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Annual Report 2021–2022, Power and Water Corporation



Annual Report 2021–2022, Power and Water Corporation

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Tabled Paper 708


Tabled Papers for 14th Assembly 2020 -; Tabled Papers; ParliamentNT




Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.




Tabled papers

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Legislative Assembly of the Northern Territory

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Legislative Assembly of the Northern Territory



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58 Page 7 of 60 Power and Water Corporation Directors' report for the year ended 30 June 2022 Review of Operations (Cont'd) $ million PWC Katherine PFAS Water Treatment Plant 10.9 Darwin Region Water Supply Source Augmentation 5.5 Core Capabilities Program - Capability Uplift Meter2Cash 3.2 Jabiru Power Station Connection and Interim Switchyard 3.0 Customer Water Meter Replacement Program (all regions) 2.1 Katherine 4.5ml Ground Level Tank Roof Replacement 1.9 Darwin Zone Meter Replacement Program 1.7 Support Hub Enhancement Program - HSE, Risk and Compliance Enhancements Project 1.6 Pole Replacement Project Phase 2. Re-Butt Program Package 4 1.6 Energy Management System - Hardware Replacement 1.5 IES Angurugu Sewerage Reticulation Upgrade - Stage 2 - Headworks Program 2.8 Weemol Sewerage System Interconnection to Bulman 2.5 Yirrkala Sewer Pump Station 1 Expansion 2.2 Wurrumiyanga New Ground Water Storage Tank 1.2 Pirlangimpi Sewerage Pumping Station Upgrade 1.1 GGaass ccoonnttrraaccttss During the current year, the Corporation performed valuation exercises on its property, plant and equipment resulting in net assets being written down by $70.0 million, of which $108.5 million was recognised in Other Comprehensive Income, partially offset by $38.5 million recognised as reversal of prior impairment expense through profit or loss. The Corporation has in place long term contracts to procure gas and associated gas transport arrangements. The fixed price nature of the long term gas contracts, the volatility in the market price of gas, the pricing and volume risk from as yet unsecured contracts, increasing competition in the gas supply market and more recently the potential impact from the displacement of gas by renewables over time are risks to the Corporation's ability to sell the gas at a price higher than the cost of gas and transport. Monitoring and assessing gas market conditions is important in determining potential future impacts on the Gas Services business. The Corporation engages external experts to perform independent assessments of future market conditions on a regular basis while also utilising data from a variety of credible sources to inform decision making. Directors have considered the current gas market environment in both the Northern Territory and Australian East Coast gas market. Independent publications are predicting a shortage of gas in the East Coast market commencing as early as 2023/24. As part of the development of the Integrated System Plan for electricity markets in Australia the Australian Energy Market Operator (AEMO) prepared forecasts for gas prices under three scenarios. AEMO price forecasts represent the closest that there is to an industry standard forecast of gas prices in eastern Australia, and therefore represent the best forecasts available. PPrrooppeerrttyy,, ppllaanntt aanndd eeqquuiippmmeenntt Entity CCaappiittaall eexxppeennddiittuurree Capital expenditure for the consolidated entity totalled $189.9 million for the year to 30 June 2022. Major project spending in the current year included: The fixed assets of Power and Water Corporation are stated at fair value, in accordance with the fair value requirements of the Australian Accounting Standards, with the core operational assets of the Power Services and Water and Sewerage business units using the income approach. Consistent with the accounting standards, the income approach has a 'purchaser of the business' perspective and is based on the net present value of the forecasted cash flows of these businesses applying anticipated market conditions. The infrastructure assets of IES Pty Ltd are valued on a current replacement cost basis. The Directors' note to the readers of the financial statements that the income approach differs to a current replacement cost basis of valuation, which is based on the cost of replacing the service capacity of the assets. The last current replacement cost valuation the Directors obtained for Power and Water Corporation was in 2013, which indicated that the current replacement cost of the core operational assets of the Power Services and Water and Sewerage business units at that date was substantially higher than the value determined using the income approach. In addition, the income approach is not the basis of valuation that would be used by an independent economic regulator for price determination or by analysts for other public policy purposes. Description Director's report for the year ended 30 June 2022

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