Origin Energy Limited · ASX:ORG
Origin Energy — Merger or Acquisition (December 2010)
38 slides from Origin Energy's merger presentation, Dec 15, 2010
Slide 1: Origin to acquire Integral Energy and Country Energy retail businesses
To Company Announcements Office Facsimile 1300 135 638 For personal use only Company ASX Limited Date 15 December 2010 From Helen Hardy Pages 38 ORIGIN TO ACQUIRE INTEGRAL ENERGY AND COUNTRY ENERGY RETAIL Subject BUSINESSES AND ENTER INTO ERARING GENTRADER ARRANGEMENTS IN NSW ENERGY REFORM Please fi
Slide 2: Acquisition of Integral Energy Retail, Country Energy Retail and Eraring GenTrader arrangements
Sydney 15 December 2010 For personal use only Not for Origin Energy Distribution or Acquisition of Integral Energy release in the Retail, Country Energy Retail and United States of Eraring GenTrader arrangements America or to any United States person
Slide 3: Important Notice
Important Notice This presentation has been prepared by Origin Energy Limited (ABN 30 000 051 696) (Origin) in relation to the acquisition of retail assets and liabilities of Country Energy and Integral Energy Australia and the entry into of GenTrader arrangements with Eraring Energy. This has been
Slide 4: Outline
Outline For personal use only 1) Transaction Overview 2) Integral Energy and Country Energy Retail Businesses 3) Eraring GenTrader Arrangements 4) Business Strategy 5) Appendix 3
Slide 5: Transaction Overview
1) Transaction Overview For personal use only
Slide 6: Origin agrees to acquire retail businesses and Eraring GenTrader arrangements
Through the NSW Government’s Energy Reform Process, Origin has agreed to acquire the Integral Energy and Country Energy retail businesses, and the Eraring GenTrader arrangements for $3,250 million1 For personal use only The transaction secures Origin’s position as the leading Australian integrated e
Slide 7: Retail businesses deliver large scale incumbent position in NSW
The Integral Energy and Country Energy retail businesses deliver Origin a large scale incumbent market position in NSW, Australia’s largest energy market Integral Energy + Country Energy retail businesses For personal use only Acquisition Price: $2,300 million Customer accounts as at Electricity: 1.
Slide 8: Customer bases acquired at $1,282 per customer account
The Integral Energy and Country Energy customer bases have been acquired for $1,282 per customer account which is consistent with previous acquisitions … For personal use only Retail Segment Price Key Metric Integral Energy and Country Energy retail customer accounts $2,108 million $1,282/customer a
Slide 9: Acquisition funded through new debt facilities and pro-rata equity offering
The acquisition will be funded through new debt facilities which are expected to be partly refinanced with a pro-rata equity offering to be conducted within 12 months … For personal use only • The acquisition is currently scheduled for completion on 1 March 2011 • The acquisition is fully financed v
Slide 10: Integral Energy and Country Energy Retail Businesses
2) Integral Energy and Country Energy Retail Businesses For personal use only
Slide 11: Acquisition increases Origin's customer accounts by over 50%
The acquisition of the Integral Energy and Country Energy retail businesses increases Origin’s customer accounts by over 50% to 4.6 million … • Origin’s electricity, natural gas and LPG customer base will increase to around 4.6 million For personal use only customer accounts post acquisition • The r
Slide 12: Integral Energy holds NSW's second largest electricity customer base
Integral Energy holds NSW’s second largest electricity customer base with an incumbent position in NSW growth corridors … For personal use only Customer Accounts – 30 June 2010 (‘000) Electricity – Mass Market 840 Electricity – Commercial and Industrial 8 Total 848 Energy Consumption FY ended 30 Jun
Slide 13: Country Energy is the incumbent retailer in regional NSW
Country Energy is the incumbent retailer in regional NSW and has a stable customer base with a large portion of customers having not chosen to switch retailer … For personal use only Customer Accounts – 30 June 2010 (‘000) Electricity – Mass Market 749 Electricity – Commercial and Industrial 6 Natur
Slide 14: IPART price caps set NSW tariffs to 30 June 2013
IPART’s determination of regulated energy price caps has effectively set NSW tariffs to 30 June 2013 giving relative pricing certainty to mass market customers on regulated tariffs in the near term For personal use only • In December 2007 the Government committed to extend energy retail price regula
Slide 15: Transition Services Agreements after completion
After completion, Transition Services Agreements will be in place under which core retail services will continue to be provided by the distribution network businesses For personal use only • Origin will enter into Transition Services Agreements (TSAs) with the distribution network businesses to cont
Slide 16: Eraring GenTrader Arrangements
3) Eraring GenTrader Arrangements For personal use only
Slide 17: Eraring Power Station location and the Shoalhaven Scheme
Eraring Power Station is situated on the western shore of Lake Macquarie, 30 km south-west of Newcastle on the NSW Central Coast For personal use only • Eraring Power Station is a coal fired power station located 30 km south-west of Newcastle • The power station’s capacity is currently being expande
Slide 18: Eraring is a reliable and flexible plant
Eraring Power Station has proven to be a highly reliable and flexible plant, with the ability to generate efficiently at as low as one third of its rated capacity, enabling it to respond to periods of peak demand and high prices For personal use only • Past operations have regularly demonstrated a m
Slide 19: Shoalhaven Scheme provides generation in peak demand periods
The Shoalhaven Scheme provides generation in peak demand periods • Shoalhaven is a pumped storage hydro Fitzroy Falls 4GL capacity is Shoalhaven Scheme scheme which serves as a duel purpose For personal use only Reservoir allocated to Eraring for storage and Pumped Storage Hydro water transfer and h
Slide 20: GenTrader arrangements provide rights over significant generation portfolio
The Eraring GenTrader arrangements provide Origin with contractual rights over a significant portfolio of power generation … Power Station Commissioning GTA Fuel Units Units Size GTA Total For personal use only Date Expiry (MW) Contract Capacity (MW) Eraring Energy Eraring Power Station 1982 – 1984
Slide 21: Origin's and Eraring's rights and obligations under GenTrader
Under the GenTrader arrangements, Origin supplies the fuel, pays the agreed operating and maintenance charges, and has the right to sell the electricity output … Origin’s Rights and Obligations Eraring’s Rights and Obligations For personal use only RIGHTS RIGHTS • Entitlements to the electricity out
Slide 22: GenTrader payment structure
The payment structure for the GenTrader arrangements includes a number of fixed and variable fees and charges payable by Origin to Eraring Energy Payment Structure For personal use only • Annual Capacity Charge - for the supply of the Total Contract Capacity to Origin over the life of the agreement
Slide 23: Eraring coal supply position
Excluding the Cobbora contract, Eraring Power Station has a substantially contracted coal position until 2012, after which it gradually declines, with no fuel supply contracts currently extending beyond 2022 … For personal use only • Eraring Power Station has historically consumed between six and se
Slide 24: Cobbora coal resource to supply Eraring
The Cobbora coal resource is expected to provide Eraring Power Station with an additional and substantial supply of competitively priced coal … For personal use only • The NSW Government is retaining ownership of the Cobbora coal resource and will progress its development to commence coal deliveries
Slide 25: Business Strategy
For personal use only 4) Business Strategy
Slide 26: National Electricity Market established in 1998
The National Electricity Market was established in 1998 in response to moves to privatise and deregulate energy markets in Australia … • In the mid 1990s energy markets in Australia were For personal use only characterised by State based ownership of electricity generation and distribution assets, w
Slide 27: Origin has grown to around 33% market share
Origin has grown from a market share of around 4% of gas and electricity accounts in the late 1990s to a market leading position of around 33% and an incumbent position in each mainland region of the NEM Origin Customer Accounts1 For personal use only Electricity and Gas Market Share in the 5,000 Na
Slide 28: Acquisition increases peak demand from around 7,000 MW to 12,000 MW
The acquisition of the Integral Energy and Country Energy retail businesses increases Origin’s peak demand from around 7,000 MW to 12,000 MW … For personal use only MW Peak Peak Demand Demand and Generation vs Generation Capacity Annual C&I Demand Capacity vs Energy Annual Demand vsAnnual Annual Dem
Slide 29: Scale and diversity reduce cost of risk management
Increased scale and diversity of the combined position reduces the cost of risk management relative to the three stand-alone businesses … For personal use only Integral Energy + Reduced Cap Capacity (MW) Capacity (MW) Requirement Country Energy + Origin Load Coincident load is lower than the sum of
Slide 30: Eraring GenTrader purchased at $313/kW versus new entrant cost
Due to allowances for plant age and various risks associated with the GenTrader contractual arrangements, the Eraring GenTrader was purchased at $313/kW, representing a significant discount to the new entrant cost to build Supply/Demand balance post Retailer For personal use only and GenTrader acqui
Slide 31: Eraring GenTrader is a competitively priced long term hedge
The Eraring GenTrader represents a competitively priced long term hedge, and also provides Origin control of the dispatch of this generation capacity For personal use only NEM Market Share of Generation Capacity1 Origin 12% TRU without GenTrader Macquarie Generation * 10% Snowy Hydro 9% Dispatch Own
Slide 32: Origin's position in the four largest NEM regions
Origin has built a position in the four largest regions of the NEM and is well placed to compete in energy retailing in each region and continue to deepen its integration in these markets MW MW 18,000 For personal use only 18,000 NSW QLD 13,500 13,500 9,000 NEM 9,000 Origin NEM 4,500 Origin 4,500 -
Slide 33: Additional demand partly met through Eraring GenTrader
The additional demand of Integral Energy and Country Energy is partly met through the Eraring GenTrader arrangements. Origin will need to acquire or develop further supply including Renewable Energy Certificates under the Mandated Renewable Energy Target … For personal use only C&I DemandMW vs Energ
Slide 34: Higher proportion of gas-fuelled stations and lower carbon intensity
Origin has a higher proportion of gas-fuelled power stations compared with the NEM and a lower average carbon intensity … Carbon Intensity by Generator Type For personal use only Brown Coal Dispatch Owned Black Coal NEM average Rights intensity 0.92t/MWh OCGT CCGT Renewables 0.0 0.2 0.4 0.6 0.8 1.0
Slide 35: Transaction secures Origin's position as leading integrated energy company
This transaction secures Origin’s position as the leading Australian integrated energy company … For personal use only Australia’s largest energy retailer with around 4.6 million customer accounts One of Australia’s largest generators with capacity and contractual arrangements in excess of 5,800
Slide 36: Appendix
For personal use only 5) Appendix
Slide 37: Origin's Generation Capacity and Contractual Rights
Origin’s Generation Capacity and Contractual Rights For personal use only Generator Capacity Type Fuel Status Ownership NEM (MW) % Scheduled Ladbroke Grove 80 OCGT Gas Merchant Plant 100 Y Quarantine 216 OCGT Gas Merchant Plant 100 Y Roma 74 OCGT Gas Merchant Plant 100 Y Mt Stuart 414 OCGT Liquid Fu
Slide 38: For further information
Acquisition of Integral Energy Retail, Country Energy Retail and Eraring GenTrader arrangements Sydney 15 December 2010 For personal use only Origin Energy For further information Angus Guthrie Group Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61 2 8345 5558 Mobile:
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