The backbone of the State - opengov.nsw.gov.au

The backbone of the State

Annual Report 2003

The Hon. Michael R Egan, MLC The Hon. John J Della Bosca, MLCTreasurer, Special Minister of StateMinister for State Development Minister for Commerceand Vice President Minister for Industrial Relationsof the Executive Council and Assistant TreasurerParliament House Parliament HouseMacquarie Street Macquarie StreetSYDNEY NSW 2000 SYDNEY NSW 2000

30th October 2003

Dear Shareholders

We have pleasure in submitting to you the TransGrid Annual Report 2003 forpresentation to Parliament. The Annual Report includes the Statement of FinancialPerformance for the year ended 30th June 2003 and the Statement of FinancialPosition as at that date certified by the Auditor-General of New South Wales.

The Annual Report was prepared in accordance with the requirements of Section24A of the State Owned Corporations Act 1989 and the Annual Reports (StatutoryBodies) Act 1984 and reporting regulations issued by the New South Wales Treasury.

Yours sincerely

P R Higginson D G Croft, AMChairman Chief Executive

ContentsChairman and Chief Executive’s Report 2Year at a Glance 6Corporate Governance 8MetroGrid 16Our Network 24Capital Works 30Corporate 35

Unregulated Business 40Innovation and Excellence 42Environment 44Community 48People 50Financial Report 53Index 103

Letter to the Shareholders

TransGrid 2003 01

TransGrid Annual Report 2003

Australia’s largest transmission company servingthe National and International Electricity SupplyIndustry

Our Objectives

To provide accessible, efficient, safe and reliable facilities for the transmission of electricity

To be commercially successful

To be environmentally and socially responsible

To identify optimum solutions to provide reliable electricity supply

Our Values

In pursuing its goals, TransGrid seeks to satisfy its customers’ needs and requirementsby drawing on our values of:

Integrity

Open Communication

Trust and Respect

Recognition of Contribution

Commitment to Health and Safety

Competence

02 Chairman and Chief Executive’s Report


TransGrid’s commitment to technological excellence

coupled with its environmental credentials underpins

the organisation’s long term responsibility to ensure

New South Wales has a secure and reliable high

voltage network across the State

03

This year has been one of excellentfinancial results as well as a period ofconsolidation. A number of theorganisation’s major infrastructure projectsare nearing completion.

MetroGrid will be commissioned during thenext financial year reporting period, thusstrengthening Sydney’s energy supplycapabilities.

TransGrid’s commitment to technologicalexcellence coupled with its environmentalcredentials underpin the organisation’s longterm responsibility to ensure New SouthWales has a secure and reliable highvoltage network across the State.

Meeting Demand

MetroGrid is one of the largest and mostambitious electricity transmission projectsundertaken in New South Wales in morethan two decades.

MetroGrid involves the reinforcement oftransmission from an existing substation inSydney’s south to a new state of the artsubstation in Haymarket. At the time ofreporting MetroGrid is more than two thirdscomplete and well on target to meet theproposed commissioning dates.

This project, which will ensure reliability ofsupply for Sydney, will service more than one million residents and business usersacross Sydney. MetroGrid has beenplanned in meticulous detail and built with aminimum of disruption to the community.

It is an achievement of which TransGrid canbe justifiably proud.

To meet the growing demand in electricityusage on the Central Coast, construction ofthe Tuggerah-Sterland Line commencedduring 2003. To minimise environmentalimpact, TransGrid has made use of existingeasements, an approach supported byenvironmental and community interests.

Other major projects commenced duringthe reporting period include a communityconsultation process for the proposedWollar-Wellington 330kV Transmission Line.This infrastructure, once in service, willreinforce supply to the State’s west andcentral west.

The organisation has now competed 90%of the construction of the Molong-Manildra132kV Transmission Line. This line is beingconstructed to meet the growing needs ofthe region west of Orange.

A considerable amount of work is beingundertaken to ensure that the key elementsof electricity supply, our substations, meetthe ever increasing load flows of thesystem. This includes works at Yass,Sydney South and Sydney West with afourth transformer being installed atCanberra in July 2002.

Network Performance

TransGrid is responsible for the largest highvoltage network in Australia, over 12,400 kilometres (km) of transmission linesand 81 substations and switching stationsmake up the network.

This year has seen a major program ofconstruction and extensive refurbishmentundertaken by the organisation to ensure itmeets its own high standards as well asinternational benchmarks of reliability.

It is very pleasing to note that TransGridhas exceeded its network target of between99.0% and 99.2% availability, achieving anoverall outcome of 99.64%.


04 Chairman and Chief Executive’s Report

Environment

To ensure that TransGrid meets itscommitment to best environmental practice,an organisation wide Environmental WorkingGroup structure was established. Thisinitiative builds on existing structures andwill further enhance our capabilities in thisvital area.

TransGrid is very proud to have maintainedcertification to AS/NZS ISO 14001 for theenvironmental management systems as wellas having successfully undergone anElectricity Supply Association of Australia(ESAA) Code of Environmental Practiceaudit.

Our commitment to the environment is a coretenet of the organisation, demonstrated webelieve not only by the way we conduct ourbusiness but also in our ongoing support ofkey environmental groups.

TransGrid continued its long term supportof Greening Australia in its environmentalrehabilitation work in the areas ofbiodiversity, salinity and erosion. With oursupport, an area of 380 hectares has beenrehabilitated.

TransGrid again was the principal sponsorof the Western Sydney Environment Week,as well as sponsoring a schools grantsprogram that encourages the involvementof schools in local bush revegetation andeducational activities.

External Business

TransGrid has expanded its horizonsnationally through its telecommunicationfacilities and assets it now owns in otherstates. This demonstrates the capacity theorganisation has to not only manage itsown network in New South Wales but tosupport transmission systems across thenation.

Internationally our relations in China havebeen strengthened with completion of stagetwo of a Regional Market Study with stagethree to commence in late 2003.

TransGrid was invited to facilitate atransmission business systems nationalseminar in Shenzhen with a RegionalElectricity Market seminar scheduled in thesecond half of the year in Kunming.

A number of training programs have beenundertaken for staff from Sichuan Electricity.These programs complement the manyother programs facilitated by TransGrid inAustralia for electricity delegates from China.

Customers

TransGrid is committed to providing a safeand reliable service for its customers. ManyConnection Agreements were facilitatedduring the reporting period.

TransGrid continued to offer guidance andassistance to the Market on connectionprocesses.


TransGrid is well placed to meet current and future

challenges. The extensive capital works program is

well under way. The MetroGrid project is on target to

meet Sydney’s expanding energy needs and the

commitment to system reliability has been realised

05

People

People are the key to the organisation andas such the organisation’s energies arefocused on the health and well-being of its staff.

The words ‘safety is our first priority’ arenot merely platitudes but reflect a corevalue of the organisation.

We are delighted to report that TransGridachieved the best health and safety resultsince the organisation’s inception.

To ensure the organisation is well equippedto meet the challenges and responsibilitiesof managing Australia’s largest high voltagetransmission network, a number of initiativeshave been implemented; these include:

■ Succession planning program

■ 11 new apprentices employed

■ Growth of Graduate, Cadet andScholarship programs

■ Customised program in BusinessManagement developed in conjunctionwith the University of New England.

Challenges

TransGrid is well placed to meet currentand future challenges. The extensive capitalworks program is well under way, theMetroGrid project will meet Sydney’sexpanding energy needs and thecommitment to system reliability has beenrealised.

Our core responsibilities to our customers,stakeholders and the environment willcontinue to drive our effort.

P R Higginson D G Croft, AMChairman Chief Executive


People are the key to the organisation and as such

the organisation’s energies are focused on the health

and well-being of its staff

06 Year at a glance


Key Performance Indicators (Including Significant Item*)

Earnings Before Interest and Tax ($ million) 169.7

Operating Profit Before Tax ($ million) 82.3

Gearing Ratio 55.3%

Interest Cover (times) 1.9

Asset Base ($ million) 2,807.4

Revenue ($ million) 412.0

■ TransGrid’s largest single project in 20 years, MetroGrid, a new 28km undergroundtransmission line into central Sydney, 68% complete and is scheduled for operation in the2003/2004 summer

■ Comprehensive community and environmental management programs successfullyimplemented as an integral part of MetroGrid

■ Establishment of an organisation wide Environmental Working Group

■ The worst bushfire crisis on record managed successfully through outstanding effortsacross the organisation – more than 600km of transmission lines were exposed to thefires (previous record was 200km) with no major interruptions to supply and only onesupply loss – in the Cooma/Bega area

■ State System Operations Control successfully transferred from Carlingford to Wallgrove,Central Regional Control, and a new state of the art Supervisory Control and DataAcquisition (SCADA) system introduced

■ Construction of the Tuggerah-Sterland 330kV Double Circuit Line commenced and will becompleted in the first quarter 2004

■ Upgrades to substations throughout the network commenced, including at Sydney South,Sydney West, Yass and Canberra

■ The National Electricity Tribunal found South Australia/New South Wales Interconnection(SNI) justified. Murraylink Transmission Company launched an appeal, with a decisionlikely before the end of 2003.

* Significant Item comprises Net Movement in Employer’s Superannuation Reserve

Return on Assets (%)

Network Availability (%)

Lost Time Injury Frequency Rate (LTIFR)

Return on Equity (%)

Network Reliability (System Minutes Lost)

Capital Expenditure ($ million)

07


7.44

11.7

8

-7.0

9

4.90

7.38

99 00 01 02 03

0.96

4.23

0.67

0.44

4.40

99 00 01 02 03

81.5

196.

4

168.

1

248.

8

260.

9

99 00 01 02 03

8.20

9.83

-0.4

2

5.19

6.19

99 00 01 02 03

99.3

7

99.4

2

99.6

2

99.6

9

99.6

4

99 00 01 02 03

4.9

8.3

6.3

4.7

2.1

99 00 01 02 03


08 Corporate Governance

Minister

TransGrid is subject to the control anddirection of its Portfolio Minister.

From 1st July 2002 to 1st April 2003,TransGrid formed part of the portfolio ofThe Hon. Kim Yeadon, MP, Minister forInformation Technology, Minister for Energy,Minister for Forestry and Minister forWestern Sydney.

From 2nd April 2003 to 30th June 2003,TransGrid formed part of the portfolio ofThe Hon. Frank Sartor, MP, Minister forEnergy and Utilities, Minister for Scienceand Medical Research, Minister Assistingthe Minister for Health (Cancer) andMinister Assisting the Premier on the Arts.

Shareholders

TransGrid’s Board of Directors isresponsible and accountable to the votingshareholders, being the New South WalesTreasurer and the Special Minister of State,who each hold one share for and on behalfof the New South Wales Government inaccordance with the State OwnedCorporations Act 1989.

Structure of the Board

The Energy Services Corporations Act 1995provides for the Board of TransGrid toconsist of:

a. the Chief Executive

b. one director to be appointed by thevoting shareholders on therecommendation of a selectioncommittee comprising:

i two persons nominated by the portfolioMinister,

ii two persons nominated by the LaborCouncil of New South Wales, eachbeing a person selected by thecommittee from a panel of threepersons nominated by the LaborCouncil; and

c. at least two and not more than five otherdirectors to be appointed by the votingshareholders at their discretion.

One of the directors is to be appointedChairperson of the Board and another is to beappointed Deputy Chairperson of the Board.

The part-time directors of the Board ofTransGrid are appointed to the Board for aperiod determined by the shareholders.

Responsibilities of the Board

The Board is responsible for the overallcorporate governance of TransGrid,including setting the organisation’s strategicdirection, and setting goals formanagement.

Board Committees

To assist the Board in fulfiling its corporategovernance responsibilities, the Boardutilises the Board Audit Committee and theBoard Committee – Remuneration andStructure. A charter governs thesecommittees and the Board delegates theirpowers and procedures.

The Board committees meet on a quarterlybasis and at such other times asconsidered appropriate.

Non-executive directors chair the Boardcommittees. The Chief Executive is also amember of the Board committees. Seniorexecutives and management may be invitedto attend committee meetings.

The Board is responsible for the overall corporate

governance of TransGrid, including setting the

organisation’s strategic direction, and setting goals

for management


09

Board Audit Committee

The Board Audit Committee reviews andassesses internal processes fordetermining, monitoring and assessing keyrisk areas. It ensures that the organisationhas an effective risk management system inplace, clear policies and procedures forreporting, actioning and documentingbreaches of laws including fraud and theft.It meets regularly with internal auditors todiscuss the control environment includingthe processes in place for improvement.

This committee sets the scope of theinternal audit function, reviewing theInternal Audit Mission Statement andCharter, the Risk Management Charter andthe Code of Ethics. The committee reviewsthe adequacy of resources and the outputof the internal audit functions. In addition,the committee reviews the adequacy andeffectiveness of management’s control ofrisk in relation to operational activities,financial reporting and compliance.

Membership of the committee is BruceVaughan, AO (Chairman), Philip Higginson,The Hon. Brian Langton and David Croft, AM.

Board Committee – Remuneration and Structure

The Board Committee – Remuneration and Structure reviews remuneration policiesand procedures to ensure that practicesadopted for the determination ofremuneration for TransGrid’s seniorexecutives are applied in line with NewSouth Wales Government policy.

Membership of the committee is PhilipHigginson (Chairman), Bruce Vaughan, AO,Marlyn Robertson and David Croft, AM.

Terms of Office and Remuneration

The remuneration of each Non-executivedirector is paid out of TransGrid funds, andis determined by the shareholders. Thetotal income received, or due receivable, by all directors of TransGrid is listed in theNotes to the Financial Statements (item 23).The Chief Executive is not entitled to anyadditional remuneration for being anExecutive Director.

Commitment to Corporate Governance

In August 2002, the ASX CorporateGovernance Council was established with a mission to develop an industry wide supportable and supported framework forcorporate governance.

The ASX Corporate Governance Councildeveloped 10 essential principles ofcorporate governance, supported by 28recommendations, which were publishedon 31st March 2003.

This framework primarily relates to listedcompanies; however, in the interests ofgood corporate governance it wasconsidered appropriate to examine therecommendations and consider TransGrid’scurrent corporate governance practices inrelation to these recommendations.

This review of TransGrid’s corporategovernance practices was undertaken inApril 2003. It was confirmed that TransGridalready had a high degree of alignment withthe recommendations. The minor gaps inalignment that were noted have beenaddressed leading to an effective system ofcorporate governance within TransGrid.

Meetings of the Board

The Board meets once per month andBoard committees meet on a quarterly oras required basis.

The names and details of Board membersare included on pages 10, 11 and 12 withthe various committees and membersincluded in the Statutory Informationsection of this Annual Report.


The Board

Mr Philip HigginsonChairman

Mr Philip Higginson has served as Chairmansince 1st February 1995. Philip’s relationshipwith TransGrid extends back to 1994 whenhe was appointed Chairman of Pacific GridPty Ltd, a wholly owned subsidiary of Pacific Power.

Philip is also Chairman of EmploymentNational Limited, Chairman of Allen CapitalFunds Management Pty Ltd and a director ofthe publicly listed hire goods companyNational Hire Group Limited and his currentexecutive role is as Managing Director ofPRO:NED Australia Pty Ltd, a companyspecialising in non-executive director searchand selection and board governance advice.

Philip has had extensive experience in seniormanagement positions in the industrialmanufacturing sector and was employed for30 years with the global chemical giant ICIAustralia Limited, the last 10 years of whichwas as Manager for New South Wales.

An experienced company director havingserved for lengthy periods as Chairman ofthe Royal Botanic Gardens and DomainTrust, a director of the Home PurchaseAssistance Authority, a member of the boardof Focus Publishing Pty Ltd, a Vice-Presidentof the New South Wales Chamber ofManufactures, a director of the EmployersFederation Limited, a Vice-President of theConservatorium of Music Foundation, andover 15 years with the Salvation Army, inwhich he served both on the Advisory Boardand two terms as Chairman of the SydneyRed Shield Appeal. He also served two terms

The Board

Meetings of the Board

Meetings Leave of Meetings EntitledAttended Absence Granted to Attend

Mr P R Higginson 11 - 11Mr R B Vaughan 9 2 11Mr D G Croft 11 - 11Mr N Betts 8 3 11The Hon. B J Langton 11 - 11Ms M C Robertson 5 - 5

Mr Philip HigginsonChairman

Mr Bruce Vaughan, AODeputy Chairman

Mr David Croft, AMExecutive Director and Chief Executive

11

as the Federal President of the AustralianBritish Chamber of Commerce, and was amember of the board of advice of the globalinsurance broking giant, Aon Ltd. A one timeVisiting Fellow of the Faculty of Engineeringat the University of New South Wales and amember of the board of the the University ofNew South Wales Foundation, hisqualifications are in marketing and generalmanagement and he is a current member ofthe Australian Institute of Management andthe Australian Institute of Company Directors,currently serving on a sub committee of thelatter reviewing director education syllabi. Aninaugural member of the board of the BellShakespeare Theatre Company, a member ofthe Australia Day Council, a member ofSydney Rotary and a member of the RoyalBotanic Gardens and Domain TrustFoundation round off his prior practicalcommunity service commitments,obligations, interests and duties.

Mr Bruce Vaughan, AODeputy Chairman

Mr Bruce Vaughan has served as theDeputy Chairman on the TransGrid Boardsince 1st February 1995.

Bruce is the Chairman of Queensland Sugar

Limited; Chairman of the Global Alliance forSugar Trade Liberalisation and Reform (10countries); and President and Chairman ofthe Research Institute of Asia and thePacific (the University of Sydney).

Formerly, Bruce was Chairman of MIMHoldings Ltd, Chairman of Dalgety FarmersLtd, Chairman of ICI Australia Ltd, DeputyChairman of CGU, director of PacificGrid PtyLtd and director of Tubemakers of Australia.Bruce was also a founding member of theBusiness Council of Australia.

He brings varied experience and a broadbase of knowledge and contacts to theTransGrid Board.

Mr Neville BettsDirector

Mr Neville Betts was appointed to theTransGrid Board on 30th June 1998.

Neville is currently an Organiser of theElectrical Trades Union of Australia, aposition that he has held since 1984. He isalso a Member of the Divisional CouncilPower Industry Committee, DeputyChairman of the Utilities and LightManufacturer Industry Training AdvisoryBoard (ITAB) and a former Member of the

Mr Neville BettsDirector

The Hon. Brian LangtonDirector

Ms Marlyn RobertsonDirector

Mr John ByrneGeneral Manager/Commercial and Board Secretary



ACT Labor Council Executive and IndustrialRelations Committee.

In addition, Neville is a Member of theAustralian Institute of Company Directorsand a Graduate of the Mount Eliza Business School.

He brings to the TransGrid Board an in-depth understanding of the electricityindustry and its associated union activities.

The Hon. Brian LangtonDirector

The Hon. Brian Langton was appointed to theTransGrid Board on 15th December 1999.

Brian has extensive experience ingovernment, having been the State Memberfor Kogarah for 16 years and, prior to this,an Alderman on Kogarah Council for 12years. During his time as the State Member,Brian held the portfolios for Transport andTourism from 1995 to1997 and EmergencyServices and Fair Trading from 1997 to1998.

In addition, Brian is a Member of theAdvisory Board of Calvary Hospital and aformer Member of the Local GovernmentAssociation Executive and a former Directorof St George Hospital.

Currently operating as a GovernmentRelations Consultant, Brian brings to theBoard more than 30 years experience in thepublic sector.

Ms Marlyn RobertsonDirector

Ms Marlyn Robertson was appointed to theTransGrid Board on 13th December 2002.

Marlyn was formerly the Director of GlobalOperations in the Service Enterprise Unit ofDow Corning Corporation. Marlyn has beenwith Dow Corning in various roles, since1982 when she moved to Australia, afterworking in the United Kingdom and living inAfrica and Egypt.

Marlyn is a member of the AustralianInstitute of Company Directors and holds aBachelor of Economics degree from theUniversity of Edinburgh.

Marlyn brings to the TransGrid Board a wealthof experience gained in a globalmanufacturing organisation.


Mr David Croft has served as an ExecutiveDirector on the TransGrid Board since 30th June 1995.

As Chief Executive of TransGrid, David isresponsible for the development, operationand maintenance of the New South Walesbulk electricity transmission network.

David was closely involved with theformation of the National Grid ManagementCouncil and the development of the NationalElectricity Market (NEM).

In September 2000, David was appointedPresident of the International Council ofCIGRÉ, an international forum betweenutilities, engineers and consultants, operatingin over 80 countries. David is a Director of theEnergy Industries Superannuation Schemeand a Governor of the University of SydneyElectrical and Information EngineeringFoundation. He is also a Fellow of theAustralian Institute of Company Directors.

David brings more than 40 yearsexperience in the management ofinterconnected power systems to theTransGrid Board.

Mr John ByrneGeneral Manager/Commercial and Board Secretary

Mr John Byrne was appointed as GeneralManager/Commercial in February 1995 andbecame Board Secretary in February 2000.

John has more than 39 years experience inthe electricity supply industry with a variedcareer in all aspects of financialmanagement. John was involved in thedevelopment of the electricity market andserved on the Electricity Task Force, whichled to the current industry structure in NewSouth Wales. He is also a Fellow of theAustralian Institute of Company Directors.


13

The Executive Team

David Croft, AMExecutive Director and Chief Executive

Appointed Chief Executive in February 1995.

As Chief Executive, David is responsible forthe development, operation and maintenanceof the New South Wales bulk electricitytransmission network. David is the Presidentof the International Council of CIGRÉ, aFellow of the Institution of EngineersAustralia, a Fellow of the Australian Instituteof Company Directors and a Fellow of theAustralian Institute of Management. David isalso a director of the Energy IndustriesSuperannuation Scheme and a Governor ofthe University of Sydney Electrical andInformation Engineering Foundation.

Qualifications: BSc, BE (Elec), FIE Aust,FAICD, FAIM

Kevin Murray General Manager/Network

Appointed General Manager/Network inFebruary 1995.

As General Manager/Network, Kevin isresponsible for managing the transmissionassets to achieve a reliable, available and safeelectricity supply in an environmentally soundmanner. The Network Business Unit is alsoresponsible for the field management andcommissioning of major capital worksprograms and for the management ofproperty and easements associated with the network.

Kevin has more than 30 years experience inthe management of high voltagetransmission systems and is responsible formanaging nearly two thirds of TransGrid’swork force. Kevin is the Chairman ofTransGrid’s Executive Occupational Healthand Safety Committee, Convenor of theNational Electricity Network Safety SteeringCommittee and a director of the New SouthWales Energy Industry Ombudsman Board.

Qualifications: BE (Elec), Dip Bus Studies, FAICD

Chris FitzGerald General Manager/Engineering

Appointed General Manager/Engineering inMay 1999.

Chris has extensive experience in theelectricity supply industry, fromtelecommunications, protection systemsand SCADA through to high voltagetransmission line and substation design andmajor project management. Chris has alsoplayed a significant role in the developmentof TransGrid’s community consultationpolicy with respect to project developmentand environmental impact assessment.Chris currently chairs the ExecutiveResearch and Development Committee inTransGrid. He is a Fellow of the Institutionof Engineers Australia.

The Engineering Business Unit isresponsible for the engineering design andspecification of the high voltage network,plant specification and procurement, andthe project management of TransGrid’smajor capital works. It provides specialistservices to other TransGrid business unitsand undertakes high voltage engineeringconsultancies in Australia andinternationally.

Qualifications : BSc, BE (Hons), ME, Grad Dip (Bus Admin), FIE Aust, CP Eng

Don HuttGeneral Manager/CorporateDevelopment

Appointed General Manager/CorporateDevelopment in April 2000.

Don has more than 10 years experience onpolicy development in the electricityindustry. He has been closely involved inthe structural reform processes of the NewSouth Wales electricity industry andparticularly, in the policy, legislative andregulatory development of the NEM and its institutions.


The Corporate Development Business Unit provides a range of strategic andadministrative services includingtransmission planning, development andpricing, project development, regulatoryaffairs, NEM compliance, and managementof major customer accounts. Additionally,the Corporate Development Business Unitmanages government, media andcommunity relations.

Qualifications: BA (Politics and Sociology),Public Admin Cert

John ByrneGeneral Manager/Commercial and Board Secretary

Appointed General Manager/Commercial inFebruary 1995.

John has more than 39 years experience inthe electricity supply industry with a variedcareer in all aspects of financialmanagement. John joined TransGrid as theFinancial Controller on its formation inFebruary 1995 and had the responsibilityfor developing TransGrid’s financial policies,procedures and organisational structure.Since that time, his responsibilities haveexpanded to include most of TransGrid’s

commercial activities. John is a Fellow ofCPA Australia.

The Commercial Business Unit providesservices such as finance, treasury, legal,logistics, transport, quality, records, audit,executive services, risk management andunregulated business projects. In addition,John performs the role of TransGrid’s BoardSecretary.

Qualifications: Comm (Acctg Proc) Cert,Cost Acctg Post Cert, Comm Prog Cert,FCPA, FAICD

Lionel Smyth General Manager/Business Resources

Appointed General Manager/BusinessResources in December 1998.

Lionel has over 20 years experience in theelectricity supply industry in a variety ofengineering and managerial roles includingall aspects of transmission assetmanagement and maintenance. Lionel wasinvolved in the development andestablishment of the Energy and WaterOmbudsman Scheme in New South Wales,and is closely involved with the New SouthWales Industry Safety Steering Committee.

The Executive Team


Kevin Murray General ManagerNetwork

Chris FitzGerald General ManagerEngineering

15

The Business Resources Business Unitprovides Health and Safety, Environmental,Property, Human Resource and InformationTechnology services to all TransGrid’sbusiness units.

Qualifications: BE (Elec), Grad Mgt Qual,GAICD

Dave ManningGeneral Manager/System Operations

Appointed General Manager/SystemOperations in July 1999. Retired fromTransGrid in February 2003.

Dave has more than 30 years experience inthe electricity supply industry, particularly inhigh voltage operations and assetmaintenance. He was previously the AreaManager responsible for the assetmanagement and system operations inTransGrid’s Orange region.

Qualifications: Grad Dip (Elec Eng), Post Grad Dip (Bus Studies), AMIEE

Peter McIntyreGeneral Manager/System Operations

Appointed General Manager/SystemOperations in March 2003.

Peter has more than 20 years experience inthe electricity supply industry in a variety ofroles, with particular expertise in highvoltage asset management. He waspreviously the Manager/Asset Performanceresponsible for the development ofmaintenance policies and assetmanagement strategies.

The System Operations Business Unit isresponsible for ensuring the security andreliability of the electricity transmissionnetwork throughout New South Wales inaccordance with the National ElectricityCode. It determines operating policy andimplementation requirements for systemoperations, including facilities required tomonitor and control the high voltagenetwork. Operations staff liaise withNEMMCO and distributors to ensure closecoordination of operating activities.

Qualifications: BSc, BE (Hons), MBA (Technology Management)

Don HuttGeneral ManagerCorporate Development

John ByrneGeneral ManagerCommercial and Board Secretary

Lionel SmythGeneral ManagerBusiness Resources

Peter McIntyreGeneral ManagerSystem Operations


A case study in engineering excellence,community consultation and best practiceenvironmental management


MetroGrid

MetroGrid involves the reinforcement oftransmission from an existing substation atPicnic Point in Sydney’s south to theHaymarket Substation in the southern CBD.It is required to cater for the significantincrease in demand for electricity in Sydney.

MetroGrid comprises three majorcomponents: ■ 28km of 330kV cabling which will be

completely underground. A total of24.5km is being laid in trenches, mainlybeneath public roads, and the last 3.5kmof the route is via a purpose built deeptunnel section under the southern CBDand approaches.

■ A highly compact, state of the artunderground substation in the Haymarket,central Sydney with technologicallyadvanced gas insulated transformers andthe first ever gas management system, toachieve minimal environmental impact.

■ Associated works by EnergyAustralia toconnect the 132kV network to theHaymarket Substation.

MetroGrid will service the more than one million residents, businesses and otherelectricity consumers in the city andsuburbs south of the harbour to BotanyBay, west to Chullora and east to thecoastline.

It encompasses one of the longest cableprojects of its type in the world.

MetroGrid includes a range ofenvironmental and technologicaladvancements:

■ New integrated optical fibre technologywill continuously monitor the cableoperating temperature

■ Design features and cable routing tomanage magnetic fields

■ Haymarket Substation was the subject ofan international design competition

■ Utilisation of world leading gas insulatedtechnology in the Haymarket Substation

■ An extensive recycling programinstigated. For instance, 90% ofexcavated sandstone is being reused forlandscaping, road base and paving andconstruction fill.


18 MetroGrid: Overview

ABOVE LEFT Installation of 132kV GasInsulated Switchgear.

TOP Tunnelling was carried out 24hours a day, seven days a week.

BOTTOM Road Header breakthroughat Haymarket Substation, January2003.

MetroGrid is one of the longest cable projects of its

type in the world

Project Timetable:■ June 2002 – planning and environmentalapproval process completed

■ June 2002 – construction commenced

■ June 2003 – project 68% completed

The various components of the MetroGridproject are targeted for completion from thefourth quarter 2003 through to the firstquarter 2004.

MetroGrid was subject to a two yearplanning and environmental approvalprocess.

The MetroGrid community liaison programis arguably the most extensive everundertaken for any major infrastructureproject in New South Wales. Thecommunity involvement program includes:

■ A full-time community liaison office on the MetroGrid route

■ Three full-time community liaison officers

■ Regular community publications

■ Regular community information sessions

■ Public surveys and follow up

■ A dedicated community information website and information line

■ Coordination with site project management.


ABOVE RIGHT Cable jointing activitieson the MetroGrid project

19

TransGrid’s largest project in two decades

20 MetroGrid: Community

Community ConsultationLaying 24.5km of cable in trenches, mainlyin the middle of suburban roads, and afurther 3.5km of cable in a purpose builttunnel under the CBD inevitably impacts onthe lives of people living and working in theaffected areas.

With the aims of minimising this impact,providing all stakeholders with as muchuseful information as possible, andimportantly, facilitating input into theprocess, TransGrid has implemented one ofthe most comprehensive communityconsultation programs ever associated withan infrastructure project in New South Wales.

A community liaison office is based inKingsgrove, approximately half way alongthe cable route. The community liaisonprogram is made up of the following:

■ Community information sessions

■ Community Liaison Group (CLG)

■ Three full-time community liaison officers

■ Notifications of upcoming works – threeletters and a door knock of residents andlocal businesses

■ Daily visits to site to talk with residentsaffected by construction activities

■ On site meetings with residents todiscuss issues

■ 24 hour 1800 freecall number

■ Signage to advise stakeholders of theproject

■ A community profile on each cablesection to identify liaison issues.


ABOVE LEFT MetroGrid CommunityLiaison Manager talking with aresident living along the MetroGridroute.

One of the most comprehensive community

consultation programs ever associated with an

infrastructure project in New South Wales

21

The MetroGrid Community Liaison Groupmeets every month and each of themembers continues to be briefed on arange of issues such as constructionprogress and the many plans such as theConstruction Environment ManagementPlan (CEMP) that are used to protect theenvironment and community.

Local Government representatives fromSouth Sydney, Canterbury, Hurstville, Cityof Sydney, Marrickville, Bankstown andRockdale have joined other experiencedmembers to make sure that the projectmeets expectations. The CommunityLiaison Group has travelled along the cableroute and conducted many site visits toexperience construction impacts first hand.

As part of the extensive informationdissemination program, an expert from theAustralian Radiation Protection and NuclearSafety Agency (ARPANSA) was invited tospeak to the CLG and answer any questionson electric and magnetic fields (EMFs).

Community SurveysOnce a section of construction iscompleted, residents and stakeholders inthe area are surveyed to ascertain: howinformation was provided; impacts andperceptions of construction activity, andany outstanding issues.

Preliminary results from sections of surveysduring the reporting period indicated 85%of those surveyed believed that TransGrid’sperformance on the MetroGrid project waseither good or very good. The areassurveyed during the year have givenpositive and constructive results. Lessonslearnt from these surveys are beingimplemented in the future sections.


ABOVE RIGHT TransGrid continuallyworked with the communitythroughout the project.

85% of those surveyed believed the MetroGrid

project’s performance was either ‘good’ or ‘very good’

22 MetroGrid: Environment

Environmental Awareness at MetroGridIn keeping with TransGrid’s commitment tominimise the impacts of constructionactivities on the environment, all publicroadways and parklands disturbed by thelaying of underground cable will be fullyrestored. MetroGrid is committed to caringfor the environment by:

■ Complying with all relevant environmentalstatutes, regulations and standards

■ Putting in place environmentalmanagement plans that control the wayworks are carried out

■ Ensuring that environmental factors aretaken into account for each activity.

Local Area ImprovementsPart of the philosophy of the community andenvironmental programs has been to providelasting improvements to the areas disruptedas part of the restoration process. Someexamples of work of this nature commencedor completed along the 28km routed duringthe year include:

Georges River National ParkMetroGrid involved the installation of theelectricity cable through parts of the GeorgesRiver National Park and the upgrade of the

existing substation at Picnic Point.

A firebreak was formed behind housesadjacent to the park. This asset protectionzone will assist in providing bushfireprotection for houses and importantly, anaccess track with a turning circle for bushfire brigade vehicles has been constructed.

A significant number of weeds and exoticplants were removed from the Parkproviding the opportunity for futurerehabilitation works.

As part of the project, an additional 3.5 hectares of the Georges River NationalPark will undergo extensive bushregeneration. The trees, shrubs andgrasses to be planted will include hakeas,banksias, acacia, callistemon, angophora,casuarina and eucalypts native to the parkas well as appropriate fire resistant nativeplants.

In preparation for this, over 26,500 nativeseeds from over 29 species have beencollected to plant as the regenerationproject progresses.

This area is seriously degraded by weedinfestation and a weed managementprogram has been prepared.


ABOVE LEFT During the installation ofthe MetroGrid 330kV cable, particularcare is being taken to return theeasement back to its originalcondition after cable laying. Naturalrock formations are carefully lifted orcut and then replaced in their formerpositions. This photograph shows arestored area adjacent to theGeorges River National Park. Theyellow markers show the alignmentof the cable.

Lasting improvements to the disrupted areas

23

The program will run for approximately three years, commencing with weedclearing and site preparation in the springof 2003.

Virginius ReserveA contribution to the improved amenity of theBankstown area is the installation of a newbike track in Virginius Reserve. This biketrack replaces an old path that runs throughthe reserve and over Little Salt Pan Creek.

Extra Security at Australian Technology ParkTransGrid responded to the changingamenity of the area at the Vice-Chancellor’sOval at the Australian Technology Park inEverleigh through the provision of additionalCCTV. The cameras are focused on the areasurrounding the construction site and thevent shaft, with safety and security benefitsto both the community and the site.

Marrickville Golf CourseUnderboring of the Cooks River during2002 required removal of the Golf Club’spractice facilities. These were replaced witha superior facility on completion of works.

Reusing and RecyclingTransGrid ensures good environmentalpractice by recycling and reusing materialexcavated from the trenches.

At the reporting date, 32,000 tonnes ofmaterial including rock, concrete, clean soiland bitumen had been removed from thecable trenches of which 5,200 cubic metreshad been recycled by TransGrid for reuse atthe Sydney South Substation. Concreteand asphalt from road pavements continueto be fully recycled.

Over 110,000 tonnes of excavated material,mainly Sydney sandstone, have beenremoved from the tunnel section, with over3,000 tonnes being recycled to provide fillrequired for the Sydney South Substation. Asubstantial amount of the remainder has beenutilised by other building sites around Sydneydue to its good qualities as fill.


330kV Cable Trench330kV Cable Tunnel330kV Substation

Haymarket Substation

Sydney South Substation

Alexandria

Tempe

Marrickville

Peakhurst

Hurstville

Picnic Point

Kingsgrove

St Peters

CBD

Botany Bay

MetroGrid Cable Route

Excavated material is reused wherever possible

24 Our Network

Network Profile

TransGrid’s high voltage transmissionnetwork is the largest in Australia. Thenetwork comprises over 12,400km oftransmission lines with voltages from 132kVto 500kV and 81 substations and switching stations.

It extends across the eastern half of NewSouth Wales from Queensland to Victoria,and the southern part of New South Walesfrom the Snowy system and ACT in the eastto Broken Hill in the west.

Maintenance of network assets, as well asmajor refurbishments and capital works, isundertaken by three network regions(southern, central and northern) and aTechnical Services Group, while networkmanagement and other specialist servicesare located in the business office in Sydney.

ReliabilityTransGrid continues to optimise its assetmanagement policies and strategies to meetthe reliability and quality expectations of itscustomers. Throughout the reporting period,TransGrid continued to deliver reliabilitymatching world’s best practice levels whileundertaking extensive maintenance,commissioning and construction programs.

Reliability relates to the amount of energynot supplied due to a breakdown in thenetwork. Described in terms of ‘SystemMinutes Lost’, it is a measure of the servicelevel of the transmission network as seen bythe customer. It is the equivalent of howmany minutes the total network, whiledelivering the annual maximum MWdemand, would have to be out of service toequate to the amount of energy notsupplied during the year. The same measurecan also be applied to the energy notsupplied in an individual incident.

■ TransGrid has established a reliabilitytarget of 1.3 system minutes rollingaverage over three years

■ For the year 2002/2003, TransGrid’s threeyear rolling average at the end of the yearwas 1.8 system minutes. When convertedto a percentage of energy delivered, thisequates to a reliability exceeding99.998%.

In 2002/2003, there were two extraordinaryevents that impacted upon the three yearrolling reliability average.

Without these two incidents, the reliabilityfigure for 2002/2003 would have been 1.02system minutes.

AvailabilityAvailability, expressed as a percentage of thetotal year, is a measure of the preparednessthat a network has to transmit energybetween its generating and consumingcustomers across its circuits. An effectivenetwork must have a high level of suchpreparedness and TransGrid continues toachieve an availability performanceconsistent with leading internationaltransmission organisations.

This measure relates to the total duration oftransmission circuit outages compared tothe total possible hours available for allcircuits. It indicates the effectiveness ofstrategies to minimise the number andduration of planned maintenance outagesby the optimisation of maintenancefrequencies and the coordination of routine,defect and capital works outages. It alsoreflects the success of maintenancepolicies and practices in reducingunplanned circuit outages.


TransGrid continues to optimise its asset

management policies and strategies to meet the

reliability and quality expectations of its customers

25


While availability is measured as apercentage of the ideal ‘no outages’situation, clearly no responsibletransmission network could attain anavailability of 100%. To do so would requireabsolutely no scheduled maintenance orcapital work to be performed.

TransGrid has a target of between 99.0%and 99.2% at the end of year. For the year2002/2003, TransGrid achieved anavailability of 99.64%.

System OperationsThe TransGrid network is now monitored andoperated around the clock from three controlrooms. There are two regional sites, at Yass(Southern Regional Control) and Newcastle(Northern Regional Control), and one inWestern Sydney comprising both CentralRegional Control and State System Operations.

System Operations has responsibility forensuring the network continues to operatein an electrically secure way and that thereis safe access to the system formaintenance and project work.

As the name suggests, State SystemOperations oversees the entire New SouthWales transmission network. After 18 yearshoused at a purpose built facility in northwestern Sydney at Carlingford, the StateSystem Operations moved to a new controlroom at Wallgrove, in Sydney’s west.

This highly complex move was completedsuccessfully, with operations commencingat the new site within the planned time andbudget constraints.

The new facility incorporates a modern andpowerful Supervisory Control and DataAcquisition (SCADA) system which providesenhanced monitoring over the DataAcquisition Control (DAC) system it replaces.

Variation of Daily State Demand (MW)

Variation of Daily Temperature* (0C)

System Weekly Maximum Demand (MW)

2000

4000

6000

8000

10000

12000

14000

0000

0200

0400

0600

0800

1000

1200

1400

1600

1800

2000

2200

Maximum Winter Demand2nd July 2002

Maximum Summer Demand30th January 2003

Minimum System Demand26th December 2002

10

20

30

40

50

0000

0200

0400

0600

0800

1000

1200

1400

1600

1800

2000

2200

Maximum Winter Demand2nd July 2002

Maximum Summer Demand30th January 2003

Minimum System Demand26th December 2002

2000

4000

6000

8000

10000

12000

14000

July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June

1992-1993 1997-1998 2002-2003

* Observatory Hill, Sydney.

ABOVE LEFT TransGridtelecommunication system has beenextensively upgraded to include afibre optic network.

ABOVE The new State SystemOperations Control Room, Wallgrove.

26 Our Network

This newly installed technology allowsproblems in the network to be located morequickly and more accurately. SCADA alsoenables the staging of virtual replays ofevents to assist post event analysis andincludes a range of other capabilities thatgreatly enhance the ability to monitor andcontrol the network.

Asset ManagementTransGrid continues to review its assetmanagement techniques in order toproduce best practice performance from itsassets. This is reflected by the highstandards of reliability and availabilityregularly achieved.

Asset management involves processes that:

■ Establish maintenance policies andrefurbishment and replacement strategies

■ Assess actual compliance with policies

■ Review the performance trends of plant

■ Compare practices with other bestpractice transmission organisations.

TransGrid employs the following processesin its asset management:

■ Specialist working groups for substations,lines, protection and metering identifyspecific performance related issuesrequiring detailed investigation, reportingand corrective action across the wholenetwork. Policies and strategies arereviewed to balance issues of plantperformance, element criticality and risk exposures.

■ Quarterly Asset Performance Reviewsexamine in detail the trends, causes andconsequences of all forced and emergencyoutages of all network plant. Investigationsare instigated, and recommendationsimplemented, based on factors that havepotential to impact on reliability, availability,the environment or safety

■ Technical Performance Assessments areconducted at all three regions as part of ayearly process. Each region’s processes,technical documentation and condition ofplant are reviewed for compliance withpolicies and standards. Suchassessments provide the local, regionaland network management with feedbackon the state of the assets and processes,as well as identifying any issues that needto be addressed


27

Broken Hill

Buronga

Balranald

Griffith

Coleambally

FinleyDeniliquin

Darlington Point

Wallerawang

Mt Piper 132Mt Piper 330

Avon

Kangaroo Valley

Dapto

BayswaterLiddell

DumaresqTenterfield

Lismore

Koolkhan

Glen Innes

Coffs Harbour

Armidale

Tamworth 330Tamworth 132

Gunnedah

Narrabri

Moree

Muswellbrook Taree

Tea Gardens

Murrumbateman

Dorrigo

Stroud

Karuah

Mudgee

Ilford

Wellington Town

BloweringDam

BHP

Mt Colah

Mt Druitt

Wallerawang

BayswaterLiddell

YassAvon Dapto

Burrendong Dam ClarenceTown

BerylWellington

Parkes

Forbes

MurrumburrahYanco

Wagga 132

Wagga 330Queanbeyan

Canberra

CoomaSnowy Adit

Guthega

Munyang

Sydney EastSydney North

Vineyard

Sydney West

Sydney South

Kemps Creek

Ingleburn

Regentville

LiverpoolBeaconsfield West

Newcastle

Tomago

Waratah

Eraring

Vales PointMunmorah

Tuggerah

Upper Tumut

Murray

Lower Tumut

Hume

Jindera

AlburyANM

Yass

Marulan

BurrinjuckTumut

Gadara

MolongOrange

CowraPanorama

Nambucca

Kempsey

Port Macquarie

Inverell

Wodonga

Redcliffs

Bulli Creek

Dederang

500kV Transmission Line330kV Transmission Line220kV Transmission Line132kV Transmission Line66kV Transmission Line330kV Underground Cable

500kV Substation330kV Substation220kV Substation132kV Substation

Supply Authority Exchange Point

Interstate Exchange Point

Transmission System Voltages

TransGrid Network System


28 Our Network

■ TransGrid’s corporate objectives forelectricity supply, safety, quality and theenvironment continue to be met throughthe implementation of the NetworkManagement Plan 2001/2006. The Planprovides a focus for ongoing analysis withinTransGrid and for continual improvement ofthe transmission system’s management

■ TransGrid continued its participation inthe International Transmission Operationsand Maintenance Study (ITOMS) programfor the fifth time. The program involvesover 20 transmission organisationsworldwide, including all seven fromAustralasia, with the balance fromEurope, Scandinavia and America. Thisstudy will utilise data from the 2002/2003 financial year

■ TransGrid’s internal benchmarkingprocess, TransGrid Inter-RegionalTransmission Operations andMaintenance Study (TIRTOMS),benchmarks its three regions utilising aformat similar to ITOMS. ThroughTIRTOMS, TransGrid is able to identifythose locations that impact on TransGrid’scombined performance in specificmaintenance activities, providing a driverto improve the local performance.

The 2002/2003 fires, in terms of theirpotential impact on electricity supplywere the worst in the history of theState.For a second consecutive season, majorbushfires throughout much of New SouthWales posed threats to life, property andelectricity supply. Flames and carbonisedairborne debris and smoke act asconductors, which can cause a line to trip.

The 2002/2003 fires, in terms of theirpotential impact on electricity supply werethe worst in the history of the State. Theycommenced in October 2002 in the north atArmidale and near the Hunter powerstations, moved down to the Central Coastand Sydney in December, surrounding thecity’s outer suburbs with a pall of smokeand ash. Then came the terribleconflagrations in January 2003, with the tragic loss of four lives and thedestruction of over 500 houses and thehistoric Mt Stromlo Observatory inCanberra, as well as one million hectares ofthe Kosciuszko National Park.

Estimated network bushfire exposureduring this period was more than 600km oftransmission lines, compared to the 200kmfor the 2001 Christmas New Year fires.

The fires caused 201 outages of 330kV and500kV transmission lines from 5th October2002 to 2nd February 2003, including 103trips with auto reclose and two at therequest of the Bushfire Service foremergency operations.


TransGrid’s approach to performance is all

encompassing

ABOVE More than 600km oftransmission lines were exposed tothe ravages of bushfires in January2003.

ABOVE RIGHT Aerial view of UpperTumut Switching Station after thebushfires.

29

Seventeen TransGrid 132kV transmissionline trips occurred due to bushfire faultsover the period, mainly on southern lines inthe Canberra/Kosciuszko area.

In one day, 4th December 2002, thenetwork experienced more main gridtransmission trips than would normally beincurred in five years!

All high voltage transmission equipment andassociated systems performed extremelyreliably. Despite the fact the fires were theworst on record, TransGrid had only oneloss of supply, namely from 132kV lines inthe Cooma, Bega and Jindabyne areas.

The system remained in a stable conditionthroughout the period and NEMMCOresponded affirmatively to requests toreclassify multiple contingencies as crediblewhen double circuit lines were under threat.The performance of the transmission lineswith regard to design and maintenance washighly effective, with only 14 poles havingto be replaced from fire damage.

Such an outstanding result in the mostextreme of circumstances reflects a highlevel of skill and preparedness of allTransGrid staff. At the front line weresystem control operators, who constantlyhad to make critical, and often split second,

routing decisions to ensure continuity ofsupply, and network maintenance teams,whose task was to quickly repair firedamaged equipment.

The entire traumatic episode was alsotestament to the diligent application ofmaintenance policies and trainingprocedures. It also reaffirmed the robustnessof network switchgear and protectionsystems and the appropriateness of firehazard vegetation control. TransGrid iscontinuing to work with rural fire services,building upon the experience gained fromthese bushfires, in right of way and accesstrack management.


To ensure the ongoing reliability of the NewSouth Wales transmission network, and tomeet the requirements of an increasingcustomer demand for electricity, TransGrid iscontinuously involved in augmentation of thenetwork and in replacement or refurbishmentof aging assets.

In addition, the network may occasionallyneed to be reinforced to meet the newrequirements of additional generating plantor of large industrial customers.

As a consequence, TransGrid’s annualcapital works program is the culmination ofan extensive planning and investmentprocess designed to deliver the mostefficient service outcome for our networkusers. The long lead times involved indelivering transmission developments makethe project planning and constructionprocess a vital component in achieving aneffective transmission service delivery system.

Developing transmission networks is quitechallenging and complex, requiringperserverance to steer the projects throughregulatory and environmental approvalprocesses. Both these processes involveextensive stakeholder consultation and areessential to ensure the best result for boththe electricity customer and the widercommunity.

Such capital works are carried out byTransGrid using a competitive contractbased project management process.

The following summaries describe the majorcapital works projects undertaken byTransGrid during this year, in a total annualprogram of over $260 million.

MetroGrid

The MetroGrid project augments theelectricity supply to the CBD and InnerSuburbs. The project includes installation of a330kV cable from Sydney South 330/132kVSubstation to a new 330/132kV componentsubstation currently under construction in theHaymarket, an associated 3.5km cabletunnel into Haymarket and cable bay worksat Sydney South Substation. The project alsoinvolves substantial associated works by thelocal distributor, EnergyAustralia, including anew 132/11kV zone substation at Surry Hillsand 132kV cable works to connect bothTransGrid’s and EnergyAustralia’s newsubstations to the existing 132kV network.

At 30th June 2003, approximately 68% ofthe major elements of the project, namelybasic tunnelling construction, cable layingand construction of the Haymarket sub-station, had been completed. At any onetime up to 345 project personnel have beenworking on the construction project, withnearly 2,000 individuals involved on sitesince construction commenced.

Independent Assessment of MetroGridConstruction ImpactAn outline of the comprehensive communityand environmental management programs iscontained in the MetroGrid feature on page20. As stated elsewhere in this report,TransGrid places great store on not onlyimplementing best practice in these areas ofpublic interest but also regularly commissionsindependent reviews to assess its ownperformance. Given the size and nature ofMetroGrid, an independent report on theproject’s environmental performance over thepast year was conducted by the project’senvironmental management representative.

30 Capital Works


TransGrid completed an annual capital works

program of over $260 million

ABOVE MetroGrid tunellers standingin front of the tunnel boring machinethat worked its way undergroundfrom Sydney Park to to TransGrid’snew Haymarket Substation.

31


It found that given the scale of the projectand the linear nature of the works, theimpacts have been effectively predicted, wellmanaged and within acceptable limits. Thereport concluded that TransGrid and itscontractors are exercising best managementpractices, the adopted constructionpractices are environmentally friendly andeffective, proper environmental safeguardsare in place and TransGrid is complying withrelevant environmental legislation andapprovals granted for the project.

Tuggerah-Sterland 330kV Transmission Line

The construction of the Tuggerah-Sterland330kV Double Circuit Transmission Line willcommence in the second half of 2003 andinto 2004 to meet the increasing demandfor electricity in the rapidly growing CentralCoast area. The double circuit line willreplace the existing 330kV single circuittransmission line that connects theTuggerah Substation and the Munmorah-North Sydney Line at Sterland in the Ourimbah State Forest.

In order to minimise the environmentalimpact, a strategy of utilising the existingeasement was proposed by TransGrid and supported by environmental andcommunity interests following extensiveconsultation with councils and the local community.

The route transverses the Ourimbah StateForest, semi rural properties, the F3Freeway, a residential estate, the mainnorthern railway, Pacific Highway andwetland areas. Scheduled completion dateis first quarter 2004.

Wollar-Wellington Transmission Line

Community consultation commenced inMay 2003 for the planned construction of anew 330kV switching station at Wollar(north-east of Mudgee), and a new singlecircuit 330kV transmission line between thenew Wollar switching station and Wellington330/132kV Substation. The newinfrastructure will reinforce the supply to thewest and central west of the State andensure reliable power supply is available tothe residents of the region. Stage one ofthe environmental impact statement alsocommenced during the reporting period.The project also includes the establishmentof a microwave radio link between Wollarswitching station and TransGrid’scommunication network, to provide bettercommunications to Wellington Substation;and the installation of 50MVAr 330kV shuntreactors at Wellington Substation.

The construction of the project is plannedto commence by 2005, and is anticipatedto be completed in 2007.

ABOVE LEFT Molong-Manildra Lineutilises compact 132kV design tominimise impact on the environment.

ABOVE Sydney South Substationrequired extensive earthworks forthree new 330kV bays.

32 Capital Works


Molong-Manildra Transmission Line

During 2003, TransGrid completed 90% ofconstruction of the Molong-Manildra 132kVTransmission Lne. The new line and theassociated Manildra 132kV Substation andits distribution lines to be constructed byCountry Energy, will provide for the needsfor the region west of Orange which isexperiencing substantial growth through thesuccess of a range of agriculture basedindustries including flour milling and abooming wine sector.

Sydney West Static VAr Compensator

TransGrid has placed a contract with ABB forthe installation of a Static VAr Compensatorat the Sydney West 330 kV Substation. TheStatic VAr Compensator (SVC) is needed tobalance the overall reactive powerrequirement of the New South Wales systemand to provide a dynamic source of reactivepower to support the system duringdisturbances. The project is scheduled to becompleted by mid 2004. Whencommissioned, it will provide a fast actingreactive power source able to control thesubstation 330kV voltage and to rapidlyrespond to network disturbances.

The need for a further source of controlledreactive power arises from continuing loadgrowth throughout New South Wales andfrom the expected power flows under theNEM. Traditionally, power flows have beenfrom power station to load centre but underthe NEM large power flows into and fromneighbouring states can now occur. Thesepower flows can fully utilise transmission linecapacities and create additional VAr losses.The SVC, through the provision of additionalreactive power, will improve the utilisation ofthe existing transmission network and willadd to the reliability and quality of supply.

Sydney South 330/132kV Substation –Replacement of Transformers andAugmentation

Sydney South 330/132kV Substation is a keypoint of supply for the Sydney metropolitanarea and the CBD and requires increasedtransformer capacity. A program of replacingthe aging units, which are approaching theend of their economic life, commenced inMarch 2003 and is scheduled to becompleted before December 2003.

Augmentation of the substation is alsorequired to facilitate the termination of the new MetroGrid cable and to provide threenew 330kV bays for additional reactive plantto be installed at Sydney South. Workcommenced in October 2002 and isscheduled for completion by the end of 2003.

ABOVE Additional 330/132kVtransformer installed at Wallgrove.

ABOVE RIGHT Capacitor banksinstalled at Wallgrove.

33


Yass 330/132kV Substation –Reconstruction

A contract for the construction of the newsubstation at Yass, the first 330kVsubstation developed on the TransGridsystem in 1959, was awarded in April 2003with work expected to be completed on theexisting site by September 2004.

Sydney West 330/132kV Substation –Installation of Transformer

The Sydney West Substation providessupply to a major part of Western Sydney.The increasing load in this region,particularly during summer peaks, hasnecessitated the installation of an additional330/132kV transformer. This project, whichincreased the number of transformers to five,was successfully completed in December2002 in time for the summer peak loads.

Canberra Substation Augmentation –Installation of Transformer

The Canberra 330/132kV Substation is a pointof supply for both ACTEW Corporation andCountry Energy. It is used to supply the loadto the Australian Capital Territory andCanberra City, Queanbeyan and parts of theSouth Coast region. The load on thissubstation is increasing and the installation ofthe fourth transformer will ensure that bothlocal distributors continue to have a reliablepoint of supply.

Installation and commissioning werecompleted in July 2002.

34 Capital Works


Other Capital Projects Work Completed or in Progress

Project Purpose Progress

Albury to ANM (Australian Relocation of 12km 132 kV Commissioned July 2002Newsprint Mills) Transmission transmission line for the Line Albury Wodonga Development

Corporation

Canberra 330/132kV Installation of fourth transformer Commissioned July 2002Substation to meet growing load in

Canberra area

Coleambally 132kV New 132kV line bays installed to Completion scheduled forSubstation improve the reliability and security September 2003

of supply to the South West area

Deniliquin 132kV Substation Installation of capacitor bank Completed July 2002

Finley 132kV Substation Installation of capacitor bank Completed September 2002

Molong to Manildra 132kV Reinforcement of supply to Completion scheduled forTransmission Line Manildra Flour Mill August 2003

Queanbeyan 132kV Installation of second transformer To be commissioned in Substation July 2003

SNOVIC Project Transmission line uprating and Completed December 2002control system implementation are required in New South Wales as part of overall project to increase Snowy/New South Wales export capability to Victoria

Sydney West 330/132kV Installation of transformer to meet Installation of the newSubstation growing load in the Western transformer completed by

Sydney area December 2002 and is now in service

Sydney West 330/132kV Installation of a 200MVAr 330kV Completed December 2002Substation tuned capacitor bank is required

to provide system reactive support

Sydney West SVC Installation of Static VAr Completion scheduled forCompensator (SVC) mid 2004

Tuggerah 330kV Substation Installation of 132kV Scheduled for completioncapacitor bank July 2003

Wollar-Wellington 330kV Reinforce supply to Central Completion scheduled for Transmission Line Western New South Wales 2007

Yass 330/132kV Substation Reconstruction of existing Completion scheduledsubstation for September 2004

Corporate 35


Role of New South Wales Transmission Network in the NEM

The New South Wales transmission networkplays a pivotal role in facilitating the NEM.The network is critical to the efficientoperation of the NEM and principallyinterconnects Brisbane to Sydney, and thento Melbourne. Most of this network isembodied in New South Wales.

In this regard, the major event in recentyears was the commissioning of theQueensland New South WalesInterconnection (QNI), the high voltageinterconnector between Queensland to NewSouth Wales. The benefits of QNI innormalising spot prices in the NEM havebeen significant. In addition, QNI hasresulted in increased power flows on theNew South Wales transmission networkwhich will need to be taken into accountwhile planning the development of the NewSouth Wales network.

New South Wales Network DevelopmentConsistent with the development ofnetworks in each state of Australia, theNew South Wales network was planned toprovide reliable cost effective connectionsbetween the major power stations in NewSouth Wales and the major New SouthWales load centres, and to provide reliablesupply to the more remote parts of the State.

Over the past 20 years, there have beenonly two major transmission links built inNew South Wales: the Eraring to KempsCreek 500kV link (which was commissionedin the early 1980s to match the start up ofEraring Power Station), and theBayswater/Mt Piper-Marulan 500kV link(presently operating at 330kV) which wasconstructed in the late 1980s and early1990s, in conjunction with the start up ofBayswater and Mt Piper Power Stations.

During this 20 year period, the customerdemand for electricity in New South Waleshas virtually doubled. Consequently, as aresult of the ongoing demand growth, majordevelopment of the transmission network inNew South Wales is now being planned, tocontinue to provide the expected level ofreliability to electricity customers in this State.

Energy Growth and Electricity DemandEnergy growth in New South Wales hascontinued at approximately 1,600GWh perannum over the past 20 years.

In that same period, winter electricitydemand has, on average, increased byabout 270MW per annum, and summerdemand at about 350MW per annum.

Customers

TransGrid provides a transmission networkservice that forms part of the linkagebetween the producers and consumers ofelectricity. TransGrid is committed toproviding the best value service to all itscustomers and to continually build on thislevel of service through regular customercontact and feedback.

The network that is critical to the efficient operation

of the National Elecricity Market (NEM) interconnects

Brisbane to Sydney and then onto Melbourne. Most

of this network is embodied in New South Wales.

Historical New South Wales Energy Use

Historical New South Wales Winter and Summer Demand

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Winter Demand Summer Demand

During the year, TransGrid processed anumber of connection enquiries andapplications from prospective load andgenerator customers, particularly from windgeneration proponents. The level of interestfrom prospective industrial load customers inthe Newcastle area continues to be strong.

TransGrid contributed to a number ofinitiatives that provided guidance andassistance to the market on the gridconnection processes outlined in the Code.These initiatives included a TransGrid WindGrid Connection Workshop, participation ina Sustainable Energy DevelopmentAuthority (SEDA) Wind Roundtable andconference presentations.

Transmission Pricing Review

TransGrid’s transmission prices for 2002/2003 were calculated for the first timeusing the cost reflective network pricingmethodology specified in Chapter 6 of theNational Electricity Code (NEC). A majorfeature of the Code based prices is thatseparate prices are set for eachtransmission connection point throughoutthe State. These prices show significantvariations between locations, providing alocational price signal to transmissioncustomers.

A series of meetings and presentations onthe price changes was undertaken topresent and prospective customers.

There was continued strong interest frombusinesses considering large industrialprojects in New South Wales and indicativetransmission prices were provided, togetherwith an explanation of the prices and theguidelines relating to transmission discounts.

TransGrid again acted as the CoordinatingNetwork Service Provider for New SouthWales and undertook the pricing allocationprocess for both EnergyAustralia’s andTransGrid’s transmission services. Pricesfor 2003/2004 were published in May 2003,after notification to TransGrid’s customers.

Local Generation and DemandManagement (DM)

TransGrid considers local generation anddemand management as equal options inmeeting the growing demand in New SouthWales.

TransGrid, EnergyAustralia and theDepartment of Urban and TransportPlanning have initiated a high priorityproject to implement a demandmanagement strategy to provide robust,practical and accurate information on theelectricity Demand Reduction (DR)opportunities in the study area that maydefer or avoid future network expansion inthe greater Sydney area. TransGrid andEnergyAustralia are sponsoring the projectby committing a total of $10 million. Anindependent project manager wasappointed in May 2003 to complete theproject within five years.

36 Corporate


100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

1950

/51

1955

/56

1960

/61

1965

/66

1970

/71

1975

/76

1980

/81

1985

/86

1990

/01

1995

/96

2000

/01

2005

/06

2010

/11

37


A Changing Regulatory Environment

The past year has been one of challengeand activity in the regulatory arena.

The most significant event was the releasein December 2002 of the major review ofthe Australian NEM conducted for theCouncil of Australian Governments (COAG).This report, known as the Parer MarketReview, has now formed the foundation forthe ongoing debate on the next phase ofreform of the NEM.

The importance of energy reform wasreflected by the establishment of anAustralian Government Committee, chairedby the Prime Minister, to determine theultimate Commonwealth position on energypolicy. In June 2003, the Ministerial Councilon Energy announced a proposal toestablish a new body responsible for energymarket rules, the Australian Energy MarketCommission, to replace the existingNational Electricity Code Administrator.These developments have implications forTransGrid’s business outcomes and theability of TransGrid to deliver improvednetwork services in the future.

Revenue Reset PreparationsUnder the National Electricity Code,TransGrid’s revenues are subject to periodicdetermination by the Australian Competitionand Consumer Commission (ACCC).Currently, the ACCC conducts this reviewevery five years in line with the incentivebased regulatory framework contained inthe Code. TransGrid is scheduled to have anew revenue cap determination during thenext financial year, covering the period from1st July 2004 to 30th June 2009.

TransGrid’s ability to meet its serviceobligations, including adequate levels ofnetwork reliability, environmental and safetyresponsibilities and its responsibilities toelectricity end users and Market Participantsin the NEM, is impacted by the ACCC’sdetermination.

Substantial resources were committed topreparing the submission to be made inOctober 2003.

South Australia/New South WalesInterconnection (SNI)

Following the National Electricity MarketManagement Company’s (NEMMCO)determination of 6th December 2001 thatSNI is justified as a regulatedinterconnector, Murraylink TransmissionCompany (MTC), lodged an appeal to theNational Electricity Tribunal against thedetermination. On 31st October 2002, theTribunal announced that SNI was justified,rejecting all of the MTC’s grounds forappeal.

On 28th November 2002, MTC filed aNotice of Appeal in the Supreme Court ofVictoria in Melbourne against the Tribunal’sdecision.

In the Appeal, NEMMCO and TransGridwere identified as Respondents to theAppeal. At the Directions Hearing in theVictorian Supreme Court on 25th February2003, the Minister for Energy (New SouthWales) and the Minister for Energy (SA)were joined as respondents to theproceedings at their respective requests.

The substantive hearing on the Appeal washeld in the Supreme Court of Victoria,Melbourne from 23rd to 26th June 2003.

A judgement was handed down by theSupreme Court on 24th July 2003,upholding the Appeal by Murraylink.TransGrid has since lodged a Notice ofAppeal with the Court of Appeal of theSupreme Court of Victoria on 7th August 2003.

38 Corporate


New South Wales Annual Planning Review

TransGrid’s ObligationsTransGrid is responsible for the planningand development of transmission networksin New South Wales.

In its role as the Jurisdictional PlanningBody (JPB) for New South Wales, itrepresents the New South WalesJurisdiction on NEMMCO’s Inter-RegionalPlanning Committee (IRPC), providesjurisdictional information to the IRPC toenable it to assist NEMMCO in producingits annual Statement of Opportunities, andcarries out an Annual Planning Review andprepares an Annual Planning Report forNew South Wales.

TransGrid is registered with NEMMCO as aTransmission Network Service Provider(TNSP) in the New South Wales region ofthe NEM. As a TNSP, it analyses the futureoperation of the transmission network todetermine the extent of any future networkconstraints, conducts annual planningreviews with Distributors to determine theextent of any emerging constraints at pointsof connection and manages the regulatoryapproval process for transmission networkaugmentations in accordance with theCode and the ACCC’s Regulatory Test.

Figure 1 illustrates the main planning andprocess interrelationship of TransGrid’splanning roles and Figure 2 shows the maintasks carried out during the APR.

2003 Annual Planning Review andReport for New South WalesThe Annual Planning Review for 2003commenced in October 2002 with a reviewof the customer demand forecast for NewSouth Wales, considering the regional loadforecasts by Distributors. These forecaststook into account the actual demand levelsexperienced during winter 2002. TransGridprovided the revised New South Wales loadforecast to NEMMCO for inclusion in its2003 Statement of Opportunities publishedon 31st July 2003.

Based on these revised load forecasts,TransGrid has updated its short term (one,three and five years) and longer term (five-10 years) analysis of current and emergingnetwork augmentation requirements. Thedemand forecasts and the results ofnetwork planning review are summarised inthe Annual Planning Report 2003.

The level of information included in the APRis intended to encourage marketparticipants and interested parties toformulate and propose options to relievethe identified constraints, including thosethat may include components of localgeneration and Demand Management (DM)or other options that may provideeconomically efficient outcomes.

The Annual Planning Report 2003 forms abasis for reporting to the New South WalesMinister for Energy on the outcome of theAnnual Planning Review 2003 for the NewSouth Wales transmission system.

39


Figure 2. Annual Planning Process

NSW CodeParticipants and

Interested Parties

TransGrid

Sub

mis

sion

s

Present Annual Planning Review

Comments at Forum

As JurisdictionalPlanning Body

As TNSP

Information to SOO

Figure 1. TransGrid’s Planning Process

Publish Statementof Opportunitiesincluding AnnualInterconnector

Review

IRPC/NEMMCO

Build Project

Resolve Disputes

Publish Final Report

Conduct PublicConsultation

Annual PlanningReviews

Participation asRequired

Prepare TG LoadForecast

Consider SOO andAnnual PlanningReview Issues

Report to theMinister

Hold PublicForum to Present

APR

Prepare and Publish Annual

Planning Report

Prepare DNSPSupply Point Load

Forecast

Planning Analysis

Issues from SOO

Distributors’ LoadForecasts

State LoadForecast

Participants’Comments

Report to Minister

PublicForum

Annual PlanningReport

40 Unregulated Business

Telecommunication Assets

TransGrid owns and manages a network ofmore than 80 radio communication sitesacross New South Wales. These assets arestrategically located and highly regarded bytelecommunication companies and thirdparty network owners for their competitiverental charges and wide coverage ofmetropolitan, regional and rural areas.

In addition to the obvious economic benefitto TransGrid, providing third party access toTransGrid’s infrastructure also assists theenvironment and local communities bymaximising the use of existing infrastructureand preventing the proliferation ofcommunication towers across the State.Furthermore, TransGrid is working withlicensed carriers to utilise existing highvoltage towers for the installation of mobiletelecommunication equipment so as toreduce the need for new mobile phonetowers. Four such installations are currentlybeing implemented.

TransGrid has established a new web site(http://www.transgrid.com.au/services/telecomms.html) to facilitate and streamline thirdparty access to network infrastructure.

TransGrid in China

During 2002/2003, TransGrid continued tostrengthen its relationships with theelectricity industry across China where itcontinues to enjoy a well deservedreputation for excellence.

The beginning of the financial year saw thecompletion of stage two of the East ChinaRegional Market Study by TransGrid withwork on stage three expected tocommence in late 2003.

In September 2002, the China ElectricityCouncil (CEC) invited TransGrid to conducta transmission business systems national

seminar in Shenzhen. Following the successof this CEC engaged TransGrid to conduct aregional electricity market national seminarin Kumming in August 2003.

During 2001/2002, TransGrid conducted atransmission network technical trainingprogram for staff from Sichuan Electricitywhich has led to a request for TransGrid toconduct a further training program for itscommercial/financial staff in late 2003.

During the year, TransGrid hosted andprovided training for 18 separate electricityindustry delegations from China. The recentrestructuring of the electricity industry inChina and the separation of generation from avertically integrated power industry provide animmediate opportunity for TransGrid to assistin both the modernisation of the newly formedtransmission companies and the introductionof competitive electricity markets.

Delivering Broadband to Regional NewSouth Wales

In August 2002, TransGrid, Country Energyand AARNet signed a Memorandum ofUnderstanding for a new, high speedtelecommunication link between Armidaleand Sydney. The agreement, which wassigned at a function held in the University ofNew England (UNE), Armidale, will result infaster and cheaper information technologyto regional centres.

The New South Wales Minister for Energyattended the signing ceremony and said theinitial agreement will serve the immediateneeds of UNE, but also has the potential tobring significant benefits to the whole NewEngland/north-west region. The new link willprovide 15 times the present bandwidthwhile reducing costs by about one third.

Armidale is an important location forTransGrid. It is a major electricity supplycentre in New South Wales and is the


During 2002/2003 TransGrid continued to strengthen

its relationship within the electricity industry including

China where it continues to enjoy a well deserved

reputation for excellence

ABOVE TransGrid operatorsmonitoring a new, high speedtelecommunication link betweenArmidale and Sydney.

RIGHT TransGrid’s live line techniquesexported to Western Australia.

41

interconnection point for electricity transferswith Queensland.

This project illustrates TransGrid’s commitmentto seeking to extract maximum communityvalue from its infrastructure assets.

UNE and TransGrid have agreed tocooperate in facilitating a pilot project toshare the usage of the link with the localcommunity for a period of up to threeyears, when separate capacity can then beprovided on the TransGrid network.

This initiative will form a model that can bereplicated at other regional centres alongTransGrid’s optical fibre network that extendsfrom the Queensland border to Albury.

Live Substation Work in Dampier

TransGrid’s reputation for barehand live linetechniques led to an unusual contract duringthe year with Hamersley Iron which called forthese skills to be adapted to a substationenvironment.

Hamersley Iron has a large iron ore miningoperation in the Pilbara region in WesternAustralia. It relies on a secure electricitysupply for its operations and is a powersupply authority in their own right. Itssystem supplies Dampier and othersurrounding towns and is connected to theNorth-West Grid system up to Port Hedland.

Because of the 24 hour nature of themining operations, outages of the electricitysupply are difficult to obtain and costhundreds of thousands of dollars per hour.

Hamersley Iron’s asset managementstrategies for the Dampier Substationidentified the need to replace all the 220kVbus insulators without interruption tosupply, a task the specialist TransGrid teamundertook in June 2003. The projectinvolved replacing 21 strings of 24mmtension insulators (378 discs) and nineunderslung post insulators.

A massive 160 tonne crane was required toaccess the substation environment withoutinfringing safe approach distance.


ABOVE LEFT A ReinhausenTapchanger monitor, installed on acritical network.

ABOVE TransGrid is a world leader inits approach to the management ofon line monitoring data.

Condition Monitoring

On line condition monitoring has been a keyarea of research for TransGrid in recent years.

A focus for the past year was the trial andevaluation of new monitoring devices, andautomated analysis and decision makingusing data from a range of on linemonitoring devices.

TransGrid has had experience with a widerange of on line monitoring devices overseveral years, including some new devicesin the 2002/2003 year.

For the first time in Australia a Reinhausentapchanger monitor was installed in anetwork, in this case on one of the mostcritical transformers in TransGrid’s networkfor maintaining supply to Sydney’s CBD.The tapchanger monitor is able to quicklydetect a wide range of adverse conditionsand generate alarms with varying levels ofurgency. The experience gained may leadto further installations on other majornetwork assets.

The generation of moisture in transformerinsulation is a key factor in its rate of aging,

and the presence of accumulated moistureover time can affect a transformer’s suitabilityfor service. On line moisture monitoring canassist in assessing the moisture content intransformers, and enable this to be trackedover time. During the year, a number ofmoisture monitors were trialled in severalimportant power transformers with ongoingtests planned.

In 2003, TransGrid agreed to trial a newsurge arrester monitoring device marketedin Australia by ABB, with a two yearevaluation period scheduled.

As well as new devices, further work wasundertaken to evaluate and refine the use of existing devices, including Alstom’s CB-Watch two circuit breaker monitors.TransGrid is one of a few utilities worldwidethat has had extensive experience with on linecircuit breaker monitoring. An on siteevaluation by a leading Alstrom representativefrom France during the reporting period willresult in greater understanding of the use andapplications of circuit breaker monitoring forthe industry world wide.

As well as extensive experience with variousdevices themselves, TransGrid hasundertaken research into the automatedanalysis of on line monitoring data. One of

Trial of a new surge arrester monitoring device

42 Innovation & Excellence


ABOVE RIGHT Partnership Agreementsigning: Mr David Croft, ChiefExecutive, TransGrid and Mr Nori Karasuda, Chief Executive,Fujitsu Australia.

43

the main advantages of on line monitoring isthe ability to have an indication of keyequipment condition parameterscontinuously in real time. With thisinformation at hand, it is possible to performanalyses and checks of several monitoringdevices in combination to achieve animproved determination of the actualcondition of the equipment. The researchundertaken in TransGrid has focused onautomating this process, where possible, sothat the condition monitoring systemprovides advice to users as well as raw data.

Optical Fibre Telecommunication Network

TransGrid’s new optical telecommunicationnetwork features 27 nodes interconnectingover 1,500km of fibre optic cable runningfrom the Queensland to the Victorian border.It is critical to the operation of the powersupply for New South Wales and themanagement of the NEM.

To minimise the environmental impact andtake full advantage of existinginfrastructure, the fibre optic network wasrun in the overhead earthwire using OPGW(optical ground wire).

Fibre spans of up to 182km, whichincorporate technology developed forsubmarine network applications, have beenused to avoid the high cost of adding newrepeater sites.

To achieve low transmission delays andhigh reliability in all circumstances, aninnovative ‘ladder’ network architecturewas developed enabling diverted traffic totake the fastest route in the event of failure.This represents a merging of power systemand telecommunication design practices.This design can also accommodate thedifferent network traffic priorities demandedby power system services.

The telecommunication network has full remote network management thatallows switching, performance monitoring,diagnostics and synchronisation from the main TransGrid maintenancemanagement centres.

During the December 2002 and January 2003bushfires, the power network experiencedfrequent faults. The signalling needed tocorrectly isolate these and maintain supplywas carried over the new optical network thattransverses the fire affected area without anymalfunctions, ensuring the reliability of themain power network.


44 Environment

A commitment to best practiceenvironmental management is a corecommitment of TransGrid and is achievedthrough the preparation and implementationof TransGrid’s Environmental Function Planand Environmental Management System.These specify the environmentalmanagement function across the businessin line with corporate objectives and values.

The past year has been both active andproductive on the environmental front, withmany achievements and milestones realisedthrough the efforts of dedicated staffthroughout the organisation.

Environmental Working GroupsA significant initiative in the reporting periodwas the establishment of a TransGridEnvironmental Working Group structure toensure adequate representation andownership in the development and rollout ofthe various environmental managementelements of the business. This includesbusiness and employee responsibilities,

training, and system documentation. Thestructure is illustrated in the diagram below.

HighlightsOther environmental highlights of thereporting period included:

■ Redefined the business’s EnvironmentalManagement System which sets theframework for the progressiveimplementation of the variousmanagement elements

■ Maintained certification to AS/NZS ISO 14001 for the EnvironmentalManagement System

■ Further enhanced ‘environmentalnetworking’ both within and outside theorganisation. This includes through theTransGrid Environmental Working Group,the New South Wales Electricity NetworkEnvironment Group, and membership ofthe Electricity Supply Association ofAustralia (ESAA) EnvironmentalCommittee.


TransGrid Environmental Working Group Structure

ESAAEnvironmentalCommittee

National Forum forElectricity Industry

New SouthWales NetworkEnvironmentCommittee

EnvironmentalForum for NewSouth WalesElectricity NetworkOrganisations

WasteManagementWorking Group

WRAPPInitiativesWaste MonitoringProcurementRecyclingDisposal

Greenhouse GasWorking Group

GreenhouseChallenge

PCB WorkingGroup

PCB ManagementPCB DisposalPCB Licensing

EnvironmentalAuthorisation/Training Working Group

EnvironmentAuthorisationSystemAssessment Training

EnvironmentalWorking Group

EMS DocumentationPolicyProceduresEMS ReviewsLegislative/RegulationReviewEnvironmentalInitiatives

Executive Environment

The past year has been both active and productive

on the environmental front, with many achievements

and milestones realised through the efforts of

dedicated staff throughout the organisation

ABOVE A tree planting day was heldat Fairfield City Farm on 5th June,World Environment Day as part ofTransGrid’s involvement in the Officeof Western Sydney’s EnvironmentWeek. Approximately 60 primaryschool children from Western Sydneyplanted 400 tubestock ofCumberland Plains Woodlandspecies in a prepared area adjacentto a TransGrid easement accesstrack.

RIGHT TransGrid’s Chairman, MrPhilip Higginson and the Hon. DianeBeamer, MP, Minister for WesternSydney, at the launch of WesternSydney Environment Week.

45

■ Enhanced and further developedTransGrid’s environmental auditingprogram

■ Successfully underwent an ESAA Code ofEnvironmental Practice audit as part ofbeing a signatory to ESAA’s Code ofEnvironmental Practice

■ Participated in the New South WalesGovernment Energy Management Policyand the Australian GovernmentGreenhouse Challenge

■ Was Principal Sponsor of Western SydneyEnvironment Week as part of TransGrid’songoing commitment to the environmentwhere the organisation is active

■ Sponsored the Keep Australia Beautiful‘School Grants Campaign’.

Environmental Authorisation and Training■ Developed an environmental awareness

training package and delivered theprogram to all regional staff

■ Performed environmental skills assessmentas part of the Environmental Authorisationsystem across all the regions

■ Determined the individual trainingrequirements for staff performing activitieswithin transmission line corridors.

Landscape Restoration Workshop■ In conjunction with the New South Wales

National Parks and Wildlife Service and theAustralian Network for Plant Conservation,TransGrid (Southern Region), ran a threeday workshop on ‘LandscapeRehabilitation’ attended by more than 70delegates from around Australia.

Materials Management, Recycling, andWaste Management■ Participated in the New South Wales

Government Waste Reduction andPurchasing Policy

■ Developed a new Waste Managementprocess for use across the business withthe underlying emphasis on materialsmanagement improvement.

Greening Australia – A Major TransGrid CommitmentSince 2000, TransGrid has supportedGreening Australia’s coordinatedenvironmental action, including itsGreenSweep program, with funding of over$300,000 plus 120,000 native trees andshrubs. GreenSweep has so far involvedmore than 120 landholders and 750volunteers in tackling loss of biodiversityand increasing salinity and erosion, througha mosaic of remnant vegetation and nativerevegetation sites.


LEFT Two thousand native trees andshrubs were planted at theheadwaters of the Boorowa River aspart of the TransGrid sponsoredGreenSweep environmental program.

ABOVE TransGrid working in anenvironmental partnership withGreening Australia and the localfarming community to control salinityand promote biodiversity in Yass andGunning Shires.

46 Environment

The total area ‘greened’ under GreenSweepto date is 380 hectares, the equivalent ofmore than 760 football fields. Surveys ofbird activity indicate GreenSweep iscurrently protecting habitat and establishingnew vegetation for more than 8,800 nativebirds including many threatened woodlandspecies.

On Sunday 18th May this year, TransGridstaff, families and friends from around NewSouth Wales planted almost 2,000 nativetrees and shrubs at the headwaters of theBoorowa River in a GreenSweep projectdesigned to control salinity and promotebiodiversity in Yass and Gunning Shires.

In the central west of New South Wales,Greening Australia planted 6,000 trees at theTransGrid substation at Molong, with seedstaken from the adjoining remnant Whiteboxwoodland, an endangered ecologicalcommunity.

Joint Environmental ProgramsTransGrid continues to be involved withuniversities, the National Parks and WildlifeService (NPWS) and local communitygroups in the research and monitoring ofthreatened species and assisting in theirrecovery. Notable examples includeTransGrid’s continued support for themonitoring of the Illawarra GreenhoodOrchid with the Wollongong University,

adjacent to TransGrid’s Dapto Substation,and Red Crowned Toadlet with NPWS andthe University of Technology, Sydney, andthe effects of slashing on Persooniabargoensis near Cordeaux.

Impact Verification ofCoffs Harbour-Kempsey 132kVTransmission LineThe 110km Coffs Harbour-Kempsey 132kVTransmission Line was constructed in2001/2002, mainly on the route of the pre-existing Country Energy 66kV power line,which was dismantled and removed. Thenew power line carries the previous 66kVcircuit and the new 132kV circuit onmodern, aesthetically designed, doublecircuit 132kV concrete pole structures.

During the year, the work was reviewedwith an independent environmental impactverification report and an independentstakeholder satisfaction surveycommissioned.

The verification report involved siteassessment of actual impacts and theeffectiveness of the environmental controlmeasures adopted by TransGrid.

The verification report confirmed that theselection of the rebuild option wassuccessful in reducing the impacts of theestablishment of the new transmission line.Using the route of the existing lineminimised the need to construct new


47

access. Development and land uses byowners and occupiers were already workingaround the existing line. The removal of oldchemically treated wood poles and affectedsoil addressed a potential contaminationproblem in the manner recommended bythe local authorities.

TransGrid had sought approval forconstruction of the line within a narrowdefined ‘corridor’ rather than on a definedalignment. This was successful in providingopportunities to reduce impacts in thedetailed design through ongoingconsultation with affected property owners.

The independent report confirms thatdeviations adopted in the course of detaileddesign and landowner consultationsresulted in improved environmentaloutcomes for property owners and alsoreducing impacts on archeological sites andflora and fauna.

Close liaison with residents resulted inminimal overall noise impact. Actualimpacts on threatened species were notsignificant and the procedures for soil anderosion management outlined in theConstruction Environmental ManagementPlan were consistently applied.

Substantial areas of acid sulphate soils(ASS) were encountered in flood plain areasand the disturbed soils were treated withlime. The report notes a lack of evidence ofsignificant environmental harm due to thesmall areas affected by the works.

The crossing of the Boambee State Forestescarpment has a history of landslipproblems affecting the previous group ofthree Country Energy 66kV lines. Under theproject, all circuits were deviated so that

the lines now span over the area of landslipwith high ground clearance and no accessis required to structure sites midway up theescarpment. This is allowing the area to berevegetated and past problems in this areawill be significantly alleviated.

The post construction review also confirmsthat electric field levels are consistent withthe Environmental Impact Statement (EIS)predictions and that magnetic fields havebeen reduced compared with those existingpreviously due to the 66kV single circuittransmission line.

Magnetic Field Mitigation Research

In conjunction with our cable supplier forthe MetroGrid project, J Power Systems,we have undertaken some original researchrelating to technologies available to reducethe magnitude of magnetic fields in thevicinity of high current capacity cables.

This work was undertaken at a speciallyconstructed cable test site where lengths of330kV cable were placed in subterraneanpositions to simulate actual installationconditions. Tests were then carried outunder controlled conditions to determine theinfluence of various treatments on themagnitude of magnetic fields.

This research is being usefully appliedduring the construction phase of theMetroGrid project and has added to thebody of engineering knowledge in this area.


TransGrid continues to be involved with universities,

the National Parks and Wildlife Service and local

community groups in the research and monitoring of

threatened species and assisting in their recovery

48 Community

TransGrid has a record of communityinteraction that continues to producebenefits for both individual communitiesand TransGrid itself.

One of the demands on TransGrid is that ithas to balance its responsibility to maintainand continually plan for a safe and secureelectricity supply network throughout NewSouth Wales with the interests of localcommunities.

TransGrid is a leader in embracing thecommunity by listening to and respondingto comment, counsel and input. A criticalelement in this process is ensuring accurateand timely information is made available tolocal interests as a foundation for the inputprocess. Issues of concern to localcommunities can cover a very widespectrum including the routing of overheadand underground lines and cables, noiseand dust issues, hours of work, access toland and homes, safety and health issuesand the positioning of substations.

Resources

The process of community consultation isapproached with the same level of rigourthat is applied to TransGrid’s engineeringendeavours. Significant value is placed ondirect and personal communications. Anumber of community liaison officers areemployed by TransGrid. Their job is to builda rapport with the community so that bothparties can have a constructive andongoing relationship based on trust and

mutual respect. Depending on the scale ofa project, a dedicated community liaisonofficer, whose job it is to interact andconsult with the community throughout thework, is attached to a particular activity.Community liaison officers are responsiblefor arranging local information sessions andpersonally visiting residents, homes andlandowners. TransGrid’s communityconsultation process may also encompassliaising with a variety of nongovernment andgovernment organisations and agenciesincluding the National Parks and WildlifeService, Aboriginal Land Councils, localcouncils and the Department ofInfrastructure, Planning and NaturalResources.

Every TransGrid project requires a uniqueand personal community consultationprocess. Community concerns varyaccording to both demographics andgeography – every situation from innerurban locations to remote rural settings canbe encountered and are treated with thesame level of full-time care and concern.

TransGrid’s current MetroGrid project,which has three full-time community liaisonofficers and an extensive list ofcommunication and consultation initiatives,is featured on page 20.


Community consultation is an integral element of

every proposed TransGrid development project.

This is a reflection of the organisation’s commitment

to involving the people whose lives may be affected

by a particular project, from the planning stages to

final delivery

ABOVE Community information sessionheld to discuss possible corridors forthe Wollar-Wellington Transmission Line.

49

Other major projects that were the subjectof community consultation programs duringthe year include:

Tuggerah-Sterland Transmission Line

This project comprised the construction ofa 330kV double circuit transmission linealong the route of an existing easement,which minimised the environmental impactsof the project. Given the sensitivity andconstraints of the areas traversed by thetransmission line, TransGrid decided thatthe environmental assessment for theproject should be similar to that of an EIS,even though planning laws decreed a muchless rigorous process could be adoptedbecause of the existing easement. Thecommunity consultation process wascentral to the project’s success and thisgesture contributed to a positive outcome.

The consultation process comprised twoseries of face to face meetings withresidents along the transmission lineeasement, the distribution of three projectnewsletters to residents in the projectareas, and the holding of a publicinformation session.

Wollar-Wellington Transmission Line

A new 330kV switching station at Wollar(near Mudgee) and a new single circuit330kV transmission line between Wellingtonand Wollar form part of a project that willreinforce the supply to the west and central

west of New South Wales. Construction isplanned to begin in 2005.

Community consultation commenced inMay 2003, with the distribution of a projectnewsletter and the holding of informationsessions at Wellington and Gulgong.Further newsletter releases and informationsessions will be held as the implementationof the project progresses. A two stage EISwill be conducted, one relating to the routeselection and one covering constructionalong the selected route.

Molong-Manildra Transmission Line

During 2003, TransGrid completed 90% ofthe construction of the Molong-Manildra132kV Transmission Line. Communityconsultations were conducted in2001/2002 to identify areas of constraintsand issues of importance to the localcommunity with the aim of refining thepreliminary corridors and selecting a‘Preferred Corridor’ for detailedenvironmental assessment. While thestraight route from Molong to Manildra is20km, as a result of these processes a27km line with 32 deviations was selectedto maintain good separation from thetownship of Molong, Aboriginal heritagesites and environmentally sensitive areas.


50 People

Organisational Development

A range of organisational developmentactivities and programs were implementedduring the year to ensure the ongoingsuccess and growth of TransGrid.

Succession PlanningSuccession planning is essential inidentifying and nurturing future leaders andin ensuring ongoing organisationalcapability. A progressive successionplanning program helps retain key peoplewithin the organisation and makes TransGridattractive to prospective employees.

A program was implemented at the CEO,General Manager, Regional/Group Managerand Branch Manager levels. Following thisinitial implementation, a comprehensivereview of the process was undertakenduring the year and improvementsidentified. An annual review of successionplans commenced in July 2003.

Training and DevelopmentTransGrid maintained its commitment tolifelong learning by continuing to providequality training opportunities to itsemployees throughout year.

This year saw the implementation ofTransGrid’s Mandatory Training PassportSystem and the continued implementationof employee development programs basedon competency standards. These programswill be available throughout the organisationas position descriptions are reviewed andsupporting training programs are sourced.

Apprenticeships TransGrid currently employs 35 apprenticesin the professions of System Electriciansand Communications. There has beenfurther review and refinement of thecompetency based training program withformal assessment of on the job activitiesnow being undertaken for all apprentices.

Leadership Development ProgramsTransGrid, in partnership with the Universityof New England, has continued to developand deliver a customised program inbusiness management (FrontlineManagement). The program offers formalqualifications up to Diploma level. During2002/2003, 34 candidates participated inthe program.

To support the succession planningprocess and complement the FrontlineManagement programs, a leadershipprogram is being developed targeted at the upper levels of management.

Graduate, Cadet and ScholarshipProgramsThe graduate, cadet and scholarshipprograms are an integral component ofTransGrid’s resourcing strategy. During2002/2003, TransGrid continued itscommitment to scholars by offeringscholarships to engineering students at the University of Technology, Sydney, aswell as Newcastle and WollongongUniversities. The graduate program wasreviewed in 2002/2003 to includedevelopment and assessment based uponnational competencies relevant to eachprofession.

Work Force DiversityTransGrid has an established Work ForceDiversity Plan that is reviewed annually and,where appropriate, revised in order to ensurerelevancy and compliance with legislation.Training was provided for all new employeesas part of the induction program.


TransGrid’s health and safety policies and practices

implemented throughout the past year achieved the

best result since TransGrid’s inception and reflects an

organisation wide commitment to health and safety

ABOVE Succession planning isessential in identifying and nurturingfuture leaders and ensuring ongoingorganisational capability.

RIGHT TransGrid’s safety proceduresare put into practice in the AnnualSafety Day Competition at WaggaRegional Centre.

The Referral Officers network was furtherimproved during 2002/2003 withinformation sessions provided to all ReferralOfficers concerning their role. This roleincludes the provision of information,support and advice for employees who feelthat they may be the victim of harassment,discrimination or work place bullying.

Registered Training OrganisationTransGrid achieved two year reaccreditationof its Registered Training Organisationstatus in August 2001 following complianceassessment by the New South WalesVocational Education and TrainingAccreditation Board (VETAB). TransGrid hasrecently resubmitted for reaccreditation fora further five years.

Health and Safety

The health and safety of TransGrid’s people,contractors, visitors and the public are theorganisation’s highest priority. Policies andpractices implemented throughout the pastyear achieved the best result sinceTransGrid’s inception and reflect anorganisation wide commitment to healthand safety. The benchmark statistic thatrecords this fact, the Lost Time InjuryFrequency Rate, was 2.1. There were fourLost Time Injuries at an Average Lost TimeRate of 7.3 days.

Three key objectives were a major focus forthe year:

■ Develop and implement effective riskmanagement in all work places and workactivities

■ Improve and maintain health and safetycommunications through effectiveconsultative mechanisms

■ Eliminate identified ‘at risk’ behaviour.

51

OH&S Statistical Information 2002/2003

Frequency Rate 2.1

Average Lost Time Rate in Days 7.3

Total Lost Time Injuries 4

Total Days Lost 29

No injuries were incurred as a result of electrical accidents.

Lost Time Injuries Sustained

Part of Body Number Type of DaysInjured Injury Lost

Back 1 Strain 2Foot 1 Crush 3Leg 1 Fractures 15Groin 1 Strain 9

Total 4 29


LEFT TransGrid maintained itscommitment to lifelong learning bycontinuing to provide quality training opportunities to staffthroughout the year.

ABOVE TransGrid’s Children’s Safety Calendar takes its safetymessage home.

52 People

Each Business Unit developed strategieswhich addressed these objectives. Ofparticular note was the random auditing ofwork teams (including contractors) andwork sites to ensure safety compliance.

The Safety Communications SteeringCommittee provides a forum for the sharingof health and safety information betweenlocations and ensures communication ismaintained with all staff via their OHSrepresentatives. This committee was alsoactive in implementing initiatives for theQuarterly Health and Safety Themesthroughout the year. These included‘Cancer Awareness’ (Health) and ‘RiskAssessment’ (Safety), among others.Specific theme initiatives includedemployee health assessments,presentations from guest speakers(physiotherapists, nutritionists, exercisephysiologists, etc) and increases in first aidclasses to achieve a goal of 50% of all staffqualified in first aid.

Safety Day and Chairman’s AwardTransGrid’s eighth Annual Safety Day washeld at Wagga in September 2002. Theparticipation rate was high and competitionintense. Tamworth, Newcastle and Yasswere divisional winners with Newcastletaking out overall honours and the SafetyDay Shield.

TransGrid also participated in the ElectricitySupply Industry Field Days and was awardedthird place in the First Aid Competition.

The Chairman’s Safety Award recognises anindividual or team who has made a significantcontribution to safety in TransGrid.

Nominations were received from allTransGrid locations with the award beingpresented to Mr Reg Harris, an EngineeringOfficer from Orange. He is a long standingsecretary and member of the Orange OHSCommittee and an enthusiastic member ofthe Orange First Aid Team. The judgescommended his actions in taking ownershipof specific OHS issues to ensure a saferwork place, including the removal anddisposal of unwanted chemicals from allOrange area work places.

Taking Safety HomeThe children’s drawing competitioncontinues to be a popular event inencouraging safety consciousness at homeas well as work. The number of entriesincreases each year and the level ofawareness of safety issues among childrenis extremely encouraging. The drawings arejudged by a panel with the best selected forinclusion in a calendar. These calendars areposted to employees’ homes withinformation relating to TransGrid’sEmployee Assistance Program and WelfareFund that are services available to bothemployees and their families.



Financial Report 53

Statement of Financial Performance . . . . . . 54

Statement of Financial Position. . . . . . . . . . . 55

Statement of Cash Flows . . . . . . . . . . . . . . . . 56

Notes to and forming part . . . . . . . . . . . . . . . 57of the Financial Statements

Statement by Members of the Board . . . . . 75

Independent Audit Report . . . . . . . . . . . . . . . 76

Beginning of Audited Financial Report


TransGrid Annual Report Fin 23/10/03 10:57 AM Page 53

54 Statement of Financial PerformanceFor the year ended 30th June 2003

Note 2003 2002$'000 $'000

Revenue from Ordinary Activities 2 & 3 411,969 385,906 Expenses from Ordinary Activities, Excluding Borrowing Costs 2 & 4 (242,287) (250,252)Borrowing Costs 2 & 4 (87,388) (82,562)

Profit/(Loss) from Ordinary Activities Before Income Tax Equivalent Expense 2 82,294 53,092

Income Tax Equivalent Expense Relating to Ordinary Activities 5 (34,892) (27,774)

Profit/(Loss) from Ordinary Activities After Related Income Tax Equivalent Expense 47,402 25,318

Increase/(Decrease) in Asset Revaluation Reserve 17 23,531 22,363

Increase/(Decrease) in Retained Earnings on Adoption of New Accounting Standard: AASB 1044 "Provisions, Contingent Liabilities and Contingent Assets” 18 3,585 -

Increase/(Decrease) in Retained Earnings on Adoption of Revised Accounting Standard: AASB 1028 “Employee Benefits” 18 (362) -

Total Revenues, Expenses and Valuation AdjustmentsAttributable to Members of TransGrid and Recognised Directly in Equity 26,754 22,363

Total Changes in Equity Other Than Those Resulting from Transactions with Owners as Owners 74,156 47,681

The accompanying notes form an integral part of these financial statements.



Statement of Financial Position 55As at 30 June 2003

Note 2003 2002 $'000 $'000

Current Assets Cash 6 282 16,669 Receivables 7 53,465 64,383 Inventories 8 20,619 21,680 Other 9 10,236 19,498

Total Current Assets 84,602 122,230

Non-Current AssetsProperty, Plant and Equipment 10(a) & (b) 2,705,403 2,534,324 Future Income Tax Benefit 17,253 16,460 Receivable 134 268

Total Non-Current Assets 2,722,790 2,551,052

Total Assets 2,807,392 2,673,282

Current LiabilitiesPayables 12 91,422 71,830 Interest Bearing Liabilities 16 158,516 147,985 Provisions 13 55,450 9,724 Tax Liabilities 14 535 (1,022)Other 15 19,152 11,103

Total Current Liabilities 325,075 239,620

Non-Current Liabilities Interest Bearing Liabilities 16 1,230,217 1,176,686 Provisions 13 47,596 49,089 Deferred Tax Liabilities 81,111 100,592

Total Non-Current Liabilities 1,358,924 1,326,367

Total Liabilities 1,683,999 1,565,987

Net Assets 1,123,393 1,107,295

Capital and Retained Earnings Capital 19 584,871 644,871 Reserves 17 490,148 466,709 Retained Profits/(Accumulated Losses) 18 48,374 (4,285)

1,123,393 1,107,295




56 Statement of Cash FlowsFor the year ended 30th June 2003

Note 2003 2002$'000 $'000

Cash Flows from Operating Activities

Cash Received in the Course of Operations 457,050 421,128 Cash Paid in the Course of Operations (151,426) (137,571)Interest Received 1,568 2,104 Interest Paid (87,128) (84,651)Income Tax Paid 29 (b) (6,848) (12,581)

Net Cash Flows from Operating Activities 29 (e) 213,216 188,429

Cash Flows from Investing Activities

Purchase of Property, Plant and Equipment (240,355) (239,474)Proceeds from the Sale of Property, Plant and Equipment 6,254 4,551

Net Cash Flows from Investing Activities (234,101) (234,923)

Cash Flows from Financing Activities

Proceeds from Borrowings 224,998 237,993 Repayments of Borrowings (160,500) (197,072)Distribution to Government 19 (60,000) -Dividends Paid 29 (b) - -

Net Cash Flows from Financing Activities 4,498 40,921

Net Increase/(Decrease) in Cash Held (16,387) (5,573)Cash at Beginning of the Financial Year 16,669 22,242

Cash at the End of the Financial Year 29 (a) 282 16,669




Notes to and forming part of the Financial Statements 57For the year ended 30th June 2003

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Underground circuits are valued on the basis of replacementcost estimates per kilometre to construct circuits of differentvoltage types and various construction characteristics.

Transformers are valued on the basis of estimates of the costof replacement transformers.

Substations are valued on the basis of estimates of the cost ofreplacement of component parts.

Capitalised work in progress is brought to account at cost.

Land is valued at market value, except for land under infra-structure assets, reserved for transmission facilities, which is atthe net realisable value. Due regard is given to the level ofexpenditure required to transform land into saleable condition.Buildings are valued at cost to TransGrid at establishment.Valuations have not been adjusted in respect of the potentialeffect of any Capital Gains Tax.

A revaluation of infrastructure assets, non-infrastructure landand staff cottages was undertaken as at 30th June 2003based on price index movements. TransGrid’s valuation policyprovides for a full and detailed valuation of these assets to beundertaken at five-year intervals, in conjunction with TreasuryPolicy and as part of the transmission network revenue settingprocess. In the intervening years, a revaluation based on priceindex movements is undertaken.

Unregulated AssetsUnregulated Assets comprise property, plant and equipmentused by TransGrid to provide services other than regulatedelectricity transmission services. The classes of unregulatedassets as disclosed in Notes 10(a) and (b) are:

■ System Plant and Equipment ■ Communication Equipment

The assets in this class are valued at their costs of acquisition,less associated accumulated depreciation. The carryingamount of these assets are reviewed annually to determinewhether they are in excess of their recoverable amount at balance date. If the carrying amount of an asset exceeds the recoverable amount, the asset is written down to thelower value.

In assessing the recoverable amounts, the relevant cash flowshave been discounted to their present value.


(a) Basis of Preparation

TransGrid is a statutory State owned corporation under theState Owned Corporations Act 1989 and was corporatisedunder the Energy Services Corporations Amendment(TransGrid Corporatisation) Act 1998.

The financial statements are a general-purpose financialreport, and have been prepared in accordance with AustralianAccounting Standards, Urgent Issues Group Consensus Viewsand other authoritative pronouncements of the AustralianAccounting Standards Board.

The financial statements have been prepared to comply withthe requirements of the Public Finance and Audit Act 1983, thePublic Finance and Audit Regulation 2000, the State OwnedCorporations Act 1989 and relevant Treasury Circulars.

The statements have been prepared on the basis of historicalcosts and, except where stated, do not take into accountchanging monetary values.

Where necessary, comparative information has been reclassifiedto achieve consistency in disclosure with amounts for the current financial year.

(b) Basis of Accounting

(i) Valuation

Regulated Assets Regulated Assets comprise property, plant and equipmentused by TransGrid to provide electricity transmission servicesthat are regulated by the Australian Competition andConsumer Commission (ACCC). The classes of regulatedassets as disclosed in Notes 10(a) and (b) are:

■ Buildings and Staff Cottages■ Land■ Easements■ System Plant and Equipment■ Communication Equipment ■ Other Assets

Transmission Grid Infrastructure Assets are valued using anoptimised depreciated replacement cost (ODRC) methodology.Valuations are determined by TransGrid staff and carried out inaccordance with the NSW Treasury Policy Guidelines for theValuation of Physical Non-Current Assets at Fair Value.

Overhead transmission lines are valued on the basis ofreplacement cost estimates per kilometre to construct the different voltage type transmission lines categorised accordingto various construction characteristics applicable to eachtransmission line.


58 Notes to and forming part of the Financial StatementsFor the year ended 30th June 2003


(ii) Capitalisation

Capital expenditure is defined as expenditure in relation to:

■ acquisition of a new unit of plant;■ installation of a new unit of plant;■ work performed on a unit of plant, where the need for the

work existed at the time the unit was acquired and the workwas carried out prior to it being put into operation;

■ replacement of a unit of plant, or of a substantial part of a unitof plant;

■ an addition or alteration to a unit of plant, which results in asignificant improvement to its overall design.

Expenditure is not capitalised below a minimum threshold of $1,000.

(c) Changes in Accounting Policies

Accounting policies are consistent with those applied in theprevious year except for changes arising from the applicationof the new AASB 1044 "Provisions, Contingent Liabilities andContingent Assets", revised AASB 1012 "Foreign CurrencyTranslation" and revised AASB 1028 “Employee Benefits”.

The accounts have been impacted in the following areas:

■ AASB 1044 resulted in the restatement of the opening balance of the insurance provision. Further details on theimpact are provided in Notes 1(i), 13, and 18.

■ AASB 1012 resulted in the inclusion of net assets or liabilitiesarising from a forward exchange contract, which are classifiedas a hedge being recognised on the Statement of FinancialPosition. Also the gains or losses on contracts intended tohedge specific purchases or sales are deferred on theStatement of Financial Position until the hedged purchase or sale is recognised. Further details including prior year comparative information are provided in Notes 1(q), 9, 15,and 31.

■ The revised AASB 1028 resulted in the restatement of theopening balance of the provision for employee entitlementsto annual leave. Further details on the impact are provided inNotes 1(g) and 18.

(d) Depreciation

Items of property, plant and equipment, including buildings butexcluding freehold land and easements are depreciated overtheir estimated useful lives. The straight-line method is used.Assets are depreciated from the month of acquisition or inrespect of constructed assets, from the time the asset reachespractical completion and is ready for use. Asset lives arereviewed annually in accordance with Australian AccountingStandard AAS 4, "Depreciation of Non-Current Assets".

The useful lives presently assigned to TransGrid's major assetsare shown in the table below:

Buildings 30 years

System Plant and Equipment – Regulated 40-50 years

System Plant and Equipment – Unregulated 20-40 years

Communication Equipment – Regulated 10-35 years

Communication Equipment – Unregulated 35 years

Other Assets 2-10 years

(e) Borrowings

Loans are carried at their principal amounts, which representthe present value of future cash flows associated with servicingthe debt.

Borrowing costs include interest and costs incurred in connec-tion with arrangement of borrowings. Discount/Premium onloans is in the nature of a cost/cost reduction of borrowing.Discount/Premiums are amortised over the term of the loansunless the amounts are insignificant where they are written offat the time of the loan. The amount applicable to each year isincluded in the Statement of Financial Performance as part ofTransGrid's borrowing costs for the year.

Interest on borrowings is recognised as expense in the periodin which it is incurred unless it relates to qualifying assets.Qualifying assets are assets which take more than 12 monthsto get ready for their intended use. Where funds are borrowedgenerally, interest on the borrowings is capitalised to qualifyingassets in accordance with AAS 34 "Borrowing Costs".

The amount of interest attributed to qualifying assets duringthe year was $6,918,000 ($8,183,000) at a weighted averagerate of 6.48% (6.57%).

(f) Dividends

Provision is made for the amount of dividend payable in relationto the current financial year, in accordance with the dividendrecognition policy set out in Treasury Circular NSW TC 03/02"Accounting for Dividends". Accordingly, a dividend in relationto the financial year is taken to be determined before balancedate, consistent with the requirements of AASB 1044.


59

(g) Employees' Leave Entitlements

A calculation in accordance with AASB 1028 "EmployeeBenefits" is made each year in respect of TransGrid's liability atbalance date for employees' entitlements to long service leaveand annual leave, and an annual contribution is made to adjustthe provision to an amount which is considered adequate tomeet that liability.

Annual LeaveThe provision for employee entitlements to annual leave represent the amount which TransGrid has a present obligationto pay resulting from employees' services provided up to balance date.

Prior to the application of the revised AASB 1028, the provi-sion was calculated at nominal amounts based on salary ratescurrent at balance date. In accordance with the requirementsof the revised Standard, the provision has been calculated atnominal amounts based on the remuneration rates that areexpected to be paid when the leave is taken. This resulted in anet decrease to Retained Earnings of $362,000, an increase inthe provision of $517,000 and an associated increase in FutureTax Benefit by $155,000 at the beginning of the year.

Long Service LeaveThe liability for employee entitlements to long service leave has,in accordance with the guidelines of Treasury Circular NSW TC03/06 "Accounting Standards Update" been calculated on thebasis of current salary rates to be paid by TransGrid resultingfrom employees' services provided up to balance date andincludes related on-costs.

(h) Superannuation

Contributions to employee superannuation plans are chargedas an expense as the contributions are paid or becomepayable. The difference between the liability determined at30th June each year and the reserve held by the EnergyIndustries Superannuation Scheme is brought to account asan account payable or a prepayment.

At balance date, TransGrid has funds held by theSuperannuation Scheme in excess of its liability. Accordingly, aprepayment of superannuation contributions is reflected in thefinancial statements (refer to Note 9).

(i) Insurance

TransGrid maintains a mix of external insurance policies andinternal provisioning in accordance with AASB 1044. Thetreatment of risks and associated liabilities are determined inconjunction with independent insurance advisers and lossadjusters.

The application of AASB 1044 effective from 1st July 2002resulted in the restatement of the insurance provision by$5,121,000, an associated decrease of Future Income TaxBenefit by $1,536,000, with a corresponding resultant netincrease in Retained Earnings.

TransGrid is a self-insurer for Workers’ Compensation. The liability for claims made, or to be made, against the InsuranceProvision is determined by reference to the Workers'Compensation Act, 1987 and the WorkCover Authority'sguidelines to self-insurers.

(j) Inventory Valuation

Inventories of Stores and Materials are valued at the averagecost of items in store automatically adjusted at time of deliveryof new items, separately determined for each location.

(k) Income Tax

TransGrid is subject to the National Tax Equivalent Regime(NTER) administered by the Australian Taxation Office. TheNTER is based on application of federal income tax laws underwhich TransGrid pays income tax equivalents to NSWTreasury.

TransGrid adopts the liability method of tax effect accounting.Income tax expense is calculated on the operating profitadjusted for permanent differences between taxable incomeand accounting profit. The effect of timing differences, whichoccur when items are brought to account in different periodsfor income tax equivalent and accounting purposes, are shownat the rate deemed applicable when the timing differencereverses in the provision for deferred income tax and futureincome tax benefit where applicable.




(l) Goods and Services Tax

Revenues, expenses and assets are recognised net of theamount of Goods and Services Tax (GST), except where theamount of GST incurred is not recoverable from the AustralianTaxation Office (ATO). In these circumstances, the GST isrecognised as part of the cost of acquisition of the asset or aspart of an item of the expense.

Receivables and payables are stated with the amount of GSTincluded.

The net amount of GST recoverable from, or payable to, theATO is included as a current asset or current liability in theStatement of Financial Position.

Cash flows are included in the Statement of Cash Flows on agross basis. The GST component of cash flows arising frominvesting and financing activities which are recoverable from,or payable to, the ATO are classified as operating cash flows.

(m) Segment Reporting

TransGrid operates in one industry being the transmission ofelectricity in New South Wales. As such, TransGrid has onlyone business segment as well as one geographical segment inaccordance with AASB 1005 "Segment Reporting", and this isreported in the financial statements.

(n) Receivables

Receivables are recognised at amounts due less a provisionfor doubtful debts. Collectibility of debts is reviewed on anongoing basis. A provision for doubtful debt is raised whensome doubt as to collection exists. Debts which are known tobe uncollectible are written off.

Trade debtors are normally settled within 20 working days fromdate of issue of invoice. The payment terms for other debtorsare generally within 30 working days.

(o) Payables

Accounts payables, including accruals not yet billed, arerecognised when TransGrid has an obligation to pay as a resultof the completion of a work or service. Trade accounts areusually settled within 60 days.

(p) Revenue

Revenue relating to TransGrid’s core operations is classified asrevenue from operating activities for the purposes of Note 3.Revenue arising from other than core operations is classifiedas revenue outside operating activities for the purposes ofNote 3.

Revenue from electricity transmission services is subject to theapplication of an ACCC-determined revenue cap for the finan-cial year. The revenue caps are determined by the ACCC atfive-year intervals. The transmission services prices are set atthe beginning of the financial year to achieve the revenue capapplicable for that year.

Revenue from the sale of goods or services is recognised upondelivery of goods or services to the customer. Interest revenueis recognised as it is earned, taking into account the interestrates applicable to the financial assets.

(q) Foreign Currency Translation

Specific CommitmentsHedging is undertaken to avoid or minimise possible adversefinancial effects of movements in exchange rates. Gains orcosts arising upon entry into hedging transactions, togetherwith subsequent exchange gains or losses resulting from thosetransactions are deferred in the Statement of Financial Positionfrom the inception of the hedge transaction up to the date ofthe purchase or sale and included in the measurement of thepurchase or sale. The net amounts receivable or payable underthe hedging transaction are also included in the Statement ofFinancial Position.

Any gains or losses after the recognition of the hedged purchase or sale are included in the Statement of FinancialPerformance, unless they relate to qualifying assets. All gainsor losses arising from hedging transactions associated withqualifying assets are capitalised consistent with AASB 1012.



61

2. PROFIT/(LOSS) FROM ORDINARY ACTIVITIES 2003 2002

$'000 $'000

Profit/(Loss) from ordinary activities before income tax equivalent expense comprises:

Revenue from Ongoing Activities 411,969 385,906Expenses from Ongoing Activities excluding Borrowing Costs (228,687) (210,939)Borrowing Costs (87,388) (82,562)

Earnings from Ongoing Activities 95,894 92,405Net Movement in Employer’s Superannuation Reserve (13,600) (39,313)

Profit/(Loss) from Ordinary Activities Before Income Tax Equivalent Expense 82,294 53,092

Earnings from Ongoing Activities

Earnings from Ongoing Activities represent TransGrid’s financial performance on its day to day business operations, the activitiesof which TransGrid is able to exercise some degree of control over the outcomes.

Net Movement in Employer’s Superannuation Reserve (also refer to Note 1(h))

The Energy Industries Superannuation Scheme advises the level of liability in respect of TransGrid’s superannuation commitmentsto its employees who are members of the various divisions of the Scheme. The calculation of the superannuation position isbased upon an actuarial review independent of TransGrid’s ongoing activities and involvement. The main drivers of the actuarialcalculation are the level of investment return, salary inflation and CPI increases. Details of these assumptions are presentedbelow.

The negative movement during the financial year is mainly attributable to the nature of the liability assessment by Actuary andlower than expected investment returns.

Energy Industries Superannuation SchemesAssumptions Applicable to Liability Operative Date as at 30th June 2003

Investment Return2001/2002 -7.0% p.a.2002/2003 -0.8% p.a.2003/2004 7.0% p.a.Thereafter 7.5% p.a.

Salary Inflation2001/2002 5.5% p.a.2002/2003 4.0% p.a.Thereafter 4.0% p.a.

Increase in CPI2001/2002 2.5% p.a.2002/2003 2.5% p.a.Thereafter 2.5% p.a.




3. REVENUE

2003 2002$'000 $'000

Revenue from Operating ActivitiesTransmission of Electricity 389,850 363,392Proceeds from Sales of Non-Current Assets 6,254 4,551Conveyancing Inquiries 2,405 2,942

398,509 370,885

Revenue from Other Than Operating ActivitiesInterest 1,273 1,414Unregulated Work 9,972 11,382Sundry 2,215 2,225

13,460 15,021

Total Revenue 411,969 385,906

Net gain/(loss) on sales of property, plant and equipment amounted to $1,123,000 (2002, Loss $503,000).

4. EXPENSES

2003 2002$'000 $'000

Transmission of Electricity 221,154 204,601Other Services 7,533 6,338

228,687 210,939

Other ExpensesBorrowing Costs 87,388 82,562Net Movement in Employer’s Superannuation Reserve 13,600 39,313

100,988 121,875

Total Expenses 329,675 332,814

Total Expenses above include depreciation of non-current assets of $108,459,000 ($101,451,000) and doubtful debts of$202,000 (Nil).



63

5. INCOME TAX EQUIVALENT EXPENSE

The income tax equivalent expense for the financial year differs from the amount calculated on the profit/(loss). The differences are reconciled as follows:

2003 2002$'000 $'000

Profit/(Loss) from Ordinary Activities Before Income Tax Equivalent Expense 82,294 53,092Income Tax Equivalent Expense/(Benefit) Calculated @ 30% 24,688 15,928

Add/less tax effect of Permanent DifferencesAccelerated Research and Development Allowance (7) (12)Net (Gain)/Loss on Debt Prepayments - (44)Movement in Employer’s Superannuation Reserve 4,080 13,182Revaluation of Assets 1,353 1,056Capital Expenditure 31 278Other 9 (15)

Income Tax Equivalent Expense Adjusted for Permanent Differences 30,154 30,373Reassessment of prior period’s timing and permanent differences 4,833 (3,103)

Net adjustment to deferred income tax liabilities and assets to reflect the decrease in company tax rate - 502

(Over)/Under Provision in Prior Year (95) 2

Income Tax Equivalent Expense 34,892 27,774

6. CASH

2003 2002$'000 $'000

Cash on Hand 13 13Deposits at Call 269 16,656

282 16,669

Deposits at call bear average floating interest rates of 4.60% (4.58%).

7. RECEIVABLES

2003 2002$'000 $'000

Current

DebtorsTrade Debtors 50,858 56,645Debtors Other Than Trade 2,809 2,162

53,667 58,807Provision For Doubtful Debts (202) -

53,465 58,807

Other - 5,576

Total 53,465 64,383




8. INVENTORIES

2003 2002$'000 $'000

Transmission Plant Spares 20,454 21,381Other 165 299

20,619 21,680

9. OTHER ASSETS

2003 2002$'000 $'000

CurrentPrepaid Superannuation 5,569 19,236Other Prepayments 340 262

Deferred Exchange Losses and Costs on Forward Foreign Exchange Contracts 4,327 -

Total 10,236 19,498

Prior year’s Deferred exchange losses and costs on forward foreign exchange contracts not required to be recognised on theStatement of Financial Position amounted to $901,000.



65

10. PROPERTY, PLANT AND EQUIPMENT

2003 2002$'000 $'000

(a) Valuation and accumulated depreciation for each class of property, plant and equipment

Regulated Assets

Land 52,650 51,595

Easements 461,322 446,082

Buildings 17,384 17,347Accumulated Depreciation (2,525) (1,861)

14,859 15,486

System Plant and Equipment 2,038,138 1,891,079Accumulated Depreciation (439) -

2,037,699 1,891,079

Communication Equipment 72,028 70,633Accumulated Depreciation (560) (1,096)

71,468 69,537

Other Assets 101,768 95,662Accumulated Depreciation (47,269) (38,001)

54,499 57,661

Total Depreciated Value of Regulated Property, Plant and Equipment 2,692,497 2,531,440

Unregulated Assets

System Plant and Equipment 13,127 2,884Accumulated Depreciation (368) -

12,759 2,884

Communication Equipment 157 -Accumulated Depreciation (10) -

147 -

Total Depreciated Value of Unregulated Property, Plant and Equipment 12,906 2,884

Total Depreciated Value of Property, Plant and Equipment 2,705,403 2,534,324

TransGrid has within its books fully depreciated assets, comprising Air Conditioners, Office Machines and Miscellaneous Equipment. These items are considered immaterial in the context of the Financial Statements.




(b) Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year

Carrying Transfers CarryingAmount at Revaluation from Amountbeginning increments/ work in at end

of year Additions Disposals Depreciation (decrements) progress of year$’000 $’000 $’000 $’000 $’000 $’000 $’000

Regulated Assets

Buildings and Staff Cottages 14,370 - - (766) 3 661 14,268

Land 49,661 - (126) - 189 774 50,498

Easements 444,705 - 19 - 4,633 9,554 458,911

System Plant and Equipment 1,803,443 - - (85,874) 18,000 50,148 1,785,717

Communication Equipment 53,561 - - (5,681) 661 17,732 66,273

Other Assets 45,133 - (5,130) (15,760) 45 27,137 51,425

Unregulated Assets

System Plant and Equipment 2,539 - - (368) - 10,588 12,759

Communication Equipment - - - (10) - 157 147

Work In Progress 120,912 261,244 - - - (116,751) 265,405

Total 2,534,324 261,244 (5,237) (108,459) 23,531 - 2,705,403

11. CAPITAL EXPENDITURE COMMITMENTS

Commitments arising from contracts for expenditure in respect of property, plant and equipment to the extent not provided for inthe accounts:

2003 2002$'000 $'000

Payable Within One Year 159,086 212,737Payable One to Five Years 3,726 56,199Payable Later than Five Years - -

Total (including GST) 162,812 268,936

Total Expenditure Commitments above include input tax credits of $14,801,000 ($25,995,000) that are expected to be recoverablefrom the Australian Taxation Office.

12. PAYABLES

2003 2002$'000 $'000

CurrentCreditors 56,095 38,106Accrued Interest 34,812 33,724Other 515 -

Total 91,422 71,830



67


13. PROVISIONS

2003 2002$'000 $'000

CurrentDividend 46,199 -Employees' Accrued Entitlements 8,332 8,143Insurance 919 1,581

55,450 9,724

Non-CurrentEmployees' Accrued Entitlements 43,272 39,113Insurance 4,324 9,976

47,596 49,089

Total 103,046 58,813

(i) Employees' Accrued Entitlements

The following table shows a breakdown of the Employees' Accrued Entitlements Provision at balance date:

Annual Leave 11,467 10,354Long Service Leave 40,137 36,902

51,604 47,256

All of the above liabilities have been fully provided. During the financial year, $11,426,000 ($10,860,000) was contributed to theabove provisions.

(ii) Insurance

In accordance with Condition 6(a)(iii) of the license granted under Section 211 of the Workers’ Compensation Act, 1987, the provision for total outstanding workers' compensation claims liability including incurred but not reported claims and administration is $4,639,000 ($5,990,456). During the financial year, $1,504,233 ($726,352) was contributed to the provision for Workers’ Compensation.

The following table details the movements in the insurance provision during the year. The carrying amounts are determined onthe basis of best estimates and actuary assessment.

AdjustmentsOpening as per ClosingBalance AASB 1044 Contributions Payments Balance

Class $’000 $’000 $’000 $’000 $’000

General 5,567 (3,171) 244 (2,036) 604

Workers’ Compensation 5,990 (1,950) 1,504 (905) 4,639

Total 11,557 (5,121) 1,748 (2,941) 5,243



14. CURRENT TAX LIABILITIES

2003 2002$'000 $'000

Provision for Income Tax 535 (1,022)

Income Tax payable by TransGrid is determined in accordance with the National Tax Equivalent Regime. Income Tax payments for the financial year are expected to amount to $8,478,430 ($10,022,708).

15. OTHER CURRENT LIABILITIES

2003 2002$'000 $'000

Electricity Creditors 14,700 11,103Net Payable on Hedges 4,327 -Other 125 -

Total 19,152 11,103

Electricity Creditors relates to monies received for electricity transmission services that are above the revenue cap as determinedby the ACCC. These monies belong to TransGrid’s customers who are market participants and will be taken into account whensetting the next period’s transmission service prices resulting in those prices being lower than they would have otherwise been.

Prior year’s Net payable on hedges not required to be recognised on the Statement of Financial Position amounted to $901,000.

16. MATURITY ANALYSIS OF BORROWINGS

2003 2002$'000 $'000

Summary of Maturity PatternUp to one year 158,516 147,985Over One and Up to Two Years 160,500 146,035Over Two and up to Five Years 441,792 442,985Over Five Years 627,925 587,666

Total 1,388,733 1,324,671

Premium on Domestic loans issued by NSW Treasury Corporation amounted to $3,983,000 (2002, Premium $4,421,000). Theeffective interest rate applicable for the debt portfolio is 6.48% (6.57%).

Borrowings shown as current liability is nominally due for repayment within twelve months. However due to the availability ofrollover facilities and the liquidity of the underlying debt instruments, TransGrid may not necessarily need to repay these loanswithin twelve months.

17. RESERVES

2003 2002$'000 $'000

Asset Revaluation ReserveOpening Balance 466,709 445,030

Increment on Revaluation of Infrastructure Assets, Staff Cottages and Non-Infrastructure Land During the Year 23,531 22,363

Transfer to Retained Earnings (92) (684)

Closing Balance 490,148 466,709



69

18. RETAINED EARNINGS/(ACCUMULATED LOSSES)

2003 2002$'000 $'000

Opening Balance (4,285) (30,287)Net Profit/(Loss) Before Dividends 47,402 25,318Dividends (46,199) -Transfer from Reserves 92 684Adjustment for Overstatement of Deferred Tax Balance on TransGrid’s Corporatisation 48,141 -Net Adjustment Resulting from Adoption of AASB 1044 3,585 -Net Adjustment Resulting from Adoption of Revised AASB 1028 (362) -

Closing Balance 48,374 (4,285)

19. CAPITAL

TransGrid commenced operations on 1st February 1995 on separation from Pacific Power under the Electricity TransmissionAuthority Act, 1994 at which time a series of assets and liabilities were transferred.

TransGrid was corporatised as a statutory State owned corporation on 14th December 1998, with share capital of two $1 shares.These shares are issued to the Treasurer and the Special Minister of State. The $2 is reported as part of Capital.

2003 2002$'000 $'000

Opening Balance 644,871 645,893Contribution to Shareholder (60,000) -Other Adjustments - (1,022)

Closing Balance 584,871 644,871

20. DIVIDEND AND CONTRIBUTIONS TO SHAREHOLDER

A dividend of $46,199,000 (2001/02, Nil) has been recognised for distribution to the shareholder. The dividend will be paid duringthe course of the 2003/04 financial year and is represented by the dividend provision.

A $60 million capital distribution to the shareholder was made during the year.

21. SECURED LIABILITIES

At balance date, there was no loan liability of TransGrid secured by a charge over TransGrid's assets.

22. AUDIT FEES

2003 2002$'000 $'000

Amounts received, or due and receivable, by the auditors for:

Auditing the Financial Statements 147 140

23. FEES PAID TO DIRECTORS

Fees, including superannuation benefits paid to Directors, other than salaries paid to full-time Directors, were $286,251 ($305,885).




24. CONTINGENT LIABILITIES

2003 2002$'000 $'000

Contingent Liabilities at balance date were:

Contract Liability 6,169 2,238Easement-related Activities 1,500 750

Easement-related Activities

The contingent liabilities for easement-related activities relate to easement compensation matters that remain unresolved as at balance date.

25. EVENTS OCCURRING AFTER BALANCE DATE

There are no post balance date events that affect TransGrid’s financial statements.

26. CONSULTANCY COSTS

The costs of consultancy services during the financial year were $492,598 ($1,266,556).

27. LEASES

TransGrid has no finance lease commitments. The following lease commitments disclosed are in the nature of operating leases.

Lessor

A non-cancellable operating lease for a building with a lease period of 10 years, an option to renew for a further 10 years, and theminimum lease receivable being $275,045 per annum GST inclusive is in existence. The gross amount of the leased asset is$3,117,109 with accumulated depreciation of $378,604 and depreciation expense for the year of $112,157. Revenue receivedfrom the lease for the financial period was $311,996 ($219,885).

Commitments in relation to the lease contracted for at the reporting date but not recognised as asset, receivable GST inclusive:

2003 2002$'000 $'000

Within One Year 279 253Later Than One Year but Not Later Than 5 Years 1,198 1,087Later Than 5 Years 3,859 3,898

Lessee

A non-cancellable operating lease for a building with lease duration of eight years, and minimum lease payments of $2,351,000per annum GST inclusive. There is a re-new option but no purchase option under the current lease arrangement. The leaseexpense for the financial year was $2,161,000 ($2,069,000).

Commitments in relation to the lease contracted for at the reporting date but not recognised as liability, payable GST inclusive:

2003 2002$'000 $'000

Within One Year 2,362 2,393Later Than One Year but Not Later Than 5 Years 6,866 9,535Later Than 5 years Nil Nil

The contingent rentals have been escalated by estimated CPI and market rate.



71

28. NATIONAL ELECTRICITY MARKET SETTLEMENT RESIDUES

The National Electricity Market (NEM) includes inter-regional trading between the Queensland, New South Wales, Snowy, SouthAustralian and Victorian market regions using the existing transmission interconnectors. Given the technical characteristics ofthe interconnectors, energy transfer between the NEM regions incurs losses and is constrained from time to time. This resultsin different pool prices being set in the various regions.

These pricing differences cause surplus settlement funds to accrue from the power flows between respective regions. NEMMCO auctions these inter-regional settlement residues. Under the National Electricity Code (NEC) and methodology autho-rised by NECA, the proceeds of the auction are paid to the Transmission Network Service Provider (TNSP) in the importingregion. NEMMCO pays to TransGrid the auction proceeds for interconnectors that import power into the NSW and Snowy NEMRegions.

In addition, the settlement process within each market region results in the accumulation of intra-regional settlement residues.These residues are not auctioned and are paid directly to the relevant TNSP. TransGrid receives intra-regional settlementresidues for the NSW and Snowy NEM Regions.

The NEM settlement residues are treated as income to TransGrid. In the event that these residues cause the total revenuereceived during the year to exceed TransGrid’s revenue cap, the excess is taken into account when setting the next period’stransmission service prices, resulting in those prices being lower than they would have otherwise been.

29. NOTES TO STATEMENT OF CASH FLOWS

(a) Reconciliation of Cash

For the purpose of the Statement of Cash Flows, cash includes deposits at call with financial institutions. Cash as at the end ofthe financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Positionas follows:

2003 2002$'000 $'000

Cash/Deposits 282 16,669

(b) Dividends and Taxes

No dividends were received. Dividends and tax equivalents paid during the year amounted to $6,848,000 ($12,581,000).

(c) Acquisitions and Disposals of Entities

No entities were acquired or disposed of during the year.

(d) Financing Arrangements

TransGrid is required to borrow all new money through NSW Treasury Corporation. TransGrid has an overdraft facility of$6,000,000 with the ANZ Bank and this facility was undrawn at balance date. TransGrid also has an indemnity guarantee facility for $10,000,000 of which $6,723,800 has been drawn.



(e) Reconciliation of Net Cash Provided by Operating Activities to Operating Profit

2003 2002$'000 $'000

Profit/(Loss) from Ordinary Activities after Income Tax 47,402 25,318Add/(Less): Items Classified as Financing/Investing ActivitiesLoss/(Gain) on Repayments of Borrowings - (147)Loss/(Gain) on Sale of Property, Plant and Equipment (1,123) 503

Add/(Less) Non-Cash ItemsDepreciation 108,459 101,451Asset Write-off 106 139Amortisation of (Premium)/Discount on Loans (436) (152)Provision for Doubtful Debts 202 -

Net Cash Provided By Operating Activities Before Change in Assets and Liabilities 154,610 127,112

Net Changes in Assets and Liabilities During the Financial Period(Increase)/Decrease in Trade Debtors 5,787 (132)(Increase)/Decrease in Other Receivables 4,930 (5,486)(Increase)/Decrease in Inventories 1,060 (730)(Increase)/Decrease in Other Assets 9,397 43,676Increase/(Decrease) in Payables (1,299) 5,009Increase/(Decrease) in Provisions 2,638 1,301Increase/(Decrease) in Income Tax & Deferred Taxes 28,044 15,193Increase/(Decrease) in Other Liabilities 8,049 2,486

Net Cash Provided by Operating Activities 213,216 188,429

30. INTEREST IN EXTERNAL ENTITIES

TransGrid holds one "B" Employer Class Share in Energy Industries Superannuation Scheme Pty Limited. The Share has a ParValue of $1.00.

TransGrid also holds 250,000 fully paid ordinary shares in Geodynamics Limited. This does not represent a material interest inthe entity. The investment in Geodynamics Limited was undertaken as part of TransGrid’s research and development activities tosponsor investigation of the generation of electricity from hot dry rocks geothermal energy.




31. FINANCIAL INSTRUMENTS DISCLOSURE

(a) Interest Rate Risk

TransGrid’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial asset andliability is set out in the following table. Exposure to interest rate risk arises from assets and liabilities bearing variable interestrates. TransGrid’s exposure is limited due to the majority of its financial assets and liabilities being either non-interest bearing orheld in fixed rates.

Note Weighted AverageEffective Floating Non-interest

interest rate interest rate Fixed interest rate bearing Total

% $’000 $’000 $’000 $’000

2003 2002 2003 2002 2003 2002 2003 2002 2003 2002

Assets

Cash 6 4.60 4.58 269 16,656 - - 13 13 282 16,669

Receivables 7 - - - - 53,465 64,383 53,465 64,383

Total Financial 269 16,656 - - 53,478 64,396 53,747 81,052Assests

Liabilities

Accounts Payable 12 & 15 4.75 6.225 14,700 - - 11,103 91,422 71,830 106,122 82,933

Borrowings 16 6.48 6.57 - - 1,388,733 1,324,671 - - 1,388,733 1,324,671

Total Financial 14,700 - 1,388,733 1,335,774 91,422 71,830 1,494,855 1,407,604Liabilities

(b) Credit Risk

Credit risk represents the loss that would occur if counterparties failed to perform as contracted. TransGrid does not have anysignificant exposure to any individual customer or counterparty.

(c) Foreign Exchange Risk

TransGrid enters into forward foreign exchange contracts to hedge certain anticipated purchase and sales commitmentsdenominated in foreign currencies (16% European Euro, 30% Swedish Krona and 54% Japanese Yen). The terms of thesecommitments are for not more than one year.

The following gains, losses and costs in relation to forward foreign exchange contracts have been deferred on theStatement of Financial Position at balance date:

2003 2002$'000 $'000

Unrealised Gains - 271

Total Unrealised Gains - 271

Unrealised Losses 3,317 -Costs of Hedge Contracts 1,010 1,172

Total Costs and Unrealised Losses 4,327 1,172

Net Costs and Unrealised Gains/(Losses) (4,327) (901)

73


4.60 4.58

4.75 6.225

6.48 6.57




(d) Net Fair Value of Financial Assets and Liabilities

The net fair value of financial assets and liabilities, with the exception of borrowings and forward exchange contracts, is reflectedby their carrying amounts in the Statement of Financial Position.

The net fair value of borrowings is based on market value derived by NSW Treasury Corporation using market interest ratescurrent at balance date.

The net fair value for forward exchange contracts is taken to be the unrealised gain or loss at balance date calculated by refer-ence to the current forward rates for contracts with similar maturity profiles.

The carrying amounts and net fair values of financial assets and liabilities at balance date are:

2003 2003 2002 2002Carrying Net Fair Carrying Net FairAmount Value Amount Value

$'000 $'000 $'000 $'000

Financial AssetsCash 282 282 16,669 16,669Receivables 53,465 53,465 64,383 64,383Forward Exchange Contracts - - 8 82

Total Financial Assets 53,747 53,747 81,060 81,134

Financial LiabilitiesAccounts Payable 106,122 106,122 82,933 82,933Borrowings 1,388,733 1,489,900 1,324,671 1,374,700Forward Exchange Contracts 4,327 3,161 909 -

Total Financial Liabilities 1,499,182 1,599,183 1,408,513 1,457,633

End of Audited Financial Report


75


Pursuant to Section 41B (1) of the Public Finance and Audit Act 1983, and in accordance witha resolution of the Board of TransGrid we declare on behalf of TransGrid that in our opinion:

1. the Financial Statements consisting of the Statement of Financial Position, theaccompanying Statement of Financial Performance, the Statement of Cash Flows and theNotes to and forming part of the Financial Statements of TransGrid for the financial periodended 30 June 2003 exhibit a true and fair view of the position and transactions ofTransGrid;

2. the Financial Statements have been prepared in accordance with the provisions of thePublic Finance and Audit Act 1983, the Public Finance and Audit Regulation 2000, andrelevant Treasury Circulars, except where a Treasurer’s exemption has been granted; and

3. the Financial Statements have been drawn up in accordance with disclosure requirementsof the relevant Australian Accounting Standards.

Further, we are not aware at this time of any circumstances which would render any particularsin the Financial Statements to be misleading or inaccurate.

P R Higginson D G CroftChairman Chief Executive

Statement by Members of the BoardFor the year ended 30th June 2003


76



Statutory Information 77


ABORIGINAL EMPLOYMENT & DEVELOPMENT STATEMENT

TransGrid has implemented an Aboriginal Employment and Development Strategy. This strategy recognises TransGrid’s intention to identify, support and promote the employment and development opportunities of Aboriginal employees throughout the organisation.

The Aboriginal Employment and Development Strategy plays an integral part in TransGrid’s Workforce Diversity Strategy which ensures that a diverse work environment is established and maintained and that all employees’ needs, differences and expectations are recognised and acknowledged.

BOARD OF DIRECTORS REMUNERATION

Remuneration paid to TransGrid’s Directors during 2002/2003 is disclosed below in the respective bandwidths.

Bandwidth Directors$80,000-$99,999 1$60,000-$79,999 0$40,000-$59,999 3$20,000-$39,999 1Up to $19,999 0

CHARTER

TransGrid was established as a State-owned corporation on 14th December 1998, by and under the Energy Services Corporations Amendment (TransGrid Corporatisation) Act 1998, which effected various amendments to the Energy ServicesCorporations Act 1995.

Section 6C of the Energy Services Corporations Act gives TransGrid, as an energy transmission operator, two principal functions, viz.

a) to establish, maintain and operate facilities for the transmission of electricity and other forms of energy, and

b) to provide services for the transmission of electricity and other forms of energy in accordance with the relevant regulatory regime.

The Section also empowers TransGrid to utilise and develop its electricity transmission facilities to carry out telecommunications services.

The principal legislation under which TransGrid operates is the Energy Services Corporations Act 1995, the Electricity Supply Act 1995 and the State Owned Corporations Act 1989.

CODE OF ETHICS & CONDUCT

Throughout 2002/2003, TransGrid has continued to develop and maintain a strong ethics culture.

Following the Chief Executive’s authorisation in June 2002, an updated Code of Ethics and Conduct (“the Code”) was promulgated to all staff. Compulsory attendance at awareness sessions, held throughout the year, have facilitated staff awareness of the revisions to the Code as well as to new segments such as the Gifts, Benefits and Hospitality Register.Staff have received the updated Code in a positive manner.

In May 2003, the TransGrid Board approved a Code of Conduct for Directors. The conduct guidelines are another element supporting TransGrid’s self-regulatory approach to the conduct of its business.

During the year, the “Contractors Guide to the TransGrid Code of Ethics and Conduct” was revised and reissued as “TransGrid Business Ethics – A Guide to Contractors, Clients and Agencies”. The Guide is available through the TransGrid website, the internal TransNet site and for inclusion as a reference in all TransGrid external contracts.

The introduction of the Ethics Helpline has provided a channel for staff to seek independent advice on ethical dilemmas or to report suspected instances of unethical behaviour, in a confidential manner.


78 Statutory Information

COMPARISON OF STAFF NUMBERS

As at 30 June 2003

Total Staff No. P/T Staff Equiv. F/T of P/T Equiv. F/T StaffSenior Contract Officers 111 0 0 111.00 Professional Officers 167 4 2.24 165.24 Engineering Officers 221 1 0.84 220.84 Administrative Officers 169 11 6.71 164.71 Tradespersons 70 0 0 70.00 Power Workers 65 0 0 65.00 Team Leader – Network 26 0 0 26.00 Operator 31 0 0 31.00 Lineworker 69 0 0 69.00 Apprentice 35 0 0 35.00

Total 964 13 9.79 957.79

COMPLIANCE 2003

During 2002-2003 TransGrid has conducted a thorough review of the requirements of the National Electricity Market and has clarified roles and responsibilities under its compliance process to support all of those of its activities associated with meeting its Code obligations to the participants of the National Electricity Market.

TransGrid continues to monitor and review all areas that are affected by changes in legislation to ensure that compliance is integrated into the culture of TransGrid operations and processes.

CONSULTANTS FEES

During the year $492,598 was spent on consulting services mainly in relation to environmental impact assessments for the South Australia/New South Wales Interconnection and Molong-Manildra 132kV Transmission Line projects, as well as for specific technical and management advice in the normal course of business.

CONSUMER RESPONSE

TransGrid receives Property Information Inquiries from solicitors, conveyancers and the general public regarding TransGrid’s rights and interests that may affect title to land. For the year ending 30 June 2003, TransGrid responded to 114,316 such inquiries. Response times were within designated time frames.

More than 80% of these inquiries were processed using online access facilities provided by the Central Register of Restrictions administered by Land and Property Information NSW.

COST OF ANNUAL REPORT

TransGrid’s Annual Report was produced under the guidance of an internal steering committee in conjunction with an external graphic designer. The total external costs incurred in the production of the Annual Report was $73,230. The Annual Report is available on the Internet (www.transgrid.com.au) and on CD ROM.



79

CREDIT CARD USAGE

Credit Card usage in TransGrid is in accordance with its detailed documented procedures. TransGrid continues to promote the correct usage of its Corporate Credit Cards and there is a continuous review of usage characteristics and authorisations.

DISABILITY PLAN

TransGrid has a documented Disability Action Plan 2000-2003 based on the New South Wales Disability Framework 1989. The plan has strategies which have been implemented by management and staff to respond to the needs of people with disabilities within New South Wales.

EEO DISCLOSURES

Commentary on EEO Achievements

Outcomes July 2002-June 2003■ Interactive workshops were provided to staff on the application of the Code of Ethics.■ Information on harassment and discrimination prevention was kept updated and made available on the intranet.■ Referral Officer’s Network was continued and refresher training provided.■ All new employees attended an Induction Program which includes Occupational Health and Safety;

Code of Ethics and Conduct; General Conditions of Employment including Leave Entitlements; Grievance and Dispute Procedures; Harassment Prevention; and Workforce Diversity.

■ All HR procedures reviewed to reflect changes in Workforce Diversity issues.

Major Planned Outcomes July 2003-June 2004■ Include Workforce Diversity Data Collection Survey in the Induction Program for all new employees.■ Continue support for the Women’s Contact Officer Network.■ Establish an Aboriginal and Torres Strait Islander network support system within TransGrid.■ Liaise with Aboriginal and Torres Strait Islander employees, managers and team leaders to identify and

promote skills development which enhances career opportunities.■ Conduct Strategic Indigenous Awareness Programs across the organisation.■ Develop a broader advertising strategy for vacant positions to encourage applications from female,

disabled and indigenous applicants.

Trends in the Representation of EEO Groups

% of Total Staff (Refer Note 2) EEO Group 2000 2001 2002 2003

Women 12 12 12 13Aboriginal and TSI 0.72 0.53 0.73 0.73People whose first language was not English 8 8 10 10People with a disability 7 7 2* 6People with a disability requiring work-related adjustment - - - 1




Trends in the Distribution of EEO Groups

Distribution Index (Refer Note 3) EEO Group 2000 2001 2002 2003

Women 113 115 116 124 Aboriginal and TSI 7 5 7 7People whose first language was not English 79 79 96 98People with a disability 66 65 18* 53People with a disability requiring work-related adjustment - - - 13

Notes1. Current staff numbers are as at 30 June 2003 2. Excludes casual staff 3. A distribution index of 100 indicates that the centre of the distribution of the EEO group across salary levels is equivalent to that of other staff. * Error in reporting

ETHNIC AFFAIRS PRIORITY STATEMENT

TransGrid’s Ethnic Affairs Priority Statement (EAPS) aims to ensure that people from all cultural backgrounds have access to participate in and contribute to TransGrid’s planning processes, facilities and services. The EAPS is an initiative of the Community Relations Commission (CAC) to facilitate development and support multiculturalism in the workforce.

TransGrid is committed to ensuring that the needs of a culturally diverse society are reflected across all aspects of the business and that cultural diversity is recognised and utilised as a valuable resource.

TransGrid’s Ethnic Affairs Priority Statement will assist the organisation to recognise the NSW Governments Ethnic Affairs Action Plan. Ethnic affairs priorities and initiatives shall reflect the culturally diverse needs of TransGrid employees and the community.

FRAUD PREVENTION

In conjunction with the promotion of the Code of Ethics and Conduct, TransGrid has implemented new security measures at specific sites to reduce the opportunity for theft and fraudulent activity. Improved lighting and security systems have been installed incorporating a new issue of locks and keys for entry into all the electricity substation high voltage switchyard sites. A range of new anti-corruption and fraud prevention awareness colour posters have been distributed and displayed in all areas as part of the fraud strategy program.

FREEDOM OF INFORMATION

TransGrid did not receive any Freedom of Information (FOI) applications under the Freedom of Information Act 1989 in 2002/2003. There were five FOI applications received in 2001/2002.

During the 2002/2003 year:

■ The impact of the requirements of the Act on TransGrid’s activities was minor.■ No major issues have arisen in connection with TransGrid’s compliance with the requirements of the Act.■ No inquiries were made under the Act by the Ombudsman, nor were there any appeals under the Act to the District Court or

the Supreme Court.



81

SECTION A Number of new FOI requests

PERSONAL OTHER TOTAL FOI REQUESTS 2001-02 2002-03 2001-02 2002-03 2001-02 2002-03

A1 New (Including transferred in) 1 0 4 0 5 0 A2 Brought forward 0 0 0 0 0 0 A3 Total to be processed 1 0 4 0 5 0 A4 Completed 1 0 3 0 4 0 A5 Transferred out 0 0 0 0 0 0 A6 Withdrawn 0 0 1 0 1 0 A7 Total processed 1 0 3 0 4 0 A8 Unfinished (Carried forward) 0 0 0 0 0 0

SECTION B Result of FOI requests

PERSONAL OTHERRESULT OF FOI REQUEST 2001-02 2002-03 2001-02 2002-03

B1 Granted in full 0 0 0 0B2 Granted in part 0 0 0 0 B3 Refused 1 0 3 0 B4 Deferred 0 0 0 0 B5 Completed 1 0 3 0

SECTION C Ministerial Certificates

2001-02 2002-03

C1 Ministerial Certificates issued 0 0

SECTION D Formal Consultations

- number of requests requiring consultations (issued) and total number of formal consultation(s) for the period

ISSUED TOTAL 2001-02 2002-03 2001-02 2002-03

D1 Number of requests requiring formal consultation(s) 1 0 1 0

SECTION E Requests for amendment of personal records

TOTAL Result of Amendment Request 2001-02 2002-03

E1 Result of amendment - agreed 0 0 E1 Result of amendment - refused 0 0 E3 Total 0 0




SECTION F Requests for notation of personal records

2001-02 2002-03

F3 Number of requests for notation 0 0

SECTION G FOI requests granted in part or refused

Personal OtherBasis of disallowing or restricting access 2001-02 2002-03 2001-02 2002-03

G1 Section 19 {applic. incomplete, wrongly directed} 0 0 0 0 G2 Section 22 {deposit not paid} 0 0 0 0 G3 Section 25 (1)(a1) {diversion of resources} 0 0 3 0 G4 Section 25(1)(a) {Exempt} 1 0 0 0 G5 Section 25(1)(b), (c), (d) {Otherwise available} 0 0 0 0 G6 Section 28(1)(b) {documents not held} 0 0 0 0 G7 Section 24(2) - deemed refused, over 21 days 0 0 0 0 G8 Section 31(4) {released to Medical Practitioner} 0 0 0 0 G9 Totals 1 0 3 0

SECTION H Costs and fees of requests processed

Assessed Costs FOI Fees Received 2001-02 2002-03 2001-02 2002-03

H1 All completed requests $0 $0 $90 $0

SECTION I Discounts allowed

Personal OtherType of Discount Allowed 2001-02 2002-03 2001-02 2002-03

I1 Public interest 0 0 0 0 I2 Financial hardship - Pensioner/Child 0 0 0 0 I3 Financial hardship - Non profit organisation 0 0 0 0 I4 Totals 0 0 0 0 I5 Significant correction of personal records 0 0 0 0

SECTION J Days to process

Personal OtherElapsed Time 2001-02 2002-03 2001-02 2002-03

J1 0 - 21 days 1 0 2 0 J2 22 - 35 days 0 0 1 0 J3 Over 35 days 0 0 0 0 J4 Totals 1 0 3 0

SECTION K Processing time

Personal OtherProcessing Hours 2001-02 2002-03 2001-02 2002-03

K1 0 - 10 hours 1 0 0 0 K2 11 - 20 hrs 0 0 0 0 K3 21 - 40 hrs 0 0 3 0 K4 Over 40 hrs 0 0 0 0 K5 Totals 1 0 3 0



83

SECTION L Reviews and Appeals

2001-02 2002-03

L1 Number of internal reviews finalised 0 0 L2 Number of Ombudsman reviews finalised 0 0 L3 Number of District Court appeals finalised 0 0

Details of Internal Review Results

Bases of Internal Review – Personal Other Grounds on which Upheld Varied Upheld Varied Internal Review Requested 2001-02 2002-03 2001-02 2002-03 2001-02 2002-03 2002-02 2002-03

L4 Access refused 0 0 0 0 0 0 0 0 L5 Deferred 0 0 0 0 0 0 0 0 L6 Exempt matter 0 0 0 0 0 0 0 0 L7 Unreasonable charges 0 0 0 0 0 0 0 0 L8 Charge unreasonably incurred 0 0 0 0 0 0 0 0 L9 Amendment refused 0 0 0 0 0 0 0 0 L10 Totals 0 0 0 0 0 0 0 0

FOI – STATEMENT OF AFFAIRS

Information required under Section 14(2) of the Act, is located as follows:

■ The agency’s structure and functions: Corporate Governance■ The way its functions affect the public: Environment, Community, Our Network■ How the public may participate in agency policy development: Environment, Community■ The kinds of documents the agency holds: Promotion■ How members of the public may access and amend agency documents: Promotion, Environment, Community, FOI

FUNDS GRANTED TO NON-GOVERNMENT COMMUNITY ORGANISATIONS

$

Greening Australia 100,000Yass River Festival 2,500Fairfield City Farm 2,500Western Sydney Environment Week 11,000Keep Australia Beautiful: School Grants Program 12,250Donations to Regional Schools 3,200Orange Adventure Playground 500Fred Hollows Foundation 500




GRADUATES, CADETS, SCHOLARSHIP PROGRAM

The graduate, cadet and scholarship programs support TransGrid’s resource planning program by providing holistic, on the job learning for developing professions in the disciplines of Engineering, Environment and Accountancy. This is achieved by rotating graduates to various teams in TransGrid. Each placement affords a unique opportunity for development in the relevantnational competencies.

External professional bodies have been engaged to provide competency assessment for each graduate. This ensures that the development is recognised at a high standard within the profession internally and externally.

TransGrid currently has six (6) Accountancy graduates, four (4) Environmental Engineering graduates and eighteen (18) Electrical Engineering graduates. In 2002 and 2003, four (4) scholars met the criteria to be converted to cadets.

During 2002/2003, TransGrid increased its commitment to scholarship programs for graduates and cadets by offering Scholarships to Engineering students at the University of Technology as well as Newcastle and Wollongong Universities. This brings the total scholarships to six, spanning each academic year during 2002/03.

GUARANTEE OF SERVICE

TransGrid service levels are determined by the Australian Competition and Consumer Commission as part of the revenue determination process. In addition, the NSW Ministry of Utilities and Energy monitors service levels. TransGrid also has defined service commitments with its customers through its Connection Agreements.

INDUSTRIAL RELATIONS POLICIES AND PROCEDURES

TransGrid continues to consult with Unions and employees on a range of industrial matters. This consultative approach has resulted in no time lost due to industrial disputes during the reporting period.

INTERNET CONTACT DETAILS

The TransGrid web site can be located at www.transgrid.com.au

KEY PERFORMANCE INDICATORS (EXCLUDING SIGNIFICANT ITEM)

Actual Target

Earnings Before Interest and Tax ($ million) 183.3 184.9Operating Profit Before Tax ($ million) 95.9 93.5Gearing Ratio 55.3% 56.3%Interest Cover (times) 2.1 2.0 Asset Base ($ million) 2,807.4 2,891.3Revenue ($ million) 412.0 408.6

TransGrid’s performance during the year was in accordance with the targets agreed with its shareholder in its 2002/03Statement of Corporate Intent (SCI).

Operating Profit Before Tax exceeded the SCI target whilst Earnings Before Interest and Tax was marginally below target.

Network assets are performing satisfactorily and this has contributed to TransGrid providing a network that was reliable withavailability level above target of 99.2% during 2002/03.

Capital expenditure targets were met with the South Australia/New South Wales Interconnection Project being the only significant project to be delayed awaiting planning/environmental approvals, and the outcome of the regulatory processes.



85

LAND DISPOSAL

During the year TransGrid disposed of the following surplus properties:

Easement affected rural land at Tarana, via Oberon – value $104,000

Easement affected rural land at Forbes – value $37,500

Depot site at Bowenfels – value $33,000

No associations between purchaser and approver

Access to documents relating to these disposals may be sought under the Freedom of Information Act, 1989

LEGAL CHANGE

Legislation

The Electricity Supply (Safety and Network Management) Regulation 2002 replaced the Electricity Supply (Safety Plans) Regulation 1997, imposing more extensive planning and reporting requirements on network operators.

Amendments to the National Electricity Code (the code of conduct approved under the National Electricity Law) impose revised information requirements concerning network outages and their market impact, and revised technical standards for network connection (to commence in November 2003).

Judicial Decisions

There have been no significant judicial decisions affecting TransGrid or the users of its services.

It should, however, be noted that TransGrid was the defendant in two sets of proceedings arising out of environmental incidentsin the south of the State in early 2001. The Environment Protection Authority prosecuted TransGrid in the Land and EnvironmentCourt on four counts under Section 120 of the Protection of the Environment Operations Act 1997 of causing waters to be pol-luted, and the National Parks and Wildlife Service prosecuted TransGrid in the Downing Centre Local Court on two counts underClause 15 of the National Parks and Wildlife (Land Management) Regulation 1995 of damaging vegetation in a park and twocounts under Section 57 of the National Parks and Wildlife Act 1974 of picking vegetation in a nature reserve. TransGrid plead-ed guilty to all counts and was convicted on all counts. The Land and Environment Court imposed penalties totalling $80,000and an order for $50,000 prosecution costs. The Local Court imposed fines totalling $3,500 and an order for $236 court costs.TransGrid duly paid all penalties, fines and costs.

MEETINGS OF THE BOARD

Meetings Leave of Meetings EntitledAttended Absence Granted to Attend

Mr P R Higginson 11 - 11Mr R B Vaughan 9 2 11Mr D G Croft 11 - 11Mr N Betts 8 3 11The Hon B J Langton 11 - 11Ms M C Robertson 5 - 5




MINISTER

TransGrid is subject to the control and direction of its Portfolio Minister.

From 1st July 2002 to 1st April 2003, TransGrid formed part of the portfolio of The Hon. Kim Yeadon MP, Minister for InformationTechnology, Minister for Energy, Minister for Forestry, and Minister for Western Sydney.

From 2nd April 2003 to 30th June 2003, TransGrid formed part of the portfolio of The Hon. Frank Sartor MP, Minister for Energy and Utilities, Minister for Science and Medical Research, Minister Assisting the Minister for Health (Cancer), and Minister Assisting the Premier on the Arts

NUMBERS OF EXECUTIVE OFFICERS

Executive Officers As at 30th June 2003 As at 30th June 2002

No. of Executive Officers at SES Level 1 or above 72 66No. of Female Executive Officers at SES level 1 or above 2 1

OCCUPATIONAL HEALTH & SAFETY

Occupational Health and Safety statistical information for 2002/2003 is shown below:

Frequency Rate 2.1Average Lost Time Rate 7.3Total Lost Time Injuries 4Total Days Lost 29

No injuries were incurred as a result of electrical accidents.

A table of the Lost Time Injuries sustained is shown below:

Part of Body Injured Number Type of Injury Days Lost

Back 1 Strain 2Foot 1 Crush 3Leg 1 Fractures 15Groin 1 Strain 9

Total 4 29 Days

ORGANISATION CHART


General ManagerBusiness Resorces

General ManagerCommercial

General ManagerCorporate

Development

General ManagerEngineering

General ManagerNetwork

General ManagerSystem Operations

Chief Executive

Board of Directors


87

PERFORMANCE STATEMENTS

Mr D Croft, Chief Executive, was assessed by the Board as having achieved all the key performance criteria set in the CorporatePlan and the Statement of Corporate Intent with the NSW Government including network reliability and availability targets andfinancial performance targets. Mr Croft has continued to make a significant contribution to the ongoing evolution of the NationalElectricity Market, has expanded the asset base through completion of unregulated projects, implemented a number of envi-ronmental management initiatives, introduced workforce and succession planning for executive and senior management rolesand maintained TransGrid’s good safety record.

Mr K Murray, General Manager/Network, was assessed by the Chief Executive as having achieved all key performance criteria including network reliability of 99.99%, circuit availability of 99.64%, achievement of TransGrid Network maintenance andrefurbishment programs, improved safety performance and convened a national committee developing a set of national networksafety standards.

Mr J Byrne, General Manager/Commercial, was assessed by the Chief Executive as having achieved all performance criteria,including the effective management of all TransGrid financial functions, significant increase in Unregulated Income including com-pletion of the SNOVIC Capacitor Banks, maintenance of TransGrid quality certifications, and introduction of the TRIM recordsmanagement system.

Mr C FitzGerald, General Manager/Engineering, was assessed by the Chief Executive as having achieved all performance criteria including the achievement of the major capital works budget for 2002/3, the management of major capital projects onschedule and to specification, strong progression of the MetroGrid project to achieve the summer 2003 commissioning targets, formalisation of the pre-planning, design and project management framework for major projects and the managementof new technology in TransGrid.

Mr D Hutt, General Manager/Corporate Development, was assessed by the Chief Executive as having achieved all performance criteria including enhancing the NEM compliance and dispute resolution processes, and assisting in the development of policy relating to the role of transmission in the National Electricity Market.

Mr L Smyth, General Manager/Business Resources, was assessed by the Chief Executive as having achieved all performancecriteria including implementation of succession planning and leadership development, leading TransGrid Safety Commitment andachievement of TransGrid’s lowest ever Lost Time Injury rate, achieving reliability of better than 99% for the corporate comput-er systems and development and implementation of an environmental authorisation system.

Mr K Tothill, Executive Manager/Regulation and Revenue, was assessed by the General Manager/Corporate Development ashaving achieved all performance criteria including the development of the process for the ACCC revenue reset application, imple-mentation of updated transmission pricing and discount arrangements, and contributing to the development of the strategies forthe approach to the potential changes of the NEM arrangements applying to the transmission business.

Mr M Park, Executive Manager/Strategic Network Planning, was assessed by the General Manager/Corporate Development as having achieved all performance criteria including the preparation of Strategic Network plans for the NSW system, the implementation of effective Joint Planning processes, preparation of 5 and 10 year capital works programs, publication of TransGrid’s Annual Planning Report, implementation of Demand Side initiatives and effectively representing NSW on the Inter Regional Planning Committee.

PRIVACY MANAGEMENT PLAN

Obligations for the use, protection and release of personal information in New South Wales are governed by the Privacy and Personal Information Protection Act 1998.

TransGrid is committed to adherence with the principles of sound privacy practice to ensure management of personal information is consistent with legislative requirements. In light of this, TransGrid prepared and implemented a Privacy Management Plan during 2002/03 to facilitate adherence to the principles of the Act and to communicate how privacy is managed within the organisation.

TransGrid’s Privacy Management Plan is available on-line to all staff via TransNet.

No complaints were received and TransGrid conducted no internal reviews during the requisite reporting period.




PROMOTION

TransGrid is committed to providing a variety of communication vehicles to inform the public, customers and suppliers throughout the reporting year as follows:

■ Annual Report■ Code of Ethics and Conduct■ Corporate Plan■ NSW Annual Planning Statement■ Network Asset Management Plan■ TransGrid Business Ethics – A Guide to Contractors, Clients and Agencies■ TransTalk: In-House Newsletter■ Variety of Brochures and Advertisements promoting TransGrid’s business and services■ Internet Site

REMUNERATION OF SENIOR OFFICERS

Remuneration packages for the year ending 30th June 2003 for TransGrid’s Chief Executive and Senior Executives are disclosed below in accordance with Treasury Circular TC 03/07.

Position Incumbent Total Remuneration Package

Chief Executive D. Croft $471,250General Manager/Network K. Murray $249,750General Manager/Commercial J. Byrne $240,500General Manager/Engineering C. FitzGerald $208,000General Manager/Corporate Development D. Hutt $206,500General Manager/Business Resources L. Smyth $182,000Executive Manager/ Revenue & Regulation K. Tothill $182,000Executive Manager/Strategic Network Planning M. Park $181,000

REPORTING EXEMPTIONS

The following reporting exemptions have been granted by NSW Treasury to enable financial reporting requirements that apply, to be broadly consistent with Corporations Act reporting requirements, given that the entity operates in the competitive National Electricity Market:

Financial Reporting Exemptions

Statutory Requirements Act/Regulation References Comments

Financial Statements s.41B (c) PF&AA Exemption from preparing manufacturing, trading and profit and loss statements. Required to prepare a summarised Operating Statement (ie summarising major categories of revenues and expenses).

Income and Expenditure Information Schedule 1, Part 1: PF&A Reg

Amounts set aside for renewal or Item 2replacement of fixed assets

Amounts set aside to any provision Item 4for known commitments

Amount appropriated for repayment Item 6of loan/advances/debentures/deposits



89


Material items of income and Item 13 Required to summarise the material items ofexpenditure on a program or revenues and expenses on a program oractivity basis activity basis.

Additional Information Schedule 1, Part 3: PF&A Reg

Excess of non-current asset value Item 13over replacement cost

Annual Reporting Exemptions


Budgets■ detailed budget for the year s.7(1)(a)(iii)ARSBA

reported on

■ outline budget for next year s.7(1)(a)(iii)ARSBA

■ particulars of material adjustments to cl 6 ARSBRdetailed budget for the year reported on

Report of Operations s.7(1)(a)(iv)ARSBA Exemption subject to the condition that information relating to the “Summary review of operations” is to be disclosed in a summarised form.

Management and Activities Schedule 1 ARSBR Exemption subject to the condition that relevant information is to be disclosed in a summarised form.

Consultants Schedule 1 ARSBR Exemption subject to the condition that the totalamount spent on consultants is to be disclosed along with a summary of the main purposes of the engagements.

Land Disposal Schedule 1 ARSBR

Payment of Accounts Schedule 1 ARSBR

Time for Payment of Accounts Schedule 1 ARSBR

Report on Risk Management and Schedule 1 ARSBR Exemption subject to the condition that relevantInsurance Activities information is to be disclosed in a summarised

form.

Abbreviations:PF&AA Public Finance and Audit Act 1983PF&A Reg Public Finance and Audit Regulation 2000ARSBA Annual Reports (Statutory Bodies) Act 1984ARSBR Annual Reports (Statutory Bodies) Regulation 2000




RESEARCH & DEVELOPMENT

Research and development has become an important strategy for TransGrid to provide innovative solutions to achieve core objectives.

A dynamic research and development program within TransGrid also assists personnel in developing their skills. TransGrid also promotes research relationships with external organisations and educational institutions. This exposes TransGrid to the very latest technology and expertise available.

TransGrid has a number of research projects or has some involvement in projects in the following areas.

■ Fibre Optic Current and Voltage transducers that use light to measure these quantities on high voltage networks. These devices are being developed in consultation with the Australian Photonics Cooperative Research Centre, the University of Sydney and ABB Australia.

■ Corporate condition monitoring system that will allow easy viewing, trending and analysis of data from online monitoring devices on the power network.

■ Insulation monitor for transformers through collaboration with the University of Technology, Sydney and Siemens.■ Travelling Wave Fault Location to quickly determine the location of network faults.■ The generation of electricity from hot dry rocks. ■ Transient stability of electrical networks■ Mitigation of electrical fields from power cables

RISK MANAGEMENT & INSURANCE

The Executive Risk Management Committee is responsible for ensuring TransGrid’s risks are identified and effectively managed.Implementation of risk management strategies are the responsibility of all levels of Management within TransGrid and a framework exists to ensure that all risks are proactively and explicitly managed on an ongoing basis.

The Corporate Risk and Audit Group assist Management in the achievement of risk management objectives by providing advice and assistance in development of risk management plans, training staff in risk assessment method, ongoing verification and review of risk mitigation actions and actively monitoring the effectiveness of the risk management process.

The Corporate Risk and Audit Manager is responsible to the Chief Executive Officer for the provision of risk management services including Internal Audit. A quarterly report is provided to the Executive Risk Management Committee and the Board Audit Committee on the effectiveness of the risk management process and the results of internal audits completed.

Risk management programs include: health and safety, environmental, fire, legislation and National Electricity Code compliance, fraud risk awareness and training in risk management. In health and safety and environment matters and issues, separate Executive Committees exist in recognition of the importance of these risk areas.

TransGrid is a licensed workers compensation self-insurer. Other insurable risk is covered by a program of self-retained risk and external insurance.

SENIOR OFFICERS

Position Name Qualifications

Executive Director and Chief Executive Mr David Croft, AM BSc, BE (Elec), FIE Aust, FAICD, FAIM

General Manager Mr Kevin Murray BE (Elec), Dip Bus Studies, FAICDNetwork

General Manager Mr Chris FitzGerald BSc, BE (Hons), ME, Grad Dip ( Bus Admin), Engineering FIE Aust, CP Eng

General Manager Mr Don Hutt BA (Politics and Sociology), Public Admin Cert.Corporate Development



91

General Manager Commercial Mr John Byrne Comm (Acctg Proc) Cert, Cost Acctg and Board Secretary Post Cert, Comm Prog Cert, FCPA, FAICD

General Manager Mr Lionel Smyth BE (Elec), Grad Mgt Qual, GAICDBusiness Resources

General Manager Mr Dave Manning Grad Dip (Elec Eng) Post Grad Dip (Bus Studies), AMIEE.System Operations Retired Feb 2003

General Manager Mr Peter McIntyre BSc, BE (Hons), MBA (Technology Management)System Operations

SIGNIFICANT COMMITTEES

Management Activities – TransGrid Committees

TransGrid Board

Mr P R Higginson ChairmanMr R B Vaughan Deputy ChairmanMr D G Croft Executive DirectorMr N Betts Director – Labor Council RepresentativeThe Hon. B J Langton DirectorMs M C Robertson Director

Board Audit Committee

Mr R B Vaughan Chairman of CommitteeMr P R Higginson ChairmanMr D G Croft Executive DirectorThe Hon. B J Langton Director

Executive Board Committee

Mr P R Higginson ChairmanMr D G Croft Executive Director

Board Committee – Remuneration and Structure

Mr P R Higginson Chairman of CommitteeMr R B Vaughan Deputy ChairmanMr D G Croft Executive DirectorMs M C Robertson Director




Executive Team

Mr D Croft Chief ExecutiveMr J Byrne General Manager/CommercialMr C FitzGerald General Manager/EngineeringMr D Hutt General Manager/Corporate DevelopmentMr P McIntyre General Manager/System OperationsMr K Murray General Manager/NetworkMr L Smyth General Manager/Business Resources

Executive Risk Management Committee

The Executive Risk Management Committee ensures that the effectiveness of management control is maintained. It oversees the setting of policies, co-ordination and communication of fraud control strategies and ensures that TransGrid’s overall fraud control measures operate effectively.

Mr D Croft Chief Executive (Convenor)Mr J Byrne General Manager/CommercialMr C FitzGerald General Manager/EngineeringMr D Hutt General Manager/Corporate DevelopmentMr P McIntyre General Manager/System OperationsMr K Murray General Manager/NetworkMr L Smyth General Manager/Business ResourcesMr P Keating Corporate Risk and Audit Manager (Meeting Secretary)

Chief Executive Business Review Committee

The Chief Executive Business Review Committee closely monitors business performance and outcomes.

Mr D Croft Chief Executive (Convenor)Mr J Byrne General Manager/CommercialMr C FitzGerald General Manager/EngineeringMr D Hutt General Manager/Corporate DevelopmentMr P McIntyre General Manager/System OperationsMr K Murray General Manager/NetworkMr L Smyth General Manager/Business ResourcesMrs J Christie Executive Assistant (Meeting Secretary)

Executive Human Resources Steering Committee (HRSC)

The Executive Human Resources Steering Committee determines human resource policy and directs strategic human resource management.

Mr L Smyth General Manager/Business Resources (Convenor)Mr P McIntyre General Manager/System OperationsMr K Murray General Manager/NetworkMr M Park Executive Manager/Strategic Network DevelopmentMr J Howland Network Business Development and Training ManagerMr S Jones Manager/Engineering DesignMr E Valageorgiou Manager/Executive ServicesMr B Rigg Manager/Human ResourcesMs F McCulloch Human Resources Generalist (Meeting Secretary)



93

Executive Occupational Health and Safety Committee

The Executive Occupational Health and Safety Committee provides direction on policies and procedures relating to occupational health and safety matters, and provides executive support to location managers and Occupational Health and Safety Committees.

Mr K Murray General Manager/Network (Convenor)Mr C FitzGerald General Manager/EngineeringMr P McIntyre General Manager/System OperationsMr L Smyth General Manager/Business ResourcesMrs L Cooper Health and Safety Manager Mr V Galea Manager/Central RegionMr G Smith Manager/Southern RegionMr K Stephenson Manager/Northern RegionMr J Zahra Manager/CorporateMr J Robinson Safety and Fire Consultant (Meeting Secretary)

Executive Business Development Committee

The Executive Business Development Committee determines business development policy and strategy and monitors performance against targets.

Mr J Byrne General Manager/Commercial (Convenor)Mr C FitzGerald General Manager/EngineeringMr D Hutt General Manager/Corporate DevelopmentMr K Murray General Manager/NetworkMr J Howland Network Business Development and Training ManagerMr R Sonter Engineering/Business Development ManagerMr P Trimmer Business Development Manager/Project DevelopmentMr A Pittlik Executive Manager/Business Development (Meeting Secretary)

Executive Planning Committee

The Executive Planning Committee determines, sets and monitors network development activities and facilitates internal communication on these matters.

Mr D Hutt General Manager/Corporate Development (Convenor)Mr J Byrne General Manager/CommercialMr C FitzGerald General Manager/EngineeringMr P McIntyre General Manager/System OperationsMr K Murray General Manager/NetworkMr L Smyth General Manager/Business ResourcesMr G Chubb Manager/Customer ServicesMr M Park Executive Manager/Strategic Network DevelopmentMr C Parker Manager/Transmission Development (Meeting Secretary)




Executive Environment Committee

The Executive Environment Committee sets corporate environmental policy and monitors the effectiveness of environmental management within TransGrid.

Mr D Croft Chief Executive (Convenor)Mr J Byrne General Manager/CommercialMr C FitzGerald General Manager/EngineeringMr K Murray General Manager/NetworkMr L Smyth General Manager/Business ResourcesMr A Gilbert Executive Environmental ManagerMr P Phillips Manager/Asset PerformanceMr G Smith Manager/Southern RegionMs M Calvert Professional Officer (Meeting Secretary)

Executive Research and Development Committee

The Executive Research and Development Committee determines, sets and monitors the overall direction of research and technology development.

Mr C FitzGerald General Manager/Engineering (Convenor)Mr P McIntyre General Manager/System OperationsMr W Glanville Manager/Technical ServicesMr G Holden Financial ControllerMr S Jones Manager/Technology DevelopmentDr A Manglick Manager/Project DevelopmentMr P Phillips Manager/Asset PerformanceMr A Pittlik Executive Manager/Business DevelopmentMr K Hinkley Professional Officer (Meeting Secretary)

Executive Information Systems Strategy Committee (ISSC)

The Executive Information Systems Strategy Committee (ISSC) sets and monitors overall direction of information systems strategies.

Mr L Smyth General Manager/Business Resources (Convenor)Mr N Aroney Manager/Operations ControlMr C Baker Manager/Transmission PricingMr J Diesendorf Manager/Environment and Business SystemsMr G Holden Financial ControllerMr P Keating Corporate Risk and Audit ManagerMr P Phillips Manager/Asset PerformanceMr T Meehan Manager/Information SystemsMr D Smith Assets Manager/Southern RegionMr W Twemlow IT Projects Manager (Meeting Secretary)

Executive Revenue Reset Committee

The Executive Revenue Reset Committee will provide an overall management strategy to help maximise TransGrid’s regulated revenue to be negotiated for the next ACCC determination (that will come into effect from the 1 July 2004).

Mr D Hutt General Manager/Corporate Development (Convenor)Mr J Byrne General Manager/CommercialMr C FitzGerald General Manager/EngineeringMr P McIntyre General Manager/System OperationsMr K Murray General Manager/NetworkMr L Smyth General Manager/Business ResourcesMr K Tothill Executive Manager/Regulation and PricingMr M Park Executive Manager/Strategic Network DevelopmentMr P Gall Manager/Regulatory AffairsMr D Gittani Professional Officer (Meeting Secretary)



95

STAFF BY CATEGORY

Category Description Number of EmployeesAdministrative Officer 169 Apprentice 35 Engineering Officer 221 Lineworker 69 Operator 31 Professional Officer 167 Power Worker 65 Senior Contract Officer 111 Team Leader - Network 26 Tradesperson 70

Total 964

STAFF BY SALARY LEVEL

Level Total Staff (Number) Men Women <$23,339 5 5 0 $23,339 - $30,654 23 22 1 $30,655 - $34,269 8 7 1 $34,270 - $43,366 38 24 14 $43,367 - $56,080 328 268 60 $56,081 - $70,101 211 181 30 >$70,101 351 333 18

Total 964 840 124

STAFF OVERSEAS VISITS

1st July 2002-30th June 2003

Name Position Countries Visited Purpose of Visit

G. Bucea Professional Officer Japan Inspection of Cable and Accessories for CBD Project

A. Pittlik Executive Manager China, Hong Kong SPEC feasibility report presentation& Vietnam

S. Jones Manager Japan Final Testing of CBD Cable Accessories

C. FitzGerald General Manager Japan Final Testing of CBD Cable Accessories

B. Mills Engineering Officer USA Attend Training Course on Dissolved Gas Analysis

M. Hackett Engineering Officer Germany Inspection and Testing of GIS for CBD Project

M. Grierson Engineering Officer Germany Inspection and Testing of GIS for CBD Project

B. Mills Engineering Officer USA Stage 2 Training on Dissolved Gas Analysis

P. Trimmer Manager China Business Development Meetings

A. Meehan Manager Denmark, Sweden SCADA and EMS Implementation& UK

W. Glanville Manager Denmark, Sweden SCADA and EMS Implementation & UK

K. Dodds Manager Singapore Participate in the APUG Steering Committee Meeting

A. Pittlik Executive Manager China Attend Cross Border Power Grid Interconnection Workshop




Name Position Countries Visited Purpose of Visit

P. Phillips Manager Sweden, Germany Tapchanger Course & Meetings with ABB & VA Tech& Austria

K. Wyper Manager Germany Attend Tapchanger Training Course

S. Adams Engineering Officer Germany Attend Tapchanger Training Course

R. Ubrihien Engineering Officer Germany Attend Tapchanger Training Course

S. Cameron Engineering Officer Germany Attend Tapchanger Training Course

G. Ebb Manager Japan Inspection and Testing of Haymarket Shunt Reactor

A. Pittlik Executive Manager Vietnam, Business Development Meetings and CEPSI Conference Hong Kong & Japan

R. Sonter Manager Japan Attend the 14th CEPSI Conference

A. Kingsmill Professional Officer Japan Attend the 14th CEPSI Conference

A. Manglick Manager Japan Attend the 14th CEPSI Conference

G. Ebb Manager Japan Witness Testing of GIS for Haymarket Substation

D. Croft Chief Executive India Attend International Electric Power Transmission Conference

G. Spence Professional Officer Japan Witness Testing of GIS for Haymarket Substation

G. Bucea Professional Officer Japan Cable Tests associated with MetroGrid Project

A. Pittlik Executive Manager Singapore Attend 6th Annual Asia Power Conference

P. Trimmer Manager China Negotiations associated with unregulated contract work

F. Li Professional Officer China Negotiations associated with unregulated contract work

N. Frappell Professional Officer USA Attend ESMO International Live Line Conference

G. Walker Professional Officer Austria Design Review of 375 and 200MVA Transformers

J. Byrne General Manager UK Risk Management Presentations to insurance underwriters

P. Higginson Chairman UK Risk Management Presentations to insurance underwriters

J. Mouatt Professional Officer Sweden Design Review of Sydney West SVC Transformer

A. McAlpine Project Engineer Japan Factory Acceptance Tests for Cable Monitoring System

A. Kingsmill Professional Officer Japan Factory Acceptance Tests for Cable Monitoring System

G. Bucea Professional Officer France Present TransGrid Paper at Jicable Conference

A further 17 trips, of which the majority of costs were funded by other Organisations, were undertaken by TransGrid Officers.



97

WASTE REDUCTION AND PURCHASING POLICY

TransGrid is a participant in the NSW Government’s Waste Reduction and Purchasing Policy (WRAPP) as part of its commitment to reducing the quantity of waste going to disposal. Waste reduction is designed to promote ecologically sustainable development by requiring more efficient use of natural resources and minimisation of environmental impacts. TransGrid is actively seeking improved methods for waste disposal wherever possible.

These strategies include

■ Further reduction in paper usage■ Increased recycling of paper, toner cartridges and construction materials■ Introduction of a WRAPP database for centralised collection of information■ WRAPP to be part of the environmental awareness training throughout the organisation

WORK FORCE DIVERSITY ACHIEVEMENTS

Referral Officer Network

The Referral Officers Network has continued to facilitate the provision of information to all staff in relation to harassment, dis-crimination and workplace bullying. A conference attended by Referral Officers took place in March 2003 to discuss relevant changes in legislation and their responsibility within the organisation.

A Referral Officer is readily available to assist employees that feel they have been a victim of harassment and/or discriminatorybehaviour. The Referral Officer is to provide information and support for employees seeking resolution. Employees are able toexpress how they feel regarding someone else’s behaviour, without being judged.

Vacation Care Subsidy

The continuation of the Vacation Care Program has ensured that subsidised childcare has been made available to all staff throughout TransGrid for all school vacation periods. During 2002/2003, 29 subsidies have been allocated.

Provision of Programs for Women

TransGrid’s major initiative in relation to women is the on-going development of the TransGrid Spokeswomen’s Network. This Network forms part of the New South Wales Government’s “Spokeswomen’s Program” administered by the Premier’sDepartment. The Program exists to promote efficiency and effectiveness in the NSW public sector by assisting women to develop their skills so that they can fully participate in the work environment.

The Spokeswomen’s Network supports TransGrid’s operations and business activities through the provision of relevant support to its women, thereby assisting them to realise their full potential. The Network is comprised of a Women’s Liaison Officer, aSpokeswomen’s Co-ordinator and 10 Spokeswomen positions.

Spokeswomen consolidate and complement the activities of TransGrid management by bringing to their attention issues relating to women.

The main focus of Spokeswomen is identifying the needs of women in the organisation, in particular with respect to Equal Employment Opportunity.

This includes:

■ Information needs relating to women and work;■ Career, training and development needs;■ Anti-discrimination issues;■ providing access to a wide contact and referral network;■ workplace conditions; and■ Identifying varying issues and priorities of women in different stages of their lifecycle or career paths.

During 2002/03, TransGrid encouraged female employees to participate in various activities specifically geared towards thedevelopment of women, such as:





■ Attendance of TransGrid’s Spokeswomen at relevant training sessions, Network Days and the Annual Spokeswomen’sConference;

■ the continued publication of the TransGrid Spokeswomen’s quarterly newsletter, Women of Today;■ attendance of female employees at the Women’s Information Days facilitated by the Spokeswomen’s Program.

These are held throughout the State and cover a wide variety of topics relating to women;■ participation of TransGrid women in the Women in Leadership Program conducted by Dattner Grant; and■ the continued participation in the Springboard Women’s Development Program.

TransGrid continues to value the diversity of its workforce and remains committed to the principles of equity, access, opportunity and participation.

WORK FORCE DIVERSITY STRATEGY

Workforce Diversity Training

TransGrid has a documented Workforce Diversity Strategy developed in line with the requirements of Part 9A of the Anti-Discrimination Act 1977.

TransGrid is committed to Equal Employment Opportunity, Cultural Diversity and Ethical Practices. All employees are expected to demonstrate an understanding of and commitment to these areas.

During 2002/03, mandatory on-line Workforce Diversity Training for all new employees has continued, as part of the employee induction program.

End of the Statutory Information


Statistical Information 99


TABLE 1 – SYSTEM ENERGY AND MAXIMUM DEMANDS

Yearly Energy Yearly Maximum (GWh) (MW)

1990/91 52119 93741991/92 52828 95191992/93 54551 97921993/94 56531 98881994/95 58091 106131995/96 59885 102281996/97* 61254 105541997/98* 62952 109961998/99* 64279 110971999/2000* 66244 116732000/2001*# 68066 113602001/2002* 70101 120682002/2003 71574 12332

Notes: The Yearly Energy and Yearly Maximum have been calculated as generated, including net import from Snowy, Victoriaand South Australia less pumping load for financial years up to and including 1995/96.* Market energy and market maximum demand is included the table from 1996/97 onwards as more appropriate to

TransGrid's role in the State Electricity Market and then the National Electricity Market.# As at 18:00hrs on 3rd May 2001, Sithe and Redbank Generators have been included in the demand and energy as

recorded by TransGrid.

TABLE 2 – TRANSMISSION LINES AND UNDERGROUND CABLES AS AT 30TH JUNE 2003

Transmission Lines Underground CablesRoute Circuit Route Circuit

Operating Voltage (km) (km) (km) (km)

500kV in service at 500kV 143 286500kV in service at 330kV 386 771

Total 500kV 529 1,057

330kV in service at 330kV 4,389 5,171 20 20330kV in service at 132kV 76 144

Total 330kV 4,465 5,315 20 20

220kV in service at 220kV 681 681

Total 220kV 681 681

132kV in service at 132kV 5,196 5,281132kV in service at 66kV 4 4

Total 132kV 5,200 5,285

66kV in service at 66kV 62 62

TOTAL 66kV 62 62

Totals 10,937 12,400 20 20


100 Statistical Information

TABLE 3 – SCHEDULE OF SUBSTATIONS AND SWITCHING STATIONS IN SERVICE AS AT 30TH JUNE 2003

TransformersComm. Year System Voltage kV No. Note Unit Rating MVA Total Rating MVA

Voltage 500kV - SiteEraring 1984 500/330 3 (a) 400 1200Kemps Creek 1984 500/330 6 (a) 400 2400

1989 330/16 2 (b) 150 -Total sites at 500 kV = 2

Voltage 330kV – SiteArmidale 1972 330/132 2 150 300

330/132 1 200 2001969 132/66 2 30 602001 330/13.6 1 (b) 305 -

Avon 1974 330 - - -Bayswater 1984 330 - - -Beaconsfield West 1979 330/132 2 375 750Canberra 1967 330/132 6 (a) 133 800

2 375 750Dapto 1962 330/132 3 375 1125

330/132 1 160 160Darlington Point 1988 330/220 2 200 400

330/132 2 280 560Dumaresq 2000 330 - - -Ingleburn 1984 330/66 2 250 500Jindera 1979 330/132 2 375 750Kangaroo Valley 1976 330 - - -Liddell 1970 330 - - -Lismore 1992 330/132 2 375 750

2000 132/26 1 (b) 180 -Liverpool 1985 330/132 2 375 750Lower Tumut 1972 330 - (e) - -Marulan 1992 330/132 1 160 160Mt Piper 1986 330/132 1 375 375Munmorah 1967 330/132 1 (e) 375 375Murray 1967 330/132 2 40 80Muswellbrook 1983 330/132 2 375 750Newcastle 1969 330/132 12 (a) 133 1600Regentville 1998 330/132 2 375 750Sydney East 1976 330/132 9 (a) 133 1200Sydney North 1963 330/132 4 375 1500Sydney South 1961 330/132 18 (a) 100 1800Sydney West 1965 330/132 12 (a) 145 1740

2003 330/132 1 375 375Tamworth 1968 330/132 2 150 300

330/132 1 200 200Tomago 1983 330 - - -Tuggerah 1986 330/132 1 375 375Upper Tumut 1969 330 - (e) - -Vales Point 1962 330/132 2 160 320Vineyard 1994 330/132 2 200 400Wagga 1973 300/132 6 (a) 133 800Wallerawang 1975 330/132 2 215 430



101


Wellington 1984 330/132 1 190 1901 200 200

Yass 1959 330/132 6 (a) 50 3001965 132/66 1 30 30

Total Sites at 330kV = 36

Voltage 220kV – Site

Broken Hill 1979 220/22 2 100 200Buronga 1988 220 - - -Balranald 2000 220/22 1 30 30Total Sites at 220kV = 3

Voltage 132kV – Site

Albury 1958 132 - (c) - -ANM 1981 132 - - -Beryl 1976 132/66 2 120 240Burrinjuck 1950 132 - - -Coffs Harbour 1979 132/66 2 60 120Coleambally 1993 132 - - -Cooma 1954 132/66/11 1 (d) 60 60

2 27.5 55Cowra 1960 132/66 2 30 60Deniliquin 1971 132/66 2 60 120Finley 1991 132/66 1 30 30Forbes 1969 132/66 2 60 120Gadara 2000 132/11 1 35 35Glen Innes 1970 132/66 2 30 60Griffith 1964 132/33 3 45 135Gunnedah 1985 132/66 2 60 120Guthega 1970 132 - (e) - -Hume 1957 132 - - -Inverell 1984 132/66 2 120 240Kempsey 1967 132/33 2 30 60

66/33 2 15 30Koolkhan 1963 132/66 1 30 30

132/66 1 60 60Molong 2001 132/66 1 30 30Moree 1984 132/66 2 60 120Mt. Piper 1988 132/66 2 120 240Munyang 1989 132/33 2 30 60Murrumburrah 1985 132/66 2 60 120Narrabri 1965 132/66 3 30 90Nambucca 2001 132/66 1 60 60Orange 1954 132/66 3 30 90Panorama 1979 132/66 2 120 240Parkes 1993 132/66 1 60 60Port Macquarie 1979 132/33 3 30 90Queanbeyan 1957 132/66 3 30 90Tamworth 1961 132/66 3 60 180Taree 1958 132/66 2 60 120

132/33 2 30 60



102



Tenterfield 1970 132/22 2 15 30Tumut 1967 132/66 2 60 120Wagga 1955 132/66 3 60 180Wallerawang 1953 132/66 2 60 120Waratah West 1992 132 - - -Yanco 1969 132/33 2 45 90Total Sites at 132kV = 40

Total Sites at all Voltages = 81

Total Transformers at rating Total Number Total Rating MVA

500kV 9 3,600330kV 121 22,015220kV 3 230132kV 75 3,82566kV 2 30

Total Transformers at all ratings 210 29,700

(a) Single phase transformers(b) Static VAR compensator transformers – Not counted in ‘Transformers Total Rating’(c) Transformer assets transferred to Great Southern Energy on 1st July, 1991(d) Substation 11kV assets transferred to Great Southern Energy on 1st July 1991(e) Substation and Switching Stations transferred from SHL to TransGrid on 28th June 2002


Aboriginal Employment and Development Statement 77

Action Plan for Women 97

Aims and Objectives 1

Board of Directors Remuneration 77

Capital Expenditure ($M) 7

Capital Projects Work Completed or in Progress 34

Capital Works 30

Chairman and Chief Executive’s Report 2

Charter 77

Code of Ethics and Conduct 77

Community 48

Comparison of Staff Numbers 78

Compliance 2003 78

Consultants Fees 78

Consumer Response 78

Contents INSIDE FRONT COVER

Corporate 35

Corporate Governance 8

Cost of Annual Report 78

Credit Card Usage 79

Disability Plan 79

EEO Disclosures 79

Environment 44

Ethnic Affairs Priority Statement 80

Executive Team 13

Financial Report 53

FOI – Statement of Affairs 83

Fraud Prevention 80

Freedom Of Information 80

Funds Granted to Non-Government Community Organisations 83

Graduates, Cadets, Sponsorship Program 84

Guarantee of Service 84

Historical NSW Energy Use 36

Historical NSW Winter and Summer Demand 36

Independent Audit Report 76

Industrial Relations Policies and Procedures 84

Innovation and Excellence 42

Internet Contact Details 84

Key Performance Indicators (Excluding Significant Item) 84

Key Performance Indicators (Including Significant Item) 6

Land Disposal 85

Legal Change 85

Letter to the Shareholders INSIDE FRONT COVER

Lost Time Injury Frequency Rate (LTIFR) 7

Meetings of The Board 10, 85

MetroGrid 16

MetroGrid Cable Route 23

Minister 8, 86

Network Availability (%) 7

Network Reliability (System Minutes Lost) 7

Network System Map 27

Notes To and Forming Part of the Financial Statements 57

Numbers of Executive Officers 86

Occupational Health and Safety 86Statistical Information 2002/2003

Organisation Chart 86

Our Network 24

People 50

Performance Statements 87

Privacy Management Plan 87

Promotion 88

Remuneration of Senior Officers 88

Reporting Exemptions 88

Research and Development 90

Return on Assets (%) Graph 7

Return on Equity (%) Graph 7

Risk Management and Insurance 90

Schedule of Substations and Switching Stations in Service as at 30th June 2003 100

Senior Officers 90

Significant Committees 91

Staff by Category 95


Index 103


Staff by Salary level 95

Staff Overseas Visits 95

Statement by Members of The Board 75

Statement of Cash Flows 56

Statement of Financial Performance 54

Statement of Financial Position 55

Statistical Information 99

Statutory Information 77

Structure of The Board 8

System Energy and Maximum Demands (MW) 99

System Weekly Maximum Demand (MW) 25

The Board 10

The Executive Team 13

TransGrid Contact Details INSIDE BACK COVER

TransGrid’s Environmental Working Group Structure 44

TransGrid Network System Map 27

TransGrid’s Planning Process 39

Transmission Lines and Underground Cables as at 30th June 2003 99

Unregulated Business 40

Variation of Daily State Demand (MW) 25

Variation of Daily Temperature (0˚) 25

Waste Reduction and Purchasing Policy (WRAPP) 97

Work Force Diversity Achievements 97

Work Force Diversity Strategy 98

Year at a Glance 6


104 Index


Sydney

201 Elizabeth Street

PO Box A1000Sydney South NSW 1235

Telephone 02 9284 3000Telephone 61 2 9284 3000Fascimile 02 9284 3456Facsimile 61 2 9284 3456Office Hours: 8:00am-6:00pm

Central Region

Metroplitan200 Old Wallgrove RoadHorsley Park NSW 2164

PO Box 87Horsley Park NSW 2164

Telephone 02 9620 0777Office Hours 7:30am-4:30pm

Orange217 -235 McLachlan StreetOrange NSW 2800

PO Box 906Orange NSW 2800


Northern Region

NewcastleWirra Crescent off University DriveWaratah West NSW 2298

PO Box 93Waratah NSW 2298


TamworthGoonoo Goonoo RoadTamworth NSW 2340

PO Box 526Tamworth NSW 2340


Southern Region

Wagga14 Copeland StreetWagga Wagga NSW 2650

PO Box 8516 Kooringal NSW 2650


YassPerry StreetYass NSW 2582

PO Box 139Yass NSW 2582


www.transgrid.com.au

This report is also available on CD.

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Documents

The backbone of the State - opengov.nsw.gov.au