AGY-3984 | Delta Electricity

Full description

Delta Electricity was one of three electricity generators established by the Energy Services Corporations Act, 1995. [The other generators were Pacific Power and Macquarie Generation]. These generators, which heralded the deregulation of electricity generation and distribution in New South Wales, were State Owned Corporations and therefore also regulated by the State Owned Corporations Act, 1989. The Act identified the generator by the name ‘First State Power’ (1) but by its commencement date it was known as Delta Electricity.

Delta Electricity was established on 1 March 1996 when the Energy Services Corporations Act 1995 was proclaimed to commence. (2)

The principal objectives of Delta Electricity were as follows:
(a) To be successful business and to that end
(i) operate at least as efficiently as any comparable business;
(ii) maximise the net worth of the State’s investment in the corporation; and
(iii) exhibit a sense of social responsibility by having regard to the interests of the community in which it operated
(b) to protect the environment by conducting its operations in compliance with principles of ecologically sustainable development as prescribed by the Protection of the Environment Administration Act, 1991;
(c) to exhibit a sense of responsibility towards regional development and decentralisation in the way in which it operates;
(d) to operate efficient, safe and reliable facilities for the generation of electricity;
(e) to be an efficient and responsible supplier of electricity; and
(f) to be a successful participant in the wholesale market for electricity (3)

The functions of electricity generators were:
(a) to establish, maintain and operate facilities for the generation of electricity and other forms of energy: and
(b) to supply electricity and other forms of energy to other persons and bodies.

An electricity generator could also:
(a) provide facilities or services that were ancillary or incidental to its principal functions; and/ or
(b) conduct any business (whether or not related to its principal functions) that it considered will further its objectives (4)

A Board of Directors managed Delta Electricity. The Board consisted of:
The Chief Executive Officer
One director appointed by the voting shareholders on the recommendation of representatives of the portfolio minister and the Labour Council of New South Wales
Between two and five directors appointed by the voting shareholders at their discretion, one of whom was to be appointed chairman. (5)

The constitution and procedure of the Board was regulated by the State Owned Corporations Act, Schedule 8.

The functions of the Board included:
appointing a Chief Executive Officer following consultation with the voting shareholders;
setting the remuneration and allowances for the Chief Executive; (6)
appointing an acting executive officer (if required) (7) and;
declaring the dividend which was determined in consultation with the voting shareholders. (8)

Delta Electricity was responsible for the management and operation of the following power stations which were transferred to it from Pacific Power together with associated staff and assets :
Vales Point (Lake Macquarie) established 1978 – 79
Munmorah (Central Coast) established 1967
Wallerawang Power Station (15 km west of Lithgow) established in 1957 and
Mt. Piper (25 kilometres west of Lithgow) established in 1993 and 1994.
Competition was introduced to the State electricity market on 10 May 1996 and expansion to a national market was planned for 1997. (9)

Three teams were central to the activities of Delta Electricity.
The Energy Trading Team was responsible for co-ordinating power station operation, bidding in the physical market and short-term contract trading;
The Marketing and Sales Team developed and customised products and established accounts with the six New South Wales electricity distributors and ACT Electricity and Water; (10)
The Maintenance Team fuelled and serviced the stations, decommissioned, dismantled and disposed of materials and was responsible for training apprentices. (11)

Delta developed a corporate structure in its first full year of operation. A general manager was responsible for each of the following areas of operation – Central Cast Operations; Western Operations; Maintenance Services; Finance; Marketing; Strategy; and Development. (12)

On 5 May 1997 stage 1 of the National Electricity Market (known as NEM1) commenced. This saw Delta entering competitively into business with Victorian generators for supply in that State in addition to its established business in New South Wales and the Australian Capital Territory. (13) The following year the electricity market developed further with the entry of South Australia into the market and the creation of the National Electricity Market Management Company and National Electricity Code Administrator. (14)

Business efficiency began to emerge in the first year of operations with a profit of $M306 and a dividend on 11.8% (15)

The Cobbora Coal Project was a joint venture between state-owned power companies Macquarie Generation, Delta Electricity and Eraring Energy to acquire and develop the coal resources at Cobbora. In 2008 each company initially worked through a subsidiary company. These were: Midwest Development Corporation Pty Limited, which was incorporated on 13 August 2008 under the Corporations Act 2001, for which Cobbora Holding Company acquired all shares from Macquarie Generation for $43.2 million on 25 February 2011; Mid West Primary Pty Limited, which was incorporated on 7 August 2008 under the Corporations Act 2001, for which Cobbora Holding Company acquired all shares from Delta Electricity for $43.2 million; and Rocky Point Holdings Pty Limited, which was incorporated on 6 August 2008 under the Corporations Act 2001, for which Cobbora Holding Company acquired all shares from Eraring Energy for $27.7 million on 25 February 2011. (16)