Notes to and Forming Part of the Financial Statements

For the Year Ended 31 March 2004

POWERCO

ELECTRICITY DIVISION

7 Commercial Paper Facility

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

The Company has established a commercial paper facility to enable the Company to borrow money (from the capital market). The programme is supported by a cash advances facility of $160 million with a syndicate of banks made up of the Bank of New Zealand, Westpac and ANZ Investment Bank, which continues until 30 October 2004. The facility is unsecured and is subject to a negative pledge deed declared by deed poll on August 1997, which has been joined by all subsidiaries (excluding Powerco Australian Holdings Limited and Powerco Holdings Limited) as guaranteeing subsidiaries. At year-end a sum of $120,000,000, which includes an interest portion of $1,725,029 of 90 day bills, with varying maturity dates, had been drawn down under the commercial paper programme which included an interest portion of $1,848,311).

8 Cash Advances Facility (Commercial Bank Debt)

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

Powerco Limited established an Asset Purchase Facility in July 2002 for the purpose of acquiring network assets from UNL. This Asset Purchase Facility for $740 million is supported by a syndicate made up of Bank of New Zealand, Westpac and ANZ Investment Bank. This facility is made up of three commitments - a Bridge Facility of $240 million, Tranche A of $250 million (expiring 1 November 2004) and Tranche B of $250 million (expiring 1 November 2006). The facility is unsecured and is subject to a Negative Pledge Deed declared by Deed Poll on August 1997, which has been joined by all subsidiaries (excluding Powerco Australian Holdings Limited and Powerco Holdings Limited) as Guaranteeing Subsidiaries. At year-end a sum of $160 million from Tranche B, which has accrued interest of $1,666,578), had been drawn down under the Asset Purchase Facility and expires in October 2006. The remaining $580 million of this facility has been cancelled.

On 31 November 2003, Powerco Taranaki Pty Limited, a subsidiary of the Company, established a commercial bank borrowing facility from Westpac Banking Corporation for $30 million. A total of $7.74 million (AUD 5.8 million) has been drawn-down as at 31 March 2004. This facility expires on 6 November 2005. The facility is also unsecured and has the benefit of the Negative Pledge Deed referred to above.

9 Working Capital Advances Facility

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

Powerco Limited operates a Multi-currency Working Capital facility with the Bank of New Zealand for up to $15 million. As at 31 March 2004, no funds were drawn down on the facility, and $6.560 million was invested with a total call (12 month) investment of $257 million). The facility is based on a revolving credit arrangement and was renewed on 31 March 2004 for a period of 364 days, expiring 31 March 2005, but is subject to automatic renewal for a further period. The facility is unsecured and is subject to a negative pledge deed and the guaranteeing subsidiaries referred to in Note 8 above.

As at 31 March 2004, Powerco Tasmania Pty Limited, a wholly-owned subsidiary of the Company, had deposits on call with Westpac Banking Corporation amounting to $2.332 million (AUD $2.033 million).

10 Property, Plant and Equipment

Property, Plant and Equipment as at 31 March 2004

| Network Systems | | |
| Capital value | 864,823 | 724,286 |
| less Accumulated depreciation | 49,286 | 21,018 |
| | 805,537 | 703,268 |

| Work in Progress | 12,713 | 8,291 |

| Total Property, Plant and Equipment | 925,046 | 718,932 |

Annual Valuation Reconciliation Report