Responding to gas market challenges Paul Adams Managing Director

About Jemena

2

Gas Electricity Water

Eastern Gas Pipeline

Queensland Gas Pipeline

Colongra Gas Transmission and Storage Pipeline

VicHub

Jemena Gas Network

ActewAGL Distribution Partnership (50%)

Jemena Electricity Network

United Energy Distribution (34%)

Rosehill Recycled Water

Our market is changing…

3

Forecast gas demand for Jemena Gas Network

4

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

PJ

Year ending June 30

Residential and small business customers (historic) Large industrial customers (historic)

Residential and small business customers (forecast) Large industrial customers (forecast)

Source: Jemena

Gas supply from a customer’s perspective

5

25% 5% 50% 20% RESIDENTIAL CUSTOMER

LARGE INDUSTRIAL CUSTOMER

75% 15% 10%

What does this mean for customers in NSW?

6

1.2m customers

Responding to changes in the gas market

•  Up to 40% reduction (in real terms) in network charges over the 2015-20 period

7

Small customers – promoting stability in end retail bills

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50% 51% 57% 61% 66% 66%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020

Residential customer consuming 15GJ/annum

JGN distribution charge proportion of bill Non Network charge proportion of bill Cumulative change in total retail bill (real terms)

Source: Jemena

Large customers – providing stability and certainty in network charges

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10% 10% 10% 9% 7% 8% 8% 9% 10% 10%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Aver

age

pric

e ch

ange

($re

al)

Prop

ortio

n of

Tot

al R

even

ue

Volume market per cent of total revenue (left axis)

Demand market per cent of total revenue (left axis)

Average price change demand market (right axis)

Regulatory control period (2010-15) Regulatory control period (2015-20)

Source: Jemena

Ensuring gas is a competitive fuel of choice

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Provide a service that customers

value

Engage to understand

their preferences

Continue to be proactive in attracting

new customers

Natural Gas, the Natural

Choice

Put downward pressure on

prices

Strive to continuously improve our

efficiency

Reduce barriers to customer

participation in the energy

market

Helping customers get the best retail

deal

Providing a service that customers value

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•  We developed our proposal through extensive engagement

•  Range of customers, stakeholders and the broader community

•  Engagement tailored to each cohort to maximise effectiveness

Providing a service that customers value

12

•  Safety

•  Maintaining current service levels

•  Universal level of service across our network

Proactively attracting new customers

13

0

5,000

10,000

15,000

20,000 20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

2012

20

13

2014

20

15

2016

20

17

2018

20

19

2020

New customer connections per year

Electricity to Gas conversions

New homes

Medium density and High Rise

Industrial and Commercial

Source: Jemena, Core Energy

Our marketing strategy and creative has evolved

14

2008 LAUNCH. GAS IS

GOOD. Cost-effective, efficient, environmentally friendly message, website purely

informational.

2010 REFINE, REALIGN,

RETAIL. Maintain healthy brand relevance, co-branded appliance retail ads,

drive traffic to website.

2012 TARGET, EXCITE,

IGNITE. Expansion of the

alliance partner network, hyper-targeted

household offers.

2014 CONNECT LIKE

NEVER BEFORE. Above the line appliance

cashbacks, emotional messaging - reconnect

with your family.

2015 TURN IT ON.

Rebrand with the strongest call to action

ever. Website redeveloped to improve

customer experience and drive connections and appliance sales.

‘Turn it on’ – a sneak peek of our 2015 campaign

15 In 2015 we empower consumers to ‘Turn it on’

Putting downward pressure on prices

•  We’re continually striving to improve our efficiency

•  Further sharpening our incentives with the Efficiency Benefit Sharing Scheme

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Reducing barriers to customer participation in the energy market

•  Providing clear information to customers about managing consumption, retail offers and available rebates

•  Simplifying and providing better information about our prices

•  Making energy markets ‘work better’ for customers –  Deregulation of retail gas prices

–  Assistance for gas customers experiencing hardship

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NSW supply security

•  There are other levers to pull – supply is secure and homes won’t run out of gas

•  But restrictions need to be lifted and new supply in NSW needs to be brought online to ease price pressures

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Gas transmission – responding to customers’ requirements

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Putting things into perspective

20

Gas supply

Market design

Pipelines