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DOING BUSINESS.
GENESIS ENERGY ANNUAL REPORT 2005
02Chairman’s Report
06Financial and Operating Highlights
08Chief Executive’s Report
12The Results So Far
36Environmental Responsibility
48Financial Statements
66 Report of the Auditor- General
We are a doing business. As the industry’s largest energy retailer, we have to
lead by example. We are charged with that responsibility. But what examples
are there of Genesis Energy leading from the front, and where have we achieved
results that will resonate positively beyond the current financial year?
In this report, we show you what we have done and why. Across the length
and breadth of our activities, projects underway form part of the bigger energy
picture. They play a part in positively influencing tomorrow’s energy supply.
GENESIS ENERGY ANNUAL REPORT 2005
GETTING THINGS DONE.
Cover image: Drilling for gas in Taranaki
67Corporate Governance Statement
69Statutory Information
72Statement of Corporate Intent (Summarised)
74Board of Directors
76Senior Management
78Our Physical Assets
81Directory
CEO’S REPORT
LEADING BY EXAMPLE P.08
ENERGY RESOURCES
ENSURING SUPPLY P.16
CUSTOMER RELATIONSHIPS
MEETING CUSTOMERS’ NEEDS AND EXPECTATIONS P.24
COMMUNITY INITIATIVES
SHOWING OUR COMMUNITY SPIRIT P.32
ENERGY GENERATION
EXPLORING UNTAPPED OPPORTUNITIES P.12
ENERGY SUSTAINABILITY
BUILDING A FOUNDATION FOR A SECURE ENERGY FUTURE P.20
STAFF DEVELOPMENT
GROWING A HIGH PERFORMANCE CULTURE P.28
ENVIRONMENTAL RESPONSIBILITY
PUTTING MORE ENERGY INTO OUR ENVIRONMENT P.36
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With this focus Genesis Energy has performed strongly achieving a net profit after tax of $70.2 million.
The result included release of an accrual for the reconciliation of prior year electricity purchases. This was offset by increased provision for site rehabilitation work at the former Meremere Power Station.
An independent review of future cash flows from the generation assets resulted in Genesis Energy’s generation assets being revalued upwards by $331 million effective from 30 June 2005.
Total revenue for the year of $1,496 million increased from $1,334 million in 2003/04 due to retail growth and increased generation volumes. However, higher generation at the Huntly Power Station was offset by higher operating costs, including higher gas prices, increased consumption of coal and increased maintenance. The average cost of fuel rose 13 percent from the previous year.
Genesis Energy’s coal reserves were 780,000 tonnes as at 30 June 2005, compared to 643,000 tonnes at the same time last year. Domestic coal supply was supported by the import of 900,000 tonnes of Indonesian coal which averted the impact of a shortfall
FINANCIAL POSITION
$1,867mTotal Assets
$497mTotal Liabilities
REVENUE
$1,496mTotal Revenue
$70.2mNet Surplus
PROFIT
CHAIRMAN’S REPORT
BEING JUDGED BY OUR RESULTS.Our strategic goal for the 2004/05 financial year was to optimise our generation and retail businesses in order to meet the demands of New Zealand’s rapidly growing electricity and gas markets.
e3p is underway
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in local deliveries. Imported coal is delivered by rail though new coal handling infrastructure at the Port of Tauranga and at Huntly.
In an effort to overcome the uncertainties of future gas supplies and electricity generation, Genesis Energy continued its positive contribution to the exploration and development of oil and gas fields in New Zealand and the location and construction of new renewable and thermal energy generation. It was very satisfying to issue the full notice to proceed for Genesis Energy’s Huntly e3p Project for the construction of a 385MW combined cycle gas turbine capable of producing enough electricity to supply more than 350,000 homes.
Obtaining and renewing resource consents for existing and new generation projects continues to be a lengthy and costly exercise. The decision by the Environment Court to limit consents for use of water through the Western Diversion of the Tongariro Power Development to ten years was appealed to the High Court, and a hearing was set down for July 2005. Genesis Energy needs long term commercial certainty over the operation of these assets. We endeavour to work closely with traditional landholders to address their concerns over management of the rivers in the Tongariro hydro scheme.
The Board, management and staff of Genesis Energy continued to work closely with the communities in which the company operates and in addition to its many community sponsorship initiatives Genesis
Energy has instigated a national apprenticeship scheme that will support our recruitment of technical and professional trainees over the years ahead.
I thank my Board colleagues for their commitment and record our thanks to retired director Hanlin Johnstone for his contribution to the establishment and growth of Genesis Energy. Dr Nicola Crauford was welcomed to the Board during the year as a new director.
In Murray Jackson as Chief Executive, the management and staff, we have a highly capable and experienced team who understand their responsibilities to the company, the communities in which they operate and to the nation. The operating and capital works commenced in the 2004/05 financial year is a testament to their commitment.
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The Hau Nui wind farm was at peak performance during October to November
Tongariro Power Scheme
bRIAN CORbAN QSO Chairman, Genesis EnergyMA (Hons), LLB, FIOD, FNZIM
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Ko tä mätou whäinga rautaki i roto i te tau pütea 2004/05 kia tino pai rawa atu ngä wähanga hanga hiko me te hoko hiko, kia tutuki ai ngä hiahia kaha tupu tonu o Aotearoa mö te hiko me te kapuni.
Nä tënei arotahi ka puta te hua more e $70.2 miriona a Genesis Energy, i muri i te utunga o ngä täke.
I kuhuna ki roto i tënei putanga te tukunga o tëtahi tahua mö ngä whakatauritenga o ngä hokonga hiko o te tau ki mua. Heoi, i pä ki ënei moni whiwhi ngä whakaritenga nui ake mö te whakapai anö i te whare hiko tawhito ki Meremere.
Kua hiki te uara o ngä hua mahi hiko ki te $331 miriona atu i te 30 Pipiri 2005, nä te arotake motuhake mö ngä moni whiwhi ka puta mai i ngä rawa mahi hiko ä ngä tau kei te tü mai.
Ko te $1,496 miriona ngä moni whiwhi katoa, he kakenga atu i te e $1,334 miriona o te tau 2003/04. Nä te piki o ngä hiko tënei pikinga. Heoi, kainga ai tënei pikinga e te nui o ngä utu mö te pukuhiko whakawera
pënei i te utu mö te kapuni, te piki ake o te whakapau waro me te piki ake o ngä mahi whakatikanga i te pukuhiko whakawera o Rahui Pökeka. Ka piki te utu toharite mö te kora mä te 13 örau i te tau.
Ka eke ngä putunga waro a Genesis Energy ki te 780,000 töne mö te tau ki 30 Pipiri 2005; i tërä tau 643,000 töne te rahi. I täpiritia ngä putanga waro i Aotearoa nei e te kawenga mai o te waro mai Initonïhia e 900,000 töne te rahi; mei kore ake kua raruraru kë ngä ratonga ki te motu. Mai i ngä hanganga hou whäwhä waro i te taunga tïma o Tauranga-moana, i Rähui Pökeka hoki, kei te kawea te waro mai täwähi huri noa i te whenua mä runga tereina.
Kia whaihanga ai ngä kumukumu e pä ana ki ngä putanga kapuni ämuri, ki te hanga hiko hoki, e kaha
tonu ana te whai wähi atu a Genesis Energy ki roto i te höpara me te whakawhanake putanga hinu, kapuni hoki i Aotearoa, ki te köwhiri tünga me te hanga pukuhiko huri hiko whakahou, whakawera hoki. He mea tino pai te whakamana, mö te Kaupapa Rähui Pökeka e3p a Genesis Energy, i te hanganga o tëtahi pürere äwhio ä-kapuni 385 MW tërä ka ähei te huri i te nui o te hiko hei whakarato neke atu i te 350,000 käinga.
He mahi roa tonu, he nui hoki te utu mö ngä tono me te whakahou i ngä whakaaetanga rawa mö ngä kaupapa o näianei, me ërä mö meake nei. Ka pïrahia i mua i te aroaro o te Köti Teitei te whakataunga o te Köti Taiao e whakawhäiti ana ki te tekau tau ngä whakaaetanga mö te huri i te ia o te wai mö te Peka Uru o te Mahinga Hiko o Tongariro. Hei te marama o Höngongoi 2005 rongohia ai te pïra. Me möhio a Genesis Energy ka pümau tonu te kaha ahumoni o ënei rawa i te roanga o te wä. Whakapau kaha ai mätou ki te mahi tahi me ngä kaipupuri whenua ki te whakatutuki i ö rätou äwangawanga e pä ana ki te whakahaere i ngä awa e whai wähi ana ki te kaupapa Tongariro.
Kei te haere tonu ngä mahi ngätahi a te Poari, a ngä kaiwhakahaere me ngä kaimahi a Genesis Energy me ngä hapori kei reira te kamupene e mahi ana. Kua tïmataria e Genesis Energy, i tua atu i äna kökiri tautoko hapori, he kaupapa ä-motu whakangungu pia ka whakatutuki i ä mätou hiahia ämuri mö ngä pia hangarau, ngaio hoki.
Ka mihi au ki taku Poari mö tä rätou pümau, ka mihi anö au ki te kaiwhakahaere kua mutu ana mahi, ki a Hanlin Johnstone, mö ana mahi e tipu ai, e pakari ai a Genesis Energy. I eke a Täkuta Nicola Crauford i roto i te tau hei mema höu o te Poari.
Ka rawe hoki ngä mahi a tö tätou Manahautü a Murray Jackson, a ngä kaiwhakahaere me ngä kaimahi. He mäia rätou, kei te ü rätou, kei te märama rätou ki ö rätou kawenga ki te kamupene, ki te hapori me te motu whänui. Ka kitea tä rätou ü mä ngä mahi whakahaere me ngä mahi haupü i tïmataria ai i te tau 2004/05.
Nä tënei arotahi ka puta te hua more e $70.2 miriona a Genesis Energy, i muri i te utunga o ngä täke.
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FINANCIAL HIGHLIGHTS
Earnings before interest tax
depreciation and amortisation
(EBITDA) reduced from
$185 million last year to
$178 million for the year to
30 June 2005. The reduction
was largely due to an increase
in fuel costs.
During the year debt increased
by $165 million to $253 million
at 30 June 2005. The increased
debt was used to fund
construction of new generation
assets. The increased
borrowings are reflected in the
debt to debt plus equity ratio
which increased 8 percent to
16 percent. The $331 million
revaluation of generation
assets reduced the debt ratio
by three percent.
Assets have increased from
$1,268 million at 30 June 2004
to $1,867 million, reflecting
the $331 million revaluation of
generation assets and capital
expenditure on generation plant.
Operating revenue has increased
with higher customer numbers
and increased generation
volumes. Wholesale market
prices were similar to last
year’s prices.
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NPAT and EBITDA
DEBT
OPERATING REVENUE AND TOTAL ASSETS
For more information go to P.48
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Trainees have increased to
13.1 percent as a result of
the National Apprenticeship
Programme. Permanent
staff have increased due
to recruitment of operating,
technical and professional staff.
EMPLOYEES
Cash flow from Operations
decreased to $113 million in
the 2005 financial year from
$130 million in 2004 largely
due to increased accounts
receivable. Cash flow to
investing activities increased
$155 million to $258 million
with $20 million spent on gas
exploration and development
and $241 million largely spent
on new generation assets.
OPERATING ACTIVITIES vs. INVESTING ACTIVITIES
Generation plant has increased from
$626 million at 30 June 2004 to $987 million
at 30 June 2005 due to the $331 million
revaluation and capital expenditure on
P40 gas turbine and the Hau Nui wind
farm. Capital work in progress has
increased from $124 million to $283 million
due mainly to spending on e3p and the
cooling tower at Huntly.
NON-CURRENT ASSETS
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KEY OPERATING HIGHLIGHTS
$1.496mOperating Revenue
2004/05 year was one of consolidation for the industry and for Genesis Energy. It has been a year to roll up the sleeves and get to work on laying new foundations for generation plant, drilling new gas fields and building relationships with customers.
At 30 June 2005, Genesis Energy has directly and in partnership over $1,000 million of capital investment in new oil and gas field and power generation projects.
The biggest project to get started in 2004/05 was the $520 million 385MW combined cycle gas turbine generator at Huntly Power Station. Known as the Huntly Energy Efficiency Enhancement Project or e3p, this new gas turbine is due for commissioning in December 2006. Huntly e3p will bring much-needed extra generating capacity for our many industrial and commercial customers.
The 19MW Awhitu Peninsula wind farm was rejected by commissioners appointed to hear Genesis Energy’s application for resource consents. An appeal to the Environment Court was set down for hearing in May 2005 and a decision is pending.
The 2004/05 summer again brought high temperatures to the Waikato River restricting output of our 1,000MW Huntly Power Station to as little as 40MW. Various attempts to give relief to generator cooling over the 20-year life of Huntly have not solved the problem. Construction of a 250MW stand-alone cooling tower with commissioning in December 2005 is now proceeding.
CHIEF EXECUTIVE’S REPORT
LEADING BY EXAMPLEGenesis Energy’s revenue of $1,496 million was a $162 million increase on the previous year. The net profit of $70.2 million was a good result when considering our thermal fuel bill reached $212 million.
$1,000mCapital Expenditure
685,570Genesis Energy Customers
New cooling tower is underway
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The Huntly 250MW generators are also undergoing major rehabilitation to meet the demand of increased coal firing and to double the life of each machine from their present 120,000 service hours. A major control system upgrade which will move each generator from analogue to digital control is planned, with the first unit to be retrofitted in November 2005.
With the New Zealand economy growing at a rapid rate, the need for investment in new generation north of Auckland has been identified.
Genesis Energy is the major retailer in this region and demand growth of three percent per annum is forecast for the next decade. To meet this demand, Genesis Energy has identified a site suitable for development of up to 360MW of combined cycle gas turbine plant near the Kaipara Harbour. Consenting the site and associated gas pipeline was planned to commence in August 2005. A multi-shaft generator is proposed to provide year round voltage support to the high voltage grid with commissioning targeted for August 2008.
Development of the $400 million offshore Kupe oil and gas platform and onshore processing plant is proceeding with commitment to construction due February 2006 and first gas expected December 2007.
The onshore Cardiff gas field was drilled to 4,850 metres in May 2005. A three month well test and flaring programme is proceeding to ascertain the commercial viability of the field.
The Genesis Energy retail business and our subsidiary company, Energy Online, together grew by 30,000 customers over the year, bringing the total industrial, commercial and residential connections to 685,000. The Genesis Energy retail gas business has completed a marketing programme to promote the use of gas for household heating and cooking.
Customer services have been enhanced with the introduction of prepay metering, credit card payment and electronic payment available through the Genesis Energy website.
Whilst we continue to grow the business, we also have been working on growing our skill base. Our need for trades people, operating staff and engineers is growing as is the average age of our employees. For this reason, we have commenced the Genesis Energy National Apprenticeship Programme to train 60 trade apprentices over the next four years. This has been made possible by the cooperation of 15 supporting industrial firms and Polytechnic colleges.
The apprenticeship scheme is part of our investment in our communities. Other substantial community investments were made during the year, including further capital commitment to the Genesis Oncology Trust; opening of the Genesis Energy Sports Centre in Masterton, the Genesis Energy Theatre in Manukau City and the Genesis Energy Sir Edmund Hillary Outdoor Leadership School at Mt Tongariro. The Genesis Oncology Trust completed its first year as an independent reporting entity.
Our total staff numbers at 30 June was 395, an increase of 10.9 percent over the past 12 months. Our staff turnover has remained very low at an average rate of 8.9 percent during the year. Our staff enjoy social engagements through the hard work of the ClubGen committee.
The past year has seen many of our plans become a reality through the commitment and hard work of our staff and the service providers that work with us. I thank the Chairman, Board of Directors, management team and valued employees for their encouragement and support during 2004/05.
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Cardiff gas field testing
3 0 . 0 8 . 0 5MURRAY JACKSON Chief Executive, Genesis EnergyMBA, BEc, FTSE, FIEAust
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Ko te $1,496 miriona te moni whiwhi a Genesis Energy
mö te tau, he pikinga mä te $100 miriona mai tërä tau. E
$70.2 miriona te hua more, he mea pai i te mea i eke te utu
o te kora whakawera ki te $212 miriona.
He tau whakatöpü tënei tau (2004/5) mö te ahumahi
whänui, mö Genesis Energy hoki. He tau ka nui ngä mahi,
kia pai ai te takoto o ngä rawa whakanao hiko me te rapu kei
hea ngä papa kapuni höu. I tua atu, ko te whakahoahoa me
ngä kiritaki.
Mai i te 30 Pipiri 2005, kua whakangao e Genesis Energy
– ko täna kotahi, rätou ko öna hoa ränei – te $1000 miriona ki
ngä tümahi höu mö ngä papa hinu me ngä papa kapuni, tae atu
ki ngä kaupapa mahi hiko höu.
Ko te mahi nui rawa atu i tïmataria i te tau 2004/05 ko te
pürere kapuni-huringa taurua e 385MW kei te Whare Hiko o
Rähui Pökeka; e $520 miriona te utu. Kïia ai tënei kaupapa,
ko te Tümahi Whakaheke i te Kai Hiko, Rähui Pökeka (Huntly
Energy Efficiency Enhancement Project), arä, e3p. Ko te titiro,
ä te marama o Hakihea o te tau 2006 ka tïmata te mahi o te
taua pukuhiko höu. Mä e3p hei whakapiki te rahi o te hiko hei
whakarato ki ngä kiritaki ahumahi, arumoni.
Käore i whakaaetia tä Genesis Energy tono whakaaetanga
rawa mö tëtahi pämu hau e 19MW ki te whanga o Awhitu e ngä
kaikömihana i tohungia. I whakaritea te pïra a Genesis Energy i
mua o te aroaro o te Köti Taiao mö te marama o Haratua 2005.
I kaha te wera o te raumati 2004/05 i te rohe o Waikato,
nä reira käore i tino kaha te whakaputa hiko i te Whare Hiko
1000MW o Rähui Pökeka; hei ëtahi wä taka rawa iho ngä hiko
ka puta ki te 40MW. Mai anö i töna tïmatanga e 20 tau ki mua,
he maha ngä rautaki i whakamätauria hei whakamäkü i ngä
pukuhiko o Rähui Pökeka; i runga i tërä, kua tata te oti o tëtahi
pourewa tü motuhake-whakamäkü 250MW, e hei te marama o
Hakihea 2005 ka tïmata tana mahi.
Ka nui ngä mahi ki te whakahöu i ngä pukuhiko e 250MW
ki Rähui Pökeka, e tareka ai te piki o te tahu waro, me te
whakakake i ngä häora e ora ai ia mïhini mai te 120,000
häora ki te 240,000 häora. Kua takoto te mahere mö te
whakapanoni i ngä pünaha whakahaere o ia pukuhiko atu i
te pünaha ringa (analogue) ki te pünaha mati (digital); hei te
marama o Whiringa-ä-rangi 2005 kua oti te pukuhiko tuatahi
te whakahöu, ä.
Nä te kaha tipu o te öhanga o Aotearoa, kua tohungia
me hangaia ëtahi whare hiko ki te raki o Tämaki-makau-rau.
Ko Genesis Energy te kaihoko hiko matua i tënei rohe. Ko te
matapae, ka tipu te hiahia mö te hiko mä te 3 örau ia tau mö
ngä tau tekau kei mua i te aroaro. E ea ai tënei hiahia, kua
tohungia e Genesis Energy tëtahi wähi kei te whanga o Kaipara
hei whakatü i tëtahi whare hiko kapuni e 360MW. Ka tïmata
ngä whakaaetanga mö te whare hiko me te paipa kapuni ä
te marama o Here-turi-kökä o te tau 2005. Ka hangaia tëtahi
pukuhiko tuaka maha hei tautoko i ngä whakapaunga ngaohiko
rahi puta noa i te tau mö te mätiti ngaohiko teitei. Ko te titiro,
ka tïmata tana mahi hei Here-turi-kökä 2008.
Kei te haere tonu te whanaketanga o te papa hinu,
papa kapuni e $400 miriona o Kupe ki tai, me ngä rawa
whakanao ki uta. Ko te titiro, ka tïmata te hangatanga ä te
marama o Whiringa-ä-rangi o te tau 2005, ka oti ä te marama
o Whiringa-ä-rangi 2007.
Kua tïmata te mahi a te papa kapuni ki uta o Cardiff;
tatü ki te marama o Haratua 2005, e 4,900 mita kua wiria.
Kei te whakahaerehia i tënei wä tëtahi whakamätautau poka,
mumura hoki kia kitea mehemea ka puta he hua i taua papa.
Ka tipu ngä mahi tauhokohoko a Genesis Energy, a tä
mätou kamupene äpiti a Energy on Line hoki; ka piki te tini
o ngä kiritaki mä te 30,000 i te tau. E 685,000 hui katoa ana
kiritaki ahumahi, arumoni, käinga. Kua oti te pänuitanga
ä-motu a Genesis Energy i tana kaupapa whakatenatena i te
kapuni hei whakamahana, whakamätao käinga.
Kei te tipu haere te kamupene, kei te tipu haere hoki ngä
möhiotanga me ngä pümanawa. Kei te kaha te hiahiatia e
mätou o ngä kaimahi hanga, ngä kaiwhakamahi mïhini me ngä
kaimahi pükaha. Kei te piki hoki te pakeke toharite o ä mätou
kaimahi katoa. Nä tënei, kua tïmataria e mätou te kaupapa Pia
ä-Motu a Genesis Energy ki te whakaako i ngä pia e 60 i roto i
ngä tau e whä kei te tü. I taea tënei, nä te tautoko mai a ëtahi
kamupene ahumahi tautoko e 15 me ngä Kura Tini.
He wähanga te kaupapa ako pia o ä mätou mahi i roto i te
hapori. Ko ëtahi atu tautokohanga a Genesis Energy i roto i te
tau, ko te whakangao rawa mä te Kaitiaki Oncology a Genesis;
te tuwheratanga o te Pokapü Täkaro o Genesis Energy ki
Whakaoriori (Masterton); te Whare Whakaari o Genesis Energy
ki te täone nui o Manukau; te Kura a Tä Edmund Hillary räua
ko Genesis Energy mö ngä Kaupapa Whakatipu Rangatira ki
Waho, kei te take o Tongariro. Kua tutuki te tau tü motuhake,
te tau tuku pürongo tuatahi a te Kaitiaki Oncology a Genesis.
E 395 ä mätou kaimahi tau ki te 30 Pipiri 2005, he pikinga
mä te X i roto i ngä marama 12 kua taha. Kua ono tau mätou
e mahi ana, ka mutu, tokoiti noa ngä kaimahi kei te wehe atu,
ko te toharite ko te X örau. Whiwhi katoa ngä kaimahi i nga
kaupapa ngahau nä te kaha o te komiti o ClubGen.
Nä te kaha me te pümau ki te kaupapa o ä mätou kaimahi
me ngä kaiwhakarato ka mahi tahi me mätou, kua tutuki
ëtahi o ä mätou whakatakotoranga i te tau kua hipa ake.
Ka mihi au ki te Heamana, ki te Poari Whakahaere, ki te ope
kaiwhakahaere me te katoa o ngä kaimahi rawe mö tä rätou
whakatenatenata, mö tä rätou tautoko hoki i a mätou puta
noa i te tau 2004/05.
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PROJECT STATUS:
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Through joint venture partnerships discover and bring more domestic gas reserves to the market 3
Secure new gas reserves for electricity generation and for our commercial and residential customers 3
Cardiff-2 Gas Prospect joint venture with Austral Pacific – well drilled and flow testing under way 3
Liquefied Natural Gas joint venture with Contact Energy – feasibility study completed and site selection work progressed 3
SUBJECT:EXPLORING UNTAPPED OPPORTUNITIES
DRIllINg DEEPER...
NOTES:
R e g u l a t o r y a p p r o v a l p r o c e s s i s p r o c e e d i n g t o s c h e d u l e w i t h t h e K u p e O i l a n d G a s F i e l d j o i n t v e n t u r e w i t h O r i g i n E n e r g y .
IMAGE:
P a r k e r r i g d r i l l i n g f o r g a s i n T a r a n a k i G
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…bECAUSE SOlUTIONS DON’T SURFACE ON THEIR OWN.Demand for electricity and gas in our country is forecast to continue increasing. We need to discover or secure adequate gas supplies for gas-fuelled electricity generation and for our customers who use gas efficiently in their homes, businesses and factories.
Genesis Energy has decided to actively participate in the development of New Zealand’s oil and gas reserves and has initiated two oil and gas field developments. By partnering with other companies, Genesis Energy not only taps into specialist resources but also spreads the commercial risk attached to gas exploration and production ventures. As a backstop we have teamed with Contact Energy to investigate gas imports.
KUPE OIl AND gAS FIElD The Kupe Gas Project proposes to extract natural gas and condensate from a gas field situated 30km off the Taranaki coast, south-west of Hawera. Genesis Energy holds contracts for 96 percent of the gas reserves from the Kupe field which contains approximately 281 petajoules of natural gas, 627,000 tonnes of LPG and 14.7 million barrels of condensate over a production life of between 15 and 20 years. The Kupe Gas Project is a joint venture between Genesis Energy (31 percent), Origin Energy (50 percent), New Zealand Oil and Gas (15 percent) and Mitsui (4 percent).
Front end engineering and design (FEED) work associated with the onshore and offshore elements was completed during the year and an Assessment of Environmental Effects was also completed prior to a resource consent application. The joint venture is scheduled to make its final investment decision in February 2006 and flow first gas in December 2007.
The regulatory approval process is proceeding to schedule with South Taranaki District Council consents obtained in May and Taranaki Regional Council consents in June. These consents are subject to public appeal with one appeal to the Regional Council lodged in early July.
CARDIFF-2 In 2004, Genesis Energy took a 40 percent equity stake in PEP 38738 (Deep Petroleum), an onshore gas prospect near Stratford in Taranaki. Late in October 2004, the operator, Austral Pacific Energy, commenced drilling a 4,850m deep well to the target Kapuni formation.
EXPLORING UNTAPPED OPPORTUNITIES
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The Cardiff-2 well re-evaluated a gas discovery made by Shell some 14 years ago at Cardiff-1. Through the application of more modern drilling technology and using modern techniques to hydraulically fracture gas pay intervals, it is possible that Cardiff-2 could prove a substantial gas-condensate reserve.
In May 2005 Austral Pacific received an independent report from Sproule International of Calgary which estimated there was a 50 percent probability of gross gas in the field of approximately 160 PJs and 12.8 million barrels of associated condensate. The report was based on electric logs, 2D seismic and other relevant data. Genesis Energy has 100 percent of the deep gas rights for PEP 38738 (Deep Petroleum).
The drilling of the Cardiff-2 well has not been without some set backs. During the cementing of a 7” liner, a failure at the liner hanger assembly occurred near 4,000m. As a result, the lower section of the well was no longer accessible, and the joint venture participants agreed to deviate a Cardiff-2A well out of the first wellbore near the 3,000m level and drill it as a vertical well to a target depth of 4,850m. Following the completion of the deviation well in March 2005, the operator embarked on a flow testing programme of the three significant gas and condensate zones.
To date, all three target zones have been hydraulically fractured and the well continues to unload fracturing fluids to surface as well as gas and condensate. Until all the fracturing fluid has been brought to the surface, no assessment of the flow potential and commercial viability can be made.
lIQUEFIED NATURAl gAS (lNg) New Zealand requires natural gas to supply the country’s existing and new combined cycle gas turbine plants well into the future. The present rate of discovery of new gas reserves appears unlikely to meet ongoing demand.
To fill the domestic gas deficit, New Zealand must either find another big domestic reserve to replace the Maui field or have the insurance policy of a consented Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG) receival terminal available.
In October 2004 Genesis Energy and Contact Energy announced the results of a joint feasibility study into importing LNG.
The importation of LNG is not expected to dramatically affect the current domestic exploration for new gas reserves. Genesis Energy and Contact Energy would welcome another Maui discovery, but together are not prepared to bet the country’s energy future on that possibility.
Phase one of the study established the technical and economic viability of the proposal and encouraged both Genesis Energy and Contact Energy to move to the next phase, which consists of more detailed site studies; initial negotiations with landowners; detailed development plans for the re-gasification plant; and project costing.
Evaluation of existing and offshore ship receival facilities and selection of a suitable site for the import terminal and re-gasification facility has been completed.
LNG tanker
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Optimise the availability and flexibility of existing generation plant 3
Begin transporting imported coal via a rail facility 3
Develop and prepare the Huntly site to accommodate capacity development plans and associated fuel delivery requirements 3
Work with major customers to manage their demand 3
SUBJECT:ENSURING SUPPLY
FIllINg THE TANK...
NOTES:
T h e c o a l r a i l d e l i v e r y f a c i l i t y w a s c o m m i s s i o n e d i n D e c e m b e r 2 0 0 4 .
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C o a l t r a i n a r r i v i n g a t H u n t l y f r o m P o r t o f T a u r a n g a .
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…bECAUSE YOU CAN’T RUN A COUNTRY ON EMPTY.With demand for electricity outstripping generation growth, a challenge facing Genesis Energy is managing the balance between supply and demand. While growing capacity, we also work to improve customers’ energy efficiency.
COAl ON THE RAIlS With the run-down of the Maui gas field and steadily increasing demand for electricity, our 1,000MW Huntly station has been operating as a baseload generator fuelled primarily by coal.
Huntly Power Station achieved 84 percent availability during the year and is now 81 percent fuelled on coal. Having secured contracts for all suitable and available local coal supplies, the immediate shortfall was made up by imports from Indonesia, contracted for an initial three-year period at one million tonnes per year and landing at the Port of Tauranga.
During 2004 we worked with the Port of Tauranga, Toll Owens, Toll New Zealand and Solid Energy to develop rail-handling facilities at the port and Solid Energy’s mine at Rotowaro.
The Port of Tauranga development included berth deepening, ship unloading, coal storage and rail loading. Each train carries 1,500 tonnes of coal
from a new covered storage facility on the wharf, which is able to stock-pile 70,000 tonnes at a time. Toll New Zealand’s Dunedin workshops constructed new coal wagons, and Genesis Energy entered into a ten year contract to receive coal at the Port of Tauranga and to rail coal to Rotowaro. Coal is received at Solid Energy’s Rotowaro mine near Huntly and
ENSURING SUPPLY
The Tauranga coal shed has temporary storage for up to 70,000 tonnes (Contractor Magazine)
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transported by truck to Solid Energy’s West Mine stockpile. It is then delivered to Huntly Power Station via the overland conveyor.
For the year to 30 June, 900,000 tonnes of coal was delivered from Indonesia. Coal reserves at 30 June were 780,000 tonnes.
MORE gENERATION AT HAU NUI Genesis Energy is committed to developing renewable energy in New Zealand. Expanding our wind generation is logical for the company as wind generation provides a good mix with hydro-generation.
The addition of eight 600kW turbines in December 2004 increased Hau Nui wind farm’s capacity to 8.65MW. Hau Nui supplies electricity to South Wairarapa via Powerco’s 33KV distribution network and has a high capacity factor, averaging 40 percent operating time over the past year.
We are continuing to identify and evaluate other potential sites for wind farms in the proximity of our 500MW of hydro-generation. In September 2004 our application for a resource consent to build a 19MW wind farm on the Awhitu Peninsula near Auckland was turned down by independent commissioners appointed
by the Franklin District Council. Eight months later the Environment Court, sitting in Auckland, heard an appeal from Genesis Energy against the decision. A decision is awaited from the Environment Court.
SAVINg A PORT THOUSANDS Our energy audit of Ports of Auckland (POA) is an example of how we have been working with industrial customers to reduce their energy usage and vulnerability to the electricity spot market. A rigorous energy audit at the port was successful in identifying two immediate ways the business could save 15 percent or $300,000 on its $2 million annual energy bill.
Results from the specialist lighting audit led to POA trialing a new type of light fitting in January 2005. POA calculated the system, a new technology not previously available in New Zealand, which reflects light better and requires less fittings than are currently in use, could save them $250,000 annually. Furthermore, a by product of the new lighting system has been less light pollution to the port’s neighbours.
The other major energy inefficiency identified by the audit was the poor power factor of refrigerated containers arriving at the port. Refrigerated containers account for close to half the port’s energy consumption and POA was able to specify a power factor correction in the design brief for a new refrigerated facility it was building, rectifying the issue at the source. Initial estimates put the savings at $80,000 – $100,000 per year. Similar energy audits have also been offered to our small to medium business customers.
Hau Nui extension
New energy-efficient lighting at Ports of Auckland
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Commence construction of the 385MW CCGT at Huntly 3
Reduce summer constraints on Huntly with new cooling tower 3
Pursue targeted and economic renewable energy projects at Awhitu and through mini hydro enhancements at Tongariro Power Scheme
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SUBJECT:BUILDING A FOUNDATION FOR A SECURE ENERGY FUTURE
gENERATINg MORE...
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T h e h e a v y h a u l a g e r o u t e f o r m o v i n g e 3 p i s s e c u r e d .
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e 3 p f r a m i n g g o i n g u p a t H u n t l y P o w e r S t a t i o n .
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…bECAUSE THE NEXT gENERATION’S gOINg TO NEED IT.Our ability to forecast how much energy is needed in the short, medium and long-term is crucial to our business and our customers.
Clearly, the electricity market is signalling that further investment in generation is required. But decision making has to be more than crystal ball gazing – it has to be based on robust analysis of demand growth, long-term fuel supply and commercial imperatives. In the past year we have moved forward on two critical projects – the construction of a new 385MW combined cycle gas turbine known as Huntly Energy Efficiency Enhancement Project (e3p) and the construction of a cooling tower that will give added availability of 250MW during warm summer months at Huntly Power Station.
HUNTlY POWER STATION For a long time a peak load generator burning mostly natural gas, the Huntly Power Station site is now operating as a 1,000MW base-load coal-fired power station. Meanwhile to the west of the station, coal arrives in a constant stream from the Huntly West Mine Stockpile, a Solid Energy facility operated under lease by Genesis Energy since March 2005.
A retrofit of the control and instrumentation system is planned with the first unit to move from analogue to digital contol in the 2005/06 summer shutdown.
E3P UNDERWAY During this financial year construction commenced on a new 385MW combined cycle gas turbine, known as Huntly e3p.
E3p is extremely important to Genesis Energy for a number of reasons. Firstly, it will meet projected growth in demand for more electricity from its commissioning date of December 2006. Secondly, because e3p will run on natural gas, which has a lower carbon emissions level than coal, it will enable Genesis Energy to reduce its carbon dioxide (C02)
BUILDING A FOUNDATION FOR A SECURE ENERGY FUTURE
Foundation pouring for e3p
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emissions and thirdly it will bring more liquidity to the wholesale market.
Huntly e3p will have an efficiency of 56 percent in converting natural gas to electricity. That is around 50 percent more efficient than the existing Huntly plant and will mean a saving of around 8PJ of fuel per annum. Due to its efficiency, e3p will displace less efficient thermal generation, including Huntly.
Piling commenced on the foundations for e3p in December 2004, with 347 piles driven into the ground by the end of April 2005. A concrete pour of 1050 cubic metres was carried out on 25 May 2005 for the gas turbine foundations. Steel framing for the turbine hall is now being erected.
bUIlDINg bRIDgES The various components of e3p – the gas turbine, generator and low-pressure steam turbine – are being manufactured in Japan by Mitsubishi Heavy Industries. These components weigh up to 377 tonnes and will arrive at the Ports of Auckland in November 2005. They are the heaviest loads to be transported over this distance on a road network in New Zealand.
Genesis Energy, working with Transit New Zealand, district councils and engineering consultants Connell Wagner, has expended considerable resources into ensuring the heavy haulage route is suitable for taking such heavy loads. The route includes 35 structures that will have to be crossed, of which 27 required upgrading, temporary bridging or bypassing in some form.
The most substantial part of this work was rebuilding the Tainui Bridge, which crosses the Waikato River at Huntly. The 45-year-old bridge required strengthening to handle e3p loads which would be up to six times heavier than those for which the bridge was originally designed. Resource consents were required for land use around the banks of the Waikato
River and for disturbing the bed of the river during pile installations.
The residents of Huntly and its environs were asked to tolerate a number of closures and restrictions on the Tainui Bridge during the reconstruction work, and Genesis Energy thanks them for their patience. We are proud now to deliver the people of the North Waikato a bridge that will last for many decades to come.
INCREASINg CAPACITY Each summer, the operators at Huntly Power Station carefully monitor the temperature of the Waikato River as the station is restricted from releasing warm water into the river once it reaches a certain level. Each year this restricts the generation output from the station. In February this year, after several weeks of sustained hot weather, the river temperature forced output at the station down to as low as 40MW.
To overcome this consent limitation at the Huntly Power Station the construction of a cooling tower is proceeding. The cooling tower will take water from any one of the four 250MW turbines and cool it before discharge back into the river. Construction of the tower was ahead of schedule at the end of June 2005 and is due to be commissioned for the 2005/06 summer.
Pupils at Huntly West Primary School
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Build the Genesis Energy brand 3
Benchmark the customer experience ensuring Genesis Energy drives best practice and best in class 3
Increase electricity and gas retail sales, subject to available gas and generation 3
Investigate technologies that will improve customers’ energy efficiency 3
SUBJECT:MEETING CUSTOMERS’ NEEDS AND EXPECTATIONS
UNDERSTANDINg DEMAND...
NOTES:
‘ O n e B i l l ’ c a m p a i g n s e e s 6 8 % o f d u a l f u e l c u s t o m e r s s h i f t i n g t o o n e c o m b i n e d b i l l .
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P a c i f i c S t e e l i s a h i g h e n e r g y u s e r .
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…bECAUSE CUSTOMERS DEMAND bETTER UNDERSTANDINg.Genesis Energy is dedicated to ensuring the owners of its 685,000 ‘Customer Connections’ receive value-added service that goes beyond electricity and gas supply, and looks to develop a deeper understanding of their needs and respond with appropriate solutions.
In June 2005 we partnered with Fisher & Paykel, Panasonic, The Electricity Commission and WEL Energy Trust to offer residential customers discounted access to energy-efficient heat pumps and fridges.
Our strategy for large customers has been to provide comprehensive audits of their energy usage, the results of which have been used to investigate, and in some cases implement, new energy-efficient systems and processes. For an example of a successful energy audit see the results achieved by Ports of Auckland on page 19.
ENERgY MANAgEMENT Genesis Energy presented an Energy Management Workshop to high-use customers in the North Island in 2005. The tour visited the cool store industry in the Hawke’s Bay, talked to large industrial users in Auckland and presented energy-efficiency advice to property managers in Wellington.
SOlUTIONS FOR NEW ZEAlAND’S PRIMARY
INDUSTRY Our drive to reduce energy consumption
in the dairy industry culminated in the launch of the Genesis Energy Dairy Efficiency Calculator at the 2005 New Zealand Mystery Creek Fieldays. Developed from rigorous dairy farm energy audits, the calculator allows farmers to input their energy tariffs, consumption patterns and information about their dairy shed into the online calculator. The calculator determines the farmer’s energy usage, identifies savings options and estimates the financial payback of installing selected energy efficient products.
INCREASINg gAS USE An integrated marketing campaign was conducted between March and June 2005 to encourage consumers to connect to gas. Genesis Energy currently has 118,572 gas customers enjoying the benefits of gas for hot water, heating and/or cooking. But widespread concern about New Zealand’s diminishing gas supplies had prompted consumers to put off investing in new gas appliances or choosing gas for their homes. The campaign addressed
MEETING CUSTOMERS’ NEEDS AND EXPECTATIONS
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this misconception, clarifying that Genesis Energy has good supplies of gas for residential use.
THE HUMAN TOUCH On the back of a successful re-branding in 2004, we have improved the performance of our Customer Contact Centre, managed by SITEL in Hamilton. Our customer service professionals field over 5,000 calls a day and aim to have 80 percent of calls answered by a ‘real person’ within 20 seconds. Since July 2004 our contact centre has bettered this mark maintaining an 83.8 percent response rate to all incoming calls. We have improved our ability to take care of our customers by introducing dedicated 0800 numbers for specific customer groups and campaigns, which sees calls answered by operators qualified in specific areas of our business.
IMPROVINg INTERNAl SYSTEMS Response rates to customer issues have improved following the implementation of our Field Services System (FSS) and Meter Reading Interface (MRI). FSS brings all fieldwork processes into a workflow management programme, which has streamlined our response to customer supply issues by automatically selecting contractors according to location.
CUSTOMER CONTROl Our prepay system InCharge was launched in April. InCharge gives customers more control over their electricity usage by adopting a prepay, like mobile phones, approach to purchasing electricity. New technology means our Incharge meters offer customers more payment options.
KIWISAVER Following the introduction of Low User Fixed Tariff regulations in 2004, Genesis Energy redefined its existing residential low user plan, Kiwisaver. This plan is best for consumers whose primary residence uses less than 8,000 kWh per year.
INCREASINg MARKET SHARE Genesis Energy’s share of the electricity market was 31 percent and of the gas market was 49 percent this year. After receiving nearly 44 percent of complaints to the Electricity Complaints Commission in 2002/03, this figure dropped to 19.4 percent in 2003/04 and has since dropped to 14 percent.
NINE WAYS TO PAY In February 2005 we introduced credit cards as a payment method. This was a result of our customers’ requesting this payment option and takes the number of payment methods to nine. As a result almost 65 percent of our customers pay by electronic methods.
PRODUCT DEVElOPMENT – INFOgEN Increasing customer understanding has driven the development and implementation of new products and services. One example of this is the introduction of a Broadband plan for our Internet product, Infogen. Having recognised that high-speed Internet is now a popular choice, we ensured it was accessible to our customers. In addition, all our Infogen plans are competitively priced and Genesis Energy customers are given reduced pricing.
ONE bIll In July 2004, residential customers were given the opportunity to have their gas and electricity on one bill. This not only gave customers one less bill to open each month but one less bill to pay. The success of the ‘one bill’ campaign sees 68 percent of residential customers who have gas and electricity with Genesis Energy having a combined bill. This is up from 38 percent in the previous year.
Pacific Steel General Manager Alan Pearson with Genesis Energy’s Zane Murray
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Build the ability to lead – by establishing a customised and quality development programme for middle management 3
Successfully retain and develop our intellectual knowledge through smart and current succession planning and development of a document management system
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Increase capabilities – preserving IP within Genesis Energy and improving responsiveness to new requirements 3
Track quality – service delivery management will focus on internal Service Level Agreements as measures of success 3
SUBJECT:GROWING A HIGH-PERFORMANCE CULTURE
UNlOCKINg OUR POTENTIAl...
NOTES:
R e s u l t s o f E m p l o y e e s u r v e y s h o w G e n e s i s E n e r g y a s a ‘ g r e a t p l a c e t o w o r k ’ ( 7 5 % ).
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T r a i n e e o p e r a t o r B a d e n D a v i e s w i t h M i l t o n N g e r e n g e r e .
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…bECAUSE PEOPlE ARE THE KEY TO OUR SUCCESS.Steady growth and change across the organisation has required a determined effort from our human resources team to meet the demand for highly skilled professional staff and to continue to grow and develop current employees.
SURVEYINg THE lANDSCAPE It seems we’re on the right track, with a 75 percent level of agreement from respondents to our annual employee survey that Genesis Energy is a “great place to work”. Our health and safety programme was cited as a particular area of strength, and job satisfaction and a sense of common purpose achieved agreement levels of 73 percent.
The survey identified areas for improvement including a need to diversify our methods of performance recognition, and while our learning and development programmes were regarded as
sufficient, we have implemented a number of new initiatives to continue to develop future leaders.
ASSESSINg OUR lEADERS Genesis Energy’s management team underwent a 360 degree leadership survey this year. Feedback was delivered via one-on-one meetings and a written summation of results was also made available. The design of the programme included a group evaluation of our executive team, which was presented to management.
NURTURINg TAlENT A Leadership Development Programme successfully piloted to 15 mid-level leaders, aimed to promote self-awareness, management skills, teamwork and business acumen. We expect to develop our future leaders from this course. The programme was designed around three themes: leading self, leading teams, and leading the business.
NATIONAl APPRENTICESHIP PROgRAMME The first intake of recruits were welcomed to the Genesis Energy National Apprenticeship Programme this year. Delivered in conjunction with Wellington Technology Institute (WelTec) in Petone, with practical training
GROWING A HIGH-PERFORMANCE CULTURE
Health assesment at work
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made possible by 15 host companies, the programme addresses the shortfall of apprentices entering the energy industry. Twenty electrical, mechanical and technical apprentices will be recruited each year for the next three years. They will be trained and placed in work with our host companies throughout New Zealand.
We received approximately 160 applications for the 20 available places in the 2005 course. Successful applicants are currently on a six-month live-in course at WelTec and will then join their host companies for on-the-job training.
INFORMATION CONTROl In response to business growth and the wealth of information and documents being generated by staff, our Corporate Property and Administration team has undertaken a bold project to implement an electronic document and records management system.
Our Information Services team has led the implementation of an Information Technology Infrastructure Library. In December 2004 Genesis Energy entered into a services agreement with Gen-i (NZ) Ltd to provide desktop information system services. Within three months Gen-i seamlessly transitioned their services into Genesis Energy.
The establishment of a data centre in the new Hamilton office provides Disaster Recovery and Business Continuity facilities to support our critical business systems. Business Continuity services supporting Retail billing operations, credit card payment options, InCharge prepayment solution, and the innovative Field Services Applications is performed from the Hamilton data centre.
A trial of Voice Over Internet Protocol in the Hamilton office allows Genesis Energy to evaluate the business benefits of implementing leading technology
through the organisation.Replacing the systems supporting the Retail
Customer Information Systems (Gentrack) with new systems has enhanced capacity and delivered higher levels of performance which has significantly enhanced the operational performance of Gentrack. The replaced systems were the original servers purchased by SITEL Corporation four years ago and were sized to support Genesis Energy’s 120,000 customers.
Continued investment in technology enables a modern, reliable, and secure infrastructure which supports the Genesis Energy business operations.
SOCIAl AND PHYSICAl WEllbEINg Our health, safety and wellness programmes rated very highly in our employee survey, and we were proud to retain our ACC tertiary accreditation for the third year running. We introduced a new online health and safety induction module which all employees now complete, as a foundation for a range of health and safety initiatives. Raised employee awareness and participation levels were promoted by fun programmes such as the Steps for Life challenge. Employees were issued with step counters, and teams challenged each other to complete the most steps during a month. Our people participated in the Huntly half marathon, the Taupo Ironman Triathlon, Auckland Round the Bays and a range of other active events.
Our staff social club, ClubGen, has 95 percent staff membership. Regular events were held throughout the year, the highlight being the mid-winter annual weekend away held last year in Rotorua.
Cross-functional teams meet often
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Offer customers a method of contributing to the Genesis Oncology Trust 3
Increase support in the communities in which we operate 3
Continue to develop initiatives that demonstrate our social responsibility 3
SUBJECT:SHOWING OUR COMMUNITY SPIRIT
DOINg MORE…
NOTES:
T h o u s a n d s o f o u r c u s t o m e r a r e n o w c o n t r i b u t i n g v i a t h e i r e n e r g y b i l l t o t h e G e n e s i s O n c o l o g y T r u s t .
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G e n e s i s O n c o l o g y T r u s t s u p p o r t s r e s e a r c h a n d t r e a t m e n t o f c a n c e r .
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…bECAUSE ENOUgH IS NEVER ENOUgH.Genesis Energy recognises the value of community understanding; without it we would cease to exist. Our support for various national, regional and community services is our way of investing in our communities and our neighbours.
TAKINg ‘gOT’ TO THE CUSTOMERS The Genesis Oncology Trust (GOT) is now firmly established with a solid capital base and strong governance. In 2004 Genesis Energy encouraged customers to donate $1 via their monthly energy bill with every dollar donated by customers before the end of the financial year matched by Genesis Energy.
The third GOT grant round attracted applications for scholarships to advance improvements in the detection, diagnosis and treatment of cancer,
and enhancements in palliative care. Fifteen grants totalling $440,000 were awarded covering post-graduate scholarships, professional development awards, research grants and special-purpose grants.
CREATINg lEADERS The Genesis Energy
Sir Edmund Hillary Leadership School was opened in May 2004 at the Sir Edmund Hillary Outdoor Pursuits Centre (OPC). Genesis Energy’s partnership with OPC has grown into a powerful association which has seen the Tongariro-based school become one of New Zealand’s premier centres for leadership training and outdoor education.
The OPC calendar also includes the annual Genesis Energy Hillary Challenge, a five-day outdoor secondary school team challenge. Now in its fifth year, the challenge has grown into a prestigious endurance race that attracted over 50 applicants for the ten
SHOWING OUR COMMUNITY SPIRIT
For more information on the activities of the GOT refer to the Trust’s Annual Report available on-line at www.genesisoncology.org.nz.
Genesis Energy Sir Edmund Hillary Leadership School
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available spaces this year. For more information see www.opc.org.nz.
PROMOTINg PHYSICAl WEllbEINg IN OUR YOUTH
We partnered with Sport Waikato to launch the Genesis Energy Sport Waikato Secondary School Sport programme in June 2005. The programme will increase services and support to secondary schools in physical education, active living and nutrition courses. The aim is to encourage secondary school students to participate in regular physical activity in order to maintain a healthy lifestyle. A dedicated group of secondary school principals has been assembled to help steer the scheme.
AWARDINg ACADEMIC EXCEllENCE In keeping with the focus on youth, Genesis Energy sponsored the National Science Fair in December. The five-day Fair awards academic proficiency in science, geology, mathematics, history and social studies to youth between the ages of 12-18, and is the amalgamation of a number of separate, less visible competitions that Genesis Energy has sponsored in the past. It is our hope that this event will build a strong
foundation of academic excellence and inspiration for New Zealand students.
HEARTlAND RUgbY The start of this year’s NPC Rugby season signals our third year as principal sponsor of Genesis Taranaki Rugby. It is a relationship we are hugely proud of because of the importance New Zealanders place on our national game. Genesis Energy also supports Taranaki Rugby’s development programme – The Way Forward. The programme is a three-level system to develop rugby in the Taranaki province through workshops, seminars and coaching opportunities at junior, intermediate and senior school and club levels.
THE CUlTURAl TWIST At the other end of the spectrum was our sponsorship of The Genesis Energy Spring Season of Carmen, and the opening of the Genesis Energy Theatre in Manukau City’s Telstra Clear Pacific Events Centre.
In addition, we are committed to supporting a number of regional stadiums and theatres in the North Island and where possible, we endeavour to develop facilities and services around our generation sites.
Genesis Taranaki Rugby
Genesis Energy Spring Season of Carmen
Students getting to grips with the environment at the Genesis Energy Sir Edmund Hillary Leadership School
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Resource consents for the Tongariro Power Scheme were made operative in December 2004 3
Genesis Energy significantly reduces the environmental impact of its brochures and newsletters by introducing the use of soy-based inks and chlorine-free paper
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Review of the use of refrigerants at Huntly Power Station results in a policy to ensure Genesis Energy works towards reducing the use and emission of synthetic greenhouse gases
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SUBJECT:PUTTING MORE ENERGY INTO OUR ENVIRONMENT
MANAgINg OUR IMPACT…
NOTES:
W e p r i d e o u r s e l v e s o n o u r c o m m i t m e n t t o e n v i r o n m e n t a l i n t e g r i t y a n d p e r f o r m a n c e .
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Hau Nu i w i nd farm has been e xtended .
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…bECAUSE WE CAN’T AFFORD NOT TO.Genesis Energy continues to work closely with communities to mitigate any adverse effects of the power schemes owned and operated by Genesis Energy.
Opportunities over and above the outcomes resulting from resource consent processes are being identified so that Genesis Energy can proactively contribute to enhancing the environment in which we operate.
“TAUPO FOR TOMORROW - EXPlORINg
SUSTAINAbIlITY THROUgH lAKE TAUPO AND
ITS TROUT” is an exciting new education programme at the Tongariro National Trout Centre that has been developed as a result of the five-year partnership begun in 2004 between Genesis Energy, the Department of Conservation (DoC) and the Tongariro National Trout Centre Society.
The main aim of the education programme is to raise the awareness of the importance of Taupo’s trout fishery, freshwater conservation and resource use. A teacher has been appointed to further develop and implement the education programme.
Genesis Energy has also developed a four-year partnership with the Lake Waikaremoana Hapu Restoration Trust and the kiwi restoration programme on Puketukutuku Peninsula at Lake Waikaremoana. Kiwi work commenced in 1992 as a joint initiative between Landcare, DoC and tangata whenua. The Trust, together with DoC, formally took
over management of the programme in 2002. The partnership enables the Trust to continue its highly successful work to eradicate pests on Puketukutuku Peninsula and to continue other initiatives that will further improve the kiwi’s chance of survival and grow the kiwi population. The work has also made significant technological advances and many of the techniques developed by the Trust are now being used elsewhere within New Zealand.
TPD CONSENT IMPlEMENTATIONS On 1 December 2004 all the consents for the Tongariro Power Development (TPD) were made operative by the Environment Court at Genesis Energy’s request. The granting of consents is the consequence of 14 years intensive consultation, extensive technical investigations of the effects of the scheme, joint Regional Council hearings and Environment Court hearings.
The legal process is not yet complete, with Genesis Energy awaiting the decision of its appeal to the High Court following the Environment Court’s decision to reduce the term of the Manawatu-Wanganui region consents from 35 years to 10 years. In the meantime the huge task of implementing 53 resource consents and associated conditions has begun.
PUTTING MORE ENERGY INTO OUR ENVIRONMENT
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The consent conditions include new minimum flows on the Whakapapa, Mangatepopo, Whanganui and Moawhango rivers, new recreational flows on the Tongariro River, flushing flows, comprehensive monitoring programmes and the provision of hydrology data via phone and the Internet. The new consents also ensure that the company has more extensive and formal reporting to regional councils.
TPD ONgOINg MITIgATION WORK As part of the TPD consents process many mitigation agreements were reached with organisations, agencies and community groups. Genesis Energy has continued to work closely with these groups to establish and implement these agreements.
Genesis Energy was saddened by the loss of the Central North Island Blue Duck Trust chairman and long-time Blue Duck campaigner, Keith Chapple. A new Royal Forest and Bird Protection Society representative will be appointed shortly and in the meantime the foundation work Keith and the Trust initiated continues with Genesis Energy support for the five-year Taranaki translocation project to create a new Blue Duck population on Mt Taranaki and the five-year predator control programme in the central North
Island. In addition the Trust has commissioned a book on Blue Duck to highlight the plight of this endangered white water species and to assist with public education. Genesis Energy, along with the Royal Forest and Bird Protection Society, is proud to sponsor the project which is due for completion in 2006.
The Whanganui River Enhancement Trust, with whom Genesis Energy is also involved, has established a 12-month business plan and implemented an annual funding round for Whanganui River Enhancement Projects in the Ruapehu and Wanganui Districts. A significant water quality project is being developed in association with Horizons Regional Council including research through post-graduate scholarships at Massey University.
FlUSHINg FlOWS AND RECREATIONAl RElEASES
Summer flushing flows have commenced on the Moawhango River to improve the health and ecology of the river and provide recreational opportunities. They complement the minimum flow which had voluntarily been introduced by Genesis Energy in 2001 and is now a consent requirement. Public safety during the releases is a top priority and Genesis Energy worked with the community, Horizons Regional Council and the New Zealand Army to agree the timing of flow releases and most appropriate methods of public notification.
Monitoring over the summer has shown a huge improvement in the health of the river, in particular the removal of silt and organic material from the riverbed and local residents have reported rainbow trout spawning for the first time in many years.
Rafters and kayakers have enjoyed more challenging runs down the Tongariro River and Whakapapa River with the commencement of recreational releases. Working with the New Zealand Recreational Canoeing Association, Genesis Energy
7:15 AM 8:15 AM
Flushing flows time comparison
Western Bays of Lake Taupo
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has undertaken two of three releases on the Tongariro River so far this year. Feedback has been extremely positive with the recreational canoeists enjoying these new events.
In planning the recreational release dates Genesis Energy worked closely with DoC to ensure that the releases are timed to avoid the Blue Duck nesting period of August to February. Surveys will now be made this season to assess the risk to nests from recreational flows which will enable more informed decision making in the future.
HUNTlY E3P The resource consents process that Genesis Energy has undertaken for e3p demonstrates the level of planning, consultation and mitigation that Genesis Energy undertakes to minimise or avoid the environmental effects of its operations.
To bring the components of the Huntly e3p generator to Huntly a heavy haulage route had to be identified to move oversized loads, weighing up to 377 tonnes, with dimensions of 7m height and 7m width. A number of roading structures en route from the Ports of Auckland to the Huntly Power Station did not have capacity, either structurally or dimensionally, to support the passage of these loads. As a result, Genesis Energy has upgraded or built bypasses around 27 of these structures, many of which required resource consents from local authorities.
The biggest upgrade was the rebuild of the Tainui Bridge in Huntly. The bridge was under strength and under sized, so a major upgrade has taken place over the last 13 months.
In order to minimise disruption to the Huntly community, Genesis Energy worked closely with Waikato District Council and adopted innovative construction techniques to limit disruption. The upgrade ensures that the Tainui Bridge is structurally and dimensionally adequate to facilitate the passage of heavy haulage loads.
Genesis Energy has an agreement with Waikato District Council to produce a number of Construction Management Plans for e3p.
These plans have now been approved by the Waikato District Council and have been implemented on site which allows Genesis Energy and the construction contractors to manage any impacts construction may have on the surrounding environment.
PORT WAIKATO – HAbITAT ENHANCEMENT WORK
Environmental mitigation projects are also being
carried out as part of the resource consent conditions for the Huntly Power Station.
Genesis Energy has undertaken works to enhance whitebait spawning areas in the lower Waikato River as a condition of resource consents relating to the discharge and mixing of cooling water from Huntly Power Station.
Genesis Energy is working to provide improved habitat for whitebait. The company is creating new fish breeding habitat in the Whauwhautahi Stream, a small tributary of the Waikato River. Provision of this new habitat is expected to benefit whitebait in the rest of the lower river.
STAKEHOlDER MANAgEMENT TOOl Genesis Energy is committed to consulting with the community and stakeholder groups on a regular basis and to sharing information on the environmental effects of our operations.
To facilitate this, a new database has been developed to ensure communication with our stakeholders is effectively managed.
The Stakeholder Management Tool is a web based tool that records all stakeholder data including details of each contact made. This tool provides a central location for all company data pertaining to stakeholders and community groups.
RENEWAblE ENERgY ENVIRONMENTAl
PERFORMANCE Genesis Energy operates hydro power schemes at Tongariro, Waikaremoana and Kourarau and the Hau Nui wind farm at Martinborough. The operation of these schemes has a range of effects on the environment and communities within those areas where they operate. Genesis Energy’s environmental specialists and field managers are working through a range of measures to minimise any adverse effects of our activities.
Tainui bridge work
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Whanganui River (Te Maire)Minimum (29 cumecs) = 100% compliance
Whakapapa RiverMinimum (3 cumecs) = 99.99% compliance
Rangipo Power Station
Rangipo Dam
Moawhango DamOhakune
Turangi
Raetihi
Poutu DamMinimum (0.6 cumecs) = 98.28% compliance
Poutu IntakeMinimum (16 cumecs) = 100% compliance
Rangipo DamMinimum (0.6 cumecs) = 99.94% compliance
Moawhango VillageMinimum (0.6 cumecs) = 100% compliance
Lake RotoairaMinimum (564.03m) = 100% complianceMaximum (564.65m) = 99.70% compliance
Poutu DamOtamangakau Dam
Te Whaiau Dam
Tokaanu Power Station
Taumarunui
Whakamarino Diversion CanalMinimum (0.025 cumecs) = 100% compliance
TUAI POWER STATION
KAITAWA POWER STATION
PIRIPAUA POWER STATION
Lake WaikaremoanaMinimum (580.29m) = 100% complianceMaximum (583.29m) = 100% compliance
Lake KaitawaMinimum (450.10m) = 100% complianceMaximum (453.50m) = 100% compliance
Lake WhakamarinoMinimum (246.30m) = 99.98% complianceMaximum (248.10m) = 100% compliance
Waikaremoana Hydro Scheme – Flow and level compliance with resource consent conditions
Tongariro Hydro Scheme – Flow and Level compliance with Resource Consent Conditions
WATER FLOW AND LEVEL COMPLIANCE
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Compliance at Genesis Energy’s renewable energy sites has been excellent again this year. This year has been most notable for the TPD resource consents becoming operative and the implementation of these consents. Given that these consents have only been operative for part of the year, we have not included detailed compliance information in this year’s report. However, we have included an overview of the hydrological compliance at TPD for 2004/05.
Work continued this year to complete the erosion protection works at Lake Moawhango as part of an agreement with the New Zealand Defence Force. Work progressed well through the dry summer and autumn and the work is now almost complete.
The five-yearly review of the Waikaremoana Power Scheme resource consents was undertaken this year. This milestone marked the completion of a number of five-year monitoring programmes, including: Lake Waikaremoana Shoreline Vegetation, Lake Waikaremoana Shoreline Morphology, Lake Waikaremoana Brown Trout, Waikaremoana Power Scheme Hydrology, Waikaretaheke River Macro-invertebrates, as well as the Waikaretaheke River Trout. Ongoing programmes include: Lake Waikaremoana Macro-invertebrates and Elver Monitoring Plan. All of the studies outlined above have been extremely useful in developing a better understanding of the effects that the scheme has on the environment. Presently we are working towards longer-term monitoring programmes that we will report on next year.
THERMAl ENERgY ENVIRONMENTAl PERFORMANCE
Genesis Energy holds 29 resource consents to operate 1,000MW Huntly Power Station, Unit 6 (a 48MW open cycle gas turbine), Huntly e3p and the Helper Cooling Tower (both currently under construction). In addition to these core resource consents Genesis Energy is
managing a number of other resource consents related to riparian mitigation works, the Huntly e3p heavy haulage route and other activities in and around the Huntly Power Station.
Over the recent years, available natural gas supplies have decreased, and the station now uses coal as its predominant fuel. This poses a number of additional environmental challenges, from ash disposal to greenhouse gas emissions, in respect of which Genesis Energy strives to achieve best outcomes both environmentally and operationally.
Environment Waikato audits the Huntly Power Station site on an annual basis. Waikato District Council has been auditing the site on a monthly basis since early 2005 because of the increasing volume of construction and land use activities.
Genesis Energy submits a number of reports to Environment Waikato on an annual basis. These reports outline our environmental performance for the previous monitoring period. Generally our environmental performance is very good however there are areas of our environmental compliance that need some additional focus. Work streams are continuing in this area.
HUNTlY COOlINg WATER DISCHARgE
TEMPERATURES Genesis Energy has a resource consent to allow the discharge of cooling water into the Waikato River. As part of the generation process at Huntly, water from the Waikato River is taken and used to cool the plant, before it re-enters the Waikato River. Resource consents place strict temperature limits on the cooling water, which Genesis Energy strives to achieve full compliance with. This can create generation restrictions from the Station during the summer months, when there are high ambient air and water temperatures, and low flows in the river.
This summer was particularly difficult for Huntly, as there were above normal ambient air temperatures, and below normal rainfall, leaving the river to drop to some of its lowest levels ever recorded. Generation from the Station was reduced to 40MW to ensure temperatures remained within consent limits. However, predicting temperatures and weather patterns is not easy, and unfortunately Genesis Energy had two breaches in temperatures for resource consents.
The resource consent that allows Genesis Energy to discharge cooling water into the Waikato River, requires a variety of other conditions being met.
New flow from the Moawhango Dam
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COMMITMENT UNDERSTANDING PLANNING IMPLEMENT MONITOR AND REPORT
April 2005 agreement from Genesis Energy’s Board to respond proactively to climate change.Chief Executive appointed the company’s climate change champion
Inventory of historic energy used to create a benchmark for future emission and energy use reductions.Development of an Emissions Reporting System for regular monitoring and reporting on Genesis Energy’s CO2 emissions activities
Formalisation of the climate change strategy. Climate change projects have been identified for 2005/06 and longer term
Implementation and strategic planning of the 2005/06 climate change projects. Introduction of a whole-of-company structure that identifies responsibilities for progressing emission reduction initiatives
Adoption of a KPI to monitor the carbon intensity of the company’s generation output.Annual climate change strategy review. Climate change performance annually reported.
The New Zealand electricity market is dominated by hydro generation; however New Zealand is reliant on generation from fossil fuels to maintain a reliable supply of electricity at all times, particularly in dry years.
As a major supplier of energy, Genesis Energy is very conscious of the environmental effects of burning fossil fuels and the role it plays in New Zealand meeting its climate change objectives.
The company has resolved to meet the environmental and business challenges presented by the Kyoto Protocol, and to turn these challenges into opportunities for the company and for New Zealand.
CURRENT POlICIES AND ACTIONS The company has been responding to climate change through its investment in energy-efficiency enhancement projects, retail customer energy-efficiency initiatives, growth in the company’s renewable energy portfolio and commitment to environmental excellence.
gENESIS ENERgY’S CONTRIbUTION TO ClIMATE
CHANgE Genesis Energy primarily emits CO2 from its generation activities at the Huntly Power Station, New Zealand’s largest thermal power station. However, Genesis Energy recognises that all aspects of its business create greenhouse gas emissions and will be responding to that challenge.
RESPONSIBLY MANAGING OUR IMPACT ON CLIMATE CHANGE
Generation activities Develop positive climate change and energy-efficiency initiatives
Non-generation activities – staff travel, office energy use
Reduce the carbon intensity of the generation profile overtime
Stakeholders and customers Improve the efficiency of existing assets
Pursue environmental excellence
Improve customer energy-efficiency
OUR STRATEGIES GOALCLIMATE CHANGE PROFILE
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RESPONDING PROACTIVELY TO CLIMATE CHANGE
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Genesis Energy has initiated a review of how the resource consent is managed in alignment with required generation output from the Station. The actions of this review have resulted in a number of technology improvements that are being implemented during the 2005 winter.
The table below summarises temperature consent breaches along with cause and action.
AIR DISCHARgE QUAlITY Particulate matter (or airborne particles) can arise from natural sources as well as from human activity. The impact of particulate matter on the environment depends on a number of chemical and physical properties. These include colour, abrasiveness, corrosivity, stickiness, pH, chemical composition and size.
PM10 refers to particles with an aerodynamic diameter less than 10 microns. Particulate matter less
than 10 microns are of particular interest from a human health perspective as they can penetrate the respiratory system.
Genesis Energy monitors continuous PM10 levels at sites around Huntly. The data shows that during 2004, around 80 percent of the time PM10 levels were good or excellent in the Huntly area. We have also compared the last three years of data. In summary there is no trend associated with this information. PM10 levels around Huntly continue to be mostly good (see definition of “good” in chart pg 45).
Increased coal stockpiles caused some compliance issues with dust levels recorded at our boundary. We have implemented a project to investigate installing dust screens and further develop the vegetation around our coal stockpiles to control this.Genesis Energy primarily emits CO2 from its generation
HUNTLY COOLING WATER DISCHARGE TEMPERATURES
DATE MAXIMUM TEMPERATURE
CAUSE ACTION
08/02/2005 25.179°C Weather conditions dramatically changed, with cloud cover clearing, and flow direction changing.
Generation was substantially reduced, to minimise impact of river heating. Environment Waikato was notified.
24/01/2005 25.06°C Weather forecast for cloud cover and rain did not occur, leading to river temperatures higher than predicted.
Reduced generation. Environment Waikato was notified.
TEMPERATURE CONSENT BREACHES
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activities at the Huntly Power Station. A run-down of gas reserves and an increased demand for electricity has increased the Huntly Power Station’s reliance on coal for generation, resulting in increasing CO2 emissions since 2003. The generation level and
thus the company’s CO2 emission profile is dependent on both the demand for electricity and the availability of other generation such as hydro and wind.
Genesis Energy is continually seeking to reduce emissions at Huntly by investing in and implementing more efficient technology at the Station.
For example, implementation of the new digital control system on the four Huntly 250MW units will bring enhanced control to the operator enabling increased efficiency.
HUNTLY AMBIENT AIR QUALITY – PM10
TOTAL CO2 EMISSIONS
Huntly Power Station
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OBJECTIVES FOR 2004/05
PROGRESS ON ACHIEVING OBJECTIVES
Continue to develop and implement the Environmental Management System and associated policies such as an Environmental Procurement Policy
• Environmental Purchasing Guidelines have been developed, with a primary focus on office stationery purchases.
• Environmental criteria were included in the Mailhouse and Transactional printing tender undertaken in early 2005. The selection and implementation of Norcross for general print has enabled Genesis Energy to significantly reduce the environmental impact of our brochures and newsletters. The reselection of Moore Gallagher presented an opportunity to put environmental performance and initiatives into our relationship plan.
• Work has commenced on cost/benefit analysis to replace traditional copy paper with recycled copy paper.
• Sustainable Building Guidelines have been developed to ensure that future office fit-outs and refurbishments meet energy, waste, water and indoor-air targets.
• Genesis Energy continues to update the QMS as procedures change or on a two yearly basis.• Genesis Energy recycles cardboard, office paper waste and printer toners.• Continued implementation and improvement of the resource consents database• Development and introduction of the Stakeholder Management Tool to provide a central location
for all company stakeholder data.• Environmental training undertaken at each site.
Continue to investigate renewable energy generation opportunities and obtain relevant resource consents
• The Franklin District Council declined the resource consent application for the proposed Awhitu wind farm. Genesis Energy appealed this decision to the Environment Court in May/June 2005 with a decision expected toward the end of 2005.
• Genesis Energy has maintained an awareness of developing renewable generation technologies. • Mangaio and Moawhango mini-hydro development progressing. Drilling consent granted for site
investigation. Draft resource consent applications and associated Assessment of Environmental Effects completed. Awaiting final design specifications.
• Ongoing investigation into other possible mini-hydro sites and wind farm sites.
Continue to investigate ways to enhance the operating efficiency of our generation assets
• This work is being incorporated into Genesis Energy’s climate change strategy and initiatives to reduce the carbon intensity of Genesis Energy’s generation activities.
• Adoption of a KPI to monitor carbon intensity.• Identification of Generation System Efficiencies at the Huntly Power Station is to be undertaken
in conjunction with the Huntly Power Station’s Life Assessment – tender documents issued.• Investigation into an upgrade of steam turbines and condenser at Huntly Power Station.• Commencement of the installation of Huntly e3p, which is 50% more efficient than the HPS.• Installation and running of Unit 6 (Project 40) which has a higher efficiency than the existing plant.• Entered into a voluntary electricity sector SF6 agreement to reduce SF6 leakages into
the atmosphere.
Develop the proactive environmental partnerships programme and identify suitable projects and partners to progress the programme
• This work is being incorporated into the development of a climate change strategy and proactive initiatives to assist to customers and stakeholders to reduce greenhouse gas emissions.
• International Council for Local Environmental Initiatives (ICLEI): Significant progress in developing a relationship between ICLEI and Genesis Energy to work in collaboration on specific projects in relation to the Communities for Climate Protection - New Zealand Programme.
• Waikato RiverCare: Genesis Energy will dedicate a resource to this group for a trial 6-month period.• Education Partnership – Tongariro National Trout Centre: A five-year Education Partnership formed
between DoC, Tongariro National Trout Centre Society and Genesis Energy. • Waikaremoana Hapu Restoration Trust Partnership: A four-year partnership agreement has been
finalised between Genesis Energy and the Trust to support their kiwi restoration project on the Puketukutuku Peninsula, Lake Waikaremoana.
Develop waste minimisation and energy reduction targets for Genesis Energy’s office sites as part of the company wide Waste Minimisation Plan and Energy Efficiency Enhancement Strategy and report on progress to achieve those targets
• This work is being incorporated into Genesis Energy’s climate change strategy.• A company-wide Emissions Calculator is being developed to create a functional system
for regular monitoring and reporting on CO2 emissions produced by Genesis Energy’s activities. • “Leave Your Car at Home Day” organised for Genesis Energy Auckland staff to increase the
awareness of vehicle greenhouse gas emissions.• A review of the use of refrigerants at Huntly Power Station was undertaken to identify any
refrigerants that use synthetic greenhouse gases (SGGs). The outcome has been the development of a refrigeration policy that will ensure there is a continuing availability of refrigeration capacity at the Station whilst ensuring Genesis Energy is working towards reducing the use and emission of SGGs.
PERFORMANCE AGAINST 2004/05 ENVIRONMENTAL OBJECTIVES
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Continue to develop and implement demand-side energy management programmes for our customers
• Participation in a pilot workshop “Save Energy and Beat the Carbon Tax – Climate Change and You” organised by the Ministry for the Environment and Landcare Research.
• Various retail campaigns were undertaken to provide energy-efficiency solutions to our customers.• Various seminars were undertaken by Genesis Energy’s National Sales team to increase the
awareness of our large-use customers to the benefits of energy management.• Sponsorship of the Wairarapa Healthy Homes project, which is retrofitting 350 Wairarapa homes
with energy-efficiency measures.
Enhance how we interact with our stakeholders
• Regular meetings and newsletters, at all our generation sites, have continued to play an important role in updating our stakeholders on Genesis Energy’s activities and events.
• The Huntly Community Group was established to liaise with the community over the works on the Tainui Bridge.
• While Solid Energy holds the land-use consent for the coal stockpiles at the old Huntly West Mine, Genesis Energy has taken responsibility to develop a strong relationship with local residents. This includes taking over Solid Energy’s responsibilities of the consent to set up site inspections and meetings every three months with the residents.
• Genesis Energy meets on a weekly basis with the Te Roopu Taiau (Environmental Group), and holds monthly meetings with the Waahi Whaanui Trust Board to enhance communication between the organisations.
• Development and introduction of the Stakeholder Management Tool.• The Tongariro Power Development consents implementation has resulted in the establishment of
new groups and trusts to implement a range of new resource consent conditions and agreements.
Enhance the sharing of information and knowledge obtained through our extensive monitoring programmes and assessment of environmental effects to contribute to environmental decision making and management at a local, regional and national level
• Genesis Energy continues to be proactive in sharing information for all its generation assets. A large proportion of the information shared is associated with both existing and new resource consent conditions and compliance, together with more general information about the sites themselves and Genesis Energy’s activities.
• Participation in the formulation of national policies and programmes such as the Water Programme of Action, 2004 Resource Management Act Review and Implementation of the Carbon Tax.
• Participation in the formulation of local and regional planning documents and policies such as the Waikato District Plan, Franklin District Council’s Rural Plan Change, Wellington City Council’s Renewable Energy Plan Change, Taupo District Plan, Horizons One Plan and Environment Waikato’s Water Allocation Plan.
• Media such as mail-outs, signage and news updates are used to update the Huntly community on the Tainui Bridge and Huntly e3p project.
• Hakarimata fisheries enhancement programme: NIWA is using the information collected for Genesis Energy and under FRST funding for presentations in conferences to share successes and failures of the project.
• Worked with the community, Horizons Regional Council, DoC and the New Zealand Army to agree the timing of summer flushing flows from the Moawhango River to ensure public safety and to avoid blue duck nesting periods.
• Worked with the Crown Forestry Rental Trust to make available information regarding the Tongariro Power Development to be used in Treaty of Waitangi claim research.
ENVIRONMENTAL OBJECTIVES FOR 2005/06
THEME OBJECTIVES
Climate Change To reduce the carbon intensity of the generation portfolio over time.To reduce the greenhouse intensity of Genesis Energy’s non-generation business activity.To encourage and assist stakeholders and customers to reduce greenhouse gas emissions.To measure and accurately report Genesis Energy’s greenhouse gas emissions across all areas of its business.
Environmental Policy and Planning
To continue to actively participate in the development of environmental policy on local, regional, national and global issues.
Treaty of Waitangi To continue to monitor and, where appropriate, participate in Treaty of Waitangi and other Maori issues.
Environmental Projects To continue to pursue excellent environmental practices across the company.To seek to partner organisations and community groups to jointly improve aspects of the environment.
Resource Consents Ensure the environmental effects of projects are appropriately assessed and steps are taken to avoid, remedy or mitigate any adverse effect that our activities have on the environment.To successfully implement and manage all resource consents in order to achieve 100% compliance.
Stakeholder Relationshipsand Communications
Continue to implement the stakeholder communication strategy encompassing continued use of consultative forums and regular, proactive communication on environmental issues.
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The Directors have pleasure in presenting the financial statements of Genesis Power Limited (trading as Genesis Energy) for the year ending 30 June 2005. For and on behalf of the Board of Directors:
49 StatementoffinancialPerformance
49 StatementofmovementSinequity
49 StatementoffinancialPoSition
50 StatementofcaShflowS
51 StatementofaccountingPolicieS
54 noteStothefinancialStatementS
54 1 Operating Revenue54 2 Operating Expenses55 3 Income Tax55 4 Dividends56 5 Current Assets56 6 Non-Current Assets56 7 Investment in Subsidiaries58 8 Goodwill58 9 Property, Plant and Equipment59 10 Current Liabilities59 11 Non-Current Liabilities60 12 Provisions60 13 Equity61 14 Commitments61 15 Financial Instruments63 16 Related Parties63 17 Inter-company Balances (Parent Company Only)64 18 Reconciliation of Net Surplus to Net Cash from Operating Activities65 19 Contingent Assets and Liabilities65 20 Resource Consents65 21 Segmental Information65 22 Significant Events After Balance Date
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briancorbanqSoChairman 30.08
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KeithSmithDeputy Chairman 30.08
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financialStatementSfor the year ended 30 June 2005
STATEMENT oF FINANCIAL PERFoRMANCE FOR THE yEAR ENDED 30 JuNE 2005
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
Operating Revenue 1 1,495,694 1,333,689 1,418,729 1,267,323
Operating Expenses 2 (1,377,042) (1,203,368) (1,305,354) (1,145,606)
operatingSurplusbeforeincometax 118,652 130,321 113,375 121,717
Less Income Tax 3 (48,407) (50,187) (45,306) (47,963)
NET SURPLUS 70,245 80,134 68,069 73,754
comprising:
Operating Surplus from Continuing Activities 70,245 78,240 68,069 73,754
Operating Surplus from Discontinued Activities 7 - 1,894 - -
70,245 80,134 68,069 73,754
STATEMENT oF MoVEMENTS IN EQUITY FOR THE yEAR ENDED 30 JuNE 2005
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
openingequity 991,813 936,729 933,811 885,107
Net Surplus 70,245 80,134 68,069 73,754
Property Revaluation Reserve 330,718 - 330,718 -
Dividends Paid 4 (23,220) (25,050) (23,220) (25,050)
EQUITY AT END oF YEAR 1,369,556 991,813 1,309,378 933,811
STATEMENT oF FINANCIAL PoSITIoN AS AT 30 JuNE 2005
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
assets
Current Assets 5 311,778 259,532 298,142 233,930
Non-Current Assets - Other 6 223,741 227,663 156,000 172,150
Non-Current Assets - Property, Plant and Equipment 9 1,331,849 780,985 1,330,886 780,336
ToTAL ASSETS 1,867,368 1,268,180 1,785,028 1,186,416
liabilitiesandequity
Current Liabilities 10 240,059 239,107 240,922 237,251
Non-Current Liabilities - Other 11 240,318 31,039 226,907 12,800
Non-Current Liabilities - Deferred Taxation 3 17,435 6,221 7,821 2,554
ToTAL LIABILITIES 497,812 276,367 475,650 252,605
Equity 13 1,369,556 991,813 1,309,378 933,811
ToTAL LIABILITIES AND EQUITY 1,867,368 1,268,180 1,785,028 1,186,416
The above statements should be read in conjunction with the accompanying notes. 49
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STATEMENT oF CASh FLowS FOR THE yEAR ENDED 30 JuNE 2005
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
cashflowsfromoperatingactivities
Cash was provided from:
Receipts from Customers 1,464,438 1,339,595 1,388,982 1,284,012
Interest Received 2,053 2,930 2,021 1,464
1,466,491 1,342,525 1,391,003 1,285,476
cashwasappliedto:
Payments to Suppliers 1,261,775 1,113,530 1,198,450 1,075,080
Payments to Employees 38,768 33,966 36,612 31,279
Interest Paid 3,936 8,904 1,922 4,866
Taxation Paid 48,655 56,326 46,458 56,659
1,353,134 1,212,726 1,283,442 1,167,884
NET CASh FRoM oPERATING ACTIVITIES 18 113,357 129,799 107,561 117,592
cashflowsfrominvestingactivities
Cash was provided from:
Sale of Property, Plant and Equipment 413 560 409 560
Principal Repayments of Finance Lease 2,775 2,367 - -
Proceeds from Disposal of Subsidiaries - 11,702 - -
Advances and Loans from Subsidiaries - - - 7,378
3,188 14,629 409 7,938
cashwasappliedto:
Advances and Loans to Subsidiaries - - 13,350 -
Gas Exploration and Development 20,069 - - -
Purchase of Investments 241 8,300 241 -
Purchase of Property, Plant and Equipment 241,361 109,644 240,848 108,363
261,671 117,944 254,439 108,363
NET CASh FRoM/(To) INVESTING ACTIVITIES (258,483) (103,315) (254,030) (100,425)
cashflowsfromfinancingactivities
Cash was provided from:
Proceeds from Borrowings 169,155 5,947 169,155 5,947
169,155 5,947 169,155 5,947
cashwasappliedto:
Repayment of Principal on Borrowings 4,543 4,262 - -
Dividends Paid 23,220 25,050 23,220 25,050
27,763 29,312 23,220 25,050
NET CASh FRoM/(To) FINANCING ACTIVITIES 141,392 (23,365) 145,935 (19,103)
NET INCREASE/(DECREASE) IN CASh hELD (3,734) 3,119 (534) (1,936)
Cash at Beginning of year 11,899 14,486 7,479 9,415
Cash Adjustment on Disposal of Subsidiaries - (5,706) - -
CASh AT END oF YEAR 8,165 11,899 6,945 7,479
compositionofcash:
Cash 8,165 11,899 6,945 7,479
8,165 11,899 6,945 7,479
financialStatementSfor the year ended 30 June 2005
The above statements should be read in conjunction with the accompanying notes.50
These financial statements have been prepared in accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 1993 and the State-Owned Enterprises Act 1986.
rePortingentity
The Parent Company’s financial statements are for Genesis Power Limited (“the Company”) as a separate entity and the consolidated financial statements are for the Genesis Power Limited Group (“the Group”), which includes the Company and all its subsidiaries. The significant subsidiaries are disclosed in Note 7.
conStitution,ownerShiPandactivitieS
The Company was incorporated and became a state-owned enterprise on 16 December 1998 pursuant to the State-Owned Enterprises Act 1986.The Company is wholly owned by Her Majesty the Queen in Right of New Zealand (“the Crown”). The Group’s core business is the generation, trading and retailing of energy in New Zealand.
generalaccountingPolicieS
The general accounting policies recognised as appropriate for the measurement and reporting of results, cash flows and financial position under the historical cost method have been followed in the preparation of these financial statements with the exception of Property, Plant and Equipment which have been revalued. The one-off review of the value of the net assets as at 1 April 1999, as agreed with the shareholding Ministers was deemed to be historical cost.
ParticularaccountingPolicieS
The following particular accounting policies which significantly affect the measurement of financial performance, financial position and cash flows, have been applied:
PrinciPleSofconSolidation
The consolidated financial statements are prepared from the financial statements of the Company and its subsidiaries, using the purchase method.The results of subsidiaries acquired or disposed of during the year are included in the Statement of Financial Performance from the date of acquisition or up to the date of disposal.All transactions between Group companies are eliminated on consolidation.
goodwill
Goodwill represents the excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets on the acquisition of a business or an equity interest in a subsidiary. Goodwill is amortised by the straight-line method over the shorter of the period of expected benefits or 20 years. The carrying amount of goodwill is reviewed annually for impairment.
SubSidiarieS
Subsidiaries are those entities in which the Company or another Group subsidiary holds a controlling interest.
JointventureS
Joint ventures are arrangements with other parties in which the Group has several liability in respect of costs and liabilities, and shares in any resulting output. The Group’s share of the assets, liabilities, revenues and expenses of joint ventures is recognised in the financial statements on a line-by-line basis using the proportional method.
inveStmentS(ParentcomPanyonly)
Investments in subsidiaries are stated at cost. Where the carrying value of the investment exceeds the recoverable amount, the investment is written down to its recoverable amount.
tradingrevenue
Revenue shown in the Statement of Financial Performance comprises the amounts received and receivable by the Group for electricity and energy-related services supplied to customers in the ordinary course of business.
taxation
The Group follows the liability method of accounting for deferred tax on a comprehensive basis.The taxation charge against the net surplus for the year is the estimated liability in respect of that net surplus after allowance for permanent differences.Future taxation benefits attributable to timing differences or losses carried forward are recognised in the financial statements only where there is virtual certainty that the benefits will be utilised by the Group.
goodSandServiceStax
The Statement of Financial Performance and Statement of Cash Flows have been prepared so that all components are stated exclusive of GST. All items in the Statement of Financial Position are stated net of GST, with the exception of receivables and payables, which include GST.
accountSreceivable
Accounts receivable are stated at estimated realisable value, after providing for debts where collection is doubtful.
inventorieS
Inventories are stated at the lower of cost and net realisable value. Cost is determined on an average-cost basis.
diStinctionbetweencaPitalandrevenueexPenditureCapital expenditure is defined as all expenditure on the purchase or creation of new property, plant and equipment, and any expenditure
StatementofaccountingPolicieSfor the year ended 30 June 2005
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StatementofaccountingPolicieSfor the year ended 30 June 2005
which results in a significant improvement to the original functionality of an existing asset.Revenue expenditure is defined as expenditure that restores an asset to its original operating capability and all expenditure incurred in maintaining assets used in operating the business.
reSourceconSentS
Costs incurred in obtaining a resource consent are capitalised and recognised as a term asset. These costs are amortised over the life of the consent on a straight-line basis.
ProPerty,PlantandequiPment
All property, plant and equipment is initially recorded at cost.The cost of purchased property, plant and equipment is the value of the consideration given to acquire the assets and the value of other directly attributable costs that have been incurred in bringing the assets to the location and condition necessary for their intended service.The cost of assets constructed by the Group, including capital work in progress, is the cost of all materials used in construction, direct labour costs of construction, resource management consent costs, and an appropriate proportion of applicable variable and fixed overheads. Financing costs on capital work in progress are capitalised at the specific project finance interest rate during the construction period. Costs cease to be capitalised as soon as the asset is available for productive use.
revaluationS
Generation assets are subsequently revalued to fair value as determined by an independent registered valuer on a periodic basis, not exceeding five years. Fair value is determined based upon a discounted cash-flow model. Any revaluation surplus arising on the revaluation of a class of property, plant and equipment is transferred directly to the asset revaluation reserve. A revaluation deficit in excess of the asset revaluation reserve balance for the class of property, plant and equipment is realised in the Statement of Financial Performance in the period it arises. When an item of property, plant and equipment is disposed of, any gain or loss is recognised in the Statement of Financial Performance.
leaSedaSSetS
leSSeeThe Group leases certain plant, equipment, land and buildings. Leases under which the Group assumes substantially all the risks and rewards incidental to ownership, have been classified as finance leases and are capitalised. All other leases are classified as operating leases. The asset and corresponding liability are recorded at inception of a finance lease at the fair value of the leased asset, at amounts equivalent to the value of minimum lease payments, including residual values.
The cost of improvements to leasehold property is capitalised and amortised over the estimated useful life of the improvements, or over the unexpired portion of the lease, whichever is shorter.Capitalised leased assets are depreciated over their expected lives in accordance with rates adopted for other similar asset categories.Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are charged to the Statement of Financial Performance as incurred.leSSorThe Group leases certain plant and equipment to others under finance lease arrangements. Finance leases receivable are recorded in the Statement of Financial Position at present value. Periodic lease receipts are allocated between the receivable and interest revenue on a yield-to-maturity basis.
dePreciation
Depreciation of property, plant and equipment, other than freehold land, is charged on a straight-line basis so as to apportion the cost of the assets less their estimated residual value over their expected remaining useful lives.
eStimateduSefullife
GENERATING PLANT 10-50 yearsNoN‑PLANT RELATED BUILDINGS 10-50 yearsoThER PLANT AND EQUIPMENT 3-15 years
ProviSionformitigationcoStS
A provision for mitigation costs is recognised when the Group has a legal or constructive obligation. The provision is based upon contractual commitments over the shorter of the contract period or the life of the resource consent. The provision is stated at the present value of the future net cash outflows expected to be incurred. The provision is reassessed at each balance date. Changes in the present value of cash-flow estimates are recognised as interest charges in the Statement of Financial Performance. The provision is reduced by actual expenditure incurred.
ProviSionforrehabilitation
A provision for rehabilitation is recognised when the Group has a legal obligation or has publicly announced its intended rehabilitation policy for a particular site. The provision is based on an independent engineering report as to the appropriate action to rehabilitate each site. The provision is stated at the present value of the future net cash outflows expected to be incurred. The provision is reassessed at each balance date. Changes in the present value of cash-flow estimates are recognised in the Statement of Financial Performance. The provision is reduced by expenditure incurred for site restoration.
loanS
Loans in existence at 1 April 1999 were revalued to fair value in accordance with the review of the net assets acquired at 1 April
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1999. New loans obtained since 1 April 1999 are stated at face value less unamortised discounts, premiums and prepaid interest.Discounts, premiums and prepaid interest and borrowing costs such as origination, commitment and transaction fees are amortised to interest expense on a yield-to-maturity basis over the period of the borrowing.
foreigncurrencieS
Foreign currency transactions are recorded at the exchange rates in effect at the date of the transaction except where hedging contracts are taken out to cover short-term foreign currency commitments in which case the transaction is translated at the rate contained in the hedging contract.Monetary assets and liabilities denominated in a foreign currency are translated at the rates of exchange ruling at balance date.Exchange differences on translation are taken to the Statement of Financial Performance.
financialinStrumentS
The Group has entered into transactions using financial instruments within predetermined policies and limits in order to reduce risks from carrying out its ongoing business. These instruments include forward exchange contracts and interest rate swaps. The Group enters into these contracts to hedge its foreign currency exposures and interest rate exposures. The Group has also entered into contracts to manage its exposure to price fluctuations on the electricity spot market. These forward contracts are contracts for differences. The contract settlements are recognised in the period in which the purchase or sale of electricity occurs. Financial instruments entered into as hedges are accounted for on the same basis as the underlying position being hedged. Any gain or loss arising on a hedging transaction will be recognised in the Statement of Financial Performance in the same period as the loss or gain on the item being hedged. Any financial instrument which does not fall within the definition of a hedge will be marked to market and any resultant gain or loss recognised in the Statement of Financial Performance as it occurs.
gaSoPerationSmininglicenceThe acquisition costs of a mining licence are capitalised. The licence costs of successful efforts are amortised over the estimated life of the field based on the unit of production depletion method, commencing from the first year of commercial production from that field. Licence costs are reviewed annually for impairment. Any impairment in value is taken to the Statement of Financial Performance.exPlorationexPenditureExploration costs, including geological and geophysical costs and costs of carrying unproved properties are included in the Statement of Financial Performance.
Exploratory drilling costs are capitalised initially; however, if it is found that an exploratory well did not find proved reserves, such capitalised costs are charged to the Statement of Financial Performance, as dry hole costs at that time.The exploratory drilling costs of successful efforts are amortised over the estimated life of the field based on the unit of production depletion method, commencing from the first year of commercial production from that field. Exploration expenditure is reviewed annually for impairment. Any impairment in value is taken to the Statement of Financial Performance.develoPmentexPenditureDevelopment costs are capitalised. The development costs of successful efforts are amortised over the estimated life of the field based on the units of production depletion method, commencing from the first year that a completed development enters commercial production. Development expenditure is reviewed annually for impairment. Any impairment in value is taken to the Statement of Financial Performance.
StatementofcaShflowS
The following are the definitions of the terms used in the Statement of Cash Flows:
• cash is considered to be cash on hand and current accounts in banks, net of bank overdrafts;
• investing activities are those activities relating to the acquisition, holding and disposal of fixed assets and of investments;
• financing activities are those activities that result in changes in the size and composition of the capital structure of the Group. This includes both equity and debt not falling within the definition of cash; and
• operating activities include all transactions and other events that are not investing or financing activities.
changeSinaccountingPolicieS
During the year the Group changed its accounting policy in regards to property, plant and equipment so as to align with the Crown’s accounting policies. Generation assets are now revalued on a periodic basis, not exceeding five years. Property, plant and equipment have been revalued upwards by $331 million effective 30 June 2005. There is no depreciation impact of this revaluation in the 2005 year.During the year the Group also changed its investment amortisation policy from a yield-to-maturity basis to a straight line basis. The change in policy was done to reflect a change in the expected pattern of consumption of the economic benefits embodied in the investment. The effect of the change resulted in an additional expense (before tax) charged to the Statement of Financial Performance for the year of $2.2 million.
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1 oPERATING REVENUE
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
tradingrevenue*
Electricity 1,350,643 1,197,741 1,281,927 1,149,543
Gas 101,269 82,722 101,269 82,722
Other 41,482 41,357 33,266 32,746
investmentrevenue
Interest 2,053 1,810 1,627 1,463
Interest from Subsidiaries - - 394 234
otherrevenue
Gain on Sale of Subsidiaries - 7,317 - -
Gain on Sale of Property, Plant and Equipment 247 615 246 615
Sponsorship - 2,127 - -
ToTAL oPERATING REVENUE 1,495,694 1,333,689 1,418,729 1,267,323
diScontinuedactivitieSRevenue from discontinued activities included in the comparative results amounts to $2.5 million for the Group (Parent: Nil). (Note 7)
*Included in the comparative trading revenue figure above is a reclassification of discounts of $53 million. The reclassification was made between operating revenue and expenditure. This was completed to ensure a more accurate operating revenue figure.
2 oPERATING EXPENSES
grouP GROuP Parent PARENT 2005 2004 2005 2004 note $000 $000 $000 $000
operatingexpensesinclude:
Depreciation of Property, Plant and Equipment
Generation Plant - Thermal Stations 12,844 7,944 12,844 7,944
Generation Plant - Hydro Stations 13,556 12,557 13,556 12,557
Generation Plant - Other Generation Assets 889 152 889 152
Other Freehold Buildings 18 18 18 18
Other Freehold Land & Improvements 76 74 76 74
Other Plant & Equipment - Other Fixed Assets 9,512 9,628 9,326 9,523
Other Plant & Equipment - Retail Assets 491 568 491 568
37,386 30,941 37,200 30,836
Loss on Sale of Property, Plant and Equipment 242 19 232 11
Amortisation of Investments 3,695 1,448 - -
Amortisation of Goodwill 8 16,818 16,818 16,391 16,391
Rental Expenses on Operating Leases 2,842 2,236 2,599 2,090
Net Loss on Foreign Currency Transactions 3 19 3 19
Bad Debts Written Off 5,847 6,937 5,437 6,708
Decrease in Doubtful Debts Provision (1,200) (370) (1,200) (370)
Interest on Borrowings 3,936 7,018 1,922 4,487
Directors’ Fees 294 249 294 249
Audit Fees 195 131 195 131
Donations 132 1,055 132 1,055
Sponsorship 1,717 2,392 1,717 2,542
Release of Prior year Electricity Accruals (10,603) - (10,603) -
noteStothefinancialStatementSfor the year ended 30 June 2005
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3 INCoME TAX
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
Operating Surplus before Income Tax 118,652 130,321 113,375 121,717
Permanent Differences 30,288 24,171 26,170 26,051
EARNINGS SUBJECT To TAX 148,940 154,492 139,545 147,768
taxat33% 49,150 50,982 46,049 48,763
Prior year Adjustments (743) (795) (743) (800)
TAX EXPENSE 48,407 50,187 45,306 47,963
comprising:
Current year Tax Assessment 36,022 48,592 38,645 46,392
underestimation in Prior year (743) (795) (743) (800)
Deferred Income Tax Liability 13,128 2,390 7,404 2,371
TAX EXPENSE 48,407 50,187 45,306 47,963
deferredtaxliability
Opening Balance 6,221 15,616 2,554 95
Prior year Adjustments (1,914) 144 (2,137) 88
Movement in Current year 13,128 2,390 7,404 2,371
Impact of Disposal of Subsidiaries - (11,929) - -
CLoSING BALANCE 17,435 6,221 7,821 2,554
imputationcreditaccount
Imputation Credits at Start of year 129,200 85,166 119,343 78,679
Plus Income Tax Paid 52,340 56,372 49,899 53,002
Less Distributed and Disposed (11,437) (12,338) (11,437) (12,338)
IMPUTATIoN CREDITS AT END oF YEAR 170,103 129,200 157,805 119,343
4 DIVIDENDS
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
Prior year Final Dividend Paid 23,220 16,220 23,220 16,220
Current year Interim Dividend Paid - 8,830 - 8,830
ToTAL DIVIDENDS PAID 23,220 25,050 23,220 25,050
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5 CURRENT ASSETS
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
Cash 8,165 11,899 6,945 7,479
Fuel Stocks 59,604 49,067 59,604 49,067
Consumable Spares 4,181 3,425 3,999 3,425
Prepayments 10,606 8,480 9,976 8,308
Accounts Receivable 204,355 174,205 174,710 146,084
Inter-company Receivables 17 - - 30,651 13,783
Taxation Receivable 16,970 5,508 11,775 5,356
Other Current Assets 482 478 482 428
Current Portion Finance Lease Receivable 6,7 7,415 6,470 - -
ToTAL CURRENT ASSETS 311,778 259,532 298,142 233,930
The effective interest rate for cash ranges from 2.9 percent to 6.4 percent per annum. Deposits are subject to interest rate review during the current year and the carrying value is equal to fair value.
6 NoN‑CURRENT ASSETS
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
Mining Licence 16,518 16,517 - -
Development Expenditure 4,720 823 - -
Exploration Expenditure 16,181 - - -
Goodwill 8 119,417 136,234 116,258 132,650
unlisted Subsidiaries - - 37,538 37,538
Other - Investments 250 - 250 -
Other - Intangibles 1,954 1,962 1,954 1,962
Non-Current Mining Stores 106 117 - -
Non-Current Kinleith Finance Lease Receivable 5,7 64,595 72,010 - -
ToTAL NoN‑CURRENT ASSETS 223,741 227,663 156,000 172,150
7 INVESTMENT IN SUBSIDIARIES
Significant subsidiaries comprise:
nameofentity Principalactivities interestheldbygroup
Genesis Power Investments Limited Holding Company for Kupe Holdings Limited 100.00%
Energy Online Limited Energy Retailer 100.00%
Kupe Holdings Limited Holding Company for Kupe Joint Venture Investment 100.00%
Kinleith Co-generation Limited Special-purpose Finance Company 100.00%
GP No. 2 Limited Holding Company for Kupe Joint Venture Investment 100.00%
Cardiff No. 1 Limited Holding Company for Cardiff Joint Venture Investment 100.00%
Cardiff No. 2 Limited Holding Company for Cardiff Joint Venture Investment 100.00%
All subsidiary entities have balance dates of 30 June.
noteStothefinancialStatementSfor the year ended 30 June 2005
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JointventureS
KuPeJointventureThe Group has a 31 percent interest in the Kupe Joint Venture, formed for the purpose of the exploration and, in the event of a discovery, development of the Kupe South Toru (PML38146) gas and condensate field. under the arrangement, costs are shared in proportion to the respective interest held. Included in the Group’s results is an operating profit of $66,255 (2004: $99,596) for the year, which reflects continuing maintenance activity by the venture. Development of the Kupe Field commenced in May 2004. Genesis Energy has contracts for 96 percent of Kupe gas.
cardiffJointventureOn 2 July 2004 the Group acquired a 40 percent equity interest in respect of the deep petroleum rights in Petroleum Exploration Permit 38738. Genesis Energy was granted the right to purchase 100 percent of the deep gas reserves in return for up to $15.0 million to be spent on the drilling and testing of the Cardiff-2 well. The remaining capital commitment at 30 June 2005 amounted to $1.9 million.
Included in the Group’s results is an operating loss of $4,065 (2004: $Nil) for the year, which reflects administration and exploration activitities by the venture. Development of the Cardiff-2 Field is yet to commence. Cardiff Joint Venture has a 31 December balance date.
KinleithfinanceleaSereceivableS
Kinleith Co-generation Limited owns a co-generation plant at Kinleith which it leases under a finance lease arrangement. The gross investment in the lease at 30 June 2005 is $113.4 million (2004: $127.0 million) with unearned income totalling $41.4 million (2004: $49.0 million), resulting in a net investment position of $72.0 million (2004: $78.5 million).
diSPoSalofSubSidiarieS
On 5 February 2004 the Group disposed of its entire interest in Kupe Mining No. 1 Limited, Kupe Mining No. 2 Limited and Kupe Developments Limited. The disposal of the subsidiaries gave rise to a net gain of $7.3 million to the Group for the year ended 30 June 2004.
grouP GROuP 2005 2004 $000 $000
SummaryoftheeffectofdisposalofSubsidiaries
Assets and Liabilities disposed of:
Net Current Assets - 62
Non-Current Assets - 37,251
Deferred Tax - (11,927)
Prior to their disposal these subsidiaries contributed an after-tax loss to the Group for the year ended 30 June 2004 of $159,022.
loSSofcontrolofSubSidiary
On 15 April 2004 the Group ceased to have a controlling interest in Genesis Oncology Trust. The loss of control gave rise to a net loss of $3.6 million to the Group for the year ended 30 June 2004.
grouP GROuP 2005 2004 $000 $000
SummaryoftheeffectoflossofcontrolofSubsidiary
Assets and Liabilities Disposed of:
Net Current Assets - 600
Non-Current Assets - 5,412
Non-Current Liabilities - (406)
Prior to disposal the Trust contributed an after tax surplus to the Group for the year ended 30 June 2004 of $2,053,056.
7 INVESTMENT IN SUBSIDIARIES ‑ CoNT.
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noteStothefinancialStatementSfor the year ended 30 June 2005
8 GooDwILL
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
Goodwill (gross) at Beginning of year 181,508 181,508 177,249 177,249
Accumulated Amortisation at Beginning of year (45,273) (28,456) (44,600) (28,208)
unamortisedbalanceatbeginningofyear 136,235 153,052 132,649 149,041
Current year Amortisation 2 (16,818) (16,818) (16,391) (16,391)
UNAMoRTISED BALANCE AT END oF YEAR 119,417 136,234 116,258 132,650
comprising:
Goodwill (gross) 181,508 181,508 177,249 177,249
Accumulated Amortisation (62,091) (45,274) (60,991) (44,599)
6 119,417 136,234 116,258 132,650
9 PRoPERTY, PLANT AND EQUIPMENT
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
generationPlant(includinglandandbuildings)
Cost 681,078 729,374 681,078 729,374
Valuation 319,867 - 319,867 -
Less: Accumulated Depreciation (13,523) (103,788) (13,523) (103,788)
BooK VALUE 987,422 625,586 987,422 625,586
otherfreeholdlandandimprovements
Cost 22,717 6,225 22,717 6,225
Valuation 9,679 - 9,679 -
Less: Accumulated Depreciation (429) (355) (429) (355)
BooK VALUE 31,967 5,870 31,967 5,870
otherfreeholdbuildings
Cost 978 867 978 867
Less: Accumulated Depreciation (74) (55) (74) (55)
BooK VALUE 904 812 904 812
capitalworkinProgress 283,409 124,269 283,409 124,269
otherPlantandequipment
Cost 65,073 54,318 63,788 53,528
Valuation 1,172 - 1,172 -
Less: Accumulated Depreciation (38,098) (29,870) (37,776) (29,729)
BooK VALUE 28,147 24,448 27,184 23,799
totalProperty,Plantandequipment
Cost 1,053,255 915,053 1,051,970 914,263
Valuation 330,718 - 330,718 -
Less: Accumulated Depreciation (52,124) (134,068) (51,802) (133,927)
ToTAL BooK VALUE 1,331,849 780,985 1,330,886 780,336
LATEST RATEABLE VALUE oF FREEhoLD LAND 5,927 4,831 5,927 4,831
valuationinformation
All existing generation assets were revalued to a fair value of $1,056 million at 30 June 2005, including capital works in progress amounting to $37.2 million. This is a Directors’ valuation based on an independent review of future cash-flows. The independent review was carried out by First NZ Capital. There is no depreciation impact of this revaluation in the 2005 year. 58
10 CURRENT LIABILITIES
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
Accounts Payable 12,547 10,789 8,776 6,266
Accrued Liabilities 164,031 142,058 155,868 135,387
Employee Entitlements 3,085 2,624 3,035 2,573
Inter-company Payables 17 - - 17,915 14,397
Other Current Liabilities 13,989 11,400 13,748 10,934
Loans Repayable Within One year 11 29,227 69,787 24,400 65,245
Electricity Hedge Contracts Due Within One year 3,034 2,249 3,034 2,249
Provisions Due Within One year 12 14,146 200 14,146 200
ToTAL CURRENT LIABILITIES 240,059 239,107 240,922 237,251
11 NoN‑CURRENT LIABILITIES
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
General-purpose Loans 234,400 65,245 234,400 65,245
Special-purpose Loans 18,238 22,781 - -
252,638 88,026 234,400 65,245
Repayable Within One year 10 (29,227) (69,787) (24,400) (65,245)
totaltermliabilities 223,411 18,239 210,000 -
Provision for Rehabilitation 12 10,077 9,822 10,077 9,822
Electricity Hedge Contracts (55) 2,978 (55) 2,978
Provision for Mitigations 12 6,885 - 6,885 -
ToTAL NoN‑CURRENT LIABILITIES 240,318 31,039 226,907 12,800
PrincipalrepaymentSchedule
Between One and Two years 5,140 4,827 - -
Between Two and Five years 218,271 13,412 210,000 -
ToTAL REPAYMENTS 223,411 18,239 210,000 -
intereStrateS
Loans, one of which was acquired from the Electricity Corporation of New Zealand (ECNZ), have interest rates ranging from 6.6 percent to 9.7 percent per annum.
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
repricinganalysis
loanbalancesSubjecttorepricing
Within One year 64,226 19,787 59,400 15,245
Between One and Two years 20,140 19,827 15,000 15,000
Between Two and Five years 148,272 48,412 140,000 35,000
Later Than Five years 20,000 - 20,000 -
252,638 88,026 234,400 65,245
The repricing analysis incorporates relevant derivative contract maturities. There is a commitment for interest rate swaps of $60 million commencing within one year of balance date, and payable within two to five years.
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11 NoN‑CURRENT LIABILITIES ‑ CoNT.
Security
The general-purpose loans are secured by a negative pledge deed over Genesis Power Limited (Parent).The special-purpose loan is secured by a fixed charge over the assets of Kinleith Co-generation Limited.
committedfundingfacilitieS
At 30 June 2005, the Company had a maximum committed funding facility of $675 million from a syndicate of major New Zealand trading banks. 12 PRoVISIoNS
grouP GROuP Parent PARENT 2005 2004 2005 2004 noteS $000 $000 $000 $000
Provisionforrehabilitation
Balance at Beginning of year 9,822 9,832 9,822 9,832
Current year Provision 15,375 2,171 15,375 2,171
Rehabilitation Expenses Incurred (3,270) (1,981) (3,270) (1,981)
21,927 10,022 21,927 10,022
Current Portion Transfer to Current Liabilities 10 (11,850) (200) (11,850) (200)
BALANCE AT END oF YEAR 10,077 9,822 10,077 9,822
Provisionformitigations
Balance at Beginning of year - - - -
Current year Provision 9,798 - 9,798 -
Mitigation Expenses Incurred (617) - (617) -
9,181 - 9,181 -
Current Portion Transfer to Current Liabilities 10 (2,296) - (2,296) -
BALANCE AT END oF YEAR 6,885 - 6,885 -
ProviSionforrehabilitation
A provision of $21.9 million (2004: $10.0 million) has been recognised for site rehabilitation. These costs are expected to be incurred over five years. The provision has been estimated using existing technology, at current prices and discounted to reflect net present value given the appropriate risks.
ProviSionformitigationS
A provision of $9.2 million (2004: $Nil) has been recognised for mitigation costs. These costs are expected to be incurred over the period of the resource consent. The provision has been estimated based upon contracted expenditures, discounted to reflect net present value.
13 EQUITY
As at 30 June 2005 there were 540,565,001 (2004: 540,565,001) shares issued and fully paid to the extent of $1.00 each. All shares rank equally with one vote attached to each share.The Company is a state-owned enterprise and all shares are owned by the Crown, as represented by the shareholding Ministers, Hon. Dr Michael Cullen, Minister of Finance and Hon. Paul Swain, Minister of State-Owned Enterprises.
noteStothefinancialStatementSfor the year ended 30 June 2005
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15 FINANCIAL INSTRUMENTS
othercommitmentS
fuelcommitmentSThe Company has contracted to purchase coal and gas supplies for future thermal generation and retail gas sales requirements. The contracts are for varying periods, annual quantities and prices. The coal contracts include a supply of approximately 252.49PJ of coal with one major contract extending out to 30 June 2014. In addition, at 30 June 2005 the coal stockpile was approximately 17.16PJ. The firm gas contracts amount to approximately 353.17PJ with two contracts extending out 15 years.
coaltranSPortationcommitmentThe Company has contracted an independent third party to provide coal transportation facilities from the Port of Tauranga to the Rotowaro rail receipt facility for a fixed annual charge of $1.0 million per annum, plus a per-tonne freight cost for coal transported. The contract extends out 15 years with a right of renewal for a further three five year terms.coalreceiPtfacilitycommitmentThe Company has committed to a fixed annual service fee charged over the life of the contract for coal receipt facilities. The contract extends to 30 June 2011.
The Group is subject to a number of financial risks which arise as a result of its operational activities. To manage and limit the effects of those financial risks, the Board of Directors has approved policy guidelines and authorised the use of various financial instruments. The policies approved, and financial instruments being utilised at balance date, are outlined below.
revenueriSKAs part of its energy supply contracts, the Group has entered into electricity price hedges with third parties. These hedges expire at various dates up to August 2009. under these contracts, the Group enters into forward rate electricity contracts. Any difference on maturity between the fixed hedge price and the spot price is settled between the parties.
unrecogniSedbalanceSAs at balance date, the aggregate face value of energy contracts amounted to $246.3 million (2004: $299.7 million) with terms up to four years. It is not practical to estimate the fair value of electricity hedge contracts as the secondary market for electricity price hedge products, namely seasonal hedge and monthly hedge, is not sufficiently active. The carrying value reflects the unamortised balance of the historical valuation performed in 1999.
currencyriSKPolicieSTrading in foreign exchange is permitted only to support specified normal business purposes. This includes purchase or sale
of foreign currency for the purpose of fixing the price of goods and services in New Zealand Dollars.All transactions which are required to be settled in a foreign currency will be covered at the time of commitment by either purchase of the appropriate foreign currency, or the purchase of forward cover. Trading in foreign currencies and related financial instruments for speculative purposes is not permitted by company policy.
unrecogniSedbalanceSThe notional or principal contract amounts of foreign exchange instruments outstanding at balance date is $284.0 million principally denominated in uS Dollars, Japanese yen and Australian Dollars (2004: $124.2 million principally denominated in uS Dollars).The cash settlement requirements of the forward exchange contracts equals the notional amounts shown above.
intereStrateriSKunrecogniSedbalanceSThe notional contract amounts of interest rate hedge instruments outstanding at balance date is $268.2 million (2004: $87.8 million) with terms up to seven years.rePricinganalySiSThe following tables identify the periods in which interest rates are subject to review on interest-bearing financial assets and liabilities, and provide the current weighted average interest rate of each item.
14 CoMMITMENTS
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
capitalcommitments
CoMMITMENTS FoR CAPITAL EXPENDITURE 204,427 26,951 202,483 26,951
operatingleasecommitments
Within One year 5,458 5,549 5,458 5,494
Between One and Two years 5,536 7,516 5,536 7,516
Between Two and Five years 14,878 21,420 14,878 21,420
Later than Five years 46,367 53,214 46,367 53,214
ToTAL oPERATING LEASE CoMMITMENTS 72,239 87,699 72,239 87,644
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noteStothefinancialStatementSfor the year ended 30 June 2005
15 FINANCIAL INSTRUMENTS ‑ (CoNT.)
grouP2005 effective non-intereSt intereSt current 1-2yearS >2yearS bearing total rateS $000 $000 $000 $000 $000
assets
Cash 5.83% 8,165 - - - 8,165
Investments - - - 250 250
Finance Lease Receivable - - - 72,010 72,010
Receivables - - - 204,837 204,837
ToTAL ASSETS 8,165 - - 277,097 285,262
liabilities
Payables and Accruals - - - 196,686 196,686
General Purpose Loans (Floating) 7.14% 24,400 - 210,000 - 234,400
Special Purpose Loan (Fixed) 8.58% 18,238 - - - 18,238
ToTAL LIABILITIES 42,638 - 210,000 196,686 449,324
grouP2004 effective non-intereSt intereSt current 1-2yearS >2yearS bearing total rateS $000 $000 $000 $000 $000
assets
Cash 5.75% 11,899 - - - 11,899
Finance Lease Receivable - - - 78,480 78,480
Receivables - - - 174,683 174,683
ToTAL ASSETS 11,899 - - 253,163 265,062
liabilities
Payables and Accruals - - - 169,120 169,120
General Purpose Loans (Floating) 6.00% 65,245 - - - 65,245
Special Purpose Loan (Fixed) 8.29% 22,781 - - - 22,781
ToTAL LIABILITIES 88,026 - - 169,120 257,146
Parent2005 effective non-intereSt intereSt current 1-2yearS >2yearS bearing total rateS $000 $000 $000 $000 $000
assets
Cash 5.77% 6,945 - - - 6,945
Investments - - - 37,788 37,788
Receivables - - - 205,843 205,843
ToTAL ASSETS 6,945 - - 243,631 250,576
liabilities
Payables and Accruals - - - 202,376 202,376
General Purpose Loans (Floating) 7.14% 24,400 - 210,000 - 234,400
ToTAL LIABILITIES 24,400 - 210,000 202,376 436,776
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16 RELATED PARTIES
creditriSKThe Group incurs credit risk from transactions with trade customers and financial institutions in the normal course of its business.The counterparties used for banking and finance activities are financial institutions with commercially acceptable credit ratings. The Company’s credit policy includes the requirement for an assessment of:• size and nature of the Group’s aggregate credit exposure at any
point of time;• credit risk appropriate to the size and nature of the relevant
transaction. Where the customer or counterparty does not meet the Group’s minimum credit quality, appropriate security is required, for example bond, guarantee or prepayment; and
• credit concentration risk.The Group does not have any significant concentration of credit risk. The maximum exposure to credit risk is represented by the carrying value of each financial asset in the Statement of Financial Position in the current year. In the prior year the maximum exposure to credit risk was represented by the carrying value of each financial asset in
the Statement of Financial Position and additionally by $4.3 million of foreign exchange derivative instruments.
fairvalueSmethodSandaSSumPtionSThe following methods and assumptions were used to estimate the fair value of each class of financial instruments:• cash at bank, bank overdraft, borrowings, term deposits,
receivables and trade creditors - the carrying value of these items is equivalent to their fair value.
• foreign currency forward exchange contracts based on valuations provided by the Group’s bankers, estimated using the mark to market methodology.
The fair value of foreign exchange instruments outstanding at balance date is $15.2 million below the contract amount principally denominated in uS Dollars, Japanese yen and Australian Dollars (2004: $4.3 million principally denominated in uS Dollars).The fair value of interest derivative instruments outstanding at balance date is $(2.0) million (2004: $(1.0) million).
The ultimate shareholder of the Company is the Crown. The Group undertakes many transactions with state-owned enterprises and government departments, carried out on an arm’s-length basis. Because it is considered that these do not fall within the intended scope of related-party disclosures, they have not been treated as such in these financial statements.All members of the Group are considered to be related parties of Genesis Power Limited. This includes the subsidiaries and the joint ventures identified in Note 7.
related-PartytranSactionSandbalanceSKeymanagementPerSonnelandmemberSoftheboardofdirectorSEach company within the Group maintains an Interests Register in which members of the Board record all entities and transactions in which they have, or may have, a potential or actual self-interest. During the year the Group and Parent undertook transactions with directors as detailed below.The Group paid contracting fees of $3,807,916 (2004: $3,402,199) to Fulton Hogan Limited, of which Hanlin Johnstone is a director.
These payments were made on standard terms and the amount outstanding at year end was $538,765. Mr Johnstone retired at the end of his term in office as a director of Genesis Power Limted on 31 December 2004.
otherrelatedPartieSGenesis Power Limited acquired certain assets, personnel and liabilities on 1 April 1999 from ECNZ, another state-owned enterprise. In addition, there is a continuing relationship with ECNZ residual. Genesis Power Limited also had an interest in hedge contracts entered into by ECNZ, by way of agreement dated 22 December 1998 between ECNZ, Genesis Power Limited, Mighty River Power Limited and Meridian Energy Limited. These hedges expired during the prior period.During the year, the Parent lent an additional net $13.4 million (2004: $(7.4) million) to subsidiaries. Interest received during the year was $0.4 million (2004: $0.2 million).No related party debts have been written off or forgiven during the year.
15 FINANCIAL INSTRUMENTS ‑ (CoNT.)
Parent2004 effective non-intereSt intereSt current 1-2yearS >2yearS bearing total rateS $000 $000 $000 $000 $000
assets
Cash 5.75% 7,479 - - - 7,479
Receivables - - - 160,295 160,295
ToTAL ASSETS 7,479 - - 160,295 167,774
liabilities
Payables and Accruals - - - 171,806 171,806
General Purpose Loans (Floating) 65,245 - - - 65,245
ToTAL LIABILITIES 65,245 - - 171,806 237,051
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17 INTER‑CoMPANY BALANCES ‑ (PARENT CoMPANY oNLY)
Parent PARENT 2005 2004 noteS $000 $000
inter-companyreceivables
Energy Online Limited - 5,204
GP No. 2 Limited 8,684 8,579
Kupe Holdings Limited 4,384 -
Cardiff Holdings No. 1 Limited 11,429 -
Cardiff Holdings No. 2 Limited 6,154 -
5 30,651 13,783
inter-companyPayables
Kinleith Co-generation Limited 12,433 9,796
Genesis Power Investments Limited 4,309 4,601
Energy Online Limited 1,173 -
10 17,915 14,397
18 RECoNCILIATIoN oF NET SURPLUS To NET CASh FRoM oPERATING ACTIVITIES
grouP GROuP Parent PARENT 2005 2004 2005 2004 $000 $000 $000 $000
NET SURPLUS FoR ThE YEAR 70,245 80,134 68,069 73,754
add/(less)non-cashitems
Depreciation 37,386 30,941 37,200 30,836
Increase in Deferred Tax Provision 11,214 2,534 5,267 2,459
Increase in Mitigation Provision 9,181 - 9,181 -
Increase in Rehabilitation Provision 11,905 190 11,905 190
Amortisation of Goodwill 16,818 16,818 16,391 16,391
Net Disposal of Subsidiaries - (1,711) - -
Net Gain on Sale of Assets (5) (596) (14) (604)
Capital Expenditure Reclassified as Investing Activities (16,280) - (16,280) -
Other Non-Cash Items 3,396 (925) (298) (2,370)
add/(less)movementsinworkingcapitalitems
Decrease/(increase) in Accounts Receivable (30,152) 1,662 (28,626) 25,992
Decrease/(increase) in Prepayments (2,126) 3,686 (1,668) 3,645
Decrease/(increase) in Inventories (11,293) (27,519) (11,111) (27,519)
Decrease/(increase) in Other Current Assets (4) 19 (54) 58
Increase/(decrease in Accounts Payable 27,567 10,445 27,051 4,338
Increase/(decrease) in Taxation Payable (11,462) (8,725) (6,419) (11,246)
Increase/(decrease) in Other Liabilities (3,033) 2,061 (3,033) 9,046
add/(less)itemsclassifiedasinvestingactivities
Disposal of Subsidiaries - 20,785 - -
Advance to Subsidiaries - - - (7,378)
NET CASh FRoM oPERATING ACTIVITIES 113,357 129,799 107,561 117,592
noteStothefinancialStatementSfor the year ended 30 June 2005
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19 CoNTINGENT ASSETS AND LIABILITIES
The following matters have not been reflected in the financial statements because of the uncertainty associated with their outcomes.
landclaimS
Genesis Power Limited acquired interests in land and leases from ECNZ on 1 April 1999. These interests in land and leases may be subject to claims to the Waitangi Tribunal and may be resumed by the Crown. Genesis Power Limited would expect to negotiate with the new Maori owners for occupancy and usage rights of any sites resumed by the Crown. Certain claims have been brought to or are pending against ECNZ and/or the Crown under the Treaty of Waitangi Act 1975. Some of these claims may affect land and leases purchased by the Company or its subsidiaries from ECNZ. In the event that land is resumed by the Crown, there is provision for compensation to Genesis Power Limited.
lawSuitSandotherclaimS
carterholtharveyCarter Holt Harvey commenced proceedings in May 2001 in the High Court against Genesis Power Limited as first defendant and Rolls Royce as second defendant in connection with a co-generation agreement between ECNZ and Carter Holt Harvey signed in 1995. Carter Holt Harvey alleges failure to deliver in accordance with the agreement, and also alleges defects in the Kinleith Co-generation plant and seeks damages.effectonoPerationSThe Board of Directors cannot reasonably estimate the adverse effect (if any) on Genesis Power Limited if any of the foregoing claims are ultimately resolved against Genesis Power Limited’s interest, or any contingent or currently unknown cost or liabilities crystallise. There can be no assurances that such litigation or costs will not have a material adverse effect on Genesis Power Limited’s business, financial condition or results of operations.
20 RESoURCE CoNSENTS
The Group requires land, air and water consents, obtained under the Resource Management Act 1991, to enable it to operate its thermal, hydro and wind-powered power stations. The duration of the consents varies up to a maximum of 35 years. The current resource consents within which the power stations operate are due for renewal at varying times. The renewal dates are fixed by the expiry date of the consent. Most consents are subject to periodic reviews.
21 SEGMENTAL INFoRMATIoN
The Group operates predominantly in one industry - the generation, trading and retailing of electricity and gas. Its operations are carried out in New Zealand and are, therefore, within one geographical segment for reporting purposes.
22 SIGNIFICANT EVENTS AFTER BALANCE DATE
No significant events took place after balance date likely to impact on these results requiring separate disclosure.
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rePortoftheauditor-generalfor the year ended 30 June 2005
tothereaderSofgeneSiSPowerlimitedandgrouP’SfinancialStatementSThe Auditor-General is the auditor of Genesis Power Limited (the Company) and Group. The Auditor-General has appointed me, Graham Naylor, using the staff and resources of Deloitte, to carry out the audit of the financial statements of the Company and Group, on his behalf, for the year ended 30 June 2005.
unqualifiedoPinionIn our opinion: • The financial statements of the Company and Group
on pages 49 to 65: - comply with generally accepted accounting practice in
New Zealand; and - give a true and fair view of: - the Company and Group’s financial position as at 30 June
2005; and - the results of operations and cash flows for the year ended
on that date. • Based on our examination the Company and Group kept proper
accounting records.
The audit was completed on 30 August 2005, and is the date at which our opinion is expressed.
The basis of our opinion is explained below. In addition, we outline the responsibilities of the Board of Directors and the Auditor, and explain our independence.
baSiSofoPinionWe carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards.
We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements did not have material misstatements, whether caused by fraud or error.
Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion.
The audit involved performing procedures to test the information presented in the financial statements. We assessed the results of those procedures in forming our opinion. Audit procedures generally include:
• determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;
• verifying samples of transactions and account balances;• performing analyses to identify anomalies in the reported data;• reviewing significant estimates and judgements made by the
Board of Directors;
• confirming year-end balances;• determining whether accounting policies are appropriate and
consistently applied; and• determining whether all financial statement disclosures are
adequate.
We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements.
We evaluated the overall adequacy of the presentation of information in the financial statements. We obtained all the information and explanations we required to support our opinion above.
reSPonSibilitieSoftheboardofdirectorSandtheauditorThe Board of Directors is responsible for preparing financial statements in accordance with generally accepted accounting practice in New Zealand. Those financial statements must give a true and fair view of the financial position of the Company and Group as at 30 June 2005. They must also give a true and fair view of the results of operations and cash flows for the year ended on that date. The Board of Directors responsibilities arise from the State-Owned Enterprises Act 1986 and the Financial Reporting Act 1993.
We are responsible for expressing an independent opinion on the financial statements and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001 and section 19(1) of the State-Owned Enterprises Act 1986.
indePendenceWhen carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand.
Other than the audit, we have no relationship with or interests in the Company or any of its subsidiaries.
grahamnaylordeloitteOn behalf of the Auditor-GeneralHamilton, New Zealand
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corPorategovernanceStatement for the year ended 30 June 2005
ShareholderSGenesis Energy is a state-owned enterprise pursuant to the State-Owned Enterprises Act 1986 and is wholly owned by Her Majesty the Queen in Right of New Zealand (Crown). The Crown’s shareholding is held by the Shareholding Ministers who as at 30 June 2005 were:
hoN. DR MIChAEL CULLEN Minister of FinancehoN. PAUL SwAIN Minister for State-Owned Enterprises
The Shareholding Ministers appoint the Board of Directors. The Board provides shareholders with a Statement of Corporate Intent (SCI) on an annual basis outlining goals, objectives and business plans in respect of the relevant financial year and each of the immediately following two financial years.
roleoftheboardofdirectorSThe Board is responsible for the proper direction and control of the activities of Genesis Energy and its subsidiaries. Generally, the principal functions of the Board are to:
• confirm corporate objectives, establish policy and approve major strategies;
• ensure business risks are appropriately identified and controlled;• oversee processes for financial reporting and compliance and
ensure the integrity of the management information system;• select and review the performance of the Chief Executive and
review succession planning; and• appoint directors to subsidiary companies.
While the Board acknowledges that it is responsible for the overall control framework of Genesis Energy, it recognises that no cost-effective internal control system will preclude all errors and irregularities. The system is based on written procedures, policies and guidelines, organisational structures that provide an appropriate
division of responsibility, a programme of internal audit, and the careful selection and training of qualified personnel.The Board has delegated the day-to-day management of the Company to the Chief Executive. In discharging its duties the Board requires management to submit annually for its consideration a business plan embracing the Company’s resource requirements. The Board also requires an annual budget based on the adopted business plan to be submitted for approval .The Board monitors actual financial results compared to budget and forecasts on a monthly basis, and on a quarterly basis it reviews the Company’s performance compared to its business plan objectives.The Board recognises the particular importance of and the need to comply with legislation controlling the environment and management of natural resources and safety and health. For that reason, it monitors the Company’s compliance with the statutes concerned through consideration of regular reports from management.
boardmemberShiP The Board comprises eight non-executive directors. All appointments to the Board are made by the Shareholding Ministers in accordance with section 36 (1)(a)(i) of the Companies Act 1993 and the Company’s constitution. The Company’s constitution requires that directors be appointed to the Board for a fixed term not exceeding three years. Shareholding Ministers may choose to renew an appointment for a further fixed term of up to three years and three months.The Board includes some of the country’s most experienced business professionals and advisers. Directors’ qualifications are set out as follows:
The following is an overview of Genesis Energy’s main corporate governance practices. Genesis Energy has a strong focus on corporate governance and aims to comply with internationally recommended best corporate governance practices as they apply in New Zealand.
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director,qualificationSandSPecialreSPonSibilitieS
BRIAN CoRBAN QSoMA (Hons), LLB, FIOD, FNZIM
APPOINTED: 21 DECEMBER 1998
• Deputy Chair of the Board of Directors from 15 February 1999• Acting Chair of the Board from 15 April to 10 May 1999• Chair of the Board of Directors from 11 May 1999• Member of Audit Committee • Member of Remuneration Committee
KEITh SMITh BCom, FCA
APPOINTED: 16 DECEMBER 1998
• Chair of the Board of Directors from 16 December 1998 to 15 April 1999
• Deputy Chair of the Board of Directors from 6 October 1999• Chair of Audit Committee• Chair of Remuneration Committee from February 2003
to August 2003• Member of Remuneration Committee
GERALDINE BAUMANN LLB
APPOINTED: 28 APRIL 2002
• Member of Audit Committee from March 2003
DENIS MCNAMARALLB (Hons)
APPOINTED: 29 APRIL 2002
• Member of Remuneration Committee from March 2003 • Chair of Remuneration Committee from March 2005
KENNETh MIChAEL wILLIAMS MA (Hons)
APPOINTED: 27 NOVEMBER 2002
• Member of Remuneration Committee from March 2005
IAN KUSABS MA (Hons) (Biological Sciences)
APPOINTED: 3 JuNE 2004
ANNABEL CoTToN BMS (Accounting & Finance), ACA, CSAP
APPOINTED: 8 JuNE 2004
• Member of Audit Committee from August 2004
DR NICoLA CRAUFoRD BSc (Hons), PhD, M Inst D
APPOINTED: 1 JANuARy 2005
The directors support the principles set out in the Code of Proper Practice for Directors issued by the Institute of Directors in New Zealand. While recognising that the Code expresses principles and does not purport to determine the detailed course of conduct by directors on any particular matter, the directors support the need for the highest standards of governance, behaviour and accountability.
comPoSitionoftheboardDuring the year Hanlin Johnstone’s term as a director ended on 31 December 2004. He had been a director of the company since 14 January 1999. Dr Nicola Crauford
was appointed as a director of the Company with effect from 1 January 2005.
boardcommitteeS The Board may constitute standing committees that focus on specific areas of the Board’s responsibility. The Board also reserves the right to constitute temporary non-standing committees to consider agreed business or projects of the Company. The current standing committees comprise the Audit Committee and the Remuneration Committee.
auditcommittee The Audit Committee is scheduled to meet no less than four times a year, with additional meetings being convened when required.The role of the Audit Committee is to:
• Assist the Board in the proper and efficient discharge of its responsibilities relating to financial reporting; that is, in producing accurate financial statements in compliance with the law and accounting standards;
• Oversee, review and enhance the Company’s external financial reporting procedures; and
• Monitor and enhance the Company’s internal financial systems and controls.
remunerationcommittee The Remuneration Committee is scheduled to meet no less than twice a year, with additional meetings being convened when required. The role of the Remuneration Committee is to oversee, review and monitor the remuneration of the Chief Executive and to act in an advisory capacity to the Chief Executive, as requested by the Chief Executive in respect of terms and conditions of employment, including remuneration for senior executives.
riSKmanagement Genesis Energy has developed a comprehensive, enterprise-wide risk management framework. The Company’s management actively participate in the identification, assessment, and monitoring of new and existing risks. Particular attention is given to the market risks that could impact on Genesis Energy. All trading activities are consistent with the policies and procedures stipulated in the Company’s Electricity Trading Risk Policy. Management undertake regular reporting to appraise the Board of the Company’s risks and the treatment of those risks.
internalaudit Genesis Energy has established an outsourced internal audit function that is responsible for monitoring the Company’s internal control systems and the integrity of the financial information reported to the Board. Internal audit operates independently from management and reports its findings directly to the Audit Committee. Internal audit liaises closely with the external auditors, who review the systems of internal control to the extent necessary to support their audit opinion. Both the internal auditors and the external auditors have unrestricted access to the Audit Committee and to the Board.
corPorategovernanceStatement-(cont.) for the year ended 30 June 2005
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dividend No dividend was declared in respect of the financial year ending 30 June 2005.
donationS In accordance with section 211(1)(h) of the Companies Act 1993, the company records that the total amount of donations made by the Company during the period was $132,166.48.
auditorS In accordance with section 19 of the State-Owned Enterprises Act 1986, the Office of the Controller and Auditor-General (“OAG”) is required to express an opinion on these financial statements. The OAG has appointed Graham Naylor of Deloitte to undertake the audit on its behalf. The report of the Auditor-General is set out on page 66 of this Report.In accordance with section 211(1)(j) of the Companies Act 1993, audit fees of $195,000 were paid or payable to Deloitte by Genesis Energy.
remunerationofdirectorS Shareholding Ministers advise the Board of the total amount of fees available to directors of Genesis Energy (including those of subsidiary companies). In accordance with section 211(1)(f) of the Companies Act 1993, the following sets out the total remuneration for the period from 1 July 2004 to 30 June 2005 (including remuneration for committee membership) and the value of other benefits received or receivable from Genesis Energy by them.
name total
BRIAN CoRBAN 64,142.98
KEITh SMITh 45,648.00
hANLIN JohNSToNE (retired 31.12.04) 16,356.85
GERALDINE BAUMANN 33,000.00
DENIS MCNAMARA 31,533.48
KENNETh MIChAEL wILLIAMS 28,785.72
ANNABEL CoTToN 33,000.00
IAN KUSABS 27,999.96
DR NICoLA CRAUFoRD (appointed 1.01.05) 13,999.98
During the year in review, Hanlin Johnstone ceased to be a director. In the year in review, the total remuneration paid to him was $16,356.85.Genesis Energy has nine subsidiary companies. The directors of eight of those companies are Brian Corban, Keith Smith and Murray Jackson. The directors of Energy Online Limited are Murray Jackson, Vince Hawksworth and Mark Anderson. None of the directors received any specific remuneration or other benefits during the period in relation to his duties as a director of these companies.
intereStSregiSterentrieS In accordance with section 211(1)(e) of the Companies Act 1993, particulars of the entries in the Interests Register and the Interests Registers of its subsidiary companies made during the period are as set out.
diScloSureofintereSt The general disclosures of interest made by the directors of Genesis Energy and its subsidiaries pursuant to section 140(2) of the Companies Act 1993 are shown. There were no declarations of interest made pursuant to section 140(1) of the Companies Act 1993 entered in the Interests Registers of Genesis Energy or its subsidiaries. No director of Genesis Energy is a shareholder of Genesis Energy or any of its subsidiaries.
Statutoryinformationfor the year ended 30 June 2005
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director PoSition organiSationbriancorban CHAIRMAN AND SHAREHOLDER Corban Consultants Limited
Lindsay Corban Associates Limited
Ngatarawa Wines Limited
Coronis Investments Limited
CHAIRMAN Radio New Zealand Limited
Melanesian Mission Trust Board
Corbans Viticulture Limited
West Auckland Trust Services Limited
Butts Bainbridge & Weir, Accountants
Languages International Limited
MEMBER Waitangi Tribunal
TRuSTEE Royal New Zealand Navy Museum
West Auckland Hospice Foundation Trust
Corban Estate Arts Centre
Prince of Wales Trust
ADVISORy COuNCIL MEMBER Church of Melanesia
CONSuLTANT Corban Revell Lawyers
KeithSmith PARTNER BDO Spicers
CHAIRMAN The Warehouse Group Limited
Healthcare Holdings Limited and subsidiaries/associates
Electronic Navigation Limited
Tourism Holdings Limited
Skellmax Industries Limited
Wrightson Limited
Lowe Corporation Limited and subsidiaries/associates
DIRECTOR Enterprise Motor Group Limited (and subsidiaries)
Macquarie Goodman (NZ) Ltd
Wickliffe Limited
geraldinebaumann MEMBER Energy Efficiency and Conservation Authority
TRuSTEE Royal New Zealand Ballet Trust
Meridian Energy Katherine Mansfield Fellowship
SENIOR LEGAL ADVISER New Zealand Historic Places Trust
denismcnamara PARTNER Simpson Grierson
HONORARy CONSuL of Mexico
DEPuTy CHAIRMAN AND BOARD MEMBER New Zealand Committee of the Pacific Economic Co-operation Council
MEMBER Advisory Board of the New Zealand Centre for Latin American Studies at Auckland university
COuNCIL MEMBER Inter Pacific Bar Association
DIRECTOR Companies associated with the partnership of Simpson Grierson
Kennethmichaelwilliams PRESIDENT New Zealand Labour Party
CHAIRMAN Transport Board Reference Group
DIRECTOR Institute of Geological and Nuclear Sciences
Auckland Regional Transport Authority
New Zealand Railways Corporation
The New Zealand Picture Company
AuTHORITy MEMBER Transit New Zealand Limited
TRuSTEE Enterprise Waitakere
Statutoryinformation–(cont.) for the year ended 30 June 2005
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director PoSition organiSationianKusabs CHAIRMAN Lake Taupo Sustainable Management Group
MEMBER Lake Taupo Management Board
CO-OPTED MEMBER Lake Rotokakahi Trust Board, Te Arawa
Tuwharetoa Maori Trust Board until December 2005
ADVISER Ngati Tuwharetoa
FISHERIES ASSOCIATE Wildland Consultants
Mitchell and Associates
annabelcotton DIRECTOR Merlin Consulting Limited
Equity Products Limited
Kingfish Limited
Kingfish Nursery Limited
Kingfish Holdings Limited
MEMBER Securities Commission
drnicolacrauford DIRECTOR AND SHAREHOLDER Crauford Robertson Consulting Limited
Martin Crauford Limited
DIRECTOR Centre for Advanced Engineering
Global Director Development Circle Limited
TRuSTEE AND MEMBER National Council uNICEF New Zealand
remunerationofemPloyeeS In accordance with section 211(1)(g) of the Companies Act 1993, the number of employees, or former employees of Genesis Energy and/or members of the Company who, during the period, received remuneration, and other benefits, the value of which exceeded $100,000 is as follows:
bandS numberofemPloyeeS bandS numberofemPloyeeS
$720,001 - $730,000 1 $160,001 - $170,000 2
$370,001 - $380,000 2 $150,001 - $160,000 2
$330,001 - $340,000 1 $140,001 - $150,000 5
$280,001 - $290,000 2 $130,001 - $140,000 10
$260,001 - $270,000 1 $120,001 - $130,000 5
$230,001 - $240,000 1 $110,001 - $120,000 16
$190,001 - $200,000 1 $100,001 - $110,000 29
$180,001 - $190,000 1
(There are two former employees included.)
inSuranceIn accordance with section 162 of the Companies Act 1993, and the constitution of the Company, the Company has insured and indemnified all directors named in this report and current and former executive officers of the Company and its subsidiaries against all liabilities to persons (other than the Company or a related body corporate) which arise out of the performance of their normal duties as directors or executive officers unless the liability relates to conduct involving a lack of good faith.
uSeofcomPanyinformation No notices have been received by the Board under section 145 of the Companies Act 1993 with regard to the use of company information received by the directors in their capacities as directors.
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StatementofcorPorateintent(SummariSed)For the year ending 30 June 2005
The Statement of Corporate Intent for the period 1 July 2004 to 30 June 2007 (SCI) was submitted by the Board of Directors of Genesis Power Limited (“Genesis Energy”) in accordance with section 14 of the State-Owned Enterprises Act 1986 (Act). The SCI, as required by the Act, specifies information in respect of the financial year in question and each of the two immediately following financial years.
natureandScoPeofactivitieSGenesis Energy’s business is primarily the generation, trading and retailing of energy in New Zealand. Consistent with these principal activities, the Company pursues activities designed to ensure the efficient utilisation of its existing capital assets, energy sources and human resources.
ScireSultS
FINANCIAL PERFoRMANCE TARGETS:
Scitarget Sciactual
Ratio of net profit after tax to average shareholders’ funds 6.6% 5.9%*
Earnings before interest and tax to average total assets 8.4% 7.7%*
Dividend Payout Nil Nil 2005 Interim Dividend
($23.2 million paid being
2004 Final Dividend)
Ratio of consolidated shareholders’ funds to total assets 67% 73.3%
*Actual was below target due to the revaluation of the generation assets.
NoN‑FINANCIAL PERFoRMANCE TARGETS:
Power station availability
Hydro 96% 94.46% (Note 1)
Thermal 92% 83.53% (Note 2)
Trainees as percent of Workforce 10% 13.1% (Note 3)
Retail Customer Satisfaction 85% 83% (Note 4)
Number of significant RMA non-compliances 0 3 (Note 5)
ratioofconSolidatedShareholderS’fundS
tototalaSSetS
conSolidatedShareholderS’fundS is comprised of the paid-up equity capital of the Company together with any revaluation reserves and retained earnings of the Company. Retained earnings is comprised of the net after-tax profits of the business less dividends paid, computed in accordance with generally accepted accounting practice in New Zealand (GAAP).
totalaSSetSis the aggregate net book value of the assets of the Company computed in accordance with GAAP. In particular, Total Assets includes the results of the revaluation process required by the shareholders upon the establishment of Genesis Energy in 1999.note1:Hydro was slightly under target for the year due to unscheduled maintenance.note2:Thermal was under target for the year due to various changes to planned outages and unscheduled maintenance that occurred.note3:Trainees as a percentage of the workforce is above target due to the introduction of the National Apprenticeship Programme and the ongoing trainee and graduates programmes.note4:Based on a survey completed in July 2004: “How do you rate the performance of your energy supplier.” Percentage of customers rating Genesis Energy good, very good or excellent.
note5:Two breaches of the river heating consent at Huntly were recorded in February 2005. One RMA breach also occurred at Huntly as a result of a small diesel spillage by a contractor. No further enforcement action has resulted from any of these breaches.
dividendPolicyIn recommending dividends payable to Shareholding Ministers, Genesis Energy will comply with the solvency levels specified in the Companies Act 1993 and will follow the procedures generally adopted by directors of publicly listed companies.under ordinary business circumstances the dividend to be declared will be determined by reference to:• Genesis Energy working capital requirements;• Genesis Energy medium-term fixed asset expenditure programme;• Genesis Energy investment in new business opportunities; and• Genesis Energy risk profile, taking into account the sustainable
financial structure for the business and considering predictions of short and medium term economic and market conditions.
Given Genesis Energy’s financial commitments to its investment in Huntly e3p, the company’s intention is not to pay a dividend in respect of the financial years ending 30 June 2005 and 30 June 2006. This dividend policy is a key component of Genesis Energy’s decision to proceed with its investment in Huntly e3p. Dividend payments are forecast to resume thereafter at 40 percent of Net Profit After Tax.
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KarenKingPERSONAL ASSISTANT
vincehawksworthGENERAL MANAGERRETAIL
brucecoleGENERAL MANAGERENGINEERING
PeggymolyneuxGENERAL MANAGERCORPORATE SERVICES
maureenShaddickCOMPANy SECRETARy AND GENERAL COuNSEL
malcolmalexanderGENERAL MANAGERCORPORATE AFFAIRS
BOARD OF DIRECTORS
murrayJacksonCHIEF ExECuTIVE
deancarrollGENERAL MANAGERGENERATION AND TRADING
markandersonGENERAL MANAGERFINANCE
GENESIS ENERGy MANAGEMENT STRuCTuRE
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BoARD oF DIRECToRS 2005
BOARD OF DIRECTORS
briancorban QSo ‑ MA (hons), LLB, FIoD, FNZIM – Brian Corban is a professional company director, lawyer and business and community
leader. He has experience in successfully leading companies through restructuring and deregulatory changes in the television, telecommunications,
transport and electricity sectors. He is currently a member of the Waitangi Tribunal, Chairman of the Melanesian Mission Trust Board, Chairman
of Ngatarawa Wines, chairman of a number of private companies and a trustee of various community trusts. In 2000, Brian Corban was appointed
a Fellow of the Institute of Directors in New Zealand and in 2001 Brian was appointed a Fellow of the New Zealand Institute of Management.
KeithSmithBCom, FCA – Keith Smith is a partner of the Auckland firm BDO Spicers. He is a past president of the Institute of Chartered
Accountants, and is Chairman of The Warehouse Group Limited, Tourism Holdings Limited, Skellmax Industries Limited, Healthcare Holdings
Limited, Wickliffe Limited, Wrightson Limited and Lowe Corporation Limited, and a director of a number of private companies. nicolacrauford
BE (Civil) – Dr Nicola Crauford is the Chief Executive of the Institute of Directors. She is a director of the Centre of Advanced Engineering, the
Global Director Development Circle, a trustee and member of the National Council for uNICEF New Zealand, and a director of a number of
private companies. She has over 10 years experience in the electricity and gas sectors in New Zealand and holds a Doctorate in fluid mechanics.
geraldinebaumann LLB – Geraldine Baumann is a member of the Energy Efficiency and Conservation Authority, a trustee of the Royal
New Zealand Ballet Trust and Meridian Energy Katherine Mansfield Fellowship and senior legal adviser to the New Zealand Historic Places Trust.
BRIAN CoRBAN KEITh SMITh
NICoLA CRAUFoRD GERALDINE BAUMANN
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deniSmcnamaraLLB (hons) – Denis McNamara is a senior partner in the law firm Simpson Grierson, the Honorary Consul of Mexico and a
board member and Deputy Chairman of the New Zealand Committee of the Pacific Economic Co-operation Council. He is also a member on the
Advisory Board of the New Zealand Centre for Latin American Studies at Auckland university and is a council member on the Inter Pacific Bar
Association.miKewilliamSMA (hons) – Mike Williams is the President of the New Zealand Labour Party, a Director of the Institute of Geological
and Nuclear Sciences, Auckland Regional Transport Authority, New Zealand Railways Corporation and the New Zealand Picture Company and is an
Authority member of Transit New Zealand.annabelcottonBMS (Accounting & Finance), ACA, CSAP – Through her consultancy firm Merlin
Consulting Limited, Annabel Cotton advises New Zealand-based listed companies on their investor relations programmes. A qualified investment
analyst and accountant, Ms Cotton is a member of the New Zealand Securities Commission. She is also a director of NZSx-listed Kingfish Limited
and subsidiaries, and of a number of private companies.ianKuSabSMSc (hons) Biological Sciences – Ian was appointed as a director or
Genesis Power Ltd in 2004. Ian Kusabs is of Ngati Tuwharetoa and Te Arawa descent and resides in the Te Arawa district. He is Principal of his own
consultancy specialising in freshwater fisheries, is a co-opted member and freshwater advisor to the Tuwharetoa Maori Trust Board, Chairman of the
2020 Taupo-nui-a-tia project, and a member of the Taupo-nui-a-tia management board. He is also a member of the Royal Society of New Zealand,
New Zealand Freshwater Society and a fisheries associate of Wildland Consultants and Charles Mitchell and Associates.
DENIS MCNAMARA MIKE wILLIAMS
ANNABEL CoTToN IAN KUSABS
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SENIoR MANAGEMENT 2005
SENIOR MANAGEMENT TEAM
murrayJacKSon MBA, BEc, FTSE, FIEAust – Chief Executive, Genesis Energy. Overall management and strategic leadership of all
Genesis Energy’s business interests. Murray has more than 40 years’ experience in the Australasian power industry. Prior to joining Genesis Energy,
he was Commissioner for the Snowy Mountains Hydro Electric Scheme in southern New South Wales and Director of Production for Pacific Power
(NSW). Murray is Chairman of the Genesis Oncology Trust and Chairman of Energy Online Ltd. vincehawKSworth C.Eng, MBA – General
Manager Retail, Genesis Energy. Management of Genesis Energy’s retail business, leading the retail business unit to provide services driven by the
needs of our customers in the residential, commercial, industrial and derivative markets. Vince is a member of the Electricity Commission’s Retail
Advisory Group. deancarroll BSc – General Manager Generation and Trading, Genesis Energy. Management and operation of all Genesis
Energy’s generation assets; thermal fuel procurement and logistics, trading strategy development and implementation; transmission and intra
generator hedge trading desk. brucecole ME, MIPENZ – General Manager Engineering, Genesis Energy. Management of engineering and
business development at Genesis Energy with particular emphasis on long-term fuel supply including Kupe oil and gas field, generation acquisitions,
redevelopment of the Meremere site, development of renewable generation projects and customer co-generation projects.
MURRAY JACKSoN VINCE hAwKSwoRTh
DEAN CARRoLL BRUCE CoLE
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maureenShaddicKLLB, BA – General Counsel and Company Secretary, Genesis Energy. As General Counsel, Maureen is responsible for
management of the provision of legal services to the Company and legal compliance and regulatory support. She is the Company Secretary of
Genesis Energy and Deputy Chair of the Genesis Oncology Trust. PeggymolyneuxMBA, BA, MIPM – General Manager Corporate Services,
Genesis Energy. Management of information systems, property and administration, Genesis Energy’s recruitment, development training, NZQA
training, e-learning and performance, employee relationships, payroll services, health and safety, remuneration and internal communication.
marKanderSon BCom, ACA – General Manager Finance, Genesis Energy. Management of Genesis Energy’s financial, audit, treasury and
insurance functions. In addition, Mark has responsibility for the company-wide risk management framework including management of the Genesis
Energy’s trading risk position and risk reporting to the Board. malcolmalexanderLLB, BA (hons) – General Manager Corporate Affairs,
Genesis Energy. Management of Genesis Energy’s strategic planning, government relations, regulatory affairs and public relations. Malcolm is a
member of the Electricity Commission’s Transmission Advisory Group.
MAUREEN ShADDICK PEGGY MoLYNEUX
MARK ANDERSoN MALCoLM ALEXANDER
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hUNTLY PowER STATIoN KoURARAU hYDRo SChEMEwAIKAREMoANA hYDRo SChEME
This scheme in the Wairarapa hills consists of two small power stations. Each station is fed by a small artificial reservoir that was formed by the damming of the Kourarau Stream.
The Waikaremoana Hydro Scheme includes the Kaitawa (36MW), Tuai (60MW) and Piripaua (42MW) hydro stations. The Waikaremoana storage reservoir was created by a landslide that closed off the valley and provided the opportunity to implement flood control while creating the characteristics for a high head hydro scheme.
The Tongariro Power Scheme gathers water from the mountains of the central volcanic plateau in the North Island. The water passes through two power stations – Rangipo (120MW) and Tokaanu (240MW) – before entering into Lake Taupo. The scheme has a catchment area of more than 2,600 sq km and uses a series of lakes, canals and tunnels to bring water to the two stations that typically generate 1,300GWh p.a. – about four percent of the country’s total generation.
With a present output of 1,000MW, Huntly is New Zealand’s largest thermal power station. It has four separate generating units of 250MW utilising conventional boiler and steam turbine technology. Each unit is capable of burning coal, natural gas or a combination of the two.
unit 6 – A nominal 40MW open-cycle gas turbine has been commissioned at Huntly.
unit 5 – A high-efficiency combined-cycle gas turbine power plant is under construction for Huntly. This 385MW plant will be about 50 percent more energy efficient than existing technology.
year commissioned: 1981
Capacity: 1000MW
Generation units: 250MWx4
Fuel: coal / gas
Chimney height: 150 m
Site area: 71 hec
years commissioned:
Tokaanu 1973
Rangipo 1983
Total capacity: 360MW
Generation units:
Tokaanu 60MWx4
Rangipo 60MWx2
years commissioned:
Tuai 1929
Piripaua 1943
Kaitawa 1947/8
Total capacity: 138MW
Generation units:
Tuai 20MWx3
Piripaua 21MWx2
Kaitawa 18MWx2
year commissioned: 1923
Capacity: 1MW
Fuel: hydro
ToNGARIRo PowER DEVELoPMENT SChEME
HyDROTHERMAL
PHySICAL ASSETS
PhYSICAL ASSETS
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TE AwAMUTU Co‑GENERATIoN PLANT
KINLEITh Co‑GENERATIoN PLANT
hAU NUI wIND FARM KUPE GAS FIELD
CARDIFF
This plant has been developed under a partnership between Fonterra and Genesis Energy, to provide electricity and steam to the major milk-processing site at Te Awamutu. The plant is based on a 54MW Pratt and Whitney aero-derivative Twinpak gas turbine exhausting into a heat recovery boiler to raise steam for process use.
This plant is located at the Carter Holt Harvey Pulp and Paper Plant at Kinleith, Tokoroa. It is fuelled by wood waste biomass supplemented as necessary with gas or coal. Biomass fuel is considered a renewable energy source because it can be replenished by planting more plantations. The fuel is burnt in a boiler to produce steam for a 40MW steam turbine and for process use.
Harnessing the strong and consistent winds of the South Wairarapa coast, the wind farm is aptly named ‘Hau Nui’ – which means ‘strong wind’ in Maori. Hau Nui’s present 15 wind turbines provide enough power for around 4,200 homes in the South Wairarapa. Hau Nui has excellent availability, recording 48 percent capacity factor over the period since commissioning.
Genesis Energy now owns 31 percent of the proven oil and gas field of Kupe, located 30km offshore from South Taranaki. Pictured above is the Tangaroa surveying in the Kupe region.
Genesis Energy holds 40 percent equity interest in respect of the deep petroleum rights in Petroleum Exploration Permit 38738.
year commissioned: 1996
Total capacity: 8.65MW
year commissioned: 1995
Electrical output
in co-generation mode: 27MW
Electrical output
in open-cycle plus
co-generation mode: 54MW
year commissioned: 1998
Electrical output: 40MW
Wood waste burnt:
400,000-700,000 t/year
CO-GENERATION WIND GAS
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a
Ambient air quality 45
Assets 49
Auditor’s report 66
Austral Pacific 14
Awhitu wind farm 4, 9
b
Board of Directors 74
c
Cardiff gas prospect 10,14
Central North Island
Blue Duck Trust 39
Chairman’s Report 2
Chief Executive’s Report 9
Climate Change 43
CO2 emissions 45
Coal train 18
Coal stockpile 2
Community investments 10
Connell Wagner 23
Cooling Tower 23
Cooling water discharge
temperature 44
Corporate Governance 67
Customer initiatives 26
Customer numbers 26
d
Dairy farm energy efficiency 26
Debt 6
e
e3p 4, 22,40
Earnings before interest and tax 6
Employees 7, 30
Energy Efficiency 26
Energy On Line 10
Environmental performance 46, 47
f
Financial Statements 48
Flow and level compliance 41
Flushing flows 39
Fuel bill 9
g
Gas campaign 27
Generation 9
Genesis Energy Recreation
Centre 10
Genesis Energy Sir Edmund Hillary
Outdoor Leadership School 34
Genesis Energy Spring Season
of Opera 35
Genesis Energy Theatre 35
Genesis Oncology Trust 34
Genesis Taranaki Rugby 35
h
Hau Nui Wind Farm 19
Huntly e3p 22, 40
Huntly Aquatic Centre 35
Huntly ambient air quality 45
Huntly environmental
performance 42
Huntly Power Station 2, 18, 22
Huntly West Primary School 22
i
InCharge prepay meters 27
InfoGen 27
Information Services 31
K
Kaipara Generation Project 10
Kupe Oil and Gas Field 10, 14
Kyoto Protocol 43
l
Lake levels 41
Lake Waikaremoana Hapu
Restoration Trust 38
Leadership development 30
Liquefied Natural Gas 15
Low user Fixed Tariff 27
m
Market share 27
Meremere Power Station 2
Meter reading initiative 27
Minimum flows 38
Mitsubishi Heavy Industries 23
n
National Apprenticeship
Programme 10, 31
National Science Fair 35
P
Parker drilling rig 12
Ports of Auckland 19
Port of Tauranga 18
Port Waikato 40
r
Recreational releases 39
Remuneration of employees 71
Report of the Auditor-General 66
Retail market share 27
Revaluation 2
Revenue 2
S
Senior management team 76
SITEL 27
Solid Energy 18
Sponsorship 35
Sport Waikato 35
Statement of Corporate Intent 72
Statement of Financial
Performance 49
Statutory information 69
t
Tainui Bridge 23
Toll New Zealand 18
Tongariro National Trout Centre 38
Tongariro Power Scheme 4, 38
Tongariro River 39
Transit New Zealand 23
Tuai Power Station 78
w
Waikato River temperatures 23
Water flows 41
Waikaremoana Power
Scheme 38, 41
Wellness programme 31
Whanganui River Enhancement
Trust 39
IND
EX
INDEx
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BOARd Of dIREcTORS
chairmanBrian Corban QSO
directorsKeith Smith (Deputy Chairman)Geraldine BaumannAnnabel CottonNicola CraufordIan KusabsDenis McNamaraMike Williams
ExEcUTIvE MANAGEMENT TEAM
chief ExecutiveMurray Jackson
General counsel and company SecretaryMaureen Shaddick
General Manager financeMark Anderson
General Manager RetailVince Hawksworth
General Manager Generation and TradingDean Carroll
General Manager corporate ServicesPeggy Molyneux
General Manager EngineeringBruce Cole
General Manager corporate AffairsMalcolm Alexander
cORPORATE OffIcE
The Genesis Energy Building
602 Great South Road
PO Box 17188
Greenlane
Auckland
Telephone 64 9 580 2094
Facsimile 64 9 580 4894
GENESIS ENERGY WELLINGTON
The Genesis Energy Building
Level 1, 93 The Terrace
Corner Woodward Street & The Terrace
PO Box 10568
The Terrace
Wellington
Telephone 64 4 495 6350
Facsimile 64 4 495 6363
GENESIS ENERGY NEW PLYMOUTh
The Genesis Energy Building
Ground Floor, Corner Gill & Liardet Streets
PO Box 8143
New Plymouth
Telephone 64 6 759 1841
Facsimile 64 6 759 1843
GENESIS ENERGY hAMILTON
The Genesis Energy Building
Ground Floor, 660 Victoria Street
PO Box 1406
Hamilton
Telephone 64 7 857 1699
cUSTOMER cONTAcT cENTRE
0800 300 400
AUdITOR
Graham Naylor of Deloitte has been appointed to perform the audit on behalf of the Controller and Auditor-General
BANkER
Westpac Institutional Bank
SOLIcITORS
Russell McVeagh
GENESIS ENERGY WEBSITE
www.genesisenergy.co.nz
ANNUAL REPORT dESIGN
dIR
Ec
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DIRECTORY
for more information or comments email:
feedback@ genesisenergy.co.nz
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