puBur2 „ 0 , 4 ESTIMATES AND FINANCIAL OPERATIONS COMMITTEE

QUESTIONS ON NOTICE SUPPLEMENTARY INFORMATION

Monday 20 January 2014

HORIZON POWER

Question on Notice for the 2012/13 Annual Report Hearing Horizon Power to be held onTuesday 28 January 2014: Hon Ken Travers MLC asked -

(1) What is the total amount of jobs cut during the year ending 2013? And, what wasthe total amount of savings from said job cuts?

Answer:

Number of jobs (positions) during year end Dec 2013 105Annualised value of jobs (positions) cut $15,021,033

(2) Can you provide a breakdown of the amount of termination payments made toemployees made redundant, or paid to employees resigning with some form oftermination bonus, for each level of annual income as follows:

$30,000 - $50,000 pa;$50,000 - $70,000 pa;$70,000 - $90,000 pa;$90,000 - $110,000 pa;$110,000 -$150,000 pa;$150,000 upwards.

Answer:

Remuneration RangeNumber of

People

Total GrossRedundancy

Payment$30,000 - $49,000 pa; 0 -$50,000 - $69,000 pa; 8 $430,496.52$70,000- $89.000 pa; 16 $1,216,214.61$90,000 - $109,000 pa; 21 $1,968,521.30

$110,000 - $149,000 pa; 27 $3,324,488.63$150,000 upwards 13 $2,242,218.78

(3) What is the head count for employees made redundant during the year ending2013, per annual income as outlined (2) above?

Answer:

Remuneration RangeNumber of

People$30,000 - $49,00 pa; 0$50,000 - $69,00 pa; 8$70,000 - $89,00 pa; 16_

$90,000- $109,00 pa; 21$110,000- $149,00 pa; 27

$150,000 upwards 13

(4) Can you provide a breakdown of the total number of employees, currentlyemployed by Horizon Power, by earning bracket as outlined (2) above?

Answer:

Remuneration RangeNumber of

People$30,000 - $49,00 pa; 5$50,000 - $69,00 pa; 45$70,000 - $89,00 pa; 88$90,000 - $109,00 pa; 76

$110,000- $149,00 pa; 88$150,000 upwards 75

(5) I note that Horizon Power made the commitment to ensuring 20 per cent of itsworkforce is of Aboriginal or Torres Strait Islander decent by 2015/16 and I ask:

(a) How many employees are currently of Aboriginal or Torres Strait Islanderdecent?

(b) What does Horizon intend on doing in 2014 to achieve its commitment?

Answer:

(a) 31 employees

(b) Horizon Power has retained its commitment to a 20% target of aboriginalemployees by 2015/16. Where positions become vacant we will continue to seekIndigenous candidates utilising our existing candidate database and through ourpartnerships with Indigenous employment agencies.

(6) Regularised power -(a) Please name the remote communities that are without regularised power as

of the present date?(b) Approximately how many people residing in said communities are without

regularised power as of the present date?(c) How many remote communities were connected to regularised power

during the year ending 2013?(d) Going forward, what plan does Horizon have to connect remote

communities to regularised power?(e) By the year ending 2014, does Horizon Power foresee all remote

communities having access to power? If not, why not? If so, what is thetotal estimated cost?

Answer:

(a) & (b) There are approximately 290 remote communities in Western Australia. Manyof the small communities are seasonal or intermittently occupied out stations or arerecreational or cultural orientated camps that are not permanently occupied. Manytherefore would not be likely to be part of a program that seeks to establish'regularised" power supplies. Instead regularisation focuses on large communities orthose that provide services to a wider area ie. such that residents of nearby smallercommunities access services from the "hub" community.

The large communities (populations above 150) and other major hub communitiesthat are not yet regularised are:

Region / LGA Community Approx. Population(2011 census)

Kimberley Hails Creek Balgo 460 Kimberley Hails Creek Mindibungu 250Kimberley Halls Creek MuIan 140Kimberley Halls Creek Kundat Djaru 175Kimberley Derby Wankkatjungka 165

Pilbara East Pilbara Jigalong 330Pilbara East Pilbara Kiwirrkurra 200Pilbara Port Hedland Yandeyarra 100

Gascoyne Upper Gascoyne Burringurrah . 100

Goldfields Ngaanyatjarraku Warburton 500Goldfields Ngaanyatjarraku Blackstone (Papulankutja) 170

Goldfields Ngaanyatjarraku Wingellina 160Goldfields Ngaanyatjarraku Wanarn 140Goldfields Ngaanyatjarraku . Warakurna 155Goldfields Menzies Tjuntjuntjara 205

3,250 total

(c) Nil — however, new power stations were commissioned in Kalumburu andNoonkanbah (Yungngora). These were the final stage of the two AboriginalRemote Community Power Supply Project (ARCPSP) Phase 2.1 projects.

(d) At this time funds are not available to support regularisation of further remotecommunities in 2014/15 or beyond.

(e) No, at this time funds are not available to support regularisation of further remotecommunities.

Horizon Power is not in a position to give an estimate of the total costs ofregularising the remaining communities as we have not done assessments ofinfrastructure in many of these communities and hence have not got an informedview of what infrastructure can be retained and what needs replacement.

(7) Aboriginal communities —(a) How many Aboriginal communities were serviced by Horizon in the year

ending 2013?(b) How many Aboriginal communities are still not serviced by Horizon Power?(c) What is the approximate total of Indigenous people still living without

access to a regularised supply of electricity?

Answer:

(a) The number of Aboriginal communities supplied by Horizon Power is:• 8 remote communities• 29 town based (town connected) communities that have been regularised• 20 town based communities that have not been regularised (supplied through

single master meters)

(b) & (c) There are 15 large and middle sized service hub communities not yetserviced by Horizon Power. The aggregate population in these communities isapproximately 3,250.

There are a large number of small communities (in excess of 200), many ofwhich are not permanent, and hence would not warrant an utility standard powersupply. The aggregate population of these is approximately 11,000.

(8) I refer to the Aboriginal Communities Training (ACT) program, and I ask:(a) How many residents of Aboriginal communities were trained and employed

as Remote Community Utility Workers in the year 2013?(b) How does Horizon ensure the safety of said workers?(c) What is the average salary of said workers?(d) Were any of said workers terminated during Horizon's reported job cuts?(e) Does Horizon intend on continuing the program in 2014?

Answer:

(a) Five (5)

(b) All Horizon Power employees fall within the scope of our health and safetypolicies which includes, but is not limited to, Safety and Health Policy,Supervision Policy, Fit for Work Policy, Fit for Work Standard and the FieldInstruction Procedures and Standards Manual.

Other key points to note:• The RCUWs are required to complete both local and safety inductions

also attend the regional depots for the safety meetings.• The RCUWs don't work on live apparatus.• Our Supervision Policy details safe working procedures for RCUWs.• All RCUWs are completing a Cert 3 Apprenticeship, which is an 11

program covering off duties, tasks and safe working procedures.

(c) $64,313.80 base salary per annum(d) No.(e) Yes.

They

stage

(9) How many new businesses were connected to, and serviced by, Horizon in theyear ending 2013?

Answer:

The number of new business customers that commenced in 2013 was 965. However someof these customers have multiple accounts. The total number of new business accounts thatwere created in 2013 was 1519.

(10) How many times during the year of 2013 did Horizon's CEO travel from and toPerth, and what was the total cost of said travel? Which locations did he travelto?

Answer:

(a) 18 times(b) $23,621.90 (includes airfares, accommodation, meals, taxis and hire cars)(c) Karratha Esperance Sydney

Canberra Melbourne BroomeCarnarvon Brisbane Port RedlandNewman Kununurra

(11) I refer to the power stations currently under construction and I ask:

(a) How many new power stations are currently being constructed?(b) What is the total budget of construction of new stations for the coming

year?(c) How many new power stations have been, or are under construction, from

2012 onwards?(d) Are any of these projects over budget?(e) Which communities will these stations service?(f) What is the generation capacity of the new power stations?

Answer:

(a) Two (2).

The Carnarvon Power Station Development Project (Mungullah) a nominal 18 MWgas and diesel power station to allow for Iles Road Power Station decommissioningis 95% complete and currently in commissioning trials.

The South Hedland Power Precinct Project with a dependable capacity of 67 MW ofinterim gas and diesel generation designed and built with the balance of plant for 100MW. The project also provides for a future connection of an Independent PowerProducer.

(b) The estimated budget for the construction of new stations for the coming year is asfollows:

The Onslow Power Infrastructure ProjectChevron is required under a State Development Agreement (SDA) to build a 9 MWpower station in Onslow. Horizon Power estimates investment in the order of $15million will be required by Horizon Power to deliver scope variations outside the SDA.This expenditure is likely to occur over FY2014/15 and FY2015/16.

Onsiow Short Term Project Stage 2 and 3This project involves installation of additionalincreased demand in Onslow. The estimatedand operational costs is $9.6 million. Horizonthree financial years to align with the handcpower station.

temporary generation to support thebudget for the works including capitalPower is staging this investment overver of the new Chevron constructed

(c) In addition to those currently being constructed, (refer to response to 11a) thefollowing have been or are under construction since 2012:

The Karratha Generation Project achieved practical completion in March 2013 andinstalled a 20MW containerised TM2500 gas turbine to meet in part Horizon Power'scapacity requirements.

Onslow Short Term Generation Project commissioned a temporary diesel generatorand infrastructure in December 2013. An additional 3 MW of generation will becommissioned by November 2014 and a further 1 MW by November 2015.

The Kalumburu Power Station a nominal 1 MW diesel power station replaced the oldpower station in Kalumburu and was completed in Quarter 4, 2013.

The Yungngora Power Station a nominal 1 MW diesel power station replaced the oldpower station in Yungngora and was commissioned in Quarter 3, 2013.

(d) None of these projects are over budget.

(e) These power stations serve the:

Pilbara districts of Port Hedland and Karratha within the North West interconnectedSystem (NWIS).Carnarvon and Onslow within the Gascoyne/Mid West region.Yungngora and Kalumburu, Derby and Fitzroy within the Kimberley region.

(f)Asset Gross Maximum CapacityCarnarvon Power Station (Mungullah) 18 MW

4x 20 MWSouth Hedland Power Precinct (Dependable capacity 67 MW)Karratha Generation 20 MW

(Dependable capacity 17 MW)Onslow Power Infrastructure 9 MWOnslow Short Term 1 MW December 2013,

Future planned: 3 MW of generationby Nov 2014 and1 MW by November 2015

Kalumburu new power station capacity 1 MW diesel generationYungngora new power station capacity 1 MW diesel generation

(12) Can Horizon Power provide a breakdown of these stations, in terms of total powergeneration, and also total generation capacity for the year ending 2013:

Gas;Diesel;Wind;Solar;Hybrid;Hydro?

Answer:

The following table includes figures that reflect both the installed capacity and the totalgeneration of Horizon Power owned and operated power stations for the financial yearperiod 2012/2013. Data for the complete 2013 calendar year is under review at this time.

mrSteffen TotalsGross Maximum Capacity mw 22 545 20 20 87 4.55 3_25 1 402 1.903 0_35Dependable Capacity 16.67 17 17_01 3_68 2.44 0.96 1.28 0.29Gross Annual Generation" 49153194 1848818 1790102 392440 3395985 1472760 2328392 297432tiel Annual Generation kv.ih 46850100 1790640 1468562 381902 1727529 1224855 2015754 297432EnergfUsed in Works kWh 2303094 58178 321540 10538 1668456 247905 35040 0Period Hours Hours 113880 3720 140712 35040 26280 35040 43800 17520Service Hours Hours 36262 163_9 2218.8 798 7493 12975 14959 3733Gas Units Number 6Gross Maximum Capacity MW

Dependable CapacityGross Annual Generation' kWh 45444906Net Annual Generation KWh 43315565Energy Used in ';`,Forks kWri 2129341Period Hours Hours

SirViCS Hairs Hours

Diesel Number 7 I 1 I 18 I 4 3 3 _2

Gross Maximum Capaciti 1,I W 3_25 1_2 1.6 0.35Dependable Capacity 1.1'01 6.8 17 17_01 3.68 2.44 0.96 1_28 0_29Gross Annual Generation' kWh 3708288 1848818 1790102 392440 3 95985 1109633 1716936 297432Net Annual Generation kWh 3534534 1790640 1468562 381902 1 27529 861728 1404298 297432Energy Used in Works kWh 173754 58178 321540 68456 247905 312638Period Hours Hours 26280 26280 35040 175203er:ice Hours Hours 54011 163.91 2218.8 798 7493 9047 10813 3732Solar 1 1Gross Maximum Capacity MrAl 0.202 0,303Gross Annual Generation' kWh 363127 611456Period Hours Hours 8760 8760SeNice Hours Hours

(13) I note the State Government changed electricity tariffs in July 2013, resulting in afour per cent increase for many customers serviced by Horizon, and I ask:

(a) How many complaints has Horizon Power received with respect to priceincreases?

(b) What is Horizon Power doing to keep costs low for rural WesternAustralians?

Answer:

(a) There are no recorded complaints, either business or residential regarding theprice increase.

(b) Horizon Power delivered the State Government's efficiency dividend for 2012/13and we are confident that we will deliver again in 2013/14. Horizon Power isimplementing a full strategic review in order to reduce the reliance on StateGovernment subsidies and will reduce the number of positions in our workforceby up to 240 by the end of June 2014. Savings of approximately $36.6 millionannually are expected to be delivered from current initiatives.

(14) What was the cost of emergency repairs to infrastructure damaged by TCChristine?

Answer:

As of mid-January, Horizon Power had incurred costs associated with Cyclone Christine ofaround $250,000.

Horizon Power remains in the process of completing rectification works to our network andthe final cost is estimated to be in the order of $1.5 million.

(15) How much of this was for repairing overhead wire infrastructure?

Answer:

Primarily damage sustained during the cyclone was to overhead transmission anddistribution assets. The underground networks in both Karratha and Port Hedland did notsustain any damage.

(16) What is the expected unit cost for electricity supplied by the temporarygeneration plants at:

(a) Karratha: and(b) South Hedland?

Answer:

(a) The forecast cost of electricity supplied by the Karratha Temporary GenerationProject (diesel) for 2013/14 is $0.84 cents per kWh.

The Karratha Temporary generation unit is a peaking plant whose purpose is toprovide capacity during unforeseen or short term contingencies (generating plantor transmission line outages) as well as any unforeseen peaks in demand.

(b) Commercial in Confidence

(17) What is the expected unit cost for electricity supplied by the new generationplants at:

(a) Onslow;(b) Carnarvon; and(c) South Hedland?

Answer:

(a) Onslow power Station (inc long-term infrastructure project) 2016-17 2017-18

Cost of Electricity/MWh $0.30 $0.30 e Base load power station operation, primary fuel gas

(b) Carnarvon Power Station2014-15 2015-16 2016-17 2017-18

Cost of Electricity/MWh $0.21 $0.20 $0.26 $0.24 e Base load power station operation, primary fuel gas

(c)Hedland Power Precinct ProjectThe Preferred tenderers for generation beyond 2016 have not yet been selected andtherefore cost of supply has not yet been finalised.