Getting water policy right: a Sydney Water perspective Dr Kerry Schott, Melbourne Institute Economic and Social Outlook Conference, July 2011
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Getting water policy right:
a Sydney
y y Water p
perspective
p
Dr Kerry Schott,
Melbourne Institute
1 Economic and Social Outlook Conference, July 2011
Good water policy: A customer focus Good long term planning Catering for a growing city Efficient delivery and use of resources The right prices Independent regulation
Customer focus…
g q
High y drinking
quality g water
Infrastructure investment to
maintain service standards and
secure supplies
Wastewater systems to protect
waterways and beaches
Sustainability
Customers appreciate that they get
value for money
Good planning…
Analysis: Portfolio choice
Constraint: S=D
Where there are various supply options S = (S1…..Sn)
Dams / desal / recycling
- And various demand management
g options
p D = ((D1…..Dm)
Evaluate on basis of:
– volume supplied or saved
– total cost per kilolitre
– variance/reliability
5
Portfolio approach – choices
Option Cost per kilolitre
Dams (Regulated value) $0.74
Dams (Replacement value) $1.32
Desal Stage 1 $2.24
Desal Stage 2 $1.99
Recycled Water (Industrial) $1.00 - $4.00 (and above)
Recycled Water (Residential) $4.00 - $6.00 (and above)
WaterFix Less than $1.50
EDC Business programs $0.50 to $2.00
DIY Water
W t saving
i kits
kit L
Less than
th $1.50
$1 50
Toilet replacement service Less than $1.50
Love your Garden Greater than $2.00
Washing machine rebates Greater than $3.20
Rainwater Tanks At least $5.00
6
Dams 7
Desalination plant - Kurnell 8
Recycling
y g–
St Mary’s
9
Water Efficiency
y
1
0Active leak detection 11
Efficient delivery
y
A typical $1000 water and wastewater bill comprises:2009-10 Expenses
p by
y type
yp
Total operating
p g expenditure
p 2009-10 (($1,076
, million))
Staff costs
Bulk water and filtration
Service contractors
Materials, transport and elec.
Property and Administration
Other expensesStaff numbers
Currently just under 3,000 FTEs
S d
Sydney Water
W t Staff
St ff Numbers
N b
16,000
14,000
quivalent Staff
12,000
10,000
8,000
Full Time Eq
6,000
4,000
2 000
2,000
0
80
85
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Calendar YearSydney Water’s Energy use 15
Energy
gy use 1996 - 2020
600,000
Historical data Forecast projections Additional:
• 40,000
40 000 t CO2
500,000 • $11M (2020)
From:
h)
Energy Use (MWh
• New
N efficiency
ffi i
400,000
and renewable
energy projects
300 000
300,000 Totalling:
T t lli
• 135,000 t CO2
Growth satisfied • $35M (2020)
200,000 by energy
saving projects
Current Efficiencies
100,000 Grid electricity Current REG
purchase same New Efficiencies and REG
as in 96/97 Greenpower
Grid power Consumed
-
16Biogas
g
Cogeneration
17Hydro
yd o electric
e ect c ge
generation
e at o - Nth
t Head
ead S
STP
18Catering for a growing city…
5-year Growth Servicing Plan
Work with private sector and planning authorities
– timing growth servicing to match demand
Growth a major
j driver of our infrastructure
planning and investmentWater demand: 1995 - 2030 20
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Localised p
projects
j –
impact of WICA
21The right pricing
Current…
• Water prices have fixed and variable components
• The total p
price of 1kL of water is close to the average
g LRMC of supply
pp y
• Over time the average LRMC is rising
g stamp
• Postage pppricing
g is p
popular
p with customers
Policy debates
debates…
• Linking prices to dam levels – ‘scarcity pricing’
• How far should postage stamp pricing extendResidential price elasticity…
Impact of increasing water usage prices from $2.00kL to
$3 00kL (50% iincrease))
$3.00kL
‘Scarcity pricing’ outcomes for an average house and unit/flat
Housing type Price Reduction in Increase in
elasticity
l i i water use water use charges
h
(%) (%) (kL/year) ($/year)
House -12% -6% 12kL +$165
Unit/flat -2% -1% 1.5kL +$146Independent
p regulation
g for
public monopolies:
p of the model if monopoly
part p y water networks are to
operate "at arm's length” from government
assists in achieving full cost recovery on investment
imposes cost discipline on the utilityWater industry
y in Sydney
y y
Bulk Water (SCA and SDP) Contestable
E i ti separation
Existing ti
Contestability for the
Water treatment (BOO)
Existing separation market
Existing SWC
Water and wastewater transport N t lM
Natural Monopoly
l
Potential divisions and distribution
Wastewater Recycling Contestable
treatment
and disposal
Retail services ContestableGood water policy: A customer focus Good long term planning Catering for a growing city Efficient delivery and use of resources The right prices Independent regulation
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