Alinta Energy Sustainability Report 2017/18 ABN 39 149 229 998 Contents A message from our Managing Director & CEO 2 Employment 52 FY18 highlights 4 Employee engagement 54 About Alinta Energy 4 Diversity and equality 57 Key sustainability performance measures 6 Learning and development 57 Sustainability materiality assessment 8 Other employment arrangements 59 Our business 16 Our communities 60 Office and asset locations 22 Vision and values 24 Markets and customers 66 Business structure and governance 26 Customer service 70 Executive leadership team 27 New products and projects 71 Alinta Energy Directors 28 Branding and customer communications 73 Risk management and compliance 29 Economic health 30 Our report 76 Reporting principles 78 Safety 32 Glossary 79 GRI and UNSDG content index 80 Environment 38 KPMG Assurance Report 81 Climate change and energy emissions 40 Environmental compliance 49 Waste and water 50 2017/18 Alinta Energy - Sustainability Report Page 1 We also tailored a suite of products for Commercial & A message from the Industrial customers that give price certainty over the long run by allowing customers to participate in the wholesale market MD & CEO if prices fall, while also providing a protective price ceiling if the market rises. I am pleased to present our 2017/18 Sustainability Report, The success of these initiatives saw our total customer which provides our stakeholders with an update on Alinta numbers increase from 770,000 to over one million during Energy’s activities and impacts. It includes information on the year. The 30% growth in customer numbers resulted our values, strategic vision and annual performance across in a 28% increase in employees to 575 people which in finance, safety, employment, environment, community, turn necessitated moves to new office premises in Perth, markets and customers. Melbourne and Sydney and the opening of a new office in Brisbane. Our approach to sustainability involves balancing social, environmental and economic outcomes as we strive to Since May 2016, the closure of the Northern and Hazelwood deliver affordable, reliable and lower emission energy. Power Stations, has seen energy hedging contracts increase in value. For a multitude of reasons (including those We understand that energy is an essential service and higher mentioned above), this has translated into higher energy bills prices can impact the most vulnerable people in our society. for customers, which have risen by around 30%2 in real terms Our sense of purpose involves a determination to make between FY08 and FY16. The increase in wholesale electricity energy more affordable and we are committed to finding prices, however, sent an important signal to the market that the right balance between delivering reliable, affordable and new investment in energy generation was required and sustainable energy. This year, we have taken steps to progress despite the energy policy uncertainty, as at late 2018, the this in a number of ways such as increasing competition by market was responding and wholesale electricity prices were entering new markets and putting downward pressure on beginning to reduce. prices by offering more competitive energy products. Being the fourth largest privately-owned energy retailer by For example, we expanded into South East Queensland customer numbers in Australia, we understand our role in through a joint venture with CS Energy and in Victoria through transitioning to lower emission generation. Last year we set an a capacity agreement with Loy Yang B Power Station. The ambitious target to support the development of 1,000MW of joint venture with CS Energy, reduced the average South East renewable energy by 2020, and we have made significant Queensland electricity bill by 13% to 16%, which according leaps towards achieving this goal. As at 30 June 2018, we to a Deloitte Report1 resulted in savings of between $20 had financially committed to ten renewable energy projects million to $40 million across our 125,000 new customers. We across Victoria, Queensland and Western Australia, totalling were delighted to be the only energy retailer in Queensland 543MW of large scale renewable generation. awarded a five-star rating in Canstar Blue’s 2018 annual comparison of electricity providers, based on feedback from We also recently acquired a geothermal business that more than 1,500 Queenslanders. provides high-efficiency air conditioning systems to households and small businesses. This technology uses stable In January 2018, our Hong Kong-based owner Chow Tai underground temperatures to deliver heating and cooling Fook Enterprises Limited (CTFE), acquired the Victorian Loy solutions. Although geothermal air conditioning products Yang B Power Station from Engie Australia. This paved the way are relatively new in Australia, there are many examples of for Alinta Energy to enter into a capacity agreement with similar technologies being successfully used across the world. Loy Yang B to buy approximately 75% of its output. We are Our geothermal products are already helping hundreds now leveraging the wholesale price certainty this gives us to of Australian households lower the costs of operating their offer competitive energy products to Victorian consumers, heating and cooling systems, which usually account for increasing competition in this major retail market. about 40% of household energy costs. 1 https://www.alintaenergy.com.au/Alinta/media/ecpdfs/Alinta_impact-on-Queensland-retail-market.pdf 2 https://www.accc.gov.au/system/files/Retail%20Electricity%20Inquiry%20-%20Preliminary%20report%20-%2013%20November%202017.pdf Page 2 Alinta Energy - Sustainability Report 2017/18 We also commissioned an innovative 35MW battery at our We also achieved consistency in our remuneration of male and Newman Power Station that has won several awards in 2018 female employees this year, with a recent review indicating including the Australian Engineering Excellence Award - near pay equity (with only a 2% variation). This compares very Innovation Category and the Australian Innovative Power favourably to Australia’s pay gap average of 15%. Technology of the year from the Asian Power Awards. This is particularly special because it is among the world’s largest Overall employee engagement reflected these positive and is the biggest Australian battery to be developed for an initiatives and rose from 58% to 64% over the last 12 months. industrial application. This brings us closer to our target of top quartile engagement, for which the 2018 threshold was 68%. The dedication and Alinta Energy believes that climate change poses significant hard work of our people resulted in our strong financial risks and supports the transition to lower emission electricity performance this year. To support further growth, we are supply over a sensible timeframe. In our view, we must take a actively investing in the development of new competitive coordinated, integrated and long-term approach to ensure energy products for our customers, providing training that we meet Australia’s international commitments to reduce opportunities for our employees and improving our business emissions. To do this, Australia needs a stable, national, processes and systems. As an example, we invested in a new bipartisan, market-based, technology agnostic policy for round of leadership training for our people during the year. energy and climate change. This will create the best results for consumers and the environment in the long term. We are also giving back to the community by supporting charities that assist vulnerable people in our society. For Over the past decade, successive governments have sought example, we recently donated $100,000 to the Salvation to establish such a policy to provide certainty for energy Army on our customers’ behalf to celebrate reaching our providers and consumers. While many policy propositions millionth customer. have had broad industry and consumer group support (such as the recent National Energy Guarantee), to date We also recently commenced a four-year sponsorship the Government has not decided to progress with a policy program with Cricket Australia to support community and elite framework. We remain in support of energy and climate level sport in Australia. change policy and will continue to work with government, industry and consumers to achieve this goal. I would like to personally thank our employees, stakeholders and the more than one million customers that chose to join We continue to focus on our safety vision of Everyone, or stay with us during the year and I’m looking forward to Every Day, Every Job: Zero Harm and are in the process of many more exciting experiences next year. developing a new safety leadership training program for people at all levels across our business. We are proud of not having had any ‘Class 1’ injuries during the year, meaning our business had no fatalities, permanent or long term impairment injuries. Jeff Dimery Managing Director & CEO Our sense of community has seen a series of employee volunteering days and encouraged our people to use their annual day of paid volunteering leave to support a community organisation they are passionate about. They volunteered at a variety of causes such as rejuvenating native landscapes with Landcare and packing hampers for the disadvantaged with UnitingCare. 2017/18 Alinta Energy - Sustainability Report Page 3 FY18 highlights About Alinta Energy • Reached 1,000,000 customers across Alinta Energy is the fourth largest privately-owned Australia and New Zealand (30% increase energy retailer by customer numbers in Australia, from FY17). supplying over one million customers. We supply • Reached 543MW of large-scale renewable retail gas and electricity and generate electricity energy projects committed. in Australia and New Zealand. We have a leading • Employee engagement increased to 64% position in the Western Australia retail mass market (from 58%). and a rapidly growing retail business in the • Acquired geothermal business (June 2018). eastern states. • During the year, the scale of our business increased substantially, resulting in strong We have a generation portfolio (owned, operated financial performance and EBITDA growth.