coal fired Loy Yang A power station, AGL’s ownership interest in which increased from 32.54% to 100% in June 2012. AGL now has full operational control of the asset. 

AGL also operates and controls 509 MW of wind generation in South Australia and Victoria. The 52.5 MW Hallett 5 and 67 MW Oaklands Hill Wind Farms are new additions to the portfolio following their commissioning in March this year. 

Merchant Operations is largely a cost centre. All generation revenue and variable operating expenditure is included in the results for Energy Portfolio Management. Merchant Operations costs increased by approximately $4 million this year due to the effect of additional new plant coming on line. This includes Hallett 5 and Oaklands Hill Wind Farms. 

Merchant Operations’ primary objective is to make sure that AGL’s generation assets are available when required, particularly during periods of peak customer demand. 

Performance is assessed by measuring the commercial availability and start reliability of generation assets. All generator units at the Torrens Island Power Station were available to operate almost 100% of the time. Start reliability at the Somerton Power Station was above 97% and AGL’s hydro assets were approximately 99%. 

These high levels of operating performance meet or exceed international benchmarks of good performance, reflecting the quality of AGL’s asset management program. As an example, a major four year project at Torrens Island Power Station to upgrade the generator control systems was completed this year. 

High rainfall throughout the year has resulted in improved water storage levels. These storage levels mean that Eildon Power Station can continue to generate at its full capacity of 120 MW, and Dartmouth has increased its generating capacity from 135 MW to 163 MW. 

## Business Customers 

This year, Business Customers (previously known as Commercial and Industrial) has been included in the Merchant Energy business. In previous years, it was included in Retail Energy. This improves alignment with other parts of Merchant Energy, particularly in relation to wholesale cost management. 

Business Customers’ role is to sell electricity, gas and other energy services to AGL’s large commercial and industrial customers. 

During the year, the group consolidated numerous billing and customer relationship management systems into the existing SAP platform used by Retail Energy. The expected benefits of this project are being realised, particularly in relation to improved cash flow. 

## Energy Services 

Energy Services resides within the Business Customers Division and enables AGL to provide energy management solutions to its commercial and industrial customer base. 

These services include: 

> embedded generation projects such as the $45 million AGL-Qenos co-generation project (currently under construction); 

> electrical and gas infrastructure; 

> energy audits; 

> HVAC and lighting upgrades; 

> efficient boiler design, sale and commissioning by AGL Boilers; 

> energy and emissions data via AGL Insight, a web based reporting platform; and 

> production and supply of LPG and naptha. 

These offerings cover the identification, design and delivery of energy solutions aimed at reducing customers’ energy costs. 

Operating EBIT in Energy Services increased by 24.6% from $17.8 million to $22.2 million as a result of an increase in new energy efficiency based projects and increased LPG production volumes and price. 

Practical completion of the 21 MW co-generation facility for Qenos Pty Limited at its Altona plant in Victoria is expected in December this year. 

Key customer projects during the past year included high voltage electrical infrastructure design and implementation, conversion of coal boilers and LPG fired ovens to natural gas, and the design and installation of chiller, air handling equipment and lighting upgrades. 

