20 March 2018 TO: ASX Limited Singapore Exchange Securities Trading Limited AusNet Services Investor Day Presentation Please find attached the presentation to be made at the AusNet Services Investor Day today. Claire Hamilton Company Secretary 2018 Investor Day 20 March 2018 Disclaimer The AusNet Services Group (AusNet Services) comprises AusNet Services Ltd and its subsidiaries. The information in this presentation is not a prospectus, product disclosure statement or other offering document and does not constitute an offer, invitation or recommendation to subscribe for, retain or purchase any securities in AusNet Services. The information is an overview (in summary form) and does not purport to be complete or contain all the information necessary to make an investment decision. This presentation is not financial product advice and does not take into consideration the investment objectives, financial situation or particular needs of any particular person. You should consider the appropriateness of the information having regard to your individual objectives, financial situation (including taxation position) and needs, and seek independent professional advice. This presentation, and the information in this presentation, will not form the basis of any contract or commitment. This presentation has been prepared by AusNet Services on the information available. To the maximum extent permitted by law, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions in this presentation and AusNet Services, its directors, officers, employees, agents and advisers disclaim all liability and responsibility (including for negligence) for any direct or indirect loss or damage which may be suffered by any recipient through use or reliance on anything contained in or omitted from this presentation. This presentation contains certain “forward-looking statements” and prospective financial information. These forward looking statements and information are based on the reasonably held beliefs of AusNet Services management as well as reasonable assumptions made by and information currently available to AusNet Services management, and are current only as of the date of this presentation. All statements other than statements of historical facts included in this presentation, including without limitation, statements regarding AusNet Services forecasts, business strategy, synergies, plans and objectives, are forward- looking statements. In addition, when used in this presentation, the words “guidance”, “forecast”, “estimate”, “expect”, “anticipated” and similar expressions are intended to identify forward looking statements. Such statements are subject to significant assumptions, risks and uncertainties, many of which are outside the control of AusNet Services and are not reliably predictable, which could cause actual results to differ materially, in terms of quantum and timing, from those described in this presentation. In receiving this presentation, you agree to the above restrictions and limitations. 2 Agenda • Introduction • Safety • Corporate Strategy Overview • Regulated Energy Services • Energy Security Board • Australian Energy Regulator • Commercial Energy Services 3 HSEQ Critical Risk Program 4 Corporate Strategy Overview Nino Ficca, Managing Director Megatrends are changing our industry Today Future Renewables backed by 86% thermal generation1 Decarbonisation dispatchable capacity and storage PV rooftop penetration 21%2 solutions PV saturation Emerging technologies to allow New business Established platforms to integrate consumer trading (P2P) Behind the Meter generation with models smart home appliances emerging Early stage adoption of AI to optimise networks Active P2P trading by prosumers New industry Financial institutions with established Global technology companies managing energy platforms, e.g. entrants utility holdings and Technology start- ups Amazon Increasing Emerging solutions for distributed customer choice generation and storage Adoption of cheaper smart home and energy solutions and products Affordability Market Opex benchmarking Policy-driven limitations on price intervention Political debate on energy prices growth Risk of asset interventions (1) FY17 NEM generation (AER) (2) Penetration of suitable rooftops, April 2017, reneweconomy.com.au 6 Focus 2021 FY18 marks year two of our five year strategy Build a portfolio of high performing and sustainable Regulated and Commercial Energy Services businesses Grow Mooroolbark Mini Grid named joint contracted winner of the Clean Energy Council's energy Innovation Award infrastructure asset base to $1bn Operate all Secured around three core $200m projects in networks in FY18 the top quartile of efficiency benchmarks Grow specialist services to essential infrastructure operators Operating two out three networks in the top quartile of efficiency benchmarks Yackandandah community Mini Grid named winner of Banksia sustainability award 7 Strategic priorities Transmission Distribution Gas CES 1. Strengthen our 1. Simplify and 1. Increase network 1. Grow contracted network in Western remove costs utilisation and asset base via utility Victoria to enable 2. Operationalise new establish a path scale connections, more generators to distributed energy forward for alternate renewable generation connect solutions fuel options infrastructure 2. Execute summer 3. Drive improvements 2. Focus on value and 2. Develop and grow preparedness to in customer efficiency to commercial, manage the portfolio satisfaction maintain top quartile industrial & position community asset 4. Improve reliability base and platform and safety 3. Influence uptake of gas and improve solutions customer 3. Participate in new satisfaction market investments and partnerships 8 DNSP RAB’s have increased, with utilisation highest in Victoria DNSP RAB growth DNSP Utilisation (Index) (%) 350 80 NSW/ACT 70 300 VIC 60 SA 250 50 TAS NSW/ACT QLD TAS 40 200 VIC QLD 30 SA 150 20 10 100 0 0 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 Source: Victorian Electricity Network Businesses Submission to the ACCC Retail Electricity Pricing Inquiry, AER State of the Market Reports 2007–17 9 TNSP RAB’s have increased less, with utilisation amongst the highest in Victoria TNSP RAB Growth TNSP Utilisation (Index) (%) 80 2.50 2.30 70 2.10 1.90 QLD 60 TAS SA 1.70 VIC 1.50 NSW/ACT 50 NSW/ACT TAS 1.30 QLD VIC 40 1.10 SA 0.90 30 0.70 0.50 20 2006 2008 2010 2012 2014 2016 2006 2008 2010 2012 2014 2016 Source: TNSP Economic Benchmarking RIN data (2006-16) and AER Draft TNSP Network Performance Report (13/02/2018), Partially As-incurred RAB. Index based on $real 2017 Closing RAB values 10 Network contribution to customer bills Around one third of a typical customer bill in Breakdown of typical customer bill in AusNet Services AusNet Services electricity distribution Electricity Distribution Network (2018) network is comprised of network costs. Solar Feed in Tariff - 1% AST will be the first Australian utility business to trial a new process that places customers Distribution - 29% at the heart of developing our expenditure plans. Transmission - 3% The new process involves the establishment of a Customer Forum which will form part our Generation & Retail - 67% 2021-25 regulatory proposal, prior to AER submission. Note: Chart is based on standard retail offers (NEE11) AGL, Energy Australia and Origin Energy and average annual consumption of 4299.25KWh (block 1 3912.32kWh and block 2 of 386.93kWh). 11 AST is focused on efficiency improvements Opex partial factor productivity Electricity Transmission Electricity Distribution (2017 estimate) Gas Distribution (2016) (2017 estimate) AST 1.76 AST 2.4 Powercor 1.62 Citipower 1.55 Energex 1.16 JGN 2.3 TransGrid 1.49 SA Power Networks 1.14 ActewAGL 1.13 AGN Vic 2.1 United Energy 1.11 TasNetworks 1.27 AST (2017) 1.07 TasNetworks 1.00 Multinet 1.9 Jemena 0.97 Powerlink 0.90 Essential 0.96 AGN SA 1.3 Endeavour 0.94 Ergon ElectraNet 0.76 0.96 AST (2016) 0.86 AGN Qld 1.0 AusGrid 0.81 2016 data Note: • Benchmarking data sourced from AER and AST modelling. • Gas Distribution benchmarking provided by Economic Insights. • Electricity Distribution benchmarking data uses 2016 data for Powercor, Citipower, Jemena, United Energy and Essential (2017 data unavailable). 12 Regulated revenues set for 3 years As of 1 January 2018, around 85% of total revenues locked-in until 2020 under regulatory determinations Current regulatory period Beginning of new reset period 2017 2018 2019 2020 2021 2022 2023 Electricity Transmission Electricity Distribution Gas Distribution 13 Regulated Energy Services (RES) Alistair Parker, EGM, RES To succeed our Regulated Businesses must adapt, be sustainably priced and influential advocates for our customers. In Electricity In Electricity In Gas Distribution Transmission, this Distribution this means this means influencing means facilitating more reducing cost for our our customers to generation connection to customers and becoming continue to use gas as reduce costs to a more dynamic network we look for lower customers and improve to better integrate the emission alternative security of supply. distributed energy future. fuels. Putting Customers first Why should we care? What is the outcome? “I have choices and Simplification I am changing the way I buy energy. New technologies are attractive to me” Cost out “I pay more for “When it goes energy than ever Better