ANNUAL PERFORMANCE REPORT 2010–11 IMPROVING CUSTOMER VALUE Endeavour Energy Annual Performance Report 2010–11 Report Performance Annual Ausgrid Locations anD contacts Kandos Emergencies, streetlights out, hot water hotline Tel: 131 003 (24 hours) Bowenfels Head office enquiries Tel: 131 081 or (02) 9853 6666 (8am – 5.30pm Monday to Friday) Windsor Fax: (02) 9853 6000 Glendenning Katoomba Email: Kings Park endeavourenergy@ Penrith Parramatta endeavourenergy.com.au Huntingwood Website: Essential www.endeavourenergy.com.au Energy Ethics hotline Narellan 1800 ETHICS (384 427) Hoxton Park Picton ABOUT THIS REPORT Main office 51 Huntingwood Drive This report provides a candid account of Endeavour Energy’s performance Huntingwood NSW 2148 during the financial year 2010–11. It notes Endeavour Energy’s successes, PO Box 6366, Blacktown NSW 2148 Moss Vale areas for improvement and our future direction and challenges. Coniston Network Project Management Office Springhill The theme for this year’s report reflects the focus of our efforts this year: improving Level 5 and 9, Westpoint Tower customer value. Affordable, reliable and safe electricity supply underpins lifestyles, 17 Patrick Street Shellharbour creates jobs and powers some of Australia’s largest and fastest growing regional Blacktown NSW 2148 economies. Maintaining the advantages this brings to our customers and our Bowenfels Field Service Centre communities is essential for our current and future prosperity. The front cover shows 9-13 Cooerwull Road a typical residential street in the North West Growth Sector. Bowenfels NSW 2790 Nowra This report complies with the requirements of the NSW Annual Reports Coniston Office legislation and embraces the principles of the Global Reporting Initiative (GRI). Corner of Bridge Street and Statutory accounts and financial information are verified by the NSW Auditor Old Springhill Road General. We have reported our emissions using the National Greenhouse and Coniston NSW 2500 Energy Reporting Scheme methodologies where available. We use the National Glendenning Central Kings Park Field Greenhouse Accounts where such methodologies are unavailable and use relevant Logistics Facility Service Centre environmental key performance indicators developed by the Energy Supply Ulladulla Pacific 49 Glendenning Road 10 Tasha Place Ocean Association of Australia. Glendenning NSW 2761 Kings Park NSW 2148 We have substantially reduced printed copies of the report this year to reduce costs and encourage sustainable practices. It was produced at a cost of $32,996 (GST inclusive). Glendenning Civil Works Centre Moss Vale Field Service Centre 15 Belfast Place 8-10 Old Dairy Close Further information about Endeavour Energy is available at our website Glendenning NSW 2761 Moss Vale NSW 2577 at www.endeavourenergy.com.au or via email correspondence: [email protected] Glendenning Field Service Centre Narellan Field Service Centre Project management Corporate and Government Affairs, Endeavour Energy 43 Glendenning Road 17 McPherson Road Glendenning NSW 2761 Smeaton Grange NSW 2567 Design Impress Design Photography Penelope Clay and NPB Photographics Hoxton Park Field Service Centre Nowra Field Service Centre Shellharbour Field Service Centre 490 Hoxton Park Road 20 Depot Road Buckleys Road Editing Businesswriters & Design Hoxton Park NSW 2171 West Nowra NSW 2541 Shell Cove NSW 2529 Printing SOS Printing Hoxton Park Technical Parramatta Field Service Centre Springhill Field Service Centre Training Centre 84-86 Macarthur Street 191-195 Five Island Road © Endeavour Energy 2011 109 Jedda Road Prestons NSW 2170 Parramatta NSW 2150 Unanderra NSW 2526 This work is copyright. Material contained in this document may be reproduced for personal, in-house or non-commercial use without formal permission or charge provided there is due Kandos Field Service Centre Penrith Field Service Centre Ulladulla Field Service Centre acknowledgement of Endeavour Energy as the source. 16 White Crescent 96-120 Blaikie Road 18 Deering Street Requests and enquiries concerning reproduction and rights for a purpose other than personal, Kandos NSW 2848 Jamisontown NSW 2750 Ulladulla NSW 2539 in-house or non-commercial use should be addressed to the Manager Corporate and Picton Field Service Centre Windsor Field Service Centre Government Affairs, Endeavour Energy, PO Box 6366, Blacktown NSW 2148. Katoomba Field Service Centre 27-29 Whitton Street 94 Bridge Street Corner Ham Street and Fairey Street ISSN 1834-0733 Katoomba NSW 2780 Picton NSW 2571 South Windsor NSW 2756 CONTENTS LETTER TO SHAREHOLDING MINISTERS Our organisation 2 Year at a glance 3 31 October 2011 Report by the Chairman and The Hon. Mike Baird MP Chief Executive Officer 4 Treasurer Level 36, Governor Macquarie Tower Our plans and priorities 6 1 Farrer Place SYDNEY NSW 2000 Our performance 8 The Hon. Greg Pearce MLC Minister for Finance and Services Safety 8 Level 36, Governor Macquarie Tower Network plan 10 1 Farrer Place SYDNEY NSW 2000 Customer value 12 Leverage technology 14 Dear Ministers Manage business risk 16 REPORT ON PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2011 Delivering performance through people 17 This report details Endeavour Energy’s performance, operations and statement of accounts for the year Our operations 18 ended 30 June 2011, in accordance with the provisions Network 18 of the Annual Reports (Statutory Bodies) Act 1984 and the principles of the Global Reporting Initiative. Retail 26 It is submitted on behalf of the Board of Endeavour Energy for tabling in Parliament. Our people 28 Copies are being sent to the Auditor-General, Our community 32 the Minister for Resources and Energy, Chairperson, Community Relations Commission, Environment 35 and key stakeholders. The report is available on our website at Governance 38 www.endeavourenergy.com.au. Management discussion Sincerely and analysis 43 Financial statements 46 Appendices 93 Michael McLeod Vince Graham Chairman Chief Executive Officer Endeavour Energy Annual Performance Report 2010–11 1 01 electricity distribution $ network serves billion 877,339 customers 3.3 or 2.1 million people Above: Adam Moreau, Third Year OUR ORGANISATION Distribution Powerline Apprentice Endeavour Energy is a New Endeavour Energy is incorporated Our values South Wales state-owned energy under the Energy Services corporation serving some of Corporations Act 1995 and operates These five values are the basis Australia’s largest and fastest growing within the terms of the Electricity for everything we do. regional economies. Supply Act 1995 on behalf of our shareholder, the New South Endeavour Energy is the new Wales Government. Safety name for the electricity network excellence business previously operating as The focus of our 2,925 people is to Integral Energy. The sale of Integral deliver a safe, reliable and efficient Energy’s Retail business and brand electricity supply to our customers to Origin Energy was completed on while delivering strong financial 1 March 2011, as part of the NSW results to our shareholder. We are Respect Government’s energy reform process. committed to making a serious for people and sincere effort to deliver better Endeavour Energy manages a value for our customers by reducing $3.3 billion electricity distribution our overhead and operating costs network for 877,339 customers or without compromising safety or Commitment 2.1 million people, in households services to customers. to customers and businesses across a network and communities franchise spanning 24,500 square Our purpose kilometres in Sydney’s Greater West, Blue Mountains, the statement Illawarra, the Southern Highlands Continuous and Shoalhaven. Every day we deliver improvement to our communities the ability to live and the energy to grow. Integrity 2 YEar AT A GLANCE Items 2009–10 2010 –11 % Change OUR SHAREHOLDER EBITDA (including capital contributions) $’000 588,980 711,567 20.8 Operating profit after tax $’000 178,979 244,717 36.7 Returns to NSW Governmenta 215,277 266,398 23.7 Dividend $’000 142,610 156,800 10.0 Income tax equivalents $’000 72,667 109,598 50.8 Qualified credit ratingb Aa3 Aa3 Net assets $’000 1,153,849 1,233,182 6.9 Return on assets % 9.5 10.8 14.0 Return on equity % 17.3 20.5 18.3 OUR OPERATIONS Reliability (unplanned interruptions to supply) Min/lost/cust 79.4 72.0 9.3 Capital expenditure $’000 417,421 496,429 18.9 Total retail sales of electricityc GWh 11,076 6,942 (37.3) Sales revenue (excluding Community Service Obligations) $’000 2,133,865 1,937,860 (9.2) OUR CUSTOMERS Total network customer connections 866,767 877,339 1.2 Customer Service Indicatord % 80 79 (1.3) Social programsc $’000 30,427 23,977 (21.2) Pensioner Rebates $’000 29,700 23,309 (21.5) Life Support Equipment Rebate $’000 727 668 (8.1) Energy Accounts Payment Assistance (EAPA)c $’000 2,467 2,023 (18.0) ENVIRONMENT Transformer oil recycled litres 433,091 629,971 45.5 e Greenhouse gas emissions t CO2e 681,285 649,608 (4.6) Reportable environmental incidents No. 1 2 (100.0) OUR PEOPLE Total employeesf 2,888 2,925 1.3 Lost time incidentsg 18 24 33.3 To ensure consistency on an annual basis, prior year statistics may have changed in line with amendments to comparative financial statement disclosures and amended definitions. a Excludes the special dividend to the NSW Government resulting from the sale of Retail net assets. b Credit rating undertaken by Moody’s Investor Services. c As at 28 February 2011, following the completion of the sale of Retail net assets to Origin Energy on 1 March 2011, therefore only represent eight months of activity compared to twelve months in the previous year. d This survey ceased in March 2011 following the completion of the sale of Retail net assets to Origin Energy. The result of 79% is based on the last survey period – February 2011. e Includes all Scope 1 and 2 emissions minus offsets purchased. f Full time equivalent employees as at 30 June 2011. g As at 30 June 2011, 23 LTIs had been recorded; one additional lost time shift occurred during July that related to a 2010–11 incident taking the total to 24.