9 AGL Energy Limited 2011 Annual Report Customer Service Our hydro generation assets have also operated efficiently during  the year. Increased dam storage levels have largely restored  generation capacity at the Dartmouth and Eildon power stations.  These renewable energy facilities will play a more important role  for AGL in the future than they have done in the recent past. Our Upstream Gas business continued work on proving up AGL’s  own reserves of gas. During the year, the proved plus probable  level of reserves increased by 32.4% from 1,578 petajoules to  2,089 petajoules. These reserves will play an important part in  meeting AGL’s requirements for gas from the middle of the decade. Providing excellent service to our customers is crucial, particularly  in an environment where many households are experiencing  substantial increases in their energy bills. Our customer service  levels continued to improve during the year, although we still have  more work to do to achieve the service levels to which we aspire. In 2010, we released our new Customer Charter which set out a  number of promises to our customers. This year we have tracked  our delivery of each of the promises set out in the Customer  Charter. I am pleased to report that, for the most part, we have  met or exceeded the service level targets we set for each promise. I am determined to continue improving the quality of the service  we provide to our customers. This will be an important objective  for AGL’s senior leaders over the coming year. Within the next few years, the existing gas pipeline infrastructure  will need to be supplemented to deliver sufficient quantities of  gas to the major east coast population centres during periods of  peak demand. The ability to store gas for use in peak periods will  become an increasingly important means of allowing AGL to meet  its customers’ needs. It will also allow AGL to generate additional  income from providing gas storage services to third parties. Among the assets gained as a consequence of AGL’s acquisition this  year of Mosaic Oil N.L. was a depleted underground gas reservoir  located in rural Queensland, which AGL has redeveloped as a gas  storage facility. AGL has already contracted with the BG Group to  provide gas storage services to support BG’s construction of an  LNG production plant at Gladstone. As the potential of Queensland’s  LNG industry is realised, the demand for storage capacity will grow,  allowing AGL to expand the storage capacity at Silver Springs. The extraordinary weather which affected our business earlier  this year had a much wider human impact, especially as a result  of the floods in Queensland. During the crisis, a number of our  people demonstrated their commitment to local communities by  volunteering to help with relief operations. For example, Silver  Springs field operator Janis Green volunteered with the local State  Emergency Service, delivering food by boat to stranded farms and  arranging helicopter assistance. AGL employees donated $24,757 to the relief effort. AGL matched  this contribution on a dollar for dollar basis and also made two  further donations of $50,000 each, one to The Salvation Army  Queensland Flood Relief and another to the Queensland Premier’s  Disaster Relief Appeal. Workplace health and safety is a matter of the utmost importance  at AGL. Over the last four years, we have put a lot of effort into  improving our workplace safety performance. We saw the benefits  of this with substantial reductions in workplace injury rates between  2007 and 2010. Unfortunately, this year, we saw a partial reversal  of that trend with our Total Injury Frequency Rate increasing from  2.7 to 5.0. Although most of the injuries were not serious, we  are determined to continue making improvements in this area.  All leaders have, as one of their performance objectives in FY2012,  the completion of actions to make AGL a safer place to work. I would like to thank all our employees for their dedication and hard  work during what was, at times, a difficult year for AGL. Over the next year, we will seek to further expand our retail  electricity customer base in New South Wales. We believe that high  quality customer service will be a point of differentiation in the  highly competitive Australian energy markets, so continuing to make  improvements in this area is a priority. Planning is now well advanced to construct a 500 MW gas- fired electricity generation plant at Dalton, north of Canberra,  which will support the expected growth in electricity load in New  South Wales. In the near future, AGL is also likely to proceed with  the development of a gas liquification and storage facility near  Newcastle in New South Wales. This facility will be used to provide  natural gas to AGL’s customers in Newcastle and Sydney and will  provide additional security of supply during times of peak use,  particularly in the winter months. AGL’s contracts to supply 100% renewable energy to both the  South Australian and Victorian desalination plants will commence  later this year. These are long-term contracts which will make an  earnings contribution for many years to come, demonstrating the  value from AGL’s commitment to the construction of renewable  energy assets. During the year, AGL continued to make good progress on achieving  its strategic objectives. In South Australia, the AGL Hallett 4 Wind Farm was commissioned  in May, and substantial progress was made on the construction of  the AGL Hallett 5 Wind Farm. In Victoria, work commenced on both  the Oaklands Hill Wind Farm and the Macarthur Wind Farm. The  Macarthur Wind Farm is being developed with our joint venture  partner from New Zealand, Meridian Energy. When completed in  2013, it will be the largest wind farm in the southern hemisphere  with an energy capacity of 420 MW. Tower sections have recently  arrived on site following months of preparatory work. We will continue looking to expand our gas reserves in areas such  as the Hunter Valley and Gloucester in New South Wales. In doing  so, we will be especially mindful of the need to work more closely  with regional communities to demonstrate that our exploration  and development activities can co-exist with agriculture, viticulture  and tourism and will not harm the environment or compromise the  health and wellbeing of local residents. Although 2011 was a challenging year in a number of respects, we  are very optimistic about AGL’s future prospects. We are confident  that shareholders will enjoy the benefit of profitable growth in the  year ahead. We have also continued to identify future wind farm development  opportunities, although we made the decision to temporarily  suspend investments in new wind farms until there is a recovery  in the price of renewable energy certificates. Our People The Year Ahead Delivering on Our Strategic Objectives Michael Fraser, Managing Director