1 UBS Utilities and Renewable Energy Conference Presented by: Ian Little Managing Director Envestra Limited 12 November 2003

2 Recent market queries What’s happening with our distributions? Where do we spend our capital? Is Envestra’s gearing too low? How do we minimise debt risks? What’s happening in the regulatory arena? Will Envestra participate in asset sales? What are our prospects?

3 What’s happening with our distributions? Strong, reliable cash flows Six years of meeting forecast returns Access arrangements in place – distributions to be maintained Distribution growth – depends on business growth, regulatory outcomes, tax and operating performance After loan notes repaid in dividends  Forecast

4 Where do we spend our capital? Normally $50-60M/year: –$10-15M replacement –$40-$45M growth Replacement: –Upgrade mains ( km/year) –60,000 meters/year Growth: –New subdivisions (300 km last year) –Mains, inlets and meters (20,000/year)

5 Where do we spend our capital? forecast: –$15M Replacement –$45M Growth –$30M FRC $90M Total Full retail contestability system: –$50M over three years –Victoria and South Australia (Queensland deferred) –$20 million/annum revenue

6 How do we fund our capex? About 25 per cent of growth capital expenditure (excluding acquisitions) and all distributions to shareholders are funded from revenue Summary 25% 75% Interest ($117M) Operating expenses ($80M) Interest on loan notes Loan note repayments Growth capital expenditure ($65M) Replacement capital expenditure ($10M) Distributions ($67M) Loan drawdowns ($47M) Revenue ($283M)

7 Is our gearing too low? Aim to minimise cost of capital Debt $1.8B and Assets $2.4B Loan notes excluded from debt Gearing 75% Assets at acquisition values (1997 and 1999) Revaluation $386M to $535M  gearing <65%

8 Is our gearing too low?

9 How do we minimise debt risks? Debt duration and balanced maturities Interest rate hedging – currently about 90% hedged through to 2006

10 What’s happening in the regulatory arena? Access Code Review – our proposals: Clear set of objectives to guide Regulators Creating real incentives for network extensions Greater allowance for marketing activities More flexible, light handed, approach Improving efficiency of regulatory process Risks – none for three years Gearing, beta, 6% risk free rate Upside – pre-tax approach, benchmarked operating costs, more realistic volume forecasts Process Outcomes

11 Will Envestra participate in asset sales? Four major ‘groups’ of transmission assets for sale Potential value gap – buyers versus sellers Significant “publicly known” issues with each Transmission versus distribution – risk transfer for Envestra Acquisition far from certain

12 What are our prospects? Cold and wet - off to a good start Total gas delivered up 5% to October 5,100 new domestic consumers in 1Q 5.7¢ distribution – full-year 9.5¢ anticipated Long-term financing via US private placement (secured 30 year debt) Higher than normal capex ($90M) Revenue  $300M Modest pre-tax profit improvement forecast  Envestra performing to expectations