Urban Water Management in Australia

The Big Picture Overview

ACCC Conference30 July 2010

Ross YoungExecutive Director

Water Services Association of Australia

Annual and decadal mean temperature anomalies for Australia (compared with 1961-90 average)

2009 mean temperatures compared against historical temperature records.

(Above) Annual and decadal mean rainfall (mm) for Australia since 1900

2009 rainfall compared against historical rainfall records.

Annual inflows to Canberra’s storages

Gig

alitr

es

187 GL Long term average inflow 1871 – 2009

68 GL average inflow 2000 - 2009 is 38% of long term average

45%48%

32% 32%

56%

12%

28%

35%

68%

25%

Annual Inflow to Brisbane's Storages – Wivenhoe, Somerset and North Pine

Gig

alitr

es

953 GL Long term average inflow 1889 – 2009

462 GL average inflow 1997 - 2009 is 49% of long term average

43% 40%

248%

37%

25%

39%

68%

9%13% 6% 12% 15%

75%

Perth Catchment rainfall and runoff

0

500

1000

1500

2000

19

11

19

14

19

17

19

20

19

23

19

26

19

29

19

32

19

35

19

38

19

41

19

44

19

47

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

To

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al*

ra

infa

ll f

or

Ja

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(m

m)

Annual rainfall 1911–1974 av (1251 mm) 1975–1996 av (1073 mm) 1997–2005 av (997 mm)

Notes: * year is taken as May to April and labelled year is beginning (winter) of year ** some rainfall filled from other stations, 2004 & 2005 are estimates

14% less

21% less

Rainfall

0.0

200.0

400.0

600.0

800.0

1000.0

19

11

19

14

19

17

19

20

19

23

19

26

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32

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35

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38

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41

19

44

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47

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50

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53

19

56

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59

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62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

To

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nu

al*

in

flo

w** t

o P

erth

da

ms

(G

L)

Annual inflow 1911–1974 (338 GL av) 1975–1996 (177 GL av) 1997–2005 (115 GL av)

Notes: * year is taken as May to April and labelled year is beginning (winter) of year ** inflow is simulated based on Perth dams (excluding Stirling & Samson)

48% less

66% less

Runoff

Desalination in Australia

LocationCapacity(ML/annum)

Ability to increasecapacity (ML/annum)

% of annual totalconsumption2007/08

Completiondate

Sydney Kurnell 90,000 180,00015%

(potential 30%) Completed

Melbourne Wonthaggi 150,000 Up to 200,00041%

(potential 54%) 2011

South East QLD Tugun 49,000   24% Completed

Perth Kwinana 45,000   19% Completed

  Binninyup 50,000 100,00021%

(potential 42%) 2011

AdelaidePort Stanvac 100,000

  71% Dec 2012

Total 484,000 674,000

This represents 46% of capital city water

consumption in 2007/08

Source: WSAA Report Card 2006-07 and 2007-08

Since 1999-00 the volume of recycled water produced has increased by 130% in major urban water utilities (>50,000 connected properties)

Residential water consumption (kL/person/annum)

Capital Cities & major regional centres 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

% change from

2007-08

% change from

2003-04

Perth 111 107 105 110 104 106 2% -4%

Adelaide 105 101 101 102 84 83 -2% -21%

Sydney 83 78 75 74 68 74 9% -11%

Newcastle 81 77 80 78 71 72 1% -11%

Canberra 87 84 93 85 69 71 4% -18%

Goldcoast 80 98 87 80 65 70 8% -12%

Geelong 92 88 92 72 68 69 0% -26%South East Water 75 74 76 69 61 58 -5% -22%Yarra Valley Water 78 74 76 69 60 57 -4% -26%

City West Water 78 73 73 65 58 56 -3% -28%Brisbane Water 102 104 73 60 51 53 4% -49%

Sydney’s Water Consumption in Relation to Population Growth

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Po

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on

To

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l Su

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ly (m

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)

Projected population increases (Series A) for Australia’s major urban water areas up to 2056

City Observed population 2007

Projected population 2026

Projected population 2056

% increase 2007 to 2056

Sydney 4,282,000 5,487,200 7,649,000 79%

Melbourne 3,743,000 5,272,300 7,970,700 113%

*South East Queensland

3,043,000 2,908,000 4,955,100 167%

Perth 1,518,700 1,410,800 1,848,500 60%

Darwin 117,400 2,455,200 4,164,400 168%

Canberra 334,100 266,800 367,200 77%

Hobart 207,400 189,300 334,900 185%

Adelaide 1,145,800 462,500 683,200 101%

Total Capital Cities

14,391,400 18,452,000 27,973,000 109%

Australia 21,015,000 28,723,000 42,510,400 102%

Source: ABS 3222.0 Population Projections, Australia, 2006 – 2101, Series A

* 2008 observed figures - Planning Information & Forecasting (PIFU) Dept of Infrastructure and Planning SEQ

The changing face of the industry Water now comes form multiple sources – natural and manufactured;

Water grids being created to minimise risks SEQ – NSW border to Noosa Heads Melbourne, Gippsland, Geelong - connected with the Goulburn Valley Bendigo and Ballarat – connect with the Goulburn Valley;

Water prices increasing

Customers taking responsibility for their own security of supply e.g. rain water tanks, domestic recycling

Move to more decentralised systems – small is beautiful

Integrated water management

Demand for a diversity of water products

Capital Cities' Water Prices as at 1 July 2010

City Fixed Charge Quantity Usage ChargeAdelaide $142.40 0 to 30kL $1.28 per kL   30-130 kL $2.48 per kL     >130 kL $2.98 per kL

Brisbane $162.92 0 to 255 kL $0.65 per kL  256 to 310 kL $0.69 per kL    >310kL $1.23per kL 

Canberra $92.08 0 to 0.548 kL per day $2.00 per kL    >0.548 kL per day $4.01 per kL

Melbourne $75.29 to $154.13 (0-440 litres/day) $1.51-$1.54 per kL  (441-880 litres/day) $1.80-$1.84 per kL    (881 + litres/day) $2.66-$2.97 per kl

Perth $186.60 0 - 150 kL $0.726 per kL  151 - 350 kL $0.88 per kL  351 - 550 kL $1.02 per kL  551 - 950 kL $1.537 per kL    over 950 kL $1.779 per kL

Sydney $1.02NA

$1.87 per kL

Hobart Based on property value   No usage charges

Darwin $164.47 NA $1.07 per kL

Source: water utility websites

Issues of pricing

Elasticity of demand not known due to water restrictions

State Governments reluctant to introduce different securities of supply

Complaints about the high fixed costs on water bills

Inclining block tariffs vs flat tariffs

Postage pricing – by city and state – will it survive?

What opportunities will smart metering and intelligent networks bring?

Forms of competition

Bulk water provision

CAPEX delivery and OPEX functions

Retail contestability

Competition in the urban water industry

No operating urban markets known by WSAA anywhere in the world

Competition at the wholesale level is possible

Competition at the retail level unlikely Water bills still a small % of household outgoings Transaction costs high unless technological break through

Much work required to evaluate marginal social benefits vs marginal social costs – probably through the Productivity Commission Inquiry

Issue Differences between the water, electricity and gas industries

Reliability of production Reliability of electricity and gas is much higher than climate dependent water storages.

Storage Water can be stored in dams for many years. Gas can also be stored but electricity storage is difficult.

Transport costs Electricity and gas can be transported over great distances cheaply. Water is heavy.

Quality Electricity quality can be specified. Gas from various sources can also be mixed. Different water sources have different qualities, disinfection treatments with public health implications.

Scarcity pricing Scarcity pricing for electricity and gas occurs over very short periods of time (minutes), scarcity pricing for water would be in months or quarters.

Environment Electricity and gas disappear once consumed. The water industry faces environmental impacts from extraction, treatment, sewerage treatment/disposal and stormwater.

Network losses Losses minor in gas and electricity but a significant issue in water transport.

Water trading

Rural and urban systems becoming increasingly interconnected

There should be NO policy on rural to urban water trades

Population growth and climate change will result in increased water trading in both rural and urban sectors

Conclusion Industry has a proud record of reform e.g. 1994 COAG

reforms and National Water Initiative

Focus on the integrated urban water cycle – not just drinking water

What about nationally consistent regulation of water?

The needs of customers must drive reform – not ideology

And just in case you have forgotten WATER IS DIFFERENT

Questions?