1. Department of Finance Workshop with private sector Merger Implementation Group 16 July 2013 Merger of Synergy and Verve Energy

2. Merger Implementation Group Background  Premier announced the merger of Synergy and Verve Energy on 10 April 2013 o Integrated into single entity with two ring fenced business units for generation and retail o Merged entity to be called Synergy o Merger to happen by 1 January 2014 o Common board established by 1 July 2013

3. Merger Implementation Group  Merger Implementation Group formed o Peter Oates (Chair) o David Hunt o Ray Challen  Role of the Merger Implementation Group o What is our role? o What is not our role?

4. Merger Implementation Group Merger objectives Stream 1:  To establish a new Synergy by 1 January 2014, consistent with the following objectives: o Cost savings o Sustaining private sector participation o Security and reliability of supply Stream 2:  Develop a position paper on the impact of the merger on the Wholesale Electricity Market

5. Merger Implementation Group Today’s outcomes  Establish common understanding of issues identified by private sector  Listen to private sector views on potential solutions and/or mitigants to these issues

6. Merger Implementation Group Stakeholders  Engaging with a wide range of stakeholders over the course of the merger WA government agencies ACCC ERA IMO Common board of the corporations Existing energy market participants Industry Retail customers Employees Unions

7. Merger Implementation Group Project governance Merger Implementation Group (Chair + 2 Members) SSO Regulatory Bodies Counterparties Other stakeholders Project Office (Project Director + 5 FTEs) Legal Corporate Restructuring Advisors Minister for Energy Treasury Chairman Common Board CEO (S), CEO (V) IndustryUnions Project Manager/s VerveSynergy Project Governance Project Communications Legal and Legislative Change Transaction Design Electricity Market Other Benefits Realisation Verve Steering Committee Synergy Steering Committee Operations Environmental Management Energy Procurement Fuel Procurement Pricing, Sales & Trading Strategy & Business Development Ring fencing ICT Legal Non-Energy Procurement & Facilities Records & Information Organisational Design Communication HR/IR Finance & Treasury Billing & Customer Care Marketing Pricing, Sales & Trading Ring fencing Fuel Procurement Energy Procurement Strategy & Business Development GenerationCorporate Shared ServicesRetail

8. Merger Implementation Group Process going forward  Merger related activities broadly categorised as: o Consultation o Legislation o Regulation o Integration of Synergy and Verve Energy  Timing  Engaging with the merger team

9. Merger Implementation Group Legislation vs. regulation  Two stages – legislation and regulations  Legislation o Will address the mechanics of the merger o Primarily consists of amendments to the Electricity Corporations Act 2005 o Drafting instructions are being finalised  Regulations o Any ring-fencing measures will be set out in the regulations, or Ministerial orders/directions made under the Act or regulations o The regulations are still being developed – stakeholder input is being sought in advance of detailed drafting

10. Merger Implementation Group  Existing contracts will be honoured  Subject to legislation Synergy and Verve Energy will merge into a single entity  Parts of the merged entity will be ring-fenced Key elements of the merger

11. Merger Implementation Group Merger Contacts  Peter Oates o Email: Peter.Oates@dpc.wa.gov.au o Mobile: 0414 690 341  Ray Challen o Email: Ray.Challen@finance.wa.gov.au o Mobile: 0408 321 262  Simon Middleton o Email: Simon.Middleton@finance.wa.gov.au o Mobile: 0409 581 482

12. Merger Implementation Group Questions

13. Merger Implementation Group Discussion topics  Ring fencing  Transfer pricing  Role of the private sector in the WEM