SP Ausnet transcript

July 21, 2010

Transcript of the question "Record Melbourne growth and Brunswick expansion/underground pressures" from the SP Ausnet 2010 AGM on Wednesday July 14, asking how the company was coping. Listen to the audio here

Stephen Mayne: Melbourne's has just been through it's fastest period of growth in history - in 2008 the population grew by 100,000 for the first time in history, and Melbourne is now of the 50 largest cities in the world. I am wondering if you could comment on how our business is being affected by this record growth that we are seeing - particularly on the transmission side, and I'm particularly interested in the whole question of urban consolidation and growing pressures on us to underground transmission or develop our networks in a way where the amenity pressures from community groups are becoming stronger.

I'm particularly interested in a recent issue that has popped around Merri Creek where there's been a proposal, with the communities up-in-arms, councils voted something down in Moreland, and there is pressure on us, on the company, to underground facilities around Merri Creek. Also I know we've committed to spend, I think, more than $100m in Brunswick, not so sure that we have actually spent that much there at the moment, but can you just talk about those pressures on us, and how as a company we are dealing with the community expectations. Particularly around under-grounding an amenity, as we as a company, cope with this unprecedented growth and urban consolidation in Melbourne.

Chairman: Thank you very much Stephen for that question, I think it is a very interesting question. Can I ask Nino to please elaborate on what we are doing?

Nino: yes chairman.

Stephen the growth is a very dominant feature of our business, and in fact one of the driving forces around our capital raising last year, was so that we could actually fund, in a sustainable sense, the growth that we're seeing.

Our distribution network, for example, in the Northern and Eastern corridors are growing quite significantly. Part of our submission to the AER and this current distribution price review is to not only cater for that ongoing growth, but also to deal with the utilisation of our assets. So the assets that sort of sit behind the immediate connections to new customers. Fundamentally very important for us to make sure our networks are well prepared for that growth.

Also in transmission we are seeing the connection of renewable energy sources - more wind farms and gas generators add connections to our transmission network. So, the funding of those, is critically important for us in the ability to access, debt markets is very important to how we fund that future growth. So, it is a very significant issue for us and something we pay a lot of time to.

In terms of under-grounding, in general we, obviously on our distribution network we, there are areas that we underground, and there are increasing pressures for under-grounding for amenity. Transmission in Australia, as you would realise, we don't have a lot of underground transmission. Simply because it hasn't been the way and technology hasn't driven us to go underground.

The particular case that you're talking about, to do with Brunswick around the Merri Creek is really a proposal by Citipower, being the planner of the supply to the CBD. So, Brunswick is being redeveloped to re-enhance security for the central business district of Melbourne. It, along with AEMO - who is the planner for the transmission network, are really who will decide on the scope of what needs to be done, along with us as the owner-operator of that facility. Obviously we are subject to regulation, and the end solution will be in concert with the AER in terms of what is an efficient expenditure to meet the demands of the CBD out of Brunswick.

So, as you know that petition at council was not approved and we're in consultation to see if there are other ways that we can deal with the amenity issue with those residents. I think we are trying to understand their position and try to deal with it as much as we can, albeit subject to regulatory approval.