TRUenergy Briefing 29 September 2006 2 Outline I ntroduction - - PowerPoint PPT Presentation

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TRUenergy Briefing 29 September 2006 2 Outline I ntroduction - - PowerPoint PPT Presentation

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TRUenergy Briefing 29 September 2006 2 Outline I ntroduction Richard McI ndoe Business Model and Strategy Richard McI ndoe Australia Energy Markets Tracy Stevens Break TRUenergy Overview Richard McI ndoe Retail Richard McI ndoe

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TRUenergy Briefing

29 September 2006

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Outline

Richard McI ndoe Sum m ary and Outlook Duncan Black Financials Duncan Black Ow nership and Capital Structure Break Tracy Stevens Portfolio Managem ent and Risk Managem ent Duncan Black Operations and Construction Richard McI ndoe Retail Richard McI ndoe TRUenergy Overview Break Tracy Stevens Australia Energy Markets Richard McI ndoe Business Model and Strategy Richard McI ndoe I ntroduction

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I ntroduction

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W hat is TRUenergy?

  • Integrated, diversified energy business
  • Generation and retail
  • Electricity and gas
  • ~ A$4.5bn assets, well capitalised
  • 4th largest generator in market with

~ 4,000MW across states and fuels

  • 5th largest retailer in market ~ 1.1m

customers

  • Excellent platform for organic growth and

acquisition

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TRUenergy and CLP

  • 100% owned by CLP Holdings
  • Owns all CLP’s assets in Australia, except Roaring 40s’ wind farms
  • CLP Holdings’ largest single investment outside Hong Kong
  • Represent 22% ¹ of CLP Holdings’ consolidated assets, and 8% ² of

consolidated profit before financing and tax

  • Significant synergies between TRUenergy and CLP Power
  • Senior management drawn from CLP Power Asia
  • Board of Directors drawn from CLP Holdings Board and CLP

Holdings senior management

  • Sir Rod Eddington is independent, non-executive Chairman

1: As at 30 June 2006 2: For 6 months ended 30 June 2006

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W hat is it im portant for you to know …..?

  • Australian energy market structure
  • TRUenergy’s business model
  • Our existing asset base
  • Our strategy
  • Growth potential and opportunities
  • Risk management
  • Financials
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South Australia Queensland New South Wales Victoria

Sydney Brisbane Melbourne Adelaide

Yallourn Energy

I n the beginning……

  • CLP established a presence in Australia

with Yallourn Energy

– Power station and retail to large

industrial customers

  • Initially acquired ~ 73%

interest as part of PowerGen acquisition in 2000

  • By 2004, had bought out minorities

and owned 100%

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Yallourn Energy South Australia Queensland New South Wales Victoria

Sydney Brisbane Melbourne Adelaide

Torrens Island Iona Ecogen SEAGas

Acquired TXU MEB and m erged w ith Yallourn…

  • Acquired the TXU merchant energy

business in May 2005 from Singapore Power

  • Integrated Yallourn and TXU merchant

energy businesses

  • Combined corporate and

portfolio management functions

  • Refinanced as corporate

with A- credit rating

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Iona Ecogen SEAGas South Australia Queensland New South Wales Victoria

Sydney Brisbane Melbourne Adelaide

Torrens Island Yallourn

And rebranded…

  • We rebranded to

TRUenergy in June 2005

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TRUenergy rebranding advertisem ent

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Tallawarra South Australia Queensland New South Wales Victoria

Sydney Brisbane Melbourne Adelaide

Torrens Island Iona Ecogen Yallourn SEAGas

Organic grow th into New South W ales….

  • We expanded into

New South Wales organically

  • Organic mass market retail growth

since mid 2005

  • Commenced construction
  • f Tallawarra 400MW

CCGT power station in June 2006

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Tallawarra South Australia Queensland New South Wales Victoria

Sydney Brisbane Melbourne Adelaide

Torrens Island Iona Ecogen Yallourn SEAGas Queensland

Now planning Queensland m arket entry….

  • We are seeking to grow
  • ur integrated business

in Queensland

  • Mass market retail

contestability from July 2007

  • Potential future

generation opportunities

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Business Model and Strategy

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The business today

Tallawarra Power S tation greenfield

Site Comment MW Yallourn Brown coal-fired base load stat ion 1,480 TIPS Gas-fired intermediate to peaking stat ion 1,280 Ecogen Hedge agreement to 2019 966 Tallawarra CCGT under construction – commercial –

  • perat ion scheduled for late 2008

400 Ret ail foot print I&C cust omers Electricit y cust omers Gas cust omers Mass market and S ME ret ail cust omers Electricit y –

  • approx. 600,000 cust omer accounts.

Primarily Vict oria, developing NS W and S A Gas –

  • approx. 500,000 cust omer accounts.

Primarily Vict oria, developing NS W and S A

Torrens Island Power S tation (TIPS ) Yallourn S EAGas Pipeline

Generation assets Retail assets

Ecogen Hedge (up to 966MW) Gas S torage Facility (12 PJ)

Other TRUenergy assets

Det ails Gas storage facility Largest gas storage facilit y in Vict oria S EAGas Pipeline Foundation shipper agreement ( >50% pipeline capacit y) and 33%

  • wner

Multiple gas suppliers Gas contracts for the next 15 years from multiple suppliers Yallourn mine S upplies brown coal t o Yallourn power stat ion

Brisbane Sydney Melbourne Adelaide

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W hat is an integrated energy business…..?

  • Unregulated

– Perceive more value and growth potential in unregulated sector,

rather than regulated transmission and distribution

  • Generation and retail

– Power generation as well as retailing to all types of customer

  • Electricity and gas

– Integrated by retailing gas and electricity, gas fired generation

  • Portfolio of assets

– Generation, retail and gas assets with complementary

characteristics

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I ntegrated Energy Business Model

Upstream Transmission Distribution Retail Generation

  • Portfolio of gas supply contracts
  • Yallourn coal mine
  • Underground gas storage facility
  • Yallourn, base-load coal-fired station
  • TIPS, gas/ oil-fired peaking power station
  • Ecogen hedge, gas-fired peaking station
  • Tallawarra, site for gas-fired station
  • 33% equity interest in SEAGas pipeline

and rights to > 50% of capacity

  • No assets
  • ~ 500,000 mass market & SME gas
  • ~ 600,000 mass market & SME electricity
  • Large I&C electricity customers
  • Large I&C gas customers
  • Assets across value chain

provides earnings stability and

  • pportunity
  • Generation and retail focused
  • Not focused on regulated T&D
  • No equity in gas – currently

source gas through long term contracts

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Forward Market

Hedge $

Trader

Hedge $

Futures

Exchange

Pool Retailer

Pool $ Pool $

Spot Market

Bill $

Network Charges $ Connection Charges $

Electricity Market Structure Overview

Transmission Grid Distribution Network

End Use Customer

Grid

Generator Retail Wholesale

Monopoly

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Vertical I ntegration - the issue…

  • Vertical integration between generation and electricity retail is a

key feature of TRUenergy’s business model

  • Earnings volatility for standalone generator or retailer a result of

pool and contract market volatility, and hedging mismatches

  • Vertical integration of generation and retail provides for optimal
  • utcomes
  • Generator - sells generation into electricity pool,

hedges revenue in short to medium term in forward market

  • Retailer - buys generation from electricity pool,

hedges commodity cost in short to medium term in forward market

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Vertical I ntegration - the issue…

$15 $17 $19 $21 $23 $25 $27 $29 $31 $33 $35 $37 $39 $41 $43 $45 $47 $49 $51 $53 $55 D e c /1 9 9 9 F e b /2 M a y /2 A u g /2 N

  • v

/2 F e b /2 1 M a y /2 1 A u g /2 1 N

  • v

/2 1 F e b /2 2 M a y /2 2 A u g /2 2 N

  • v

/2 2 F e b /2 3 M a y /2 3 A u g /2 3 N

  • v

/2 3 F e b /2 4 M a y /2 4 A u g /2 4 N

  • v

/2 4 $ /M W h

CAL 02 CAL 03 CAL 04 CAL 05 12 MTHS (360 DAYS MOVING DAILY AVERA CAL 06 CAL 07

Victorian Electricity Forward Contract prices

12 month moving avg spot price Regulated Retail tariffs (Indicative only) Indicative Retail Margins Generation Earnings

  • Retail tariffs relatively constant, to a large extent are regulated
  • Retail margin has inverse correlation with generation margins
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Vertical I ntegration - the benefits

  • I nternalise Margins - combining or internalising retail and

generation margins, resulting in more stable cashflow/ income stream than either standalone

  • Reduced Risk – balancing generation output and retail load

reduces earnings volatility

– Reduced cost of debt and equity - TRUenergy’s debt margins

today are one third of Yallourn’s standalone

– Achieved A- credit rating - not possible for standalone generator

  • r retailer
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Developments

Integrated portfolio is being adopted by competitors AGL & Origin are key competitors Snowy, International Power and Santos emerging as potential key competitors Qld retail sale potentially start of broader NSW/Qld re- structuring over next 3 – 5 yrs, driving further consolidation

Legend

Large Medium Relative Size to TRUenergy Cust (%) Gen MW (%)

Com petitors are vertically integrating

Starting Competitors Opportunities

Customers Generation Upstream Gas TRUenergy AGL Origin Santos International Power Snowy Energex Integral Energy Australia Country Ergon NSW Gen Co’s Qld Gen Co’s

6 0 - 9 0

  • 8 0 - 1 3 0
  • 5 7
  • 1 0 5
  • 6 7
  • 7 3
  • 1 4 0
  • 8 4

1 0 1 2 0 1 0 7 1 5 0 4 1 2 6 0 1 0 0 1 0 0

Contenders

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W hy target a 2 0 % m arket share…..?

  • I ndustry consolidating - since privatisation in Victoria,

significant M&A activity resulted in industry consolidation, with players choosing either the regulated or unregulated space

  • End Gam e - in generation / retail space, likely NEM will follow UK

and New Zealand markets to consolidate to 4 or 5 large vertically integrated players

– AGL, Origin and TRUenergy key players to date – Future privatisations in Qld and NSW key next steps

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Current Position and Market Share

Brisbane Sydney Melbourne Adelaide

Qld NSW Vic SA MacGen Delta Eraring Energy Australia Integral Energy Country Energy Enertrade Stanwell CS

  • Energy

Energex Ergon Tarong

NEM Generation Market Share

17% 12% 11% 11% 9% 8% 8% 7% 7% 6% 4%

Other Mac Gen Snowy Delta TRUenergy Enertrade Int Power Eraring CS Energy Tarong Stanwell

NEM Retail Market Share

25% 15% 14% 10% 10% 7% 7% 6% 6%

AGL Origin Energy Australia Energex TRUenergy Integral Energy Country Energy Ergon Other Custs (m) 3.0 1.8 1.6 1.2 1.1 0.9 0.8 0.7 0.7 MW 6800 4900 4450 4200 3700 3100 3100 2900 2800 2400 1600

  • 5th largest retailer, 10% NEM share
  • 4th largest generator, 9% NEM share
  • Strong presence in VIC and SA
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W hat do w e need to achieve a 2 0 % share…

4,300 1.3M The challenge 8,000 2.4M 20% target 3,700 1.1M Current Generation ( MW ) Retail ( custom ers)

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Market TRUenergy Customers Generation 1.06M

  • 3,836MW
  • Market

TRUenergy Customers Generation 4.08M 9,067MW

  • Market

TRUenergy Customers Generation 4.20M 12,634MW Market TRUenergy Customers Generation 1.90M 11,498MW

The Opportunities

  • Qld and NSW provide key
  • pportunities for

TRUenergy

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To sum m arise our strategy…

  • text

Stage 1

Single asset with Yallourn only

  • Concentration of financial

resources in one asset

  • Single asset risks/value limitations

(2001-05)

Stage 4

Access local capital for growth

  • Combine step-wise acquisition

with local funding

  • Potential local market listing

(2007/08)

Stage 3

Grow integrated asset base & extend footprint

  • Aim for 20% national market

share

  • Extend business model to high

growth NSW & Qld States

(2006-08)

Stage 2

Acquire/merge with other retailers / generators

  • Hedge risks & diversify
  • Improve quality of business &

earnings

(2005)

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Australian Energy Markets

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Generation

~40%

Transmission

132kV - 500kV ~10%

Distribution

415V - 66kV ~40%

Retailing

240V ~10%

Regulated Natural Monopoly with “open access”

Competition where it is possible……. price regulation and open access where it isn’t

Competitive Competitive

Electricity Supply Chain

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NEM generation by energy

Brown Coal 29% Gas 6% Hydro 8% Black Coal 56% Other 0% Wind 1% NEM Fuel type by capacity

Wind 2% Hydro 17% Gas 10% Brown Coal 17% Black Coal 52% Other 2%

Electricity Fuel Supply

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Production, Processing & Storage

~50%

Transmission

(High Pressure) ~5%

Distribution

(Low Pressure) ~35%

Retailing

~10%

Regulated Natural Monopoly Competitive Competitive Partially Regulated

Gas Supply Chain

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Australia has significant gas reserves

Gippsland Basin 5 Tcf Otway Basin 1.5 Tcf

Yolla Field TRUenergy Gas Storage

VIC SA QLD NT NSW WA

Sydney Canberra Perth Brisbane Adelaide Darwin

Moomba Gas Plant Ballera

Bayu/Undan LNG

Wallumbilla

Longford Gas Plant Thylacine/Geographe Fields Melbourne Minerva Field Casino Field Kipper Field

Cooper Basin 1.8 Tcf Coal Seam Methane Projects 2.6Tcf (potentially 5-10 Tcf) Basin Discovered Gas Resource

Gas Field - undeveloped or under development

Townsville Gladstone

Gas Processing Plant Minerva Gas Plant Otway Gas Plant* * Under construction Bass Gas Plant Orbost Gas Plant Proposed PNG Pipeline

Greater North West Shelf 90Tcf Browse Basin 30Tcf Timor Sea 25Tcf Papua New Guinea (PNG) 10Tcf

Existing pipeline Proposed pipeline 1Tcf= 1068PJ (Vic uses ~ 250PJ p.a.)

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Australian Energy Market Size

3% annual growth in gas consumption (1PJ=936Mcf) 2-3% annual growth in electricity consumption, 3-4% growth rates in summer peak demand periods

Northern Territory Victoria New South Wales Tasmania Queensland

South Australia

Western Australia

AUSTRALIA Total NEM NEM share of Australia Population (m) 19.5 17.1 87% Installed Capacity MW 45,330 36,700 81% GWh consumption 176,100 153,000 87% PJ consumption 1,000 610 61%

QUEENSLAND share of Australia share of NEM Population (m) 3.7 19% 22% Installed Capacity MW 11,300 25% 31% GWh consumption 40,000 23% 26% PJ consumption 80 8% 13%

WESTERN AUSTRALIA share of Australia Population (m) 1.9 10% Installed Capacity MW 5,300 12% GWh consumption 12,000 7% PJ consumption 370 37%

NEW SOUTH WALES & ACT share of Australia share of NEM Population (m) 7.0 36% 41% Installed Capacity MW 12,800 28% 35% GWh consumption 63,000 36% 41% PJ consumption 140 14% 23% VICTORIA share of Australia share of NEM Population (m) 4.9 25% 29% Installed Capacity MW 8,900 20% 24% GWh consumption 39,000 22% 25% PJ consumption 250 25% 41%

SOUTH AUSTRALIA share of Australia share of NEM Population (m) 1.5 8% 9% Installed Capacity MW 3,700 8% 10% GWh consumption 11,000 6% 7% PJ consumption 140 14% 23%

Note: In WA gas is a significant source for electricity generation.

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Note: Gas consumption has been converted from PJ to GWh

Australian Energy Market - Consum ption by State

  • 10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000

N S W & A C T V I C Q L D W A S A T A S N T

Consumption – GWh equivalent

LPG Natural Gas Electricity

Note: LPG= Bottled Propane Gas

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National Electricity Market in Australia

Key Characteristics

  • NEM consists of South Australia, Victoria, New South Wales, Queensland and

Tasmania

  • Single market operator - NEMMCO
  • Settled via ½ hourly gross pool, underlying 5 minute dispatch & pricing
  • Common clearing / spot / pool price
  • Generators offer price / volume packets of generation into the market
  • Maximum pool price A$10,000 / MWh (called Value of lost load (VoLL))
  • Primarily a Capacity constrained market
  • Generators and retailers enter into derivative contracts to manage price risk
  • cash settlement, no physical delivery
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Forward Market

Hedge $

Trader

Hedge $

Futures

Exchange

Pool Retailer

Pool $ Pool $

Spot Market

Bill $

Network Charges $ Connection Charges $

Electricity Market Structure Overview

Transmission Grid Distribution Network

End Use Customer

Grid

Generator Retail Wholesale

Monopoly

Note: Green arrows refer to regulatory fees, red arrows to settlement payments based on market outcomes

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Retail electricity cost stack

Transmission & Distribution Cost NEM Fees

Pass Through

Wholesale Energy Cost

Portfolio Management

Retail Cost to Serve Retail Margin

Retail

A$40 – A$50/ MWh A$30 - A$60/ MWh A$5 - A$20/ MWh

‘Typical value’

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$20 $25 $30 $35 $40 $45 $50 $55 $60 $65 Dec/1999 Feb/2000 May/2000 Aug/2000 Nov/2000 Feb/2001 May/2001 Aug/2001 Nov/2001 Feb/2002 May/2002 Aug/2002 Nov/2002 Feb/2003 May/2003 Aug/2003 Nov/2003 Feb/2004 May/2004 Aug/2004 Nov/2004 Feb/2005 May/2005 Aug/2005 Oct/2005 Jan/2006 Apr/2006 Jul/2006 $/MWh

W ithout vertical integration, fluctuating w holesale costs create variable retail m argins

Cal 0 2 Flat Contract Prices Cal 0 3 Cal 0 8 Cal 0 7 Cal 0 6 Cal 0 4 Cal 0 5 1 2 Month Moving Average Spot Price Average W holesale Cost I ncluded in Vic Retail Tariff

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Forw ard Trading Activity Manages Price Risk

  • OTC or exchange traded
  • largely OTC, either via brokers or direct with counterparties
  • futures exchange traded
  • Participants
  • Generators, Retailers & Traders (about 30 participants)
  • Relatively illiquid 3-4 years
  • Common products
  • Swaps
  • Futures
  • Options

– Cap or floor – Collars (combination cap and floor) – Swaptions – Asian options

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Australian Gas Markets

Key Characteristics

  • State based systems with integrated transmission system
  • Victoria market carriage system
  • Open access to transmission and distribution
  • Monopoly producers dominate supply but sources of supply are increasing
  • Long term supply contracts linked to CPI with price resets
  • Currently daily pricing in Victoria
  • Intra – day pricing from March 2007
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Eastern Australia Gas Market Developm ent

  • Immature market
  • Monopoly producers (Gippsland Basin - Esso/ BHP

Billiton, Cooper Basin - Santos and others) > 90%

  • f supply
  • Monopoly retailers (AGL in NSW, Origin in SA, Vic

Govt in Victoria)

  • Single supply sources to market (Cooper Basin – to

Adelaide and Sydney, Gippsland Basin to Victorian)

Late 1990s, to present 1960s, 70s and 80’s

TASMANIA HOBART

Existing pipelines.

Sale Townsville Iona

VICTORIA SOUTH AUSTRALIA QUEENSLAND NORTHERN TERRITORY NEW SOUTH WALES WESTERN AUSTRALIA SYDNEY CANBERRA MELBOURNE PERTH BRISBANE ADELAIDE

Cooper Basin

Moomba

MAPS

Ballera

SW Qld (raw gas)

EAPL

Existing pipelines.

Sale Townsville Iona

VICTORIA SOUTH AUSTRALIA QUEENSLAND NORTHERN TERRITORY NEW SOUTH WALES WESTERN AUSTRALIA TASMANIA SYDNEY CANBERRA MELBOURNE PERTH HOBART BRISBANE ADELAIDE DARWIN

Cooper Basin

Moomba Ballera

EGP TGP SEAGas

  • Mature Victorian gas market, other states evolving
  • Monopoly producers still dominate supply but new

sources competing eg Otway Basin, Queensland Coal Seam Methane

  • Competitive retail market dominated by AGL, Origin

and TRUenergy

  • Integrated network with alternative supply sources

to market created by SEAGas and EGP

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Com petition and Ow nership State by State

Closed Queensland

  • Gas industry privatised
  • PNG pipeline (possibility)
  • Mass market opening July 2007
  • Electricity public
  • Electricity retail to privatise 2006

New South Wales & Snowy

  • Electricity public
  • Gas private
  • Gas & electric retail markets open
  • Retail price caps
  • Privatisation uncertain

Victoria

  • Fully privatised
  • Market fully open &

competitive

  • Retail price caps

Tasmania

  • Electricity public
  • Gas being developed
  • Basslink completed

2006

  • No Retail competition

South Australia

  • Fully privatised
  • Retail fully open &

competitive

  • Retail price caps

Western Australia

  • Electricity public
  • Gas privatised
  • Competition

beginning

Partially Open

Open Northern Territory

  • Electricity public
  • Market fully open
  • No competition
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Retail Energy Market Reform

  • State markets have opened to retail competition in tranches
  • Industry has driven the approach to Mass Market Systems

capability

  • Regulatory framework
  • Regulated pricing for mass market - negotiated multi year

retail price paths in Victoria, New South Wales and South Australia

  • Regulated customer protection framework covers all retailing

functions, for example billing, sales & marketing

  • Extensive but inconsistent compliance programs in place in

each State to comply with varying State compliance and compliance reporting obligations

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Major Areas of Continuing Retailer Regulation

  • Consumer Protection
  • Minimum Terms for Customer Contracts (Retail Codes)
  • Hardship policies
  • Compliance and compliance reporting / audits
  • Ombudsman schemes provide independent arbitration and mediation

between consumers and retailers

  • Market Rules, for example
  • National gas market development
  • Transmission Regulated prices to Australian Energy Regulator
  • Retail Pricing
  • Retail price caps and reviews
  • Greenhouse policy
  • Victorian Renewable Energy Target (VRET)
  • Emissions Trading Scheme consultation
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TRUenergy Overview

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TRUenergy Business Structure

TRUenergy business comprises functional areas:

  • Retail
  • Operations & Construction
  • Portfolio Managem ent
  • Corporate

– Finance – Information Systems – Legal & Corporate – Human Resources – Business Development – CLP Internal Audit

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Attract and retain customers by delivering on

  • ur promise

to put customers first Manage our access to generation to meet customer needs and create value through wholesale trading of gas and electricity and I&C sales Deliver efficient and reliable production of gas and electricity from our power stations and gas plants Build and leverage relationships with government and regulators Identify and analyse growth opportunities and manage investment projects Provide robust risk controls as well as monitor and report for energy market activities Protect our business and assets with appropriate insurance and effective incident management systems Assist business to minimise legal risk and establish sound governance structures and processes Maintain our facilities and business premises Ensure accurate and efficient finance/ tax planning and reporting Provide corporate financing and cash management services Manage procurement of the goods and services we need to run our business Recruit, support, develop and reward employees Deliver excellence in information technology solutions to meet business needs Ensure effective communication with stakeholders and develop

  • ur corporate reputation

TRUenergy vision: To be the leading integrated energy business in Australia

Procurem ent Corporate Finance Planning, Accounting & Tax Facilities Managem ent Legal Enterprise Risk Public Affairs Market Risk Business Developm ent Hum an Resources I nform ation Services Governm ent & Regulatory Affairs Portfolio Managem ent Retail Operations and Construction

Attract and retain customers by delivering on

  • ur promise

to put customers first Manage our access to generation to meet customer needs and create value through wholesale trading of gas and electricity and I&C sales Deliver efficient and reliable production of gas and electricity from our power stations and gas plants Build and leverage relationships with government and regulators Identify and analyse growth opportunities and manage investment projects Provide robust risk controls as well as monitor and report for energy market activities Protect our business and assets with appropriate insurance and effective incident management systems Assist business to minimise legal risk and establish sound governance structures and processes Maintain our facilities and business premises Ensure accurate and efficient finance/ tax planning and reporting Provide corporate financing and cash management services Manage procurement of the goods and services we need to run our business Recruit, support, develop and reward employees Deliver excellence in information technology solutions to meet business needs Ensure effective communication with stakeholders and develop

  • ur corporate reputation

TRUenergy vision: To be the leading integrated energy business in Australia

Procurem ent Corporate Finance Planning, Accounting & Tax Facilities Managem ent Legal Enterprise Risk Public Affairs Market Risk Business Developm ent Hum an Resources I nform ation Services Governm ent & Regulatory Affairs Portfolio Managem ent Retail Operations and Construction

TRUenergy Business Structure

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Experienced Managem ent Team

Managing Director Richard McIndoe

  • Dir. Retail

Karen Lowe

  • Dir. Hum an

Resources Margie Hill

  • IT Strategy &

Planning

  • Business

Solutions

  • Business

Improvement

  • Dir. Portfolio

Managem ent Carlo Botto

  • Electricity
  • Gas
  • Physical
  • I&C

Customers

  • Regulatory

Affairs

  • Dir. Business

Developm ent Sam Bristow

  • Yallourn
  • TIPS
  • UGS
  • Tallawarra

General Counsel & Corp Sec. Amanda Barnett

  • Retail

Strategy and Devt

  • Sales and

Marketing

  • Commercial

Business Segment

  • Customer

services

  • Dir. I nform ation

System Phillip Nesci

  • Legal
  • Intellectual

Property

  • Company

Secretarial

  • Corporate

Governance

  • Facilities

Management

  • Public Affairs

Chief Financial Officer Duncan Black

  • Financial

Control

  • Reporting
  • Treasury
  • Tax
  • Planning
  • Procurement
  • Risk

Management

  • Dir. Operations &

Constructions Michael Hutchinson

  • Greenfield

Power Station Development

  • Acquisitions

I nternal Audit

  • Human

Resources

slide-49
SLIDE 49

Retail

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29 September 2006

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50

Role of Retail

  • To manage TRUenergy’s mass market and small business customer base

with the aim of retaining existing customers and winning new customers whilst improving profitability and customer service

  • To provide required back office services including call centre and billing
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29 September 2006

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51

Overview of TRUenergy Retail

  • Currently 1.1m customers
  • Majority located Victoria
  • Growing presence South Australia and New South Wales
  • Strengths
  • Brand recognition
  • Successful migration of customers from Government Regulated

Tariffs to Market Based Tariffs

  • Customer churn performance better than industry average
  • Customer complaints lower than industry average
  • Opportunities
  • Queensland
  • Retail market opening 1 July 2007
  • Further organic growth in South Australia and New South Wales
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29 September 2006

TRUenergy Briefing

52

Victorian Market Churn Since Deregulation

  • 10,000

20,000 30,000 40,000 50,000 60,000 2002-1 2002-7 2003-1 2003-7 2004-1 2004-7 2005-1 2005-7 2006-1 2006-7 Transfers per month Gas - Per Month Elect - Per Month 22% 27% 20% 13%

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29 September 2006

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53

Trends in the Market

3% 5% 5%

2 0 0 3

8% 7% 5% Victoria 6% 10%

2 0 0 6

5% 7%

2 0 0 5

3% 5%

2 0 0 4

New South W ales South Australia Average Market Discounts*

* Include upfront incentive

Num ber of Players in the m arket 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 VI C 3 5 7 8 1 1 SA 3 5 5 8 8 NSW 4 4 4 7 1 1 Discounts in the m arket

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29 September 2006

TRUenergy Briefing

54

Retail competitors are using a myriad of marketing and pricing tools to win and retain customers, such as

  • Strategic

–

Loyalty rebates

–

Tiered exit fees (years 1 to 3)

–

Fixed price contracts

–

1, 2 and 3 year contracts

–

Usage and supply discounts (ranging from 5% -12% currently in the market)

–

Product bundling (gas / electricity / insurance etc.)

  • Tactical incentives

–

DVDs, shopping vouchers, memberships

–

Direct debit discounts

–

Pay on time discounts

–

Loyalty rewards (eg Frequent Flyer Points)

Retail Market Levers

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29 September 2006

TRUenergy Briefing

55

TRUenergy speed dating advertisem ent

slide-56
SLIDE 56

Operations and Construction

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29 September 2006

TRUenergy Briefing

57

Asset Overview

Tallawarra Power S tation greenfield

Site Comment MW Yallourn Brown coal-fired base load stat ion 1,480 TIPS Gas-fired intermediate to peaking stat ion 1,280 Ecogen Hedge agreement to 2019 966 Tallawarra CCGT under construction – commercial –

  • perat ion scheduled for late 2008

400

Torrens Island Power S tation (TIPS ) Yallourn S EA Gas Pipeline

Generation assets Generation assets

Ecogen Hedge (up to 966MW) Gas S torage Facility (12 PJ)

Other TRUenergy assets Other TRUenergy assets

Det ails Gas storage facility Largest gas storage facilit y in Vict oria S EAGas Pipeline Foundation shipper agreement ( >50% pipeline capacit y) and 33%

  • wner

Multiple gas suppliers Gas contracts for the next 15 years from multiple suppliers Yallourn mine S upplies brown coal t o Yallourn power stat ion

Brisbane Sydney Melbourne Adelaide

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29 September 2006

TRUenergy Briefing

58

Yallourn provides up to 1 ,4 8 0 MW of cost com petitive base-load generation

  • Yallourn is a 1,480MW power station and coal

mine located in the Latrobe Valley

  • Coal mine adjacent to power station providing

a secure, low cost source of fuel

– Reserves for power station needs to 2032 – Mine operation and maintenance through

alliance contract with RTL, a joint venture between Roche, Thiess and Linfox

  • Yallourn is a key generation asset

– Provides ~ 23% of Victoria’s electricity needs – Average availability since privatisation 89% – Multi-skilled workforce – New digital control system – Operated by TRUenergy, maintenance by

alliance contract with Siemens/ Thiess JV

Yallourn Pow er Station — Overview Yallourn Pow er Station — Overview

Asset Installed capacity Details Availability (June 2006 ytd) Yallourn 1,480MW 2x360MW 2x380MW 91.9% Technical specifications Technical specifications

Yallourn Pow er Station Location

`

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SLIDE 59

29 September 2006

TRUenergy Briefing

59

Yallourn - Significant I m provem ent Projects

I m provem ent I m provem ent

Control & I nstrum entation Upgrade Control & I nstrum entation Upgrade New Mining Method New Mining Method

Details Details

  • Project to modernise power station

control & instrumentation systems

  • New central control room and power

plant simulator

  • Units 3 & 4 operational
  • Supplied under alliance with ABB
  • New method uses dozers (D11 Cat) and

feeder-breaker technology

  • Upgrade of coal handling, conveying systems
  • 3 of 5 dredgers now decommissioned, one

maintained for ongoing overburden removal and one for emergency coal supply

Benefits Benefits

  • Improvements relating to availability
  • Improved control related run-up costs
  • Improved capability, reliability at lower cost

– Production per man hour more than doubled – Coal supply reliability increased to 99.9%

Tim ing Tim ing

  • Commenced: 2002
  • Scheduled completion: 2008
  • Dredger mining operations replaced with dozer

mining system in 2002/ 3

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29 September 2006

TRUenergy Briefing

60

I m provem ent I m provem ent Diversion of Morw ell River Diversion of Morw ell River I ndustrial Relations I m provem ents I ndustrial Relations I m provem ents Details Details

  • Design, supply and construction

contracted to RTL

  • Contract value A$116m
  • Project planned over 4 dry seasons

(November to June)

  • Completed on schedule and to budget
  • Scope of work

– 11 million cubic metres of earthworks. – 3.5km of clay lined watercourse. – 1,246m of conveyor tunnels through

embankment

  • AIRC made an MX Award in Oct 2001 after

failed EBA negotiations

  • Delivered a team based culture, enabled

reduction in manning levels and introduction of new technology providing significant flexibility and right to manage

  • Subsequent major changes implemented

without industrial action

  • Outsourcing of mine O&M to Alliance
  • Power station maintenance reorganisation
  • I&C, new mining method, MRD

Benefits Benefits

  • Enables mining of East Field extension

to 2010 and Maryvale Field beyond 2010

  • Resulted in competitive advantage for

Yallourn Tim ing Tim ing

  • Commenced: October 2000
  • Completed: May 2005
  • Continuous change since October 2001
  • New EBA signed in August 2004 without

dispute

Yallourn - Significant I m provem ent Projects

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29 September 2006

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61

South Australia peaking/ m id-m erit capacity provided by Torrens I sland Pow er Station

  • Located on Torrens Island, approx 15 km

northwest of Adelaide

  • Consists of two plants, TIPS A and TIPS B
  • 1,280MW from 8 gas fired steam turbines
  • Largest generation plant in South Australia

providing ~ 40% of capacity

  • TXU acquired the 99-year lease of TIPS from

the South Australian government in 2000 for A$295m

  • Historically, TIPS was supplied with gas from

central Australia, but now gas sourced mainly from Victoria through SEAGas Pipeline

TI PS Overview TI PS Overview TI PS Location TI PS Location Technical specifications Technical specifications

`

TIPS A TIPS B Capacity 480MW 800MW Units 4x120MW 4x200MW Market Role Peaking Intermediate Fuel Type Gas/ Oil Gas/ Oil Commissioned 1967-71 1975-1980

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29 September 2006

TRUenergy Briefing

62

Additional peaking plant capacity provided under the Ecogen Master Hedge Agreem ent ( MHA)

Asset Rated capacity Details Newport 500 MW Single turbine

  • Gas/ st eam generat or
  • Located south-west of Melbourne

Jeeralang 466 MW 7 unit s

  • Gas generat or
  • Located in the Lat robe Valley east of

Melbourne

Ecogen Generation Plant Ecogen Generation Plant

  • Ecogen MHA provides 966MW of capacity over a

20 year period

  • Ecogen plant - Newport and Jeeralang gas-fired

peaking power stations

  • The MHA is a contract between TRUenergy and

Ecogen

– TRUenergy has no ownership or operational

control

– Contract commenced on 6 May 1999 and runs

for 20 years until 6 May 2019

– Ecogen dispatches plant into market – TRUenergy receives pool revenue and provides

for guaranteed return of operating costs and return of capital

– TRUenergy supplies gas to Ecogen

Overview of Ecogen MHA Overview of Ecogen MHA

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29 September 2006

TRUenergy Briefing

63

Gas Storage facility providing the ability to m anage portfolio gas position

  • Gas storage and processing facility near Port

Campbell in south west Victoria

– Commissioned in 1999 - capacity of 12 PJ – Plant capacity represents ~ 25% of peak-day

Victorian retail gas demand

  • Connected directly to Victorian gas

transmission system and SEAGas Pipeline

  • TRUenergy must make certain storage

capacity available to other participants

  • Underground storage capacity

– Reduces supply shortage risk to TRUenergy

gas customers and generation assets

– Allows TRUenergy additional supply

flexibility to that under gas supply contracts

  • Gas processing for nearby gas fields in

addition to storage services

Underground Gas Storage ( “UGS”) - overview I ona gas storage reservoir-technical param eters

  • 260TJ/ day withdrawal deliverability
  • 100 TJ/ day of injection deliverability
  • 12 PJ of storage capacity

UGS schem atic

Iona gas processing plant (320 TJ/ d) Iona compression facilities SWP SEAGas North Paarat te Wallaby Ck Heyt esbury S antos offshore Iona reservoir (12.2PJ cap)

50 TJ/d 50 TJ/d 125 TJ/d 250 TJ/d 70 TJ/d 320 TJ/d Max 100 TJ/d 260 TJ/d 90 TJ/d 165 TJ/d
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29 September 2006

TRUenergy Briefing

64

SEAGas pipeline capacity provides flexibility for gas business, equity interest stable cashflow s

  • 685km pipeline from near Melbourne to Adelaide, operational

from January 2004

  • JV together with International Power and Origin — TRUenergy

33.3% equity interest

  • Project financed, non recourse to owners
  • Provides an alternative in South Australia to Cooper Basin gas
  • Gas switching flexibility in Victoria / SA
  • TRUenergy has rights to > 50% of capacity for 15 years—

390 TJ/ day capacity

  • SEAGas pipeline secures additional supply option for TIPS and

provides significant flexibility to TRUenergy gas strategy

  • 33.3% equity interest provides stable return

Overview of SEAGas Pipeline SEAGas Location

S ydney Canberra

South Australia New South Wales Victoria

Adelaide Melbourne SEAGas pipeline

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SLIDE 65

29 September 2006

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65

The com bined portfolio w ell integrated across m erit order to support business’ retail load

Combined portfolio a good combination of assets to support retail business EB generation assets provide TRUenergy with diversification by fuel, units, states and across the merit order Generation portfolio has significant presence in Victoria and S A

Com m entary Victoria and South Australia generation m erit order Victoria capacity

Osborne 6% Thomas Playford 7% Pelican Point 16% Dry Creek GT 5% Ladbroke Grove 3% Torrens Island A 15% Torrens Island B 25% Northern 17% Snuggery/ Port Lincoln 3% Mintaro GT 3% Loy Yang B 13% Hazelwood 20% Newport 7% Jeeralang 6% Loy Yang A 25% Yallourn 18% S

  • uthern Hydro

7% Anglesea 2% Morwell (Energy Brix) 2%

Total TRUenergy capacity 31%

South Australia capacity Cum ulative capacity ( MW Traded)

Total TRUenergy capacity 40%

Dry Ck/ Mintaro 238MW 10,000 6,000 2,000 4,000 8,000 10 20 30 40 50 150 Yallourn 1,320MW Loy Yang A 1,840MW Loy Yang B 920MW Hazelwood 1,440MW S

  • uthern Hydro 469MW

Morwell (Energy Brix) 176MW Anglesea 135MW Northern (Flinders) 514MW Osborne 171MW Ladbroke Grove 78MW Marginal Cost (A$/ MWh) Average Peak Average Off Peak TRUenergy owned / contracted Newport 475MW Torrens B 760MW Jeeralang 468MW Torrens A 380MW

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29 September 2006

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66

Tallaw arra Sum m ary

  • 400MW A$400m CCGT in construction in NSW,

TRUenergy Balance Sheet financed

  • EPC Contract with Alstom, issued Notice to

Proceed in early June 2006

  • Commercial Operations Date scheduled for late

2008 to hit summer peak

  • Constructed on site of former coal-fired power

station, acquired from NSW govt

  • Access to cooling water, close to gas

transmission, connection to electricity transmission

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29 September 2006

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67

Tallaw arra Overview

  • NSW largest market in the NEM
  • NSW forecast to require new generation supply in 2008/ 9
  • Tallawarra lowest cost new entrant by virtue of site benefits
  • Key contributor to NSW Greenhouse Gas Abatement Scheme (NGAC)
  • Strong source of incremental earnings growth for TRUenergy
  • Growing TRUenergy retail business provides natural hedge to generation
  • 600Ha site provides property development upside
slide-68
SLIDE 68

Portfolio Managem ent and Risk Managem ent

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SLIDE 69

29 September 2006

TRUenergy Briefing

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Fuel Generation W holesale Retail

Long Term Gas Supply and Transportation Agreements

Gas Market Electricity Market

I & C Underground Storage Wholesale Mass Market And Small Business Pool I & C Wholesale Mass Market And Small Business TIPS / MHA Yallourn Tallawarra Liquid Fuel Yallourn Coal

TRUenergy’s comprehensive wholesale portfolio extracts value across the energy value chain

I ntegrated W holesale Portfolio

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29 September 2006

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70

Role of Portfolio Managem ent

  • Portfolio Management’s objective is to protect and enhance the value of

TRUenergy’s assets

  • Generation/ Gas Supply and customer usage/ load
  • As TRUenergy is a vertically integrated energy company, Portfolio Management’s

core role is managing the residual position between physical supply and customers’ demand by:

  • Contracting supply or hedging asset cash flow to optimise earnings
  • Bidding and dispatching/ scheduling generation and gas to monetise asset value
  • Portfolio Management’s wholesale market expertise provides a platform for

TRUenergy to contribute to the development of Australia’s energy markets

  • Portfolio Management engages with industry and government stakeholders to develop

sustainable energy policy

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29 September 2006

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71

TRUenergy’s Risk Managem ent Fram ew ork

TRUenergy’s energy trading activities are conducted within a strong governance framework

  • Comprehensive Risk Management Policies
  • Strong oversight of operations by Risk Management and Audit
  • Functional and organisational separation of front, middle and back office energy

trading activities

  • Systems and processes minimise operational risk
  • Portfolio risk measures provide early warning indicators around cash, contribution

and value TRUenergy’s risk management policies, procedures and systems were reviewed in early 2006 by Protiviti, a US-based consultant, which found risk management at TRUenergy to be “fit for purpose” whilst identifying a number of areas for improvement which are currently being pursued

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29 September 2006

TRUenergy Briefing

72

Com m ercial & I ndustrial Custom ers Counterparties and Brokers NEMMCO/ VENCorp

Front Office

Physical Markets Bid development & submittal Market & asset monitoring & re- bidding Co-ordination with asset management and plant operations Operational liaison with NEMMCO & VENCorp

Plant Operations

Director Portfolio Managem ent

  • Execution Strategy - forward market, bidding, stakeholders
  • Counterparty & customer relationship management

Operational infrastructure management Electricity Portfolio Counterparty relationship development Position monitoring & management Forward transaction execution Contract pricing & information gathering Risk RMP & procedures

  • Compliance
  • Development

Credit management Forward curve Position Monitoring & Reporting Valuation

Middle Office

Settlem ents Pool Settlements Contract Settlements Contract Confirmation

Back Office Managing Director

Large Custom er Portfolio Customer relationship development Product development Account management, including billing enquiries, network and market information Customer information and business process management I &C Billing Customer transfers Metering data Billing

Governance & Oversight

Risk Managem ent Com m ittee

Gas Portfolio Counterparty relationship development Position monitoring & management Contract management Contract pricing & information gathering

Counterparties

Risk Consultative Com m ittee Executive Com m ittee Group I nternal Audit I nternal Audit

Audit

Risk Managem ent Fram ew ork - Segregation

slide-73
SLIDE 73

Ow nership and Capital Structure

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29 September 2006

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TRUenergy Group

CLP Australia Holdings Pty Ltd

CLP Australia Finance Pty Ltd CLP Australia Energy Holdings Pty Ltd TRUenergy Australia Pty Ltd TRUenergy Yallourn Pty Ltd

CLP Power Asia Ltd

  • Yallourn

Power Station

  • Yallourn

Mine

CLP Australia Pipelines Pty Ltd

  • Investment

in SEAGas

TRUenergy Pty Ltd TRUenergy Gas Storage Pty Ltd TRUenergy SA Generation Pty Ltd

  • UGS
  • TIPS
  • Retail Business
  • Ecogen MHA
  • Gas Supply

Contracts

  • Finance

Company

  • Syndicated

Bank Debt

  • Aust MTN

CLP Holdings

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29 September 2006

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75

TRUenergy borrow ing structure

  • CLP Australia Holdings Pty Ltd is holding

company for the Australian operating subsidiaries:

  • TRUenergy Yallourn Pty Ltd (Yallourn

Power Station and Mine)

  • CLP Australia Energy Holdings Pty Ltd

(owns business acquired from Singapore Power in May 2005)

  • CLP Australia Finance Pty Ltd
  • The borrowing structure for the senior debt

has the following terms

  • Negative pledge - no security interests
  • ver assets of the guarantor group other

than permitted security interests

  • Subordination - Senior indebtedness to

rank ahead of all other indebtedness

  • Requirement to hedge interest rate

exposure

  • The following financial covenants will be

tested semi-annually:

  • Interest Cover
  • Debt to Total Capitalisation

Ownership and borrowing structure Ownership and borrowing structure CLP Australia Finance Operating S ubsidiaries TRUenergy Yallourn Pty Ltd S enior debt A$2,300m CLP Australia Energy Holdings Pty Ltd Equity Perpetual notes S hareholder loans CLP Australia Holdings

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29 September 2006

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76

Senior Debt - Capital Structure

A$1,600m senior debt facilities

  • Syndicated A$1,600m senior bank debt facility (syndicate of 14

banks)

  • Comprises of two tranches:
  • 3 year A$650m revolver facility; and
  • 5 year A$950m revolver facility
  • The terms of both tranches allow for early repayment and redraw
  • Margin based on a pricing grid linked to credit rating
  • Syndicated A$1,600m senior bank debt facility (syndicate of 14

banks)

  • Comprises of two tranches:
  • 3 year A$650m revolver facility; and
  • 5 year A$950m revolver facility
  • The terms of both tranches allow for early repayment and redraw
  • Margin based on a pricing grid linked to credit rating

A$700m Australian MTN

  • Australian domestic A$ Medium Term Note issuance on A$2 billion

program

  • Comprises three tranches:
  • 7 year A$325m Fixed Rate Notes
  • 7 year A$325m Floating Rate Notes
  • 10 year $50m Floating Rate Notes
  • Australian domestic A$ Medium Term Note issuance on A$2 billion

program

  • Comprises three tranches:
  • 7 year A$325m Fixed Rate Notes
  • 7 year A$325m Floating Rate Notes
  • 10 year $50m Floating Rate Notes

A$250m working capital facility

  • In addition to the base capital structure, a A$250m working capital

facility is in place to meet guarantee requirements and support intra-period working capital fluctuations

  • In addition to the base capital structure, a A$250m working capital

facility is in place to meet guarantee requirements and support intra-period working capital fluctuations

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29 September 2006

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77

950 50 650 50 100 200 300 400 500 600 700 800 900 1000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

600 Un- drawn

Facility A 650 Facility B 7yr M TN 10yr M TN

Maturity Date Facility A 22/08/2009 Facility B 22/08/2011 7yr MTN 16/11/2012 10yr MTN 16/11/2015

Debt Maturity Profile

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29 September 2006

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78

Financing Capacity

50 50 10yr Floating AUD MTN 1,700 2,300 Total 325 325 7yr Floating AUD MTN 325 325 7yr Fixed AUD MTN 950 950 5yr Bank Loan 50 650 3yr Bank Loan Drawn Amount (A$m) Facility Amount (A$m) Facility Senior Debt Facilities

  • CLP Australia Holdings and

TRUenergy rated A-/ stable by Standard & Poor’s

  • Conservative gearing < 40%

providing significant financial flexibility

  • A$600m of undrawn committed

debt facilities

slide-79
SLIDE 79

Financials

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29 September 2006

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2 0 0 6 I nterim Results

  • High mass market electricity and gas

sales volumes resulting from hot summer and cold winter despite strong retail competition

  • Electricity sales volumes ~ 30%

higher than 1H 2005

  • Gas sales volumes ~ 20% higher than

1H 2005

  • 2H earnings usually ‘flatter’ than 1H
  • Focus on operating expense synergies
  • Debt repayment reducing interest

costs Income Statement HK$m Electricity Portfolio 2,007 Gas Portfolio 233 Total Gross Margin 2,240 Profit before financing and taxation 628 Earnings for the period 287

CLP Australia Holdings Period ended 30 June 2006

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29 September 2006

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Seasonality of Earnings

  • Earnings profile is seasonal
  • Electricity greater determinant of

earnings than gas

  • Electricity customer consumption

typically higher over southern hemisphere summer, particularly January & February

  • Gas customer consumption peaks

in southern hemisphere winter due to demand for heating

  • 2H earnings usually ‘flatter’ than

1H; summer & winter ‘peaks’ impact largely felt in 1H

Electricity Volumes

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec GWh

Gas Volumes

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec TJ

Note: Indicative only

slide-82
SLIDE 82

Sum m ary and Outlook

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29 September 2006

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The business today

Tallawarra Power S tation greenfield

Site Comment MW Yallourn Brown coal-fired base load station 1,480 TIPS Gas-fired intermediate to peaking station 1,280 Ecogen Hedge agreement to 2019 966 Tallawarra CCGT under construction – commercial –

  • peration scheduled for late 2008

400 Ret ail foot print I&C cust omers Electricit y cust omers Gas cust omers Mass market and S ME ret ail cust omers Electricity –

  • approx. 600,000 cust omer account s.

Primarily Vict oria, developing NS W and S A Gas –

  • approx. 500,000 cust omer account s.

Primarily Vict oria, developing NS W and S A

Torrens Island Power S tation (TIPS ) Yallourn S EAGas Pipeline

Generation assets Retail assets

Ecogen Hedge (up to 966MW) Gas S torage Facility (12 PJ)

Other TRUenergy assets

Det ails Gas storage facility Largest gas storage facilit y in Vict oria S EA Gas Pipeline Foundation shipper agreement ( >50% pipeline capacit y) and 33%

  • wner

Multiple gas suppliers Gas contracts for the next 15 years from multiple suppliers Yallourn mine S upplies brown coal t o Yallourn power stat ion

Brisbane Sydney Melbourne Adelaide

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29 September 2006

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84

Strengths Opportunities W eaknesses Threats

TRUenergy SW OT

  • Vertically integrated business w ith diverse

assets

  • Strong position Vic & SA – retail and

generation, low cost base load generation

  • Brand recognition
  • Robust Risk Managem ent practices
  • A- credit rating, significant funding capacity
  • Greenfield pow er station developm ents, for

exam ple Tallaw arra

  • Qld retail m arket opening
  • NSW retail grow th
  • Potential NSW privatisation
  • Retail grow th delivers reduced cost– to-serve
  • Custom er appetite for churn
  • I rrational pricing by governm ent ow ned

com petitors

  • Market consolidation and acquisitive nature
  • f com petitors
  • Regulatory policy, for exam ple, em issions

trading potential im pact on greenhouse intensive generation

  • Lack of NSW & Qld presence
  • Lack of retail scale
  • Large brow n coal generator
  • Age of plant
  • No upstream gas investm ent
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29 September 2006

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85

To sum m arise our strategy…

  • text

Stage 1

Single asset with Yallourn only

  • Concentration of financial

resources in one asset

  • Single asset risks/value limitations

(2001-05)

Stage 4

Access local capital for growth

  • Combine step-wise acquisition

with local funding

  • Potential local market listing

(2007/08)

Stage 3

Grow integrated asset base & extend footprint

  • Aim for 20% national market

share

  • Extend business model to high

growth NSW & Qld States

(2006-08)

Stage 2

Acquire/merge with other retailers / generators

  • Hedge risks & diversify
  • Improve quality of business &

earnings

(2005)

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29 September 2006

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86

Strong pipeline of grow th opportunities….

  • Organic grow th - well positioned to grow organically into NSW, Qld

– Generation - proven development capability, gas availability – Retail - strong retail capability, strong branding and products,

customer growth provides scale to reduce cost to serve

  • Acquisition - demonstrated ability to acquire and integrate

businesses, in short to medium term a number of opportunities

– Qld Retail - privatisation of retail businesses in Qld ongoing – NSW Retail - potential future privatisation of 3 retailers – Generation Privatisation - potential future in Qld and NSW – Others - acquisition of niche retailers, gas assets

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Tallawarra South Australia Queensland New South Wales Victoria

Sydney Brisbane Melbourne Adelaide

Torrens Island Iona Ecogen Yallourn SEAGas Queensland

TRUenergy Vision

  • Vision to be the leading

integrated energy business in Australia

  • Grow from strong VIC and

SA position into NSW and QLD

  • Target 20% national

market share in retail and generation