Investor Presentation. October 2011

Transcription

1 Investor Presentation October 2011

2 Agenda TRUenergy overview Strong, balanced business model Retail Scale and Quality Diverse generation portfolio supported by strong fuel position Strong financial discipline and position Summary 2

3 A strong portfolio of diversified assets RETAIL ASSETS* Customers 2.8 million customer accounts ELECTRICITY ASSETS^ 5,613MW Yallourn Coal-fired power station 1,480 Tallawarra A Gas-fired power station 420 Hallett Gas-fired power station 203 Delta Western Gentrader (Mt Piper & Wallerawang) Offtake Coal-fired power stations 2,400 Newport & Jeeralang Offtake from gas-fired plants 966 Waterloo & Cathedral Rocks Wind farms 144 PROSPECTIVE DEVELOPMENT^ 1,546MW Tallawarra Stage B (permitted) 420 Marulan Gas-fired power station (permitted) 700 Mallee Solar Park Proposal for solar power station 180 Petratherm 10% equity in Paralana geothermal project 30 Stony Gap, Roberstown & Waterloo II GAS ASSETS^ Iona gas storage and processing plant Eastern Star Gas Upstream gas Wind farms PJ gas storage facility 30.8% (>500PJ of equity CSG: Gunnedah Basin. Subject to shareholder & court approval) Equity in Queensland CSM developments *As at 30 June 2011 ^As at 30 September 2011 A & B TRUenergy has evolved to be one of Australia s leading vertically integrated and diversified energy companies 3

4 Delivering financial scale OVERVIEW Equity $4.2bn (as at 30 June 2011) Total assets $9.2bn (as at 30 June 2011) Total liabilities Drawn net debt $5.0bn (as at 30 June 2011) $2.6bn (as at 30 June 2011) Revenue $3.0bn* (6 months to 30 June 2011) EBITDAF Normalised $379M* (6 months to 30 June 2011) NPAT Normalised $148M^ (6 months to 30 June 2011) A & B Includes only four months of NSW assets ^ Excludes NSW acquisition costs and stamp duty and only four months of NSW contribution Vertically integrated model provides broad optionality 4

5 A scale player in the industry post-nsw sale AGL Origin TRUenergy # Customers ( 000 s) Electricity 1,925 3,214 1,984 Gas 1, Generation Capacity (MW) 3,116 5,948 5,613 Generation Output (MWh) (1) 4,938 18,620 31,416 Total capitalisation at 30 June 2011 (A$m book net debt + equity) 6,813 17,799 6,819 S&P / Moody s Credit Ratings BBB (Stable) / BBB+ (Stable) / Baa1 (Neg) BBB (Stable) / NEM-wide Generation Capacity (MW) (2) Existing NEM-wide Energy output (GWh) (3) Electricity & Gas Retail Customers 8,000 6,000 4,000 2,000 5,948 5,613 4,870 MW 4,006 0 Origin TRU MacGen Snowy Hydro Existing Capacity 3,330 3,116 Stanwell Corp. AGL Post NSW Acquisition 3,056 Int. Power 20% 15% 10% 5% 0% 15.4% Government Owned Pre-Acquisition NSW Acquisitions Origin AGL TRU Others Government Owned Existing Customers Post NSW Privatisation Notes 1. TRUenergy analysis of annual output for Origin and TRUenergy inclusive of estimated full year generation for Eraring/Shoalhaven and Mount Piper/Wallerawang 2. Source: Scheduled and Semi-Scheduled capacity for winter 2011/12 as per Australian Energy Market Operator ( AEMO ); Based on equity ownership (as per public filings); AGL capacity includes Oaklands Hill and Hallett 5 wind farms; Origin capacity includes Mortlake 3. AGL s generation (GWh) does not include their 32.5% interest in Loy Yang; International Power includes their 92% interest in Hazelwood Power GWh 11.2% 9.5% 9.1% 8.7% 8.3% TRU MacGen Int. Power Origin CS Energy Loy Yang 6.9% Stanwell 2.4% AGL National Market Share % Shown in Blue Market Share / Million Customers 33% % % % 2.1 TRUenergy now the national No. 2 electricity retailer, No. 3 gas retailer, No. 1 generator by output, and No.2 generator by capacity 5

6 Experienced management team Managing Director Richard McIndoe (1,209 employees) Chief Financial Officer Kevin Holmes General Counsel & Company Secretary David Lambert Director Operations & Construction Michael Hutchinson Director Energy Markets Mark Collette Director Retail Adrian Merrick Director Information Services Gary Martin Director Corporate and Government Affairs Kate Shea Director Human Resources David Purvis Significant business and industry experience, track record of delivery 6

7 Evolution to reach full integration with scale Fully Integrated With Scale Investment Yallourn/AusPower Acquired Yallourn 2001 Vertical Integration Acquired TXU Merchant Energy Business 2005 Horizontal Integration Hallett power station 2007 Roaring 40 s wind JV formed 2005 Tallawarra power station construction 2006 Tallawarra PS commissioned 2009 Geothermal investment 2008 Iona gas plant expansion 2009 Roaring 40s wind assets acquired 2011 Acquired NSW retail and gentrader 2011 Proposed Eastern Star upstream CSG 2011 Time Base load brown coal generator Some vertical integration through AusPower I&C retail business Risks associated with single generator in a single market Generation expansion via acquisition, greenfield development Generation portfolio in different states, different fuel types, across merit order Acquired direct interest in mass market retailer I&C expansion to track generation growth Gas plant expansion Development of Tallawarra power station Portfolio optimisation via power station asset swap with AGL Vertically integrated company with national scale and balance of generation and retail In-house renewables and gas expertise Reduced emissions intensity Australia s third largest energy retailer A clear strategy has resulted in a unique group of assets 7

8 Key business strengths Robust financial position and strong credit metrics supporting investment grade rating Strong market position Vertically integrated business model provides a natural hedge Proven strong debt market and shareholder support TRUenergy Horizontally diversified retail and generation portfolio and fuel base Clear carbon strategy and actively managed environmental issues Experienced management team Sound operating performance Robust business model 8

9 Strong, balanced business model

10 Vertical integration is the key strategic driver Hallett Generation Capacity Balanced Capacity Load Swing Mass Market Retail Retail Ecogen Bought Contracts Electricity National Electricity Market Electricity Sold Contracts Tallawarra I&C/Business Load Business Retail Mt Piper & Wallerawang Generation Energy Balanced Energy Mass Market Retail Load Pricing, forecasting & green certificates Energy Markets Yallourn Outage planning, bidding & dispatch Operations & Construction Available for Sale Energy Markets Sales Channels to Market The TRUenergy portfolio is well balanced with significant scale and diversity 10

11 Vertical integration reduces risk and increases flexibility Historical Generation and Retail Load 2011 Actual Electricity Position* Peaking Gen & Caps Retail Load Swing TWh 10 8 TWh 15.0 Swaps Gas Fired Qld/SA Delta West NSW Yallourn Vic Yallourn EcoGen Tallawarra Other Resi SME Business I&C 0.0 Long Short * As at 31 July 2011 Portfolio allows us to maximise returns in a volatile market 11

12 Merit Order Portfolio of generation assets with strength in both geographic and fuel diversity TRUenergy s portfolio of assets and options is well positioned to lead the transition to a low emissions future TRUenergy s average weighted short run marginal cost ( SRMC ) to generate is slightly below the NEM weighted average SRMC ($/MWh) Indicative Merit Order (No Carbon Price) Yallourn: 1,480MW Brown Coal 0 5,000 NEM average ($30.6/MWh) Mt Piper: 1,400MW Black Coal 10,000 15,000 20,000 25,000 30,000 35,000 Indicative capacity (MW) Tallawarra: 435MW Gas Wallerawang: 1,000MW Black Coal Newport: 500MW Gas Hallett: 203MW Gas Excludes semi scheduled capacity (such as wind power) and hydro, which effectively has zero SRMC, and assumes fuel cost is held constant Brown coal (excl. Yallourn) generators highlighted in brown Source: TRUenergy modelling. NEM Average line shown is the aggregate of the SRMC estimated for each generator multiplied by its capacity. TRUenergy s portfolio is lower than market average merit order with or without carbon 12

13 Merit Order Portfolio of generation assets with strength in both geographic and fuel diversity TRUenergy s portfolio of assets and options is well positioned to lead the transition to a low emissions future TRUenergy s average weighted SRMC to generate is slightly below the NEM weighted average SRMC ($/MWh) Indicative Merit Order ($23/t Carbon) NEM average ($50.3/MWh) Yallourn: 1,480MW Brown Coal Tallawarra: 435MW Gas Newport: 500MW Gas 0 0 5,000 10,000 15,000 20,000 Mt Piper: 1,400MW Black Coal Indicative capacity (MW) Wallerawang: 1,000MW Black Coal Jeeralang: 466MW Gas Hallett: 203MW Gas 25,000 30,000 35,000 Excludes semi scheduled capacity (such as wind power) and hydro, which effectively has zero SRMC, and assumes fuel cost is held constant Brown coal (excl. Yallourn) generators highlighted in brown Source: TRUenergy modelling. NEM Average line shown is the aggregate of the SRMC estimated for each generator multiplied by its capacity. TRUenergy s portfolio is lower than market average merit order with or without carbon 13

14 TRUenergy s strategy for sustainable growth Generation Develop generation to support retail load Renewables opportunities Eventual replacement of carbon intensive generation Project Pipeline Technology Project State MW Queensland Greenfield generation project opportunities Peaking gas Marulan (development approval secured) NSW 700MW Brisbane Peaking gas Intermediate gas Strzelecki (site secured) Yallourn (site secured) Vic Vic Up to 800MW 1,000MW SA Renewables focus NSW Upstream gas; greenfield generation project opportunities Intermediate gas Tallawarra B (planning approval secured) NSW 420MW Adelaide Sydney Peaking/Intermediate gas Late Stage Wind Sites Solar PV proposal Greenfield sites QLD Up to 1,400MW Stony Gap, Waterloo II, Robertstown Mallee Solar Park (planning approval secured) SA Vic 216MW in total Up to 180MW Geothermal Paralana SA 30MW pilot Melbourne VIC Gas developments; Renewables and greenfield generation project opportunities Pipeline of projects to support retail position and meet clean energy requirements 14

15 Retail Scale and Quality

16 A strong retail position in a consolidated environment TRUenergy Retail Footprint Total accounts ~ 2.8million Electricity accounts ~ 1.98millions Gas accounts ~ 827,000 SA Retail TRUenergy and EA accounts 12% of marketarket Queensland Retail TRUenergy and EA accounts 5% of market NSW/ACT Retail TRUenergy and EA accounts 34% of market Brisbane VIC Retail TRUenergy and EA accounts 26% of market Adelaide Melbourne Sydney As at 30 June 2011 The combined business EnergyAustralia and TRUenergy creates a truly national leader with ~ 23% share of the national energy market 16

17 Australian energy retail consolidation has led to three major participants Pre NSW Energy Asset Sales Post NSW Energy Asset Sales Customers (# m) Customers (# m) AGL Origin EA TRUenergy Country Integral Lumo Simply Other AGL Origin EA TRUenergy Market share by retailer in NSW Country Integral Lumo Simply Other NSW Govt AGL 65% Origin TRUenergy Other NSW asset sale was the last opportunity for major retail sector consolidation 17

18 Approach to retail market position Drive profit growth and performance improvements Protect strong incumbent position in Vic and NSW Queensland Key area for organic retail growth Organic growth in Queensland and SA NSW integration Back office improvements, including new customer care and billing system to reduce cost to serve SA Maintain retail position and some organic growth Adelaide NSW Protect retail position Complete integration Sydney Brisbane Melbourne VIC Protect retail position Strong position in key NEM retail markets 18

19 Diverse generation portfolio supported by strong fuel position

20 With Delta Western and wind, TRUenergy has a more balanced portfolio of generation assets and fuel TRUenergy now has the largest privately-owned energy portfolio Delta Western increased generation capacity controlled by TRUenergy by almost 80% Reduced TRUenergy s overall emissions intensity (~1.09 to 0.95 sent out vs NEM average intensity of ~0.89) Fuel Mix before Acquisition Ecogen 31% Hallett 7% Tallawarra 14% Yallourn 48% Brown Coal Gas Black Coal Fuel Mix with Delta West and Roaring 40s Tallawarra 8% Ecogen 17% Mt Piper 25% Hallett 3.5% Wind 2.5% Yallourn 26% Wallerawang 18% Wind Hydro Others Fuel Mix in the NEM 21% 21% 3% 2% 15% 43% Source: AEMO, AER 2010 TRUenergy s portfolio mix of brown coal, black coal, gas fired and wind generation broadly reflects the Australian generation sector on average 20

21 Eastern Star Gas improves upstream gas position Working level interest of 20% in ESG permits Access to over 500 PJ of equity coal seam gas from Gunnedah Basin Hedges rising gas price risk Potential development upside Experienced partner in Santos Ownership Structure Santos 100% ESG 80% TRUenergy 20% Tallawarra A&B Marulan Yallourn Strzelecki ESG Permits* * PEL 238, PAL 2, PPL 3, Wilga Park Power Station, PEL 433, PEL 434. ESG also has farm-in rights over PELs 6, 427 and 428 in NSW; and PELs 117, 121 and 122 in SA 21

22 Wind farm acquisitions and development pipeline Renewable energy expected to exceed growth in thermal generation, underpinned by RET Estimated $25Bn of industry investment required to 2020 Flexibility to meet REC through most cost effective source: Build or contract Operational Waterloo South Australia 100% ownership 111MW Advanced planning stage Cathedral Rocks South Australia 50% ownership 66MW Other sites for development options Stony Gap South Australia 100% ownership 123MW Robertstown South Australia 100% ownership 75MW Waterloo II Bangor (SA) South Australia One Tree Hill (NSW) 100% ownership Dry Plains (NSW) 18MW Bowmans (Vic) Yea (Vic) As at 30 September 2011 Greater flexibility to meet REC requirements 22

23 Carbon Policy November 2011 Pass Carbon Scheme Legislation (estimated) July % reduction target Initial emission targets period Legislation Operation Fixed Price Period Floating Price Period July 2012 Carbon Scheme commences TRUenergy s Targets July 2015 Converts to floating price ETS Price/floor ceiling July Introduced a cap on carbon intensity and undertook immediate action to reduce emissions by 2010 Cut emissions intensity by 1/3 of 2007 levels (from 1.2TCO 2 /MWh to 0.8TCO 2 /MWh) Reduce emissions by 35% on estimated 1990 baseline by share of the National Electricity Market Reduce emissions by 60% on estimated 1990 baseline by share of the National Electricity Market Sustainable reduction in 370,000 tonnes of CO 2 at Yallourn from 2007 to 2010 Diverse portfolio and TRUenergy climate change strategy reduces carbon policy risk 23

24 Strong financial discipline and position

25 Improving financial performance 2010 Performance (1) Revenue $3,415m 11% on 2009 EBITDAF $627m 25% on 2009 NPAT $202m 40% on 2009 (1) Normalised A$m 4,000 3,000 2,000 1,000 0 CAGR : 10.1% Revenue * 70.8% H H 2011 Key drivers EBITDAF New projects Tallawarra Power Station Sustained retail margins Improved asset performance Opex management and bad debt management A$m CAGR : 12.0% 29.5% 2011 Performance (6 months to June 30) The business continues to perform well in 2011 Credit rating reaffirmed BBB/Stable by S&P post NSW announcement 4 months contribution from NSW assets A$m H H 2011 CAPEX H H 2011 Excludes Roaring 40s, Petratherm and Eastern Star Gas and normalised to exclude once off costs (eg NSW assets, Yallourn insurance, etc) 25

26 Long-term and increasingly diversified debt facilities Credit rating upgraded in 2010 to BBB/Stable by S&P Total drawn net corporate debt of $2,616M as at 30 June 2011* First time USPP issuance in 2010 NSW acquisition bridge $1.2bn + working capital $0.4bn 2011 refinancing of term maturities and NSW bridge debt (Total New Facilities= $2.05bn) Positioning for future debt capital markets issuance to diversify debt sources and tenor Debt Maturity Profile Debt composition 24% Bank Facilities USPP Weighted Average Debt Maturity is 4.4 years 17% 59% A$ Bond * Excludes Cathedral Rocks non-recourse debt Supported with BBB stable credit rating and clear intention to maintain prudent investment grade credit profile 26

27 Summary

28 Key business strengths Robust financial position and strong credit metrics supporting investment grade rating Strong market position Vertically integrated business model provides a natural hedge Proven strong debt market and shareholder support TRUenergy Horizontally diversified retail and generation portfolio and fuel base Clear carbon strategy and actively managed environmental issues Experienced management team Sound operating performance Robust business model 28

29 Appendix

30 Summary power station and fuel profile Plant Ownership /Contract Capacity (MW) Role CO 2 intensity (kg/kwh) Fuel Type and Arrangement Yallourn (VIC) Own 1,480MW brown coal fired steam turbines (4 units) Baseload 1.40 Own the adjacent brown coal mine, operating licence to 2026 and reserves beyond Tallawarra (NSW) Own 420MW combined cycle gas turbine (gas and steam units) Base to intermediate 0.36 Supplied from portfolio of long term gas contracts Hallett (SA) Own 203MW open cycle gas turbines (12 units) Peak to super peak 1.06 Supplied from portfolio of long term gas contracts and/or can be fired on Distillate Mt Piper (NSW) Contract 1,400MW black coal fired steam turbines (2 units) Baseload 0.81 Black coal contracts from mines in the region Wallerawang (NSW) Contract 1,000MW black coal fired steam turbines (2 units) Baseload 0.88 Black coal contracts from mines in the region Newport (VIC) Contract 500MW gas fired steam turbine Peak to intermediate 0.53 Supplied from portfolio of long term gas contracts Jeeralang (VIC) Contract 466MW gas fired steam turbines Peak 0.78 Supplied from portfolio of long term gas contracts Generation portfolio diversified by fuel type, location and role. Generation mix supports retail load shape and reduces hedging costs and risks 30

31 Yallourn output is equivalent to 23% of electricity demand in Victoria & 6% across the NEM Overview Base load, brown coal thermal plant at Yallourn (South East Victoria) Third largest power station in Victoria Four independent generating units Station located next to the TRUenergy-owned brown coal mine Secure, low-cost fuel with mining licenses until at least 2026 Average availability since privatisation ~89% 2010 Achievements Key performance indicators results: equivalent availability factor 89.5% forced outage rate 3.9% Record net generation of 11,644 GWh Unit 3 High/Intermediate Pressure turbine upgrade delivered 15 MW increase for same full load steam flow Major contract awarded for installation of coal conveyor infrastructure for new Maryvale field ` Installed capacity 1,480MW CO 2 intensity (kg/kwh) Details 2 x 360MW 2 x 380MW 1.40 Yallourn provides low cost baseload energy to supply retail customers in the NEM 31

32 Tallawarra Power Station is one of the most efficient gas-fired power stations in Australia Overview State-of-the-art combined cycle intermediate plant with capacity of 420MW Operation commenced on 23 January 2009 Located on Lake Illawarra ~ 15 km south of Wollongong Emits 50-70% less greenhouse gas than traditional coal fired generators important generation asset in the transition to a lower carbon intensity 2010 Achievements Key performance indicators results: equivalent availability factor 90.9% forced outage rate 3.6% Generation output of 2,550 GWh Station met heat rate target and air emissions targets for NOx and CO 2 intensity ` Installed capacity 420MW CO 2 intensity (kg/kwh) Details Gas and steam turbines 0.36 Tallawarra Lands 600Ha site with potential for land development upside Pre-rezoning approval granted Tallawarra provides baseload to intermediate electricity to the NEM 32

33 Hallett is a peaking plant which can provide up to 5% of South Australia s electricity capacity Overview Hallett has an installed capacity of 203MW with 12 quick start open cycle gas-turbine generators The gas is supplied to the station from the Moomba pipeline with backup diesel fuel stored on site 2010 Achievements All key performance indicators met including: equivalent availability factor 96% start reliability 98.8% forced outage rate 0.54% ` Installed capacity 203MW CO 2 intensity (kg/kwh) Details 12 open cycle gas turbines 1.06 Installation of an additional gas turbine with capacity of 23MW completed in 2011 increasing capacity to 203MW Hallett s quick start-up provides risk management against rapid demand changes within the customer base 33

34 Agreements add 3,366MW of generation capacity Delta Western GTA Ecogen Hedge Mount Piper Wallerawang Newport Jeeralang Fuel type Black coal Black coal Gas Gas Size (MW Capacity) 1,400 1, Merit Order Base load Peak load Contract capacity 1, Expiry of Operating Life Carbon Intensity as generated Structured off-takes assist to match TRUenergy s wholesale capacity with retail demand 34

35 Iona underground gas storage capacity represents ~25% of peak-day Victorian retail gas demand Overview Iona Gas Plant is an underground gas storage and gas processing facility near Port Campbell in south west Victoria Commissioned in August 1999 The plant is connected directly to both the Victorian gas system and the SEAGas Pipeline (transmission pipeline connecting Victoria and South Australia) Capacity into Victoria is 260 TJ per day Capacity into the SEAGas Pipeline is 165 TJ per day Installed capacity Storage Processing Details 22PJ/day 500TJ/day 2010 Achievements Commercial availability of 98.8% 11 years operation without a Lost Time Injury Completed plant expansion in June 2010 ` Gas contracts Portfolio of gas supply contracts from multiple suppliers Iona smoothes TRUenergy s gas demand, storing gas during summer and providing extra gas for heating in winter 35

36 NSW integration on track Transition Services Agreement Timeline months Sales & Marketing Contracts Sales channel management Marketing services Registering small/large customers and large customer connection points 30 September Customer transition Forecasting & settlements Load forecasting Wholesale settlements Billing Services Bill production and price changes Issuing service orders for DNSPs Collections & Debtor Management Service Credit collection & debt recovery Complaints and disputes Customer Service Customer enquiries and up-sales Account mgnt & contract renewals Business Information Service General ledger transactions Customer and sales activity data Pre-Purchase TSA TRU TSA Min TSA Max 36

37 Achievements against Climate Change Strategy Commitments Achievements since 2007 Cap carbon intensity No construction of new power stations using traditional, Greenfield coal-fired technologies Completed construction and began operation of Tallawarra power station Australia s most efficient gas fired power station NSW acquisitions have reduced carbon intensity of generation portfolio Reduce emissions Reduce emissions from electricity generation and gas processing operations Manage waste and water Use less intensive fuels for transport and operations Improve efficiency of corporate offices Significant carbon reduction at Yallourn from operational efficiency improvements Recycled cooling water introduced at Yallourn Development of Environment and Resource Efficiency Plans Improved sustainability of corporate offices during refurbishment 37

38 Achievements against Climate Change Strategy Commitments Achievements since 2007 Invest in emerging low and zero emission technology Invest in more renewable energy, such as wind and solar Direct investment to low emission technologies Support research and development Help customers manage their carbon footprint Increase uptake of accredited GreenPower Offer energy efficient products and services Help customers to offset emissions Support community programs to reduce emissions Paralana geothermal project Windfarm investments (Waterloo, Cathedral Rocks and development sites) Ignite project Mallee Solar Park proposal Increased accredited GreenPower customers by 22,000 Established Energy Management Initiative team Launched carbon offset tool Energy efficiency audits in Vic and SA Launched TRUenergy Solar Solutions Partnership with Conservation Volunteers Australia 38

39 Enhanced customer care and billing system and integration timeline Customer service and back office Oracle platform will replace multiple systems with a single platform: Increases customer responsiveness Improves cost to serve Supports development of innovative products System testing well advanced Deployment in 2012 Existing schedule for transition 1 March 2011 Timeline (months) TSA Schedules vary but all core services available for 36 months NSW Migration No migration of customers during TSA. TRUenergy Legacy Systems Oracle platform Migrate existing customers 39

40 Disclaimer This presentation may contain forward looking statements and comments about future events, including our expectations about the performance of TRUenergy Group's business. Such comments are not audited and are based on a number of factors that we cannot control and so no representation or warranty is provided by or on behalf of TRUenergy or CLP that they should or will be achieved. We cannot be certain that the comments will be accurate or complete and so they should not be relied on. Please note that, in providing this presentation, TRUenergy has not considered the objectives, financial position or needs of any particular recipient. 40