Creating a new energy future – a bold vision
12. Property, plant and equipment (PPE)
Policies
PPE is initially measured at cost, and subsequently stated at cost less depreciation and any impairment losses. Cost may include: — Consideration paid on acquisition — Costs to bring the asset to working condition — Materials used in construction — Direct labour attributable to the item — Interest costs attributable to the item — A proportion of directly attributable overheads incurred — If there is a future obligation to dismantle and/or remove the item, the costs of doing so Capitalisation of costs stops when the asset is ready for use. Subsequent expenditure that increases the economic benef its derived from the asset is capitalised. Uninstalled assets are stated at the lower of cost and estimated recoverable amount. Depreciation commences when an asset becomes available for use. Depreciation of PPE, other than freehold land and capital work in progress, is calculated on a straight-line basis and expensed over the useful life of the asset. Useful lives are reviewed regularly and adjusted as appropriate for the revised expectations. Estimated useful lives (years) are as follows:
Buildings
40 – 100
Meters and meter inspections 2 – 40 Computer and telco equipment 2 – 50
Distribution systems
5 – 100 5 – 20
Leasehold improvements
Other plant and equipment
2 – 55
Key accounting judgements
The group’s property, plant and equipment, particularly the group’s distribution assets, are critical to the running of the group’s business. In assessing whether the costs incurred in a project on the group’s assets are capital in nature, management must apply the following judgements: — Whether the costs incurred are directly attributable to bringing an asset to the location and condition necessary for it to be capable of operating in the manner intended by management; — Whether subsequent costs incurred represent an enhancement to existing assets or maintain the current operating capability of existing assets; — Whether overhead costs can be reasonably allocated to the construction or acquisition of an asset.
Capital commitments
The estimated capital expenditure for PPE and software intangibles contracted for at balance date but not provided is $206.1 million for the group (2020: $127.0 million).
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