✨ Electricity Company Financial Report
19 AUGUST
NEW ZEALAND GAZETTE
2221
Horowhenua Energy Limited Line and Energy Businesses - Annual Report 1997
The Company uses infrastructure accounting methods which recognise that well planned maintenance of the network assets preserves the service potential of the infrastructure asset for the foreseeable future. Accordingly no depreciation is charged on the infrastructure.
The level of maintenance required to preserve the service potential of the infrastructure asset is determined by a detailed asset management plan.
c) Depreciation
Depreciation is provided on non infrastructure assets using either a diminishing value (DV), or straight line (SL) basis on all tangible fixed assets other than freehold land, at rates calculated to allocate the assets' cost or valuation less estimated residual value, over their estimated useful lives.
Leased assets are depreciated over the shorter of the unexpired period of the lease and the estimated useful life of the asset.
Depreciation rates are:
- Substation assets: 4% straight line
- Freehold buildings: 1% - 2.5% straight line
- Plant and equipment: 10% - 25% diminishing value
- Computer equipment: 20% straight line
- Vehicles: 20% - 25% diminishing value
d) Receivables
Receivables are stated at their estimated realisable value.
e) Leases
The Company leases certain land and buildings.
Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of the operating profit in equal installments over the lease term.
f) Financial Instruments
The Company has various financial instruments with off-balance sheet risk for the primary purpose of reducing its exposure to fluctuations in electricity spot market prices. While these financial instruments are subject to risk that market rates may change subsequent to acquisition, such changes would generally be offset by opposite effects on the items being hedged.
The Company has entered into electricity price hedging contracts with electricity generators in order to minimise the risk of price fluctuations on the electricity spot market. Assets, liabilities, and any unrealised revenues and expenses associated with these instruments as at balance date are not recognised in the financial statements. Realised revenues and expenses are recognised in the statement of financial performance on maturity of the hedging contracts and are incorporated as part of the cost of wholesale electricity.
Full disclosure of information about electricity price hedging contracts to which the Company is a party is provide on note 7.
g) Changes in Accounting Policies
There have been no changes in accounting policies during the year.
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VUW Te Waharoa —
NZ Gazette 1997, No 94
NZLII —
NZ Gazette 1997, No 94
✨ LLM interpretation of page content
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Electricity Information Disclosure for Horowhenua Energy Limited
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🏭 Trade, Customs & Industry30 May 1997
Electricity, Information Disclosure, Horowhenua Energy Limited, Financial Statements, Performance Measures, Valuation, Audit