ANNUAL REPORT 2014/15 DIVERSIFIED ENERGY ABOUT ABOUT THIS REPORT STANWELL This report provides an overview of the major initiatives Stanwell is a diversified energy business. and achievements of Stanwell Corporation Limited We own coal, gas and water assets, which we (Stanwell) as well as the business’ financial and use to generate electricity; we sell electricity non-financial performance for the 12 months ended directly to business customers; and we trade 30 June 2015. gas, coal and electricity products. Each year, we document the nature and scope of our strategies, objectives and actions in our Statement of With a generating capacity of more than 4,000 megawatts (MW), Stanwell is the largest Corporate Intent. The Statement of Corporate Intent electricity generator in Queensland. We have the represents our performance agreement with our capacity to supply approximately 45 per cent of shareholding Ministers. Our performance against our the State’s peak electricity requirements through 2014/15 Statement of Corporate Intent is summarised our coal, gas and hydro generation assets. on pages 3 to 19. We are a proud generator of environmentally- Electronic versions of this and previous years’ reports responsible energy. Through our portfolio of hydro are available online at www.stanwell.com or from power stations, we generate more than 150 MW Stanwell’s Stakeholder Engagement team on of clean energy. We also operate two of Australia’s 1800 300 351. most efficient coal-fired power stations: the supercritical 443 MW Tarong North Power Station and the sub-critical 1,460 MW Stanwell Power Station. We have undertaken a number of initiatives to optimise the efficiency of our coal-fired plant and reduce emissions. In 2014/15, we spent more than $123 million on sustaining capital at our power stations TABLE OF CONTENTS and Meandu Mine to maintain asset integrity About Stanwell Energy 1 and performance, and to ensure that we continue to meet statutory and environmental Chairman’s statement 3 compliance requirements. Chief Executive Officer’s review 5 We own and have access to competitively- priced fuel, which has assisted our transformation Performance indicators 8 to a diversified energy company. In cases Asset performance 9 where it provides a better return, we sell our coal or gas to customers instead of using it to Strategic direction 10 generate electricity. The year ahead 11 We also have an established retail business, selling electricity directly to business customers. Sell our energy for the best return 12 We are growing this retail service to include a Simplify and streamline our business 15 broader range of commercial and industrial business customers in Queensland, New South Secure our future 17 Wales and Victoria. Corporate governance 20 As at 30 June 2015, we employed 698 people at our sites and offices (30 June 2014: 710). Financial results 28 Directors’ report 29 OUR MISSION – Stanwell contributes to Queensland’s prosperity through the safe and Auditor’s independence declaration 34 responsible provision of energy and commercial Financial statements 35 returns from our business operations. Notes to the consolidated financial statements 42 OUR VALUES – Safe, Responsible and Commercial – shape how we lead and operate our business. Directors’ declaration 98 Together, they guide how we think, make decisions Independent auditor’s report 99 and act on a day-to-day basis at Stanwell. ABOUT STANWELL ENERGY In 2008, Stanwell started selling electricity directly to large commercial and industrial customers, predominately in Queensland. We have expanded our retail offering to target a broader range of business customers and extended our geographical market presence to include New South Wales and, more recently, Victoria. In December 2014, our retail brand, Stanwell Energy, was launched. Stanwell Energy is more than just a business energy retailer; it is backed by one of the largest electricity generation portfolios in Australia. This means we can offer products that match our customers’ requirements at a competitive price. We are proud of our high level of customer service and in 2014/15 we were successful in retaining 100 per cent of our existing customers. STANWELLSTANWELL ANNUAL ANNUAL REPORT REPORT2014/15 2014/15 | ABOUT | STANWELL CURRENT SECTIONENERGY 1 ENERGY PORTFOLIO GENERATION ASSETS Generation assets Fuel assets A. Stanwell Power Station, Central Queensland – Coal Coal 1,460 MW (coal) Gas Gas B. Tarong power stations, Southern Queensland – 1,843 MW (coal) Hydro Water C. Swanbank E Power Station, South East Queensland – Office 385 MW (gas) D. Mackay Gas Turbine, Central Queensland – 34 MW (diesel) E. Mica Creek Power Station, North West Queensland – 302 MW (gas) F. Kareeya Hydro, Far North Queensland – 86.4 MW (hydro) ENERGY PORTFOLIO G. Barron Gorge Hydro, Far North Queensland – 66 MW (hydro) H. Koombooloomba Hydro, Far NorthGENER QueenslandATION ASSETS – Generation assets Fuel assets 7.3 MW (hydro) A. Stanwell Power Station, Central Queensland – Coal Coal I. Wivenhoe Small Hydro, South East1,460 Queensland MW (coal) – Gas Gas 4.3 MW (hydro) B. Tarong power stations, Southern Queensland – 1,843 MW (coal) Hydro Water COAL ASSETS C. Swanbank E Power Station, South East Queensland – Office 385 MW (gas) CAIRNS J. Meandu Mine, Southern Queensland – long-term coal supply to G the Tarong power stations D. Mackay Gas Turbine, Central Queensland – 34 MW (diesel) E. Mica Creek Power Station, North West Queensland – K. Kunioon coal resource, South Queensland302 MW (gas) – potential future fuel N H supply for the Tarong power stationsF. Kareeya Hydro, Far North Queensland – 86.4 MW (hydro) F TULLY L. Curragh North Mine, Central QueenslandG. Barron Gor – gelong-term Hydro, Far agr Northeement Queensland – 66 MW (hydro) with Wesfarmers Curragh which H.pr ovidesKoombooloomba low-cost Hydr coalo, toFar North Queensland – Stanwell Power Station, and a revenue7.3 MW st re(hydramo) for coal exports I. M. Mineral Development Licence 30 Wivenhoe6, Central Small Queensland Hydro, South – East coal Queensland – 4.3 MW (hydro) MOUNT ISA resource located near the Curragh North Mine COAL ASSETS E WATER ASSETS J. Meandu Mine, Southern Queensland – long-term coal supply to MACKAY G CAIRNS D N. Koombooloomba Dam, Far North theQueensland Tarong power – stationscaptures water K. Kunioon coal resource, South Queensland – potential future fuel N H for use at Koombooloomba Hydro and Kareeya Hydro power stations supply for the Tarong power stations F TULLY L. Curragh North Mine, Central Queensland – long-term agreement M ROCKHAMPTON GAS ASSETS with Wesfarmers Curragh which provides low-cost coal to Stanwell Power Station, and a revenue stream for coal exports O. Kogan North Joint Venture, South East Queensland – provides L M. Mineral Development Licence 306, Central Queensland – coal A MOUNT ISA up to four petajoules per annum of rgasesour toce Swanbanklocated near the E PowerCurragh North Mine Q E Station via the Roma to Brisbane Gas Pipeline MACKAY WATER ASSETS D P. Roma to Brisbane Gas PipelineN. – Koombooloombacontracted capacity Dam, Farof 52North Queensland – captures water terrajoules per day for use at Koombooloomba Hydro and Kareeya Hydro power stations K Q. Comet Ridge agreement, Central Queensland – option to secure M ROCKHAMPTON B J long-term gas or to exit agreementGAS for ASSETS an agreed payment to L Stanwell of $20 million O. Kogan North Joint Venture, South East Queensland – provides P I A up to four petajoules per annum of gas to Swanbank E Power BRISBANE Q Station via the Roma to Brisbane Gas Pipeline O P. Roma to Brisbane Gas Pipeline – contracted capacity of 52 C terrajoules per day K Q. Comet Ridge agreement, Central Queensland – option to secure B J long-term gas or to exit agreement for an agreed payment to Stanwell of $20 million P I BRISBANE O C GENERATION ASSETS COAL ASSETS WATER ASSETS A. STANWELL POWER STATION, Central J. MEANDU MINE, Southern Queensland N. KOOMBOOLOOMBA DAM, Far North Queensland – 1,460 MW (coal) – long-term coal supply to the Tarong Queensland – captures water for use at B. power stations Koombooloomba Hydro and Kareeya TARONG POWER STATIONS, Southern Hydro power stations Queensland – 1,843 MW (coal) K. KUNIOON COAL RESOURCE, Southern C. Queensland – potential future fuel supply SWANBANK E POWER STATION, South East for the Tarong power stations GAS ASSETS Queensland – 385 MW (gas) O. L. KOGAN NORTH JOINT VENTURE, South East D. CURRAGH NORTH MINE, Central Queensland Queensland – provides up to four petajoules MACKAY GAS TURBINE, Central Queensland – long-term agreement with Wesfarmers – 34 MW (diesel) per annum of gas to Swanbank E Power Curragh which provides low-cost coal to Station via the Roma to Brisbane E. MICA CREEK POWER STATION, North West Stanwell Power Station, and a revenue Gas Pipeline Queensland – 218 MW (gas) stream for coal exports P. M. ROMA TO BRISBANE GAS PIPELINE F. KAREEYA HYDRO, Far North Queensland MINERAL DEVELOPMENT LICENCE 306, – contracted capacity of 52 terrajoules – 86.4 MW (hydro) Central Queensland – coal resource located per day near the Curragh North Mine G. BARRON GORGE HYDRO, Far North Q. COMET RIDGE AGREEMENT, Central Queensland – 66 MW (hydro) Queensland – option to secure long-term gas H. KOOMBOOLOOMBA HYDRO, Far North or to exit agreement for an agreed payment Queensland – 7.3 MW (hydro) to Stanwell of $20 million I. WIVENHOE SMALL HYDRO, South East Queensland – 4.3 MW (hydro) 2 STANWELL ANNUAL REPORT 2014/15 | ENERGY PORTFOLIO CHAIRMAN’S STATEMENT Stanwell performed strongly in EVER-CHANGING 2014/15, continuing the transition ENERGY INDUSTRY from a wholesale generator to a The national debate about the future diversified energy business. of fossil fuels and the growth of This was evidenced by new revenue renewable energy has continued streams such as trading in gas and this year, following the repeal of the expanding our retail business to Carbon Tax in July 2014 and the wider and more geographically reduction in the Renewable Energy dispersed markets.