Whitehelm Capital

Case Studies

Rowville Transmission Facility

Investment Description and History

Rowville Transmission Facility (RTF) is a special purpose vehicle that owns an electrical transformation and switching facility located in Rowville, in the south eastern suburbs of Melbourne, Victoria. Electricity arrives at RTF from the Latrobe valley through three 500 kV transmission lines. This power is then stepped down to 220 kV for onward transmission to SPI PowerNet (a subsidiary of SP AusNet). RTF’s revenues are provided by the Australian Energy Market Operator (AEMO) on an availability basis. Its operations are outsourced to SP AusNet, which receives a fee for this service.

The facility was constructed in November 1999 by Eastern Energy Limited and sold to RTF, a special purpose vehicle established by Whitehelm Capital. In 2003 and 2006, the Victorian Energy Networks Corporation (VENCorp) and RTF entered into arrangements to undertake the first and second augmentation works of the facility.

The return on investment for RTF has exceeded initial expectations. Quarterly cash distributions to investors continue to be made as expected, underpinned by the strong operational performance of the asset. This is evidenced by the plant continuing to meet the required service levels.

Investment Merits

RTF is a stable, operating asset that has the following attractive investment characteristics:

  • a long term contracted revenue stream (to 2029) with AEMO, a strong counterparty;
  • very low operational risk due to pass through of operational and maintenance obligations to SP AusNet, a strong counterparty operator;
  • an inflation-linked revenue stream, along with matched inflation-linked debt and predominantly inflation-linked (and contracted) expenses; and
  • a forecast consistent and high yield over the remaining asset life

Whitehelm Value-Add

Whitehelm added substantial value through the original structuring of the transaction, which resulted in significant taxation savings in the early years of the investment. In addition, the structuring of the subsequent investments, and the management and negotiations of augmentation works has increased distributions to investors.

Whitehelm provides board presentation and has appointed an experienced independent director to the Board.

Whitehelm also performs management and administrative services as part of its investment management role.