Multinet

Revenue streams

Approximately 99% of Multinet’s total revenue is regulated and is primarily from distribution tariffs charged to customers for connection to, and use of, Multinet’s distribution system.

Growth in distribution revenue is driven by regulated tariff charges and volume growth. Multinet’s top 250 gas users collectively account for only around 1% of total distribution revenue. As a result, the potential for a negative impact on revenue from the loss of a major user is very low.

Other revenue comes from the provision of regulated services such as meter reading, mains and services provision, and meter data management.

Multinet’s distribution business provides predictable, regulated revenues. The access arrangements, which regulate distribution tariffs, apply for five years. The current regulatory decision provides for the tariffs to be linked to CPI.

The next reset date for Multinet’s access arrangement is 1 January 2013.

Established commercial position

Multinet is an established gas distributor within its service area and receives revenues for each energy consumer connected to its distribution network, irrespective of which retailer sells the gas to that customer.

System enhancement works

Multinet is undertaking a number of significant capital works programs designed to improve reliability and increase the capacity of the network to meet the growing gas needs of its customers. Current projects include the design and construction of a major new high pressure pipeline at Lilydale and upgrades to key pipeline infrastructure.

Increased rainfall compared to previous years has resulted in an increase in the incidence of water ingress to the network, causing a higher than desirable number of interruptions to customers. As a result, Multinet has initiated de-watering programs in the affected areas and is focussing its pipeworks renewal projects in those areas most at risk of water-related outages.

Multinet is also engaged in major enhancements to its information technology infrastructure and systems to ensure that it is well placed to achieve its reliability and efficiency goals.

Internalisation of services

On the expiry of the current operations and maintenance contract with Jemena in 2013, Multinet is planning to internalise its key management functions, while continuing to outsource its operating functions and network services.

Planning for this transition is well under way. In the interim, with the cooperation of its existing O&M provider, Multinet has brought its corporate and customer services management functions in-house, with the intent of realising early improvements to the business through greater control and transparency of operations.

Operational overview

FY2011 performance

In the year ended 30 June 2011 MGH reported revenues of $194 million and EBITDA of $144 million.

Financial summary

Capital management

In July 2011, Multinet fi nalised a two-tranche $120 million bank debt facility, comprising term debt of $70 million and a revolving IT growth capital expenditure facility of $50 million, both over three years. The term debt in this facility extends an existing $70 million facility while the new growth capex facility secures funding into the next regulatory period.

Multinet intends to repay the remaining SOLA subordinated debt balance of $112 million owed to DUET by the end of 2011.

Credit ratings

Rating levels as at period end were: