AnnualReport 2018-19 Tas Networks.com.au TasNetworks pays respect to the traditional owners of this land, the Tasmanian Aboriginal people. We pay respect to those that have passed before us and acknowledge today’s Tasmanian Aboriginal people who are the custodians of this land. Tasmanian Networks Pty Ltd ABN 24 167 357 299 PO Box 606, Moonah, TAS 7009 1-7 Maria Street, Lenah Valley, Tasmania 7008 1300 127 777 | tasnetworks.com.au The cover image shows the impact the January 2019 bushfires had on our electricity assets and the superb effort of the emergency teams to protect our community and assets from bushfire. 1 CONTENTS ABOUT US 2 FROM OUR CHAIRMAN 4 FROM OUR CEO 6 OUR CUSTOMERS 9 SAFETY AND WELLBEING 16 CONNECTING WITH OUR COMMUNITY 20 OUR PEOPLE 22 ENVIRONMENT AND SUSTAINABILITY 26 CYBER SECURITY 29 GROWTH 33 CORPORATE GOVERNANCE 38 PERFORMANCE AGAINST OUR STATEMENT OF CORPORATE INTENT 51 TASMANIAN GOVERNMENT REPORTING REQUIREMENTS 54 DIRECTORS' REPORT 55 AUDITOR'S INDEPENDENCE DECLARATION 59 INDEPENDENT AUDITOR’S REPORT 60 CONSOLIDATED FINANCIAL STATEMENTS 64 DIRECTORS' DECLARATION 114 AnnualReport 2018-19 2 ABOUT US • Operating the network on a day-to-day basis, including all fault restoration TasNetworks delivers power to • Maintaining the public lighting system Tasmanians. Our vision is to be trusted by our customers to deliver today and 42-24 create a better tomorrow. We own a subsidiary business called 42- 24 that specialises in telecommunications, We own, operate and maintain the electricity information technology services and data transmission and distribution network in centres. Tasmania. We deliver a safe, cost-effective and reliable electricity supply to more than Project Marinus 285,000 residential, commercial and industrial We're finalising the business case assessment customers. and starting design and approvals planning Our responsibilities include: for Project Marinus: a second Bass Strait • Keeping our people and our customers safe interconnector known as Marinus Link, together with the associated supporting • Maintaining and replacing network transmission in north-west Tasmania. Marinus infrastructure to ensure a reliable service for Link will play a key role in Australia's future our customers electricity grid. • Connecting new customers to the network (including small and large-scale generators) About this report • Investing in the network to support capacity This report reviews the operations of growth Tasmanian Networks Pty Ltd and our subsidiaries TasNetworks Holding Pty Ltd, FortyTwo24 Pty Ltd, Marinus Link Pty Ltd and Large Scale Renewables Pty Ltd for the 2018-19 financial year. AnnualAnnualReportReport Kelly Bowring, Leader 42-24, with Dean Dixon, 20182018--1919 Business Development Manager 42-24. 3 WHAT IT TAKES TO DELIVER YOUR POWER TRANSMISSION 3 500 CIRCUT KILOMETRES OF TRANSMISSION LINES 7 700 TRANSMISSION LINE SUPPORT STRUCTURES 11 000 HECTARES OF EASEMENT 49 SUBSTATIONS DISTRIBUTION 15000 KILOMETRES OF HIGH VOLTAGE POWERLINES 5000 KILOMETRES OF LOW VOLTAGE POWERLINES 2000 KILOMETRES OF HIGH AND LOW VOLTAGE UNDERGROUND CABLES 100100001101010101100001 00111001011010101010100011 230 000 01010101110100101010 101011 POLES 0101010110010101100001 001110010101010100011 010101011101001010100 1010110101101100001 TELECOMMUNICATIONS 00111001010101010001101010 1011101001010100 10101100001 00111001010101010001101010 1675 1011101001010100 10101100001 KILOMETRES OF FIBRE 00111001010101010001101010 OPTIC CABLE 1011101001010100 10101100001 00111001010101010001101010 2 1011101001010100 10101100001 DATA CENTRES 00111001010101010001101010 1011101001010100 10101100001 PEOPLE 1005 EMPLOYEES AnnualReport 2018-19 4 FROM OUR CHAIRMAN The energy industry is evolving in a substitution of lower cost Tasmanian hydro manner we have never seen before. generation, pumped hydro storage and competitive renewable resources for higher Across Australia, wind and large-scale solar cost thermal and renewable generation in generation developments are proceeding at mainland regions of the NEM. Importantly, it unprecedented rates. At the household level, would facilitate the connection of increasingly customers are beginning to see the benefit critical dispatchable generation to support of integrating solar, batteries and devices into power system security in the NEM. the electricity grid. This is a unique opportunity for our state and Accompanying these developments a potential game changer for our business. are significant challenges as coal-fired However, we must ensure the project’s social plant retires and the need grows for new licence and environmental impacts of the Link dispatchable generation that can support are carefully considered and communities intermittent solar and wind generation. are closely engaged, both in Tasmania and Victoria. In this environment, network businesses need to ensure both large-scale and small- scale generation assets are connected safely and reliably, while continuing to provide customers sustainable prices. While the surge of customers installing solar provides them greater control over their energy usage, it creates challenges for managing our network. It means the system needs to facilitate power flowing both to and from local premises with generation and storage assets. Over the past five years of TasNetworks, we have been working to create a future electricity grid that enables us to keep prices down, keep the lights on and to leverage our unique position in the National Energy Market (NEM). We have been building capabilities and trialling new systems to ensure network design delivers benefits. This includes the Bruny Island Battery Trial, with the objective to improve ways of network management using distributed energy storage, improve the autonomous operation of energy storage and investigate the social aspects of tariff structures. The trial provides a glimpse into a future electricity network where everyone can benefit. This year we released our Marinus Link Initial Feasibility Report, which demonstrates a second Bass Strait interconnector would provide NEM-wide economic benefits, including the transition to a future of lower carbon emissions. Marinus Link would enable AnnualAnnualReportReport 20182018--1919 5 We continue to see unprecedented enquiries Lance Balcombe. With the strong support of for new renewable generation developments the entire TasNetworks team the company to connect to the transmission network. While has delivered excellent results in 2018-19 and this is an exciting opportunity for TasNetworks consolidated the foundations for addressing and Tasmania, it is paramount to ensure future challenges. these developments are connected and coordinated in a manner which ensures that Dr Dan Norton AO Tasmania’s energy security and the reliability Chairman of the network is not compromised, while also ensuring that price rises for our customers remain sustainable. Once again, robust consideration of social and environmental impacts and careful community consultation are critical. This is particularly important as we plan the transmission developments to enable the connection of large-scale renewable energy in the North-West. The Australian Energy Regulator (AER) allowed TasNetworks revenue of $2,012.5 million for the 2019-24 period. I wish to acknowledge the customers and stakeholders that worked with us to develop a proposal that ensures TasNetworks is appropriately equipped to address the challenges of a rapidly changing industry, while continuing to provide the affordable, safe and reliable services our customers expect. I would like to acknowledge the work of my fellow Directors, particularly retired Director Dr Jane Sargison for her service to TasNetworks and great contribution to the Board and committees. Following Jane’s retirement, we welcomed Dr Julie Beeby to the Board and also appointed an additional director, Sarah Merridew. Both Julie and Sarah have a wealth of experience and are providing valuable leadership, insight and knowledge to the Board. During 2018-19, TasNetworks had many accomplishments. I am particularly proud of our ability to face new technical and operational challenges head on and our involvement in leading Australia’s renewable energy future. We look forward to working closely with our customers and the community on both challenges and the opportunities that present us in the years to come. I specifically acknowledge the commitment of the TasNetworks Leadership Team led by AnnualReport 2018-19 6 FROM THE CEO The 2018-19 year was another successful year for TasNetworks, culminating with the celebration of our five-year anniversary. We can be proud of the efforts of our entire team who continue focus on delivering valuable services and outcomes to our customers, our owners and our community. A shining example of this was our response to January’s devastating bushfires that burned on many fronts across Tasmania. Our team participated in a massive collaborative effort with the fire and emergency services, the Australian Energy Market Operator (AEMO), Government agencies, the Bureau of Meteorology and local communities to coordinate a safe response, protect our key transmission and distribution assets while working hard to maintain energy system security across Tasmania at a time when it was very much needed. Fortunately, our assets losses were reasonably low, particularly for the business while also providing improved in comparison to those under threat, and customer outcomes. Combined, the two the restoration efforts from our team and elements