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frequently asked questions

Closure of the Share Offer

Now that the Share Offer has closed, what happens next?
At the close of the extended offer period, 700 people have applied for shares to a value of $4m. In the current economic climate this is an amazing outcome and clearly demonstrates the exceptional level of interest in community owned renewable energy generation.

Thanks to this strong response, the equity raised so far represents about one third of the total capital required for the project to proceed. To move ahead, we need to secure additional equity roughly equivalent to that already raised, as well as debt funding for the balance.

Over the coming weeks, your Board will be pursuing institutional investors and energy industry entities with the aim of securing the additional equity needed for the project. In the event that debt funding is still required, we will follow up on the positive discussions we have already had with a bank with a view to putting the necessary facility in place.

To remain informed of the progress of this project, please register your details here.

Why have applications fallen short of expectations?
There is no doubt that the current financial crisis has had a significant impact. Applications exceeded $1 million after just five weeks, but have slowed dramatically since the 'credit crunch' became headline news every day. Many people have told us that they have either placed their funds in term deposits which they cannot access, or have suffered significant declines in the value of their assets which has prevented them investing.

I have already lodged an application. Is my money safe or will I lose it if the project does not go ahead?
Your money is not at risk. These funds have been deposited in an interest bearing, segregated trust account with the Bendigo Bank. The Board will ensure that all interest earned on these funds will be applied for the benefit of Hepburn Wind and its members. Furthermore, we have taken advantage of the Federal Government's deposit guarantee insurance to further secure your funds. If a decision is taken not to proceed, all money received will be returned in full.

How do you plan to raise the balance of funds needed?
We have been expanding our marketing efforts to specifically target the professional investor market and a range of investment institutions. We will also be seeking endorsements and support from those who have already invested. We are working with Government to help further market the offer, and are in ongoing discussions with companies that operate in the energy market.

Will I be able to buy in to Hepburn Wind later?
Following the close of the Share Offer on 12 December 2008, the Board is reviewing how the project will proceed. If any decision is made to offer further shares to the public, an email will be sent to all those registered on our database. To remain informed of the progress of this project, please register your details here.

How can I help?
This ground-breaking project needs to succeed in order to demonstrate what is possible to other communities, and to send a clear message to Government that the public expects urgent action on climate change.

Although the public Share Offer is closed, we welcome referrals to potential large investors such as superannuation funds where you believe there may be strong interest in the project.
If you would like to help the project in other ways, please register your interest here.

Share Offer

Can I sell my shares?
In accordance with the Victorian Co-operatives Act 1996, Hepburn Wind may, at the request of a shareholder, repurchase their shares. However, in any one year no more than 5% of the total share capital of Hepburn Wind may be repurchased by Hepburn Wind. In the event that a shareholder wishes to sell their shares they may also sell them to a potential buyer. Shares in Hepburn Wind will not be tradable on a registered stock exchange, however Hepburn Wind will maintain a register of buyers and sellers for shares. This register will put willing buyers into contact with those shareholders that wish to sell their shares.

Can I apply for shares if I live outside Victoria?
The Hepburn Wind Share Offer was made in Victoria. However Hepburn Wind may accept applications from outside Victoria subject to certain constraints regarding the overall number of interstate applications. If you reside outside Victoria and have applied to be a shareholder, Hepburn Wind will inform you if your application has been successfuldividend in due course.

I live outside Victoria and I am a "sophisticated investor", will my application for shares be accepted?
As you will have read, Hepburn Wind intends to give preference to locally based applications. However, due to the size of the offer, we expect to approve a large number of applications from people outside the local community.The number of applications from people living in Australia, but outside Victoria, that Hepburn Wind is permitted to accept is limited. However this limitation does not apply to "sophisticated" investors. Therefore we would encourage people to apply as a sophisticated investor and, to do so, they need to include a short letter from their accountant attesting to their status as a sophisticated investor.

What is a "sophisticated investor?"
A "sophisticated investor" is a person who has net assets of $2.5 million or more or has gross income for each of the last two financial years of at least $250,000 a year. This criteria must relate to the same entity to which the offer is made. A qualified accountant must certify that the person/entity satisfies this criteria and this certification must be no more than two years old.

I live outside Australia, will my application for shares be accepted?
As you will have read, Hepburn Wind intends to give preference to locally based applications. However, due to the size of the offer, we expect to approve a large number of applications from people outside the local community.

There are no legal restrictions to the number of shareholders that live outside Australia.

Can I implement this project into my super somehow?
Our Share Offer closed on 12 December 2008. To remain informed of the progress of this project, please register your details here.

Financial

How accurate are the estimated costs?
The costs of construction have been estimated based on best available market knowledge. Turbine costs are increasing, and are being constantly monitored, however we are confident that the estimates in the financial model are appropriate. A contingency amount has also been included to allow for adverse price movements. Ongoing costs associated with the wind farm have also been estimated and an inflation factor has been included to allow for cost increases.

22 December 2008: Due to changes to exchange rates, turbine prices, and interest rates the Board and its advisers are reviewing the financial model and will provide all applicants with updated information as soon as it is available.

What are the annual expenses of the co-op?
Shareholders will not be directly charged for expenses the co-op incurs. Rather, expenses will come out of the gross income received by Hepburn Wind from the sale of renewable electricity. The projected dividends set out in the Offer Document are after taking account of all expenses Hepburn Wind is expected to incur. Any dividend, therefore, is net of Hepburn Wind’s expenses. Types of expenses the co-op expects to incur can include: rates, insurance, annual fees for maintenance and service, land rental, and fees related to the operation and management of the co-op itself, such as postage and accounting.

Will there be a ‘return’ on my investment and what is it estimated to be?
Your investment in Hepburn Wind will generate financial returns through the sale of the renewable electricity the Wind Park generates. Information regarding the projected earnings per share can be found in the Offer Document. The Directors anticipate that the majority of earnings will be paid to shareholders as dividends after making allowance for expenses and contingencies. Payments to shareholders from after-tax earnings will carry associated imputed franking credits.

What will be the dividend?
The Financial information section of the Share Offer document sets out the projected earnings per share after accounting for all expenses but before any allowance for taxation payments. The Directors anticipate that the majority of earnings will be paid to shareholders after making allowance for these payments. Payments to shareholders from after tax earnings will carry associated franking credits.

Will my investment be taxable?
The income you receive from Hepburn Wind will be taxable under Australian taxation system. The final amount of tax payable will take into account any franking credits associated with dividend and will depend on each shareholders personal taxation situation. Hepburn Wind will issue the appropriate tax form, which you will be required to file with your tax return.

What will happen to the profits?
The power generated by the turbines is expected to be sold to an electricity retailer via a Power Purchase Agreement. Once the running costs of the Wind Farm and Hepburn Wind have been met, the remaining profits, less a contribution to the Community Sustainability Fund, will flow back to shareholders.

Has the financial model been independently audited?
The financial modelling has been developed over the course of the project. The workings of the model has been verified by an independent accounting and financial firm.

How will the local community benefit from this wind park?
The local community will benefit from the project because it will prevent over 12,000 tonnes of CO₂ from being emitted into the atmosphere each year. The Community will benefit financially by receiving part of the profits from the wind park via the Community Sustainability Fund. The Board of Hepburn Wind intend to make these grants available to programs with an emphasis on community and sustainability. Additionally, shareholders in Hepburn Wind will also benefit from the financial returns on their investment.

What will happen to the money that goes in to the Community Sustainability Fund?
These funds will be administered by the Board of Hepburn Wind who will determine the funding allocations for the most appropriate local projects with an emphasis on community and sustainability issues.

Management

What is Hepburn Wind?
Hepburn Wind is the co-operative that will own and operate the Hepburn Community Wind Park—Australia’s first community owned wind farm. Shareholders of Hepburn Wind elect its board of directors on the basis of the co-operative principle of ‘one member, one vote’. Shareholders of Hepburn Wind will collectively own the Wind Park, which will comprise two turbines with a combined capacity of 4 megawatts, located on Leonards Hill some 10 km south of Daylesford.

What is a co-operative?
A co-operative is similar to a conventional public corporation, but with a key difference:
Regardless of the number of shares any one shareholder owns, the shareholder always has one vote at meetings. That way shareholders with $5000 invested will always have as much say as shareholders who have invested $100,000.

Who will run Hepburn Wind?
Hepburn Wind is managed by a Board of Directors who have been elected by the shareholders of Hepburn Wind. Information about each of the Directors can be found on the Hepburn Wind website.

Who are Future Energy?
Future Energy Pty Ltd is a company which works with communities to develop small to medium-sized renewable energy generation facilities. Future Energy has worked alongside the founders of this project from day one, and has funded the project to the current stage including all costs related to obtaining the planning permit and the activities for the share offer. Future Energy currently owns the project, and once Hepburn Wind has raised the necessary funding via the Share Offer, it will repay Future Energy and take over ownership. Future Energy will manage the construction and commissioning of the farm on behalf of Hepburn Wind.

Do the Board members get paid and how often will they have to stand for re-election?
The Board members give their time on a voluntary basis and will only receive reimbursement for expenses incurred directly in relation to the operation of Hepburn Wind. For any information about the operation of the Hepburn Wind Co-operative, please refer to the Rules which can be downloaded from www.hepburnwind.com.au

Hepburn Wind is a co-operative. How will it be audited and regulated to make sure it is being properly run?
Hepburn Wind will be run according to the requirements of the Victorian Co-operatives Act 1996 which imposes numerous governance and regulatory requirements on co-operatives. Financial statements will be prepared and professionally audited and will be available to all shareholders.

As a Hepburn Wind Shareholder, how often will I receive news and information about the performance and earnings of the wind farm?
Hepburn Wind is required to report its financial performance to its shareholders on an annual basis. However, Hepburn Wind intends to regularly update its shareholders on the performance of the wind farm and the co-operative.

The Business Case

The planning permit was challenged unsuccessfully in VCAT. Are there any grounds under which another challenge could be lodged?
No–there are no further avenues of appeal.

What will be the impact on Hepburn Wind’s income when the carbon trading scheme is introduced?
Until the final details of the Federal Government scheme are fleshed out it is not possible to be completely certain. It seems that electricity prices will rise as a result of the scheme, so it is logical that Hepburn Wind will benefit from general upward movements in average energy prices.

Will you be able to build more turbines on the same site at a later stage?
No–the planning permit only provides for the construction of two turbines on Leonards Hill. A further planning application would be needed to erect additional turbines however it is considered that the Leonards Hill site is ideal for a maximum of two turbines.

Lots of new wind farms are going to be built over the next few years in Victoria. Won’t this reduce the price of the energy being produced by Hepburn Wind?
In order for Australia to meet its future emissions targets, a huge increase in clean renewable energy supplies will be needed to substitute for the necessary reduction in ‘black’ energy generation and emissions. In addition, Australian energy demand is growing at 2% a year and that is unlikely to change in the short term. Currently wind energy is the most viable and easiest to establish, but even when other technologies become viable on a large scale basis, it is certain that every possible MW of renewable energy will be needed, so there is little likelihood of supply outstripping demand and forcing prices down.

Is there a warranty on the wind turbine?
The turbines will carry a manufacturer’s warranty and performance guarantee for the first years of their operation. Additionally, Hepburn Wind intends to enter into a long term maintenance agreement with the chosen turbine provider.

Will the turbines depreciate over time?
Yes. Depreciation is the way accountants attempt to reflect the fact that an asset may decline in value over the life of the asset. It is deducted from revenues as an expense over the equipment’s life. The projected financial information set out in the Offer Document incorporate depreciation projections over the life of the project.

Will the turbines be insured?
Hepburn Wind will enter into a standard “operating all risks” wind farm insurance contract.

How will the turbines be maintained?
The turbines will be covered by a warranty and performance guarantee in their early years of operation. In addition Hepburn Wind will enter into a long term maintenance agreement with the selected turbine provider.

Will I be responsible for accidents/damage incurred by the co-op?
No. The fact that the co-operative is incorporated insulates shareholders, members, officers, and directors from some sources of potential liability. As with any enterprise, the balance of potential liability is addressed by insurance. Hepburn Wind will be covered by a comprehensive liability and insurance policy, which specifically addresses risks of claims arising from the operation of wind turbines.

The Wind Farm

Is there enough wind on Leonards Hill and how do you know how much energy will be generated?

Yes. Leonards Hill is subject to strong and consistent winds. According to Sustainability Victoria’s Wind Atlas, Leonards Hill is in the upper end of the Victorian wind regime. A wind monitoring mast was installed on the Leonards Hill site in August 2006. After 12 months of data had been collected, Garrad Hassan Pacific Pty Ltd, a recognised world leader in wind energy analysis, was engaged to perform an expert wind energy assessment for the site. Garrad Hassan's wind energy analysis predicts that turbines in the class Hepburn Wind will be installing will produce an average of 12,200 MWh p.a.

Why may it take nearly two years to build the wind farm?
The actual construction of the wind farm will only take a few months. Most of the time is the lead time necessary to obtain delivery of the latest turbines, which are in high demand all around the world.

How many wind turbines will there be?
The wind park will be composed of two turbines each with a maximum output of 2 megawatts making a total of 4 megawatts.

How high are the proposed turbines?
The planning application is for a maximum size of turbines and blades of less than 110 metres. This will be made up of towers about 70 metres high and blades about 40 metres long.

What is the working life of a turbine?
25 years is a reasonable estimate, provided that routine maintenance is carried out. At the end of the period there is the potential for the site to be “repowered” with the latest turbines.

What if we get strong gales—will the turbines fall over?
No—above a certain wind speed the blades ‘feather’ so that they are edge on to the wind and ‘lock down’. The towers are designed to withstand wind speeds way in excess of anything that can be expected in the area.

What are the chances that the turbines get struck by lightning and catch fire?
Turbine fires do occur, just as they do in any form of structure that involves electricity, heat or rotating machinery such as cars, trains, buildings, mines, schools and houses. The facts are:
• There are around 50,000 turbines installed globally at the moment (around 40,000MW)
• There are three to four turbine fires each year globally.
• That is a statistical rate of one in every 12,500 turbines.
• We are installing two, so the chances of one of them catching fire is 0.016%.

Will these turbines really make a difference to the environment?
Yes. The renewable electricity produced by the wind park will be fed into the local grid thereby reducing the local demand from the wider grid. Therefore the Wind Park will offset emissions that would have been produced by other sources of power such as the coal-fired power stations in the Latrobe Valley. According to the Victorian Government, the average 2 MW turbine displaces approximately 6,000 tonnes of CO₂ every year.

How much energy will they make? How much greenhouse gas emissions will they save?
The table below shows the approximate energy and greenhouse benefits of the Hepburn Community Wind Park. This information is based on over 12 months wind monitoring at the site.

Energy production p.a.	12,200 megawatt hours
Equivalent number of households	2,300 homes
Greenhouse gas abatement	12,200 tonnes of CO₂ p.a.
Equivalent number of cars off the road	2,800 cars
Equivalent number of trees planted	18,000 trees

How can I use the green power from the wind turbines?
The renewable energy generated by the wind park is expected to be sold to an energy retailer under a Power Purchase Agreement. The shareholders of Hepburn Wind will then share in the net profits arising from the energy sales. The actual renewable electricity generated by the Wind Park will be fed directly into the local electrical distribution network. This has the effect of reducing the energy demand of the local area which would otherwise be supplied by the wider electricity grid. It is hoped the selected energy retailer may offer the renewable energy for customer purchase under its green power product offering. More generally, Hepburn Wind encourages you to elect to purchase 100% green power from your energy retailer to support this and similar projects.

Last updated: 22 December 2008