Issue Date: 30.06.2015 Budget Assumptions ForecastOPERATING for INCOME the year ending 30 June 2016 Generation Sales The current Power Purchase Agreement (PPA) is with Pulse Energy. This contract has prices for six four-hourly blocks each day with different prices for summer (Oct-Mar) and winter (Apr-Sept). Generation estimates for this year are significantly lower than previous and reflect the low lake level coming out of the 2014/2015 summer. The electricity retail trial through Simply Energy ended in the 2014/2015 financial year and there is no intention to continue with self-retailing in the 2015/2016 year. Retailing may be revisited in future years. This Year (year ending 30 June 2016) Revised May 2015 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Total Year Generation (MWh) 10 Year Average 1,544 1,477 1,731 2,765 2,899 2,742 2,590 1,442 2,988 2,072 2,098 2,262 26,609 Budget Generation 349 465 810 1,953 2,520 1,953 1,674 870 1,163 1,350 1,674 1,890 16,670 Price ($/MWh) Budget Price (Pulse Contract) $92.58 $92.58 $92.58 $64.40 $64.40 $64.40 $64.40 $64.40 $64.40 $92.58 $92.58 $92.58 Revenue ($) Budget Revenue (Pulse Contract) $ 32,287 $ 43,049 $ 74,989 $ 125,764 $ 162,277 $ 125,764 $ 107,798 $ 56,024 $ 74,860 $ 124,982 $ 154,977 $ 174,974 $ 1,257,746 Calculate Generation (MWh) Days in Month 31 31 30 31 30 31 31 29 31 30 31 30 366 SYB cumecs (Consent) 4.0 4.5 6.0 8.5 7.0 6.0 3.5 3.5 7.5 8.0 4.5 4.5 Average DSW Release (2011-2014) 7.7 6.2 5.8 11.9 11.8 8.9 8.3 6.2 8.2 7.0 10.1 8.2 8.4 Min DSW Release (2011-2014) 3.1 2.0 3.6 7.2 9.6 6.9 5.6 5.1 1.9 5.8 4.7 4.1 5 Average cumecs (Budget 2015) 1.5 2.0 3.0 6.0 8.0 6.0 6.0 4.0 5.0 6.0 6.0 6.0 5.0 Average MW (from dam level = head) 5 5 6 7 7 7 6 5 5 5 6 7 Budget MWh (calculate from cumecs) 349 465 810 1,953 2,520 1,953 1,674 870 1,163 1,350 1,674 1,890 16,670 Historical DSW Releases (Monthly Averages) Min 3.1 2.0 3.6 7.2 9.6 6.9 5.6 5.1 1.9 5.8 4.7 4.1 Mean 7.7 6.2 5.8 11.9 11.8 8.9 8.3 6.2 8.2 7.0 10.1 8.2 Max 14.2 17.4 8.4 16.4 13.8 10.6 11.9 7.4 14.9 7.8 13.2 13.3 Last Year (year ending 30 June 2015) Revised Generation Revenue Budget (January 2015) Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Year Generation (MWh) Budget 1,394 1,595 2,004 2,757 2,640 2,891 2,615 1,730 2,805 2,247 1,735 1,705 26,118 Actual 2,711 598 1,024 2,763 2,739 1,880 1,550 975 344 Revised Budget 2,711 598 1,024 2,763 2,739 1,880 1,450 1,020 450 648 744 810 16,837 Difference 1,317 -997 -980 6 99 -1,011 -1,165 -710 -2,355 -1,599 -991 -895 -9,281 Price ($/MWh) Budget $ 100.77 $ 90.91 $ 81.13 $ 45.10 $ 51.50 $ 65.51 $ 38.39 $ 72.44 $ 94.74 $ 99.21 $ 98.31 $ 89.67 Actual $ 51.38 $ 147.85 $ 56.02 $ 64.46 Revised Budget (Pulse Contract) $ 51.38 $ 147.85 $ 56.02 $ 64.46 $64.40 $64.40 $64.40 $64.40 $64.40 $92.58 $92.58 $92.58 Difference -$49.39 $56.94 -$25.11 $19.36 $12.90 -$1.11 $26.00 -$8.05 -$30.35 -$6.63 -$5.73 $2.91 $0.00 Revenue ($) Budget $ 140,475 $ 144,995 $ 162,576 $ 124,352 $ 135,960 $ 189,378 $ 100,396 $ 125,323 $ 265,748 $ 222,926 $ 170,573 $ 152,887 $ 1,935,589 Actual $ 139,293 $ 88,366 $ 57,378 $ 178,091 $ 177,699 $ 125,429 $ 101,453 $ 65,094 $ 22,028 Revised Budget (Pulse Contract) $ 139,293 $ 88,366 $ 57,378 $ 178,091 $ 176,387 $ 121,064 $ 93,373 $ 65,683 $ 28,978 $ 59,991 $ 68,879 $ 74,989 $ 1,152,473 Difference -$1,182 -$56,629 -$105,198 $53,739 $40,427 -$68,314 -$7,023 -$59,640 -$236,770 -$162,935 -$101,694 -$77,898 -$783,116 Cumulative -$1,182 -$57,811 -$163,008 -$109,270 -$68,843 -$137,157 -$144,180 -$203,819 -$440,589 -$603,524 -$705,218 -$783,116 Water & Operation Revenue Water Charges Water charges remain unchanged from 2014/2015 at an annual charge of $197.04 x 16,000 shares ($16.42 per month, per share, plus GST). Discount of 2.5% is given to those using the direct debit payment method. Sutherlands The total income collected from Sutherland’s users is $233,400 per annum ($19,450 per month): Capacity charges are based on the users’ nominated flow rate. No increase proposed to the 2014/2015 charges of $461.05 per litre/second. The Water charge is based on 135% of the OWL water charge. As no increase is proposed to the OWL water charges, the charge for unshared water is $643.39 per litre/second. Discount of 2.5% is given to those using the direct debit payment method. Incremental Water - Collett Road The charge is based on a % of the OWL water charge. As no increase is proposed to the OWL water charges, the charge for unshared water is $91,900 p.a. ($7,658 per month). Discount of 2.5% is given for using the direct debit payment method. Infrastructure Charges Levels Plain Scheme No increase is proposed to the prior year 2014/2015 charges. Income from Levels Plain users is calculated from an annual charge of $40.92 x 3,296 shares - $134,872 p.a. or $11,239 per month. This equates to an infrastructure charge per share of $3.41 per month, plus GST. Discount of 2.5% is given to those using the Direct Debit payment method. Budget Assumptions 2015/2016 - year ending 30 June 2016 1 Issue Date: 30.06.2015 State Highway 8 Users State Highway users who do not hold “water” shares or have not paid the capital cost of the buried mainline pipe are charged in accordance with the agreement they had with Levels Plain Irrigation. Water charge is $237.96 per hectare (OWL water charge $197 + LPIC admin charge $40.96). Capacity charge in lieu of capital contributions is $200.00 p.a. per hectare. Kakahu Scheme Income from Kakahu users is calculated from an annual charge $246.72 x 3,208 shares - $791,478 p.a. or $65,956 per month (last year $276.72, reduction of $30 per hectare as resolved at “I” class meeting in July 2015). This equates to an infrastructure charge per share of $20.56 per month (last year $23.06), plus GST. Refinancing undertaken as part of the restructure has given the opportunity to reduce the financial charges to the KIL scheme. Discount of 2.5% is given to those using the Direct Debit payment method. Totara Valley Scheme Income from Totara Valley users has been calculated from an annual charge $161,342. The annual charge is made up from A and E shares, some full, some partly paid. No increase is proposed to the prior year 2014/2015 charges. Discount of 2.5% is given to those using the Direct Debit payment method. The income collected from “E” share charges of $49,454 p.a. is to be applied to interest charges and debt reduction associated with the $230k loan with ANZ. Water Abstraction Charges (Timaru District Council) TDC charges are subject to CPI increase at June quarter. The CPI increase is estimated at 1.1%, based on the last 3 years average (below), and has been applied from 1 July 2015 to 30 June 2016. Income from TDC per month is estimated at $329,469 p.a. ($27,456 per month). Opihi Augmentation - prior year charge of $233,446 plus an estimated CPI increase of 1.1% - total $236,014 ($19,668 per month). Additional Water - prior year charge of $92,652 plus an estimated CPI increase of 1.1% - total $93,671 ($7,806 per month). Consumers price index Tradables, non-tradables and all groups – index numbers and percentage changes (1)(2) Base: June 2006 quarter (=1000) Tradables(3)(4) Non-tradables(5) All groups(3) Percentage change Percentage change Percentage change From same From same From same Index From Index From Index From quarter of quarter of quarter of previous previous previous previous previous previous quarter quarter quarter Series ref: CPIQ SE9NS6000year SE9NS6500year SE9A year Quarter 2012 Mar 1100 -0.4 0.3 1219 1.2 2.5 1164 0.5 1.6 Jun 1101 0.1 -1.1 1225 0.5 2.4 1168 0.3 1.0 Sep 1101 0.0 -1.2 1231 0.5 2.3 1171 0.3 0.8 Dec 1093 -0.7 -1.0 1235 0.3 2.5 1169 -0.2 0.9 2013 Mar 1088 -0.5 -1.1 1248 1.1 2.4 1174 0.4 0.9 Jun 1083 -0.5 -1.6 1256 0.6 2.5 1176 0.2 0.7 Sep 1096 1.2 -0.5 1265 0.7 2.8 1187 0.9 1.4 Dec 1090 -0.5 -0.3 1271 0.5 2.9 1188 0.1 1.6 2014 Mar 1082 -0.7 -0.6 1285 1.1 3.0 1192 0.3 1.5 Jun 1084 0.2 0.1 1290 0.4 2.7 1195 0.3 1.6 Source: Statistics New Zealand average 1.1 NON-OPERATING INCOME Interest & Sundry Income Dividends Received An annual dividend from LineTrust South Canterbury of $500 has been allowed for in January 2016 (a receipt similar to that received in the 2014/2015 year).