2:34
7:32
10:09
12: 34
1:58
2:07
aM
OUT ON A LIMB
pM
STORMY NIGHTS AND DAYS
aM
pM
THE POWER TO DELIVER ANYWHERE
ON THE ROAD AGAIN
aM
pM
MAINTAINING OUR BEST
IN-DEPTH TRAINING
pM
pM
PITCHING IN FOR THE BITE
MEASURING UP FOR CUSTOMERS
pM
OUR QUIET ACHIEVERS
SLOW DOWN, WORK UNDERWAY
A TOWER OF STRENGTH
5:45
5:50
6:44
8:26
10:23
pM
ANNUAL REPORT 2010
pM
00:00
ETSA UTILITIES PLAYS A ROLE IN THE LIVES OF ALL SOUTH AUSTRALIANS.
DAY IN. DAY OUT.
out on a limb.
2: 34
Twenty-four hours, seven days a week, our crews are ready
to respond to outages and emergencies. Vegetation falling
on power lines from outside clearance zones can cause
significant damage, bringing down lines and poles. In some
cases, crews have to replace several poles and re-string
downed wires. It’s a job that can take considerable time
depending on the extent of damage. In responding to these
kinds of events, we will first make the area safe and then
look to restore power to as many customers as possible by
switching them to other feeders, even before we commence
repair work. Generally, customers in the immediate
vicinity of the damage can't be resupplied until repair
work is completed or generators are installed.
DAY IN. DAY OUT.
Am
7:32
ON THE ROAD AGAIN.
DAY IN. DAY OUT.
When it comes to maintaining the 87,000 kilometres of power lines
across South Australia, there’s a long dusty road ahead for our
people. They cover about 15 million kilometres a year travelling
near and far to inspect, maintain and build the electricity
network. We place a big emphasis on road safety — whether it is
ensuring employees are safe and considerate drivers on our roads,
managing fatigue or supplying the right vehicles for the right
job. That, and a commitment to a high level of maintenance for
our fleet, means our employees travel safely and South Australians
can rely on them to do the right thing on our roads.
aM
ETSA Utilities
ABN 13 332 330 749
a partnership of:
Spark Infrastructure
SA (No. 1) Pty Ltd
ABN 54 091 142 380
Spark Infrastructure
SA (No. 2) Pty Ltd
ABN 19 091 143 038
Spark Infrastructure
SA (No. 3) Pty Ltd
ABN 50 091 142 362
Each incorporated
in Australia
CKI Utilities Development
Limited
ABN 65 090 718 880
HEI Utilities Development
Limited
ABN 82 090 718 951
Each incorporated in
The Bahamas
The ETSA Utilities 2010
annual report is printed
by a Carbon Neutral
process with recycled
and sustainable forest
fibre using world’s
best practice ISO 14001
Environmental Management
Systems.
ETSA UTILITIES ANNUAL REPORT 2010
CONTENTS
08
09
10
12
16
Business
Overview.
Chairman’s
Report.
CEO’s
Report.
Results
Summary.
Strategic
Overview.
PAGES
Who we are.
What we do.
How we do it.
17
24
34
38
39
44
Strategic
Review:
Strategic
Review:
Strategic
Review:
Corporate
Governance.
Board
Profiles.
Generating
financial
returns and
growth for
owners.
Delivering
value to
customers
and benefits
to the
community.
Ensuring
an engaged,
skilled
and safe
workforce.
Executive
Management
Group.
48
49
Historical
Operating
Statistics.
Directory
of Services.
PAGES
PAGES
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 8
BUSINESS
Overview
WHO WE ARE, WHAT WE DO,
HOW WE DO IT.
WHO WE ARE.
ETSA Utilities is South Australia’s
electricity distributor and one of
South Australia’s largest organisations,
employing more than 1,800 people
throughout metropolitan and regional
South Australia.
ETSA Utilities is 51% owned by Cheung
Kong Infrastructure Holdings Limited
and Power Assets Holdings Limited,
which form part of the Cheung Kong
Group of companies. The remaining
49% is owned by ASX-listed Spark
Infrastructure.
WHAT WE DO.
Our key task is the operation and
development of the South Australian
electricity distribution network – a core
component of the State’s infrastructure
delivering electricity to more than
820,000 residential and business
customers.
Our responsibilities include:
• maintaining the safety and
reliability of the network;
• connecting new customers;
• extending and upgrading the
network to meet changing needs;
• maintaining street lighting for
councils and government; and
• meter data collection for retailers.
We also successfully compete for
construction and maintenance contracts
involving electrical infrastructure projects
for government and the private sector.
STRATEGIC INTENT.
To be a leader in electricity distribution
and infrastructure services in Australia.
HOW WE ARE REGULATED.
Economic regulation of the business
is the responsibility of the Australian
Energy Regulator (AER), which, in 2010,
established pricing arrangements for the
2010-2015 regulatory control period. The
Essential Services Commission of South
Australia (ESCoSA) retains a role in
establishing and monitoring reliability
and customer service targets for ETSA
Utilities.
Our technical compliance with the
requirements of the Electricity Act,
Standards and Codes is monitored
by the Office of the Technical Regulator
(OTR) with the Department for
Transport, Energy and Infrastructure.
The Energy Industry Ombudsman
of South Australia is an independent
body that can investigate and resolve
disputes between customers and energy
companies, including ETSA Utilities.
VALUES.
• Believing in a workplace free of
accidents and injuries.
• Ensuring our employees are set
up to succeed.
• Treating customers as we would
wish to be treated.
• Valuing and rewarding our
employees for their contribution
to the business.
• Seeking opportunities for growth
and productivity improvements.
• Taking pride in being a respected
corporate citizen.
• Achieving the expectations of
our owners.
KEY PERFORMANCE INDICATORS.
Our performance against three Key
Performance Indicators (KPIs) will
measure our success:
• Generating financial returns and
growth for owners;
• Delivering value to customers and
benefits to the community; and
• Ensuring an engaged, skilled and
safe workforce.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 9
Chairman’s
report
PETER TULLOCH.
CHAIRMAN.
Regulatory resets are an intense and
time consuming process, but are
valuable in that they provide a high-level
of confidence to South Australians that
we have appropriate plans in place to
manage an essential State infrastructure.
In 2010, ETSA Utilities once again
demonstrated its strong and consistent
performance as a leading utility in
Australia.
It continues to perform very soundly for
the owners and deliver a cost-efficient
and quality service for South Australians.
It does so without fuss or self
congratulation, day in, day out.
That commitment and consistency
was sorely challenged in 2010 with a
succession of major storms that tested
the mettle of field crews, customer
service staff and management.
In May, the AER made its final decision
on the regulatory price reset, providing
for a significant increase in investment in
the regulated network that will support
the continued growth of the South
Australian economy, renewal of network
assets and increased security of supply.
The Board is particularly proud of the
achievement of a new corporate record
for successive days without a Lost Time
Injury (LTI), once again underlining our
industry leadership in safety.
The Board is encouraged that, despite
another year of strong and consistent
performance, the management team,
under the leadership of recentlyappointed CEO, Robert Stobbe, is
focused on ETSA Utilities becoming
an even better performer.
A new strategic plan with an emphasis
on industry leadership, safety, customer
service and work and cost efficiency, has
set the road map for the next five years
and beyond.
The Board thanks all employees for their
continuing efforts and commitment to
making a difference for South Australians,
every day.
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 10
CEO’s
report
ROB STOBBE.
CHIEF EXECUTIVE OFFICER.
The year 2010 was an important one
for ETSA Utilities.
In financial terms, we had a successful
year – growing revenue and profit for
our owners.
Earnings before interest, tax, depreciation
and amortisation (EBITDA) increased
5.8%. Distribution revenue was up 10.5%
despite a 1.1% reduction in sales. Net asset
revenue continued to perform strongly
and our capital expenditure increased
significantly to meet network capacity
requirements and Transmission Code
obligations.
These are discussed in more detail
in the Strategic Review.
We undertook a number of major
projects benefitting the State and
electricity consumers, and commenced a
major project (working with ElectraNet,
the State’s high voltage transmission
services provider) to ensure a more
secure electricity supply for the Adelaide
Central Business District (CBD).
Of huge significance for everyone at
ETSA Utilities, we went through the
entire calendar year without an LTI.
In fact, by year end, we had not had
an LTI for a record 533 days, compared
with our previous best of 511 days.
We also have been working hard to
improve customer service and our
surveys showed we had our best ever
year in terms of customer satisfaction.
Our ambition to improve on what I
believe has been very sound performance
over many years is reflected in our new
strategic intent to be a leader in electricity
distribution and infrastructure services.
This is discussed in more detail in our
Strategic Review.
We continued to train and develop a new
generation of field workers, technicians,
managers and engineers, and were
acknowledged for our training and
development focus, winning the major
award at the SA Training Awards.
In May 2010, the AER delivered its final
determination regarding ETSA Utilities’
electricity distribution network pricing
and the management of the South
Australian distribution network for
2010-2015.
We also made progress in key areas that
help set up the business for the future.
The AER approved $1.65 billion in network
investment, reflecting the need to
support our growing economy, support
major infrastructure works, ensure
sufficient network capacity to meet
projected demands, renew ageing assets
and provide adequate security of supply.
The endorsement by the Board of our
Strategic Plan 2011-2015 was a key
outcome for management because
it sets a clear path for the future.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 11
ceo’s report
continued
In its determination, the AER has made
it clear that the outcome ‘achieves
an appropriate trade-off in terms of
price, on the one hand, and quality,
safety, reliability and security of supply
of electricity, on the other’.
In the 15 years to the end of the new
regulatory period (ie from 2000-2015),
we anticipate the overall price of
electricity will rise in real terms
by 43% while our distribution charges
will rise by only 13%.
At ETSA Utilities we acknowledge the
community’s concern regarding rising
energy prices.
This kind of performance reflects ETSA
Utilities’ national leadership in terms
of cost efficiency.
Pricing is being impacted by a number of
factors including increases in generation,
transmission, distribution and retail
costs, and the impact of regulatory
requirements and government
legislation.
I like to think that one of our most
significant achievements has been
our demonstration of the role that the
private sector can play in the efficient
and effective management of essential
infrastructure.
Over many years, ETSA Utilities has
played a very significant role in keeping
a lid on electricity price rises in South
Australia.
In that context I want to thank all
employees for their efforts once again
in 2010 and their willingness to continue
to improve our performance.
In the decade 2001-2010, our distribution
charges fell by about 15% in real terms
compared with a 17% increase in the
total bill.
We are conscious that ETSA Utilities
plays a central role in South Australia,
day in, day out, and we are committed
to getting even better, every day.
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 12
RESULTS
SUMMARY
NETWORK CAPITAL EXPENDITURE
INCLUDING GIFTED ASSETS ($M)
TOTAL REVENUE ($M)
2005
2006
2007
2008
2009
2010
759.6
810.4
913.5
971.9
1,052.7
1,126.9
2005
2006
2007
2008
2009
2010
150.4
163.0
186.1
222.3
270.1
341.6
EBITDA²
INCLUDING INTEREST INCOME ($M)
ELECTRICITY DISTRIBUTION
GROSS REVENUE ($M)
2005
2006
2007
2008
2009
2010
596.8
614.5
651.1
688.9
731.4
812.5
2005
2006
2007
2008
2009
2010
468.8
456.5
507.0
541.2
632.4
669.0
OTHER REVENUE¹ ($M)
CASH GENERATION FROM OPERATIONS
BEFORE BORROWING COSTS &
CAPITAL EXPENDITURE ³ ($M)
2005
2006
2007
2008
2009
2010
2005
2006
2007
2008
2009
2010
161.1
186.9
263.1
282.8
321.6
314.2
448.4
434.9
481.6
523.5
605.0
602.2
¹Other revenue includes
asset-related revenue,
revenue from public
lighting, interest
revenue, external
contracting work and
interest income.
²EBITDA is earnings before
interest, tax, depreciation
and amortisation.
³Cash generation from
operations before
borrowing costs and
capital expenditure is
receipts from customers
less payments to
suppliers and employees.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 13
RESULTS SUMMARY
continued
SOUTH AUSTRALIAN ELECTRICITY
SYSTEM MAXIMUM DEMAND ⁴ (MW)
2005
2006
2007
2008
2009
2010
2,604
2,420
2,873
2,656
2,854
2,581
3,172
2,861
3,490
3,104
3,321
3,000
TRANSMISSION SYSTEM PEAK DEMAND
DISTRIBUTION SYSTEM PEAK DEMAND
RELIABILITY - STATE SAIDI⁵
(AVERAGE MINUTES WITHOUT SUPPLY
⁶
PER ANNUM EXCLUDING MEDs)
2006
2007
2008
2009
2010
153.9
153.4
119.0
167.4
153.0
MAJOR EVENT DAYS⁶ [MINS]
(AVERAGE MINUTES WITHOUT SUPPLY
PER ANNUM DUE TO MAJOR EVENTS)
2006
2007
2008
2009
2010
44.O
16.2
13.6
38.2
142.0
NUMBER OF LOST TIME INJURIES
2005
2006
2007
2008
2009
2010
4
5
0
⁴Distribution System
Peak Demand revised to
include contribution of
embedded generation
(exceeding 1MW)
3
3
0
SAFETY PERFORMANCE INDEX ⁷
2005
2006
2007
2008
2009
2010
31
50
0
5
17
0
EMPLOYEE NUMBERS
(FULL TIME EQUIVALENTS)
2005
2006
2007
2008
2009
2010
1,410
1,549
1,676
1,769
1,840
1,833
⁵From 1 July 2010 our
targets and reporting to
the Regulator are based
on Outage Management System (OMS) data
(available from 2006).
This includes more
accurate linking between
the distribution system
and customer numbers,
low voltage data and
excludes planned
interruptions. All years
shown have been revised
to reflect this change
and to allow like-for-like
comparison.
⁶MED = Major Event Day
i.e. where the daily State
SAIDI > 4.369 mins.
⁷Safety Performance
Index is the number of
days lost from injuries
per million hours worked.
IN-DEPTH TRAINING.
10:09
DAY IN. DAY OUT.
ETSA Utilities has recruited some
270 apprentices in recent years as we
build our next generation of field and
electrical workers. Our apprentices
undertake practical and theoretical
training managed through our Training
Services Centre at Angle Park. New
training facilities were opened at
the Centre in 2010. It is nationally
accredited and provides training and
refresher courses for our electrical
and power line employees and training
for external clients. Our employees
need to be skilled at working at
heights as well as underground. Here
an apprentice is undertaking safety
training for working in a confined
space (an underground junction box).
aM
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 16
Strategic
Overview
From a strategic perspective, 2010
was a watershed year in ETSA Utilities’
development.
The past decade has seen the business
mature as a stand-alone distribution
business, with a record of solid performance in line with the expectations of
stakeholders.
Looking forward though, the pace of
change is accelerating. We now have
new regulatory arrangements, a larger
program of works, escalating customer
expectations, impacts arising from
climate change and carbon policy,
and the challenges and opportunities
arising from an unprecedented rate
of change in technology.
In response, thorough and far-reaching
reviews were conducted in 2010 into
our strategy, our structure and our
leadership.
During the year, a new-look executive
management team reviewed ETSA
Utilities’ management structure. The
resultant changes have provided a clear
focus for management responsibility
and accountability for achievement
of our goals.
The strategic objectives of the business
were also reviewed, with the help of
employees from many areas across
the business. Those reviews confirmed
many of our existing directions, but
acknowledged the need for step
improvements to respond to the
challenges described above.
First, there was recognition that we
could be more challenging in our
strategic intent. Rather than being
satisfied with being a respected provider
of distribution services, we now
aspire to be a leading distribution and
infrastructure management business.
We already are a leader in some aspects,
not least safety, but we believe we can
do even better.
In the period to 2015, that step-change
in performance will enable achievement
of our key objectives.
We have identified key business drivers —
things that drive our business every day —
revolving around safety, cost efficiency,
strong customer and stakeholder
relationships and highly efficient work
processes. This will ensure we are:
• delivering on the needs of our
shareholders by achieving our target
returns, maintaining the business’s
risk profile, and protecting the
long term value of the business;
• providing customers with safe,
reliable, value for money electricity
distribution services, and information
that meets their needs;
• maintaining our business’s standing
in the community as an exemplary
corporate citizen in South Australia;
• ensuring that our workforce is safe,
skilled and committed, and that our
resourcing arrangements can meet
our work program needs; and
• maintaining and developing key
capabilities that will help sustain
our success into the future.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 17
Strategic
REVIEW
GENERATing FINANCIAL RETURNS
AND GROWTH FOR OWNERS.
ETSA Utilities continued to meet all
key financial targets in 2010.
Regulated revenues exceeded targets
due to higher network tariffs as a result
of the 2010-15 regulatory reset outcome
and above-budget sales due to a cooler
winter driving up demand.
Total distribution revenue for 2010 (net
of transmission charges) was $595.0
million, an increase of 10.5% from 2009.
Customer numbers grew from 812,529
in 2009 to 820,387 in 2010. At 11,320
GWh in 2010, the volume of sales fell
approximately 1.1% relative to the 11,447
GWh sold in 2009, but exceeded the
budget of 10,980 GWh by 3.1%.
At $152.9 million, net asset-related
revenue continued to perform strongly,
stemming from robust levels of
customer connection work as well as
major projects work — such as network
infrastructure to support the new
desalination plant to the south of
Adelaide and the Hardened and
Networked Army base north of Adelaide.
In 2010, net capital expenditure
increased significantly in order to meet
increased network capacity requirements
as well as Transmission Code obligations
relating to increasing security of supply
for the Adelaide CBD. Net capital
expenditure totalled $240.3 million,
an increase of 59% from that invested
in 2009.
Earnings before interest, tax, depreciation
and amortisation (EBITDA) (including
interest income) of $669.0 million were
achieved in 2010, an increase of 5.8%
on the 2009 performance.
Profit before tax in 2010 of $276.2 million
(excluding derivative income or expense
for changes in valuations of financial
instruments) was a 15.2% improvement
on the 2009 result.
THE REGULATED BUSINESS.
The cost efficient management of the
regulated network is core business for
ETSA Utilities.
Over time, we consistently meet our
regulated targets for reliability, customer
service and quality of supply, although
we had a challenging year in 2010.
Targets for reliability were not met in all
regions, primarily due to severe weather
events in April, July, September and
December, affecting many customers
across the State.
Technical performance of the distribution
network is measured by reliability and
quality of supply. Performance measures
for these are:
• System Average Interruption
Duration Index (SAIDI). The sum
of the duration of each sustained
customer interruption (ie customer
minutes), divided by the total number
of distribution customers. SAIDI
excludes momentary interruptions
(one minute or less duration).
• System Average Interruption
Frequency Index (SAIFI). The total
number of sustained customer interruptions, divided by the total number
of distribution customers. SAIFI
excludes momentary interruptions
(one minute or less duration).
• Quality of supply factors.
These include voltage variations
(eg fluctuations).
Considering the complexity of the
assets, the unique challenges of the
South Australian network operating
environment, evolution of regulatory
requirements, changing technologies
and financial pressures, managing the
network is challenging and always
evolving.
Looking forward, we face a range
of challenges, including: ongoing
increases in summer peak demand;
projects to meet the new Transmission
Code security of supply requirements;
upgrading our Network Operations
Centre; changing patterns of demand;
and the implementation of condition
monitoring strategies to optimise
management of ageing assets.
Over the next few years, in managing
our network, we will focus on:
• Asset Management
Best practice management of network
assets to minimise whole-of-life costs
while meeting reliability targets and
managing risk.
• Network Planning
Planning of new and upgraded
networks to accommodate future
demand and growth at least cost.
• Network Operations
Efficient operation of the network
to maximise the safety and reliability
of electricity supply to customers.
• Customer Solutions
Development of optimum customer
solutions related to new connections,
extensions and alterations.
• Smart Networks
Developing a ‘Smart Network’
strategy and road map to guide
future network development and
investment.
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 18
Strategic ReVIEW
GENERATING FINANCIAL RETURNS
AND GROWTH FOR OWNERS.
REGULATORY RESET.
Finalisation of the 2010-2015 regulatory
pricing decision was a crucial event in
2010.
For the next five years, the AER has
approved a doubling — to $1.65 billion —
of capital investment in the State’s
electricity distribution network.
This is a major investment by ETSA
Utilities in the future of South Australia
and reflects our commitment to
supporting the State’s growth and
prosperity, as well as meeting customer
expectations of capacity, security and
reliability.
The AER also approved a 53% increase in
operating expenditure to $1.066 billion,
reflecting the step up in workload as well
as rising costs.
While our plans will be adjusted and finetuned to meet emerging and changing
priorities, a guide to key areas of network
expenditure in the 2010-2015 period is:
• major connection projects supporting economic growth and the huge
program of State infrastructure
investment in water, public
transport, health and education;
• expenditure on capacity and robustness to meet changing patterns of
generation, demand and climate;
• investment in the next generation
of network control systems to help
improve outage management and
restoration after extreme weather
events and ensure we have a platform
to adopt emerging ‘smart network’
technologies that benefit customers;
• new and upgraded infrastructure
to support mandatory changes in
the transmission sector, which will
improve supply security to the CBD
and other areas; and
• replacement and refurbishment
of ageing infrastructure.
LOOKING TO THE NETWORK
OF THE FUTURE.
A reality with electrical infrastructure
internationally is that it has changed
little in its technology and structure
over the years.
The broad capital expenditure
components determined by the AER
are set out in the chart (opposite).
With various adjustments, the impact
in customer bills will be about 3% per
annum including annual inflation
(estimated to be 2.5% p.a.), or an increase
of about $50 per year on average for
the typical residential customer (who
consumes about 5MWh — for a $1,400
total annual bill). The impact on small
business will be of a similar magnitude.
The expanded investment in the network
provides many benefits for customers.
• An orderly investment in new and
replacement infrastructure will ensure we are able to improve security
of supply and maintain reliability.
• We will also invest in network
management technology that
will improve our ability to monitor
and manage outages in extreme
weather events.
• ETSA Utilities will be able to meet
the changing demand patterns of
residential customers.
• Customers will continue to benefit
from our efficiency – even with the
substantial investment proposed,
our costs per customer and kilometre
of line are among the very lowest in
the country.
• ETSA Utilities will have the resources
to meet demand driven by business
investment and economic growth.
• We will significantly strengthen
security of supply for the CBD.
• We all benefit from connection
of important government infrastructure, including water projects
and new rail and road infrastructure,
which will support competitiveness
and jobs.
In recent times, however, there has been
a rapid maturing of new technology
that makes it possible to contemplate
new ways to better manage electricity
networks and improve services for
customers.
An intelligent network, or smart grid,
combines advanced communication,
sensing and metering infrastructure
with the existing electricity network.
This means an electricity system that
works smarter and better, reducing
running costs in the long term through
active, automated systems that monitor
equipment and respond to changing
conditions and emergency situations,
and that help us provide better
customer service.
ETSA Utilities has been examining
smart network options, with a focus on
technology that will allow us to better
manage the network and demand, as
well as manage the impact of growing
investment by customers in ‘embedded
generation’ options such as Photo Voltaic
(PV) generation.
We are particularly interested in
technology that will allow two-way
communication that advises us of
outages automatically and which allows
remote monitoring of equipment such
as transformers. However, in the next
few years, while trialling some emerging
technologies, our focus is to introduce
the foundation network of Supervisory
Control and Data Acquisition (SCADA)
systems and Distribution Management
Systems (DMS) that will allow us to
receive, analyse and act on network
information to achieve lower costs and
better service for customers. With these
investments in SCADA and DMS, we
will be positioned to offer even smarter
solutions in the future.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 19
Strategic ReVIEW
GENERATING FINANCIAL RETURNS
AND GROWTH FOR OWNERS.
CAPITAL EXPENDITURE COMPONENTS
($M 2010 REAL)
OTHER, 52
NON-NETWORK, 331
CAPACITY, 615
SAFETY &
ENVIRONMENTAL, 156
RELIABILITY & SECURITY
OF SUPPLY, 88
ASSET REPLACEMENT,
216
Our industry body, Energy Networks
Association (ENA), is undertaking a
national discussion on smart networks.
This is important because there will need
to be political, regulatory and customer
support for the significant investment
required over the coming decades.
Similar debates are occurring in many
other countries as various stakeholders
grapple with the balancing issues of
new grid capabilities from emerging
technologies, cost effective investment,
desired levels of supply reliability and
quality, and the costs and benefits for
consumers.
ETSA Utilities is participating in the
working group established by the ENA
and we are also continuing our own work
in the areas of demand management
and intelligent networks.
We have been at the forefront of trials to
manage demand and we are continuing
those trials. Where appropriate, we
will ensure we understand the benefits
of a range of emerging technologies
(including new-generation meters that
offer new functionality) in those trials.
CUSTOMER CONNECT
(NET), 196
THE COMPETITIVE MARKET.
With our established State-wide
resources, capabilities and proven track
record, ETSA Utilities has the financial
strength and reputation to compete in
key markets for electrical infrastructure
services.
Our Construction and Maintenance
Services division (CaMS) provides design,
construct and commission solutions for
substation, distribution and transmission
line and telecommunications projects.
A major issue in management of the
network continues to be meeting
the growth in peak demand, which is
growing faster than average demand.
• South Australia’s average demand
for power is less than half its peak
demand.
• The average use of electricity in
older homes is just 35% of their
peak demand.
• The average use of electricity in
homes in newer sub-divisions is just 21% of their peak demand.
CaMS’ client list includes major
Australian industry organisations,
including mining companies, BHP
Billiton, OneSteel and Oz Minerals,
and electricity businesses such as
ElectraNet and Powercor.
We also provide telecommunications,
construction and maintenance services
to large and small organisations
including NBN Co, Nextgen, and Telstra.
In 2010, ETSA Utilities continued its long
partnership with ElectraNet, providing
construction and maintenance services.
Peak demand is an issue because it
means we have to have expensive
infrastructure in place to meet a peak
demand that occurs on a few extremely
hot days of a South Australian summer,
typically around six to nine days each
year.
Major transmission-related projects
included completion of the new
Davenport substation at Port Augusta
and commencement of works on the
new City West and Mount Barker
substations.
Eventually, we anticipate that demand
management applications will be most
effective when coupled with the more
intelligent network of the future.
ETSA Utilities also won the contract to
manage the construction of the National
Broadband Network first release site in
Willunga, south of Adelaide.
measuring up for customers.
12: 34
DAY IN. DAY OUT.
Every day, we’re in contact with customers.
Here we are helping a customer with information
about her new meter. Meter replacement is a
daily task for ETSA Utilities with more than
30,000 replacement meters installed every year.
In 2010, more than 4.4 million meter reads
were conducted so customers could be billed
by their retailers. The emergence of a new
generation of meters, with the capability for
remote reading, will revolutionise this aspect
of the industry in the next 15 to 20 years.
pM
1:58
DAY IN. DAY OUT.
Traffic management is an every day task for ETSA Utilities’
employees. The mix of traffic and an on-the-road worksite
needs to be managed carefully both to ensure the safety
of employees and members of the public, and to manage
traffic flow so drivers can continue on their way with
minimal disruption. For larger projects, we engage traffic
management specialists and develop detailed plans to
minimise impacts, particularly for peak hour traffic.
Slow down, work underway.
pM
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PAGE 24
Strategic
REVIEW
dELIVERING VALUE to customers
AND BENEFITS TO THE COMMUNITY.
Today, more than ever, electricity is the
life blood of our economy and community.
Every day South Australians expect a
reliable electricity supply to ensure
they can go about their business.
That has important implications for
ETSA Utilities in managing and balancing
various expectations regarding the
performance of the South Australian
electricity network.
Every day, we focus on five key areas.
These are:
• ensuring a safe and reliable
electricity supply;
• ensuring the network has the
capacity and robustness to meet the
electricity needs of South Australians;
• ensuring the network is maintained
and configured in a way that reduces
the occurrence of supply outages;
• implementing localised improvements when there are reliability
issues on specific sections of the
network; and
• ensuring we act promptly to restore
supply and identify and repair a fault
when an outage occurs.
The chart (opposite) shows ETSA Utilities
has consistently been delivering a high
level of reliability when compared with
other distributors in Australia.
Clearly, reliability will vary depending
on the location of communities and the
various challenges faced in supplying
those communities.
Our detailed regional targets recognise
that supply for remote parts of the State
often relies on long radial lines, traversing
difficult country and exposed to varying
conditions.
The variety of conditions faced by our
network and the customers connected
to it figured prominently in regional
reliability outcomes for some customers
in 2010.
For example, customers in areas such as
Elliston on the far-west coast, Gladstone
in the mid-north and Pinnaroo in the
State’s Mallee district experienced repeat
outages caused by lightning, with our
restoration efforts hampered by weather
conditions, access issues, the need to
patrol long lines to identify faults and the
lack of alternative options for switching
customers to other supply lines (unlike in
the metropolitan area, where customers
can often be switched to other feeders
to allow restoration of power).
The year proved to be the worst on record
in terms of the extent of supply outages
driven by a series of extreme weather
events.
Indeed, extreme weather is a major
challenge in managing our electricity
network in South Australia.
Of key concern for us are storms
(particularly those involving lightning)
and extended heatwaves when extreme
heat combines with peak demand levels
to place extraordinary stress on electrical
infrastructure.
Reflecting the impact of extreme
weather on reliability, Guaranteed
Service Level payments — which are paid
for interruptions lasting more than 12
hours or for repetitive interruptions —
increased from $1.3 million in 2009 to
more than $6 million in 2010.
We experienced a severe five-day heatwave and storms in January and major
storms, including extensive lightning
activity, in April, July, September and
December.
Our analysis found the storms on 9-10
July and 3-5 September were the worst
we have had in the ten years we have
kept detailed records. In September,
we had interruptions affecting about
151,000 customers, compared with the
120,000 customers affected in the July
storm.
In the December storm, more than
132,000 lightning strikes were recorded
in a 24-hour period, causing extensive
damage to the State’s electricity
transmission and distribution networks.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 25
Strategic ReVIEW
dELIVERING VALUE to customers
AND BENEFITS TO THE COMMUNITY.
ELECTRICITY DESTRIBUTION – RELIABILITY OF SUPPLY
Source: AER State of the Energy Market 2010
AVERAGE MINUTES OF
OUTAGES PER CUSTOMER
450
400
350
300
250
200
150
100
50
0
2000-01
2001-02
2002-03
QLD
NSW
We also received a record number of calls
from customers on Saturday 4 September
with 50,363 calls compared with the
previous high of 34,565 on 10 July.
The significance of these two storms
is reflected in the fact they accounted
for about 84 minutes of SAIDI.
ESCoSA reviewed all aspects of our
performance during the January
heatwave and noted performance
of the network, call centre and supply
restoration efforts were satisfactory.
ESCoSA also stated that the preparation
of the network for meeting the demands
of the summer appeared to have been
effective because ‘there appeared to have
been no endemic issues related to the
adequacy of the network or customer
call centre’.
ESCoSA also reviewed our performance
in the July storms and did not identify
any systemic issues impacting orderly
response to outages or customer calls.
2003-04
VIC
2004-05
2005-06
SA
ENSURING SAFETY FROM BUSHFIRES.
At ETSA Utilities we do everything we can
to minimise the risk of bushfires through
careful preparations in the lead-up to
summer. Preparations generally include
vegetation clearance, aerial and ground
patrols of lines in bushfire risk areas
and replacement and upgrading of
infrastructure to meet summer demand.
The horrific bushfires in Victoria in
February 2009 were a stark reminder
of the tragic consequences of bushfires.
It is important to note that following the
Ash Wednesday fires in South Australia
in the 1980s, a comprehensive response
was developed and targeted directly at
mitigating the factors that were found
to have started some of the fires.
In response, we have extensive bushfire
mitigation strategies in place. These have
been developed over time. Some relate
to specific regulatory requirements (such
as vegetation clearance) but many are
directly associated with our strategy
to reduce the likelihood of fire starts.
2006-07
TAS
2007-08
2008-09
NEM AVERAGE
Right through summer, we have detailed
monitoring of weather conditions and
close contact with the Bureau of
Meteorology (BoM) and Country Fire
Service (CFS) regarding bushfire
conditions.
We also have legislated provisions
that allow disconnection of power in
emergency situations, which included
adverse weather conditions, aimed at
saving lives and property. Where there is
a heightened risk of fire being started by
our infrastructure, then, in consultation
with the CFS, ETSA Utilities may turn off
power to protect the safety of the public.
Turning off power to bushfire risk
areas in emergency situations reduces
the chances of a bushfire starting,
particularly if a tree branch, vegetation
or flying debris comes into contact with
a power line as a result of strong winds.
ETSA Utilities is represented on the State
Bushfire Coordination Committee, which
is reviewing the findings of the Royal
Commission into the Victorian Bushfires
from a South Australian point of view.
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 26
Strategic ReVIEW
dELIVERING VALUE to customers
AND BENEFITS TO THE COMMUNITY.
MEETING GROWTH AND
CHANGING DEMAND.
Whether it’s an updated substation
meeting growth in local demand in an
established residential area or supplying
private sector and government projects,
ETSA Utilities plays an important role
in supporting the achievement of
economic and community objectives.
ETSA Utilities publishes two annual
network reports that describe network
developments and invite community and
stakeholder involvement: one describing
the network and emerging issues, the
other describing demand management
initiatives and activities undertaken in
the previous financial year.
These reports make provision for
Requests for Proposals (RFPs), where
external parties may make proposals
to ETSA Utilities for the resolution of
network problems, including through
the use of demand management
approaches, and the evaluation of
those proposals.
The Electricity System Development
Plan (ESDP) includes an overview of ETSA
Utilities’ system planning methodology,
13 regional development plans and
specific plans for metropolitan 66kV
lines and 11kV/7.6kV feeder exits. Where
relevant, details of system constraints
and the proposed corresponding projects
are included in these development plans.
Aldinga/Willunga substation
Upgrade of the existing substation.
MAJOR PROJECTS UNDERTAKEN
OR COMMENCED IN 2010:
Tramline extension
Construction of power supply for
the tramline extension to Bowden/
Brompton.
Uraidla substation
Upgrade of the existing substation.
Burnside substation
Replacement of an existing transformer.
Desalination plant
Upgrading of the electricity supply to
the new desalination plant, including
a new substation at Lonsdale.
Clare substation
Construction of a new transmission
connection point and upgrading of
the substation.
Kangaroo Island Demand
Management solution
Demand Management solution for
an expanding abalone farm at Smith
Bay on Kangaroo Island.
Murray Bridge South substation
Expanding the existing substation
in support of a major residential
development and shopping complex.
Hackham substation
Construction of a new 66/11kV substation.
Mount Barker substation
Construction of a new transmission
system connection point and rebuilding
of our distribution substation.
Cheltenham substation
Replacing an existing transformer
to allow for the racecourse residential
redevelopment and future growth.
Para substation
Increasing capacity of the Penfield –
Elizabeth South 66kV line.
Houghton substation
Upgrade of the existing substation.
American River substation
Upgrade of the existing substation
to meet summer demand growth
projections.
City West project
Construction of a new transmission
connection point to the Adelaide
CBD and the southern suburbs.
Northern Expressway
Electrical infrastructure for a new
23 kilometre expressway project
to Adelaide’s north.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 27
Strategic ReVIEW
dELIVERING VALUE to customers
AND BENEFITS TO THE COMMUNITY.
CUSTOMER SERVICE.
ETSA Utilities is focused on working hard
every day to improve service outcomes
for customers.
Our research of customers reveals strong
customer preference for timely and
accurate information regarding outages.
This is most challenging at times when
we have a major event, where, for
example, a storm has caused multiple
outages.
Currently, we rely on customers to advise
us of outages via telephone calls to our
Faults and Emergencies line on 13 13 66.
Customers without power can use this
service to report faults and also check
whether we are aware of outages in
their area.
Current interruptions information
is included on our website at www.
etsautilities.com.au and at a mobilephone friendly site m.etsautilities.com.au
Where appropriate, we also use the
media to advise customers of outages
and restoration progress, particularly
where there are larger numbers of people
involved, when it is difficult to contact
customers directly, or when there is a
fast-moving situation, such as in a
major storm event.
ETSA Utilities received more than
750,000 calls to its five main phone lines
during 2010, achieving a Grade of Service
of 88.6% of telephone calls answered
within 30 seconds.
ETSA Utilities recognises that customers
want fast and accurate information and
we have embarked on a multi-year
program to improve our interactions
with customers, with the aim of being
industry leaders in customer
communications by 2015.
The main elements of this will be
delivering immediate outage information,
integrating real-time information from
the mobile computers carried by our
field crews with the current interruption
information available to customers via
various channels.
We are examining new channels for
providing this information to customers,
including SMS messages direct to mobile
phones (trialling starts in 2011) and
opportunities for self servicing for
other aspects of our interaction with
customers, such as information on
planned outages and next meter
read dates.
In 2010, ETSA Utilities staff attended
35,346 connection appointments. This was a 10% increase over 2009
and the highest number of connection
appointments ever achieved by ETSA
Utilities.
The increase was driven primarily by
the growing volume of connection
work for PV installations, which
accounted for more than 39%
of all customer connection work.
Managing the sharp growth in
connections was a challenge during
2010. In response, additional resources
were recruited, a new PV on-line
application system was put in place
and changes were made to the on-line
appointment booking system used by
electricians to help manage the large
volume increase of applications from
this market sector.
At the end of 2010, there were 27,000 PV
Small Electrical Generator (SEG) systems
connected to the distribution network.
As part of its role, ETSA Utilities provides
data collection services for retailers. ETSA
Utilities owns, installs and maintains
meters and contracts AMRS (Aust) Pty
Ltd to conduct meter reading and other
services on our behalf.
DAY IN. DAY OUT.
2:07
A tower of strength.
High above ground, an ETSA Utilities employee works on replacing a
faulty insulator on an ElectraNet transmission tower. ElectraNet has
a long term contract with the Construction and Maintenance Services
division (CaMS) of ETSA Utilities for construction and maintenance
services for its 275kV and 132kV transmission network. ElectraNet
is responsible for transporting electricity from our State’s power
generators to shared connection points for ETSA Utilities to then
distribute to residential and business customers.
PM
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PAGE 30
Strategic ReVIEW
dELIVERING VALUE to customers
AND BENEFITS TO THE COMMUNITY.
In 2010, about 4.4 million meter readings
were conducted, with 205,000
disconnections and reconnections being
undertaken over the course of the year
and more than 120,000 customers were
transferred to new retailers, representing
approximately 15% of the current
customer base in South Australia.
ETSA Utilities has various meter
replacement programs in place, including
for old, damaged or tampered meters.
About 30,000 meters are replaced
each year. External audits conducted on
behalf of the Australian Energy Market
Operator (AEMO) in 2010 confirmed
compliance with our Meter Data Provider
(MDP) responsibility.
ETSA Utilities takes customer service very
seriously, and we constantly assess our
service through customer surveys of
service quality and against the pledges
we make in our Customer Charter.
At the Customer Service Institute Awards
held in Sydney in late 2010, our Customer
Response team won a State award for
the Division of a Large Business and two
of our employees won individual State
recognition for their exceptional
customer service skills.
ETSA UTILITIES IN THE COMMUNITY.
We are very proud of our reputation as
a significant corporate citizen in South
Australia.
We have many long and fruitful
partnerships with community
organisations, enabling hundreds
of thousands of South Australians
to benefit from, or participate in,
activities supported by ETSA Utilities.
Our sponsorship program reflects
the significant role we play in South
Australia, and our desire to be a positive
force in the community, day in, day out.
A key part of our commitment has
been long-term relationships with
the organisations we support:
Adelaide ETSA Bite
Our newest partnership with Adelaide
ETSA Bite, South Australia’s team in the
new Australian Baseball League, helps
to re-establish this community-oriented
sport at the State level and encourages
kids to get involved in healthy sporting
activity.
Adelaide Film Festival
The biennial Adelaide International
Film Festival has become a major
event on our festival calendar.
Adelaide Symphony Orchestra
The Adelaide Symphony Orchestra
is synonymous with excellence and,
through our support, is developing
a new generation of music lovers.
Barossa Under the Stars
ETSA Utilities helps light up Barossa
Under the Stars, an event that has
brought a long list of superstars to the
Barossa for the enjoyment of South
Australians.
Country Arts SA
Our long association with Country Arts
SA has helped more than 100,000
people attend arts events at regional
locations across the State.
Endeavour Australia Cheung
Kong Awards
We are proud supporters of this program,
which facilitates educational exchange
for tertiary students in Australia and the
Asia Pacific region.
ETSA Contax Netball
We have supported ETSA Contax for
more than 15 years, helping thousands
of young South Australians enjoy healthy
sports activity. A powerful force in State
netball, ETSA Contax has a proud history
of success.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 31
Strategic ReVIEW
dELIVERING VALUE to customers
AND BENEFITS TO THE COMMUNITY.
ETSA Park
We’ve been there from the start.
ETSA Park is a world-class netball
venue and home for Netball SA
and the Adelaide Thunderbirds.
Helpmann Academy
ETSA Utilities continues to support the
development of the next generation
of South Australian artists through
our involvement with the Helpmann
Academy.
Lights of Lobethal
Every Christmas, tens of thousands of
South Australians flock to the Adelaide
Hills to view the Lights of Lobethal —
a special event on our festive calendar
supported by ETSA Utilities.
Mary Potter Hospice ‘Loving
Tree’ Lights
The Mary Potter Loving Tree provides
a very special and supportive event to
remember those unable to be a part
of festive celebrations.
Zoos SA
Our partnership with Zoos SA is
supporting a range of their conservation
and education programs and helped
bring Wang Wang and Funi to Adelaide
Zoo. Today, visitors to the Adelaide Zoo
enter through The ETSA Connection,
the new entrance plaza, a meeting place
for the many people visiting the Zoo.
Trees for Life
We continue to work with Trees for Life
to support the wonderful efforts of its
volunteers across South Australia.
EMPLOYEES IN THE COMMUNITY.
ETSA Utilities’ employees are not just
committed to delivering electricity to
South Australians.
Every day, they are making a huge
contribution to life in our community.
They do so through their own endeavours
in their own communities or in association
with our Employee Foundation.
Some staff support the Foundation’s
nominated charities directly through
salary sacrifice, others make
contributions linked to specific fundraising activities and others provide
in-kind support through volunteering.
In 2010 more than $158,000 was
donated by the Employee Foundation
to various causes. Employees raised
more than $100,000 for refurbishment
of accommodation rooms at the Cancer
Council of South Australia’s Flinders
Lodge facility, which supports regional
cancer patients attending Adelaide
for treatment. We planted trees and
pulled weeds at the Para Woodland,
volunteered at Hutt Street Centre and
contributed to the work of Mary Potter
and Uniting Care Wesley.
Our major fundraising event was the
Relay for Life, which raised $35,000
for Flinders Lodge, while regional staff
organised special fundraising events,
including the Moonta Golf Day and
Mount Gambier Garage Sale.
Our thanks go to all employees involved
in the various activities of the Foundation.
STORMY NIGHTS AND DAYS.
5:45
DAY IN. DAY OUT.
Extreme weather is a major issue for
management of the electricity distribution
network. Storms in particular leave a lot
of damage and provide major challenges
to our crews. In 2010, we responded to
a series of major storm events, with
the worst experienced in July, September
and December. Large numbers of customers
were left without power as lightning struck
insulators and winds and flying vegetation
brought down lines. In September and
December, poles were washed away in flood
waters that meant access issues for our
crews and a delay in restoration work.
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PAGE 34
Strategic
REVIEW
ENSURING AN ENGAGED, SKILLED
AND SAFE WORKFORCE.
With a strong commitment to safety,
flexible working arrangements, a
commitment to building a diverse
workforce, and extensive personal
development opportunities, ETSA
Utilities is a great place to build a
long-term and satisfying career,
day in, day out.
In 2010, employees at ETSA Utilities
achieved a new record for successive
days without an LTI (an injury resulting
in an employee being away from work
for at least one full day or shift).
The previous record of 511 days was
passed in December and, by year end,
ETSA Utilities had gone 533 days
without an LTI.
ETSA Utilities is a significant training
organisation with a proud history of
training South Australians and providing
them with long-term, rewarding careers.
In recent years we have recruited about
270 apprentices, with 110 already in our
workforce and another 158 currently
undergoing training. In 2010, we
re-launched our nationally accredited
Training Services unit, which continues
to play a major role in preparing our staff
for the future and equipping them with
the skills to undertake these works.
In 2010, while ETSA Utilities maintained
its workforce numbers, recruitment of
apprentices continued apace. By year
end 31 power line and electrical trades
apprentices were recruited for induction
in February 2011.
Safety is an ongoing part of doing our
work, every day.
As part of our commitment to developing
an engaged, skilled and safe workforce,
we invest heavily in the development of
our people. In addition to our dedicated
Training Services unit, which meets the
main technical training requirements
of our employees, we offer a range of
leadership development programs,
safety training, IT training and other
educational opportunities.
Safety procedures are well embedded
and, in 2010, safety was again a matter
of ongoing communication and dialogue
across the business, with particular
emphasis on switching safety, driving,
fatigue management and the danger
of complacency.
We provide an online training and
development framework for employees
to access development activities and
learn career advancement techniques.
We also offer a range of interactive online
training courses that employees can
complete at their own pace.
This reflects a high level of discipline
and dedication by everyone across
the business to safety, particularly
because employees face a wide range
of hazards that have the potential to
cause death and serious injury.
ETSA Utilities supports employees
undertaking external studies and offers
educational assistance, including study
leave, to help balance work and study
commitments.
The quality of our training programs
was recognised at the South Australian
Training Awards in 2010, where we were
named SA Employer of the Year.
ETSA Utilities’ leadership development
programs include tailored frontline and
middle-management development
sessions; 360 degree leadership surveys,
including coaching sessions; and an
MBA program.
We also regard mentoring as a valuable
learning and development tool, so we
were particularly pleased when, in an
Australian first, ETSA Utilities was
awarded the highest ‘gold benchmark’ for
our graduate mentoring program by the
International Standards for Mentoring
Programs in Employment (ISMPE) — the
peak body that oversees international
mentoring standards.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 35
Strategic ReVIEW
ENSURING AN ENGAGED, SKILLED
AND SAFE WORKFORCE.
ENVIRONMENT AND
SUSTAINABILITY PROGRAMS.
ETSA Utilities plays a leadership role
in managing environmental risks and
opportunities.
We are committed to prudent
environmental management practices
and manage the environmental risks
associated with our business activities
in accordance with sustainability
principles, good corporate citizenship,
and regulatory and statutory
requirements.
Each year an Environmental Management Plan is developed identifying clear
and appropriate objectives, strategies,
managerial controls and continuous
improvement mechanisms for dealing
with environmental issues associated
with our business operations.
Overseeing the implementation of the
Environmental Management Plan is
the Environmental Management
Committee, which is made up of
senior and operational staff.
Topics covered in the annual Plan include
climate change regulation; energy, waste
and water management; oil filled assets
management; hazardous substances
management; site (land) contamination
remediation; environmental impact
assessment of new business activities;
and fleet efficiency.
Key actions undertaken and completed
in 2010 were:
• ETSA Utilities has become one of
Mitsubishi Motors Foundation
Customers for the new i-MiEV electric
vehicle. Three vehicles are being used
as pool cars and our experience will
be a valuable source of information
on the practical performance of
this emerging technology as well as
learning more about the potential
impact of electric vehicles on network
management;
• continued performance improvement
against our fleet vehicle CO2 target
of 215gms/km CO2;
• continued monitoring and reporting
of data for key resource consumption,
including energy, waste, water
and fuel and the development and
implementation of improvement
programs for these resources;
• upgrading of the lighting at the
Keswick Head Office building, which
will reduce electricity consumption
by fluorescent luminaires by 60%;
• development and implementation of
Construction Environment Management Plans for all major regulated
and non-regulated construction
projects;
• attainment of ISO 14001 accreditation
for CaMS’ Environment Management
System;
• completion of a comprehensive
Waste and Recycling Review (part
funded by ZeroWaste SA) and creation
of a cross-functional working group
to implement ongoing improvements
in this area;
• assessment and remediation of
historical site contamination of depot
and substations sites in line with our
site decontamination program; and
• recycling more than 2,200 tonnes
of scrap metal as well as reclaiming
and/or recycling about 367,000 litres
of oil. ETSA Utilities also follows a
policy of (where possible) refurbishing
transformers instead of purchasing
new ones — in 2010, 176 transformers
were refurbished.
GREENHOUSE REPORTING –
NATIONAL GREENHOUSE ENERGY
REPORTING SYSTEM.
Climate change impacts are a potentially
significant issue for our business to
monitor and manage. We are carefully
monitoring and evaluating the potential
future impacts on our business of climate
change effects and a carbon constrained
economy.
Every year, ETSA Utilities submits a
report under the National Greenhouse
and Energy Reporting System (NGERS) —
a requirement of the Federal Government
as part of a framework for reporting
information about greenhouse gas
emissions, greenhouse gas projects,
and energy use and production by large
corporations.
Our greenhouse gas (CO2) emissions for
the 2009/10 financial year were 546,592
tonnes, 96.5% of which were associated
with energy losses during electricity
distribution.
The power to deliver anywhere.
We undertake some of this State’s largest infrastructure projects
through our Construction and Maintenance Services division (CaMS).
The team was contracted by ElectraNet to undertake a major project
to decommission the ageing 132kV switchyard at ElectraNet’s Playford
Transmission Substation and relocate to ElectraNet’s nearby Davenport
Substation. The relocation consolidated electricity infrastructure at
the Davenport site, securing major transmission supply for the State’s
Eyre Peninsula and Upper North.
5:50
DAY IN. DAY OUT.
pM
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PAGE 38
CORPORATE
GOVERNANCE
ETSA Utilities is committed to demonstrating the highest standards of
corporate governance. It is the method
by which we are directed, administered
and controlled, and its ultimate aim
is to achieve, as closely as possible, the
best balance of outcomes for owners,
customers, individuals and the
community.
Risk Management and Compliance
Committee
The Risk Management and Compliance
Committee is responsible for reviewing
the risk profile of the business and
oversight of risk management processes,
and for ensuring the business has
appropriate procedures to ensure it
complies with its legal and regulatory
obligations.
Board of Directors
The Board is responsible for the overall
corporate governance of ETSA Utilities,
including approval of the strategic
direction and values, monitoring
financial and operational performance,
ensuring adequate systems for the
identification and management of risk,
and evaluating the performance and
remuneration of senior management.
Remuneration Committee
The Remuneration Committee reviews
and makes recommendations to the
Board on remuneration arrangements
for managers and staff.
Board Committees
The Board has established three
committees to assist in the discharge
of its responsibilities:
The function operates under a co-source
arrangement with KPMG. Internal Audit
undertakes independent appraisals and
provides assurance on the adequacy
and effectiveness of business controls.
Audit Committee
The Audit Committee assists the Board
with its responsibilities for financial
reporting, maintaining an efficient
and effective system of internal control
and promoting an ethical culture.
Internal Audit
ETSA Utilities has an internal audit
function reporting directly to the
Audit Committee.
All internal audit work is undertaken
in accordance with the International
Professional Practice Framework
provided by the Institute of Internal
Auditors.
Risk Management
The business has a formal Risk
Management Policy that is consistent
with the Australian/New Zealand
Standard (AS/NZS ISO 3100: 2009). An
integrated risk management framework
is in place that includes a regular review
of our risk exposures and reporting to
the Risk Management and Compliance
Committee detailing the risk position
and the controls and strategies
implemented to minimise the risk.
Asset Management
ETSA Utilities’ Asset Management
Policy is to:
• manage the network assets to satisfy
customer service needs, meet licence
obligations, provide a safe environment for employees, contractors
and the community, and to deliver
optimal returns to shareholders;
• employ good industry asset management practice to manage the life
cycle of assets, and to ensure longterm sustainable performance and
condition of the assets; and
• prepare an asset management plan
that is reviewed on an annual basis.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 39
BOARD
PROFILES
HL KAM.
CT WAN.
PETER TULLOCH.
Mr Tulloch was appointed Chairman
of ETSA Utilities on 21 December 2005.
He also is Chairman of CHEDHA Holdings
Pty Ltd and its subsidiaries, CitiPower
Pty and Powercor Australia Ltd. He is
a Non-executive Director of CK Life
Sciences Int’l (Holdings) Inc.
Mr Tulloch chairs the Risk Management
and Compliance Committee and is a
member of the Audit Committee of ETSA
Utilities. He worked for more than 30
years in banking in Asia prior to moving
to Australia in late 2002. He was
educated in Scotland and is a Fellow
of the Institute of Canadian Bankers.
Mr Kam is the Group Managing Director
of Cheung Kong Infrastructure Holdings
Ltd, Deputy Managing Director of
Cheung Kong (Holdings) Ltd, President
and Chief Executive Officer of CK Life
Sciences Int’l (Holdings) Inc and an
Executive Director of Hutchison
Whampoa Ltd and Power Assets
Holdings Ltd in Hong Kong.
Mr Kam is also a Director of CHEDHA
Holdings Pty Ltd and its subsidiary
companies, and a Director of AquaTower
Pty Ltd.
He holds a Bachelor of Science degree
in Engineering and a Master’s degree
in Business Administration.
Mr Wan is a Director of CHEDHA
Holdings Pty Ltd and its subsidiary
companies.
He has worked for the Power Assets
Group since 1978. From September 2000
to June 2003, he was Chief Executive
Officer of Powercor Australia Ltd and
CitiPower Pty. He is now Director of
Engineering (Planning & Development)
of Power Assets Holdings Ltd.
Mr Wan holds a Bachelor of Science
degree in Electrical Engineering and
is also a Chartered Engineer. He is
an Honorary Fellow of the Energy
Institute in the United Kingdom.
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 40
BOARD PROFILES
CONTINUED.
KS TSO.
CHERYL BART AO.
ANDREW HUNTER.
Mr Tso was appointed to the Board
of ETSA Utilities in 2000. He is also a
Director of CHEDHA Holdings Pty Ltd
and its major subsidiary companies.
Mr Tso is the Group Managing Director
of Power Assets Holdings Ltd. He has
more than 40 years of business
experience, including senior management and engineering roles with the
Power Assets Group and ten years as
Group Managing Director of Hutchison
Whampoa Properties. He is also an
Executive Director of Cheung Kong
Infrastructure Holdings Ltd.
Mr Tso holds a Bachelor of Science
degree in Civil Engineering.
Mr Hunter is a Director of CHEDHA
Pty Ltd and its subsidiary companies.
He is the Chief Financial Officer of
Cheung Kong (Holdings) Ltd, Executive
Director and Chief Operating Officer of
Cheung Kong Infrastructure Holdings
Ltd, and an Executive Director of Power
Assets Holdings Ltd.
He is a member of The Institute of
Chartered Accountants of Scotland
and holds a Master of Arts degree
and Master’s degree in Business
Administration.
Ms Bart is a lawyer and company
Director. She chairs the South Australian
Film Corporation, Environment
Protection Authority (EPA), Adelaide Film
Festival, ANZ Trustees Ltd and the AER
Foundation.
Ms Bart is a Non-executive Director of
Spark Infrastructure Ltd, the Australian
Broadcasting Corporation and Audio
Pixel Holdings Ltd.
She is also a Director of various private
and charitable organisations. Ms Bart
has Bachelor degrees in Law and
Commerce and is a Fellow of the
Australian Institute of Company
Directors.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 41
BOARD PROFILES
CONTINUED.
JOHN D DORRIAN.
LAURA REED.
DR KEITH TURNER.
Ms Reed is the Chief Executive Officer
of Spark Infrastructure Ltd and a
Non-executive Director of CHEDHA
Holdings Pty Ltd and its subsidiary
companies.
She has more than 20 years’ experience
working in various financial and
commercial roles in the gas industry.
Prior to joining Spark Infrastructure,
she held a number of senior financial
roles including Chief Financial Officer
at Envestra Limited.
Ms Reed has extensive experience in
the utilities sector related to strategic
planning, financial forecasting, treasury
management and taxation. She has a
Master’s degree in Business Administration,
Bachelor of Arts degree in Business and
is a Fellow of CPA Australia.
Mr Dorrian is a Managing Director of
Deutsche Bank AG, Chairman of RREEF
Infrastructure, Asia Pacific and a
non-executive director of Deutsche
Asset Management (Australia) Limited.
He is also a Non-executive Director of a
number of Australian and international
companies including, Australia Pacific
Airports Corporation Limited (the owner
of Melbourne and Launceston Airports),
the Spark Infrastructure Group, CHEDHA
Holdings Pty Ltd and its subsidiaries
CitiPower Pty and Powercor Australia
Ltd, DWS Global Agricultural Land &
Opportunities Fund Limited and DWS
Vietnam Fund Limited.
A Fellow of The Institute of Chartered
Accountants in Australia and a member
of the Australian Institute of Company
Directors, he holds a Bachelor of Arts
degree in Financial Management from
Macquarie University in Sydney.
Dr Turner has extensive experience in
the energy sector in New Zealand. Most
recently, he served as Chief Executive
Officer of Meridian Energy Limited from
1999 to 2008.
Prior to that, he worked as a private
energy expert advising a range of large
corporate clients and Government.
He has previously served in a number
of senior roles in establishing Contact
Energy, and in the Electricity Corporation
of New Zealand, and the New Zealand
Electricity Department, as well as
many industry reform roles. He is also
Chairman of Fisher & Paykel and Deputy
Chairman of Auckland International
Airport.
With 87,000 kilometres of line, about 400 substations,
69,000 transformers, and millions of electrical joints and
connections, the maintenance of our assets is a key task
for employees. Here, we are working on one of our Padmount
transformers, which can be found in many towns and suburbs.
Regular maintenance and replacement of assets that are
showing signs of wear and tear, damage or stress not only
ensures a high level of reliability for customers,but also
maximises the working life of valuable equipment.
Maintaining our best.
DAY IN. DAY OUT.
6:44
PM
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 44
EXECUTIVE
MANAGEMENT
GROUP
ROB STOBBE.
CHIEF EXECUTIVE OFFICER.
Mr Stobbe has more than 30 years’
experience in the utilities infrastructure
arena, having held senior management
positions in the electricity, water, gas
and telecommunications sectors both in
Australia and overseas. Most recently he
was CEO of TransAdelaide and prior to
that, CEO of Spark Infrastructure Ltd. He
has also held senior executive positions
at Northern Gas (UK), Powercor,
CitiPower and ETSA Utilities.
Pictured: Top to bottom
SUE FILBY.
GENERAL MANAGER CUSTOMER
RELATIONS.
Ms Filby has extensive operational
and change management experience
in public transport, local and state
government and workers’ compensation.
She is responsible for customer relations,
service improvements, connection
services, and revenue management.
MARK BROWNLEY.
GENERAL MANAGER FIELD SERVICES.
SEAN KELLY.
GENERAL MANAGER BUSINESS
IMPROVEMENT.
Mr Brownley has more than 20 years’
experience in complex asset management and systems development and
has held executive-level operational and
technical positions with ASX50 group
companies, including in infrastructure
services and aviation. He is currently
responsible for infrastructure services
to the distribution network including
operations, the delivery of capital
projects and network upgrades
as well as maintenance and supply
restoration.
Mr Kelly has 25 years’ experience in the
energy industry — in the former ETSA
Corporation, AGL Energy and the South
Australian Government. He has held
senior management roles covering
national and state energy policy and
regulation, energy pricing, and
organisation development as well as
a wide range of corporate functions
including governance, IT, people and
audit. He is responsible for business
improvement and innovation across
ETSA Utilities.
ETSA UTILITIES ANNUAL REPORT 2010
PAGE 45
executive management group
CONTINUED.
ROB SNOWDON.
GENERAL MANAGER CONSTRUCTION
AND MAINTENANCE SERVICES.
DR ERIC LINDNER.
GENERAL MANAGER REGULATION
AND RISK.
Dr Lindner has more than 40 years’
experience in the electricity industry
covering planning, research, design,
environmental management, regulation
and a range of corporate responsibilities.
He holds the position of Company
Secretary and is responsible for regulatory
and risk management, legal services,
property and real estate.
DOUG SCHMIDT.
GENERAL MANAGER NETWORK
MANAGEMENT.
Mr Schmidt has extensive experience
in the electricity industry and local
government. In previous electricity
industry positions, Mr Schmidt has been
responsible for planning and strategy;
engineering and design; project management and delivery; and management
of field depots and operations. He is
responsible for network engineering,
network control and asset management,
as well as Demand Management and
Smart Networks functions within
ETSA Utilities.
Pictured: Top to bottom
Mr Snowdon has more than 30 years’
senior management experience in the
electricity, construction, executive
development, finance and sporting
industries. He is responsible for
managing and growing electrical
infrastructure, construction and
maintenance services for external
customers in the competitive market.
ROB STEVENS.
CHIEF FINANCIAL OFFICER.
Mr Stevens has 20 years’ experience in
the electricity industry, including senior
roles in accounting, internal audit and
financial IT systems. He is responsible
for financial management, materials
and services contracts, treasury and tax
functions and Information Technology.
DAVID SYME.
GENERAL MANAGER PEOPLE
AND CULTURE.
Mr Syme has more than 24 years’
experience in the electricity industry in a
wide range of senior roles responsible for
the provision of support services to the
business. He is responsible for human
resources, organisation development,
training, environmental management
and health and safety.
PITCHING IN FOR THE BITE.
8:26
The Adelaide ETSA Bite hit the ground running
at the start of the Australian Baseball League
season, and kept powering on from there. Victory
over the Melbourne Aces in the inaugural game
at Norwood Oval under lights was the first of
a series of wins. With ETSA Utilities and South
Australia right behind them, the ETSA Bite went
all the way to the Grand Final play-offs. The
determination, team spirit and courage they
showed, day in, day out, made all of us at
ETSA Utilities proud to support a team of a
great South Aussies.
DAY IN. DAY OUT.
PM
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
PAGE 48
historical
operating
statistics
FOR YEAR ENDING 31 DECEMBER
FINANCIAL OUTCOMES ($M)
Total revenue and other income........................................................... Earnings before interest, tax, depreciation and amortisation
(EBITDA — including interest income) .................................................. Earnings before interest and tax (EBIT) ................................................. Cash generation from operations before borrowing costs and capital
expenditure ......................................................................................... Total capital expenditure (including gifted assets) ................................ Network capital expenditure (including gifted assets) ........................... Total assets ......................................................................................... CUSTOMER NUMBERS¹
Residential (including hot water).......................................................... Small business..................................................................................... Large business..................................................................................... Total customers ............................................................................... 2006
2007
2008
2009
2010
810 914 972 1,053
1,127
457 335 507 379 541 403 632
482
669
516
435 195 163 4,361 482 210 186 4,513 524 255 222 4,542 605
313
270
5,116
602
395
342
4,880
684,474 694,041 704,096 713,228
97,917 98,731 99,135 99,282
20 20 20 19
782,411 792,792 803,251 812,529
720,602
99,765
20
820,387
ENERGY DELIVERED (GWh)
Residential.......................................................................................... Hot water............................................................................................ Small business..................................................................................... Large business..................................................................................... Unmetered.......................................................................................... Total energy delivered...................................................................... 3,508 756 5,309 1,463 109 11,145 3,552 697 5,476 1,466 109 11,300 3,679
704
5,485
1,400 111 11,379 3,818
666
5,533
1,317
113
11,447
3,813
616
5,496
1,290
105
11,320
TRANSMISSION SYSTEM PEAK DEMAND (MW)................................... 2,873 2,854 3,172 3,490
3,321
DISTRIBUTION SYSTEM PEAK DEMAND² (MW)................................... 2,656 2,581 2,861 3,104
3,000
RELIABILITY ³ (AVERAGE MINUTES WITHOUT SUPPLY PA)
Statewide excluding significant weather events.................................... Statewide due to significant weather events⁴........................................ 153.9
44.0
153.4
16.2
119.0 13.6 167.4
38.2
153.0
142.0
KILOMETRES OF LINE
Overhead............................................................................................. Underground....................................................................................... Total kilometres of line.................................................................... 70,717 13,689 84,406 70,960 14,568 85,528 71,066
15,210
86,276
71,217
15,714
86,931
71,291
16,071
87,362
PERCENTAGE OF LINE UNDERGROUND............................................... 16.2
17.0
17.6
18.1
19.0
NUMBER OF EMPLOYEES (FTE)......................................................... 1,549 1,676 1,769 1,840
1,833
¹ 2006 data changed due to timing of reporting for 2006 Annual Report.
²Revised to include contribution of embedded generation (exceeding 1MW)
³From 1 July 2010 our targets and reporting to the Regulator are based on Outage Management System (OMS) data. All years shown have been revised to reflect this change and to allow like-for-like comparison.
⁴Major Event Day i.e. where the daily State SAIDI > 4.369 mins.
ETSA UTILITIES ANNUAL REPORT 2010
Directory
FAULTS AND EMERGENCIES:
13 13 66
This service is available 24 hours a day, 7 days a week:
• To report electricity supply emergencies.
• To report power interruptions.
• To access information about power interruptions in your area.
• To report infrastructure faults.
FOR LIFE-THREATENING SITUATIONS:
000
CUSTOMER SERVICE:
13 12 61
CUSTOMER FEEDBACK LINE:
1800 088 667
INTERPRETING SERVICE:
13 14 50
STREET LIGHT FAULTS:
1800 676 043
ELECTRICAL CONTRACTORS CONNECTIONS SERVICE:
Phone: 1300 650 014
Fax : 1300 650 016
UNDERGROUND CABLE LOCATIONS:
1100 (Dial Before You Dig)
ELECTRICITY FRAUD & THEFT HOTLINE:
1800 061 090
CORPORATE SWITCHBOARD:
8404 5667
WEBSITE:
www.etsautilities.com.au
STREET ADDRESS:
1 Anzac Highway, Keswick SA 5035
POSTAL ADDRESS:
GPO Box 77, Adelaide SA 5001
PAGE 49
OUR QUIET ACHIEVERS.
DAY IN. DAY OUT.
10:23
Substations have a multitude of essential roles in our
electricity network – though they go largely unsung. They
generally have switching, protection and control equipment
and one or more transformers. Transformers do exactly that,
transform incoming higher voltages to lower voltages for
further distribution into the network. In a large substation,
circuit breakers are used to interrupt any short circuits
or overload currents that may occur on the network. Smaller
distribution stations may use re-closer circuit breakers or
fuses for protection of distribution circuits. Substations
also have a role in voltage regulation.
PM
2 3:59
ETSA UTILITIES PLAYS A ROLE IN THE LIVES OF ALL SOUTH AUSTRALIANS.
DAY IN. DAY OUT.
WE DO EVERYTHING IN OUR POWER TO DELIVER YOURS
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