ElectraNet

ElectraNet operates and manages the electricity transmission network throughout South Australia, providing the high voltage, large capacity network for generators to transport their electricity to end users. ElectraNet has a long-term lease expiring in 2199.

Performance highlights 2009

In financial year 2009, ElectraNet's revenue increased 21.7 per cent to $251.0 million and EBITDA increased by 24.5 percent to a total of $192.3 million.

On 1 May 2009 the Australian Energy Regulator (AER) released its review of the return on capital parameters for all Australian electricity utilities. As a regulated electricity utility company, ElectraNet's revenue allowance is based on an assumption of operating expenses, a rate of return (known as the Weighted Average Cost of Capital - WACC) and an asset base (known as the Regulated Asset Base - RAB). ElectraNet's WACC is reset every five years by the AER, and was recently reset, thereby fixing its WACC for the five-year period 1 July 2008 to 30 June 2013. As part of the current industry review the AER changed three of its WACC parameters reducing the industry WACC. Actual regulatory resets, including revenue, cost and capital expenditure allowances are, however, specific to each utility, with the next regulatory period for ElectraNet commencing 1 July 2013.

Earlier in the financial year, ElectraNet successfully appealed one aspect of the AER's Final Regulatory Decision for the current regulatory period to the Australian Competition Tribunal under the Merits Review arrangements. This appeal related to the recognition of a portion of ElectraNet's easement acquisition costs in its opening RAB that the AER had sought to exclude. The successful appeal secured an increase in ElectraNet's RAB and revenue allowance.

ElectraNet Transmission Investments (ETI) completed two projects during the year, being non-regulated connections to Quarantine Power Station and Hallett Hill Wind Farm and secured a further project - North Brown Hill Windfarm. ETI invests in non-regulated transmission connection opportunities outside of the regulated entity. This diversifies the group's revenue and allows it to participate in potentially higher yielding unregulated transmission lines.

Also during the year, ElectraNet successfully refinanced several bank debt facilities in line with current market rates. ElectraNet's next refinance is not scheduled until early in the financial year to June 2011.

Performance outlook

The primary focus for ElectraNet management going forward will be on implementing the proposed operating and capital expenditure programs over the remaining four years of the current regulatory period. One of the key projects will be the Adelaide Central Reinforcement project, which involves a major expansion of the high voltage electricity supply network to the Adelaide Central Business District. Successful investment in regulated assets increases ElectraNet's asset base and helps to grow its revenues.

ElectraNet
Financial and operational performance

* CAGR: Compound Annual Growth Rate

(1) Estimated 30 June 2009 RAB as at October 2009. This is an estimate as the RAB is formally confirmed at the commencement of each five year regulatory period. Prior estimate of August 2009 has been revised following completion of the regulatory accounts and reflects the slower than anticipated regulatory expenditure for the period. Full regulatory expenditure is expected to be made by the end of the regulatory period in June 2013.

For more information please visit the ElectraNet website