Envestra

A major focus of Envestra is sustainability – doing the things that we believe will enable us to meet the long-term expectations of our shareholders and the community.

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We do this by protecting the environment in which we operate, delivering high quality services to the consumers supplied with energy via our networks, providing a safe working environment for our employees, encouraging their development and rewarding success. Allied to this is the support we provide to local communities and organisations with which we interact. By continually improving our performance in these areas we create a stronger future for Envestra.

Australia’s natural gas reserves are expected to last at least 100 years and over the next two decades, its use will grow to around 25% of the nation’s primary energy needs. Envestra’s ever expanding gas distribution networks will play a pivotal role in delivering this environment friendly fuel.

HEALTH AND SAFETY OF OUR PEOPLE

Management of occupational health and safety associated with the Company’s operations continued to receive close attention.

We have the responsibility to ensure that our major contractor, APA, adopts a sound approach to this important business activity. APA has more than 1,100 employees and contractors working for Envestra. During the year
nine lost-time injuries were sustained by APA employees, and seven among contractors. These compare with five and two in the previous year, respectively.

APA’s focus is on the frequency of lost-time and moderate injuries, defined as the Serious Injuries Frequency Rate (SIFR) and a range of activities aimed at preventing injuries. A SIFR of 10.3 for employees and contractors
was recorded in 2008-09. Although this is slightly above the target set for the year, it is a sound performance considering the nature of many of the operational activities undertaken.

During the year, four environmental audits and eight environmental emergency response exercises were conducted on our networks. These activities did not identify any major issues.

Envestra closely monitors the performance of its operator, APA, to ensure compliance with all requirements of the environmental licences and permits held by the Company. There were no material incidents during the year.

RISK MANAGEMENT

The Company, through its Executive Risk Management Committee, undertakes a comprehensive risk management assessment at least twice each year that aims to identify key business risks and ensure appropriate control mechanisms or other actions are in place to minimise exposures. This assessment, and the control mechanisms, is regularly reviewed by the committee throughout the year. The outcomes are monitored by the Audit and Risk Committee at regular intervals.

Our internal audit program is conducted by KPMG and focuses on controls associated with major risk areas.

During 2008-09 KPMG undertook reviews of Envestra’s compliance with its Treasury Policy, shared services cost allocations by APA under the Operating and Management Agreements, and APA’s compliance with environmental and employee policies.

ENVIRONMENTAL BENEFITS OF NATURAL GAS

As one of Australia’s largest distributors of natural gas, we take pride in our role in the distribution of this environment-friendly fuel.

In South Australia, Queensland and Victoria, the governments have introduced energy policies that prevent standard electric hot water services being installed in new dwellings. Only high efficiency natural gas units, gas-boosted solar systems and electric heat pumps qualify for installation under the new regulations. As from 1 July 2008, in South Australia, the Government also prohibited the replacement of standard electric hot water units in established dwellings when existing water heaters reach the end of their operational life.