Materiality

Our approach to materiality

We conduct materiality assessments periodically, to inform our sustainability priorities, effort and investment. Our most recent materiality assessment was completed in 2021-22 using the following method:

Consistent with best practice guidance from the Global Reporting Initiative (GRI) and International Sustainability Standards Board (ISSB), we are committed to revisiting our material issues annually, and conducting a full materiality assessment every two to three years. We are planning to undertake our first double materiality assessment during 2023-24.

Access and reliability

For us, access and reliability mean designing and providing products and services that meet the needs of our stakeholders, reduce barriers to access and ensure continuity of service across all demographic and geographic groups.

Our overall network availability of 99.96 per cent exceeds both our goal and independently audited reliability requirements. We are investing in a smarter network to improve network visibility, which will enable us to anticipate and manage constraints, streamline connections, and manage network capacity through demand response technologies.

As customers transition to net zero, a smarter network will also help us to meet their energy needs in a safe, reliable and affordable way.

Our 2024-29 Regulatory Proposal includes investment to maintain overall reliability in line with customer preferences. We have identified groups with performance outside standard levels. So they are not disadvantaged in the future, we have proposed reliability-driven microgrid installations and a targeted reliability improvement program.

We have partnered with AGL to install our first large network battery in the Sovereign Hills area of Port Macquarie. This will increase network capacity without the major capital expenditure needed to upgrade the poles and wires network. We also deployed Australia’s first hydrogen-based Stand Alone Power System for a heritage accommodation cottage at the NSW Myall Lakes National Park. For more information see ‘Pillar 2: Drive connections and load‘ and ‘Pillar 4: Enable smart communities and new customer solutions‘.

We are running targeted trials to improve how we manage electric vehicle charging and vehicle-to-grid discharging on our network. See ‘Pillar 3: Facilitate electric vehicle adoption‘.

Our quarterly customer research program tracks residential and small business customer perceptions of whether we respond in a timely, consistent manner and deliver on our promises. Our Customer Satisfaction Index moved from 80.7 (quarter four 2021-22) to 75.9 (quarter four 2022-23) across the course of 2022-23, with increasing cost of energy, combined with general cost of living pressures, being a key concern for customers. See ‘Our customers and communities‘ for more information.

Climate risk and resilience

In recent years, we have seen communities badly affected by bushfires and floods. To address these challenges, we are working to build a more resilient network for the long term.

After four phases of consultation with our customers, we identified areas we need to address in our 2024-29 Regulatory Proposal – network of the future, resilience and reliability, pricing, and other essential services.

We learned that customers expect us to support more renewables and replace assets with more resilient options such as fire-proof poles and Stand Alone Power Systems (SAPS). These changes are already underway. We commenced offering SAPS to some remote customers following the implementation of the national SAPS regulatory framework in late 2022. As of 30 June 2023, we have four SAPS installed, with a target of 400 by 2028-29.

A detailed review of bushfire modelling developed in partnership with Melbourne University will help us manage our network assets more appropriately and efficiently in relation to a changing climate.

Completed in late 2022, a climate impact assessment (CIA) of three acute hazards – bushfire, flood and windstorm – is helping us to quantify potential impact on our network assets and customers. This information is shaping our asset management strategies and priorities, development of technical standards, network planning and design, investment decisions and contingency planning. Our industry-leading digital twin network model is already providing new insights into our network.

We are also working to improve the accuracy of risk assessments for network and crews. The predictions are based on data from Bureau of Meteorology weather stations. As some remote locations are out of range, we are trialling pole-mounted weather and environment sensors in rural and remote areas prone to bushfires.

Customers also expect us to provide relief to communities in crisis situations with, for example, generators and a portable community hub. In a transdisciplinary collaboration with the Southcoast Health and Sustainability Alliance and Zepben we are testing islandable microgrids in the New South Wales south coast shire of Eurobodalla. Microgrids can continue to power local energy networks when they are cut off from the national system – for example, during a bushfire. The project is being funded by the Australian Government’s Regional and Remote Communities Reliability Fund with the intention of modelling the use of renewable energy to provide power independent from the main grid.

Further details on our approach to climate risk and resilience are included in ‘Task Force on Climate-related Financial Disclosures‘.

Affordability

Our Corporate Strategy is designed to improve customer service and the customer experience while lowering overall costs. We are working to keep the network component of electricity bills as low as possible despite the significant challenges across the industry, such as rising costs and wholesale market volatility. From 2023-24, we will see the effects of the NSW Electricity Infrastructure Roadmap, which will continue to evolve over the next few years.

For customers, our distribution network costs peaked in 2012-13, when a typical residential customer’s annual distribution network charge was $1,245 per annum (in real $2022-23 terms). By comparison, this will be $784 in 2023-24 – a saving of $461 per annum, or 37 per cent. Over the same period, a typical small business customer has achieved an annual saving of $2,253, or 41 per cent.

We are keeping costs as low as possible and improving reliability for remote and rural customers and communities by transitioning high cost-to-serve customers to more efficient and reliable solutions, such as Stand Alone Power Systems, where this is economically and technically feasible.

Our current tariffs are based mainly on the amount of electricity customers use regardless of when they use it. New technologies such as household solar, electric vehicles and battery storage can result in some households and businesses paying less than their fair share, while others pay more. We partnered with retailers Red Energy and Discover Energy to trial new, fairer tariffs for residential and small business customers and encourage them where possible to use less power during the 5-8pm peak time.

Employee value proposition

Successful employee engagement is key to recruiting and retaining high performing people. This means keeping our employees safe, ensuring our workforce reflects the communities we serve, and providing training and development opportunities.

Employee safety is our priority, and our leadership development programs are continuing to embed safety into mindset, culture and performance. The updated safety incident management tool is making it easier to monitor performance and log incidents. We are also updating Network Fatal Risks Critical Controls to prevent fatalities. Our Towards Zero driving safety working group is helping to improve driver attitudes, raise awareness of road safety risks and reduce the number of driving incidents for our employees, who travel more than 30 million kilometres every year.

We are taking practical steps to build an inclusive and diverse workforce. These include establishing an Inclusion Advisory Group, a corporate mentoring program and LGBTQIA+ awareness training, delivering disability in recruitment training to the recruitment team, and partnering with Work180, who help raise the bar for women in the workplace. We are also continuing to help young Aboriginal and Torres Strait Islander people to reach their potential through recruitment, training and scholarship programs.

Providing learning opportunities across the business is central to our culture of achievement and growth. We offer ‘Learn and Grow’ self-paced learning and virtual classroom workshops, financial support for study and have introduced a professional development assessment platform to help employees align their development with career goals.

See ‘Our people‘ for more information.

Energy and emissions

We are developing a range of approaches to help us manage the way we use energy and reduce the quantity of greenhouse gas emissions emitted by our business operations.

This year, we set a target to reduce greenhouse gas emissions by 50 per cent by 2030 from a base year of 2020-21.

Batteries are fundamental to the clean energy transition and we are continuing to innovate in this area. In February 2023 we launched our first trial network battery near Port Macquarie on the NSW Mid North Coast. Developed in partnership with AGL, the Sovereign Hills Network Battery will increase the amount of rooftop solar generation local customers can export to the network. The battery will capture and store excess locally-produced renewable energy, then release it into the network when it is needed.

We found that output from existing rooftop solar systems increased by 5 per cent during a trial reduction in voltage to align with the 230-volt Australian Standard. See ‘Pillar 2: Drive connections and load‘ for more details.

Within our network area, approximately 30TWhs of diesel, natural gas and LPG is consumed each year across residential, commercial, industrial, mining and agricultural sectors. Our 10-year Electrification Strategy will expedite electrification in regional, rural and remote NSW to provide emissions reductions and low-cost resilient energy. For the rest of 2023 we will be working with customers, industry and government to provide immediate value as we develop electrification guides, tools, panel suppliers and specialists.

During 2022-23 we completed our Bulk LED Upgrade Program for streetlights, with 96 per cent of the 178,000 streetlights we manage and/or bill for now LED. Changing to LED lamps reduces greenhouse gas emissions. See ‘Streetlights‘ for more information.

We are also implementing policies and strategies to support the growth of electric vehicles (EVs). This includes transitioning our fleets of light and heavy vehicles to zero tailpipe emission equivalents, ensuring that EV charging providers can quickly and easily connect to our network and engaging with both providers and local government councils to enable innovative charging solutions. Our EV Charging Infrastructure Working Group is bringing stakeholders together to deliver an optimal outcome for the network, charging operators and end users. See ‘Pillar 3: Facilitate electric vehicle adoption‘ for more details.

We report every year on our Scope 1 and 2 greenhouse gas emissions in accordance with the National Greenhouse and Energy Reporting Act 2007. Our Scope 1 emissions are from fuel use, Sulphur Hexafluoride (SF6) leakage in the electricity distribution network and wastewater handling by Essential Water. In 2023, distribution network loss emissions accounted for 94 per cent of total Scope 1 and 2 emissions. The increased renewable connections facilitating the net zero transition will also reduce our emissions. Over the past five years, distribution network loss emissions have reduced by 14 per cent, and our total Scope 1 and 2 emissions have reduced by 15 per cent since 2018-19.

We are developing a transition plan and decarbonisation pathway that addresses Scope 1, 2 and 3 emissions.

See ‘Our Scope 1, 2 and 3 emissions‘ for more details.

Community investment and engagement

The better we know our customers the easier it is to meet their needs. Building trust by including them in discussions and decision making also creates the most fertile environment for growth and change.

We hold Customer Advocacy Group (CAG) meetings four times per year. Members drawn from across the network provide feedback and insights to our business decision makers and relay information back to their constituents, organisations and communities. They represent residential customers including those considered vulnerable, small businesses, industrial and commercial customers, and local government.

We have introduced a new data model to enhance our understanding of how customers are using our products and services. This will enable better, customer-focused decision making. We are also implementing an automated survey to capture customers’ perception of our performance.

During 2022-23 we contributed more than $726,000 to more than 130 community groups, stakeholders and charity organisations – combined contributions by our generous employees and the organisation.

See ‘Our customers and communities‘ for more details.

Legal and regulatory compliance

Energy is a heavily regulated industry. We must comply with relevant legal and regulatory requirements across our business, such as laws governing data privacy, wages, work health and safety and the environment.

For information regarding how we are meeting our legal and regulatory compliance requirements related to health, safety and wellbeing, see ‘Our People‘.

For information concerning our approach to governance and monitoring of compliance requirements, see ‘Management and accountability’ (page 48 of Annual Report 2022-23 PDF).

Our handling of modern slavery

Our Modern Slavery Statement for 2022-23, which will be released in December 2023, will outline our performance and outcomes, including:

• 87 per cent of third-party suppliers have completed the Modern Slavery Supplier Assurance qualification, against a target of 95 per cent.
• Zero human right violations were reported in our supply chain
• Advanced analytical assurance tools monitored 176 major suppliers in key spend categories as at 30 June 2023 to identify risks relating to environmental, social and governance (ESG).

We are continuing to meet key suppliers to develop our relationships and learn about opportunities for improvement within the broader industry.

Biodiversity and land use

We are committed to conserving the natural environment in the regions where we operate. Where possible, we rehabilitate biodiversity and restore land affected by our business operations.

Over the past year we continued our partnership with the NSW National Parks and Wildlife Service (NPWS) by making a co-contribution to ongoing rainforest restoration activities on Susan Island. We also relocated two osprey nests to protect this threatened species, and remove the risk of outages or a fire, at Tea Gardens and Palmers Island, west of Yamba.

Cultural heritage

During 2022-23 we incorporated the Aboriginal heritage due diligence process into our environmental impact assessment (EIA) documentation. We will review policy guidelines next financial year following the Aboriginal heritage awareness training sessions held over the past year.

Heritage impact is a mandatory EIA requirement. During 2022-23 we completed Aboriginal heritage surveys for:

• Pinnacles Place – Broken Hill
• South Jerrabomberra High Voltage Supply Project
• Wills Street Sewerage Treatment Plant Replacement Project – Broken Hill
• Quorn Park Switching Station and Powerline Augmentation
• South Durras Pole Replacement.

We engaged a heritage consultant to review restorative works at the former Lismore power station following the major flood event last year. The review will include options and recommendations for the future of the power station.

We sold the former Glen Innes power station to the local council, who are considering turning it into a museum. We also sold the former Tenterfield power station.

Environmental incidents

There were 488 incidents listed in our safety incident management tool up to 30 June 2023. Incident Classification Rating (ICR) ranges from 1, the highest, to 5, the lowest. 94 per cent of environmental incidents are ICR 5.