Utilities

ElectraNet

Australia: South Australia.

Acquired December 2003
UTA Ownership 10.1%
Description

ElectraNet operates and manages the regulated electricity transmission network throughout South Australia. It provides 5600 km of high-voltage, large-capacity connections between generators and the local distribution network, which ultimately delivers the electricity to end users. ElectraNet’s principal business is regulated by the Australian Energy Regulator (AER). ElectraNet recently received the AER final determination for the regulatory period that runs from 1 July 2018 until 30 June 2023. ElectraNet has a long-term lease over its assets expiring in 2200.

Investment Rationale
  • High barriers to entry
  • Critical component of electricity supply network
  • Low risk business profile (regional monopoly) underpinned by an established regulatory regime
  • Revenues and regulated asset base linked to inflation and interest rates 
 
Key ESG Elements
  • Maintaining appropriate vegetation management  / bushfire prevention systems and processes.
  • Delivering a ‘safety first’ and high performance culture amongst staff and contractors.
  • Enhancing employee engagement, company culture and performance through targeted initiatives.
  • Pursuing emerging technology opportunities as appropriate, such as grid-scale battery storage.
  • Delivering key objectives in accordance with ElectraNet’s Business Plan and associated parameters.
  • Ensuring that internal systems associated with compliance and governance related activities are appropriate, understood and effective.

Phoenix Natural Gas

Northern Ireland, Belfast.

Acquired August 2013
UTA Ownership 50.0%
Description

Phoenix Natural Gas is the largest gas distribution company in Northern Ireland, providing gas in excess of 200,000 domestic and business customers, in the Greater Belfast and Larne regions. This represents a penetration rate of around 65% of total available properties, which will continue to rise as natural gas replaces oil as the primary heating source. The asset is regulated by the Northern Ireland Authority for Utility Regulation.

Investment Rationale
  • New network built to modern standards
  • Favourable maturing regulatory framework – natural monopoly; perpetual licence; allowed return set at attractive level until 2022; UK Competition and Markets Authority is ultimate appeal body
  • Attractive cash flows profile underpinned by – no material volume risk protection mechanism and limited maintenance capex; incentive linked to connection levels; strong linkage to inflation and interest rates
  • Future upside options – growth opportunities within and adjacent to the existing licence
Key ESG Elements
  • Ongoing commitment to LIFE (Corporate Social Responsibility program) which positively impacts the community.  In 2018 there is a special focus on Envronmental Responsibility.
  • Establishment and support of charity 'Energy for children' which supports disadvantaged young people.
  • Continuous improvement of its H&S management system.
  • PNG continues to promote the uptake of natural gas to deliver environmental as well as financial savings,  with continued savings of around 270,00 tonnes of CO2 per annum.

South East Water

United Kingdom.

Acquired February 2005
UTA Ownership 50.0%
Description

South East Water is the largest water-only company by regulated capital value in England and Wales. South East Water provides water to approximately 2.2 million people in the South of England. The asset is regulated by the United Kingdom water regulator Ofwat and operates under a perpetual licence.

Investment Rationale
  • High quality, mature regulated water utility in a water constrained region of the United Kingdom
  • Low risk business profile (regional monopoly) underpinned by an established regulatory regime
  • Revenues and regulated asset base linked to inflation and interest rate
Key ESG Elements
  • Developing a new ESG framework
  • Commitment to continuous improvement of its H&S management systems.
  • Commitment to water conversation through leak detection and repair and customer education
  • Support of our nominated charity WaterAid

Sydney Desalination Plant

Australia: Sydney; New South Wales.

Acquired June 2012
UTA Ownership 33.3%
Description

Sydney Desalination Plant is one of the largest desalination plants in the world with a nameplate capacity of 250 megalitres per day. The plant is Sydney’s only non-rainfall dependent source of drinking water and can supply more than 15% of Sydney’s water needs when fully operational.  It is contracted to supply water to Sydney Water until 2062.

Investment Rationale
  • Long-term revenue contract with Sydney Water Corporation (effectively AAA rated counterparty)
  • Mature and transparent regulatory regime under the Independent Pricing and Regulatory Tribunal of NSW (IPART)
  • Inflation protection – real regulated revenues indexed to inflation
  • No volume risk - financially indifferent to level of operation
  • Proven operationally with two year proving period prior to acquisition
  • Top tier global O&M operator in water utilities sector
  • Alignment of interest with co-investors (long term infrastructure investors)
Key ESG Elements
  • The plant is powered by 100% renewable energy and  energy consumption and carbon dioxide emissions are monitored and reported
  • Barrier maintained along the boundary of the adjacent conservation area
  • The plant is operated in accordance with a range of environmental management plans
  • Marine water quality and ecosystem monitoring program in place
  • Reinstatement of the Plant
  • Works commenced in December 2016 following a localised tornado event that occurred in December 2015.
  • The original plant builder, John Holland, was selected to do the reinstatement of the plant which is expected to be completed in December 2018
  • Strong safety culture and practices on site has resulted in zero LTI's since reinstatement work commenced in December 2016 to January 2018.

TransGrid

Australia: New South Wales.

Acquired December 2015
UTA Ownership 20.0%
Description

TransGrid operates the largest high-voltage electricity transmission network in Australia. Stretching along the east coast of Australia from Queensland to Victoria, the network links the three most-populous states in Australia, facilitating interstate energy flows and forming the backbone of the National Electricty Market. With 13,000km of high voltage transmission lines, 99 substations, 2,300km of optical fibre network and 123 radio towers, TransGrid performs a critical role in delivering electricity to approximately three million households and businesses across NSW and the ACT.

Investment Rationale
  • Geographic monopoly for TransGrid’s core business
  • Critical component of electricity supply network
  • Low-risk business profile underpinned by an established regulatory regime
  • Revenues and regulated asset base linked to inflation and interest rates
  • Significant opportunities to grow telecom business activities
  • Leading facilitator of renewable energy development in the National Electricity Market 
Key ESG Elements
  • TransGrid provides support to the community by contributing through its Community Partnership Program to a variety of local initiatives:
  • BeSafeKids Program is aimed at primary school students and covers areas including electrical history, overview of TransGrid, electrical safety, and TransGrid’s environmental commitment.
  • GreenGrid is a partnership between TransGrid and Greening Australia which has made tangible improvements to land, biodiversity, river health and sustainable production over a period of 18 years.
  • TransGrid’s Community Partnership Program is now in its 7th year and to date has delivered more than $400,000 in funding to community groups
  • A new Work and Safety Package (WASP) has been recently launched.  WASP enables field planners to create Safe Work Method Statements to effectively manage TransGrid’s high consequence risks.  WASP is an in-house developed safety documentation solution that integrates into TransGrid’s Resource and Allocation Calendar system.
  • TransGrid initiated the safety initiative “Ensuring an effective safety culture” in 2014/15 and was designed as a three year change program.  The program aims to strengthen the safety culture of TransGrid’s employees and contractors while maintaining employee safety engagement.