WSAA Members Meeting Update 10 February 2011 Perth

1. WSAA Members Meeting Update10 February 2011Perth Ross YoungExecutive DirectorWater Services Association Australia

2. WSAA Structure Board Water Quality & Health Committee Environment & Sustainability Committee Asset Management Committee Ross Young Executive Director Danielle Roche Program Leader – Asset Management Barbara Crawford Manager., Communications Amy Doyle Personal Assistant to the Executive Director VACANT Sydney Administration Mike Busetti Program Leader - Metering Grant Leslie Manager, Business Services David Cox Manager, Technical Services Adam Lovell Manager, Strategy & Policy • Financial & risk management • IT • Corporate Safety & Wellbeing • Business processes and policies • Business development (external sales, tools etc) • Benchmarking and NPR • Water industry capability and capacity • Codes • Metering • Technical Networks • Product Appraisals • Design Assurance • Asset Management Program • Policy analysis & development • Regulatory issues • Strategic WSAA programs • R&D/collaboration Evelyn Rodrigues Program Coordinator - Research & Development Carl Radford Program Manager – Asset Creation Jaimie Hicks Program Coordinator -Asset Management VACANT Program Coordinator -Water Quality & Health David Yates Finance Administrator Jason Robertson Portal Administrator Kristy Drzewucki Program Coordinator - Environment & Sustainability Peter Gee Program Manager – Performance Improvement

3. Productivity Commission Inquiry • WSAA presented its submission the Productivity Commission public hearing in Canberra on 29 November 2010. • 77 submissions have now been received. • Key topics that appear to be interesting to the Productivity Commission include: • Council managed water utilities in regional NSW and QLD • Who makes the key decisions to augment supplies • The relationship between the economic, public health and environmental regulators • Interest in setting up a trial of a competitive framework at the wholesale level • Many submissions promoted scarcity pricing

4. PC key inquiry dates

5. Productivity Commission WorkshopInsights into domestic water consumption from merging utility billing data with Census collection district data • ABS data from 2006 Census. • Includes socio-economic index (SEIFA) compiled by the ABS. • There are four SEIFA and each measures advantage and disadvantage in different ways. • Water utility data from YVW and SEW for 2005-06 and 2009-10.

6. Productivity Commission WorkshopInsights into domestic water consumption from merging utility billing data with Census collection district data Preliminary findings • On average, water and wastewater bills represent a small proportion of household income. • Household size and income have significant positive influence on per capita consumption. • The age profile of the household also influences water consumption with households comprising age groups 4 to 19 and 44 to 64 being highest users. • Dwelling type and tenure appear to have limited influence on water consumption. • There appears to be greatest awareness among the more highly educated or skilled of the benefits of conserving water. • Household size is the most influential determinant of household water consumption.

7. Productivity Commission WorkshopModelling framework policy and sensitivity analysis • PC staff presented on models developed for Melbourne and Perth’s water supply systems. • Issues raised at the workshop include: • The 10 year period was too short for water planning. • Environmental flows and flood protection have been ignored. • What happens to carry over storage and in particular evaporation loss? • Both models hinge on inflow probabilities on a high, medium and low range. • Scenarios could well be a better approach than using probabilities. • It is not clear what problem the models are attempting to address.

8. Engineers Australia (EA) National Infrastructure Report Card • The National Infrastructure Report Card was launched by EA on 24 November 2010 at the National Press Club in Canberra. • WSAA appointed ‘observers’ in each of the State and Territory Report Card processes. • WSAA has concerns about the EA process: • Overall water rating was C in 2005 and this rating increased to C+ in 2010. • Potable water was rated B- in 2005 and was also rated B- in 2010 despite over $30 billion being spent on new water sources. • How the State and Territory scores are aggregated at the national level is unclear and a methodology should be made public. • WSAA will be making representations to EA on our concerns

9. Engineers Australia Infrastructure Report Card

10. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Aims of the workshop • To test the validity of preliminary findings from the ‘Developing Future Directions for the Urban Water Sector’ Project. • This project seeks to identify the scope of further reforms in the urban water sector.

11. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Assessment of the case for reform Key proposition 1: There are opportunities for further reform to improve urban water outcomes by: • Addressing shortcomings exposed by drought to meet future challenges • Maximising existing opportunities to empower customers and deliver better services to meet their needs Key proposition 2: Lack of clarity and agreement about the objectives of the urban water sector and an associated lack of clarity around the boundaries of the sector is the major barrier to change.

12. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Key proposition 3: The Australian urban water sector needs reforms that ensure that: • Objectives are clear and agreed • Institutional roles and responsibilities are clear • Refinements are made to the mix of market, planning and regulatory policy settings to better achieve desired outcomes. Key proposition 4: There are merits to the national approach to reform but changes to the framework are required to improve its effectiveness.

13. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Suggested objective to “protect public health and safety, provide secure and reliable water services, be environmentally sustainable and achieve economic efficiency”.

14. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Areas of agreement Security of supply • No policy bans • Clearer security standards • Clearer roles • Implement agreed planning principles • New risk based assessment tools Environmental and public health • Full assessment of costs and benefits of IWM and regulation • Recycling with multi-barrier risk based approach • Better regulation • Regional / rural Aspects of pricing and competition • Third party access • Cost reflective pricing (e.g. wastewater) • Independent economic regulation

15. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Areas requiring further analysis • Potential for market-oriented approaches and competition • Debate about types of options and benefits • Agreement that: • Main benefits are in bulk supply • National connected market not possible • May be lower hanging fruit in some places • Phased implementation is wise • More work in detailed design is required

16. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Areas of passionate disagreement • Integrated water management, water sensitive cities, and liveability • Restrictions and technical water use efficiency • The role of pricing • Central planning versus choice and differentiated service offerings

17. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop • Areas where there was a lack of clarity include: • Sustainability and water sensitive cities • Restrictions and conserving water • The role of pricing

18. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop NWC position • There are fundamental differences in objectives and system boundaries • whether water conservation is an objective in its own right • the balance between individual and collective customer needs • how customer service and broader community and environmental outcomes are balanced • the extent to which the urban water industry should be responsible for broader objectives

19. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Key areas for in institutional reform • Supply-demand planning and investment • Independent economic regulation • Demand management • Broader sustainability outcomes • Regional urban water in some jurisdictions • Role of government in funding investments

20. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Pricing reform • Recommitment to principles of pricing reform • Pricing for efficiency and financial viability • Other measures for equity (e.g. CSOs) • Full implementation of agreed and priority reforms • Independent economic regulation as prerequisite • Rigid LRMC pricing and IBTs exposed during drought • More flexible approaches and flexible regulation? • Scope for market price signal for bulk supply

21. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Improved planning • Improved processes and techniques are essential • Risk-based portfolio approaches to supply-demand planning • Extreme variability is business as usual in Australia • Removal of artificial policy barriers • National urban water planning principles supported

22. Future Directions for the Australian Urban Water SectorNWC Stakeholder Workshop Improved water quality and environmental regulation • Principles for better regulation • Outcomes not input focused • Risk-based • Targeted and proportionate to the problem • Cost-effective • Regulatory streamlining – (e.g. recycling) • A possible case for greater national consistency • Report to be released in late March early April

23. Other related projects • The Committee for Economic Development of Australia (CEDA) has announced a project titled Australian Water Resources, in partnership with Uniwater and Harvard University. • Ken Matthews is the Chair of the strategy and John Langford and Michael Porter make up the team. • Volume 1 covers how both rural and urban utilities have adapted to scarcity and will be released by June 2011. • Volume 2 looks at optimising institutional arrangements and reform frameworks and scheduled for completion in early 2012. • Infrastructure Australia is currently developing a plan of action in response to PriceWaterhouseCoopers’ Review of urban water security strategies report.

24. Other related projects (cont.) Infrastructure Australia released ‘Regional Towns Water Quality and Security Review on 31 January 2011 The key recommendations are: • Mandate compliance with Australian Drinking Water Guidelines through legislation or regulation • Implement a nationally consistent Best Practice Management Framework for all regional water utilities • Move toward more cost reflective pricing water pricing • Develop a more highly skilled workforce to operate and maintain water systems in regional water utilities by developing a nationally consistent trade qualification • Reform the governance structure of regional water utilities in NSW and Queensland

25. WSAA Projects Capital Prioritisation Guidelines and Principles • 18 participants have completed a detailed questionnaire. • Several economic regulators have been interviewed. • 20 case studies will be developed that identify best practice. • A workshop for all participants on 25 February 2011 at Sydney Water. • Finalised principles and guidelines are expected by April 2011. Customer Services Performance Improvement Project • Project will commence in August 2011 and completed in December 2011. • A consultant will be appointed in late February 2011. • All WSAA Members and suitable water utilities world wide will be invited to participate. National Performance Report (NPR) • NPR is expected to be released in early April 2011. • Key areas of focus will include pricing, financial performance, CAPEX and OPEX and recycling. • Format of comparative section of the report to be improved.

26. General Update • Singapore PUB wish to organise mid year workshops based on topics rather than individual workshops with each utility. WSAA has committed to assist in organising these workshops. • WSAA has a 1 day stream at OzWater’11: the changing nature of the industry and Cities of the Future are the two key topics. • Sydney Water’s price elasticity of residential demand study is due for release in mid February. • A national smart water meter technology trial strategy proposal has been completed to ensure that meter functionality does not differ apart from the environmental factors such as terrain, meter installation and location. • The WSAA Mutual Aid Guidelines have been invaluable during the recent floods and cyclones on the east coast of Australia. Thanks to all Members of the Water IAAG.

27. General Update (cont.) • Global Water Research Coalition Report ‘Energy Efficiency in the Water Industry: A Compendium of Best Practice and Case Studies’ has been released outlining how utilities around the globe are becoming more energy efficient. Key conclusion include: • Up to 15% of wastewater energy demand can be offset by biogas generation. • Pumping of drinking water represents 70% of water supply energy demand and at least 30% for wastewater. • Up to 60% of energy demand in wastewater is used in the aeration process. • Energy savings from pumping vary widely but overall savings of between 5 and 30% of current energy demand appear achievable. • Savings arise from improved maintenance and the closer matching of pumps to their duties. • Electronic copies of the report to be distributed to WSAA Members when available.

28. Cities of the Future • Sustainable Population Strategy for Australia • WSAA providing submission including water/population occasional paper • 3 panels: Bob Carr, Heather Ridout and Graeme Hugo • Infrastructure Australia - Urban Design Protocol • nationally consistent urban design language and policy framework • http://www.majorcities.gov.au/discussion_paper • Integrated Resource Planning (NWC/ISF) • Launch March 8 in Canberra by Parliamentary Secretary • Series of road shows around the country

29. Carbon and Energy Policy, Regulation and Research • Accounting for renewables under NGERS • Scope 1 direct emissions of methane and nitrous oxide • National Carbon Offset Standard • PMSEIC – Challenges at the Energy/Water/Carbon Intersections • CSIRO Water and Energy report Mk II • Based on 09/10 NGERS supplied data; includes desalination

30. Carbon and Energy Policy, Regulation and Research • CSIRO Water and Energy report Mk II – early trends • Based on 09/10 NGERS supplied data; includes desalination; recent water demand figures • In SEQ desalinated and recycled water made up around 10% of the water supplied in 2009/10, with the treatment energy for these ‘rainfall independent’ water sources constituting more than 40% of the total energy for water supply treatment and pumping. • The utilities in this project serve a population of over 15 million (~70% of total Australian population) and the total utility annual energy demand was 7.6 PJ. In comparison the total Australian domestic annual energy demand is approximately 8,300 PJ. 

31. Carbon and Energy Policy/Regulation • Water Industry Guidelines for Energy and GHG reporting • Urban water industry specific guidance for meeting emissions reporting regulation • Specialist calculator to be compatible with Fed Gov’s OSCAR • Carbon and Energy Factsheets/Wiki • Plain English fact sheets including glossary • Carbon offsets, renewable energy, NGERS and energy pricing • Now available on WSAA members website • Cost of Carbon Abatement • 13 members with licences; Case study presentation at Ozwater • Occasional paper to be developed

32. Water Quality Issues • Release of the Australian Drinking Water Guidelines • Late February/early March • Probably by Fed Health Minister; in conjunction with Community Water Planner • Water Treatment Alliance Tools to be released shortly – filtration and disinfection • NWC – Urban water quality regulation • USEPA developments • Fluoride; chromium VI; perchlorate

33. Research Collaboration Update International Collaboration Highlights over last 6 months • Improved awareness of use of research • 95 people requested access – increase of 20% • 158 research reports downloaded from WERF • Improved tech transfer • Conference with WateReuse Association in November – 200 attendees from 7 different countries. • 54 staff from 16 members logged onto the WERF 2010 Research Forum • WERF SIMPLE webcast for WSAA members • Influencing the research agenda • WSAA members represented on 5 out of the 6 new WERF program areas teams

34. Research Collaboration Update • Completion of an R&D survey • 17 WSAA members completed the survey • Compared R&D expenditure, structure within an organisation and how costs are measured • Additions to the list of WSAA Member projects • Details of over 400 projects; Available on the Member only section of the WSAA website • Improved communication between Australian Research Funders • CoE (Water Recycling, Desalination), WQRA, UWSRA, Smart Water Fund with plans to include Goyder • Align planning cycles, work together on common areas of interest, avoid duplication of research • Centres of Excellence for Desalination and Water Recycling

35. Questions?