21 AUGUST NEW ZEALAND GAZETTE 2403

notes to and forming part of the financial statements CentralPower Limited

(h) Changes In Accounting Policies

Income Tax

During the current year the Company changed its accounting policy with respect to treatment of taxation. Income tax is now accounted for using the comprehensive basis under the liability method. Previously deferred taxation was calculated using the liability method on the partial basis. The change was made in the interests of improved financial reporting.

The implementation of this new accounting policy has had the following impact on the financial statements for the current year: net surplus has decreased by $1.7 million, non current liabilities have increased by $10.1 million, and revaluation reserve has decreased by $8.4 million.

With the exception of the above there have been no material changes in accounting policies during the year and all other policies have been applied on a consistent basis with previous years.

(i) Disclosure of Methodologies for Allocation of Costs, Revenues, Assets and Liabilities

The Electricity (Information Disclosure) Regulations 1994 were replaced by the Electricity (Information Disclosure) Regulations 1999 as from 29 April 1999. The electricity costs, revenues, assets and liabilities of the Company have been allocated using the mandatory avoidable cost allocation methodology as prescribed by the 1999 Regulations. Under the 1994 Regulations, cost allocation guidelines were optional, and a number of allocation methodologies were followed. The change in allocation methodology resulted in a decrease in the opening equity of the line business by $0 (1999 $7,683,008).

2. Operating Surplus Before Taxation for the Year

                                                             2000       1999
                                                             $000's     $000's

   11 Operating revenue
   (a) (a) Revenue from line/access charges: 37,796 36,476
   (b) (b) Revenue from "Other" business for services carried out by
   the line business (transfer payment): 0 0
   (c) (c) Interest on cash, bank balances and short term investments: 5 19
   (d) (d) AC loss-rental rebates: 1,283 2,047
   (f) (e) Other revenue not listed in (a) to (d): 955 336
   (g) Total operating revenue 40,039 38,878

Expenditure (Schedule 1, Part 2)
Operating expenditure
(a) Payment for transmission charges 10,712 10,637
(b) Transfer payments to the "Other" business for:
(i) Asset maintenance: 1,713 2,019
(ii) Consumer disconnection/reconnection services: 0 0
(iii) Meter data: 0 0
(iv) Consumer-based load control services: 0 0
(v) Royalty and patent expenses: 0 0
(vi) Avoided transmission charges on account of own generation 668 0
(vii) Other goods and services not listed in (i) to (vi) above 0 0
(viii) Total transfer payment to the "Other" business 2,381 2,019
(c ) Expense to entities that are not related parties for:
(i) Asset maintenance: 419 560
(ii) Consumer disconnection/reconnection services 0 0
(iii) Meter data: 0 0
(iv) Consumer-based load control services: 0 0
(v) Royalty and patent expenses: 0 0
(vi) Total of specified expenses to non-related parties (sum of (i) to (v)) 419 560
(d) Employee salaries, wages and redundancies 2,405 2,202
(e) Consumer billing and information system expense 184 429
Net loss asset disposal 530 657