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Western Power reduces costs by $25.5 million

Western Power's Annual Report, released today, reveals the utility reduced operating costs by $25.5 million in the 2012/13 Financial Year.

Chief Executive Officer Paul Italiano said the efficiencies were realised as the utility delivered a record number of wood pole replacements and reinforcements.

“Western Power invested more than $1 billion in the network to address historical underinvestment in maintenance. We not only exceeded our targets, we delivered our works program at an overall lower cost” he said.

Wood pole replacements increased by 12 per cent to 17,432 over the past year, while wood pole reinforcements surged 96 per cent to a total of 48,479.

Western Power has more than 650,000 wood poles in its network, which presents a logistical challenge given the network is spread over a geographical area the size of the United Kingdom.

Highlights for the year include:

  • Frequency of lost time workforce injuries (LTIFR) – down 50%
  • $25.5 million reduction of operating costs
  • 48,479 wood pole reinforcements – up 96%
  • 17,432 wood pole replacements – up 12%
  • 17,082 gigawatt hours of energy transported to customers – up 1.4%
  • 23,993 new customer connections
  • 30,567 meter changes to support photovoltaic (PV) systems
  • The Mid West Energy Project on time and on budget

Western Power recorded a normalised Net Profit After Tax (NPAT) of $93 million. Normalised profit excludes the financial impact of developer and customer contributions*.  The utility invested almost ten times this amount, or $1.05 billion in capital programs.

Of the $93 million normalised profit, about $39 million was derived from residential customers, or an average of $42 per residential customer a year. Profit is returned as a dividend to the State Government to invest in other services.

“We are now firmly on the path to improvement. Western Power now has a greater focus on our customers and we have implemented reforms to the business to provide a better service at the lowest possible cost” Mr Italiano said.

Western Power has more than one million customers and operates one of the largest isolated electricity networks in the world.

“I am very proud of our people who keep the Community of Western Australia connected with electricity every day and night of the year often working in difficult weather conditions.” Mr Italiano commented.

Western Power’s revenue is fixed until 2017, which means growth in revenue will be lower than growth in network investment over the next four years. This will result in an increasing reliance on debt, which rose 13 per cent to $6.19 billion in 2012/13.

“The challenge for Western Power over the next twelve months will be to service growth while also addressing the legacy of aging infrastructure in a fixed revenue environment.”

“I am conscious of the fiscal constraints on the business and have implemented a number of efficiency measures including a freeze on executive salaries for the second year in a row” Mr Italiano concluded.

Western Power is committed to the safe, reliable and affordable supply of electricity to its customers in the South West Interconnected Network.

*Western Power's revenue is fixed by the ERA. Net Profit After Tax (NPAT) of $191 million includes $98 million in capital contributions and gifted network assets. By removing the financial impact of these items, the resulting normalised NPAT result was $93 million.



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