statement of corporate intent ?010/11 - …€¦ · · 2014-07-28the scope encompassed marketing,...

STATEMENT OF CORPORATEINTENT?010/11

Statement of Corporate Intent 2010/11

1 EXECUTIVE SUMMARY 5

2 INTRODUCTION 5

3 CURRENT PERFORMANCE AND ACHIEVEMENTS TO DATE 5

3.1 Synergy's Performance 6

3.1.1 Customer Service 6

3.1.2 Financial 7

3.1.3 Projects undertaken 7

4 BUSINESS ENVIRONMENT AND CHALLENGES 8

4.1 Business Imperatives — the Future 8

5 CORPORATE DIRECTION 9

5.1 Corporate Vision 9

5.2 Redefining energy retailing 9

5.2.1 SYNERGY'S VALUES 10

5.3 STRATEGIC THEMES AND INITIATIVES 10

5.3.1 Relentlessly Drive Operational Excellence and Cost Efficiency 10

5.3.2 Grow the Core Business 11

5.3.3 Leverage the Customer Base 11

5.3.4 Create an Optimised and Secure Supply Portfolio 11

5.3.5 Developing our Team and Talent for the Future 12

5.3.6 Position Synergy as a trusted Customer Advocate and Thought Leader 12

6 PERFORMANCE TARGETS 13

6.1 Balanced Scorecard 13

6.2 Operational Performance Measures 13

CORPORATE RESPONSIBILITIES 14

Legislated Requirements and Functions 14

Efficiency and Demand Management Requirements 15

Trade Practices Act and State Fair Trading Act 15

Environmental Responsibilities 15


Social Responsibilities 15

Accounting and Dividend Policy 16

Accounting Standards 16

Dividend Policy 16

Ministerial Reporting 16


I am pleased to present the Statement of Corporate Intent (SCI) of the Electricity RetailCorporation, trading as Synergy, in accordance with the Electricity Corporations Act 2005.

The Statement of Corporate Intent outlines Synergy's goals and objectives for 2010/11, thetargets Synergy will pursue, the achievement of which are fundamental to its success, and theinitiatives the organisation will pursue over the next twelve months.

The Statement of Corporate Intent details the way in which the legislative and statutoryobligations on Synergy and the policy requirements of our shareholder, the Western AustralianState Government, will be met.

From its inception in April 2006, Synergy has recorded tremendous success in contributing tothe development of a secure, reliable and competitive energy market in Western Australia, inthe interests of both customers and the State.

Synergy's vision is to redefine energy retailing which is focused on ensuring Synergy isresponsive to the present and future needs of its customers. There is a multitude of issuesfacing Synergy's customers and these are shaping their evolving needs. On the basis of this,Synergy itself must evolve and in effect redefine energy retailing to ensure it remains in touchwith the needs of its customers and also its shareholder.

This Statement of Corporate Intent outlines the work which will be undertaken over thefollowing twelve months to take Synergy on its journey to achieving our vision.

MR MICHAEL SMITHCHAIRMAN


E

The Statement of Corporate Intent is prepared in accordance with the requirements of theElectricity Corporations Act 2005 (WA). It outlines the objectives for the 2010/11 financial year,and describes how the business will achieve these.

:NTRODUCTION

Synergy has undertaken a significant transformation, implementing the most comprehensivebusiness technology solution currently in use by any utility across Australia which will drivedown costs and create the platform for growth in the future with an ability to deliver productsand services it could not have contemplated previously.

Synergy is already a leading and successful participant in Western Australia's energy marketand is committed to formulating objectives and implementing strategies that entail, encourage,foster or support a secure, reliable, competitive and cleaner energy market in WesternAustralia.

Synergy is focused on assisting customers to:

• understand and cope with price increases especially through the provision of energyefficiency solutions and encouragement of load shifting to off-peak consumption;

• transition to a more sustainable lifestyle or operating regime in an environment wherecarbon emissions have cost implications for businesses and the community at large; and

• reduce their carbon emissions (footprint) through environmentally friendly energy productofferings, carbon offsets and other abatement techniques.

["• LE.F ,:RMANCE AND ACHIEVEIVIL1 ITS TO DATE

Synergy markets approximately 80% of the electricity sold in the SWIS (franchise andcontestable customers) and over 35% of the contestable gas load. The business carries thisout with a workforce of approximately 290 people possessing appropriate knowledge and skillsto assist customers and meet business needs.

Since Synergy was established in April 2006, it has realised some significant achievementsand has generally exceeded its targets.

Synergy is:

• Securing Western Australia's energy future for customers;

• Obtaining secure, diverse energy supplies at competitive wholesale prices;

• Meeting the needs of customers through relevant products, services, education andadvocacy;

• Addressing the challenges of climate change, and helping customers deal with the impactof climate change;

• Preparing for a carbon constrained future (CPRS/Renewables); and

• Leveraging the benefits of its business transformation programme and implementation of anew billing system.


Synergy is advocating:

• Cost reflective tariffs;

• A glide path to provide time to adjust to the new pricing paradigm;

• Advanced meters and in home displays with time of day pricing (to drive behaviouralchange in customers); and

• Support for the financially disadvantaged.

3.1 Synergy's Performance

3.1.1 Customer Service

In 2008/09 Synergy achieved a number of significant customer milestones and implemented anumber of new initiatives:

• Residential disconnections for non-payment were reduced by 13.4% in 2008/09. Since2005/06, residential disconnections have fallen by more than 63%.

• Synergy maintained a very high level of customer service during the year evidenced by itson-line customer satisfaction survey of 92%.

• The percentage of the 919,948 telephone calls responded to by a Synergy operator within30 seconds was 79%, comparable to the previous year's performance of 80%. In addition,Synergy dealt with more than 230,900 telephone calls through its interactive voicerecognition system.

• In 2008/09 Synergy received 2,030 complaints or 0.2 per 100 small use customers, whichis low compared to eastern states retailer standards.

• Synergy's industry best practice "Keeping Connected" financial hardship policy wasreviewed in the second half of 2008/09 resulting in positive customer changes includingbroadening of the hardship assessment criteria. The appointment of an additional casemanager brought the number of case managers to three, to provide dedicated expertise,support and assistance to Synergy customers experiencing hardship.

• The "switch off" advertising campaign to advocate a range of power saving options,including heat, light and power, provided by Synergy to its customers was very successfulwith results from the campaign exceeding targets in all areas.

• Synergy's website was updated to a new user friendly interface with a higher degree of selfservice functions and interactive tools to assist customers to transact and reduce powercosts 24/7.

• A review of Synergy's electricity customer service charter was undertaken in conjunctionwith key external stakeholders.

• In partnership with Fieldforce, energy audits for both residential and business customerswere undertaken to provide a detailed assessment of customers' energy consumption toenable them to consume less and reduce their bills.


3.1.2 Financial

Synergy has delivered strong financial as well as other returns to the community since itsinception. Since it commenced operations in April 2006, Synergy has returned to thecommunity over $170 million through dividends and tax equivalent payments. In 2008/09Synergy's net profit after tax was $89.2 million.

There are a number of factors attributable to Synergy's strong performance including one-offcontributions received from the market. It is however particularly pleasing that Synergy'sstrong results have come from activities which have delivered returns above the marginallowed under the vesting contract and one off market factors.

3.1.3 Projects undertaken

Synergy has undertaken a number of projects to fulfil its corporate charter and to deliver onthe drive to increase long term profitability and customer service.

3.1.3.1 Project Columbus

As a part of the drive to operational efficiency Synergy has implemented the mostcomprehensive business technology solution currently in use by any utility across Australia.The solution covers all markets including residential, small to medium enterprises, industrialand commercial business and for dual fuel products (electricity and gas) on a single customerrelationship management (CRM) & billing technology platform. The solution also includes aweb channel for customer self service and product sales; and a customer segmentationwarehouse.

Project Columbus comprised redefinition of strategy, business process, people, andtechnology.

The scope encompassed marketing, sales, product development, provisioning, customer care,service, billing and collection, as well as a new technology delivery model. The organisationstructure was redesigned based on the new processes.

Project Columbus is a very important step in Synergy's transformation, driving down costs andcreating the platform for growth in the future with an ability to deliver products and services itcould not have contemplated previously.

Leveraging the Columbus solution will be critical to Synergy's future success. The skills,capability and knowledge of Synergy's people, coupled with an unprecedented level ofcustomer information and data, will enable Synergy to develop energy solutions for customersnow and in the future.

3.1.3.2 Supply procurement

During 2009/10, Synergy publicly announced a major supply contract with Verve Energysecured as part of Synergy's Displacement obligations, secured through the SupplyProcurement 2008 tender process. The contract is for 638 MW of capacity credits andassociated energy (later stepping down to 300 MW) from Verve's portfolio of generators over a15-year supply term commencing in late 2011.

In March 2010, Synergy signed a 15-year contract to underpin the development of the 206MW Collgar wind farm located near Merredin. The Collgar wind farm comprises 111 turbinesand will be one of the largest wind power projects in Australia.


3.1.3.3 Carnegie Corporation & New World Energy MOUs

Synergy demonstrated its commitment to supporting new renewable energy ventures inWestern Australia by signing memoranda of understanding (MOU) with New World Energy,supporting the development of geothermal energy and Carnegie Corporation, supporting thedevelopment of wave energy.

In early 2009 New World Energy was granted its first geothermal exploration permits, coveringfive areas in and around the Perth basin. New World Energy's association with Synergyvalidates geothermal energy as a significant potential energy source for the State and willassist in the delivery of reliable emissions-free energy to WA consumers.

Carnegie is developing a small scale commercial demonstration wave energy electricitygeneration facility off Fremantle utilising its CETO wave energy technology. The first stage ofthe project will have generation capacity of 6 MW, and subsequently be increased to acapacity of 50 MW. Synergy will purchase the energy and environmental rights produced fromthe first stage of the project.

3.1.3.4 Hardship Policy

Synergy worked closely with key industry stakeholders to develop and deliver a holistic energyutility hardship programme to Western Australian energy users. This incorporated the deliveryof the Hardship Utility Grant Scheme (HUGS), the Hardship Efficiency Programme (HEP)support by a new establishment internal customer case management team. These initiativesare all designed to assist customers manage the financial pressures that life can deliver. Keyto the success of the programs is the unification of interest groups across the State thatsupport the programme including local financial councillors.

BUSINESS ENVIRONMENT AND CHALLENGES

4.1 Business Imperatives — the Future

Synergy plays a critical role in the WA electricity and gas market. The electricity contractsSynergy puts in places has a key influence on the reliability of supply, the cost faced bycustomers and ability of WA to meet its growing energy needs. The flexibility and diversity inSynergy's electricity and gas portfolio has assisted Synergy to deliver the supply reliabilitycustomers demand, despite supply disruptions such as the Varanus gas crisis. Synergy willalso be a key agent whose procurement activities will be the key determinant if WesternAustralia meets the renewable energy target agreed by the Federal Government and StateGovernments and Territories at the Council of Australian Governments (COAG) in 2009. Thistarget can only be met if retailers are buying sufficient renewable credits. Similarly, Synergywill play a key role to ensure the state can address the challenges arising from the CarbonPollution Reduction Scheme (CPRS) in the event the CPRS is ultimately introduced.

The environment in which Synergy is operating is increasingly dynamic, typified by the overhang of the global financial crisis, impending changes to the market rules in the WholesaleElectricity Market (WEM) and replacement of the Vesting Contract. All this is occurring in thecontext of rapidly escalating energy costs borne by Synergy's customer after more than adecade of frozen customer prices.

In response to the rapid increase in energy costs Synergy has been a champion of energyefficiency that will assist customer to defray the increase in their electricity bills. The drive toenergy efficiency will typify the evolution of customer needs that will potentially encompassmore embedded generation where generation capacity is installed on the customer premisesto a more significant extent than is typical at present. This will be subject to the relevant


concepts being explored to determine the merits of rolling out such projects on a small ormass scale, and if supported, securing the appropriate approvals to take the concept to market.

Synergy's vision is to redefine energy retailing. This is driven primarily by the fact that thecustomer needs from its retailer are expanding and evolving. The traditional retailer needs tobecome more nimble and able to deliver diverse customer energy solutions. This will result inSynergy embracing innovative means to efficiently and effectively satisfy the customerdemand in the context of increasing energy costs and evolving technical solutions.

The overwhelming imperative in the current environment is to ensure Synergy remains afinancially robust entity making returns commensurate with the risk it is taking to satisfy theneeds of its customers. This is critical to ensure Synergy maintains the credit rating andbalance sheet to enable it to continue to underwrite long term power procurement contracts toensure the ongoing supply reliability of energy supply in WA.

CORPORATE DIRECTION

5.1 Corporate Vision

At its inception Synergy developed a vision to transform its retailing to meet its customers'future needs, leveraging the skills, experience and passion of its people. Since 2009/10,Synergy has been preparing to address the emerging energy market, impacted by both localand global issues, and has determined nothing less than a fundamental transformation of thebusiness of energy retailing is required to meet the anticipated challenges.

While many of the challenges are obvious, Synergy believes the changes which will impactupon the industry, and Synergy's customers, create unprecedented opportunities for growthand to be an energy retailer unlike any seen before.

Synergy's 2015 Vision is therefore to "Redefine energy retailing .... across the full value chain....with boundless opportunities".

5.2 Redefining energy retailing

Synergy's vision is to redefine energy retailing which is focused on ensuring Synergy isresponsive to the present and future needs of customers.

The traditional paradigm of Synergy purchasing a portfolio of electricity and billing itscustomers is being challenged by the increasing costs of generation fuels, generating capitalcosts, network access and transmission capacity costs and the availability of suitable land onwhich to locate power stations. These increasing costs will progressively mean thatalternatives to the traditional paradigm such as embedded and distributed generation willbecome increasingly economic for the customer to meet their energy requirements.Generation at the customer site may avoid or reduce the cost associated with networkservices. This form of energy efficiency would also reduce the network loss factor that thecustomer otherwise pays for and also reduces the amount of capacity the retailer mustcontract to service the customer load. This potential evolution of the customer energy solutionwill potentially deepen the relationship an energy retailer has with the customer that mayinvolve energy management services to encompass on site sub metering, demandmanagement, more diverse and granular price signals and carbon liability management.

Redefining energy retailing will be also driven by the potentially evolving regulatoryenvironment that will seek to incentivise customers to use less energy and shift energy usagepatterns away from more peaky periods. In California the regulatory regime decouples orinverts retailer profit margins from the quantity of electricity consumption. This has redefined


energy retailing from an endeavour of maximising the volume of sales to one whereby profitmargins are higher the less energy that is sold. This outcome is assisted by the design of thetariff regime that provides a clear incentive to customers to use less energy while alsoqualifying for rebates for installing energy efficient appliances.

The paradigm of electricity retailing is on a path of change. Synergy is redefining energyretailing to keep pace with that change to ensure value based energy solutions are available tocustomers.

5.2.1 SYNERGY'S VALUES

The organisational values on which Synergy bases its reputation and with which it is deliveringon its vision are:

• Enterprising: Enables the business to seize opportunities, move ahead, take the initiative,innovate and focus on being the experts in energy. Synergy supports a culture focused onthe growth of the business, its people, the community, the environment and the State;

• Quality Relationships: Ensures Synergy focuses on establishing good relationships witheach person with an interest in its business: Synergy understands the importance of goodrelationships with customers, staff, stakeholders, the community and the environment;

Spirit: Is an intrinsic quality to enable Synergy to approach work with enthusiasm andeagerness. It breeds a culture of initiative, interest and "giving things a go"; and

• Integrity: Is the foundation that grounds the business. Synergy will keep its promises andbuild trust with customers and stakeholders.

5.3 STRATEGIC THEMES AND INITIATIVES

5.3.1 Relentlessly Drive Operational Excellence and Cost Efficiency

Synergy's recent Business Transformation (BT) programme, Project Columbus, has positionedSynergy as a competition enabled retailer can deliver more and better customer solutionswhile remaining nimble.

The new IT platform enables Synergy to deliver improved product and service offerings whichmeet customer expectations and deliver cost efficiencies, such as bill smoothing and customerself-service through our new integrated website. The website also holds great potential tocommunicate effectively with the community by providing information on a range of topics ofrelevance targeted by customer segment, building understanding of changes in the energysector – the rationale for increasing tariffs and meeting the challenge of climate change.

Improved integration with external agencies has facilitated the management of rebates andresponsiveness to customers in hardship – a vital service to the community.

Most importantly, the platform affords Synergy the flexibility to move into a broader range ofenergy efficiency and environmental product offerings that will enable a cleaner energy futurefor Western Australia. Enhanced customer segmentation capabilities will be progressivelyengaged to maximise the effective targeting of the new products and services.

The benefits of the new platform will continue to grow over coming years as customers take upthe new services and product initiatives.


5.3.2 Grow the Core Business

The most obvious step in enabling Synergy to redefine energy retailing is to secure and growits core business as a priority. While Synergy will continue to use dual fuel (electricity and gas)offers tactically to retain and maximise the profitability of key customers, a major focus will beto grow Synergy gas portfolio position to service our customer needs.

A key to maintaining and growing Synergy's "core" products involves ensuring the security ofsupply and reliability of energy offerings throughout the SW IS. As Synergy represents a verysmall portion of the supply value chain in terms of cost, to a very large degree this involvesplaying a pro-active advocacy role in respect of the end use consumer. Synergy mustadvocate State energy policy, network regulation (gas and electricity) and market rules areformulated and operate in a manner consistent with such objectives and at the same time areas cost effective as is achievable.

5.3.3 Leverage the Customer Base

Fundamentally the most valuable asset of any electricity retailer is its existing customer base.Naturally the customer base is the source of revenue on which the retailer depends, thecustomer base and servicing this customer base is the sole reason for the retailer to exist.Synergy is focused on leveraging the customer base as its primary asset to deepen therelationship and expand the means by which Synergy services its customer needs.

Climate change and increasing energy prices represent two of the largest change drivers inthe market and open opportunities for valuable new products and service offerings, to meetthe evolving energy needs of customers.

By delivering tailored offerings and communications Synergy can strengthen the relationshipwith customers, increasing customer stickiness while reducing the cost to service the customerbase.

Evidence shows it is more cost effective for a retailer to retain an existing customer comparedto winning back a previous customer or securing a new customer. This is the driving conceptbehind leveraging the existing customer base. Efficiently servicing the existing customer baseis more efficient than securing an additional customer. Synergy seeks to grow its businessthrough effective customer service.

5.3.4 Create an Optimised and Secure Supply Portfolio

The wholesale generation market is becoming increasingly complex:

e The global financial crisis has impacted greatly the ability of new and existing generatorsto secure financing as well as creating uncertainty in regard to long term demandforecasts;

o The WA gas market has been characterised by significant price increases and mediumterm supply limitations;

e Transmission constraints have meant that some new generation projects can not currentlybe developed and therefore decreases competitive pressures in the wholesale electricitymarket;

o The need to meet the recently legislated Renewable Energy Targets (RET) and theuncertainty surrounding the Emissions Trading Scheme.


Within this environment Synergy will take a cautious but proactive approach in developing anoptimised and secure supply portfolio. The proactive approach would involve the continueddevelopment of relationships with generators to ensure:

• Electricity is purchased from a range of generators who have different fuels (e.g. coal, gasand wind) and that have a range of different primary fuel sources (e.g. North West ShelfJoint Venture gas and Apache/Santos gas). These both enhance supply security andcreate competitive tension;

• RET requirements are meet by a range of existing and, if financially viable, newtechnologies (e.g. wave, geothermal); and

• Optimised plant configurations are developed to meet the challenge of an EmissionsTrading Scheme.

5.3.5 Developing our Team and Talent for the Future

Synergy's people are a key component of the organisation and a major factor in its success todate and the future. Notwithstanding the above, Synergy's business is in transition and theskills and capabilities which have served Synergy well to date will need to evolve to cope withthe myriad challenges which face the industry, a "redefined" business and planned businessgrowth.

Synergy's People and Culture Strategy seek to meet these challenges by attracting andretaining a talented workforce with the skills, attributes and capabilities to achieve andenhance its business strategy.

Synergy is committed to:

• Embedding its desired culture and the behaviours that will underpin success;

• Strengthen Synergy's culture and build a high performing organisation by driving thephilosophy of rewarding high performance;

• Ensure clear alignment of people process with Synergy's strategic themes and businessdirection;

• Developing capability of the current workforce and bringing new talent and capabilities intothe organisation that drive Synergy's strategic execution;

• Recognising and investing in the development of Synergy's people team and our "star"players;

• Engaging and empowering employees; and

• Development and implementation of a retention strategy for key employees.

5.3.6 Position Synergy as a trusted Customer Advocate and Thought Leader

Synergy has an extremely important role to play in preparing customers and stakeholders for achanging energy future, particularly with customers facing constant and steep increases inelectricity costs. In addition, Synergy has an integral role in the area of security and reliabilityof supply, and ensuring customers fully understand that role, and in increasing customerawareness of the impact of energy consumption on the environment.


2009/10Forecast

With such changes, Synergy is determined to be

• A trusted and expert player in the energy market; and

o An active customer advocate – delivering customer focused energy solutions.

Synergy will continue to work on product development, targeted communications, policydevelopment and education, to assist customers and stakeholders in responding to thechanging energy future, and to be seen to be a trusted customer advocate.

6.1 Balanced Scorecard

2010/11

BUDGET

FINANCIAL

Earnings Before Interest and Taxation ($M) 127.6

Net Profit after Tax ($M) 89.3

CUSTOMERS

Customer Service Index' (%) 0.67

New Promoter Score (Residential) 10% improvement

EMPLOYEE.— -

Organisational Effectiveness Survey I 70%

The new promoter score is an indication of the proportion of customers that would recommendSynergy to other customer.

6.2 Operational Performance Measures

The business will also manage day-to-day performance through the use of a wide range ofoperational key performance indicators. The measures and targets for these operational KPIsover the forecast period are shown below.

Total Number of Calls Received 1,083,434

1,500,000

TBA

% of Calls not answered within 30 9.7%

25.0%

20.0%seconds from when a customer isconnected to a complaint/inquiry line

Average waiting time before a call is 17.4

40.0

20.0answered


% of calls abandoned

CORPORATE RESPONSIBILITIES

Synergy is responsible for purchasing and retailing electricity to customers in the SouthWestInterconnected System (SWIS) serving more than 900,000 industrial, commercial andresidential customers. The primary activities of Synergy include energy trading (purchasing),marketing, electricity and gas sales, customer service and billing and payment processing.Through its billing process, Synergy receives approximately $1.5 billion in revenue per annum.The business operates a dedicated Contact Centre and a limited outbound teleservices group.In addition, Synergy services major customers' needs through an account managementsystem.

Synergy's current and future functions and responsibilities are defined in the business'governing legislation, the Electricity Corporations Act 2005 (/VA) and in the industry'sgoverning legislation, the Electricity Industry Act 2004 (WA) (and subordinate instruments).The Board of Directors is the governing body, reporting to the Minister for Energy, while theManaging Director is responsible for Synergy's day-to-day operations.

Synergy's accountability to Government is met through the Strategic Development Plan (SDP)and this document, the Statement of Corporate Intent (SCI). Both are agreed annually with theMinister.

Legislated Requirements and Functions

Synergy's principal functions, as outlined in Section 44 of the Act, include:

e Supply electricity to consumers and services that improve the efficiency of the electricitysupply and the management of demand;

o Purchase or acquire electricity;

• Generate electricity, but only after the expiry of a prohibition on the generation of electricity(s. 47), which has a minimum period of seven years (i.e. 2013) and could be extended to10 years (i.e. 2016) under order from the Minister;

• Acquire gas and supply it to customers; and

• Provide retail services to Horizon Power (customer management and billing services) andWestern Power (fault call management).

Currently, under its Act, all of the these functions are only to be undertaken in the SWIS in WA,except for those related to gas and the provision of services to Horizon Power, which servescustomers in the North West and regional areas of Western Australia. Outside of WA,Synergy is able to perform all of the above functions.

Synergy may not enter into a contract or agreement without Ministerial approval, under s. 68, ifthe value of the contract or agreement exceeds $20M or $50M for transactions for the supplyof electricity and/or gas (increased annually by CPI commencing 1 July 2009).

The Act specifies Synergy's specific obligations, powers and the relationship with the Minister.These are consistent with the principles of corporatisation underlying the legislation.


In performing its functions, Synergy must, at all times, (s.61):

® "Act in accordance with prudent commercial principles"; and

® "Endeavour to make a profit, consistent with maximising long-term value".

Efficiency and Demand Management Requirements

The Act, related legislation and regulations require Synergy to supply electricity to customersin a way that promotes and improves efficiency in the supply of electricity supply and themanagement of demand. This requirement reflects the fact that Synergy has a significantfranchise market and therefore, can influence the amount of power consumed and the"peakiness" of electricity demand through its business activities. Key initiatives currentlyinclude the activities being conducted under Perth Solar City, outlined in 5.2.3.3.

Trade Practices Act and State Fair Trading Act

Synergy manages compliance with the Trade Practices Act 1974 (Commonwealth) and theFair Trading Act 1987 (WA) by:

® Providing detailed policies and guidelines to staff to assist them in managing theseobligations;

® Developing a compliance culture through the use of mandatory in-house training,supported by the "Safetrac" on-line computer training package; and

O Maintaining in-house regulatory and legal resources to provide guidance to all staff as tothe nature of their obligations under the Acts, and to address any specific issues as andwhen they arise.

Environmental Responsibilities

Synergy is committed to working towards a sustainable energy future by providing innovativeenergy choices for our customers. Synergy will pursue environmental initiatives that will benefitour customers, stakeholders and staff.

Synergy has set objectives and identified initiatives in order to improve our environmentalperformance with regard to wholesale procurement, carbon emissions, internal businesspractices, customer communication and product development. One of Synergy's initiativesincludes the execution of a transaction with the Forest Products Commission for the planting of6.5 million trees in 2009 with the option for additional plantings in future years. Carbon creditsgeneration from the plantation will be used to provide carbon offsets for retail customers inorder to meet their requirements (voluntary or mandatory).

Synergy will also be an active participant in the development and implementation of newenvironmental policies, such as renewable energy targets, emissions trading and emissionstandards.

Social Responsibilities

Relationships with communities are fostered both through commercial relationships, keysponsorships and partnerships that Synergy undertakes each year.


Synergy is strongly committed to providing its customers with a consistently high level ofservice while minimising the cost to serve. The Customer Charter details this commitment toresidential and small use business customers.

Synergy's tariff structure provides for a number of non-commercial activities to meet certainequity and welfare objectives on behalf of the State Government. Managing these CommunityService Obligations (CSOs) absorbs a substantial resource.

The following CSOs are currently undertaken:

• Rebates: Up to five different rebates are available to eligible customers (such aspensioners, veterans, seniors and persons with a Department of Social Security issuedhealth card). Rebates can be claimed for the daily supply charge, account establishmentfee and part of the meter-testing fee. Customers with dependent children listed on healthcare cards are able to claim a rebate for part of the energy charge on their bills.

• Community Service Concession: Eligible charitable and voluntary organisations canelect to take supply on the concessional Cl and D1 tariffs instead of general supply tariffs.

• The Power Price Equity Scheme: This scheme was approved by the Government in2004 to ensure that concession cardholders, who are permanent residents in caravanparks, receive similar benefits to those in standard dwellings.

• Hardship Utility Grant Scheme: Synergy administrates and facilitates the operation ofthe Hardship Utility Grant Scheme (and the related Hardship Efficiency Scheme).

Accounting and Dividend Policy

Accounting Standards

Synergy's accounting policies are consistent with Corporations Law requirements as specifiedin Schedule 4 of the Act. Financial statements adopt the historic cost convention and reflectthe accrual basis of accounting. Consistent with the State Budget, the projected financialoutlook is in accordance with the Australian International Financial Reporting Standards(AIFRS).

Dividend Policy

Dividends are calculated annually on the basis of 75% of Net Profit After Tax, declared in Julyof each year and paid in December of the same year.

Ministerial Reporting

In line with the accountability provisions of the Act, Synergy will provide the Minister with aquarterly report, for the first three quarters and an Annual Report for the whole financial year.Each Quarterly Performance Report will be submitted one month after the end of the quarterand will include:

• an overview of performance and highlights of important achievements.

The Annual Report will follow the end of the financial year and will be provided to the Ministerwithin the time specified by the Act. It will include:

• consolidated statutory financial statements and other statutory information required of anycompany under the Corporations Law;


• an overview of major achievements and an appraisal of future prospects;

• a comparison of performance with Statement of Corporate Intent targets; and

• other information required by the Act to be included, such as the particulars of anydirections given by the Minister for Energy.

In addition to quarterly and annual reports, the Act requires that the Minister be provided with:

• a five-year Strategic Development Plan and this one-year Statement of Corporate Intent;

• a report on staff compliance with any Board issued codes of conduct; and

• any information in Synergy's possession requested by the Minister.


statement of corporate intent ?010/11 - …€¦ · · 2014-07-28the scope encompassed marketing,...

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