#1The New EnergyAustralia October 2012 C EnergyAustralia#2Disclaimer This presentation has been prepared by EnergyAustralia, a wholly owned subsidiary of CLP Holdings Limited. The information contained in this presentation is for information purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this presentation, the objective, financial position or needs of any particular recipient has not been considered. This presentation is strictly confidential and is intended for the exclusive benefit of the institutions to which it is presented. It may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the express consent of EnergyAustralia. The recipient shall not disclose any of the information contained in this presentation to any other person or use such information to deal, or to encourage any person to deal, in the securities of CLP Holdings Limited or any related party. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of EnergyAustralia, CLP Holdings Limited, their related bodies corporate, shareholders or respective directors, officers, employees, agents or advisors, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence for any loss arising from the use of information contained in this presentation. This presentation may contain forward looking statements and comments about future events, including our expectations about the performance of EnergyAustralia's business. Forward looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward looking statements will not be achieved. A number of important factors could cause EnergyAustralia's actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward looking statements. As such, undue reliance should not be placed on any forward looking statement. This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained herein shall form the basis of any contract or commitment. 2 2 C EnergyAustralia#3EnergyAustralia is one of Australia's leading vertically integrated and diversified energy companies Legend Gas assets Generation assets 3 QLD Retail 0.1 million accounts SA Retail 0.2 million accounts 20% interest Brisbane in Narrabri Hallett Power Station (203MW) Adelaide Cathedral Rocks (66/33MW) Waterloo (111MW) (500PJ) NSW/ACT Retail 1.4 million accounts VIC Retail 1.2 million accounts Melbourne Sydney The largest privately held supplier of generation output to the NEM Australia's third largest energy retailer with market share of 22% across Eastern Australia by customer accounts Delta West GenTrader (2,400MW)) Owns the largest underground gas storage facility in Australia with long-term gas supply contracts Pipeline of development opportunities in retail, generation and coal seam gas Tallawarra Power Station (420MW) lona Gas Storage Facility (22PJ Storage; 500TJ/d Processing) Yallourn Power Station and Coal Mine (1,480MW) Ecogen Hedge (up to 966MW) As at 31 December 2011 Brighter Energy for Today and Tomorrow C EnergyAustralia#44 EnergyAutralia has a deeply integrated position, providing a flexible, well balanced portfolio with scale and diversity Your Home Load Swing Hallett Generation Capacity Balanced Capacity Mass Market Retail National Sold Contracts Your Business Ecogen Bought Contracts Electricity Electricity Electricity Market Tallawarra Balanced Energy Generation Energy Mt Piper & Wallerawang Yallourn Operations & Construction Business Retail I&C/Business Load Pricing, forecasting & green certificates Mass Market Retail Load Available for Sale Sales Energy Markets Outage planning, bidding & dispatch Channels to Market Energy Markets Retail EnergyAustralia#5Business Update#6We have invested in a world class brand with broad reach - complemented by new web presence and functionality TRU EnergyAustralia energy 6 C EnergyAustralia ◉ EnergyAustralia Search for... Q Residential Small business Large business About us Another change for the better It's an exciting time for us - TRUenergy and EnergyAustralia have come together under the one brand. Welcome to our new website > The new web portal is designed around the customer experience Flexible back-end so that we can move quickly, and customise customer interactions Powerful channel to market C EnergyAustralia#7We also deployed our new billing platform, which will drive improved customer experience and operational efficiency Our new billing system now gives us: Better information for decision making Links to the data warehouse A single view of the customer Automation and accuracy of billing. Enhanced credit capabilities 7 Scalability for growth. Readiness for the migration of TSA accounts C EnergyAustralia#8EnergyAustralia remains actively involved in advocacy with Governments and regulators regarding energy price regulation Electricity Retail Price Regulation VIC Retail price path period No Price Regulation Wholesale cost approach Retail margin allowance NSW QLD SA July 2013 June 2016 July 2013 June 2016 Jan 2011 - June 2014 75% LRMC 25% Market Cost Currently Market Cost 5.4% of EBITDA 5.7% on total costs + 5% headroom Next likely reprice date 1st July 2013 1st July 2013 Total EA customer base ~ 600 k ~ 1.1 million ~ 100 k Draft determination indicates SA will move to Market Cost in Jan 2013 ~5.2% of EBITDA (10% of wholesale + retail operating costs) 1st Jan & 1st July 2013 ~ 100 K 8 EnergyAustralia believes that in the long run market competition should set retail prices • The removal of price regulation in Victoria has resulted in: • Flexible pricing • Innovative products High levels of competition (one of the highest churning markets in the world) EnergyAustralia also believes that to preserve an appropriate environment for investment in power generation wholesale energy prices must as a minimum reflect the genuine long- run cost of building new generation in the NEM C EnergyAustralia#9EnergyAustralia's generation portfolio broadly reflects NEM intensity Largest privately-owned energy portfolio in the NEM by output EnergyAustralia's portfolio carbon intensity of 0.95 compared with NEM of ~0.89 ■ Yallourn's captive coal mine provides a fixed low cost fuel source, contributing to a low-cost generation portfolio ◉ Yallourn is well positioned to benefit from a rising wholesale gas price market, despite the introduction of the carbon tax from 1 July 2012 EnergyAustralia Fuel Mix¹ Wallerawang 18% Mt Piper 25% Yallourn 27% Tallawarra 8% Hallett 4% Ecogen 18% NEM Fuel Mix² 20% 53% 27% Brown Coal Gas Black Coal 1. Excludes wind Source: EnergyAustralia estimates and ACIL Tasman market model data 9 2. Excludes hydro, wind and others Source: EnergyAustralia estimates and ACIL Tasman market model data C EnergyAustralia#10Impact of carbon and gas price on Energy Australia's asset portfolio Asset Yallourn CO2 Int.* (kg/kWh) Increase in carbon price Increase in gas price Comment 1.4 ✓ Delta Western 0.90 / 0.92 ✓ (Mt Piper/Wallerawang) Ecogen 0.56 / 0.94 (Newport / Jeeralang) Tallawarra 0.37 Hallett Wind Iona Gas Storage Narrabri CSM • *Calculated on a "sent out" basis 1.05 n/a n/a n/a ✓ X Impairment of $350 million (pre-tax) Transitional Assistance (cash and free carbon permits) ■ Lower gross margins following introduction of carbon pricing but offset by increasing gas prices ■ Improved position in merit order following introduction of carbon Higher efficiency reduces its exposure to increases in gas prices relative to other gas power plants ■ Increase market price volatility results in higher usage and profitability ■ Higher pool prices with no change to cost base Value of inventory and gross margins increases with increases in carbon and gas prices ■ Increase in underlying asset value Directionally, EnergyAustralia sees the decision in 2012 to remove the floor price of $15 per tonne in the Australian carbon regime and instead link to the European ETS as positive 10 EnergyAustralia#11Remediation of the Yallourn mine has progressed well • Collapse of the Morwell River Diversion (MRD) in early June temporarily disrupted operations at the Yallourn Power Station - • Coal supply was swiftly restored – two conveyors now operational • Dewatering operations continue • • • 11 Majority of water from the MRD now being piped around the mine Full repair design for the MRD is nearing completion - with reconstruction works expected to be completed in mid 2013 All four power generation units have been available since early August C EnergyAustralia#12Conclusion 12 EnergyAustralia is one of Australia's leading energy companies The Company's deeply integrated position provides a flexible, well balanced portfolio with scale and diversity Rebranding and the new billing system provide greater recognition, improved customer experience, greater operational efficiency and the ability to bring new and innovative products to market EnergyAustralia remains actively involved in advocacy with Governments and regulators regarding energy policy and energy price regulation - focussed on the need to build a sustainable future for this critical industry Brighter Energy for Today and Tomorrow C EnergyAustralia#13Appendix#14EnergyAustralia's generation portfolio is diversified by fuel source and geography Plant Fuel Capacity (MW) Ownership Merit Order VIC NSW SA Yallourn Brown Coal 1,480 Own Base Mt Piper Black Coal 1,400 Contract (until 2043) Base Black Coal Wallerawang 1,000 Contract (until 2029) Base Tallawarra Gas 420 Own Hallett Gas 203 Own Intermediate Peak Newport Gas 500 Contract (until 2019) Peak Jeeralang Gas 466 Contract (until 2019) Peak Waterloo Wind 111 Own Cathedral Rocks Wind 1. 14 Total capacity, EnergyAustralia's equity share is 33MW Semi-scheduled 661 Own (50%) Non-scheduled e EnergyAustralia#15EnergyAustralia's generation assets are supported by long term fuel supply contracts Fuel Plant Brown Coal Yallourn Mt Piper Black Coal Wallerawang Tallawarra . • Fuel Arrangement EnergyAustralia owns the brown coal mine adjacent to power station Operating licence to 2026 and reserves beyond 2032 Portfolio of long term coal supply contracts through to 2029 Diversity of coal supply from different mines • Volume flexibility in existing supply contracts and ability to defer to take advantage of uplift in pool prices Continue to negotiate longer term coal supply contract on competitive prices 15 Gas Hallett Newport Jeeralang • Portfolio of long term gas contracts through to 2021 (plus equity gas from Narrabri) Subject to Take-or-Pay arrangements, but with rights to bank gas for use at later times Gas storage provides considerable flexibility in managing gas requirements C EnergyAustralia#16SRMC ($/MWh) • • 460 420 400 140 120 100 80 60 8812 40 20 Merit order adjusted for carbon price Portfolio of generation assets with strength in both geographic and fuel diversity EnergyAustralia's average weighted short run marginal cost to generate is slightly below the NEM weighted average 2010 Indicative Merit Order ($23/t Carbon) Yallourn: 1,480MW Brown Coal Tallawarra: 420MW Gas Newport: 500MW Gas Mt Piper: 1,400MW Black Coal Wallerawang: 1,000MW Black Coal 5,000 10,000 15,000 20,000 Indicative capacity (MW) 25,000 30,000 35,000 Н Jeeralang: 466MW Gas Hallett: 203MW Gas Source: EnergyAustralia modelling, excludes semi scheduled capacity (such as wind power) and hydro, which effectively has zero SRMC, and assumes fuel cost is held constant EnergyAustralia's generation assets Competitors' assets (excluding brown coal) Brown coal generators (excluding Yallourn) 16 EnergyAustralia's portfolio is lower than market average merit order with or without carbon C EnergyAustralia#172011 market share of generation capacity; by State Victoria¹ Other 8% EA 23% Snowy Hydro 21% AGL International 27% Power 21% South Australia 17 EA Intfratil 7% Other 4% 4% Infigen 5% Origin 9% Alinta 18% Intl. Power 19% Source: AER, 'Sate of the Energy Market', 2011 Note 1: AGL includes acquisition of LYA NSW Other EA 3% 18% Snowy Hydro 15% Delta 16% Queensland Macquarie Origin 18% 30% Other 12% AGL 5% Stanwell 33% Millmerran 6% AGL 34% Callide 7% Origin Energy 8% CS Energy 29% C EnergyAustralia#182011 market share of retail customers; by fuel type Electricity 100% 75% 50% 25% Gas 100% 75% 50% 25% 0% 0% VIC NSW SA QLD ACT Vic NSW SA Qld ACT ■ EA Acte wAGL AGL Origin EA AGL Origin Energy Other - Private Other Govt Acte wAGL Other - Private Other Govt Source: AER, 'State of the Energy Market', 2011 18 Source: UBS broker research C EnergyAustralia#19EnergyAustralia is effectively internally hedged² Actual 2011 Volume (TWh) 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 Actual 2011 Generation Capacity and Retail Load (MW) 8,000 6,000 4,000 2,000 0 Long¹ Short¹ Short by segment¹ Yallourn NSW Delta West Other SA/QLD Contracts VIC MM C&I Long¹ Short¹ Yallourn Delta Tallawarra Hallett NSW Swaps Qld Caps SA Ecogen Vic Source: EnergyAustralia 1. 2. 19 Source: EnergyAustralia Long position refers to electricity sources such as generation and contracts while short position refers to uses of electricity from retail customer base Internal hedging refers to the netting off of an entity's electricity sales and purchases from the wholesale pool (reducing net exposure to the pool electricity price) C EnergyAustralia#20Clean Energy Legislation in Australia Australian Government's Clean Energy legislation was passed by the Senate in November 2011 including the following components • Default target of 5% abatement on 2000 emissions by 2020 • • A carbon pricing mechanism which commenced on 1 July 2012, starting with a fixed carbon price of A$23 per tonne rising at 2.5% per annum in real terms for the first three years (up to 1 July 2015) From 1 July 2015, Australia will move to an emissions trading scheme with the carbon price set by the market A floor price of $15/tonne was originally proposed under the scheme post July 2015. However the scheme was changed in August 2012 to remove the floor price and instead link the Australian scheme to the European ETS. Consequently post 2015 up to 50% of an entity's liability may be met through international permits (either EUAS or CERS etc) with a limit of 12.5% from CERs. As a result Australian carbon prices from July 2015 onwards are expected to be somewhat lower than under the original scheme - given that the current price of carbon in Europe is lower than the previous price floor of $15/tonne; An Energy Security Fund was established to administer . • . Transitional assistance provided for generators with emissions intensity of over 1.0 tonnes/MWh (rate capped at 1.3 tonnes/MWh) Transitional assistance is in the form of cash compensation of A$1 billion in the first year and annual permits (free carbon units) of 41.7 million per annum for four years from 1 July 2013² Negotiation for the closure of 2,000MW of electricity generation capacity by 2020 was originally proposed (generator intensity at least 1.2 tonnes/MWh will be eligible). However no commercial agreement could be reached and this has subsequently lapsed. EnergyAustralia is expected to receive the following transitional carbon assistance payments and permits from the federal government: FY- - June end year Cash compensation (A$m) $257.5m FY12 FY131 FY14 FY15 FY16 FY17 1. 2. Source: Company estimates and Clean Energy Act 2011 Permits² Carbon price (A$) Total compensation (A$m) $257.5m 23.0 10.7m 24.2 $259.4m 10.7m 25.4 $272.3m 10.7m Floating price 10.7m Floating price The absence of compensation in FY13 is a function of timing. Cash compensation was received in FY12, prior to the commencement of carbon pricing, while the first set of permits are allocated in FY14, the second year of carbon pricing Each permit represents one tonne of carbon equivalent pollution C EnergyAustralia 20 20