Territory Stories

9.1 The Board’s Strategic Directions 2016-2020 May 2016



9.1 The Board’s Strategic Directions 2016-2020 May 2016

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Tabled paper 1883


Tabled Papers for 12th Assembly 2012 - 2016; Tabled Papers; ParliamentNT






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4.4 Weaknesses 4.4.1 High operating expenditure A review of Power and Water's operating expenditure (opex) levels demonstrates that the Corporation's opex is relatively high. Most obviously, Power and Water's corporate costs are high as shown in Figure 4.3. This chart compares Power and Water's corporate overheads by measuring corporate overheads as a percentage of total opex, with total opex being all expenses excluding interest, tax, depreciation and amortisation and the cost of gas purchases. The blue bar represents Power and Water (for 2015-16), the green bars represent a sample of Australian utility corporations, and the orange bar represents the median for the sample. Power and Water's corporate overheads are considerably higher than all other businesses in the sample. It is recognised that the rankings in the chart may be affected by the extent to which corporate costs are allocated to business units, but this is not expected to account for all of the above-average ratio exhibited by the Corporation. Efficiencies could be achieved were the Corporation to strive for median performance in this regard. The Board's analysis paints an overall picture of the Corporation having higher costs...than industry peers. Figure 4.3: Corporate overheads / Total OPEX (%) comparison 30% 25% 20% 15% 10% 5% 0% Power and Water Note: Power and Water here excludes IES Pty Ltd; Comparative information sourced from latest available annual reports and restricted to Australian power, water and gas utilities that publish a breakdown of costs including corporate overheads. The sample is comprised of eight government-owned utilities and four privately-owned utilities, which in turn comprise five water utilities, four electricity distribution utilities, two multi-utilities and one gas distribution utility. Seven of the utilities have annual revenues larger than Power and Water's while four have annual revenues which are smaller. THE BOARD'S STRATEGIC DIRECTIONS 2016-2020 18