AGL Energy Limited · ASX:AGL
AGL Energy — Citi Infrastructure & Utilities Conference 2007
32 slides from AGL Energy's conference presentation, June 2007
Slide 1: Operational & Strategic Update
agl energy operational & strategic update paul anthony, managing director & ceo Citi Infrastructure & Utilities Conference Sydney, June 2007
Slide 2: Disclaimer
disclaimer the information in this presentation: + is not an offer or recommendation to purchase or subscribe for securities in agl energy limited or to retain any securities currently held + does not take into account the potential and current individual investment objectives or the financial situa
Slide 3: Growing from a position of strength
agl energy growing from a position of strength » Australia’s largest retailer of gas & electricity; «4.1m customer.accounts across NSW, Victoria, South Australia, Queensland & Western Australia (includes 100% of JV’s) — ~1.3m dual-fuel customer accounts (includes 100% of JV’s) — 170 years of operati
Slide 4: A focused energy company
a focused energy company Operational Snapshot yesteinad Gas vega ee et 2. F gos 2.0 electricity 1.3 M duat-tvel {includes 300% oF vs} Genecetinn : é Sr EGABTY) 200 PE 3,300 MW equity capacity $,600 MY {inctudes 200% J¥s & development prajects) Gat Re 2 a a L QLD ACCOUNTS 3,320 Pls contracted ges nae
Slide 5: The integrated strategy
the integrated strategy the ‘four corners—big goal’ approach hunters & gatherers of value across gas & electrici ergy chains electricity electricity ups "influencing regulatory &industryoutcomes jon, downstream supply HE supply gas gas growth platform & skills to succeed across gas & electricity ene
Slide 6: The integrated strategy: months of deploying the 'four corners' approach
the integrated strategy 12 months of deploying the ‘four corners’ approach ~Southern Hydro (645MW) upstream supply downstream retail ~Bogong (Hydro 140MW) electricity y electricity ~Hallet (Wind 9S5MW) ~Torrens Island (Gas 1,280MW) ~Gas & renewable generation projects under review ~2400MW ~ acquired
Slide 7: Wholesale price volatility
$38 $30 wholesale price volatility an energy constrained market NEM currently driven predominantly by energy & not capacity constraints ® Pre drought characterised by (seasonal) capacity constraints — market separation & pricing events * Currently characterised by high average prices & low volatilit
Slide 8: Building the natural hedge: upstream generation
building the natural hedge upstream generation 100% of Torrens. Island Power Station (TIPS) ® Acquiring 1,280MW TIPS (Sth Aust) gas fired peaking & intermediate power station for $417m — transaction close date 2 July 07 * Delivers immediate natural hedge between upstream generation and downstream (c
Slide 9: TIPS transaction economics
00S OS a transaction economics disciplined, creative transactions deliver value accretion Se $4,300, $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 Specific Capacity Value ($/KW) SO « > A. S é re ra ~ foe eo a4 iad tis oe & og & os Me a re ee é é & eos oe of re y e A x , & . & é & & “ 8
Slide 10: TIPS energy & capacity benefits
TIPS energy & capacity benefits ¥ Delivering ~180% © increase in energy output to the AGL generation portfolio Post TIPS P ~4,300 GWhr Post Hailett & Bogong ~4,800 GWhr @ Torrens Island O Somerton GB AGL Hydro (Vic), Dartmouth / Eildon etc B AGL Hydro (NSW) Various 1. ~160% net of drought impacted h
Slide 11: Delivering the natural hedge
delivering the natural hedge rebalancing retail load & generation capabilities > Physical / owned intermediate & peak generation cover extreme price risk periods — ~30% of AGL load occurs peak pricing periods & represents ~40% of COGS ® Equity.investment in Loy Yang A provides natural financial hedg
Slide 12: Mitigating future price movements & capturing wholesale profit pools
mitigating future price movements & capturing wholesale profit pools indicative hedging approach for mass market ® A balance of own generation coupled with prudent forward hedge planning % Intra year cover of ~90% or more of forecast load | indicative forecast load Trading discretion based on house
Slide 13: Generation diversity
generation diversity a balanced portfolio A robust generation portfolio mitigates risk of market cycles * Diversity of fuel type (coal, gas & hydro/renewables) % Diversity of generation type - base, intermediate & peak 12
Slide 14: Building the natural hedge: upstream gas
building the natural hedge upstream gas Moranbah (Arrow) QGC %50% stake in MGP for US$68.7m (~A$93m) ® Initial 27.5% stake for cash outlay of up * First upstream equity gas in fast-growing to $327 million Queensland market * AGL secures up to 740 PJ, 20 year GSA * Strengthens supply position in East
Slide 15: Moranbah & QGC: transaction economics
2P reserves $/GJ moranbah & qgc: transaction economics disciplined, creative transactions deliver value accretion $2.40 $2.00 $1.60 $1.20 $0.80 $0.40 $0.00 + Moranbah (Arrow) + ~349% $0.49 AGL acquisition (Moranbah) Current market! 1. As at 4June 2007. Market capitalsiation + net debt / 2P reserves
Slide 16: Hydro upside potential
hydro upside potential * Kiewa Scheme 68% full (~240MW - full AGL Hydro Storage discretion) — additional 140MW Bogong expansion forms part of Kiewa Scheme Dartmouth —Kiewa Scheme ~~-Bildon % Derivative products (temperature & precipitation hedges) contribute *% GEAC (Loy Yang A) to deliver substanti
Slide 17: Project Phoenix: on track & on budget
project phoenix on track & on budget Complete ® Detailed design and build; — Design, configuration & build of 130 strategic retail business processes, voice architecture, interfaces, reports & industry regulated enhancements — Rationalisation of retail products & rates; ~ ~1,100 to 78 strategic prod
Slide 18: Powerdirect integration
powerdirect integration on track - operations & cost * Powerdirect Pty Ltd (SME business) will continue to operate as stand alone brand & business operating out of Victoria —IT, billing, customer service and sales & marketing functions completely segregated from AGL — currently finalising QLD Acquis
Slide 19: Driving operational efficiency
driving Retail Headcount {end target FY09 ~ 640 FTE's) 1300 Current position ....: W 1100 Lf a 900 $ 700 x 500 300 + T , T , T Apr-06 Dec-06 Apr-07 Jun-07 dun-08 Jun-O3 oomme Actual —— Planned Corporate & Merchant Headcount {end target FY08 ~400 FTE's) we E i € 1300 s § 1100 c fi g 900 J urrent posi
Slide 20: Creative strategic execution: upstream gas
creative strategic execution upstream gas AGL to take 35% stake in CSM Energy Limited * Initial cash outlay of $3 million * Strong leverage to CSM business upside * CSM Energy’s strategic focus — acquiring coal mine methane (“CMM”) gas and project rights; and — providing CMM extraction & commerciali
Slide 21: Chicago Climate Exchange initiative
competitive leadership chicago climate exchange initiative % First utility outside North America to join Chicago Climate Exchange * Avenue to liquid market to trade excess carbon credits * Additional incentive to further invest in domestic emission reduction projects —~AUS $2 billion invested in ren
Slide 22: Growth projects — status
growth projects — status osmw Hallett wind - Ahead of schedule & on budget, due for completion THOS: : 140MW Bogong hydro: Ahead of schedule & on budaet, due for completion 2H09 : ate ownsville gas: _ Option over site, currently negotiating off-take agreements 70- 1OOMW | Mica Creek : : AGLICS Energ
Slide 23: Building carbon effective generation
building carbon effective generation a leading renewable position Current Ganeratic ‘ Equity generation including off-take agreements and plant under construction 2 Generation including off-take agreements, plant under construction, 100% of JV’s & development projects 22
Slide 24: In summary
in summary clearly defined, ‘four corners’ integrated strategy * Driving consolidation in a fragmented market to deliver first mover advantage and ultimately deliver ongoing, sector leading sustainable returns %. Clearly.identified, ‘locked in’.growth opportunities. supporting the four.corners strat
Slide 25: Further information/contacts
further information/contacts a range of information on AGL Energy Limited including asx & media releases, presentations, the inaugural 2007 interim result as well as historical ‘The Australian Gas Light Company’ scheme booklets, annual reports, sustainability reports, presentations and financial res
Slide 26: Appendices
appendices 25
Slide 27: Building the natural hedge: upstream gas
building the natural hedge Moran bah (Arrow) Eivntitonie Maciniiabt 9 “ooneavde: Pio ‘SMoranuahs(Gwoatates Pipette ‘Fiejaaed Evenicaiie ‘Te dy la aks “o AGL. Gaic Uniritoppeteit tessa Gee Perinat RecaRniTiO upstream gas 26
Slide 28: Gas: fuel of choice
gas: fuel of choice existing portfolio duration & flexibility ® current gas demand fully contracted for next.10 years * extensive portfolio flexibility within both equity.and contract gas — annual contract quantity (ACQ) ‘up & down’, maximum daily quantity (MDQ), take-or-pay (ToP) and flexible deliv
Slide 29: Project Phoenix: budget
project phoenix budget - on track Total Project Phoenix 90,000,000 7 80,000,000 ok a ACTUAL aa wae FORECAST 70,000,000 ee we 60,000,000 oot 49,633,481, at <a 50,000,000 ae ASB9Z387 40,000,000 yi? 30,000,000 a 20,000,000 40,000,000 Lt , SF OLS SS SIS Sd dA Md SS SS SF PISPF LL SE PED SI SLICE SEL EO
Slide 30: Project Phoenix: full timetable
project phoenix full timetable Establish operational control and management based on rigorous use of reliable metrics implemented to track performance and process compliance > Qtr~by-gtr review and approval of cost-reduction initiatives Restructure, rationalise and consolidate middie management and
Slide 31: Project Phoenix: transforming retail
project phoenix transforming retail Complete *® Timely completion of Detailed design and Build phase: — Design and configuration of 130 strategic AGL Retail Business processes; design encompasses end to end Retail capabilities, from Marketing and Sales through Customer acquisition to Customer Servic
Slide 32: Powerdirect integration: budget & cost
powerdirect integration on track - budget & cost * Powerdirect Pty Ltd (SME business) will continue to operate as stand alone brand & business operating out of Victoria — IT, billing, customer service and sales & marketing functions completely segregated from AGL — AGL will leverage & provide its be
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