbon price such as the Clean Energy Finance Corporation and Energy Savings Initiative, should be implemented so as to Target 10% minimise the cost impact on customers and any distortionary effects on energy markets. Since the passing of the scheme, Origin has actively focused on

implementation and compliance. The business is working to establish 4.9 the significant systems and processes that will support us to meet our carbon liabilities from 1 July 2012. 2.6 Simultaneously, Origin continued to advocate, directly and through 0.7 0.4 industry associations, that in Australia’s deregulated energy markets, 0.3 the national emissions trading scheme should be supported by a 07 08 09 10 11 limited number of complementary policies. We advocated on reviewing and rationalising the plethora of federal and state based Emissions intensity of supply chain below the NEM since 2007 (%) complementary climate change policies including energy efficiency and solar feed-in tariffs. We also contributed to the development of key complementary policies including the Large-scale Renewable (1) Based on Origin’s estimate of the full fuel cycle of NEM generation and Origin Energy Target (LRET), Small-scale Renewable Energy Scheme (SRES), operated generation. The methodology incorporates NEM purchases and Origin operated generation only. the Carbon Farming Initiative and the National Carbon Offset Standard. (2) Darling Downs is capable of supplying enough electricity to power more than 400,000 homes per day. This is based on an average Queensland household which consumes 30 kWh/d and output from Darling Downs of 500 MW, though the power station can produce up to 630 MW. (3) The technology used cuts annual water consumption to around 200 megalitres, compared to 8,500 megalitres for conventional water-cooled coal-fired power stations.

Origin Energy sustainability report 2011 13 Our communities

3. Reduce the greenhouse gas emissions intensity of our gas Three hundred hectares of Pongamia trees planted at Spring Gully production by 15 per cent by 2012. are now more than one year old and are taking water from the We again exceeded this target in 2011, with an emissions intensity Spring Gully Reverse Osmosis plant. 44.5 per cent lower than the intensity reported in 2007. In 2007, the Over the past year Origin, through Australia Pacific LNG, has worked emissions intensity of our gas production was 11.0 ktCO2-e/PJe and with Australia’s leading science body, the CSIRO, to form a new this year it was 6.11 ktCO2-e/PJe. research alliance to continue to pursue industry-leading research on The continuing improvement in the emissions intensity of our gas CSG water. The Gas Industry Social and Environmental Research production can be attributed to the ramping up of our CSG production Alliance (GISERA) will conduct impartial and independent scientific facilities including Talinga in Queensland, the Kupe natural gas research into social and environmental issues arising from the gas production facility in New Zealand and taking over the operation of industry. Surface and groundwater research undertaken by the Otway gas plant in Victoria. These have positively impacted our the Alliance aims to enable the CSG-LNG industry to plan and manage overall emissions intensity profile. water resources according to the Integrated Water Resource Management framework promoted by the Global Water Partnership(1). Looking ahead to completion of the 5-Year Strategy in 2012, we expect to continue to meet and exceed this target. For more information see the GISERA website: http://www.gisera.org.au/ 6. Rehabilitate or look for opportunities to offset land we have disturbed. 44.5 In 2011, we disturbed 112 hectares of land and rehabilitated 58 hectares, achieving a ratio of rehabilitated land to newly disturbed land of approximately 52 per cent. This is lower than the ratio of 61 per cent 27.4 reported in the prior year. We did not achieve the target set last year of a ratio of 65 per cent or better as we were impacted by the floods 15.0 in Queensland and our development activities continued to increase, Target 15% particularly around our CSG operations and the Mortlake Power 9.1 Station, as we seek to meet the growing demand for cleaner energy.

0 While we did not meet expectations this year, we continue to 07 08 09 10 11 implement new strategies to minimise and manage our land Reduction in emissions intensity of Origin’s Australian gas disturbance and rehabilitation. We have recently implemented production since 2007 (%) innovative new hybrid drilling rigs for our CSG operations which we expect will disturb around one tenth of the land area of conventional drilling rigs. The hybrid rigs are much smaller and lighter than 4. Reduce or offset all greenhouse gas emissions from our conventional rigs and are easily portable, which means they can be non-energy producing sites. deployed in most locations without the need for development of Using a mix of GreenPower and approved carbon offsets we offset 100 access roads or grading thereby minimising land disturbance. This is per cent of greenhouse gas emissions from our non-energy producing the first time the purpose-built rigs from Canada have been used in sites. Australia and follows a comprehensive two-year global study into As committed in our last report, we purchased GreenPower to offset drilling best practice. 20 per cent of the greenhouse gas emissions associated with We have also delivered added benefits in the form of offsets through electricity consumption in our offices, shops and LPG terminals during our management of CSG water, as described in the previous section. the first half of the year. A variety of carbon offsets were surrendered At Talinga we are using treated CSG water to irrigate plantations to offset the remaining 80 per cent of emissions (including all business of broad acre crops including sorghum and wheat adding to local travel emissions). We will offset all calendar year 2011 emissions from agricultural productivity. At Spring Gully we are using treated water our non-energy producing sites with 90 per cent voluntary offset to irrigate a 300 hectare plantation of Pongamia trees, chosen in part certificates and 10 per cent GreenPower. for its potential as a biofuel. Looking ahead we will continue to innovate and pursue best practice 5. Identify opportunities for the reduction and re-use of waste. operating procedures to minimise our land disturbance and improve Origin is committed to minimising the consumption and production rehabilitation. of waste materials wherever possible across all business units, and implementing plans to manage and reduce waste. Further to our commitment in this area, we have developed and begun to implement a CSG Water Management Strategy. Early work in this area includes the development of several projects for the beneficial use of treated water to irrigate crops. A key feature of the strategy is a water reinjection study which will investigate the feasibility of taking water produced when extracting CSG and reinjecting it into suitable underground aquifers. During 2012, we will conduct reinjection trials at Spring Gully and other sites. Negotiations are also underway to supply some treated water to landholders for irrigation as well as the provision of treated water for industrial use. The strategy also involves the release of some treated water into the Condamine River, in line with strict environmental approvals and guidelines. (1) The Global Water Partnership (GWP) is an international network of development agencies, country members, research organisations and NGOs that offers practical advice for sustainably managing water resources.

14 our communities 7. Actively consult with the community at all locations where Often working closely with local councils, the Community Reference Origin has a material impact. Groups (CRGs) meet on a regular basis and provide the opportunity for We continued to listen to and learn from local communities around community members to raise issues, ask questions and be informed our major operations and development projects this year. Origin’s new about construction or operational updates. In addition to Origin, the Community Engagement Directive shaped our approach in this area, groups are made up of landholders, community members, council defining our process for engaging effectively with communities representatives, construction contractors, and other interested parties impacted by our activities. such as community groups, regulators, government departments, and scientific experts. We participate in CRGs at Mortlake, BassGas, Otway, Through our people and project teams associated with Otway, and at our Ironbark CSG development project. In Townsville we work BassGas, Cullerin Range Wind Farm, our gas fired power stations with the Council on their Together Townsville Project which identifies at Uranquinty, Darling Downs, Ladbroke Grove and Mt Stuart, and opportunities for supporting relevant initiatives and at Cullerin Range our development projects at Mortlake, Stockyard Hill, Crystal Brook, we run a Community Investment Committee. Big Hill (Kerrawary Power Station) and Tara (Ironbark Project) we have worked to raise our presence and availability in local communities The benefits of clear and detailed communication with communities as well as address community concerns where necessary. at all stages of a project can be seen at Stockyard Hill, which received state and federal approvals in 2011. Origin’s approach to consultation We are also implementing this engagement process across our received recognition in local media and now that the project has been interests around the world by working with our international joint approved we will move to a formal CRG for the Stockyard Hill Wind venture partners to establish processes for consulting communities Farm in 2012. affected by our projects in their earliest stages. Over the coming year we will increase this engagement, particularly for our activities in Regional Community Consultative Committees (RCCCs) have been Papua New Guinea, Indonesia and Chile. established for our Australia Pacific LNG project, with the Roma Committee established in partnership with another CSG industry Active consultation continued in the south central Queensland gas proponent. fields around our Australia Pacific LNG project. The planning process for the location of wells for this project is a prime example of our Towards the end of the year, we took steps to increase communication efforts to maintain open lines of communication. When planning with communities regarding our CSG operations, acknowledging this locations for wells, Origin works closely with landholders to ensure is an area that requires greater effort, particularly to provide balance wells are located in convenient places that pose minimal disruption in the public debate. We conducted the largest core study ever to farming operations. undertaken targeting groundwater knowledge in the Surat Basin, a sub-basin of the Great Artesian Basin, and toured the resulting 8. Achieve positive community relationships through regular, 12 tonne core sample throughout the gasfields in Queensland and to open and transparent communication with host communities. Canberra, informing the community, policy makers and the media on As a company, working in industries of increasing public interest, the natural safeguards provided by the geology of the Great Artesian it is important that we make decisions that appropriately balance Basin, separating our activity from aquifers. The core and other work the interests of our stakeholders, particularly the communities in undertaken by Origin and other CSG proponents is helping to make which we operate. We care what communities think of us and we the Great Artesian Basin one of the best understood underground make a concerted effort to actively engage and consult with water resources in the world. communities regarding our activities, forming relationships based In addition to the open, regular and transparent communication on open and transparent two-way communication. Community afforded by CRGs, Origin has held open days, tours, information days Reference Groups (CRGs) form an important part of our positive and barbecues, and produced and delivered information newsletters working relationships with communities. and fact sheets for projects and developments, met with landowners and neighbours, delivered presentations to councils and community groups, and responded to complaints and feedback.

DISCOVER MORE ONLINE

Discover more about how we are working to deliver on our commitment to communities, by visiting our Sustainability Report online. Additional information includes: – Our compliance with regulatory standards, a breakdown of our greenhouse gas emissions and a summary of key waste and water management initiatives; – Examples of where we are helping to make a positive contribution to the communities in which we operate; and – Case studies demonstrating our actions to improve environmental performance. Visit Origin sustainability reporting online at http://reports.originenergy.com.au

Origin Energy sustainability report 2011 15 Our communities

CASE STUDY: Responding to the community about coal seam gas

The development of the CSG industry has attracted considerable community and media attention. Some of the concerns about CSG have been raised as a result of a lack of accurate information about the industry. In order to contribute to a more balanced public debate, Origin is making an effort to provide accurate facts about the Australia Pacific LNG project. CSG is a safe and reliable energy source which for 15 years has been used every day to power homes and cook meals in Queensland. Following, we seek to answer some of the common questions raised about the industry. Q: CSG is a new industry and I hear there are risks, how do we know if it is worth it? A: CSG is a safe and reliable energy source and Origin has been producing it in Queensland for more than 15 years – the longest track record of any CSG company. CSG is already a major provider of energy to Queensland, supplying around 90 per cent of the State’s gas demand and fuelling about 15 per cent of its electricity capacity. To ensure sustainable development, the industry is heavily regulated. Origin’s project alone complies with or exceeds more than 1,500 state and federal government conditions, over and above existing Stuart Gray, Origin Farm Manager Monreagh, one of the examples regulations. of CSG coexisting with agriculture Q: Will CSG drain the Great Artesian Basin (GAB) of water? A: CSG’s impact on the GAB has been greatly exaggerated. The Q: How adequate is the science behind CSG development? industry’s water extraction is minor compared to current and historic A: Extensive technical studies and strict regulations have been applied GAB extraction and is comparable to many existing industries, including to the CSG industry. The Australia Pacific LNG project has undertaken farming. The annual extraction of water at the peak of the industry’s a major environmental impact statement (EIS), which built on existing production is equivalent to taking five litres out of an Olympic-sized research and regional studies, and included a wide range of technical swimming pool. studies which took more than 10,000 field hours to complete, using Origin’s handling of water is strictly regulated and monitored. Like other recognised experts and consultants. The CSG industry is subject to CSG companies, we share our water knowledge with the Queensland very strict regulations and controls by the Queensland and Australian Government and in doing so help to vastly increase scientists’ governments, providing confidence that the project will meet strict understanding of the GAB, making it one of the best understood environmental standards. underground water resources in the world. Q: Will CSG extraction impact prime agricultural land? Q: Will CSG contaminate drinking water supplies? A: CSG can, and in much of Queensland already does, coexist with rural A: Suggestions that CSG will pollute drinking water are not accurate industries and does not pose a threat to Australia’s food production. for a number of reasons. During extraction water is only taken from The vast majority of Origin’s CSG operations are on grazing land – not coal seams – not from aquifers commonly used for local water supply. strategic cropping land. Importantly, each well takes up a relatively There are also natural geological barriers, for example hundreds of small area, roughly half the size of a netball court, so farming activities metres of very low permeability rock, which separate the coal seams like cattle grazing and cropping can continue around the wells largely and the commonly used groundwater supply aquifers. Our wells are undisturbed once they are in production. When planning locations for designed to very strict standards, with layers of cement casing wells, Origin works closely with landholders to locate wells in separating the wells from the surrounding environment. convenient places that pose minimal disruption to farming operations. On land Origin owns, we are actively demonstrating that CSG can Q: Is all CSG extracted by fraccing? co-exist with agriculture, see Monreagh case study on page 17. A: A large number of CSG wells do not require fraccing. Fraccing is only used where the flow of gas needs to be improved. Only a small number Q: Are farmers powerless to stop CSG development on their land? of wells have been fracced to date. A: All of Origin’s activities are carried out with the agreement and consent of the owner of the land and we do not enter a landowner’s Q: Does fraccing use massive amounts of secret chemicals? property without a signed agreement. We are committed to building A: More than 97 per cent of the liquid is water and sand. Any additives informed, transparent, lasting relationships with our landowners and used are clearly listed on our website. The tiny amount of additives in over 15 years have found that overwhelmingly we have been able to fraccing include substances common in things we eat or wash with access the CSG resource in a way landowners are comfortable with. almost every day, including toothpaste, soap, cleaning products and We currently have more than 600 active land access agreements in place. vinegar. The additives are entirely safe in the tiny amounts used by us.

16 our communities CASE STUDY: Natural gas a breath of fresh air for working farms

When you mention the CSG industry, people generally don’t think of At Monreagh, which already has a number of wells and over time will a CSG company running farming operations. The reality is, Origin is a have up to 20 wells, Origin has established an ongoing irrigation and major landowner in Queensland and as a direct result of that ownership, land management strategy that will see thousands of litres of treated is also a farmer. Origin owns more than 65,000 hectares of agricultural water piped in from the nearby Talinga water treatment plant and land. On this land, we will drill wells that extract natural gas from coal used to irrigate crops including wheat, mung beans, chickpeas, lucerne seams 200 to 1,000 metres underground. and sorghum. The outputs will be marketed locally and all supplies will Like any landholder we face a range of challenges every day in also be locally purchased. managing our properties – clearing, back-burning and mending fences The property is also grazed by more than 4,000 head of cattle run to name a few. With large parcels of land under our management, in joint venture with a local farmer, with both parties sharing the we have a responsibility to maintain production on our farms and financial benefits. ensure they continue to contribute to the productivity of the local A live-in manager, employed by Origin, supervises the property. A number agricultural industry. of people from the local community are also employed, including a A CSG well can generally be located around farming operations to stockman, Wayne McLennan, who musters the cattle. minimise disruption to other activities like broad acre cropping or Until now, Monreagh has operated at the mercy of the elements, grazing. On our own properties, and on the properties of many of our with times of severe drought taking a heavy toll on the land. The new landholders, for the 15 years we have been producing CSG we have irrigation program will effectively drought-proof Monreagh, allowing found both activities can genuinely and productively co-exist. We are it to produce crops and maintain cattle even in times of drought. actively demonstrating this on our Monreagh property southwest of Chinchilla. Origin’s Land and Water Supervisor Ronald Thompson said, “Monreagh has produced bumper crops from the 400 hectares of wheat and oats planted through winter. “Monreagh station, which comprises 1,100 hectares of farmland, is proof that gas and agriculture can not only ‘co-exist’, but also actually work well together. It’s a very significant parcel of land for both gas and agriculture,” he said.

CASE STUDY: Sun shines on Uranquinty Community Hall

When making financial contributions, Origin aims to tailor investment environmental footprint, as it avoids the production of more than to the unique needs of the community. In 2011, we worked closely with 70 tonnes of greenhouse gas over the life of the system(1). members of the community surrounding Uranquinty Power Station to Former Chair of the UPA, Bruce Harris said the initiative has understand the key local challenges and how we could contribute to demonstrated Origin’s long-term commitment to the Uranquinty initiatives that would really add value. community. Located 15 kilometres south of Wagga Wagga, Uranquinty has a “Origin is now considered very much part of the Uranquinty population of less than 1,000 people and often struggles to find the community. resources to support community activities. One of the community’s “As a very small community organisation, it’s not often that the UPA most important resources is the Uranquinty Community Hall. The has the opportunity to form such a significant partnership, especially Wagga Wagga City Council owns the hall and Uranquinty Progress one that delivers so many long-term benefits. Not only is this helping Association (UPA) funds its ongoing running and maintenance costs. us to pay our power bills for the next year, but it means these costs After discussing the challenges facing the UPA, we decided that the will continue to be covered,” Mr Harris said. best way to provide support was to do what we do best; provide “The legacy of Origin’s contribution will last well into the future,” energy solutions. We arranged a solar partnership with the UPA, he said. whereby Origin installed a 2.3 kilowatt solar electricity system on the roof of the hall. The benefits of the solar partnership to the UPA are Following the success of this project, Origin is preparing to offer a solar threefold. Firstly, it will help pay their power bills. Secondly, it provides partnership on an annual basis to not-for-profit organisations within an income stream, because the UPA is paid a premium for the the local region. electricity generated by the system that is fed back into the grid. (1) Based on 2.3kW system producing 3.1782 MWh generation per annum. With a System Depending on the UPA’s energy consumption, this could generate life of approx 25 years, total generation equals 79 MWh. 1 MWh is equal to 1 tonne up to $2,000 per annum. Finally, it enables the UPA to lower its of CO2 emissions hence the system saves more than 70 tonnes of CO2 emissions.

Origin Energy sustainability report 2011 17 Our employees

Our Commitment: Create a rewarding workplace for our people by valuing everyone’s contribution, encouraging personal development, recognising good performance and fostering equality of opportunity.

Origin employees at the Spring Gully Gas Plant, Queensland

18 our employees Consistent with the growth of the business, the number of people employed by Origin has grown over the past year. Origin had 5,213 employees at the end of the 2011 financial year, an increase of 19 per cent or 821 people on the prior year, reflecting expanded operations and project activities in Upstream, Australia Pacific LNG, Generation and in Retail. Approximately 92 per cent of our workforce is engaged full time. Voluntary employee turnover, which includes our customer contact centres, was running at 16 per cent per annum at year end, approximately one percentage point above the five-year average. In addition to employees, there were 3,798 contractors engaged in our activities at year end, a small decrease on the prior year.

In 2007, we set ourselves two employee-related objectives for the ensuing five years: – To provide and maintain a satisfying and rewarding work environment for all employees; and – To eliminate or manage hazards and practices in our business that could cause accident, injury or illness to people, damage to property or unacceptable impacts on the environment. To deliver on these objectives, we laid out a series of 5-Year Strategies which we report against in this section.

5-Year Strategies 1. Achieve a Total Recordable Injury Frequency Rate of 4.0 2. Eliminate barriers to employment, development and by 2012. workplace opportunities so that our workplace attracts and While many of our business units showed a positive change in the represents diversity from the communities in which we operate. Total Recordable Injury Frequency Rate (TRIFR), a reflection of their We recognise that employing and partnering with a diverse range of commitment and hard work during the year to improving safety, people will give us access to a range of perspectives to make the best company-wide we recorded a TRIFR of 6.0, well above our target of decisions today to create value for our stakeholders now and into the 4.9 for this year. A number of our employees and contractors sustained future. injuries while at work. During the year we developed a Diversity and Inclusion Policy which This result prompted us to reassess our approach to safety and look aims to create an environment in which individuals are involved, for a measure which would encourage us to be more alert to potential supported, respected and connected. We placed a gender lens on our risks before they result in incident or injury, as well as promoting more recruitment processes by committing to including the best female conversations within the business about keeping each other safe. candidates on short lists. Since tracking this, from October 2010 to We have adopted Observations as a lead indicator to drive behavioural June 2011, 43 per cent of people recruited to join Origin were women. change across our company. We have set a 2012 target for Observations Gender strategies have also been implemented in our graduate and we are tracking well towards achieving it on the way to our long-term recruitment. Our latest graduate intake had an equal representation aspiration of a harm and injury free workplace. of males and females. We continued to focus on increasing the number of women in management roles and under-represented roles Sadly, in February 2012, after the reporting period, a road accident in and we have been working with senior managers to raise their the Papua New Guinea Highlands resulted in the death of one of our awareness of their own potential unconscious biases. Origin colleagues. This is a stark reminder of the importance of safety and we continue to make it our first priority. At Origin, we recognise the employment opportunities our business activities bring to the communities in which we work. We have introduced improved methods of attracting new employees from local communities including talking with graduates at local career fairs and maintaining ongoing contact with prospective local employees in key 16.3 skill areas. Our work on an Indigenous engagement strategy continues. This year we commenced discussions with government agencies and training

9.1 providers to develop training programs targeting Indigenous people 8.5 within our areas of operations. 6.0 5.6 In the coming year we will continue to measure our performance in Target 4.0 this area against targets including remuneration equity and gender equity in underrepresented roles.

07 08 09 10 11

Total Recordable Injury Frequency Rate

Origin Energy sustainability report 2011 19 Our employees

3. Maintain a working environment in which our employees are 4. Encourage and recognise employee-led sustainability engaged, believe Origin is a great place to work and recommend initiatives. Origin as a great place to work. As anticipated in last year’s report, the establishment of the Origin Since we first measured employee engagement across Origin in late Foundation in 2010 led to significant opportunities for our employees 2008, we have seen some improvements, including a 15 per cent to take part in skilled volunteering. Skilled volunteering provides increase in engagement in our Retail business. This strong result was Origin Foundation partners with access to professional services that achieved during a time of significant growth for the business and in may otherwise be beyond their reach. At the same time, employees the midst of the major transformation of our business and customer benefit from the opportunity to develop personally and professionally. relationship management systems – resulting in high activity and Volunteers provided their time and skills across a wide variety of pressure for this part of the business. Notwithstanding this success, professional capacities during the year including developing marketing we continue to target considerable improvements in this area. plans and assisting with financial reporting with partner Turnover rates are a key indicator of employee engagement and across organisations. the business they have been maintained at or below the levels recorded Employee interest and participation in skilled volunteering was part of at the beginning of this commitment in 2007. This year, the result in a larger trend across Origin away from large scale projects and towards our Customer Contact Centre showed further improvement, falling ongoing contributions such as repeat attendance at a conservation another two percentage points from the prior year. site or project work in a skilled capacity. While we are conscious that change can be challenging for employees A total of 13 per cent of Origin’s employee base took part in volunteering and needs to be managed carefully, we believe Origin’s current and activity during the year and employees contributed 5,438 hours to continuing high growth phase will provide an exciting and engaging volunteering in the community, an increase of 10 per cent on the environment filled with opportunities for our employees. previous year. Employee development continues to be a key area of focus and during For more information about the work of the Origin Foundation, visit 2011 we launched a new suite of Origin management, leadership and www.originfoundation.com.au talent development programs.

DISCOVER MORE ONLINE

Discover more about how we are working to deliver on our commitment to employees, by visiting our Sustainability Report online. Additional information includes: – How we plan to drive continuous improvements in our health and safety performance; – Our strategy to help make Origin a better place to work for our employees; – Programs we are developing to improve gender diversity in our business; and – Characteristics of our workforce including employee numbers, geographical breakdown, turnover and gender diversity. Visit Origin sustainability reporting online at http://reports.originenergy.com.au

20 our employees CASE STUDY: Origin shifts to the front foot to improve safety performance

At Origin we aspire always to lead. Our principle of due care states that we have an overriding duty to ensure the health and safety of our employees and to minimise the health, safety and environmental impacts on our customers and the communities in which we operate. This means that we strive to: – create an injury-free workplace; – preserve our people’s health; and – mitigate environmental effects. The standards Origin has set are high and we recognise that we must have a determined and ongoing program of work to achieve our goals. Unfortunately, Origin’s safety performance worsened in 2011 – Origin’s TRIFR rose to 6.0 from 5.6 – prompting the Executive Management Team to reconsider our approach. For many years, Origin has used TRIFR as the primary measure of safety performance. TRIFR measures the total number of recordable injuries that occur per million hours worked on a rolling 12 month basis. Recordable injuries include lost time cases, restricted work cases and medical treatment cases. In recent years Origin has sought to encourage improved performance by linking the Employee Share Plan – the program through which employees can obtain performance-based shares in Origin – to a TRIFR target. However, TRIFR measures incidents after they occur. Because most Origin’s Observations initiative encourages conversations aimed incidents and injuries are the result of behaviour and the choices at making the workplace safer people make, Origin decided that a more proactive approach, focusing on modifying behaviours before an incident occurs would be a more As Origin Managing Director Grant King said to employees when useful measure and a better motivator for employees. Origin recognised announcing the Observations initiative, “At heart, Observations are that safety observations are a simple and effective way to prevent about looking out for each other and speaking up to keep everyone unsafe behaviours and reinforce safe behaviours. So for 2012 Origin safe, whether it be ourselves, our managers, our teams or our changed its approach and set a target for safety observations for the contractors.” year. This averages out to around six observations per employee per Origin launched the safety observation campaign during Safety Week year and is a significant increase on the 7,000 observations Origin in October 2011. Education sessions throughout the organisation were recorded in 2011. held. Employees have embraced the initiative and look set to achieve Safety observations are used in organisations throughout the world the target well before the financial year ends. and are well-recognised as an indicator of safety performance. An observation is a conversation between one colleague and another. They are an opportunity: – to recognise and acknowledge people who are working safely or who are caring for the environment; – to care for a colleague who may be working unsafely; and – to address safety hazards before someone gets hurt. By linking the safety observation program to the Employee Share Plan, Origin has placed ownership of Origin’s Health, Safety and Environment (HSE) performance in the hands of its people. It encourages everyone to make time for HSE and builds a culture where people are rewarded for speaking up to make the workplace safer. Observations are a key tool for putting Origin’s values into practice and they are just one of a range of tools Origin has in place to drive our safety performance. Each observation is recorded in the Origin Collective Intelligence System to enable Origin to monitor trends in behaviour and to share learnings across the organisation.

Origin Energy sustainability report 2011 21 Our employees

CASE STUDY: Our Compass guides the decisions we make

What sets us apart at Origin is not what we do, but how we do it. The creation of a new purpose statement allowed us to clearly In operating our business, we make a range of decisions and choices articulate what kind of company Origin aims to be – a company every day. Many of these decisions directly or indirectly affect our that aspires always to lead. stakeholders. Our decisions must therefore stand up to scrutiny by With the refresh of the framework completed, Origin’s challenge our stakeholders today, and also stand the test of time. was to communicate these changes to staff, so that they could use Ensuring consistency and alignment in decision making is not always the framework to assist them in making better decisions, and fully easy, especially in a business that continues to grow and expand rapidly. understand the outcomes we strive together to deliver for our Since listing on the ASX in 2000, Origin has grown from a market stakeholders. (1) capitalisation of around $300 million to more than $14.0 billion today. Workshops were held across the country to provide an opportunity for To keep up with this growth, Origin’s employee numbers have grown senior leaders to learn about the refreshed framework. At the end of (1) from 2,200 employees in 2000, to more than 5,600 people today. each workshop, attendees were tasked with naming the new framework. Since our establishment, Origin has had a framework to guide After many suggestions and a short-listing process, the Executive employee behaviour. Called our Commitments, Principles and Values, Management Team selected the name ‘Our Compass’. it was developed in conjunction with the St James Ethics Centre. Given Our Compass is an accurate reflection of the role our Purpose, the growth of Origin since the original framework was put in place, we Principles, Values and Commitments play at Origin. Like a compass, decided to revisit the Commitments, Principles and Values to ensure they help steer us in the right direction, assisting us to make better they remained applicable and relevant to the Company today. decisions and choices in a way that is common across Origin. Led by the Managing Director and the Executive Management Team, the refresh involved the creation of a new purpose statement and the enhancement of the existing Commitments, Principles and Values to better reflect the Origin of today and our key stakeholders. This included adding a fifth key stakeholder, our business partners, reflecting the importance of our partnerships with other businesses in delivering energy solutions to customers today, and in the future. (1) As at March 2012.

CASE STUDY: Rapid growth propels strategic resourcing solution

Thousands of direct and indirect jobs will be created by the Australia Our recruitment will consist of a mixture of permanent staff and Pacific LNG project, which is one of Australia’s largest LNG export contractors, and we also expect to source candidates both projects currently being developed by Origin and its joint venture domestically and from the international market in instances where the partners. specialist skills we require are not available to us in the domestic Currently employing approximately 1,600 people, the project will grow market. Importantly, all key project management personnel will be to 6,000 people during peak construction. The ongoing operation of employed by Origin, which will ensure we can continue to operate the project will employ more than 1,000 jobs. consistently across the business in line with the Company’s values. The project requires specialist expertise across a wide range of professions Identification and attraction of talent are an important part of the including geoscientists, pipeline workers, engineers, rig operators, solution and Origin has developed an employment promise to clearly landowner support teams, indigenous and community affairs people, articulate to prospective employees the attributes that make Origin an site managers, jetty subcontractors, builders, electrical and instrument attractive place to work, as well as the strengths of the Australia trades and environmental scientists to name just a few. Pacific LNG project. Finding the right people with the right skills in a tight labour market, While the resourcing challenge remains a significant one, as stated in particularly when there is significant competition for the same kind the project’s Environmental Impact Statement, we remain committed of workforce, is a big challenge. to the successful execution of our resourcing strategy and to carry out our activities with minimal impact to the environment and community Origin has spent a lot of time planning its approach to meet this surrounding the operations. challenge. We first ensured we had an experienced and dedicated recruitment team in place to manage the process. We also spent considerable time mapping Origin’s workforce requirements for the Upstream component of the Australia Pacific LNG project, for which we are the operator.

22 our employees Our investors

Our Commitment: Deliver market leading performance for shareholders by identifying, developing, operating and growing value-creating businesses.

Uranquinty Power Station, NSW

Origin Energy sustainability report 2011 23 Our investors

In 2011, Origin continued to take major steps in the development of the business and delivered strong underlying business performance. In acquiring the NSW energy businesses and taking a FID on the first phase of the Australia Pacific LNG project, we successfully secured two major opportunities to consolidate market leading positions, which are already having a significant impact on Origin’s business. These opportunities will underpin further growth in the short, medium and long-term.

In 2007, we set ourselves the objective to provide sustainable returns to Origin’s key economic stakeholders. We defined two 5-Year Strategies to help deliver on this objective, which we report against in this section.

5-Year Strategies 1. Maintain an investment grade rating. 2. Provide shareholder returns in the top quartile of comparable We continue to maintain a strong investment grade credit rating. companies. During 2011, we undertook a number of capital management We have again achieved our target of delivering shareholder returns initiatives to fund acquisitions as well as the ongoing capital that are in the top quartile of comparable ASX-listed companies expenditure requirements of the business while preserving balance (ASX 100) over a rolling five year period. sheet strength. Returns to shareholders are made up of the appreciation of the These funding initiatives included $3.3 billion to support the Integral Origin share price and the dividends we pay. Our policy is to target Energy and Country Energy retail businesses transaction as well as annual dividends of at least 50 cents per share or 60 per cent of the GenTrader arrangements with Eraring Energy. We completed a Underlying EPS. Our declared annual dividend of 50 cents per share, $2.3 billion pro-rata equity entitlement offer and a syndicated bank which represented 70 per cent of Underlying EPS, was consistent facility to refinance $900 million of existing bank debt. We also with this policy. accepted oversubscriptions which resulted in the syndication of a $2.15 billion and US$350 million three to five year bank facility in April 2011. We also completed a €500 million hybrid issue which obtained equity credit from Standard & Poor’s and Moody’s and provided further 158 support to our balance sheet. We remain committed to sustaining a capital structure which supports and nurtures the long-term viability of our business. Q Origin Q Top quartile Q ASX 100 46 13

Percentage of Total Shareholder Returns over a five year period: 30 June 2006 to 30 June 2011 (%)

DISCOVER MORE ONLINE

Discover more about how we are working to deliver on our commitment to investors, by visiting our Sustainability Report online. Additional information includes: – Full disclosure of our financial performance in Origin’s 2011 Shareholder Review and Annual Report; and – How the innovative PAITREO structure of our equity raising was equitable for all shareholders. Visit Origin sustainability reporting online at http://reports.originenergy.com.au

24 our investors CASE STUDY: Unique equity raising structure delivers equality for retail and institutional investors

On 15 December 2010, Origin announced the acquisition of the Integral The reaction to the Origin offer by both institutional and retail Energy and Country Energy retail businesses and entry into the Eraring shareholders was very positive. Mr Kolesnikoff commented that GenTrader arrangements. Origin’s structure allowed all shareholders to capture greatest value To fund the $3.3 billion transaction and to strengthen Origin’s balance from their investment, while giving the Company the certainty of sheet for investment in other growth opportunities, in March 2011, funding that it needed. The structure of Origin’s $2.3 billion Origin announced a $2.3 billion equity raising. The announcement renounceable rights offer won the support of all shareholders. marked the largest equity raising in the Australian market in 2011. The 79 per cent take-up rate by retail shareholders is the highest rate In recent years, many equity raisings carried out did not necessarily among the 21 accelerated renounceable entitlement offers of offer an equitable structure to both institutional and retail $100 million or more since 2008. shareholders. For example, accelerated rights offers, which have been Origin also collected about 93,000 individual applications from retail widely used, are understood to produce better results for institutions. shareholders under the offer, which is also a very high level when Many were also non-renounceable and therefore retail investors who compared to other recent equity raisings. did not take up their entitlement received no value. With many of the As for the trading of the retail entitlements, some 21,000 individual issues also including an institutional placement, retail investors were trades took place. The entitlements were traded in a range of $1.85 to often heavily diluted. Understandably, these issues and structures $3.57 per entitlement not taken up, and at a volume weighted average attracted some criticism from retail investors and financial media. price of $3.01 per entitlement traded. In approaching the 2011 equity raising, Origin’s objective was to The Origin share price outperformed the market over the period of the provide an equitable structure for both retail and institutional retail rights trading to 6 April 2011. Origin shares increased by 7.6 per shareholders, consistent with the approach the Company had taken cent during the offer period, compared with a 5.1 per cent gain in the with its previous equity raisings. S&P/ASX 200 Index over the same time frame. Origin did not believe any of the existing structures would fully deliver The success of the equity raising demonstrated widespread support on its objective, and therefore worked in conjunction with Bank of among Origin’s retail and institutional shareholders for the acquisition America Merrill Lynch to refine the new PAITREO structure it had of the NSW energy assets, as well as the Company’s strong track already begun developing. A PAITREO is a Pro-rata Accelerated record of delivering growth since listing on the ASX in 2000. Institutional Tradeable Renounceable Entitlement Offer. On 26 September 2011, CFO Magazine announced that Origin’s Vas Kolesnikoff, CEO of the Australian Shareholders Association, PAITREO was awarded Secondary Market Equity Raising of the Year at described Origin’s structure as different to other accelerated the CFO Dealbook Awards for 2011, with the judges commenting that institutional capital raisings. the offer was an innovation that was a clear improvement on previous “Traditionally, smaller shareholders could only sell their rights after structures. waiting 28 days, when there was little or no value left in the rights. The Australian Shareholders’ Association also commended Origin in Origin allowed its small shareholders to sell their rights in the first growing its business through an opportune acquisition and financed 14 days of the offer period, such that those who chose not to acquire under a capital raising structure which was fair to all of its more shares, were able to capture as much value as possible,” he said. shareholders, giving them the choice to take advantage of the most The offer was structured as a one for five fully underwritten pro-rata appropriate investment opportunity suitable to their circumstances. renounceable offer to raise approximately $2.3 billion. This means The structure of the offer may also have contributed to its success, shareholders were eligible to buy one share for every five shares providing equitable benefits for retail and institutional shareholders, they held. and uniquely creating an upfront liquidity event for retail shareholders. While the structure still offered a retail shortfall bookbuild at the end of the process, a month after the institutional shortfall had been dealt with, the innovation in the offer structure was that retail shareholders were able to trade their entitlements on the ASX for 14 days after the institutional bookbuild was conducted. Origin offered approximately 177 million shares at $13 each, a 17 per cent discount to the closing price the day before the announcement. This represented the first time retail shareholders had been given upfront liquidity for their entitlements in an accelerated offer. In addition, eligible retail shareholders who did not sell or take up their entitlement were still able to receive value for their entitlement via a shortfall bookbuild after the retail entitlement offer closed.

Origin Energy sustainability report 2011 25 Origin Foundation and Community Investment

In 2010, to celebrate the 10th anniversary of Origin’s listing on the Australian Securities Exchange, we established the philanthropic Origin Foundation.

The Foundation is based on the belief that education, training and – Transition to study and work – working with the Country Education development have the power to transform lives and improve Foundation, we’re helping young people in regional Australia access communities. Education is a vital building block for a successful life, further education and training; and providing a pathway into employment and financial stability, and – Scholarships to further the aspirations of high achievers – supporting enhancing an individual’s capacity to participate in life. talented Australians through partnerships with groups like the The Foundation delivers support in three ways: a grants program; General Sir John Monash Foundation. matching employee donations to charities; and facilitating The Foundation also provides the opportunity for Origin people to volunteering by Origin employees in the community. volunteer with these organisations, matching needs with skills. As of December 2011, the Foundation had partnered with 19 not-for-profit During the past year, employees spent 5,438 hours sharing their organisations in support of 33 differing programs to the value of time and skills with the community. $5.4 million. Through our focus on lifelong learning we support a broad In addition, the Foundation matches any donations that Origin range of initiatives, including: employees make to charitable organisations through the giving – Early childhood education intervention – partnerships include program, Give2. Employees donated $288,942 in the past year, The Smith Family’s Let’s Count early years numeracy program; which was matched by Origin to provide a total of $577,884 to – School reform – through partnerships with groups like Big Picture, a range of charities. we’re helping to re-engage young people in education; We look forward to the continued growth and development of the Foundation’s activities in coming years. Photo courtesy of the Country Education Foundation of Australia.

Origin Foundation partners with the Country Education Foundation of Australia to help young people in regional Australia access further education and training

26 ORIGIN FOUNDATION Origin Foundation and Good Return

Innovative philanthropy teamed with inventive microfinance and education is changing lives on both sides of the agreement through a partnership between the Origin Foundation and Good Return. Good Return is a social enterprise which provides small loans and education to families in the Asia Pacific to help them start or build a business, and feed and educate themselves. A gift from the Origin Foundation will help Good Return increase their capacity to facilitate loans tenfold over the next three years. The extra support will help Good Return to generate 8,000 new loans, impacting the lives of more than 40,000 people in Asia Pacific, where more than two-thirds of the world’s poor live. In addition to the Foundation’s financial contribution, Origin employees will also provide advice to Good Return on sustainable energy options for communities with little or no electricity. While the benefits to Good Return’s borrowers are direct and measureable, reports from Origin employees show they too are learning and gaining from the experience with many remarking on the significant impact it had on their lives. Photo courtesy of Good Return. The Origin Foundation and Good Return partnership provides small loans and education to families in the Asia Pacific

Community Investment

Origin contributes to the communities in which we operate through near our operations in south central Queensland and in 2011, increased economic activity arising from developing and operating 23 apprentices joined the program. This brings the total number of our assets. We also contribute financially to community initiatives, scholarship recipients to 76 since the program was launched in 2007. ensuring we tailor our investment to match the unique needs of each We continue to focus on providing scholarships to apprentices and of the communities in which we operate. trainees working in areas of critical skill needs. To ensure our investment is directed to the areas of greatest need and We also run the CARS driver training program to boost skills and where we can add value, Origin works directly with community attitudes towards safe driving, in partnership with the Royal Automobile members. In a number of our locations, members of Origin’s Community Club of Queensland and Queensland Minerals and Energy Academy. Reference Groups provide feedback on the issues of interest to each This year 294 students and community members participated in the community and assist to identify suitable opportunities. program. Since the program commenced more than 900 people have In the 2011 financial year, we contributed $8.3 million to local taken part. communities, an amount that has been independently verified by the At Uranquinty Power Station in NSW, we established a solar partnership London Benchmarking Group. This figure consists of our total cash with the Uranquinty Progress Association, in which local tradesmen contribution including grants provided by the Origin Foundation, the installed an Origin-supplied solar system to the roof of a new value of volunteer hours taken by our employees and in-kind support. community hall. Generating more power than consumed, the system Our total cash contribution to communities was approximately will ensure a steady and ongoing supply of income to the Association. $7.6 million, including the Foundation’s $5.4 million investment. In New Zealand, Origin and the Kupe Joint Venture continued our Community investment contributions made by Origin over the year partnership with the Bishop’s Action Foundation, donating NZ$50,000 were focused on school energy efficiency and safety programs and towards the establishment of a facility for local community groups local initiatives with our host communities. and government-funded agencies working with youth. A considerable amount has been invested in Queensland, reflecting the scale of our operations, which span CSG exploration and production, power generation and retailing. We offer Community Skills Scholarships to local apprentices and trainees from communities

Origin Energy sustainability report 2011 27 Online Resources

This is a concise version of Origin’s 2011 Sustainability Report. As the size and complexity of our business continues to increase, so too does the challenge of meeting our commitments to stakeholders. Our concise report focuses primarily on our performance against the 5-Year Strategies we set for each of our key stakeholder groups in our 2007 report. To complement our concise report, we are increasingly moving our reporting information online so it is more readily available to those who wish to see it. Our online Sustainability Report discloses our performance to the same extent as in previous years and is compiled using the GRI’s G3 guidelines. It can be viewed at http://reports.originenergy.com.au. Key performance indicators including GRI management disclosures and our greenhouse gas emissions are detailed online.

Sustainability Ratings and Benchmarks

We were included in the Dow Jones Sustainability Asia Pacific Index, We continue to be a member of the FTSE4Good Index Series, which is which was launched in 1999, and is the first global indexes designed designed to identify companies that meet globally recognised corporate to track the financial performance of the leading sustainability-driven responsibility standards. Origin has been a member since 2004. companies worldwide.

Since 2009, Origin has been a signatory to the Energy Supply Our community investment data is independently verified by the Association of Australia’s Sustainable Practice Framework, which is London Benchmarking Group (LBG), which promotes a consistent a major platform for the energy supply sector’s work in improving set of criteria for determining community investment, donations sustainability in the industry. and commercial initiatives in the community.

We are a participant in the Carbon Disclosure Project, an independent We were included in The Global 100 list of the Most Sustainable not-for-profit organisation which holds the largest database of primary Corporations in the World, which is an annual project initiated by corporate climate change information in the world. Corporate Knights, the magazine for clean capitalism.

DISCOVER MORE ONLINE

Should you wish to learn more about Sustainability at Origin, Origin Sustainability please visit our website www.originenergy.com.au/sustainability Australia Square or contact our Sustainability team: Level 45, 264-278 George St Sydney NSW 2000

28 About this report Glossary of terms

2C Best Estimate Contingent resource. Electricity measures Kbbls Kilobarrels = 1,000 barrels 3C High Estimate Contingent resource. – Watt (W) A measure of power when a one ampere Kt Kilotonnes = 1,000 tonnes. 2P reserves Proved plus Probable reserves. of current flows under one volt of pressure. LNG Liquefied natural gas. – Kilowatt (kW) One kW = 1,000 watts. Analysis of geological and engineering data LPG Liquefied petroleum gas. suggest these reserves are more likely than not – Kilowatt Hour (kWh) Standard unit of electrical to be recoverable under reasonable economic, energy representing consumption of one NEM National Electricity Market. technical and operating methods. kilowatt over one hour. NGOs Non-government organisations. 3P reserves Proved plus Probable plus Possible. – Megawatt (MW) One MW = 1,000 kW or Offshore exploration The search for hydrocarbon one million watts. AGAAP Australian Generally Accepted Accounting deposits under the sea. Principles. – Gigawatt hour (GWh) One GWh = 1,000 Onshore exploration The search for hydrocarbon megawatt hours or one million kilowatt hours. A-IFRS Australian equivalents to International deposits beneath the Earth’s surface, such as oil – Terawatt hour (TWh) One TWh = 1,000 gigawatt and natural gas. Financial Reporting Standards. hours, or one million megawatt hours. Appraisal well OCGT Open Cycle Gas Turbine power station. Well drilled to determine the size EOWA Equal Opportunity for Women in the of an oil or gas discovery. Workplace Agency. Operating Cash flow After Tax Ratio (OCAT Ratio) AS 3806 (OCAT – interest tax shield)/Productive Capital. Australian Standard on Compliance EPA Environment Protection Authority or Program used to manage regulatory risks. Productive Capital is 12 months’ average funds equivalent state authority. employed excluding capital work in progress and APLNG Australia Pacific LNG, an incorporated EPS Earnings per share, total earnings divided including 50 per cent of APLNG. joint venture between Origin, ConocoPhillips by the weighted average shares on issue. and Sinopec. Peaking plant A generator that can be quickly Exploration well A well drilled to identify a new started to operate during periods of high Availability The time a generation plant was reservoir of oil or gas. electricity demand and/or high prices in the available for use, after deducting planned and electricity market. unplanned outage hours, compared with the total Farm-out arrangement The owner or lessee of time under review. mineral rights (the first party) assigns a working Photovoltaic (PV) Photovoltaic cells convert interest to an operator (the second party), the sunlight into electricity. Barrels (bbls) A measure used for oil production consideration for which is specified exploration Plugged and abandoned A well, generally and sales. One barrel equals approximately and/or development activities. 159 litres. unsuccessful, which has been abandoned with Farm-in arrangement The arrangement from the cement plugs and from which hydrocarbons Bopd Barrels of oil per day. viewpoint of the second party is termed a cannot be produced in the future. Capacity factor A generation plant’s output over “farm-in arrangement”. Power On Origin’s hardship program which a period compared with the expected maximum FEED Front end engineering and design. provides payment options for customers output from the plant in that period based on experiencing financial difficulty. 100 per cent availability at the manufacturer’s FID Final Investment Decision. QCA operating specifications. Full Retail Contestability (FRC) Where homes Queensland Competition Authority. Capital expenditure Investment in acquisition and businesses are able to choose their own Reserves Origin Energy uses reserves definitions or improvement of long-term assets, such as energy supplier. consistent with the Society of Petroleum property, plant, or equipment. Gas measures Engineers and required by Australian Securities Exchange. Reserves reported are based on Carbon dioxide (CO2) Greenhouse gas produced – Joule Primary measure of energy in the information compiled by full time employees of as a by-product of oil and gas production and metric system. the Company who are qualified in accordance when burning fossil fuels and biomass. – Gigajoule (GJ) A gigajoule equals one billion with Australian Securities Exchange listing Cased and suspended A successful well with a joules. An average Victorian household rule 5.11. steel casing installed to enable future production. consumes around 55 GJ annually. Reserves Replacement Ratio (RRR) Annual change Churn Mass-market energy customers switching – Terajoule (TJ) A Terajoule is equal to in reserves, before deducting production, divided suppliers. 1,000 gigajoules. by production during the year. An annual RRR of Climate change Any change in climate over time, – Petajoule (PJ) A Petajoule is equal to 100% indicates full replacement of production by whether due to natural variability or as a result one million gigajoules. reserve additions for that year. of human activity. – Petajoules equivalent (PJe) An energy RET The Federal Government implemented measurement Origin Energy uses in its annual Coal seam gas (CSG) a Renewable Energy Target (RET), requiring Natural gas contained within report to represent the equivalent energy in coal seams. 20 per cent of electricity to come renewable different products so the amount of energy energy sourced by 2020. Cogeneration Producing two or more forms of contained in these products can be compared. Seismic survey energy from one fuel source. Generally, The factors used by Origin Energy to convert to A geophysical survey to understand cogeneration plants operated by Origin Energy PJe are: one million barrels crude oil = 5.83 PJe; rock formations beneath the earth’s surface. produce steam and electricity from natural gas. one million barrels condensate = 5.41 PJe; one SLIVER solar panels An Origin Energy product CCGT Combined Cycle Gas Turbine power station. million tonnes LPG = 49.3 PJe; one TWh of which uses one-tenth of the silicon of electricity = 3.6 PJe. conventional solar panels while matching their Condensate A light oil that separates during gas power, performance and efficiency. production processes due to changes in pressure Geothermal Energy that is generated by and temperature. converting hot water or steam from deep Spot market A wholesale market for commodities, beneath the Earth’s surface into electricity. such as electricity or crude oil, which allows Contract Price (CP) An international price for LPG, matching of supply against demand. in US dollars, using the Saudi Aramco Contract GHG Greenhouse gas. Price tender process. Australian LPG producers Greenfields exploration Where Origin Energy Statutory profit Profit as disclosed in the income export LPG or sell into the domestic Australian holds exploration rights, but does not have a statement of the statutory accounts. market at prices that reflect the CP. Similarly, substantial producing interest. The Company Origin Energy Limited and its Australian LPG retailers purchase domestically Hedge contract A financial instrument to manage controlled entities. produced or imported LPG based on CP. the risk created by price volatility for a commodity Total Recordable Injury Frequency Rate (TRIFR) Development well A well drilled to enable (such as electricity or crude oil) on a spot market. The total number of fatalities and injuries production from a known oil or gas reservoir. Buyers and sellers of the commodity may enter resulting in lost time, restricted work duties or EBIT Earnings before interest and tax. into long or short-term contracts at an agreed medical-treatment per million hours worked. price. EBITDA Earnings before interest, tax, depreciation Underlying profit Statutory profit adjusted for the and amortisation. HSEMS Health, Safety and Environment impact of items that do not inform the ongoing Management System. performance of the business and used to measure EIS Environmental Impact Statement. Hydrocarbons Oil and gas, including condensate the underlying performance of the business. and gas liquids (LPG and ethane). Upstream Part of Origin Energy’s business that is involved in the exploration and production of hydrocarbons.

Origin Energy sustainability report 2011 29 DIRECTORY Origin Energy Limited

Registered offi ce Share register Secretaries Level 45, Australia Square Link Market Services Limited Andrew Clarke 264-278 George Street Level 12, 680 George Street Helen Hardy Sydney NSW 2000 Sydney NSW 2000 Auditor GPO Box 5376 Locked Bag A14 Sydney NSW 2001 Sydney South NSW 1235 KPMG Telephone (02) 8345 5000 Toll Free 1300 664 446 Facsimile (02) 9241 7377 Telephone (02) 8280 7155 Internet www.originenergy.com.au Facsimile (02) 9287 0303 Email [email protected] Internet www.linkmarketservices.com.au Email [email protected]

This report is printed on Impact 100 per cent recycled paper, sourced from post consumer waste. The paper is certified against the Forest Stewardship Council (FSC) standards, which supports the responsible use of the world’s forest resources. The report was printed using soy-based vegetable inks by GEON Group, which holds FSC certification (C015306). This Sustainability Report provides a company overview for the 12 months between July 2010 – June 2011. Further information about Origin’s sustainability performance can be found on the website: http://reports.originenergy.com.au