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The Parliamentary Secretary for Water, the Hon. Dr Mike Kelly AM MP, today released two national reports on the performance of Australia's urban water utilities and rural water service providers during 2007-2008.

Dr Kelly said, "The National Performance Report on Urban Water Utilities provides extraordinary detail on the performance of the urban water sector on indicators such as infrastructure investment, per capita water use and wastewater recycling.

"In the past year our urban water utilities boosted their investment in infrastructure by 41% and increased wastewater recycling by 6%, whilst over the same period the average urban Australian used 12% less water.

"It is encouraging to see Australia's urban water utilities working so hard to secure our cities' growing water needs, and to adapt to climate change and a future with less water.

"The National Performance Report on Rural Water Providers highlights the devastating impact of continuing drought on the major irrigation areas in the 2007-08 reporting year, forcing providers to cut the amount of water delivered to farmers by 36%. Meanwhile these rural water service providers were able to invest $350 million in system and infrastructure improvements – an increase of 45% against the previous year.

Dr Kelly said, "Through our $12.9 billion Water for the Future plan, the Australian Government is investing in four key priorities – taking action on climate change; using water wisely; securing water supplies; and supporting healthy rivers. As part of this plan, our cities and towns need to use water sustainably, as well as investing in desalination, recycling and stormwater infrastructure projects to reduce our reliance on rainfall.

"The reports I am releasing today show that Australia's urban water utilities and rural water providers are playing a key role in securing our water needs for the future. At the same time, the industry is improving its performance in vital areas including health, customer service, asset management, environment, finance and pricing."

The National Performance Reports deliver on a key commitment in the National Water Initiative, Australia's blueprint for water reform, to annually benchmark water pricing and service quality, and to do so independently and publicly. Good-quality, robust and meaningful information on the performance of our water utilities is vital to ensure the industry is efficient, accountable and responsive to community expectations.

The urban water report was prepared by the National Water Commission, all state and territory governments, and the Water Services Association of Australia. The rural report was prepared by the Commission and state governments. Reports are available online at www.nwc.gov.au .

National Performance Report 2007-08: urban water utilities
Backgrounder - summary of key findings

The 2007-08 urban report includes information from 82 water utilities who supply approximately 16.8 million Australians with their urban water services. It contains extended analysis for three key indicators: residential water supplied, recycled water, and capital expenditure.

Residential water supplied per property

The report highlights the success of urban water conservation measures and demand management initiatives such as water restrictions.

Across Australia, the average annual residential water supplied per property for 2007-08 was 211 kilolitres compared to 240 kilolitres the previous year. This represents a12% decrease in water use across Australian households.

The impact of water conservation strategies – including restrictions – resulted in a 21% decrease in residential water supplied over a 6-year period from 2002-03 to 2007-08, despite a 9% increase in the number of connected properties in the same period.

If the 2002-03 average residential water supplied of 227 kilolitres had remained in place in 2007-08, reporting utilities would have had to supply an additional 378 gigalitres of water. This is close to the total water supplied to Melbourne.

 

For further information on residential water supplied refer pages 12-18 of the report.

Recycled water

Recycled water is becoming an increasingly important water source around Australia due to the reduction in average rainfall and the increasing acceptance of recycled water as a viable and safe alternative to traditionally sourced water.

The volume of recycled water supplied increased by 23% from 2005-06 to 2006-07, with rise of 6% from 2006-07 to 2007-08.

The amount of recycled water supplied varies significantly across utilities. Some did not recycle at all, while several others recycled all sewage collected.

In general, higher levels of recycling occur where the recycled water is predominantly used for low-value irrigation-type purposes rather than high-value residential uses.

Further information on recycled water can be found on pages 19-24 of the report.

Capital expenditure

In response to a drying climate coupled with population growth, utilities have embarked on an unprecedented capital expenditure program which will continue for years to come.

Capital expenditure has almost doubled over the past five years as the prolonged drought in many metropolitan areas has driven investment in new water supply infrastructure. Reflecting this, the report shows large increases in capital expenditure across utilities, up from $3.2 billion in 2006-07 to $4.5 billion in 2007-08: a 41% increase. This figure excludes some major capital projects that are not being funded by water utilities.

Climate change challenges have also changed the investment focus towards infrastructure solutions that are less dependent on rainfall, such as desalination and recycled water.

Gold Coast Water, Sydney Water and ACTEW all recorded large increases in total capital expenditure compared to previous years. Gold Coast Water is undertaking a number of major projects, including the BMP Alliance, the Merrimac Wastewater Treatment Plant and the Pimpama Coomera third-pipe recycled water scheme. Sydney Water had a number of large capital projects including the Western Sydney Recycled Water Plant, a desalination plant at Kurnell and a number of priority sewerage programs.

For further information on capital expenditure refer pages 68-76 of the report.

Typical residential bill

Urban water prices have risen steadily, in part to pay for new water infrastructure and also to offset reduced revenue due to conservation measures (including restrictions).

The average typical residential bill for water and sewerage services supplied by utilities increased across all utility size groupings in 2007-08: up by 3.8% for utilities with 100,000+ properties, up by 3.3% for utilities between 50,000 and 100,000 properties, up by 3.9% for utilities with 20,000 and 50,000 properties, and by 3.8% for those with 10,000 and 20,000 properties.

Table 7.1.1 Overview of results – P8 Typical residential bill (water & sewerage)

Size group	High	Average	Low
100,000+ connected properties	ACTEW 866	658	City West Water 446
50,000 to 100,000 connected properties	Ipswich Water 904	686	Goulburn Valley Water 512
20,000 to 50,000 connected properties	Coffs Harbour 1,028	772	Lower Murray Water 547
10,000 to 20,000 connected properties	Byron 1,051	871	Ballina 6992

ACTEW had the highest real increase at 11%, whilst Yarra Valley Water’s typical residential annual bill decreased by 7% due to a fall in water consumption, despite prices increasing by 1.6%.

Reported increases in typical residential bills, along with reported reductions in bills for half the utilities, reflect the interplay of several factors:

• The overall impact of price increases reported has been greater than overall reduction in typical residential bills.
• Variable results for utilities reflect different stages in the investment and regulatory price setting cycle for 2007-08, with some utilities (e.g. in Melbourne) foreshadowing increases during the next regulatory price-setting round.
• For some utilities, price increases have not fully offset the revenue reductions resulting from the lower volumes supplied.
• Price increases for some utilities reflect a greater and earlier impact from infrastructure investments on utility budgets.

For further information on typical residential bills refer pages 52-54 of the report.

Water losses

Although water losses have remained largely consistent over the past year, the Australian urban water industry has substantially reduced the water loss from leakage over the last six years.

From 2005-06 to 2007-08, the major urban utilities serving over 100,000 connected properties have collectively reduced real losses (litres/service connection/day) by approximately 20%.

Brisbane Water’s real losses have fallen sharply over the past two years, from 141 litres per service connection per day in 2005-06, to 107 in 2006-07, and down to 75 in 2007- 08.

Table 5.3.1 - Overview of results - A10 Real losses (litres/service connection/day)

Size of grouping	High	Average	Low
100,000+ connected properties	Sydney Water 91	68	Barwon Water 38
50,000 to 100,000 connected properties	Cairns Water 223	75	Gosford 25
20,000 to 50,000 connected properties	P&W, Darwin 927	81	Lower Murray Water 27
10,000 to 20,000 connected properties	P&W, Alice Springs 4,696	110	Westernport Water 8

Further information on water loss can be found in pages 32-34 of the report.

Dividend and dividend payout ratio

This indicator reports the dividend payable by a utility for the reporting year, and the dividend payout ratio (that is, dividend payable divided by net profit after tax, NPAT). It gives an indication of the level of funds returned to the government/shareholder, or conversely, retained by the utility for re-investment in the business.

Dividends across the entire urban water sector in 2007-08 totalled $1.15 billion, compared to $1.11 billion in 2006-07 (although some utilities reported for the first time in 2007-08).

Table 10.9.2 - For utilities with 100,000+ connected properties

	F20 Dividend ($000s)			F21 Dividend payout ratio (%)
Utility	2005-	2006-	2007-	2005-	2006-	2007-
ACTEW	31,570	32,686	34,055	100	100	100
Barwon Water	1,077	0	0	12	0	0
Brisbane Water	25,227	18,348	26,325	29	29	56
City West Water	16,142	25,211	21,500	39	91	92
Gold Coast Water	60,281	78,693	81,323
Hunter Water	33,800	35,100	34,600	46	59	96
SA Water - Corporation	230,937	214,093	186,054	95	95	93
South East Water	48,640	17,802	24,100	80	31	45
Sydney Water	193,000	140,000	190,000	73	42	105
Water Corporation - Perth	376,896	388,998	381,612	75	74	73
Yarra Valley Water	36,427	22,021	8,400	95	97	93

Dividends across all utilities with 100,000+ connected properties (includes additional utilities to above table) totalled almost $1 billion in 2007-08, a small (3%) increase on 2006-07. In general, individual dividend payout ratios either stayed similar to 2006-07 or increased, reflecting similar dividends but decreasing net profits.

Further information on dividends can be found in pages 95-97 of the report.

Water supply interruptions

The majority of utilities recorded a longer duration of unplanned interruptions in  2007- 08 compared to 2006-07, with only Hunter Water and Barwon Water recording shorter durations.

For further information on water supply interruptions refer pages 32-34 of the report.

Net greenhouse emissions

From the report it appears there is significant variation across utilities’ reported net greenhouse gas emissions.

Meaningful comparison of these results is difficult as a number of variables impact on emissions levels: the source of water, gravity versus pumped networks, geographic conditions, the incidence of large customers and industry within a customer base, the prevailing greenhouse policy in the jurisdiction, and the method of calculation. Furthermore, many utilities have only been reporting this indicator for the last few years (since the National Performance Report began), so it is difficult to extrapolate emerging trends.

Table 8.1.1 - Overview of results - E12 Total net greenhouse gas emissions (net tonnes CO2-equivalents) (per 1,000 properties)

Size of grouping	High	Average	Low
100,000+ connected properties	SA Water, Adelaide 994	325	City West Water 10
50,000 to 100,000 connected properties	Gippsland Water 1,280	579	Cairns Water 251
20,000 to 50,000 connected properties	Wannon Water 927	472	WC, Mandurah 205
10,000 to 20,000 connected properties	SA Water, Whyalla 4,696	955	Queanbeyan 204

For further information on net greenhouse emissions refer pages 56-58 of the report.

Accuracy of data

All urban utilities are subject to a rigorous auditing regime for key indicators. These indicators are subjected to independent audit by a qualified third-party auditor and must meet specified accuracy and reliability requirements before they can be published. If key indicators are not audited or do not satisfy audit requirements, they are not published. Approximately 80% of indicators have been audited.

National Performance Report 2007-08: rural water providers
Backgrounder - summary of key findings

The National Performance Report 2007–08: rural water service providers is the second annual report outlining the performance of the rural water sector. Based on a nationally agreed performance framework this report presents a consistent and informative overview of the essential services delivered by rural water utilities and operators.

The data underpinning this report has been collected and collated from thirteen rural water service providers located in five jurisdictions.

The threshold for including a rural water service provider is that the additional recurrent costs incurred by that organisation in relation to data collection, reporting and required audits (on a proposed three yearly cycle) are less than 1% of the total revenue associated with the provision of rural water services. Where the recurrent costs of reporting exceed this threshold, rural water service providers are not required to report; however, they are encouraged to do so in the interests of industry transparency.

Key results

Capital expenditure increased 45% since last year - from $241million to $350 million, with much of this rise due to construction of the Wimmera-Mallee Pipeline (capital expenditure for this project was $215 million in 2007-08).

The average volume of unaccounted water per kilometre of distribution system decreased by 5% - down from 34.8 megalitres to 33.1 megalitres/km.  Drought, efficiency gains and operational changes contributed to this outcome.

Delivery volumes decreased by 36% across all rural providers due to ongoing dry climatic conditions - from 5510 gigalitres last season to 3540 gigalitres delivered this year. Water service providers in New South Wales and Victoria were hit hardest, experiencing a decrease of 51% on volumes delivered last season.

The performance of different rural water service providers is determined by different geographical, climatic, production and soil characteristics. These inherent differences make it very difficult to compare rural water service providers.

Over time, the report will enable agencies to track their own performance and to compare themselves against the performance of others against trend data.  It will also enable stakeholders and the community to see how well the sector is performing.

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