PUBLIC ist o' 2 4 JAN 7914 ESTIMATES AND FINANCIAL OPERATIONS CO QUESTIONS ON NOTICE SUPPLEMENTARY INFORMATI Tuesday, 28 January 2014 WESTERN POWER HON KEN TRAVERS MLC ASKED — (1) I refer to report by Report 14 by the Legislative Council Standing Committee on Public Administration 2012 (the "Unassisted Failure Report"), finding that Western Power had failed to adequately manage its wood pole assets to an acceptable level, and I ask: a. What was the total budget during the 2013 financial year for management of wood pole assets, and was the budget adequate for the tasks Western Power needed to undertake? b. What is the total sum Western Power has allocated to managing its wooden pole assets for 2014 financial year? What total per cent of Western Power's annual budget does this allocation represent? Answer: a. For the 2013 financial year Western Power spent $249 million on the management of wood pole assets. This was sufficient for the tasks Western Power needed to undertake. b. The budget allocated to the management of wood pole assets in the 2014 financial year as per the 2013/14 State Budget is $194.4 million, which represents 19% of the total capital expenditure budget. (2) I refer to the fact that a great deal of Western Power's assets were installed in 1950s and 1960s and I ask: a. What issues are Western Power facing with respect to these assets? b. What has Western Power planned with respect to managing these assets? c. How has Western Power calculated the benefits of refurbishing and reinforcing assets, verses total replacement? d. Has Western Power sought an independent review or any external advice? a. Maintaining assets in a serviceable state for use on the network and replacing assets when they have reached the end of their life. Page 1 of 9
Transcript
PUBLIC isto'2 4
JAN 7914
ESTIMATES AND FINANCIAL OPERATIONS CO
QUESTIONS ON NOTICE SUPPLEMENTARY INFORMATI
Tuesday, 28 January 2014
WESTERN POWER
HON KEN TRAVERS MLC ASKED —
(1) I refer to report by Report 14 by the Legislative Council Standing Committee onPublic Administration 2012 (the "Unassisted Failure Report"), finding thatWestern Power had failed to adequately manage its wood pole assets to anacceptable level, and I ask:
a. What was the total budget during the 2013 financial year for management ofwood pole assets, and was the budget adequate for the tasks Western Powerneeded to undertake?
b. What is the total sum Western Power has allocated to managing its woodenpole assets for 2014 financial year? What total per cent of Western Power'sannual budget does this allocation represent?
Answer:
a. For the 2013 financial year Western Power spent $249 million on the management ofwood pole assets. This was sufficient for the tasks Western Power needed toundertake.
b. The budget allocated to the management of wood pole assets in the 2014 financialyear as per the 2013/14 State Budget is $194.4 million, which represents 19% of thetotal capital expenditure budget.
(2) I refer to the fact that a great deal of Western Power's assets were installed in1950s and 1960s and I ask:
a. What issues are Western Power facing with respect to these assets?b. What has Western Power planned with respect to managing these assets?c. How has Western Power calculated the benefits of refurbishing and
reinforcing assets, verses total replacement?d. Has Western Power sought an independent review or any external advice?
a. Maintaining assets in a serviceable state for use on the network and replacingassets when they have reached the end of their life.
Page 1 of 9
b. Western Power is committed to investing $7 billion over the five years of the thirdAccess Arrangement period (ending 30 June 2017) to improve the safety,reliability and performance of the network. Within this program, priority has beengiven to the replacement of more than 100,000 poles and 260,000 polereinforcements.
Western Power's capital works program increased by 17 per cent over the last yearto over $1.05 billion. More than one-third of this was spent directly on improvingthe safety of the network, including the replacement and reinforcement of woodpoles. Despite the significant increase in investment, further increases will berequired in the future if Western Power is to meet its obligations and servicegrowth.
c. Western Power uses a net present value basis for assessing the financial cost ofmaintaining an asset versus replacing an asset. This is in accordance with theframeworks that have been agreed with the Economic Regulation Authority inWestern Power's Access Arrangement.
d. Yes. Western Power currently has net assets of approximately $8bn and totaloutgoings of approximately $1.9bn each year. Western Power also entered intoprocurement contracts worth in excess of $1bn last year. Like any business of thissize, it is prudent to ensure that appropriate standards are applied. Western Powerappropriately sought external advice and independent review to validate a range oftechnical and financial decisions to ensure its expenditure was prudent.
(3) What is the total amount of jobs cut during the year ending 2013? And, what wasthe total amount of savings from said job cuts?
Answer:
There were 159 redundancies at Western Power during the year ending 2013.
The aggregated annual total fixed remuneration (inclusive of base salary,superannuation and allowances) for these employees was $20,560,388.55.
(4) Can you provide a breakdown of the amount of termination payments made toemployees made redundant, or paid to employees resigning with some form oftermination bonus, for each level of annual income as follows:
Western Power does not pay bonuses. The following termination payments were madeto employees made redundant during the year ending 2013:
(5) What is the head count for employees made redundant during the year ending2013, per annual income as outlined in (4) above?
Answer:
(6) Can you provide a breakdown of the total number of employees, currentlyemployed by Western Power, by earning bracket as outlined (4) above?
Answer:
Page 3 of 9
(7) Have any employees been injured while working for Western Power?
Answer:
Western Power is pleased to have recorded an improvement in its safety record and is oneof the best performing utilities on this measure. All Western Power employees are requiredto report any injuries of any nature, with all incidents investigated and categorised byseverity. Over the last 12 months there have been 196 work related injuries, 2 of whichresulted in lost time. The incidents can be categorised as follows:
Category of incident Number of injuriesNo treatment required 75First aid treatment 72Medical treatment injury 27Restricted work injury 20Lost time injury 2
5 1 Western Power — Lost Time Injury Frequency Rate.4.5
(8) Can you provide a breakdown of the total amount spent on entertainment duringthe year ending 2013?
Answer:
Western Power is acutely aware of the cost of electricity and is pleased to have reduced itsentertaining expenditure. A breakdown of entertainment costs for the years 2006 to 2013 is asfollows:
(9) I refer to the $24,940 spent at the Novotel Vines Resort in October 2013, and I ask:
a. Is the review conducted at the Novotel Vines available for public scrutiny?b. Why was the total cost so high?c. Was entertainment provided at the resort (food, drink and the like)?d. Why was Novotel selected?e. How does Western Power justify such excessive spending in light of the job
cuts which occurred throughout 2013?f.Was the spending at Novotel approved by Minister Mike Nahan?
Answer:
a. The purpose of the workshop was to brief Western Power's senior leadershipteam to explain the necessary changes to enable them to focus on meetingcustomer expectations. As such there is no review or report that can be madeavailable.
b. In comparison to what other government agencies, GTEs and commercialorganisations spend on similar workshops, the cost was not high. WesternPower sought quotes and considered a number of venues for the workshop. TheNovotel Vines was considered the best value for money venue at that time.
c. Staff were provided with a meal and put on a skit which focussed on safety inthe workplace.
d. See part b.e. Western Power spent more than $1.9bn in 2012/13. Western Power has an
obligation to ensure this is spent responsibly, efficiently and effectively.
Page 5 of 9
$20,000 to focus the new leadership team's understanding of communityexpectations is not excessive.
f No. The expenditure was below the threshold amount requiring Ministerialapproval as per section 68 of the Electricity Corporations Act 2005.
(10) I refer to the complaints by people living in the City of Geraldton, with respect toundergrounding power along Durlacher Street (per road safety standards), and Iask:
a. What is Western Power doing about this hazard?b. Why was the original pole, which was replaced with a larger pole merely
10cm from the road, replaced?c. Why has the power along this road not yet been undergrounded?d. Does Western Power intend on undergrounding the power in the future?e. If so, when? If not why not?
Answer:
a. The State Underground Power Program is administered by the Public UtilitiesOffice.
b. The original jarrah pole was damaged.
c. Refer to part a)
d. Refer to part a)
e. Refer to part a)
(11) Did Western Power seek legal advice throughout 2013 and if so what was thecost?
Answer:
Yes. Western Power spent approximately $1.9bn in the 2012/13 financial year.Western Power received advice on a range of matters including major projects, legalnegotiations with large customers and electricity transfer access contracts. WesternPower was pleased to be able to contain the cost of obtaining this legal advice during2013 to $1,859,639.
Page 6 of 9
(12)What was the total management cost of Western Power for the year ending 2013?
Please provide a breakdown of costs by way of executive body; legal counsel;general administration; entertainment; and any other major management costsincurred.
Answer:
Western Power does not incur costs categorised under "general administration". We havesupplied "other expenditure" as an alternative and would be happy to provide additionalinformation if requested.
A breakdown of the management costs requested for the year ended 31 December 2013 is:
(13)What was the total pay of the executive body, CEO, CFO and chair people duringthe year ending 2013?
Answer:
The total remuneration of the Executive body, including CEO, CFO and Board, for theyear ending 2013 was $4,918,177.00
This figure is consistent with information previously provided in Western Power's AnnualReport and comprises of payments made to the following individuals:
Western Power Position From ToExecutivePaul Italian° CEO 1/1/2013 31/12/2013Stewart Hart CFO 1/1/2013 31/12/2013Cameron Parrotte Executive Manager, Network 1/1/2013 31/12/2013
Ken Brown General Manager, Operators 1/1/2013 28/12/2013(Former)
Mark De Laeter General Manager, Networks 1/1/2013 29/3/2013(Former)
Philip Southwell General Manager, Regulation 1/1/2013 31/12/2013& Sustainability (Former)
Western PowerBoardAlan Mulgrew Chair 1/1/2013 31/12/2013
Mervyn Davies Board Director 1/1/2013 31/12/2013
George Cash Board Director 1/1/2013 31/12/2013
Sue Wilson Board Director 1/1/2013 31/12/2013
Paul Underwood Board Director 1/1/2013 31/12/2013
John Cahill Board Director 1/1/2013 31/12/2013
(14)Have any employees complained of occupational health and safety issues?
Answer:
Western Power does not consider the reporting of safety and health issues as complaints.On the contrary, staff are positively encouraged to proactively raise and discuss matterswith management which may pose a risk to them or the public. It has been clearlyestablished that organisations with a superior safety culture treat the reporting of safetyhazards and incidents as a positive reflection of awareness of safety in the workplace. It isthrough encouraging the reporting of hazards and incidents that Western Power has beenable to significantly improve its safety performance. Western Power considers it isdangerous to suggest that the reporting of safety incidents and hazards are complaints. Anyissues relating to safety and health at Western Power are regularly reported and dealt within an appropriate manner and within appropriate timeframes.
(15)Have any employees opened workers compensation claims? If so, what is the totalcost incurred by way of workers compensation claims for the previous financialyear, and are there any pending or unsettled claims?
Answer:
Between 1/7/2012 and 31/6/2013, Western Power recorded 88 workers compensationclaims. Of these, 63 claims have been closed and a further 15 claims are pendingcompletion. To date, the total cost incurred by way of workers compensation claims for theprevious financial year is $516,174.
Page 8 of 9
(16)1 refer to Western Power's media release of 11 December 2013, which reads"Western Power met or exceeded nearly all of its targets", and ask, which targetswere not met and why?
Answer:
Western Power met 16 out of 17 Service Standard Benchmarks for the 2012/13 period. Thebenchmark Western Power did not meet was the measure for how frequently customersattached to very long rural feeders (approximately 95,000 customers) experienced a powerinterruption. An unusually high level of lightning activity across rural areas of the state hadan adverse impact on this metric.
(17) I refer to FutureGrid and I ask;a. How many individuals are engaged by FutureGrid; andb. How many of these individuals have a wage or salary in the following
bands:i. less than $100,000;ii. $100,000 to less than $150,000;iii. $150,000 to less than $200,000;iv. $200,000 to less than $250,000;v. $250,000 to less than $300,000; andvi. $300,000 and over.
Answer:
a) Employees are not engaged by FutureGrid. Six Western Power employees have beenassigned to FutureGrid activities. In addition to this, Transfield has assigned a number ofemployees to FutureGrid operations. Western Power is not at liberty to advise whatTransfield pays its employees.
