Aspiring always to lead - Origin Energy · shareholders by identifying, developing operating and growing value-creating businesses. – Create value for our customers, by understanding

Sustainability Report 2011

Aspiringalways to leadstrategy performance growth

ORIGIN ENERGY LIMITEDABN 30 000 051 696

Scope of report

Employees completing Origin’s defensive driver training course

CONTENTS1 Our Compass2 Managing Director’s Message4 Company Profile7 Our 5-Year Sustainability Objectives8 Our Customers12 Our Communities18 Our Employees23 Our Investors26 Origin Foundation and Community

Investment28 About this Report29 Glossary of Terms

Welcome to Origin’s 10th Sustainability Report. Since 2001, we have been reporting voluntarily on our success in meeting the commitments we make to our key stakeholders.

In this year’s Sustainability Report we once again report on how we are tracking against the 5-Year Strategies we set out in our 2007 report. A small number of case studies bring to life some of what we do each day.

We have not set forward targets in this year’s report as 2012 will be the final year of reporting against our current 5-Year Strategies. In the 2012 report we will communicate the next phase of Origin’s sustainability journey.

Our online Sustainability Report discloses our performance consistent with previous years and is compiled using the Global Reporting Initiative’s (GRI) G3 guidelines. It can be viewed at http://reports.originenergy.com.au

Unless otherwise stated, this document reports on the sustainability performance of the activities and assets operated by Origin for the 12 months to 30 June 2011 and monetary amounts are in Australian dollars.

Cover: Ronald Thompson, Origin Land Management Supervisor at his property in the Queensland gasfields

b

Our Compass

What sets us apart at Origin is not what we do but how we do it. The Purpose, Principles, Values and Commitments contained in our Compass guide our actions and help us make better choices that appropriately balance the interests of all of our stakeholders.

OUR PURPOSEWe aspire always to lead. We deliver today’s energy needs; and we search and innovate to create tomorrow’s energy solutions. We honour our principles and values, and they are evident in all we do. We live our commitments to our shareholders, to our customers, to our people, to our communities and to our business partners.

OUR VALUESOrigin’s Values describe good behaviour:

Caring. We care about our impact on customers, colleagues, the community, environment and shareholders.

Listening. We listen to the needs of others, knowing that an unfulfilled need creates the best opportunities.

Learning. We constantly learn and implement new and better ways, sharing information and ideas effectively.

Delivering. We deliver on the commitments made in all areas of performance.

OUR PRINCIPLESOrigin’s Principles provide guidance for making the right decisions:

– We conduct ourselves and our business with due care and in accordance with relevant laws and regulations. We have an overriding duty to ensure the health and safety of our employees, and to minimise the health, safety and environmental impacts on our customers and the communities in which we operate.

– We will add value to the resources that come under our control.

– The value we create will be distributed to stakeholders recognising the need to ensure the sustainability of our business, and its impact on the environment and the communities in which we operate.

– We encourage diversity and expression of ideas and opinions but require alignment with the Company’s Principles, Values and Commitments and the policies established to implement them.

– When faced with choices, we make decisions knowing they will be subject to scrutiny. We should be able to demonstrate the soundness of our decisions to all stakeholders.

OUR COMMITMENTSOrigin’s Commitments define the outcomes that we strive to achieve for key stakeholders.

We commit to:

– Deliver market leading performance for shareholders by identifying, developing operating and growing value-creating businesses.

– Create value for our customers, by understanding their needs and delivering relevant and competitive energy solutions to meet those needs both today and into the future.

– Create a rewarding workplace for our people by valuing everyone’s contribution, encouraging personal development, recognising good performance and fostering equality of opportunity.

– Respect the rights and interests of the communities in which we operate, by listening to them, understanding and managing the environmental, economic and social impacts of our activities.

– Respect the rights and interests of our business partners, by working collaboratively to create valued and rewarding partnerships.

Origin Energy sustainability report 2011 1

managing director’sMessage

(1) Activity took place after the close of the reporting period.

(2) The 2010 EPS has been restated for the bonus element of the rights issues completed in April 2011.

With this greater prominence will come greater interest and closer scrutiny from many in the community about who we are, what we do and how we do it. We expect this, and we are confident in our ability to respond.

It has always been important to us, but never more so than now, that we honour our principles and values and that we meet the commitments we make to our customers, our people, our communities, our business partners and our investors.

In this, our 10th Sustainability Report, we report our progress, and try to give a flavour of how we go about our business.

More detail and a richer representation is available in our online report.

Taking a leadership position In December 2010, Origin announced the acquisition of a portfolio of energy businesses from the NSW government. Those acquisitions were completed on 1 March 2011. Combining the acquired businesses with our existing business, we have become Australia’s leading energy retailer (33 per cent of customer accounts in the National Electricity Market) and the owner of one of Australia’s largest and most flexible portfolios of electricity generation (12 per cent of available capacity).

In July 2011(1), Australia Pacific LNG, Origin’s incorporated joint venture with ConocoPhillips and Sinopec, made a Final Investment Decision (FID) to proceed with a one-train, 4.5 million tonnes per annum Coal Seam Gas (CSG) to Liquefied Natural Gas (LNG) project with infrastructure to support a second LNG train. Origin is the operator of the gasfields and pipeline for Australia Pacific LNG.

Since the close of the 2011 reporting period, binding agreements have been signed with The Kansai Electric Power Company and Sinopec to complete the marketing of the second train. Sinopec also subscribed for additional equity in Australia Pacific LNG, which on completion will reduce Origin’s share to 37.5 per cent. Australia Pacific LNG possesses Australia’s largest Proved plus Probable (2P) CSG reserves, which are reserves likely to be recoverable using standard technical and operating methods, making Origin a leading player in developing natural gas resources in Australia.

Our leading retail and CSG positions are supported by a strong balance sheet and a range of longer-term growth options.

Statutory Profit for the 2011 financial year was $186 million, down from $612 million in the prior year. Underlying Profit increased by 15 per cent and Underlying EBITDA by 32 per cent, with Underlying Earnings Per Share up 10 per cent(2) to 71 cents. Shareholders received 50 cents per share in fully franked dividends and for the full year dividend were able to engage in a Dividend Reinvestment Plan at a 2.5 per cent discount to the share price. Origin has undertaken a number of capital management activities, raising more than $5 billion in total, which positions us well to fund our share of the Australia Pacific LNG project and other committed projects.

We also made progress on a range of longer-term renewable and gas opportunities, including exploration and development of geothermal resources in Chile and Indonesia, assessment and development of hydro resources such as the potential Purari Hydro Project in Papua New Guinea and exploration for gas in the Canterbury Basin in New Zealand, South East Asia and Kenya.

As well as leading in a commercial and development sense, Origin takes great pride in how we go about our business – being particularly focused on our customers and the communities in which we operate.

Customer focusUnderpinning our long-term success is the ability to foresee, understand and meet the changing needs of our customers, large and small.

Our multi-year Retail Transformation program will deliver simpler processes and an integrated billing and customer management system, facilitating better customer service in the years ahead. Excellent progress through 2011 meant that at publication of this report all 2.6 million Queensland, Victorian, South Australian and directly-acquired NSW electricity and gas customers have been migrated to the new system. Acquired NSW customers of Country Energy and Integral Energy will be migrated to the new system over the next two years.

Origin remains a leader in product innovation, servicing more than 370,000 GreenPower customer accounts and providing the only green gas product in the Australian market to more than 130,000 households. Revenue from Origin’s Retail Solutions business, which includes sales of solar photovoltaic (PV) panels, more than doubled to $445 million. Our tri-generation business won a number of major contracts for energy-efficient power, heat and cooling services to large buildings and was named lead partner in a project to deliver against the City of Sydney’s Sustainability 2030 vision. Additionally, Origin has continued to invest in electric vehicle charging capability, business metering and energy efficiency solutions.

As these product areas mature, the system provided by Retail Transformation will help us provide next generation products and services. As an example, in May 2011, US Vice President Joe Biden announced a partnership between Origin and Colorado technology company Tendril to launch Australia’s first large-scale pilot of world-class customer engagement technology for the energy sector. Origin will adapt and connect the technology into our new billing platform and provide the opportunity for customers to see their consumption in real time, and therefore better manage their quarterly power bills. Origin is committed to being the leading innovator in providing this revolutionary capability.

After a decade of continuous growth, major investment decisions in the 2011 financial year led to Origin’s emergence as a leader in both the Australian energy market and the fast-growing coal seam gas industry.

2 Managing director’s message

The community’s competing concerns about cost, growth and the environmentThe cost of living is among the highest concerns of Australian households, with energy cost being one component of that. Prices have risen significantly in recent years, mainly due to the costs incurred by transmission and distribution companies in upgrading and extending poles and wires networks. These costs make up more than half of a retail customer’s bill, and are passed through to consumers by Origin and other retailers.

Wholesale electricity costs have been flat, but this is expected to change in the future as the prices of coal and gas as fuel inputs rise in response to international demand and higher production costs. Additionally, the Commonwealth Government’s new carbon price will commence on 1 July 2012 and the price of Renewable Energy Certificates will increase in years ahead. Customers continue to subsidise a variety of less efficient small-scale renewable and energy-efficiency schemes at state and Commonwealth level.

For so long as most renewable technologies remain much more expensive than fossil fuels, there will be an essential role for natural gas to play in achieving Australia’s environmental goals. Not only does baseload gas generate electricity with approximately half the emissions of coal, it typically uses only two to three per cent as much water(1) and causes vastly less local air pollution.

Australia’s traditional sources of natural gas – such as the Cooper Basin – are in decline. It is a boon for the country that we have a 15-year-old CSG industry that is capable not only of meeting Australia’s natural gas requirements, but of meeting growing global energy demand for electricity generation at lower emissions than produced by coal-fired generation.

Like all extractive industries, CSG can have an impact on local communities and the environment. We actively and continuously engage with landholders and communities around our operations in Queensland. Governments in that state have over time introduced strong regulatory regimes and consultation mechanisms to ensure the industry and communities can work together for mutual benefit. We welcome the Commonwealth’s efforts to ensure that all states develop similar processes.

We are proud of the relationships we have built up over time with many local communities around our power stations, gas plants and wind farm assets across Australia. Today we have more than 600 land access agreements in place with local farmers. Overwhelmingly we have found that we have been able to work through any concerns with landholders and access the resource on good terms.

Communication with unaffected communities around CSG has been more challenging. The CSG industry involves advanced precision engineering, with drilling taking place up to a kilometre below the ground. For those unfamiliar with the technical processes associated with gas extraction, including some media, it raises a number of potential issues and involves numbers and distances and volumes of water, salt and chemicals that can seem large to the uninitiated, but are actually commonplace and in some cases quite minor in the context of significant industries such as gas, mining or agriculture.

Investment in communication, and in listening to those people most affected by and most interested in the industry, will always be a priority for Origin.

Our CompassAs a bigger company, working in industries of increasing public interest, it is more and more important that our people be able and supported to make good decisions that are respectful of our stakeholders.

One of the achievements in 2011 I am most proud of was the re-consolidation of our Principles, Values and Commitments, alongside a new Purpose Statement into a guiding Compass for the Company. It formed a major theme of our senior management conference last year and I travelled to all of our major cities to meet with a range of managers to discuss what our Compass means to them.

At Origin, we aspire always to lead, in the broad sense of that word. We make decisions knowing they cannot always be attractive to everyone, but that they effectively and appropriately balance the competing demands that exist for more and cleaner sources of energy globally, and a changing social, environmental and technological landscape. Our stakeholders can have faith in us that we will make good choices, and we are confident that those choices will stand up to scrutiny over time.

Grant KingManaging Director

(1) The technology used cuts annual water consumption to around 200 megalitres, compared to 8,500 megalitres for conventional water-cooled coal-fired power stations.

3

Company Profi lebusiness strategy: Delivering consistent performance and growth through integration

FUELOrigin’s Exploration and Production business targets gas resources close to markets so the Company can quickly and effectively develop and monetise any discovery. Origin is a leading producer of gas in Australia and through Australia Pacific LNG, holds a share in the country’s largest 2P CSG reserves. Together with its domestic operations, Origin is working with ConocoPhillips and Sinopec in the Australia Pacific LNG incorporated joint venture to develop one of Australia’s largest CSG to LNG export projects. To Origin, fuel may also take the form of wind, geothermal, hydro and solar resources.

GENERATIONOrigin has one of Australia’s largest and most flexible power generation portfolios with 5,310 MW of owned and contracted capacity. Origin is the largest owner and developer of gas-fired electricity generation in Australia and among its assets is the highly efficient combined cycle Darling Downs Power Station. Fuelled by CSG, Darling Downs emits less than half of the greenhouse gas emissions of a typical coal-fired power station. Origin is also developing a substantial portfolio of renewable energy opportunities including wind, geothermal, hydro and solar photovoltaic energy.

RETAILOrigin is Australia’s leading energy retailer with 4.4 million(1) electricity, natural gas and LPG customers. Origin is one of Australia’s largest installers of rooftop solar systems and is also the market leader in green energy sales with more than half a million GreenPower and green gas customers. Origin also continues to develop new products and business lines to give customers different and more efficient ways of using energy, including smart home products and business-2-business solutions.

CONTACT ENERGYOrigin owns a 52.8 per cent interest in Contact, one of New Zealand’s largest integrated energy companies and listed on the New Zealand Exchange. Contact has an integrated position, including an extensive portfolio of gas supply arrangements, gas storage, a diverse and flexible generation portfolio, and a strong retail position with approximately 563,200 customers(1) across the North Island and South Island of New Zealand.

FUEL GENERATION RETAIL

Origin’s strategic focus remains on the competitive segments of the Australian and New Zealand energy markets, with additional opportunities in fast-growing international energy markets.

Origin’s integrated strategy provides a natural hedge against market risks and enhances the range of growth opportunities available to the business.

(1) As at 31 December 2011.

4 company profile

Business Snapshotas at 31 December 2011

(1) Excluding Contact Employees as at 31 December 2011.

S&P/ASX TOP 20 by market capitalisation

160,000+ shareholders

4.4 million customers across Australia

Market leading green energy provider

5,310 MW owned and contracted generation capacity

52.8% interest in Contact Energy, New Zealand

5,600 employees(1)

RENEWABLE OPPORTUNITIES

Australia, Chile, Papua New Guinea and Indonesia

5Origin Energy sustainability report 2011

Origin has an extensive portfolio of assets and operations in Australia and New Zealand, with additional opportunities in fast-growing international energy markets.

Map of assets and operations

6 company profile

Our 5-Year Sustainability Objectives

In 2007, we set ourselves a series of 5-Year Objectives to help deliver on the commitments we made to each of our key stakeholder groups at that time – customers, communities, employees and investors. We also laid out 5-Year Strategies to meet these objectives. Looking back over the fourth year of our journey, we report our progress against the strategies in four sections – Our Customers, Our Communities, Our Employees and Our Investors. In re-consolidating our Compass during 2011, we recognised the importance of our business partners as a key stakeholder. When we outline the next phase of our sustainability journey in 2012, we will include our business partners.

ENVIRONMENTECONOMIC

SOCI

AL

SOCI

AL

ENVIRONMENT ENVIRONMENT

SOCIA

L

SOCIAL

INVESTORS

EMPL

OYE

ES

COMMUNITIE

S

CUSTOM

ERS

ObjectiveTo reduce the greenhouse gas intensity of our customers’ energy consumption.

Objective To maintain community support and goodwill for the Company’s activities.

ObjectiveTo take all feasible

steps to eliminate or minimise any adverse

impact that our activities have on the environment.

ObjectiveTo eliminate or

manage hazards and practices in our

business that could cause accident, injury

or illness to people, damage to property

or unacceptable impacts on the environment.

Objective To provide

sustainable returns to Origin’s key economic

stakeholders.

ObjectiveTo provide and maintain a satisfying and rewarding work environment for all employees.

ObjectiveTo reduce the greenhouse gas intensity of our energy production and distribution and non-producing assets.


Our Customers

Our Commitment: Create value for our customers, by understanding their needs and delivering relevant and competitive energy solutions to meet those needs both today and into the future.

With 4.4 million customers, Origin is now Australia’s leading energy retailer

8 our customers

5-Year Strategies1. Be recognised as the leading provider of green energy products.

Origin is proud of its continued market leadership in providing green energy solutions to Australians. At the close of the 2011 financial year, Origin had approximately 505,000 green energy customer accounts, three per cent less than the prior year – 373,000 GreenPower electricity customers and 132,000 green gas customers, noting Origin is the only provider of a green gas product. The reduction in GreenPower customer numbers reflects a contraction of the total GreenPower market as customers moved away from premium priced green energy options and towards discounted energy products, most likely as a result of carbon uncertainty, cost of living pressures and in particular, rising energy bills.

Over the past four years, Origin has grown its GreenPower market share almost every year and did so again over the past 12 months, mainly due to the addition of new GreenPower customers acquired through the acquisition of the NSW energy businesses. Origin’s GreenPower market share is almost four times that of our nearest competitor.

Looking forward, Origin will seek to build further on its leadership in green energy solutions. In particular we will be working to better understand how green energy products continue to add value in a market where carbon is priced.

2. Increase our sales of low carbon intensity products to 10 per cent of our total supply chain greenhouse gas emissions by 2012.(2)

In the 2011 financial year, Origin improved sales of low carbon intensity products as a proportion of total retail sales revenue by three per cent on the prior year and we are recognised as genuine leaders in this market.

The sales value of low carbon intensity products all increased – including GreenPower, green gas, solar PV systems and co-generated electricity, while the sale of carbon offsets decreased. Growth was driven primarily by the solar business which doubled revenues to $440 million and completed 36,840 installations, a 466 per cent increase on the 6,449 installations completed in the prior year. Origin is the largest installer of solar PV in Australia.

Over the past four years, Origin has continued to grow the proportion of retail revenue represented by low carbon intensity products, which has now significantly exceeded the target set in 2007. This is a result of the Company’s investment in innovation in this market and its commitment to helping customers develop a view of energy solutions beyond that of a basic commodity.

Origin acknowledges that the growth of solar in particular has been stimulated by favourable state energy policies which provided attractive feed-in tariffs to customers and that these have since been reduced or removed. Notwithstanding this lessening of support, Origin continues to see strong medium and long-term growth in this market and continues to focus on innovation and product development to drive growth.

GreenPower market share (%) Retail revenue represented by low carbon intensity products (%)

58(1

)

07 08 09 10 11 11

33

30

38

16(1

)

48

Nearest competitor

Target 10%

18

07 08 09 10 11

0.5

5

10

15

In the 2011 financial year, Origin became Australia’s largest energy retailer with 4.4 million customers, following the acquisition of the Integral Energy and Country Energy retail businesses. Origin also holds a 52.8 per cent interest in Contact Energy, which has more than 560,000 customers in New Zealand.

In 2007, we set ourselves two customer-related objectives for the ensuing five years:

– To reduce the greenhouse gas intensity of our customers’ energy consumption; and – To maintain community support and goodwill for the Company’s activities.

To deliver on these objectives, we laid out four 5-Year Strategies, which we report against in this section.

(1) GreenPower market share for Origin and nearest competitor include customer accounts acquired through the sale of NSW energy assets.

(2) This target has been re-stated to focus on increasing the take up of low carbon intensity product options by our customers.


3. Lead industry policy on access and hardship response.

In the past year, there has been an increase in the number of customers who have contacted Origin to discuss difficulty in paying their energy bill. At the close of the 2011 financial year, 8,537 customers were being financially supported under a specialised payment plan – a significant increase on the 6,253 customers being similarly supported in the prior year. Origin provided more than $2.8 million to customers in payment support through a combination of payment plans and energy efficiency programs.

We carried out 880 home energy audits during the year, almost 200 more than the prior year, helping customers identify energy saving opportunities within their homes and providing more than $89,000 worth of energy efficiency items as a part of this service. Participating customers saved approximately $335 off their energy bills annually.

The increase in customers using payment support over the past few years coincides with an increasing focus on cost of living pressures and in particular, rising power prices. Despite the fact that the average Australian household still spends the same percentage of household income on electricity today that it did 10, 20 and 30 years ago(1), we recognise that some customers continue to experience genuine hardship and struggle to pay essential bills such as energy. We will continue to offer support to those people through our hardship program, Power On.

Looking ahead, we will continue to work more closely with our community partners to help customers identify opportunities to improve their energy efficiency and save on their energy bills, particularly through carrying out energy audits.

4. Reduce Ombudsman complaints by 30 per cent from 2007 levels by 2012 and proactively resolve customer complaints.

In 2011, customer complaints rose to 5.5 per 1,000 customers, up from 4.0 last year. This increase is consistent with the trend of rising Ombudsman complaints across the energy industry, driven by factors including an acute focus on energy prices, the smart meter rollout in Victoria and the large increase in solar PV installations nationwide.

Complaints have consistently risen over the past four years, making it increasingly unlikely that we will reach our five year target of reducing Ombudsman complaints from 2.2 complaints per 1,000 customers to 1.5 by 2012. Since the target was set in 2007, Origin has acquired large customer bases in Queensland (2008) and NSW (2011), and at the same time we have seen far greater interest and scrutiny on the cost of living, including power prices, and the energy sector in general.

Despite the recent trend, Origin remains committed to reducing the number of complaints received over time. As well as seeking to reduce or eliminate the issues prompting customer complaints within our control, we continue to work to improve the overall customer experience. Over the past few years we have invested in a major transformation of our billing systems to enable us to deliver a more streamlined and efficient service to our customers. We have made significant progress since the close of the reporting period, with four large-scale customer migrations successfully completed to move 2.6 million pre-NSW acquisition customers to the system. The remaining acquired NSW customers will be migrated to the new system over the next two years and following this, we expect to see improvements reflected in the number of complaints received.

More specifically, we also have an aspiration to resolve our customers’ needs the first time they call. Our employees commit to getting it right the first time, by taking the time to understand the customer’s issues and ensuring they remain up to date with Origin’s products and solutions so they can do their best to resolve the customer’s enquiry.

Our customers

(1) Source ABS, 6 September 2011. Number of Ombudsman complaints per 1,000 customers

Target 1.5

5.5

07 08 09 10 11

2.2

2.2

3.9 4.0

DISCOVER MORE ONLINEDiscover more about how we are working to deliver on our commitment by visiting our Sustainability Report online. See how we are:

– Setting an example as Australia’s leading energy retailer; – Transforming our ability to deliver sustainable long-term improvements in customer

service through our Retail Transformation project; and – Continuing to invest in new products to enable us to better meet the changing

energy needs of our customers.

Visit Origin sustainability reporting online at http://reports.originenergy.com.au

10 our customers

CASE STUDY:

Helping customers take charge of their energy bills

CASE STUDY:

Origin set to deliver improved customer engagement

As power prices rise due to necessary investment in the poles and wires that transport electricity to homes and the impact of climate change policies such as the carbon price mechanism, many customers are experiencing bill shock and some are genuinely struggling to pay their higher bills.

A study conducted by McCrindle Research for Origin during 2011 revealed that customers felt powerless about their rising bills and were struggling to see how making small changes to their behaviour could reduce their energy consumption, and in turn, their bills.

Origin is pursuing a number of initiatives to help customers better understand and manage their energy use. The Origin website is a great resource for customers wanting to learn how to save energy and money and reduce carbon emissions. Origin’s energy efficiency ambassador, Anne Armansin conducts at-home energy audits and provides practical, easy to understand energy advice online.

Origin is also pioneering the development of home energy management solutions in Australia, signalling the beginning of a very different relationship between customers and energy retailers. Using Origin’s home energy management solution, home electricity usage can be read, measured and uploaded to an online portal, accessible remotely. Customers will be able to view in real time how much energy they are using and what it is costing them, and consequently make changes to their behaviour to keep consumption and bills down. The technology is currently being trialled in Victoria.

While smart home solutions and energy efficiency tips help many customers, there are others suffering financial hardship who need support to pay their energy bills. Origin offers industry leading financial hardship programs which help customers by developing payment plans, commissioning energy audits and aiding customers in accessing relevant government assistance.

Reflecting increased cost of living pressures, over the past year, the number of customers who have contacted Origin to discuss their difficulty in paying their energy bill increased and more than $2.8 million was provided in payment support.

Origin’s retail business has grown significantly over the past 10 years, driven by both organic growth and acquisitions. In the past year alone, Origin’s customer base increased by 1.6 million customers through the acquisition of the Integral Energy and Country Energy retail business – in the process making Origin Australia’s largest energy retailer. This growth has brought with it both opportunities and challenges.

For example, data collection and processes were inconsistent across the businesses we acquired. This created challenges for call centre operators who often needed to switch between different systems in order to resolve customer enquiries regarding natural gas, electricity or solar bills.

Recognising these challenges, Origin launched its Retail Transformation project in 2008. Retail Transformation focused on integrating all of Origin’s customer relationship management processes and systems. A new state-of-the-art SAP-based system replaces outdated billing systems, as well as introducing more sophisticated, integrated, customer friendly solutions that will improve business capability.

The project underpins a major commitment to changing the way Origin engages with customers, in the process significantly improving the experience we provide to them. The new system will deliver call centre staff relevant and more detailed customer information on a single screen which will enable our team to respond more quickly and effectively to customer enquiries, and as much as possible, provide solutions within the one call.

Retail Transformation will also deliver efficiency improvements, strongly positioning Origin for future growth. With 4.4 million customers across Australia, implementation of Retail Transformation presents significant technical and logistical challenges and has therefore been pursued in a staged manner.

In June 2011, 300,000 South Australia customers were transferred. Initial performance exceeded expectations with call centre average handling times consistent with, and in some cases less than, legacy systems. Business operations continue to be stable and there have been no significant customer or regulatory issues to date. We are now focused on training and up-skilling our staff to work with the new system and processes to ensure a smooth transition across all states. By the end of the project, we will have trained more than 1,000 support personnel, ensuring we have the capacity to meet our service level targets.

The project has an added benefit of driving better engagement of our call centre employees, with a recent survey revealing a 16 per cent increase in engagement and a two per cent decrease in turnover rates.

UPDATE: Following the close of the 2011 reporting period, all Origin customers in Queensland, Victoria, South Australia and a small number in NSW were successfully migrated to the new system. The 1.6 million customers acquired through the NSW acquisitions will be transferred to the new system over the next two years.

Easier to read bills help customers manage their energy use


Our communities

Our Commitment: Respect the rights and interests of the communities in which we operate, by listening to them, understanding and managing the environmental, economic and social impacts of our activities.

Origin’s broad range of activities bring it into contact with diverse stakeholder groups

12 our communities

5-Year Strategies1. Contribute to a policy and industry response to climate change that delivers an effective pricing regime for carbon.

In recent years there has been significant uncertainty in Australian public policy matters, in particular carbon policy. Origin’s diverse and integrated Australian business is well placed to manage policy uncertainty around carbon and we continued to advocate for policy certainty in this and other areas during 2011.

As a long time supporter of an emissions trading scheme, Origin welcomed in 2011 the passage of the bills necessary to make it happen. The trading scheme at the heart of the Commonwealth Government’s Clean Energy Future package benefits from years of work by Australia’s experts in designing a market based approach to reducing emissions. Origin contributed to this activity, particularly through representation by our Managing Director Grant King on the Government’s Climate Change Business Roundtable advising on the design of a carbon price mechanism. The scheme starts on 1 July 2012 with a fixed price period, starting at $23 per tonne of carbon.

We believe it is important that the clean energy transformation is pursued in an economically responsible manner with minimum market distortions. The effective implementation of the carbon price is central to achieving this aim and interventions such as the price floor in the floating price period and restrictions on the use of international permits should be minimised to encourage efficient outcomes. Compensation for Emissions Intensive Trade Exposed Industries should maintain international competitiveness, especially important considering that global action on pricing carbon is progressing slowly. Parts of the clean energy transformation other than the carbon price such as the Clean Energy Finance Corporation and Energy Savings Initiative, should be implemented so as to minimise the cost impact on customers and any distortionary effects on energy markets.

Since the passing of the scheme, Origin has actively focused on implementation and compliance. The business is working to establish the significant systems and processes that will support us to meet our carbon liabilities from 1 July 2012.

Simultaneously, Origin continued to advocate, directly and through industry associations, that in Australia’s deregulated energy markets, the national emissions trading scheme should be supported by a limited number of complementary policies. We advocated on reviewing and rationalising the plethora of federal and state based complementary climate change policies including energy efficiency and solar feed-in tariffs. We also contributed to the development of key complementary policies including the Large-scale Renewable Energy Target (LRET), Small-scale Renewable Energy Scheme (SRES), the Carbon Farming Initiative and the National Carbon Offset Standard.

2. Reduce the greenhouse gas emissions intensity of our electricity supply chain to 10 per cent less than the National Electricity Market by 2020.

In 2011, the emissions intensity of our electricity supplied to customers was 4.9 per cent below the National Electricity Market (NEM), an improvement on the prior year’s result of 2.6 per cent.(1) The improvement was due to higher utilisation of Origin’s CSG-fuelled Darling Downs Power Station. Origin is proud of the standard set by its combined cycle Darling Downs Power Station, which is one of the cleanest baseload power stations in Australia, emitting less than half of the greenhouse gas emissions of a typical coal-fired power station(2) and using roughly three per cent of the water(3).

This year we did not meet our predicted outcome of achieving supply chain emissions intensity nine per cent below the NEM, due to lower than expected production from Darling Downs and the impact of a large increase in total customers from the acquisition of the Country Energy and Integral Energy retail businesses.

Our progress since we established the target in 2007 has been significant, improving from a supply chain emissions intensity that was 0.4 per cent below the NEM, to 4.9 per cent today, and taking us almost half way towards our target by 2020. We have continued to lower the emissions intensity of our generation sites despite a large increase in production, and our emissions intensity has also been impacted by the increased purchase of NEM electricity to meet the needs of a larger customer base through retail customer acquisitions in Queensland (2008) and NSW (2011).

(1) Based on Origin’s estimate of the full fuel cycle of NEM generation and Origin operated generation. The methodology incorporates NEM purchases and Origin operated generation only.

(2) Darling Downs is capable of supplying enough electricity to power more than 400,000 homes per day. This is based on an average Queensland household which consumes 30 kWh/d and output from Darling Downs of 500 MW, though the power station can produce up to 630 MW.

(3) The technology used cuts annual water consumption to around 200 megalitres, compared to 8,500 megalitres for conventional water-cooled coal-fired power stations.

Emissions intensity of supply chain below the NEM since 2007 (%)

4.9

07 08 09 10 11

0.4

0.3 0.

7

2.6

Target 10%

The breadth of Origin’s activities brings us into contact with a diverse range of communities. We engage with community representatives ranging from governments and media through to non-government organisations, local community groups and individuals.

In 2007, we set ourselves three objectives in relation to communities for the ensuing five years:

– To take all feasible steps to eliminate or minimise any adverse impact that our activities have on the environment; – To reduce the greenhouse gas intensity of our energy production and distribution and non-producing assets; and – To maintain community support and goodwill for the Company’s activities.

To deliver on these objectives, we laid out a series of 5-Year Strategies, which we report against in this section.


3. Reduce the greenhouse gas emissions intensity of our gas production by 15 per cent by 2012.

We again exceeded this target in 2011, with an emissions intensity 44.5 per cent lower than the intensity reported in 2007. In 2007, the emissions intensity of our gas production was 11.0 ktCO2-e/PJe and this year it was 6.11 ktCO2-e/PJe.

The continuing improvement in the emissions intensity of our gas production can be attributed to the ramping up of our CSG production facilities including Talinga in Queensland, the Kupe natural gas production facility in New Zealand and taking over the operation of the Otway gas plant in Victoria. These have positively impacted our overall emissions intensity profile.

Looking ahead to completion of the 5-Year Strategy in 2012, we expect to continue to meet and exceed this target.

4. Reduce or offset all greenhouse gas emissions from our non-energy producing sites.

Using a mix of GreenPower and approved carbon offsets we offset 100 per cent of greenhouse gas emissions from our non-energy producing sites.

As committed in our last report, we purchased GreenPower to offset 20 per cent of the greenhouse gas emissions associated with electricity consumption in our offices, shops and LPG terminals during the first half of the year. A variety of carbon offsets were surrendered to offset the remaining 80 per cent of emissions (including all business travel emissions). We will offset all calendar year 2011 emissions from our non-energy producing sites with 90 per cent voluntary offset certificates and 10 per cent GreenPower.

5. Identify opportunities for the reduction and re-use of waste.

Origin is committed to minimising the consumption and production of waste materials wherever possible across all business units, and implementing plans to manage and reduce waste. Further to our commitment in this area, we have developed and begun to implement a CSG Water Management Strategy. Early work in this area includes the development of several projects for the beneficial use of treated water to irrigate crops.

A key feature of the strategy is a water reinjection study which will investigate the feasibility of taking water produced when extracting CSG and reinjecting it into suitable underground aquifers. During 2012, we will conduct reinjection trials at Spring Gully and other sites. Negotiations are also underway to supply some treated water to landholders for irrigation as well as the provision of treated water for industrial use. The strategy also involves the release of some treated water into the Condamine River, in line with strict environmental approvals and guidelines.

Three hundred hectares of Pongamia trees planted at Spring Gully are now more than one year old and are taking water from the Spring Gully Reverse Osmosis plant.

Over the past year Origin, through Australia Pacific LNG, has worked with Australia’s leading science body, the CSIRO, to form a new research alliance to continue to pursue industry-leading research on CSG water. The Gas Industry Social and Environmental Research Alliance (GISERA) will conduct impartial and independent scientific research into social and environmental issues arising from the gas industry. Surface and groundwater research undertaken by the Alliance aims to enable the CSG-LNG industry to plan and manage water resources according to the Integrated Water Resource Management framework promoted by the Global Water Partnership(1).

For more information see the GISERA website: http://www.gisera.org.au/

6. Rehabilitate or look for opportunities to offset land we have disturbed.

In 2011, we disturbed 112 hectares of land and rehabilitated 58 hectares, achieving a ratio of rehabilitated land to newly disturbed land of approximately 52 per cent. This is lower than the ratio of 61 per cent reported in the prior year. We did not achieve the target set last year of a ratio of 65 per cent or better as we were impacted by the floods in Queensland and our development activities continued to increase, particularly around our CSG operations and the Mortlake Power Station, as we seek to meet the growing demand for cleaner energy.

While we did not meet expectations this year, we continue to implement new strategies to minimise and manage our land disturbance and rehabilitation. We have recently implemented innovative new hybrid drilling rigs for our CSG operations which we expect will disturb around one tenth of the land area of conventional drilling rigs. The hybrid rigs are much smaller and lighter than conventional rigs and are easily portable, which means they can be deployed in most locations without the need for development of access roads or grading thereby minimising land disturbance. This is the first time the purpose-built rigs from Canada have been used in Australia and follows a comprehensive two-year global study into drilling best practice.

We have also delivered added benefits in the form of offsets through our management of CSG water, as described in the previous section. At Talinga we are using treated CSG water to irrigate plantations of broad acre crops including sorghum and wheat adding to local agricultural productivity. At Spring Gully we are using treated water to irrigate a 300 hectare plantation of Pongamia trees, chosen in part for its potential as a biofuel.

Looking ahead we will continue to innovate and pursue best practice operating procedures to minimise our land disturbance and improve rehabilitation.

(1) The Global Water Partnership (GWP) is an international network of development agencies, country members, research organisations and NGOs that offers practical advice for sustainably managing water resources.

Reduction in emissions intensity of Origin’s Australian gas production since 2007 (%)

44.5

07 08 09 10 11

0

9.1

15.0

27.4

Target 15%

Our communities

14 our communities

7. Actively consult with the community at all locations where Origin has a material impact.

We continued to listen to and learn from local communities around our major operations and development projects this year. Origin’s new Community Engagement Directive shaped our approach in this area, defining our process for engaging effectively with communities impacted by our activities.

Through our people and project teams associated with Otway, BassGas, Cullerin Range Wind Farm, our gas fired power stations at Uranquinty, Darling Downs, Ladbroke Grove and Mt Stuart, and our development projects at Mortlake, Stockyard Hill, Crystal Brook, Big Hill (Kerrawary Power Station) and Tara (Ironbark Project) we have worked to raise our presence and availability in local communities as well as address community concerns where necessary.

We are also implementing this engagement process across our interests around the world by working with our international joint venture partners to establish processes for consulting communities affected by our projects in their earliest stages. Over the coming year we will increase this engagement, particularly for our activities in Papua New Guinea, Indonesia and Chile.

Active consultation continued in the south central Queensland gas fields around our Australia Pacific LNG project. The planning process for the location of wells for this project is a prime example of our efforts to maintain open lines of communication. When planning locations for wells, Origin works closely with landholders to ensure wells are located in convenient places that pose minimal disruption to farming operations.

8. Achieve positive community relationships through regular, open and transparent communication with host communities.

As a company, working in industries of increasing public interest, it is important that we make decisions that appropriately balance the interests of our stakeholders, particularly the communities in which we operate. We care what communities think of us and we make a concerted effort to actively engage and consult with communities regarding our activities, forming relationships based on open and transparent two-way communication. Community Reference Groups (CRGs) form an important part of our positive working relationships with communities.

Often working closely with local councils, the Community Reference Groups (CRGs) meet on a regular basis and provide the opportunity for community members to raise issues, ask questions and be informed about construction or operational updates. In addition to Origin, the groups are made up of landholders, community members, council representatives, construction contractors, and other interested parties such as community groups, regulators, government departments, and scientific experts. We participate in CRGs at Mortlake, BassGas, Otway, and at our Ironbark CSG development project. In Townsville we work with the Council on their Together Townsville Project which identifies opportunities for supporting relevant initiatives and at Cullerin Range we run a Community Investment Committee.

The benefits of clear and detailed communication with communities at all stages of a project can be seen at Stockyard Hill, which received state and federal approvals in 2011. Origin’s approach to consultation received recognition in local media and now that the project has been approved we will move to a formal CRG for the Stockyard Hill Wind Farm in 2012.

Regional Community Consultative Committees (RCCCs) have been established for our Australia Pacific LNG project, with the Roma Committee established in partnership with another CSG industry proponent.

Towards the end of the year, we took steps to increase communication with communities regarding our CSG operations, acknowledging this is an area that requires greater effort, particularly to provide balance in the public debate. We conducted the largest core study ever undertaken targeting groundwater knowledge in the Surat Basin, a sub-basin of the Great Artesian Basin, and toured the resulting 12 tonne core sample throughout the gasfields in Queensland and to Canberra, informing the community, policy makers and the media on the natural safeguards provided by the geology of the Great Artesian Basin, separating our activity from aquifers. The core and other work undertaken by Origin and other CSG proponents is helping to make the Great Artesian Basin one of the best understood underground water resources in the world.

In addition to the open, regular and transparent communication afforded by CRGs, Origin has held open days, tours, information days and barbecues, and produced and delivered information newsletters and fact sheets for projects and developments, met with landowners and neighbours, delivered presentations to councils and community groups, and responded to complaints and feedback.

DISCOVER MORE ONLINEDiscover more about how we are working to deliver on our commitment to communities, by visiting our Sustainability Report online. Additional information includes:

– Our compliance with regulatory standards, a breakdown of our greenhouse gas emissions and a summary of key waste and water management initiatives;

– Examples of where we are helping to make a positive contribution to the communities in which we operate; and

– Case studies demonstrating our actions to improve environmental performance.



Our communities

The development of the CSG industry has attracted considerable community and media attention. Some of the concerns about CSG have been raised as a result of a lack of accurate information about the industry.

In order to contribute to a more balanced public debate, Origin is making an effort to provide accurate facts about the Australia Pacific LNG project. CSG is a safe and reliable energy source which for 15 years has been used every day to power homes and cook meals in Queensland.

Following, we seek to answer some of the common questions raised about the industry.

Q: CSG is a new industry and I hear there are risks, how do we know if it is worth it?

A: CSG is a safe and reliable energy source and Origin has been producing it in Queensland for more than 15 years – the longest track record of any CSG company. CSG is already a major provider of energy to Queensland, supplying around 90 per cent of the State’s gas demand and fuelling about 15 per cent of its electricity capacity. To ensure sustainable development, the industry is heavily regulated. Origin’s project alone complies with or exceeds more than 1,500 state and federal government conditions, over and above existing regulations.

Q: Will CSG drain the Great Artesian Basin (GAB) of water?

A: CSG’s impact on the GAB has been greatly exaggerated. The industry’s water extraction is minor compared to current and historic GAB extraction and is comparable to many existing industries, including farming. The annual extraction of water at the peak of the industry’s production is equivalent to taking five litres out of an Olympic-sized swimming pool.

Origin’s handling of water is strictly regulated and monitored. Like other CSG companies, we share our water knowledge with the Queensland Government and in doing so help to vastly increase scientists’ understanding of the GAB, making it one of the best understood underground water resources in the world.

Q: Will CSG contaminate drinking water supplies?

A: Suggestions that CSG will pollute drinking water are not accurate for a number of reasons. During extraction water is only taken from coal seams – not from aquifers commonly used for local water supply. There are also natural geological barriers, for example hundreds of metres of very low permeability rock, which separate the coal seams and the commonly used groundwater supply aquifers. Our wells are designed to very strict standards, with layers of cement casing separating the wells from the surrounding environment.

Q: Is all CSG extracted by fraccing?

A: A large number of CSG wells do not require fraccing. Fraccing is only used where the flow of gas needs to be improved. Only a small number of wells have been fracced to date.

Q: Does fraccing use massive amounts of secret chemicals?

A: More than 97 per cent of the liquid is water and sand. Any additives used are clearly listed on our website. The tiny amount of additives in fraccing include substances common in things we eat or wash with almost every day, including toothpaste, soap, cleaning products and vinegar. The additives are entirely safe in the tiny amounts used by us.

Q: How adequate is the science behind CSG development?

A: Extensive technical studies and strict regulations have been applied to the CSG industry. The Australia Pacific LNG project has undertaken a major environmental impact statement (EIS), which built on existing research and regional studies, and included a wide range of technical studies which took more than 10,000 field hours to complete, using recognised experts and consultants. The CSG industry is subject to very strict regulations and controls by the Queensland and Australian governments, providing confidence that the project will meet strict environmental standards.

Q: Will CSG extraction impact prime agricultural land?

A: CSG can, and in much of Queensland already does, coexist with rural industries and does not pose a threat to Australia’s food production. The vast majority of Origin’s CSG operations are on grazing land – not strategic cropping land. Importantly, each well takes up a relatively small area, roughly half the size of a netball court, so farming activities like cattle grazing and cropping can continue around the wells largely undisturbed once they are in production. When planning locations for wells, Origin works closely with landholders to locate wells in convenient places that pose minimal disruption to farming operations. On land Origin owns, we are actively demonstrating that CSG can co-exist with agriculture, see Monreagh case study on page 17.

Q: Are farmers powerless to stop CSG development on their land?

A: All of Origin’s activities are carried out with the agreement and consent of the owner of the land and we do not enter a landowner’s property without a signed agreement. We are committed to building informed, transparent, lasting relationships with our landowners and over 15 years have found that overwhelmingly we have been able to access the CSG resource in a way landowners are comfortable with. We currently have more than 600 active land access agreements in place.

CASE STUDY:

Responding to the community about coal seam gas

Stuart Gray, Origin Farm Manager Monreagh, one of the examples of CSG coexisting with agriculture

16 our communities

CASE STUDY:

Natural gas a breath of fresh air for working farms

When you mention the CSG industry, people generally don’t think of a CSG company running farming operations. The reality is, Origin is a major landowner in Queensland and as a direct result of that ownership, is also a farmer. Origin owns more than 65,000 hectares of agricultural land. On this land, we will drill wells that extract natural gas from coal seams 200 to 1,000 metres underground.

Like any landholder we face a range of challenges every day in managing our properties – clearing, back-burning and mending fences to name a few. With large parcels of land under our management, we have a responsibility to maintain production on our farms and ensure they continue to contribute to the productivity of the local agricultural industry.

A CSG well can generally be located around farming operations to minimise disruption to other activities like broad acre cropping or grazing. On our own properties, and on the properties of many of our landholders, for the 15 years we have been producing CSG we have found both activities can genuinely and productively co-exist. We are actively demonstrating this on our Monreagh property southwest of Chinchilla.

Origin’s Land and Water Supervisor Ronald Thompson said, “Monreagh has produced bumper crops from the 400 hectares of wheat and oats planted through winter.

“Monreagh station, which comprises 1,100 hectares of farmland, is proof that gas and agriculture can not only ‘co-exist’, but also actually work well together. It’s a very significant parcel of land for both gas and agriculture,” he said.

At Monreagh, which already has a number of wells and over time will have up to 20 wells, Origin has established an ongoing irrigation and land management strategy that will see thousands of litres of treated water piped in from the nearby Talinga water treatment plant and used to irrigate crops including wheat, mung beans, chickpeas, lucerne and sorghum. The outputs will be marketed locally and all supplies will also be locally purchased.

The property is also grazed by more than 4,000 head of cattle run in joint venture with a local farmer, with both parties sharing the financial benefits.

A live-in manager, employed by Origin, supervises the property. A number of people from the local community are also employed, including a stockman, Wayne McLennan, who musters the cattle.

Until now, Monreagh has operated at the mercy of the elements, with times of severe drought taking a heavy toll on the land. The new irrigation program will effectively drought-proof Monreagh, allowing it to produce crops and maintain cattle even in times of drought.

When making financial contributions, Origin aims to tailor investment to the unique needs of the community. In 2011, we worked closely with members of the community surrounding Uranquinty Power Station to understand the key local challenges and how we could contribute to initiatives that would really add value.

Located 15 kilometres south of Wagga Wagga, Uranquinty has a population of less than 1,000 people and often struggles to find the resources to support community activities. One of the community’s most important resources is the Uranquinty Community Hall. The Wagga Wagga City Council owns the hall and Uranquinty Progress Association (UPA) funds its ongoing running and maintenance costs.

After discussing the challenges facing the UPA, we decided that the best way to provide support was to do what we do best; provide energy solutions. We arranged a solar partnership with the UPA, whereby Origin installed a 2.3 kilowatt solar electricity system on the roof of the hall. The benefits of the solar partnership to the UPA are threefold. Firstly, it will help pay their power bills. Secondly, it provides an income stream, because the UPA is paid a premium for the electricity generated by the system that is fed back into the grid. Depending on the UPA’s energy consumption, this could generate up to $2,000 per annum. Finally, it enables the UPA to lower its

environmental footprint, as it avoids the production of more than 70 tonnes of greenhouse gas over the life of the system(1).

Former Chair of the UPA, Bruce Harris said the initiative has demonstrated Origin’s long-term commitment to the Uranquinty community.

“Origin is now considered very much part of the Uranquinty community.

“As a very small community organisation, it’s not often that the UPA has the opportunity to form such a significant partnership, especially one that delivers so many long-term benefits. Not only is this helping us to pay our power bills for the next year, but it means these costs will continue to be covered,” Mr Harris said.

“The legacy of Origin’s contribution will last well into the future,” he said.

Following the success of this project, Origin is preparing to offer a solar partnership on an annual basis to not-for-profit organisations within the local region.

CASE STUDY:

Sun shines on Uranquinty Community Hall

(1) Based on 2.3kW system producing 3.1782 MWh generation per annum. With a System life of approx 25 years, total generation equals 79 MWh. 1 MWh is equal to 1 tonne of CO2 emissions hence the system saves more than 70 tonnes of CO2 emissions.


Our employees

Our Commitment: Create a rewarding workplace for our people by valuing everyone’s contribution, encouraging personal development, recognising good performance and fostering equality of opportunity.

Origin employees at the Spring Gully Gas Plant, Queensland

18 our employees

5-Year Strategies1. Achieve a Total Recordable Injury Frequency Rate of 4.0 by 2012.

While many of our business units showed a positive change in the Total Recordable Injury Frequency Rate (TRIFR), a reflection of their commitment and hard work during the year to improving safety, company-wide we recorded a TRIFR of 6.0, well above our target of 4.9 for this year. A number of our employees and contractors sustained injuries while at work.

This result prompted us to reassess our approach to safety and look for a measure which would encourage us to be more alert to potential risks before they result in incident or injury, as well as promoting more conversations within the business about keeping each other safe.

We have adopted Observations as a lead indicator to drive behavioural change across our company. We have set a 2012 target for Observations and we are tracking well towards achieving it on the way to our long-term aspiration of a harm and injury free workplace.

Sadly, in February 2012, after the reporting period, a road accident in the Papua New Guinea Highlands resulted in the death of one of our Origin colleagues. This is a stark reminder of the importance of safety and we continue to make it our first priority.

2. Eliminate barriers to employment, development and workplace opportunities so that our workplace attracts and represents diversity from the communities in which we operate.

We recognise that employing and partnering with a diverse range of people will give us access to a range of perspectives to make the best decisions today to create value for our stakeholders now and into the future.

During the year we developed a Diversity and Inclusion Policy which aims to create an environment in which individuals are involved, supported, respected and connected. We placed a gender lens on our recruitment processes by committing to including the best female candidates on short lists. Since tracking this, from October 2010 to June 2011, 43 per cent of people recruited to join Origin were women. Gender strategies have also been implemented in our graduate recruitment. Our latest graduate intake had an equal representation of males and females. We continued to focus on increasing the number of women in management roles and under-represented roles and we have been working with senior managers to raise their awareness of their own potential unconscious biases.

At Origin, we recognise the employment opportunities our business activities bring to the communities in which we work. We have introduced improved methods of attracting new employees from local communities including talking with graduates at local career fairs and maintaining ongoing contact with prospective local employees in key skill areas.

Our work on an Indigenous engagement strategy continues. This year we commenced discussions with government agencies and training providers to develop training programs targeting Indigenous people within our areas of operations.

In the coming year we will continue to measure our performance in this area against targets including remuneration equity and gender equity in underrepresented roles.

Total Recordable Injury Frequency Rate

6.0

07 08 09 10 11

16.3

8.5 9.

1

5.6

Target 4.0

Consistent with the growth of the business, the number of people employed by Origin has grown over the past year. Origin had 5,213 employees at the end of the 2011 financial year, an increase of 19 per cent or 821 people on the prior year, reflecting expanded operations and project activities in Upstream, Australia Pacific LNG, Generation and in Retail. Approximately 92 per cent of our workforce is engaged full time. Voluntary employee turnover, which includes our customer contact centres, was running at 16 per cent per annum at year end, approximately one percentage point above the five-year average. In addition to employees, there were 3,798 contractors engaged in our activities at year end, a small decrease on the prior year.

In 2007, we set ourselves two employee-related objectives for the ensuing five years:

– To provide and maintain a satisfying and rewarding work environment for all employees; and – To eliminate or manage hazards and practices in our business that could cause accident, injury or illness to people, damage to property

or unacceptable impacts on the environment.

To deliver on these objectives, we laid out a series of 5-Year Strategies which we report against in this section.


3. Maintain a working environment in which our employees are engaged, believe Origin is a great place to work and recommend Origin as a great place to work.

Since we first measured employee engagement across Origin in late 2008, we have seen some improvements, including a 15 per cent increase in engagement in our Retail business. This strong result was achieved during a time of significant growth for the business and in the midst of the major transformation of our business and customer relationship management systems – resulting in high activity and pressure for this part of the business. Notwithstanding this success, we continue to target considerable improvements in this area.

Turnover rates are a key indicator of employee engagement and across the business they have been maintained at or below the levels recorded at the beginning of this commitment in 2007. This year, the result in our Customer Contact Centre showed further improvement, falling another two percentage points from the prior year.

While we are conscious that change can be challenging for employees and needs to be managed carefully, we believe Origin’s current and continuing high growth phase will provide an exciting and engaging environment filled with opportunities for our employees.

Employee development continues to be a key area of focus and during 2011 we launched a new suite of Origin management, leadership and talent development programs.

4. Encourage and recognise employee-led sustainability initiatives.

As anticipated in last year’s report, the establishment of the Origin Foundation in 2010 led to significant opportunities for our employees to take part in skilled volunteering. Skilled volunteering provides Origin Foundation partners with access to professional services that may otherwise be beyond their reach. At the same time, employees benefit from the opportunity to develop personally and professionally. Volunteers provided their time and skills across a wide variety of professional capacities during the year including developing marketing plans and assisting with financial reporting with partner organisations.

Employee interest and participation in skilled volunteering was part of a larger trend across Origin away from large scale projects and towards ongoing contributions such as repeat attendance at a conservation site or project work in a skilled capacity.

A total of 13 per cent of Origin’s employee base took part in volunteering activity during the year and employees contributed 5,438 hours to volunteering in the community, an increase of 10 per cent on the previous year.

For more information about the work of the Origin Foundation, visit www.originfoundation.com.au

Our employees

DISCOVER MORE ONLINEDiscover more about how we are working to deliver on our commitment to employees, by visiting our Sustainability Report online. Additional information includes:

– How we plan to drive continuous improvements in our health and safety performance; – Our strategy to help make Origin a better place to work for our employees; – Programs we are developing to improve gender diversity in our business; and – Characteristics of our workforce including employee numbers, geographical breakdown,

turnover and gender diversity.


20 our employees

At Origin we aspire always to lead. Our principle of due care states that we have an overriding duty to ensure the health and safety of our employees and to minimise the health, safety and environmental impacts on our customers and the communities in which we operate.

This means that we strive to:

– create an injury-free workplace; – preserve our people’s health; and – mitigate environmental effects.

The standards Origin has set are high and we recognise that we must have a determined and ongoing program of work to achieve our goals. Unfortunately, Origin’s safety performance worsened in 2011 – Origin’s TRIFR rose to 6.0 from 5.6 – prompting the Executive Management Team to reconsider our approach. For many years, Origin has used TRIFR as the primary measure of safety performance. TRIFR measures the total number of recordable injuries that occur per million hours worked on a rolling 12 month basis. Recordable injuries include lost time cases, restricted work cases and medical treatment cases. In recent years Origin has sought to encourage improved performance by linking the Employee Share Plan – the program through which employees can obtain performance-based shares in Origin – to a TRIFR target.

However, TRIFR measures incidents after they occur. Because most incidents and injuries are the result of behaviour and the choices people make, Origin decided that a more proactive approach, focusing on modifying behaviours before an incident occurs would be a more useful measure and a better motivator for employees. Origin recognised that safety observations are a simple and effective way to prevent unsafe behaviours and reinforce safe behaviours. So for 2012 Origin changed its approach and set a target for safety observations for the year. This averages out to around six observations per employee per year and is a significant increase on the 7,000 observations Origin recorded in 2011.

Safety observations are used in organisations throughout the world and are well-recognised as an indicator of safety performance. An observation is a conversation between one colleague and another. They are an opportunity:

– to recognise and acknowledge people who are working safely or who are caring for the environment;

– to care for a colleague who may be working unsafely; and – to address safety hazards before someone gets hurt.

By linking the safety observation program to the Employee Share Plan, Origin has placed ownership of Origin’s Health, Safety and Environment (HSE) performance in the hands of its people. It encourages everyone to make time for HSE and builds a culture where people are rewarded for speaking up to make the workplace safer. Observations are a key tool for putting Origin’s values into practice and they are just one of a range of tools Origin has in place to drive our safety performance.

Each observation is recorded in the Origin Collective Intelligence System to enable Origin to monitor trends in behaviour and to share learnings across the organisation.

As Origin Managing Director Grant King said to employees when announcing the Observations initiative, “At heart, Observations are about looking out for each other and speaking up to keep everyone safe, whether it be ourselves, our managers, our teams or our contractors.”

Origin launched the safety observation campaign during Safety Week in October 2011. Education sessions throughout the organisation were held. Employees have embraced the initiative and look set to achieve the target well before the financial year ends.

CASE STUDY:

Origin shifts to the front foot to improve safety performance

Origin’s Observations initiative encourages conversations aimed at making the workplace safer


Our employees

CASE STUDY:

Rapid growth propels strategic resourcing solution

CASE STUDY:

Our Compass guides the decisions we make

Thousands of direct and indirect jobs will be created by the Australia Pacific LNG project, which is one of Australia’s largest LNG export projects currently being developed by Origin and its joint venture partners.

Currently employing approximately 1,600 people, the project will grow to 6,000 people during peak construction. The ongoing operation of the project will employ more than 1,000 jobs.

The project requires specialist expertise across a wide range of professions including geoscientists, pipeline workers, engineers, rig operators, landowner support teams, indigenous and community affairs people, site managers, jetty subcontractors, builders, electrical and instrument trades and environmental scientists to name just a few.

Finding the right people with the right skills in a tight labour market, particularly when there is significant competition for the same kind of workforce, is a big challenge.

Origin has spent a lot of time planning its approach to meet this challenge. We first ensured we had an experienced and dedicated recruitment team in place to manage the process. We also spent considerable time mapping Origin’s workforce requirements for the Upstream component of the Australia Pacific LNG project, for which we are the operator.

Our recruitment will consist of a mixture of permanent staff and contractors, and we also expect to source candidates both domestically and from the international market in instances where the specialist skills we require are not available to us in the domestic market. Importantly, all key project management personnel will be employed by Origin, which will ensure we can continue to operate consistently across the business in line with the Company’s values.

Identification and attraction of talent are an important part of the solution and Origin has developed an employment promise to clearly articulate to prospective employees the attributes that make Origin an attractive place to work, as well as the strengths of the Australia Pacific LNG project.

While the resourcing challenge remains a significant one, as stated in the project’s Environmental Impact Statement, we remain committed to the successful execution of our resourcing strategy and to carry out our activities with minimal impact to the environment and community surrounding the operations.

What sets us apart at Origin is not what we do, but how we do it. In operating our business, we make a range of decisions and choices every day. Many of these decisions directly or indirectly affect our stakeholders. Our decisions must therefore stand up to scrutiny by our stakeholders today, and also stand the test of time.

Ensuring consistency and alignment in decision making is not always easy, especially in a business that continues to grow and expand rapidly. Since listing on the ASX in 2000, Origin has grown from a market capitalisation of around $300 million to more than $14.0 billion(1) today. To keep up with this growth, Origin’s employee numbers have grown from 2,200 employees in 2000, to more than 5,600(1) people today.

Since our establishment, Origin has had a framework to guide employee behaviour. Called our Commitments, Principles and Values, it was developed in conjunction with the St James Ethics Centre. Given the growth of Origin since the original framework was put in place, we decided to revisit the Commitments, Principles and Values to ensure they remained applicable and relevant to the Company today.

Led by the Managing Director and the Executive Management Team, the refresh involved the creation of a new purpose statement and the enhancement of the existing Commitments, Principles and Values to better reflect the Origin of today and our key stakeholders. This included adding a fifth key stakeholder, our business partners, reflecting the importance of our partnerships with other businesses in delivering energy solutions to customers today, and in the future.

The creation of a new purpose statement allowed us to clearly articulate what kind of company Origin aims to be – a company that aspires always to lead.

With the refresh of the framework completed, Origin’s challenge was to communicate these changes to staff, so that they could use the framework to assist them in making better decisions, and fully understand the outcomes we strive together to deliver for our stakeholders.

Workshops were held across the country to provide an opportunity for senior leaders to learn about the refreshed framework. At the end of each workshop, attendees were tasked with naming the new framework. After many suggestions and a short-listing process, the Executive Management Team selected the name ‘Our Compass’.

Our Compass is an accurate reflection of the role our Purpose, Principles, Values and Commitments play at Origin. Like a compass, they help steer us in the right direction, assisting us to make better decisions and choices in a way that is common across Origin.

(1) As at March 2012.

22 our employees

Our investors

Our Commitment: Deliver market leading performance for shareholders by identifying, developing, operating and growing value-creating businesses.

Uranquinty Power Station, NSW


5-Year Strategies1. Maintain an investment grade rating.

We continue to maintain a strong investment grade credit rating. During 2011, we undertook a number of capital management initiatives to fund acquisitions as well as the ongoing capital expenditure requirements of the business while preserving balance sheet strength.

These funding initiatives included $3.3 billion to support the Integral Energy and Country Energy retail businesses transaction as well as the GenTrader arrangements with Eraring Energy. We completed a $2.3 billion pro-rata equity entitlement offer and a syndicated bank facility to refinance $900 million of existing bank debt. We also accepted oversubscriptions which resulted in the syndication of a $2.15 billion and US$350 million three to five year bank facility in April 2011.

We also completed a €500 million hybrid issue which obtained equity credit from Standard & Poor’s and Moody’s and provided further support to our balance sheet.

We remain committed to sustaining a capital structure which supports and nurtures the long-term viability of our business.

2. Provide shareholder returns in the top quartile of comparable companies.

We have again achieved our target of delivering shareholder returns that are in the top quartile of comparable ASX-listed companies (ASX 100) over a rolling five year period.

Returns to shareholders are made up of the appreciation of the Origin share price and the dividends we pay. Our policy is to target annual dividends of at least 50 cents per share or 60 per cent of Underlying EPS. Our declared annual dividend of 50 cents per share, which represented 70 per cent of Underlying EPS, was consistent with this policy.

Percentage of Total Shareholder Returns over a five year period: 30 June 2006 to 30 June 2011 (%)

158

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Origin Top quartile ASX 100

In 2011, Origin continued to take major steps in the development of the business and delivered strong underlying business performance. In acquiring the NSW energy businesses and taking a FID on the first phase of the Australia Pacific LNG project, we successfully secured two major opportunities to consolidate market leading positions, which are already having a significant impact on Origin’s business. These opportunities will underpin further growth in the short, medium and long-term.

In 2007, we set ourselves the objective to provide sustainable returns to Origin’s key economic stakeholders. We defined two 5-Year Strategies to help deliver on this objective, which we report against in this section.

DISCOVER MORE ONLINEDiscover more about how we are working to deliver on our commitment to investors, by visiting our Sustainability Report online. Additional information includes:

– Full disclosure of our financial performance in Origin’s 2011 Shareholder Review and Annual Report; and

– How the innovative PAITREO structure of our equity raising was equitable for all shareholders.


Our investors

24 our investors

CASE STUDY:

Unique equity raising structure delivers equality for retail and institutional investors

On 15 December 2010, Origin announced the acquisition of the Integral Energy and Country Energy retail businesses and entry into the Eraring GenTrader arrangements.

To fund the $3.3 billion transaction and to strengthen Origin’s balance sheet for investment in other growth opportunities, in March 2011, Origin announced a $2.3 billion equity raising. The announcement marked the largest equity raising in the Australian market in 2011.

In recent years, many equity raisings carried out did not necessarily offer an equitable structure to both institutional and retail shareholders. For example, accelerated rights offers, which have been widely used, are understood to produce better results for institutions. Many were also non-renounceable and therefore retail investors who did not take up their entitlement received no value. With many of the issues also including an institutional placement, retail investors were often heavily diluted. Understandably, these issues and structures attracted some criticism from retail investors and financial media.

In approaching the 2011 equity raising, Origin’s objective was to provide an equitable structure for both retail and institutional shareholders, consistent with the approach the Company had taken with its previous equity raisings.

Origin did not believe any of the existing structures would fully deliver on its objective, and therefore worked in conjunction with Bank of America Merrill Lynch to refine the new PAITREO structure it had already begun developing. A PAITREO is a Pro-rata Accelerated Institutional Tradeable Renounceable Entitlement Offer.

Vas Kolesnikoff, CEO of the Australian Shareholders Association, described Origin’s structure as different to other accelerated institutional capital raisings.

“Traditionally, smaller shareholders could only sell their rights after waiting 28 days, when there was little or no value left in the rights. Origin allowed its small shareholders to sell their rights in the first 14 days of the offer period, such that those who chose not to acquire more shares, were able to capture as much value as possible,” he said.

The offer was structured as a one for five fully underwritten pro-rata renounceable offer to raise approximately $2.3 billion. This means shareholders were eligible to buy one share for every five shares they held.

While the structure still offered a retail shortfall bookbuild at the end of the process, a month after the institutional shortfall had been dealt with, the innovation in the offer structure was that retail shareholders were able to trade their entitlements on the ASX for 14 days after the institutional bookbuild was conducted.

Origin offered approximately 177 million shares at $13 each, a 17 per cent discount to the closing price the day before the announcement. This represented the first time retail shareholders had been given upfront liquidity for their entitlements in an accelerated offer.

In addition, eligible retail shareholders who did not sell or take up their entitlement were still able to receive value for their entitlement via a shortfall bookbuild after the retail entitlement offer closed.

The reaction to the Origin offer by both institutional and retail shareholders was very positive. Mr Kolesnikoff commented that Origin’s structure allowed all shareholders to capture greatest value from their investment, while giving the Company the certainty of funding that it needed. The structure of Origin’s $2.3 billion renounceable rights offer won the support of all shareholders.

The 79 per cent take-up rate by retail shareholders is the highest rate among the 21 accelerated renounceable entitlement offers of $100 million or more since 2008.

Origin also collected about 93,000 individual applications from retail shareholders under the offer, which is also a very high level when compared to other recent equity raisings.

As for the trading of the retail entitlements, some 21,000 individual trades took place. The entitlements were traded in a range of $1.85 to $3.57 per entitlement not taken up, and at a volume weighted average price of $3.01 per entitlement traded.

The Origin share price outperformed the market over the period of the retail rights trading to 6 April 2011. Origin shares increased by 7.6 per cent during the offer period, compared with a 5.1 per cent gain in the S&P/ASX 200 Index over the same time frame.

The success of the equity raising demonstrated widespread support among Origin’s retail and institutional shareholders for the acquisition of the NSW energy assets, as well as the Company’s strong track record of delivering growth since listing on the ASX in 2000.

On 26 September 2011, CFO Magazine announced that Origin’s PAITREO was awarded Secondary Market Equity Raising of the Year at the CFO Dealbook Awards for 2011, with the judges commenting that the offer was an innovation that was a clear improvement on previous structures.

The Australian Shareholders’ Association also commended Origin in growing its business through an opportune acquisition and financed under a capital raising structure which was fair to all of its shareholders, giving them the choice to take advantage of the most appropriate investment opportunity suitable to their circumstances.

The structure of the offer may also have contributed to its success, providing equitable benefits for retail and institutional shareholders, and uniquely creating an upfront liquidity event for retail shareholders.


The Foundation is based on the belief that education, training and development have the power to transform lives and improve communities. Education is a vital building block for a successful life, providing a pathway into employment and financial stability, and enhancing an individual’s capacity to participate in life.

The Foundation delivers support in three ways: a grants program; matching employee donations to charities; and facilitating volunteering by Origin employees in the community.

As of December 2011, the Foundation had partnered with 19 not-for-profit organisations in support of 33 differing programs to the value of $5.4 million. Through our focus on lifelong learning we support a broad range of initiatives, including:

– Early childhood education intervention – partnerships include The Smith Family’s Let’s Count early years numeracy program;

– School reform – through partnerships with groups like Big Picture, we’re helping to re-engage young people in education;

– Transition to study and work – working with the Country Education Foundation, we’re helping young people in regional Australia access further education and training; and

– Scholarships to further the aspirations of high achievers – supporting talented Australians through partnerships with groups like the General Sir John Monash Foundation.

The Foundation also provides the opportunity for Origin people to volunteer with these organisations, matching needs with skills. During the past year, employees spent 5,438 hours sharing their time and skills with the community.

In addition, the Foundation matches any donations that Origin employees make to charitable organisations through the giving program, Give2. Employees donated $288,942 in the past year, which was matched by Origin to provide a total of $577,884 to a range of charities.

We look forward to the continued growth and development of the Foundation’s activities in coming years.

Origin Foundation and Community Investment

Origin Foundation partners with the Country Education Foundation of Australia to help young people in regional Australia access further education and training

In 2010, to celebrate the 10th anniversary of Origin’s listing on the Australian Securities Exchange, we established the philanthropic Origin Foundation.

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26 ORIGIN FOUNDATION

Origin contributes to the communities in which we operate through increased economic activity arising from developing and operating our assets. We also contribute financially to community initiatives, ensuring we tailor our investment to match the unique needs of each of the communities in which we operate.

To ensure our investment is directed to the areas of greatest need and where we can add value, Origin works directly with community members. In a number of our locations, members of Origin’s Community Reference Groups provide feedback on the issues of interest to each community and assist to identify suitable opportunities.

In the 2011 financial year, we contributed $8.3 million to local communities, an amount that has been independently verified by the London Benchmarking Group. This figure consists of our total cash contribution including grants provided by the Origin Foundation, the value of volunteer hours taken by our employees and in-kind support. Our total cash contribution to communities was approximately $7.6 million, including the Foundation’s $5.4 million investment.

Community investment contributions made by Origin over the year were focused on school energy efficiency and safety programs and local initiatives with our host communities.

A considerable amount has been invested in Queensland, reflecting the scale of our operations, which span CSG exploration and production, power generation and retailing. We offer Community Skills Scholarships to local apprentices and trainees from communities

near our operations in south central Queensland and in 2011, 23 apprentices joined the program. This brings the total number of scholarship recipients to 76 since the program was launched in 2007. We continue to focus on providing scholarships to apprentices and trainees working in areas of critical skill needs.

We also run the CARS driver training program to boost skills and attitudes towards safe driving, in partnership with the Royal Automobile Club of Queensland and Queensland Minerals and Energy Academy. This year 294 students and community members participated in the program. Since the program commenced more than 900 people have taken part.

At Uranquinty Power Station in NSW, we established a solar partnership with the Uranquinty Progress Association, in which local tradesmen installed an Origin-supplied solar system to the roof of a new community hall. Generating more power than consumed, the system will ensure a steady and ongoing supply of income to the Association.

In New Zealand, Origin and the Kupe Joint Venture continued our partnership with the Bishop’s Action Foundation, donating NZ$50,000 towards the establishment of a facility for local community groups and government-funded agencies working with youth.

Innovative philanthropy teamed with inventive microfinance and education is changing lives on both sides of the agreement through a partnership between the Origin Foundation and Good Return.

Good Return is a social enterprise which provides small loans and education to families in the Asia Pacific to help them start or build a business, and feed and educate themselves.

A gift from the Origin Foundation will help Good Return increase their capacity to facilitate loans tenfold over the next three years. The extra support will help Good Return to generate 8,000 new loans, impacting the lives of more than 40,000 people in Asia Pacific, where more than two-thirds of the world’s poor live. In addition to the Foundation’s financial contribution, Origin employees will also provide advice to Good Return on sustainable energy options for communities with little or no electricity. While the benefits to Good Return’s borrowers are direct and measureable, reports from Origin employees show they too are learning and gaining from the experience with many remarking on the significant impact it had on their lives.

Origin Foundation and Good Return

Community Investment

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The Origin Foundation and Good Return partnership provides small loans and education to families in the Asia Pacific


Online Resources

This is a concise version of Origin’s 2011 Sustainability Report. As the size and complexity of our business continues to increase, so too does the challenge of meeting our commitments to stakeholders. Our concise report focuses primarily on our performance against the 5-Year Strategies we set for each of our key stakeholder groups in our 2007 report.

To complement our concise report, we are increasingly moving our reporting information online so it is more readily available to those who wish to see it. Our online Sustainability Report discloses our performance to the same extent as in previous years and is compiled using the GRI’s G3 guidelines. It can be viewed at http://reports.originenergy.com.au.

Key performance indicators including GRI management disclosures and our greenhouse gas emissions are detailed online.

We were included in the Dow Jones Sustainability Asia Pacific Index, which was launched in 1999, and is the first global indexes designed to track the financial performance of the leading sustainability-driven companies worldwide.

We continue to be a member of the FTSE4Good Index Series, which is designed to identify companies that meet globally recognised corporate responsibility standards. Origin has been a member since 2004.

Since 2009, Origin has been a signatory to the Energy Supply Association of Australia’s Sustainable Practice Framework, which is a major platform for the energy supply sector’s work in improving sustainability in the industry.

Our community investment data is independently verified by the London Benchmarking Group (LBG), which promotes a consistent set of criteria for determining community investment, donations and commercial initiatives in the community.

We are a participant in the Carbon Disclosure Project, an independent not-for-profit organisation which holds the largest database of primary corporate climate change information in the world.

Sustainability Ratings and Benchmarks

DISCOVER MORE ONLINEShould you wish to learn more about Sustainability at Origin, please visit our website www.originenergy.com.au/sustainability or contact our Sustainability team:

Origin Sustainability Australia SquareLevel 45, 264-278 George StSydney NSW 2000

We were included in The Global 100 list of the Most Sustainable Corporations in the World, which is an annual project initiated by Corporate Knights, the magazine for clean capitalism.

28 About this report

Glossary of terms

2C Best Estimate Contingent resource.

3C High Estimate Contingent resource.

2P reserves Proved plus Probable reserves. Analysis of geological and engineering data suggest these reserves are more likely than not to be recoverable under reasonable economic, technical and operating methods.

3P reserves Proved plus Probable plus Possible.

AGAAP Australian Generally Accepted Accounting Principles.

A-IFRS Australian equivalents to International Financial Reporting Standards.

Appraisal well Well drilled to determine the size of an oil or gas discovery.

AS 3806 Australian Standard on Compliance Program used to manage regulatory risks.

APLNG Australia Pacific LNG, an incorporated joint venture between Origin, ConocoPhillips and Sinopec.

Availability The time a generation plant was available for use, after deducting planned and unplanned outage hours, compared with the total time under review.

Barrels (bbls) A measure used for oil production and sales. One barrel equals approximately 159 litres.

Bopd Barrels of oil per day.

Capacity factor A generation plant’s output over a period compared with the expected maximum output from the plant in that period based on 100 per cent availability at the manufacturer’s operating specifications.

Capital expenditure Investment in acquisition or improvement of long-term assets, such as property, plant, or equipment.

Carbon dioxide (CO2) Greenhouse gas produced as a by-product of oil and gas production and when burning fossil fuels and biomass.

Cased and suspended A successful well with a steel casing installed to enable future production.

Churn Mass-market energy customers switching suppliers.

Climate change Any change in climate over time, whether due to natural variability or as a result of human activity.

Coal seam gas (CSG) Natural gas contained within coal seams.

Cogeneration Producing two or more forms of energy from one fuel source. Generally, cogeneration plants operated by Origin Energy produce steam and electricity from natural gas.

CCGT Combined Cycle Gas Turbine power station.

Condensate A light oil that separates during gas production processes due to changes in pressure and temperature.

Contract Price (CP) An international price for LPG, in US dollars, using the Saudi Aramco Contract Price tender process. Australian LPG producers export LPG or sell into the domestic Australian market at prices that reflect the CP. Similarly, Australian LPG retailers purchase domestically produced or imported LPG based on CP.

Development well A well drilled to enable production from a known oil or gas reservoir.

EBIT Earnings before interest and tax.

EBITDA Earnings before interest, tax, depreciation and amortisation.

EIS Environmental Impact Statement.

Electricity measures

– Watt (W) A measure of power when a one ampere of current flows under one volt of pressure.

– Kilowatt (kW) One kW = 1,000 watts. – Kilowatt Hour (kWh) Standard unit of electrical

energy representing consumption of one kilowatt over one hour.

– Megawatt (MW) One MW = 1,000 kW or one million watts.

– Gigawatt hour (GWh) One GWh = 1,000 megawatt hours or one million kilowatt hours.

– Terawatt hour (TWh) One TWh = 1,000 gigawatt hours, or one million megawatt hours.

EOWA Equal Opportunity for Women in the Workplace Agency.

EPA Environment Protection Authority or equivalent state authority.

EPS Earnings per share, total earnings divided by the weighted average shares on issue.

Exploration well A well drilled to identify a new reservoir of oil or gas.

Farm-out arrangement The owner or lessee of mineral rights (the first party) assigns a working interest to an operator (the second party), the consideration for which is specified exploration and/or development activities.

Farm-in arrangement The arrangement from the viewpoint of the second party is termed a “farm-in arrangement”.

FEED Front end engineering and design.

FID Final Investment Decision.

Full Retail Contestability (FRC) Where homes and businesses are able to choose their own energy supplier.

Gas measures

– Joule Primary measure of energy in the metric system.

– Gigajoule (GJ) A gigajoule equals one billion joules. An average Victorian household consumes around 55 GJ annually.

– Terajoule (TJ) A Terajoule is equal to 1,000 gigajoules.

– Petajoule (PJ) A Petajoule is equal to one million gigajoules.

– Petajoules equivalent (PJe) An energy measurement Origin Energy uses in its annual report to represent the equivalent energy in different products so the amount of energy contained in these products can be compared. The factors used by Origin Energy to convert to PJe are: one million barrels crude oil = 5.83 PJe; one million barrels condensate = 5.41 PJe; one million tonnes LPG = 49.3 PJe; one TWh of electricity = 3.6 PJe.

Geothermal Energy that is generated by converting hot water or steam from deep beneath the Earth’s surface into electricity.

GHG Greenhouse gas.

Greenfields exploration Where Origin Energy holds exploration rights, but does not have a substantial producing interest.

Hedge contract A financial instrument to manage the risk created by price volatility for a commodity (such as electricity or crude oil) on a spot market. Buyers and sellers of the commodity may enter into long or short-term contracts at an agreed price.

HSEMS Health, Safety and Environment Management System.

Hydrocarbons Oil and gas, including condensate and gas liquids (LPG and ethane).

Kbbls Kilobarrels = 1,000 barrels

Kt Kilotonnes = 1,000 tonnes.

LNG Liquefied natural gas.

LPG Liquefied petroleum gas.

NEM National Electricity Market.

NGOs Non-government organisations.

Offshore exploration The search for hydrocarbon deposits under the sea.

Onshore exploration The search for hydrocarbon deposits beneath the Earth’s surface, such as oil and natural gas.

OCGT Open Cycle Gas Turbine power station.

Operating Cash flow After Tax Ratio (OCAT Ratio) (OCAT – interest tax shield)/Productive Capital. Productive Capital is 12 months’ average funds employed excluding capital work in progress and including 50 per cent of APLNG.

Peaking plant A generator that can be quickly started to operate during periods of high electricity demand and/or high prices in the electricity market.

Photovoltaic (PV) Photovoltaic cells convert sunlight into electricity.

Plugged and abandoned A well, generally unsuccessful, which has been abandoned with cement plugs and from which hydrocarbons cannot be produced in the future.

Power On Origin’s hardship program which provides payment options for customers experiencing financial difficulty.

QCA Queensland Competition Authority.

Reserves Origin Energy uses reserves definitions consistent with the Society of Petroleum Engineers and required by Australian Securities Exchange. Reserves reported are based on information compiled by full time employees of the Company who are qualified in accordance with Australian Securities Exchange listing rule 5.11.

Reserves Replacement Ratio (RRR) Annual change in reserves, before deducting production, divided by production during the year. An annual RRR of 100% indicates full replacement of production by reserve additions for that year.

RET The Federal Government implemented a Renewable Energy Target (RET), requiring 20 per cent of electricity to come renewable energy sourced by 2020.

Seismic survey A geophysical survey to understand rock formations beneath the earth’s surface.

SLIVER solar panels An Origin Energy product which uses one-tenth of the silicon of conventional solar panels while matching their power, performance and efficiency.

Spot market A wholesale market for commodities, such as electricity or crude oil, which allows matching of supply against demand.

Statutory profit Profit as disclosed in the income statement of the statutory accounts.

The Company Origin Energy Limited and its controlled entities.

Total Recordable Injury Frequency Rate (TRIFR) The total number of fatalities and injuries resulting in lost time, restricted work duties or medical-treatment per million hours worked.

Underlying profit Statutory profit adjusted for the impact of items that do not inform the ongoing performance of the business and used to measure the underlying performance of the business.

Upstream Part of Origin Energy’s business that is involved in the exploration and production of hydrocarbons.

Origin Energy sustainability report 2011 29

Registered offi ce

Level 45, Australia Square264-278 George StreetSydney NSW 2000

GPO Box 5376Sydney NSW 2001

Telephone (02) 8345 5000Facsimile (02) 9241 7377Internet www.originenergy.com.auEmail [email protected]

Share register

Link Market Services LimitedLevel 12, 680 George StreetSydney NSW 2000

Locked Bag A14Sydney South NSW 1235

Toll Free 1300 664 446Telephone (02) 8280 7155Facsimile (02) 9287 0303

Internet www.linkmarketservices.com.auEmail [email protected]

Secretaries

Andrew ClarkeHelen Hardy

Auditor

KPMG

DIRECTORYOrigin Energy Limited

This report is printed on Impact 100 per cent recycled paper, sourced from post consumer waste. The paper is certified against the Forest Stewardship Council (FSC) standards, which supports the responsible use of the world’s forest resources. The report was printed using soy-based vegetable inks by GEON Group, which holds FSC certification (C015306).

This Sustainability Report provides a company overview for the 12 months between July 2010 – June 2011. Further information about Origin’s sustainability performance can be found on the website: http://reports.originenergy.com.au

Documents

Aspiring always to lead - Origin Energy · shareholders by identifying, developing operating and growing value-creating businesses. – Create value for our customers, by understanding