Department of Energy and Water Supply CS2731 09/13 ISSN 2201-2095
Interpreter statement
The Queensland Government is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds. If you have difficulty in understanding the annual report, you can contact us on 13 QGOV and we will arrange an interpreter to effectively communicate the report to you.
Public availability
Copies of the Department of Energy and Water Supply (DEWS) annual report are available online at www.dews.qld.gov.au. Limited printed copies are available by calling 13 QGOV.
Enquiries about this publication should be directed to the Principal Planning and Governance Officer, Planning, Performance and Governance, DEWS.
Email: [email protected] Phone: 07 3033 0534
This publication has been compiled by Planning and Performance, Business Corporate Partnerships in the Department of Agriculture, Fisheries and Forestry for the Department of Energy and Water Supply.
© State of Queensland, 2013.
The Queensland Government supports and encourages the dissemination and exchange of its information. The copyright in this publication is licensed under a Creative Commons Attribution 3.0 Australia (CC BY) licence.
Under this licence you are free, without having to seek our permission, to use this publication in accordance with the licence terms.
You must keep intact the copyright notice and attribute the State of Queensland as the source of the publication.
Note: Some content in this publication may have different licence terms as indicated.
For more information on this licence, visit http://creativecommons.org/licenses/by/3.0/au/deed.en. Contents
Letter of compliance...... 2 Director-General’s message...... 3 About the Department of Energy and Water Supply...... 4 Our vision...... 4 Our role...... 4 Our services...... 4 Summary of performance Strategic Plan 2012–16...... 6 Strategic challenges and opportunities...... 6 Our operating environment...... 7 Our achievements...... 7 Key priorities for 2013–14...... 8 Governance Structure and management...... 9 Organisational structure...... 9 Executive Management Team...... 9 EMT profiles...... 9 EMT committees...... 11 Public Sector Renewal Program...... 15 Legislation and other government bodies...... 16 Governance Risk and accountability...... 17 Risk management...... 17 Audit and Risk Committee...... 17 External scrutiny...... 18 Internal audit...... 18 Governance Human resources...... 20 Public Sector Ethics Act 1994...... 20 Workforce planning, attraction and retention...... 20 Management and leadership development...... 21 Employee performance management framework...... 21 Governance Information management...... 24 Information systems...... 24 Recordkeeping...... 24 Open data...... 24 Our performance...... 25 Objective 1: Cost-effective, safe, secure and reliable energy and water supply...... 25 Objective 2: Effective reform...... 30 Objective 3: Engaged stakeholders...... 35 Objective 4: Optimise shareholder value...... 37 Objective 5: A capable, flexible and proud workforce...... 39 Financial performance...... 40 Chief Finance Officer’s message...... 40 Financial summary...... 40 Financial statements for the year ended 30 June 2013...... 42 Annual report compliance checklist...... 92 Appendix 1 Legislation...... 94 Appendix 2 Schedule of statutory authorities and instrumentalities...... 95 Appendix 3 Schedule of government-owned corporations...... 96 Appendix 4 Service performance...... 97 Service standards...... 97 Appendix 5 Report of the regulator’s activities under the Water Supply (Safety and Reliability) Act 2008...... 99 Recycled water...... 99 Drinking water quality...... 100 Coal seam gas water...... 101 Other matters...... 102 Glossary and acronyms...... 103 Contacts...... 104
Department of Energy and Water Supply | 2012–13 Annual Report Page 1 Letter of compliance
5 September 2013
The Honourable Mark McArdle MP Minister for Energy and Water Supply
PO Box 15458 Department of CITY EAST QLD 4002 Energy and Water Supply
Dear Minister
I am pleased to present the 2012–13 Annual Report and financial statements for the Department of Energy and Water Supply.
I certify that this annual report complies with: • the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009 • the detailed requirements set out in the Annual report requirements for Queensland Government agencies.
A checklist outlining the annual reporting requirements is included in this report.
Yours sincerely
Department of Energy and Water Supply | 2012–13 Annual Report Page 2 Director-General’s message
The Department of Energy and Water Supply has achieved a lot in the last 12 months and I am proud that, as a department, we are delivering on the Queensland Government’s pledge to reduce pressure on the cost of living and grow the 4-pillar economy. While it will take some time for the benefits of the key aspects of the department’s policy and reform work to flow through to consumers, a solid foundation has been set to ensure they do.
The department delivers innovative policy, planning and regulatory solutions in partnership with stakeholders to support cost-effective, safe, secure and reliable energy and water supply. We are firmly focused on this work, but as a department we must also respond to wider energy and water supply issues, which are front of mind for all Queenslanders, as they arise.
The department has already delivered the government’s immediate relief to Queenslanders by freezing the standard electricity tariff (Tariff 11) for 12 months and by providing a one-off $80 bulk water rebate to all eligible South East Queensland (SEQ) households.
Furthermore, the merger of the SEQ bulk water entity and the abolition of the Queensland Water Commission reduced the costs of supplying bulk water to the council-owned water businesses in SEQ, and this saving has been passed on to consumers.
Long-term reforms are a priority and it is in this area that I think the department has really stepped up.
A 30-year water discussion paper was taken to the people of Queensland with a raft of measures aimed at delivering a long-term vision of water supply, irrigation, recreational opportunities and environmental services at lowest cost. Feedback has enabled the government to refine its long-term strategy, which will be important for Queensland’s future economic and social development.
The reports of the Independent Review Panel on Network Costs and the Interdepartmental Committee on Electricity Sector Reform were significant pieces of work that will guide the development of the state’s first 30-year electricity strategy, to be released in 2014. The reports also laid the foundation for Queensland’s largest shake-up of the energy sector, a reform agenda which will commence in the current 2013–14 year.
The department has also achieved a range of red-tape reduction measures, including closing both the Queensland Gas Scheme and the Smart Energy Savings Plan, and other deregulation aimed at minimising the administrative burden on council-owned water service providers.
Forty-two recommendations that the department has responsibility for from the Queensland Floods Commission of Inquiry have been successfully implemented, including advising on temporary full supply levels for SEQ dams.
Finding the balance between delivering results for Queensland and doing it in a way that is fiscally responsible remains a challenge for all departments, but one that our department is committed to.
Jonathan (Jon) PC Black
Director-General Department of Energy and Water Supply
Department of Energy and Water Supply | 2012–13 Annual Report Page 3 About the Department of Energy and Water Supply
The Department of Energy and Water Supply Our services is responsible for delivering the government’s commitment to reduce pressure on the cost of The department’s functions are delivered through living and grow the 4-pillar economy through 2 main service divisions: Energy and Water Supply innovative and efficient energy and water and Sewerage Services. supply services. Energy is responsible for policy development and for reform and regulation of the Queensland Our vision energy sector to ensure cost-effective, secure and reliable energy supply. It is also responsible The department’s vision is to reduce cost-of-living for establishing a long-term electricity strategy, pressures through innovative and efficient energy informed by the outcomes of the government’s and water supply services. review on electricity sector reform, to address cost-of-living pressures and sustainability of the Our role sector. The department’s role is to develop and deliver Energy delivers 5 services: innovative policy, planning and regulatory solutions in partnership with our stakeholders. • Energy Generation and Fuel—responsible for developing and implementing policy that The department contributes to the government’s directly affects the generation of electricity objectives for the community: and alternative energy; ensuring that effective emergency planning and response • Grow a 4-pillar economy—through effective arrangements are in place; and supporting and policy, planning and regulation to support advising the Minister in his role as stakeholder cost-effective, safe, secure and reliable of the state-owned energy entities energy and water supply and by reducing regulatory burden. • Energy Networks—responsible for developing and implementing policy that directly affects • Lower the cost of living for families—by energy network service providers and identifying and implementing strategies to influencing national energy agendas address cost pressures on electricity and water prices and implementing energy and water • Energy Consumer and Retail—responsible sector reform. for developing and implementing policy that has a direct effect on retailing and end-use • Deliver better infrastructure and better consumers of energy planning—by developing and implementing 30-year strategies for Queensland’s electricity • Energy Sector Regulation—responsible and water supply sectors and implementing for administering Queensland energy relevant Queensland Floods Commission of sector regulation Inquiry recommendations. • Energy Sector Reform—responsible for • Restore accountability in government— developing and implementing reform of the through effective stakeholder engagement Queensland energy sector. and by optimising shareholding value in state-owned entities and ensuring robust and streamlined regulatory requirements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 4 Water Supply and Sewerage Services is • Water Supply Regulation—responsible for responsible for implementing water sector reform regulating the quality of drinking water supply to address cost-of-living pressures. It is also provided by registered water service providers responsible for establishing a long-term strategy in Queensland for Queensland’s water sector and regulating • Dam Safety Regulation—responsible for water supply so that agriculture, mining, industry registering, assessing and monitoring the and regional and urban communities have access safety of large referable dams in Queensland to cost-effective, safe, secure and sustainable • Water Sector Reform (Legislation and Policy)— water supplies. responsible for developing and implementing Water Supply and Sewerage Services delivers policy on state and national water issues and 5 services: facilitating changes to water supply and related legislation • Water Sector Planning—responsible for providing advice on possible temporary full • Water Sector Reform (Economic Advice)— supply levels for the state’s flood mitigation responsible for providing economic evaluation dams; coordinating the optimisation studies and advice on bulk and rural water pricing and for Wivenhoe, Somerset and North Pine dams; regulation and advising and supporting the developing urban drainage design standards Minister in his role as stakeholder of the state- for stormwater-related flood risk; managing owned water entities. and reporting on the department’s response to the Queensland Floods Commission of Inquiry recommendations; planning for adequate water supplies to underpin regional and economic growth; and managing a suite of non-commercial water assets held by the state
Department of Energy and Water Supply | 2012–13 Annual Report Page 5 Summary of performance Strategic Plan 2012–16
The department’s strategic direction was set out in our Strategic Plan 2012–16, including what we intended to achieve (our objectives); how we would achieve it (our strategies); and how we would measure our success (our performance indicators). See Our performance for details of our achievements.
Objectives Performance indicators • 30-year plans for Queensland’s energy and water Cost-effective, safe, secure and reliable energy supply sectors developed within agreed time frames and water supply and endorsed by Cabinet
• Regulatory reduction initiatives completed
• Number of Queensland Floods Commission of Effective reform Inquiry recommendations implemented on time
• Level of stakeholder satisfaction with engagement Engaged stakeholders on key programs/initiatives
• Level of compliance with shareholder service Optimise shareholder value requirements by energy and water entities
• Absenteeism below the public sector average
• Percentage of employees with personal A capable, flexible and proud workforce development plans
Strategic challenges and opportunities Our strategic plan identified the following strategic risks: • cost-of-living pressures not addressed by sustainable solutions • increasing demand for energy and water supply • balancing stakeholder expectations • loss of critical capability and corporate knowledge.
Department of Energy and Water Supply | 2012–13 Annual Report Page 6 Our operating environment
Sector Operating environment • More than 2 million residential and small business electricity and gas customers
• 21 000 large electricity customers
• 5 energy government-owned corporations (GOCs) providing generation, transmission and distribution Energy infrastructure worth $29.9 billion • 20 private entities operating 25 privately owned generators
• 29 active electricity and 12 gas retailers
• the highest rates of overall and peak electricity demand growth in Australia
• Two large state-owned bulk water entities (Seqwater and SunWater) and 2 Category 1 water boards
• 164 registered water service providers Water • More than 4.4 million or 96% of the state’s population serviced by reticulated water service providers
Our achievements • Delegated power to the Queensland Competition Authority to set regulated During 2012–13, the department delivered electricity prices for 3 years (2013–14 to a number of government priorities and 2015–16), rather than annually (including commitments. Key achievements are listed below. greater stakeholder consultation and consideration of transitional pricing arrangements for different customer groups) Energy • Reduced the Solar Bonus Scheme feed-in tariff • Set up the Interdepartmental Committee on for new customers from 44 cents to 8 cents per Electricity Sector Reform supported by the kilowatt hour Independent Review Panel on Network Costs to advise on network costs. Delivered the • Commenced development of planning final report of the committee, including the guidelines for wind farms outcomes of the review panel • Rationalised carbon reduction and energy • Released a directions paper for a 30-year efficiency schemes electricity strategy to set out a vision and road • Removed the standards for new coal-fired map to achieve a resilient electricity supply power stations following the introduction of system into the future the Australian Government carbon pricing • Froze Tariff 11, the residential flat rate mechanism, bringing Queensland in line with electricity tariff, for 12 months from 1 July 2012 other states and territories • Included the impact of the carbon tax on retail • Efficiently delivered the government’s election electricity bills from 1 July 2012 commitment for the energy portfolio with the successful closure of existing climate-smart • Provided guaranteed protection to customers projects saving around $100 million who wish to change electricity retailers after being advised of a price increase
Department of Energy and Water Supply | 2012–13 Annual Report Page 7 Water Supply Key priorities for 2013–14 • Amalgamated the South East Queensland Key priorities for 2013–14 include: bulk water entities (Seqwater, LinkWater and the SEQ Water Grid Manager) into a single • Leading the implementation of agreed water authority (Seqwater) and abolished the outcomes of the Interdepartmental Committee Queensland Water Commission on Electricity Sector Reform • Facilitated a review of options for the Gold • Providing improved opportunities for Coast Desalination Plant and Western Corridor consumers to participate in both energy and Recycled Water Scheme water sectors • Implemented arrangements to provide a • Releasing a 30-year electricity strategy and a one-off $80 rebate for households and 30-year water strategy residents of retirement villages in South • Continuing to implement Queensland Floods East Queensland Commission of Inquiry recommendations, • Released a discussion paper for a 30-year including leading and implementing the water strategy to seek input on a long-term Wivenhoe, Somerset and North Pine dam strategy for Queensland’s water supply sector optimisation studies • Undertook a review of South East Queensland • Implementing energy and water red-tape bulk water prices, which limited the annual reduction initiatives, including ceasing the household increase for 2013–14 and 2014–15. Queensland Gas Scheme and reducing the The new bulk water prices took effect from administrative burden for water service 1 July 2013 providers • Progressed local management arrangements • Finalising a government position on reform for SunWater’s channel irrigation systems of local management arrangements for SunWater’s channel irrigation schemes • Commenced a review of the operations of state-owned bulk water infrastructure developer and manager, SunWater • Progressed implementation of the Queensland Floods Commission of Inquiry recommendations, including advice on temporary full supply levels for South East Queensland dams and optimisation of Wivenhoe, Somerset and North Pine dams • Assessed the performance of all affected referable dams following the January and February 2013 flood events
Department of Energy and Water Supply | 2012–13 Annual Report Page 8 Governance Structure and management
There are 2 tiers of governance within the department’s corporate governance framework: • Executive Management Team (EMT) • EMT committees.
Organisational structure
Director-General Office of the Director-General
Deputy Director-General, Deputy Director-General, Program Director and General Manager, Deputy Director-General, Energy Water Supply and Advisor, Flood Inquiry Planning, Performance Business and Corporate Sewerage Services Response and Delivery and Governance Partnerships DNRM & DEWS
Executive Management Team Jon has qualifications from the University of New South Wales, the Australian Institute of Company EMT functions as the department’s board of Directors, The Royal Military College, Duntroon, management. It considers the development and and the United States Marine Corps. Jon is also an strategic direction of the department as a whole Adjunct Professor at The University of Queensland. and advises on, endorses and approves significant policy and management decisions. Karen Masnata, Deputy Director-General, The team takes a collaborative management Energy approach to address the challenges facing the department and works together to ensure optimal Karen Masnata commenced as Deputy Director- outcomes, in line with the department’s strategic General on 4 June 2012. Karen is responsible priorities. for leading and managing the roles and responsibilities of the Energy Group, which EMT profiles include the delivery of a cost-effective, safe, secure and reliable energy supply. Karen provides direction and leadership to deliver and develop Jon Black, Director-General innovative policy, planning and regulatory solutions in partnership with internal and Jon commenced as Director-General on 21 May external stakeholders. Karen is also responsible 2012. As Director-General, Jon is responsible for for the implementation of the government’s ensuring the department meets its accountability reform agenda, as well as the development and obligations and achieves its strategic objectives to implementation of the 30-year electricity strategy. deliver government priorities. Prior to this role, Karen held economic advisory Jon has a strong background in water management roles with Price Waterhouse Coopers and in Queensland as the former CEO of UnityWater Deloitte and senior financial advisory roles and prior to that the South East Queensland water with Queensland Treasury and Queensland and sewerage distribution business. Treasury Corporation. Jon combines this firsthand industry knowledge with a wealth of leadership experience gained in his 25-year career with the Australian Army.
Department of Energy and Water Supply | 2012–13 Annual Report Page 9 Karen has qualifications from the Australian Danny Short, General Manager, Planning, Institute of Company Directors (Order of Merit), Performance and Governance the Securities Institute of Australia (Corporate Finance), the University of Technology Sydney Danny is responsible for strategic governance (College of Law) and the Queensland University and risk management, performance reporting and of Technology (Bachelor of Laws). leading the planning process for the department. The position is also the Chief Finance Officer and is responsible for financial and resource Benn Barr, Acting Deputy Director-General, management within the department. Energy Danny has over 20 years experience in senior and Benn Barr commenced as Acting Deputy Director- executive management roles across a variety of General on 19 December 2012. Benn is responsible corporate and strategic governance, financial for leading and managing the roles and management, performance and risk positions. responsibilities of the Energy Group, which include Danny has undertaken roles at the Queensland the delivery of a cost-effective, safe, secure and Water Commission and across various Queensland reliable energy supply. Benn is also responsible Government organisations in the areas of public for the development and implementation of the works, housing and communities. 30-year electricity strategy and the Queensland Government’s current electricity sector reform Danny is a Certified Practising Accountant and program. holds a Bachelor of Commerce degree. His most recent positions have been as General Benn’s substantive role is General Manager, Manager, Strategic Governance and Risk with the Energy Sector Reform—Consumer and Retail. Benn Queensland Water Commission and prior to that as has over 20 years public policy experience in the Director of Finance, Housing, Homelessness and Queensland and Australian governments. Properties within the Department of Communities. Benn graduated from James Cook University with Throughout his career, Danny has implemented a a Bachelor of Economics. range of governance measures, built frameworks to assist in assessing risk and has had significant involvement with many stakeholder committees Ken Sedgwick, Deputy Director-General, and key central agencies. Water Supply and Sewerage Services Ken Sedgwick commenced as Deputy Director- Judith Jensen, General Manager, Liaison General on 9 July 2012. Ken is responsible for Office (July 2012 – January 2013) leading and implementing water policy, reform and regulation to ensure that the water supplied Judith led and managed the department’s Liaison to Queensland communities is safe, reliable and Office until she left the department in January delivered cost-effectively. Ken is also responsible 2013. The Liaison Office was the key point of entry for the development of the 30-year strategy for the into the department (including the Minister’s water sector, which will provide strategies for the office) for the department’s stakeholders government to meet future demand and provide and clients, including the energy and water safe and secure water supplies while protecting government-owned corporations and water the environment. statutory authorities. The Liaison Office provided a key linkage when dealing with state and Australian Prior to this role, Ken was Acting Deputy Under government departments seeking advice from the Treasurer in Queensland Treasury and Trade. He department. It also represented the department worked for Queensland Treasury and Trade in a on a number of whole-of-government forums variety of senior roles, including leading Treasury’s and committees. involvement in the multitude of structural changes within the Queensland water industry. Prior to Judith holds a Bachelor of Laws and is admitted his Treasury career, Ken worked in the former as a lawyer to the Supreme Court of Queensland. Department of Primary Industries in Brisbane Since 2002, Judith has held legal policy positions and Townsville. in the water and natural resources portfolios, and has led the development and implementation of major water-related legislation.
Department of Energy and Water Supply | 2012–13 Annual Report Page 10 Darren Schneider, Acting General Paul Walsh, Program Director and Advisor, Manager, Liaison Office (January 2013 – Floods Inquiry Response and Delivery April 2013) Paul leads the department’s implementation Following the resignation of Judith Jensen, Darren of the recommendations of the Queensland led and managed the Liaison Office. This role Floods Commission of Inquiry and other also involved assisting in a review of the Liaison outcomes of the inquiry. Paul reports directly to Office to determine how its functions could the Director-General on matters relating to the be discharged most effectively and efficiently, government’s commitments to the commission’s including the organisational support required recommendations and leads stakeholder for the office. The outcome of this review was engagement on flood inquiry matters, including the decision to reintegrate the Liaison Office’s with other government departments, water and functions into the Energy and Water Supply and energy entities and members of the public. Sewerage Services divisions of the department Paul joined the Queensland Public Service in from 1 May 2013. Darren managed and supported 2005 after working 18 years in the private sector. the initial steps of this reintegration process. Paul has a Bachelor of Arts (Criminology) and Darren holds bachelor’s degrees majoring in Bachelor of Laws and is admitted to the Supreme economics and mathematics and has undertaken Court of Queensland. Paul has expertise in higher studies in computing and applied finance. natural resources law, administrative law and He also has extensive experience across a broad governance. Paul also holds a Bachelor of the range of energy areas including regulation and Built Environment (Architecture). policy. This experience has provided him with a strong skills base which he applies to his EMT committees decision-making, the leadership of his team, and the relationships and communications In accordance with the department’s corporate with work colleagues, clients and departmental governance framework, EMT is supported by stakeholders. He has also developed an excellent committees formed to perform specific tasks understanding of the energy industry, the or assignments. department and the public service generally. Finance Committee Kate Callaghan, Deputy Director-General, The committee is the key governance body for Business and Corporate Partnerships coordination, implementation and oversight of financial management, reporting and governance Kate Callaghan oversees the delivery of strategic functions within the department. corporate services and business support programs to the department. Kate also oversees Role all corporate services for the Department of Natural Resources and Mines (DNRM) and the legal Overseeing the range of financial and risk and accommodation functions for 6 agencies. management functions, including monthly financial reporting, resource allocation, financial Kate has vast experience leading large, diverse compliance and internal controls work groups. She has over 40 years experience in the Queensland Government and has held senior Responsibilities executive and management roles within a number • Monitoring the financial performance of of government organisations since 1987. the department against its priorities and Prior to her current role, Kate was the Group approved budgets Executive for Corporate Relations within the • Ensuring the optimum use of financial former Department of Employment, Economic resources and approving or endorsing Development and Innovation (DEEDI), which budget adjustments managed the marketing, communications, human • Ensuring a sound internal control resources, audit, legal and service delivery environment is maintained functions. Kate was also responsible for leading change management for DEEDI.
Department of Energy and Water Supply | 2012–13 Annual Report Page 11 • Considering significant projects and Financial Compliance Subcommittee transactions and savings initiatives The Financial Compliance Subcommittee meets • Monitoring financial policy development regularly in support of the Finance Committee. • Ensuring that priorities set by the government It oversees the financial compliance framework, are funded and able to be delivered within including monitoring internal controls, oversight budget and on time of controls and reconciliations performed by Queensland Shared Services (QSS) and • Monitoring financial risk assessment including progressing issues identified through the internal control activities audit process. • Monitoring strategic procurement issues • Ensuring compliance with legislative and Membership regulatory obligations; government directives; General Manager, Planning contracts and agreements; standards and Danny Short (Chair) Performance and Governance codes; and internal policies and procedures and Chief Finance Officer
• Reviewing outstanding audit issues related Abhijeet Singh Manager, Financial Services to financial management Executive Director, Client Matthew Nye Services (Finance and Facilities), Membership QSS
General Manager, Planning Director, Accounting Services Corynne Scott Danny Short (Chair) Performance and Governance (Finance), QSS and Chief Finance Officer Director, Transaction Business General Manager, Energy Shane Harmer Alan Millis Services, QSS Networks and Regulation Director, Reporting and Finance General Manager, Queensland Bruce Hunt Bob Reilly Services, QSS Water Supply Regulator Director, Finance Business Sharon Dickman Abhijeet Singh Manager, Financial Services Improvement, QSS Linda Chalmers Senior Business Support Officer (Secretariat) ICT Investment and Strategy Committee
Meetings and achievements The department has an ICT Investment and Strategy Committee to comply with information The committee commenced meetings in the last standard IS2 ICT Resources Strategic Planning. 6 months of the 2012–13 financial year and met approximately monthly in that period. Role
Key achievements • Ensuring the department’s ICT investment and assets remain aligned with our business • Provided a structured forum, with priorities and plans and support whole-of- representation from all areas of the government ICT directions department, to oversee the preparation of the budget • Providing whole-of-department leadership, strategic direction and oversight in the • Reviewed and monitored the financial position planning and delivery of the portfolio of against budget ICT-related initiatives in the department • Considered and discussed reports from the • Providing assurance to the Director-General Chief Finance Officer and Financial Compliance that information management and ICT in the Subcommittee department is being appropriately governed to ensure return on investment through effective • Endorsed the finalisation of the department- delivery of approved initiatives and meeting specificFinancial management practice manual government priorities and financial delegations • Received regular updates on the implementation of a single payroll system
Department of Energy and Water Supply | 2012–13 Annual Report Page 12 Responsibilities Meetings and achievements • Reviewing and monitoring the department’s The committee met approximately every 6 weeks investments in information management during 2012–13. systems and technologies to ensure they are managed through appropriate governance Key achievements processes (including risk management) and delivering stated outcomes and benefits • Rolled out new software (including Microsoft Windows 7) across the department and • Authorising and directing the development consolidated mail services of strategic and operational plans for ICT-enabled business • Monitored relevant projects • Prioritising the department’s investments • Developed the ICT strategic plan in information management systems and • Established the ICT policy group technologies consistent with our strategic direction, and ICT Partnership Board and government priorities Human Resource Management Committee • Scrutinising the delivery of approved and Role funded project and program allocations and approving the reallocation of unused funds Undertaking strategic human resource planning for the department to enable business renewal • Escalating significant risks to the ICT activity, support cultural change and manage Partnership Board and/or the Director-General workforce risks • Monitoring information management and ICT service provider arrangements under Responsibilities the Business and Corporate Partnerships, • Providing consultation on the development including performance of whole-of-department strategies to manage • Developing the department’s information establishment within budget management capability • Supporting the development and implementation of the department’s workforce Membership management plan each year, once approved by EMT General Manager, Planning Danny Short (Chair) Performance and Governance • Monitoring implementation progress of agreed and Chief Finance Officer workforce management strategies and projects General Manager, Queensland • Providing strategic policy advice Bob Reilly Water Supply Regulator • Monitoring and reviewing workforce reports, General Manager, Generation Denis Warburton workforce management performance and and Fuel workforce risk treatments Director, Flood Inquiry Response Paul Walsh • Monitoring compliance with legislation, and Delivery Unit directives and policies relating to workforce Analyst, Water and Sewerage management Don Clunes Reform • Providing advice on the optimum use of human Tony Grant Chief Information Officer resources by overseeing the department’s establishment and staffing profile • Endorsing reward and recognition initiatives • Monitoring other human resource matters, including workplace health and safety, ethics and integrity
Department of Energy and Water Supply | 2012–13 Annual Report Page 13 • Supporting, facilitating and monitoring the Membership implementation of the WHS management Acting Executive Director, system Celia Venables Human Resources, Business and (Chair) Corporate Partnerships (BCP) • Supporting, facilitating and monitoring the implementation of the WHS strategies and Acting Deputy Director-General, Benn Barr providing leadership and direction to ensure Energy the key objectives and business priorities Deputy Director-General, Water are achieved Ken Sedgwick and Sewerage Services • Promoting an enhanced safety culture General Manager, Planning, Danny Short Performance and Governance • Overseeing the department’s WHS risk profile and Chief Finance Officer and recommending a systematic approach to managing specific WHS risks for adoption by Acting Manager, Human Conor Fardon senior management Resources, BCP • Identifying strategies to manage significant Acting Director, Human Cheryllyn Phillips Resources, BCP emerging WHS trends and facilitate the implementation of corrective action Meetings and achievements • Reviewing circumstances surrounding The committee met 6 times during 2012–13 workplace incidents that are referred to the committee for review and making and (approximately every 8 weeks). supporting recommendations from the reviews Key achievements • Monitoring WHS performance and providing strategic direction to enhance performance • Developed the establishment management within the department program to support workforce management and ensured that establishment was managed • Promoting continuous improvement by within budget in the department reviewing and reporting on WHS performance within the department against targets • Developed the performance and development agreement process for implementation in the • Monitoring compliance with legislative 2013–14 planning cycle (including training, obligations to ensure EMT is aware of support and tools) significant issues as they arise
• Monitored workforce and human resource management issues Membership Kate Callaghan Work Health and Safety Governance Deputy Director-General, BCP (Chair) Committee Deputy Directory-General, Karen Masnata Role Energy Deputy Director-General, Water Ensuring that the department fulfills statutory Ken Sedgwick obligations and organisational requirements for Supply and Sewerage Services the management of workplace health and safety General Manager, Planning (WHS) matters Danny Short Performance and Governance and Chief Finance Officer Responsibilities Judith Jensen General Manager, Liaison Office • Considering workplace health and safety risks Darren Schneider and issues relating to day-to-day operations Mark Williams Director, Human Resources, BCP • Facilitating the implementation of standardised Mandy Hendry Manager, WHS Unit, BCP corporate strategies, policies, processes and initiatives
Department of Energy and Water Supply | 2012–13 Annual Report Page 14 Meetings and achievements Public Sector Renewal Program The committee met twice during 2012–13. The Public Sector Renewal Program commenced in July 2012. The program aims to deliver on the Key achievements government’s vision to transform the Queensland Developed and implemented a range of WHS Public Service to be more efficient, deliver better initiatives, including: outcomes for the community and achieve best value for money for government services. • WHS policy statement The program is being overseen by the Public • WHS and injury management accountabilities Sector Renewal Board. The board is conducting and responsibilities matrix comprehensive operational efficiency reviews • WHS strategy 2012–13, including the strategic of government agencies to examine their implementation and action plan strategies and objectives and how efficiently and effectively they deliver services, and to make • WHS communication strategy 2012–13 recommendations for improvement. • WHS and injury management quarterly reporting framework. The department commenced its public sector renewal review in May 2013 and is currently examining its critical services and delivery Agency Consultative Committee models and was due to present to the board in The committee is co-chaired by the Executive late July 2013. The review is focused on 6 strategic Director, Human Resources and Communications, questions: and an employee representative from the unions. • What business are we in? It includes management representatives from across the department. • What are the services/functions that we deliver trying to achieve? Together Queensland, the Industrial Union of • Should the service/function be provided? If so, Employees and the Association of Professional should it be provided by government? Engineers, Scientists and Managers Australia were represented by union delegates who are • What is the best method of service delivery? employees of the department. Officials from both • Is there is a strong reason for the service/ unions attend in an ex-officio capacity. function to be delivered internally to The role of the committee is to provide a forum government? to discuss a broad range of employee issues and • How are we using the Commission of Audit provide an avenue for consultation between the contestability framework to examine what department and unions. This includes ensuring the business should be doing? the department implemented and complied with The presentation to the board will outline all relevant arrangements under the Industrial proposals and options around which services Relations Act 1999, the Public Service Act 2008 should continue, how they should be delivered, and the State Government Departments Certified and the capabilities required to be more efficient, Agreement 2009 (the Core Agreement). achieve value for money and ultimately deliver The committee met regularly and was the primary better outcomes for Queenslanders. forum for consultation on the department’s current In addition, agencies were requested to identify and emerging industrial issues, workforce strategy relevant ‘transformational change’ or renewal and organisational change issues. projects, aligned to the program’s 6 key areas of focus: service strategy; delivery models; governance and structure; assets; revenue; and procurement.
Department of Energy and Water Supply | 2012–13 Annual Report Page 15 The department identified 3 renewal projects Legislation and other government for 2012–13: bodies • Interdepartmental Committee on Water and Amalgamation of the SEQ Bulk Water Entities Legislation administered • Interdepartmental Committee on Electricity Sector Reform (including the Independent Legislation administered by the department as at Review Panel on Network Costs) 30 June 2012 in accordance with Administrative Arrangements Order (No. 4) 2012 is listed in • Department of Energy and Water Supply Appendix 1. strategic planning and organisational review. The department reported quarterly to the board Statutory authorities and through the Office of Public Sector Renewal, instrumentalities Public Service Commission. All 3 initiatives were delivered during the period and details of each Authorities, commissions and boards are can be found in Our performance. independent statutory bodies of the government established by an Act of Parliament to administer that Act.
Their operations and decisions must be independent of government ministers, departments and other agencies.
A schedule of energy and water supply statutory authorities and instrumentalities, including their reporting arrangements, is provided in Appendix 2.
Government-owned corporations A schedule of energy and water supply government-owned corporations, including their reporting arrangements, is provided in Appendix 3.
Department of Energy and Water Supply | 2012–13 Annual Report Page 16 Governance Risk and accountability
Risk management • access information, records and personnel of the department, for such purpose Risk management forms an integral part of • request the attendance of any employee, the department’s governance framework. The including executive staff, at committee department acknowledges that in order to achieve meetings its purpose and strategic objectives it must ensure a robust risk management system. That is why the • conduct meetings with the department’s department has developed a risk management internal auditors and external auditors, policy and procedure based on the AS/NZS ISO as necessary 31000:2009 Risk Management. • seek advice from external parties, as During the 2012–13 financial year, 4 strategic necessary. risks to the delivery of the department’s strategic The committee acts as a forum for dialogue objectives were identified: between the Director-General, senior • cost-of-living pressures not addressed by management, Internal Audit and the Queensland sustainable solutions Audit Office. • increasing demand for energy and water supply The functions and role of the committee do not diminish the statutory and regulatory duties and • balancing stakeholder expectations responsibilities of the Director-General, nor do • loss of critical capability and corporate they detract from management’s responsibilities knowledge. in relation to corporate governance, internal control, fraud prevention and risk management. A program of treatment options was developed to manage these strategic risks and progress in implementing them was reported quarterly to the Membership Executive Management Team and the Audit and Risk Committee. Managing strategic risks and Susan Rankin (Chair) Independent Consultant developing solutions to mitigate and treat residual Peter Dowling Independent Consultant risks remains a priority for the department. (external member)
Karen Masnata Deputy Director-General, Energy Audit and Risk Committee Deputy Director-General, Water Ken Sedgwick The Audit and Risk Committee was established in Supply and Sewerage Services accordance with the Financial and Performance Management Standard 2009 (s. 35). The committee met 4 times in 2012–13, and held 1 out- Committee members were provided with of-session briefing. The committee observed the recommendations arising from Queensland Audit terms of its charter having due regard to the Audit Office reports to Parliament that relate to the committee guidelines: improving accountability department. During 2012–13, 6 recommendations and performance issued by Queensland Treasury from previous periods were actioned and closed. (June 2012). As at 30 June 2013, 7 recommendations remained open. Of these, 4 of were on track to complete The committee is directly responsible to the implementation actions by their due date, and Director-General. In discharging its responsibilities 3 were past their due date. it has the authority to: • conduct or authorise investigations into Remuneration matters within its scope of responsibility Two external members received total remuneration of $8000 for their role on the committee.
Department of Energy and Water Supply | 2012–13 Annual Report Page 17 External scrutiny corporate governance processes, internal controls, risk assessment and management practices. This The Queensland Audit Office (QAO) in Results is in keeping with the role and responsibilities of audit: state public sector entities for 2011–12 detailed in the Financial Accountability Act 2009. (November 2012) identified that all state public sector entities should review procurement QGIAS reports to the Audit and Risk Committee practices for contract rollovers to ensure there quarterly. is appropriate contract succession planning and The internal audit function is independent that value for money is being maintained. As a of management and the external auditors. In result, a new contract procurement procedure 2012–13 QGIAS: was approved for the department. • discharged the responsibilities established Other QAO reports issued in 2012–13, which in the Internal Audit Charter by executing the were not targeted specifically at the department, internal audit program of work prepared as were forwarded to the department for a result of risk assessments, materiality and review and implementation of any beneficial contractual and statutory obligations recommendations. • provided reports on results of internal audits undertaken to the Audit and Risk Committee Queensland Ombudsman and the Director-General No investigative report of relevance to the • monitored and reported on the status of department was published in 2012–13. implementation of internal audit and external audit recommendations to the Audit and Risk Committee (management is responsible for Coroner implementation of audit recommendations) There were no significant findings of relevance • liaised with Queensland Audit Office to ensure to the department in 2012–13. there was no duplication of ‘audit effort’ • supported management by providing advice Internal audit on corporate governance and related issues, including fraud and corruption prevention The formation of the Queensland Government programs and risk management Internal Audit Service (QGIAS) was approved on 12 June 2012 as a result of restructures to • allocated internal audit resources to those government departments (Administrative areas considered to present the greatest risk Arrangements Order No. 3). QGIAS is a business and where the work of internal audit could be unit within the Department of Environment and valuable in providing positive assurance or Heritage Protection and provides internal audit identifying opportunities for positive change services to 5 departments in a • reviewed the departmental annual financial co-sourced arrangement. statements prior to presenting them to the Audit and Risk Committee The role, operating environment and operating parameters of QGIAS are established in the • provided secretariat support to the Audit and Internal Audit Charter, which has due regard to Risk Committee. professional standards and the Audit committee During 2012–13, QGIAS’s key achievements were: guidelines: improving accountability and performance issued by Queensland Treasury • completing the 2012 bridging program of (June 2012). internal audits
QGIAS provides independent assurance and • finalising the 2013 internal plan (program of work) advice to the Director-General, senior management and the Audit and Risk Committee. It enhances the • completing the fraud management department’s corporate governance environment practices review through an objective, systematic approach to • conducting fraud risk assessment workshops evaluating the effectiveness and efficiency of
Department of Energy and Water Supply | 2012–13 Annual Report Page 18 • performing computer-assisted audit techniques Internal audit staff members belong to professional bodies including the Institute • providing project assurance over the of Internal Auditors, CPA Australia and the machinery-of-government finance systems project Information Systems Audit and Control Association. The department continues to support • providing project assurance over the the ongoing professional development of internal machinery-of-government human resources audit staff. payroll systems project. Internal audit considers there are controls in Internal audit activities include: place to minimise the opportunity for fraud or • financial, compliance and operational reviews mismanagement in those areas of the department that were subject to the program of internal audits • information system and data integrity reviews as approved by the Director-General. • special review assignments as requested by management.
These activities are undertaken having regard to the International standards for the professional practice of internal auditing and Queensland Treasury’s Audit committee guidelines: improving accountability and performance.
Department of Energy and Water Supply | 2012–13 Annual Report Page 19 Governance Human resources
Public Sector Ethics Act 1994 The department continued to be an active participant in the Queensland Public Sector During 2012–13, the department increased Ethics Network and the Public Interest Disclosure employee awareness and understanding of the Coordinators Network. These networks, Code of conduct for the Queensland Public Service coordinated by the Public Service Commission through intranet news items, management and Queensland Ombudsman, provided a forum emails and face-to-face contact at various for regular discussion, information exchange, human resource network meetings. Employees benchmarking and promotion of ethics principles were provided with access to the code via the and practices within government agencies. department’s intranet. Employees were given access to education and training in public sector The department’s performance and development ethics and ethical decision-making in accordance agreement plan templates incorporated ethics with s. 12K of the Public Sector Ethics Act 1994. priorities, including adherence to the requirement This was achieved through a training course titled of education and training pursuant to s. 12K ‘Code of conduct and ethical decision-making’, of the Act. Managers were also encouraged to which employees were required to complete raise integrity and accountability matters in the as part of their induction, and then as a short workplace for regular discussion with employees refresher course annually thereafter. This training and to draw attention to their individual was developed in partnership with other agencies responsibilities as departmental employees. through the Business and Corporate Partnerships arrangement and was primarily supplied as an Workforce planning, attraction and online interactive training program, with the ability retention to be supplemented with face-to-face training if required. During 2012–13, Human Resources partnered with divisions to assist them to reorganise In addition, presentations and discussions their activities following the restructure of the relating to the code of conduct, the importance of department. Divisions were asked to outline ethical behaviour, and techniques to assist ethical their activities (what is done and how); what decision-making were also undertaken with a had changed in their business and for their staff selection of managers and employees. as a result of business renewal activities; and The department developed an integrity framework any resource or workforce management issues that provided the platform for the implementation challenging their workplaces. and progress of education and training for the Human Resources collated this information in code and related human resource management order to develop strategies and work programs to procedures and practices. support priority areas identified.
Human resource management procedures and Over the coming financial year, Human Resources practices developed or revised during the period will offer management and leadership programs, were assessed by the department’s human and will partner with the department to deliver resources and ethics practitioners to ensure more detailed workforce planning and capability compliance and alignment with the code. Online development activities, to ensure that it has the tools and resources, as well as specialist advice right people, in the right jobs, at the right time to networks, also assisted managers to meet their support service delivery. ethical responsibilities and increase employee awareness and understanding. As at 30 June 2013, the department employed approximately 238 active full-time equivalent staff.
Department of Energy and Water Supply | 2012–13 Annual Report Page 20 Annual separation and retention rates for material to encourage and support performance 2012–13 were: conversations. The emphasis has been on clarifying performance objectives and standards, • retention rate— 74.0% continuous improvement and capability • separation rate— 30.1%. development to achieve the department’s business objectives and sustain a high- Management and leadership performance workforce. development The departmental delivery of the performance management framework has seen a cascade of A suite of programs that focused on building performance and development agreements from the resilience of our people and increasing their the Director-General and senior executives flowing capabilities during times of change were offered through organisational structures to include staff. during 2012–13. These included: This provides a clear line of sight for staff and • Leading during Workplace Change—a program engenders accountability and an understanding for executives and managers focused on leading of how their role contributes to the broader self and others and building resilience in a departmental outcomes. changing environment • Building Resilience in the Workplace—a Flexible working arrangements: work–life program to provide staff with strategies to balance identify and manage stress and practical skills to help and maintain focus and morale and build Policies, processes and information were provided resilience in times of change to promote work–life balance and flexible working • Leading Resilient Teams through Change— arrangements. This included flexible work options designed for managers and staff to understand such as part-time work (including job-sharing responses to change and to develop practical arrangements), telecommuting, compressed strategies to build resilience in teams hours, purchased leave and phased retirement. Information was also reviewed and made available • The Change Room—an online program to on the intranet for breastfeeding in the workplace, examine change and how to self-manage through the change process, supported by including employee responsibilities and details an online facilitator. of parenting facilities located in major city and regional locations. The department sent 1 participant to the Public Sector Management Program. This leadership and management program was delivered by the Industrial and employee relations Queensland University of Technology. Human framework Resources will continue to promote whole-of-sector The department actively pursues a positive development programs within the department relationship with its industrial partners to promote during 2013–14. workplace harmony. The department meets all of its obligations under the relevant legislation, Employee performance management awards, agreements and public service directives. framework The department’s Agency Consultative Committee The department developed a comprehensive is a joint union–employer committee. It provides a performance planning framework to complement forum to discuss a broad range of employee issues the Public Service Commission Chief Executive and is an avenue for consultation between the and Senior Executive Service Performance and department and relevant unions regarding current Development Framework. This included the and emerging industrial issues. development of a new template and supporting
Department of Energy and Water Supply | 2012–13 Annual Report Page 21 Workplace health and safety communicated effectively across the department. The objectives of this communication strategy Workplace Health and Safety Strategy are to: In November 2012, the Director-General endorsed • provide a cultural change management process the department’s Work Health and Safety Strategy for the department by integrating health and 2012–2015. The strategy was developed from safety into standard business practices the Australian Work Health and Safety Strategy • assist in launching the Work Health and Safety 2012–2022, which provides a nationally Strategy across the department coordinated approach to work health and safety. • develop and implement a number of The strategy’s aim is to promote consultation and workplace health and safety communication a positive safety culture; establish meaningful mechanisms and tools (partnering the strategy governance structures and accountabilities; build implementation and action plan) to promote work health and safety leadership and workforce the strategy’s presence across the department capability; and implement an effective risk • provide a framework for workplace health and management framework. safety consultative arrangements Workplace health and safety targets • improve workplace health and safety performance by disseminating workplace The department has adopted 3 key national health and safety information across the targets for 2012–15: department to: • 6% reduction in the number of injuries »» promote and raise awareness of health and safety matters • 9% reduction in the incidence rates of all »» maximise compliance with legislation, claims resulting in 1 or more weeks off work departmental policies, procedures and • 9% reduction in the incidence rates of claims management systems. due to body stressing. Central to the success of the department’s The department will aim to reduce the target workplace health and safety is the recognition that measures by a third over each financial year a safe workplace is more easily achieved when during the life of the strategy. leaders and workers communicate with each other The department’s annual targets are: about workplace health and safety issues and work together to find solutions. • 2% reduction in the number of injuries The structure of workplace health and safety • 3% reduction in the incidence rates of all committees will have distinct and clear functions claims resulting in 1 or more weeks off work with regular performance reviews to ensure • 3% reduction in the incidence rates of claims intended outcomes are met. Consultation will due to body stressing. occur across all levels within the department, recognising the diversity of the business while The strategy targets are reviewed on a quarterly leveraging the benefits of sharing knowledge, basis and tabled at the Work Health and Safety experience and systems. Governance Committee. The department met all 3 targets for 2012–13. Early retirement, redundancy and The department continues its efforts to reduce retrenchment expenses related to WorkCover Queensland and will introduce formal reduction targets when A program of redundancies was implemented mature performance data is available. during 2012–13. During the period, 69 employees received redundancy packages at a cost of Consultative arrangements $4.5 million. Employees who did not accept The Work Health and Safety Strategy is supported an offer of a redundancy were offered case by a comprehensive communication strategy, management for a set period of time, where which outlines the communication framework, reasonable attempts were made to find alternative tools and mechanisms to be used to ensure employment placements. During the period, no workplace health and safety information is employees received retrenchment packages.
Department of Energy and Water Supply | 2012–13 Annual Report Page 22 Queensland Multicultural Policy the 2013–14 financial year. The department, where required or relevant, has addressed The department commenced an organisational accessibility to interpreter services as well review in July 2012. The review culminated in as information. People from a culturally and an announced optimal structure effective from linguistically diverse background are valued 1 January 2013. contributors to our organisation and we ensure Following the announcement of the new roles with the department are promoted and organisational structure, business units have accessible to people from these backgrounds. focused on transitioning staff and consolidating The following reported measures reflect the the business delivery of the department. activities of a new department evolving to Accordingly any planned training activity for meet the whole-of-government core cultural competence has been deferred until multicultural outcomes.
Queensland Multicultural Action Plan 2011–14: whole-of-government core outcomes Core outcome Performance indicators Measure Number of staff who have participated in cultural Nil training this competence training annually reporting period Improved cultural Number of staff who have participated in cultural competence of staff Nil training this competence training as a percentage of the total number reporting period of department staff for the year
Amount spent annually on interpreters engaged by the Nil requests this department and government-funded non-government Improved access to reporting period interpreters for clients organisations when accessing services Number of interpreters engaged annually by the department Nil requests this and government-funded non-government organisations reporting period
Number of key information publications translated into Nil languages other than English annually
Nil Improved communication Number of languages other than English in which and engagement publications are available with culturally and Nil linguistically diverse Number of information sessions or workshops held for (CALD) communities people from culturally and linguistically diverse backgrounds and/or organisations Number of culturally and linguistically diverse groups, peak bodies and other stakeholders consulted or engaged Nil annually on the development or implementation of department projects, services, policies and programs
29 employees (11.46%) Number and percentage of staff indicating they are from have indicated they are Improved recruitment a non–English speaking background from a non–English and retention strategies speaking background for staff from CALD backgrounds Number of complaints about racial discrimination within Nil the department
Department of Energy and Water Supply | 2012–13 Annual Report Page 23 Governance Information management
Information systems A single consolidated recordkeeping platform has been agreed for the department and work The department continues to operate, maintain has commenced to migrate and decommission and develop a range of information systems the legacy recordkeeping systems. The former to support services, initiatives and corporate NRW RecFind system containing over 4 million operations. Highlights include: records has been migrated into the consolidated • Queensland Gas Scheme—tracking and recordkeeping platform. A program of electronic validation system for gas electricity certificates document and records implementation and training is ongoing throughout the department, • Solar Hot Water Rebate Management System— including the development of new e-learning stores data on the rebates paid, with details of training packages to deliver ongoing training tradespersons used in the installations across the state. • Project Governance System—stores and reports on key data for projects Open data • Solar Hot Water Program Database—program The Queensland Government’s open data is now closed, but the Rebate Management revolution aims to release as much information System crosschecks its applicants with those as possible to encourage the private sector to in this database as part of eligibility checking develop innovative new services and solutions to • Water Industry Compliance Database—stores Queensland problems. information in relation to compliance activities of water entities and regulatory activities of the The department has published its Open Data Queensland Water Supply Regulator in relation Strategy 2013–17 and is committed to releasing to the Water Supply (Safety and Reliability) as much data as possible in an easy-to-find and Act 2008 chapters 2 and 4 accessible manner. Released data will be free and made available under the least restrictive licence, Recordkeeping allowing for its use and re-use. Where practicable, the department will publish data in machine- The department is operating a recordkeeping readable formats that can be downloaded, indexed strategy to ensure that it complies with the Public and searched by commonly used web applications. Records Act 2002, Public Service Act 1996, and Information Standard 40—Recordkeeping. The following 3 annual reporting requirements are now available through the Queensland Government Records Management Services delivers document Open Data website (www.data.qld.gov.au): and records management services to the department through a support, training, service • consultancies delivery and records processing model. »» consultancies expenditure broken down into categories relevant to the agency A major appraisal and disposal program has been »» the total cost of consultancies established, designed to identify time-expired records for disposal and to transfer permanent • overseas travel records to the Queensland State Archives. »» the name of the officer and their position Legacy records from Allconnex Water and the »» the destination and reason for travel Queensland Water Commission were transferred »» the cost of the travel (travel, accommodation to the department and arrangements made for and on-costs), including an indication of their future management. Permanent records contribution from other agencies or sources were prepared and transferred to the Queensland State Archives. Off-site record holdings have been • Queensland Multicultural Policy »» the implementation of the Queensland identified and inherited legacy records are being Multicultural Policy appraised and processed. »» performance against actions and core outcomes.
Department of Energy and Water Supply | 2012–13 Annual Report Page 24 Our performance
The department’s strategic direction in 2012–13 1.3 Manage risks associated with energy and was set out in our Strategic Plan 2012–2016, water supply services through effective including what we intended to achieve (our planning and policy objectives); how we would achieve it (our 1.4 Ensure efficient and effective regulation strategies); and how we would measure our success (our performance indicators). 1.5 Anticipate and provide policy and regulatory advice on emerging market dynamics and Performance against 2012–13 service delivery technologies statement measures is outlined in Appendix 4.
During 2012–13, the department had 5 major Energy—key achievements strategic business objectives: • cost-effective, safe, secure and reliable 30-year electricity strategy energy and water supply During 2012–13, the department progressed the • effective reform development of a 30-year electricity strategy to set out a clear vision and action plan to • engaged stakeholders achieve a resilient, cost-effective and customer- • optimise shareholder value focused electricity sector in Queensland. This process has been shaped by the outcomes of the • a capable, flexible and proud workforce. Interdepartmental Committee on Electricity Sector Reform and the Independent Review Panel on Objective 1: Cost-effective, safe, Network Costs. secure and reliable energy and The department released a directions paper on water supply 17 December 2012, which defined the current challenges and opportunities facing the electricity sector in Queensland; outlined the context for the Performance 2012–13 2012–13 Notes reform process; and established a road map for indicator Target Actual the development of the strategy. The department 30-year strategies received nearly 80 submissions in response for Queensland’s to the directions paper, which were assessed electricity and water supply sectors and have informed the development of the 1 100% 100% developed within 30-year electricity strategy discussion paper. The agreed time frames discussion paper will be released in the second and endorsed by half of 2013, inviting further feedback from Cabinet Queenslanders. Further information is available 1. Although the final 30-year electricity and water sector at www.dews.qld.gov.au. strategies have not yet been finalised and endorsed by Cabinet, the target was based on meeting 100% of Freezing Tariff 11 agreed milestones (including revised milestones) for each quarter during the period, which was achieved. The government froze Tariff 11, the residential electricity tariff, for 12 months commencing Strategies 1 July 2012. From that date, the only increase that customers received was the addition of the 1.1 Develop 30-year strategies for Queensland’s Australian Government’s carbon tax. To achieve electricity and water supply sectors the freeze, a subsidy was provided to electricity 1.2 Identify and implement strategies to address retailers via a reduction in the relevant Energex cost pressures on energy and water prices network charge for customers being charged the regulated price or whose market contracts were at or below the regulated price.
Department of Energy and Water Supply | 2012–13 Annual Report Page 25 An average household on Tariff 11 will see a During 2012–13 savings of over $100 million were price increase of 22.6% from 1 July 2013. The also attained through the cessation of a number Queensland Competition Authority has applied a of climate-smart initiatives, including the 3-year transitional arrangement to Tariff 11 in order Cloncurry Solar Farm, Solar Hot Water Rebate to manage the consumer impacts of rebalancing and Solar Flagships. the fixed and variable charges of Tariff 11 so they Since 1 July 2012, household bills have displayed reflect their true cost by 1 July 2015. the impact of the carbon tax on retail electricity Tariffs for small business customers will increase prices. This helps customers understand how by 13–17.4% on average, depending on the much this tax adds to their bill. tariff. The Queensland Competition Authority has advised that tariffs that are classified as Increased customer protections for contract ‘transitional and obsolete’ will still be able to be exit fees accessed by customers for another 7 years, at The department completed legislative which time they will be removed from the tariff amendments to the Electricity Act 1994, which schedule. Transitional and obsolete tariffs are guarantees protection to customers who wish to generally accessed by farming and irrigation change electricity retailers after being advised of a customers and large business customers outside price increase. The amendments prohibit retailers South East Queensland, and are being phased from charging early termination fees if they raise out as they do not reflect the underlying cost electricity prices above the regulated notified of supply. price for customers on market contracts. This However, in acknowledging the cost pressures and has encouraged customers to review their bills conditions facing the agricultural sector, and in regularly and provided them with the support of the 4-pillar economy, the government option of reverting to the notified price or has capped the increase for all transitional and switching retailers. obsolete tariffs at 10% in 2013–14. Delegation to Queensland Competition Further information about regulated Authority for price setting retail electricity prices is available at On 5 September 2012, the Minister issued a www.dews.qld.gov.au. delegation (including terms of reference) to the Reducing the cost of solar and carbon Queensland Competition Authority (QCA) to reduction programs commence its pricing determination process for a 3-year period, commencing 1 July 2013 until Since March 2013, the department has been 30 June 2016, rather than annually as in previous reviewing a range of options to address the delegations. This provides the QCA with more ongoing costs of the Solar Bonus Scheme feed-in scope to lessen financial impacts on electricity tariff, which was legislated in 2008 and whose customers, and provides the electricity industry costs are being passed on to all electricity with more certainty. The QCA will still announce customers via higher network pricing. In July annual price determinations. 2012, the government reduced the tariff for new customers from 44 cents to 8 cents per The QCA released its draft determination for kilowatt hour. 2013–14 regulated retail electricity prices on 22 February 2013 and the department provided The department also implemented additional detailed analysis and advice to support the cost-saving measures that prevent the transfer government’s response to the draft determination. of the 44 cent tariff between property owners Following extensive stakeholder consultation, and/or tenants. These measures are estimated the QCA released its final determination on to save more than $1 billion in tariff payments by 31 May 2013. 2028. Further information about the Solar Bonus Scheme is available at www.dews.qld.gov.au.
Department of Energy and Water Supply | 2012–13 Annual Report Page 26 Gas supply trading hub at Wallumbilla Energy—future directions Through the work of the Standing Council on 30-year electricity strategy Energy and Resources on energy market reform, the department continued to facilitate the The 30-year electricity strategy discussion paper development of a gas supply hub at Wallumbilla, will be released, inviting further feedback from west of Brisbane. The development of the gas Queenslanders. The final 30-year electricity trading exchange aims to enhance transparency strategy will outline the government’s longer term and reliability of supply by creating a voluntary policies and planned actions to achieve the vision market that offers a low-cost, flexible method to for Queensland’s electricity sector and will be transfer title of gas from 1 party to another and released in early 2014. enhance transparency, reliability and flexibility Reducing the cost of solar and carbon of gas trading and supply. reduction programs Wind farm planning guidelines From 1 July 2013, information on household During 2012–13, the department progressed electricity bills will be expanded to include the work on the development guidelines for wind cost of the Renewable Energy Target. farms. This work is ongoing with the draft State The department will continue to review the Planning Policy currently providing for wind Solar Bonus Scheme feed-in tariff and report farm developments to be referred to the State to government in the second half of 2013 with Assessment Referral Agency for approval. options to reduce the scheme’s cost and price Sustainable gas market impacts. This will include consideration of the policy settings for a future feed-in tariff once the The Queensland gas market was reviewed in 8 cent tariff ends on 30 June 2014. 2010, 2011 and 2012 to inform decision-making on security of domestic gas supply; more effective Sustainable gas market resource management; and the development The gas supply trading hub will be implemented of a more competitive Queensland gas market. in early 2014. The hub will be the first in Australia The 2012 gas market review was released on and is intended to be a national model, which 27 September 2012. The department has been could be replicated in other locations. monitoring the market closely and continues to work with other jurisdictions and through the The department will participate in the Australian Standing Council on Energy and Resources. domestic gas market study to be completed by the end of 2013. This will be a comprehensive Energy sector regulation analysis of the current state of play and challenges During the period, the department continued to in the market, and will include an assessment of administer the statutory functions of the regulator potential policy responses. under the Electricity Act 1994 and the Gas Supply Wind farm planning guidelines Act 2003, including: The department will provide necessary • administering licensing functions for electricity information and support to implement the generation and transmission and electricity wind farm planning guidelines, following their and natural gas distribution and retail entities completion. • monitoring and enforcing compliance for energy entities and liaising with other responsible authorities, including the Water—key achievements Queensland Competition Authority and the 30-year water sector strategy Energy and Water Ombudsman Queensland. The government has committed to creating a strong and resilient water sector to help deliver Queensland’s economic and lifestyle goals. To achieve this, the department has progressed the development of a long-term water sector strategy for Queensland.
Department of Energy and Water Supply | 2012–13 Annual Report Page 27 A discussion paper was released on 18 December South East Queensland bulk water price review 2012 to seek input into the development of During 2012–13, the department undertook a the strategy. The discussion paper set out the review of SEQ bulk water prices. The outcomes key challenges facing the sector, as well as of the review were considered and accepted by opportunities for creating a water sector that government on 28 March 2013, with the new bulk can deliver water supply, irrigation, recreation water prices taking effect from 1 July 2013. opportunities and environmental services at the lowest cost. As part of the process, the department identified a number of measures to lower the price increase, During the 3-month consultation period, 124 enabling the government to reduce the annual submissions were received from local councils, household increase for 2013–14 and 2014–15 water service providers, industry, researchers and to $49 for an average household (except for the the community. A number of public forums and Somerset Regional Council, where there is a lower industry workshops were also held, which have increase). The measures that have contributed to informed the development of the draft 30-year the lower price increase included: water sector strategy. The resulting draft strategy is due to be released in the first half of 2013–14. • abolishing the Queensland Water Commission Further information, including a feedback • removing the previous requirement to build report on submissions received, is available additional infrastructure in the foreseeable at www.dews.qld.gov.au. future from the regional water security program Queensland Government Bulk Water Rebate for SEQ • operating the manufactured water assets The government committed to providing a at lower cost levels, including continuing to one-off $80 bulk water rebate to help reduce operate the Gold Coast Desalination Plant cost-of-living pressures for households in South in stand-by mode and closing the Western East Queensland (SEQ). The department worked Corridor Recycled Water Scheme in close partnership with the 5 water service providers in SEQ to facilitate the necessary • merging the bulk water entities into 1 entity, arrangements to distribute the water rebate. All reducing administration costs. households who pay water charges, either to their Further information about bulk water prices in water service provider or their body corporate, SEQ is available at www.dews.qld.gov.au. were eligible for the rebate, which was applied to the first or second bill of 2013. SunWater irrigation prices 2013–14 rebate
The water rebate is also being applied to residents The department has supported SunWater to in SEQ retirement villages and manufactured home determine and implement a one-off rebate for parks. As these households do not receive a water Mareeba–Dimbulah relift, Bundaberg and Lower bill directly from an SEQ water service provider, Mary irrigation channel tariff groups. the $80 water rebate is being paid directly by South East Queensland System Operating Plan the government. All rebates for these multi-unit households should be received by September The South East Queensland System Operating 2013. As at late June 2013, approximately Plan Version 5, made under the Water Act 2000, 1.096 million households received the $80 water facilitates the achievement of the desired level rebate, at a cost to the Queensland government of service objectives for SEQ. The plan sets out of $85.5 million. An additional $1.2 million is the operating rules for the water grid to ensure expected to be paid by the completion of the sufficient water will be available to meet regional rebate in September 2013. The Gold Coast City water demands. Council contributed $10 per household towards the water rebate for its residents.
Further information about the bulk water rebate is available at www.dews.qld.gov.au.
Department of Energy and Water Supply | 2012–13 Annual Report Page 28 Regional Water Security Program for the Staff within the department also participated South East Queensland region in the Community Recovery Ready Reserve operations following natural disasters The Minister approved the revised 2012 Regional experienced across the state during late January Water Security Program for SEQ based on advice and February 2013. received from the Queensland Water Commission. This program ensures water security in SEQ by Non-commercial water assets managing and establishing strategies and actions The department completed the safety upgrade of to ensure preparedness to respond to future Ibis Dam and transferred the dam to Tablelands demand and drought. This includes planning Regional Council after completing a due diligence for supply augmentation, drought response and review in consultation with the council and timely use of manufactured water. The program community. minimises the likelihood of running out of supply capacity and consequent hasty infrastructure Safety signage and fencing upgrades were investments. completed at Loudoun Dam and various weirs to ensure public and staff safety. Regional water supply planning Regional water supply planning is undertaken Water sector regulation to promote economic growth and development The department continued to administer the and water supply security with consideration of statutory functions of the regulator under the the available water resource for the area. This Water Supply Safety and Reliability Act 2008 planning seeks to ensure that the state’s future relating to: urban, rural, industrial and mining water needs • drinking water service providers, including can be met and to identify significant supply risks approval of drinking water quality management in the short, medium and longer term. During plans 2012–13, the department consulted on the draft North West Regional Water Supply Strategy and • production and supply of recycled water prepared water supply strategies for the Galilee, • dam safety of referrable dams. Bowen and Surat coal basins as part of the Department of State Development, Infrastructure A full report of the Queensland Water Regulator’s and Planning (DSDIP) infrastructure frameworks drinking water quality activities is available in for these basins. The department is continuing to Appendix 5. assist with assessments on water supply potential to support DSDIP’s Central Queensland resource Water—future directions supply chain. 30-year water sector strategy 2012–13 wet season The draft 30-year water sector strategy will be The department advised the Minister in relation to released in the first half of 2013–14. The draft his powers to make declarations for temporary full strategy will identify key areas of implementation supply levels for relevant dams in SEQ (Wivenhoe for the first 5 years. and North Pine Dams) under the Water Supply (Safety and Reliability) Act 2008. Queensland Government Bulk Water Rebate The department continued to enhance its The rebate will be completed. responsibilities as the functional lead agency in relation to electricity, gas and fuels and water SEQ bulk water price review supply under the Disaster Management Act 2003 The department proposes to consult with the and the state disaster management framework. community on the revised desired level of service This included a review of the arrangements put in objectives for SEQ before the end of 2013. This place following Tropical Cyclone Oswald. will ensure a good understanding of community expectations about water restrictions, the security of water supply and planning assumptions that will drive investment decisions in the SEQ bulk water supply system.
Department of Energy and Water Supply | 2012–13 Annual Report Page 29 Regional water supply planning Energy—Key achievements Work continues in relation to regional Queensland Interdepartmental Committee on Electricity water supply planning to improve water service Sector Reform (including the Independent delivery through identifying water supply needs, Review Panel on Network Costs) risks and opportunities; developing strategies to improve resilience to drought and flood extremes; In mid-2012, the government established the and reducing the cost and impact of disruptions Interdepartmental Committee on Electricity to services. Sector Reform (IDC) to investigate the current challenges in the electricity sector and make The department (along with the Bureau of recommendations to ensure: Meteorology, Seqwater and the Chief Scientist in the Department of Science, Information • electricity in Queensland is delivered in a cost- effective manner for consumers Technology, Innovation and the Arts) will continue to provide such advice as and when needed. • Queensland has a viable, sustainable and competitive electricity industry Non-commercial water assets • electricity is delivered in a financially The department has commenced a review of sustainable manner from the Queensland its non-commercial water assets with a view to Government’s perspective. providing options on future management of the assets for government’s consideration in 2013–14. The IDC was chaired by the Director-General of the Department of Energy and Water Supply and also Water sector regulation included the Director-General of the Department of the Premier and Cabinet and the Under Treasurer, The activities and priorities for the Queensland Queensland Treasury and Trade. The IDC was Water Supply Regulator will be set out in the supported by an independent review panel to department’s Annual Compliance Plan 2013–14. investigate the impact of Queensland’s electricity network on prices. Objective 2: Effective reform The department actively supported the work of the IDC and panel through research, analysis and Performance 2012–13 2012–13 Notes secretariat services. Following a comprehensive indicators Target Actual review of the sector and consideration of the Regulatory reduction 1 8 17 expert advice of the review panel, the IDC initiatives completed delivered its final report to government in early Number of 2013. The government’s response to the IDC report Queensland Floods was released on 16 June 2013. Commission of Inquiry 17 24 recommendations The final IDC report makes a number of implemented on time recommendations for reform across the electricity sector. The recommendations are grouped into 1. This target was based on 8 red-tape reduction initiatives identified by Queensland Treasury and 3 broad strategies: Trade. The department delivered additional red- tape reduction initiatives during the period. • Strategy 1—stop building unnecessary infrastructure and improve the efficiency of network businesses Strategies • Strategy 2—maximise the benefits of 2.1 Implement energy sector reform competition while protecting customers 2.2 Implement reform of the South East • Strategy 3—develop a more effective role Queensland water sector for government.
2.3 Reduce red tape and streamline regulatory Key reforms will include introducing tariff reform; requirements moving from a price control approach to a price 2.4 Implement relevant Queensland Floods monitoring approach; strong customer protection; Commission of Inquiry recommendations better customer engagement; and moving to a
Department of Energy and Water Supply | 2012–13 Annual Report Page 30 network-based community service obligation The department is supporting the residents and for delivery of the uniform tariff policy. The businesses of the Daintree in developing new government has also given in-principle approval power supply options for the region. to establishing a holding company for Energex and Ergon Energy. Cessation of the Queensland Gas Scheme and Smart Energy Savings Program Following the release of the IDC report, the department acted quickly to establish the The government has introduced legislation Electricity Reform Implementation Committee to amend the Electricity Act 1994 to cease the (ERIC). This comprised senior representation from Queensland Gas Scheme as at 31 December 2013 Queensland Trade and Treasury, the Department and repeal the Clean Energy Act 2008 to cease the of the Premier and Cabinet and the Department of Smart Energy Savings Program. Energy and Water Supply to oversee the electricity The scheme requires electricity retailers to source sector reform implementation program. The first 15% of their electricity from gas-fired generators to meeting of ERIC was held on 9 July 2013. develop the gas industry and reduce greenhouse As lead agency for the electricity sector reforms, gas emissions from electricity generation. The the department has also established a program cessation of the scheme will reduce compliance office to manage coordination of the reform costs for retailers. implementation and serve as secretariat to ERIC. The Smart Energy Savings Program requires A range of reference and working groups for critical businesses with energy consumption above projects to address the IDC recommendations are certain thresholds to undertake an energy audit, also being established. The IDC outcomes will develop an energy savings plan and publish their inform the further development of the 30-year actions on a 5-yearly cycle. The cessation of the electricity strategy. program will remove a compliance burden (and Further information about the IDC, including its associated compliance costs) for participants. final report and the government’s response, is available at www.dews.qld.gov.au. Removal of standards for new coal-fired power station Red-tape reduction initiatives for the energy sector In March 2013, the government announced the removal of a requirement that any new coal-fired These initiatives were designed to increase power station be ‘carbon capture ready’ and competition and reduce costs for industry, commit to the implementation of carbon capture providing a positive flow-on effect to consumers. when commercialised. With the introduction of the Australian Government carbon pricing mechanism Repeal of the Daintree Electricity Supply Policy this policy is redundant and its removal brings The repeal of the Daintree Electricity Supply Policy Queensland in line with other states and territories. was approved by government on 6 November Adoption of the National Energy Customer 2012. Daintree residents and businesses now Framework have an opportunity to improve their power supply arrangements in a market-driven manner, which As part of its response to the final report of the was previously banned under the old policy. Interdepartmental Committee on Electricity Sector Options such as shared power supply networks, Reform, the government has conditionally agreed which can often be cheaper than using individual to adopt the National Energy Customer Framework generators, are no longer prevented by the policy. in 2014, after consideration of options that will ensure protections for customers outside of South The Daintree will remain excluded from Ergon East Queensland. The framework harmonises the Energy’s network delivery area, and any decision way states and territories regulate energy retail to extend Ergon’s distribution would have to be operations, replacing multiple energy retailer carefully considered by government at a future licensing regimes with one. In doing so it creates point in time. efficiencies for retailers operating across state and territory borders.
Department of Energy and Water Supply | 2012–13 Annual Report Page 31 Adoption of the framework in Queensland would bulk water services in SEQ (Seqwater) commenced repeal separate retail licensing, reporting and operations on 1 January 2013 and the QWC was customer protection regimes for electricity abolished effective 1 January 2013. As a result: and gas in favour of a new regime covering • Responsibility for water restrictions and water both electricity and gas. Simplifying regulation efficiency management plans was transferred for retailers of electricity and gas will mean a to water service providers. The department reduction in regulatory compliance costs that may, will continue to consider a long-term approach due to increased retailer competition, result in to water restrictions in SEQ, in particular, to reduced cost pressures on customer retail pricing. identify appropriate roles and responsibilities to develop, implement and enforce restrictions. The framework will strengthen the safety net The department will provide advice on such for vulnerable electricity customers and bolster long-term arrangements by early 2014. customer protections for gas customers generally. It will also provide all-new protections for energy • The water savings targets for new houses and consumers in on-supply arrangements commercial and industrial buildings, which (e.g. tenants supplied electricity or gas by included rainwater tanks, have been reviewed. Changes to the water savings targets in the a landlord). Queensland Development Code MP4.2 and 4.3 are expected in 2013. Energy—future directions • The former SEQ market rules ceased from 30-year electricity strategy 1 January 2013 and were replaced with the SEQ Bulk Water Supply Code (outlined below). The 30-year electricity strategy discussion paper will be released early in 2013–14 for a period of Bulk Water Supply Code public consultation. This will inform a number The Bulk Water Supply Code, administered by of ongoing reforms in the sector to ensure that the department, regulates the supply of bulk our electricity supply system meets the needs of services such as the supply of water and water Queensland customers. services in SEQ. The code provides for the regulation of operational matters (e.g. whole- Water—key achievements of-system planning and protocols), pricing and access matters, and other miscellaneous and Amalgamation of the South East Queensland transitional matters. bulk water entities and removal of water restrictions Other red-tape reduction initiatives for the water sector As part of its 4-point water plan to reduce water prices, the government committed to merging These initiatives were designed to increase the bulk water authorities in SEQ and abolishing competition and reduce costs for industry, the Queensland Water Commission (QWC). The providing a positive flow-on effect to consumers. department was responsible for the amalgamation project, overseen by the Interdepartmental Streamlined water approval process Committee on Water. During 2012–13, the department prepared The South East Queensland (Restructuring) and proposed legislative changes to provide a Other Legislation Amendment Bill 2012 was streamlined water approval process for water introduced into Parliament on 31 October 2012 service providers in SEQ. The proposed changes, and was passed by the Legislative Assembly on approved on 1 July 2013, will simplify legislative 29 November 2012. The statutory authority for arrangements for distributor-retailers to approve connections to their water and sewerage networks. It is anticipated that appropriate legislative amendments will be introduced in the second half of 2013.
Department of Energy and Water Supply | 2012–13 Annual Report Page 32 Reducing regulatory reporting and other On 7 June 2012, the government released its requirements for water service providers response to the final report, which supported all of the report’s recommendations and These changes included: outlined the government’s implementation • replacing the requirement for various framework, including the establishment of management plans with annual performance 5 implementation groups: reporting, publication of a comparative report, and increased transparency for customers • Planning Implementation Group • simplifying the regulation of recycled water • Building Implementation Group by only requiring schemes with higher risks • Environment and Mines Implementation Group to have recycled water management plans • Emergency Management Implementation Group • reducing reporting obligations for some dam owners by extending the periods for failure • Dams Implementation Group. impact assessment reporting The department is leading the Dams • reducing reporting for certain water service Implementation Group and had a key role in providers about drinking water quality implementing recommendations within the incidents by extending the reporting period Building Implementation Group and Planning from quarterly to annually from 1 July 2012 Implementation Group. until the service provider’s water quality management plan is approved At 30 June 2013, the Dams Implementation Group had ensured that 26 recommendations were • removing monthly reporting on SEQ drought successfully implemented, including a reviewed infrastructure projects by water service providers under the Water Regulation 2002 and updated Queensland urban drainage manual; legislation to improve dam safety conditions; • implementing changes to industrial relations emergency action plans; future flood mitigation requirements for council-owned water business manuals; and declaring temporary full supply in SEQ levels. The 14 longer term recommendations • expanding the criteria for exemption from the are due to be completed by 30 June 2014 and requirement for water suppliers to fluoridate the 2 remaining recommendations are being implemented by third parties. • permitting an authorised person appointed by a service provider who replaces and maintains Some of the key recommendations implemented water meters to also install them to reduce by the department to date are provided in costs and save time. the following. Implementation of relevant Queensland SEQ flood management Floods Commission of Inquiry recommendations The department is coordinating the Wivenhoe– Somerset Dam Optimisation Study (WSDOS) The Queensland Floods Commission of Inquiry and the North Pine Dam Optimisation Study (QFCOI) was established in January 2011 to (NPDOS) in consultation with stakeholder local examine the state’s 2010–11 flood events. On governments and state agencies. The first stage 16 March 2012, the QFCOI released its final report. of both studies is investigating operational The 177 recommendations were directed at a broad options to improve flood mitigation outcomes with range of issues, including floodplain management, Stage 1 for NPDOS and WSDOS due for completion land use planning, building regulations, the in December 2013 and February 2014 respectively. performance of private insurers, operational and abandoned mines, emergency management and Through this work, the Queensland Government dam management. The department is responsible will consider the implications of operational for completing 42 of the 177 recommendations. strategies over a range of flood events, having regard to inundation of urban and rural areas; water supply security; dam safety; submerging of bridges; bank slumping and erosion; and riparian fauna and flora.
Department of Energy and Water Supply | 2012–13 Annual Report Page 33 Ministerial Advisory Council for Flood On 24 September 2012, the department released Mitigation Manuals the independent review. The United States Department of the Interior Bureau of Reclamation On 24 April 2013, the Minister established the and the United States Army Corps of Engineers Ministerial Advisory Council for Flood Mitigation jointly conducted the independent review. The Manuals. The department facilitated the US institutions brought proven expertise in the necessary arrangements for the establishment operations of large and gated flood mitigation of the council and provides its secretariat. dams similar to Queensland’s dams, and assured The advisory council is a key step in the approval Queensland residents, especially flood victims, of process for future flood mitigation manuals the absolute independence of the review. submitted by Seqwater to the Minister. Flood The report addresses key issues, including mitigation manuals guide and determine critical the safety of the dams, flood operations, the decision-making by dam engineers during flood January 2011 flood event and Seqwater’s report events at the 3 flood mitigation dams in SEQ, into that flood event, and makes a number of namely Wivenhoe, Somerset and North Pine dams. recommendations. The members will provide independent advice and expertise about whether a manual is suitable and The department is considering the findings and meets the requirements of the legislation. recommendations of the independent review. The recommendations are also being assessed The advisory council held its inaugural meeting by engineers from the department’s Queensland on 2 May 2013. It is anticipated that in early Water Supply Regulator and engineers from August 2013, Seqwater will submit for approval Seqwater, with the first priority being to identify the revised flood mitigation manuals for the 3 dam safety matters for future wet seasons. dams. These revisions are expected to be minor, but important, improvements. Major revisions to Urban drainage manual the manuals are not expected until after the dam optimisation studies are completed in early 2014. The Queensland urban drainage manual was originally published in 1992 and is intended to Independent review of Seqwater’s flood assist engineers and stormwater designers in the event report planning and design of urban drainage systems within Queensland. During 2012–13, the department facilitated an independent review of Seqwater’s January 2011 The department has undertaken a review of the flood event: report on the operation of Somerset manual as required by recommendation 10.8 of Dam and Wivenhoe Dam (2 March 2011). the Queensland Floods Commission of Inquiry. As a result, a draft 2013 edition of the manual has The purpose of the independent review was now been released with feedback due by the end to implement recommendation 16.3 of the of October 2013. Queensland Floods Commission of Inquiry. This key recommendation required that an The manual is designed to be used in partnership appropriately qualified and independent person with other design manuals on topics such be engaged to review Seqwater’s report. The as floodplain management; total water cycle completion of the independent review also management; water sensitive urban design; and addressed the government’s commitment to natural channel design. The department will identify any dam safety issues for the 2012–13 publish a final 2013 version in December 2013, wet season. incorporating relevant feedback.
Further information about the department’s floods response is available at www.dews.qld.gov.au.
Department of Energy and Water Supply | 2012–13 Annual Report Page 34 Objective 3: Engaged stakeholders advocacy has been of key interest, with facilitated discussions on the proposed national consumer advocacy body and possible arrangements in Performance 2012–13 2012–13 Notes Queensland. indicator Target Actual Stakeholder engagement survey Level of stakeholder satisfaction with 1 90% 77% The survey was conducted between 24 May and engagement on key 11 June 2013 and distributed to a number of the programs/initiatives department’s key stakeholders. There was a 1. The department’s stakeholder engagement satisfaction 59.5% response rate to the survey with almost all online survey delivered an overall satisfaction rating (91.3%) of the respondents having had dealings (either satisfied or very satisfied) result of 77.3%. with the department at least once a month in the year preceding the survey. The overall stakeholder Effective stakeholder engagement is a critical engagement satisfaction rating (satisfied or very element of the department’s policy, planning, satisfied) was 77.3%. reform and regulatory programs as detailed Stakeholder forums throughout this report. Frequent and open consultation with stakeholders is paramount to In implementing a program of reform across successfully progressing key reform initiatives the energy and water sectors, the department in the energy and water supply sectors. has engaged a wide variety of stakeholders in appropriate forums, including: Strategies • the establishment of the Electricity Reform Implementation Committee (ERIC) and other 3.1 Positively engage and influence our reference and working groups to address and stakeholders to ensure a shared implement the recommendations arising from understanding of expectations, roles and the Interdepartmental Committee on Electricity responsibilities Sector Reform 3.2 Work in partnership with our stakeholders • an invitation for submissions during the to develop and deliver innovative solutions development of both the water and electricity strategies following the release of the 3.3 Enable service providers and dam owners directions and discussion papers to build their capacity and capability • public forums and industry workshops during 3.4 Support innovation, research and the development of the draft 30-year water development in the energy and water sector strategy supply industry • an industry-based strategic reference group 3.5 Influence national energy and water to assist in the further development of the supply agendas 30-year electricity strategy • the establishment of working groups and an Key achievements independent project team to establish local management arrangements for SunWater’s Consumer and Industry Reference Group irrigation channels.
The department participated in the Consumer Northern Queensland Councils Community and Industry Reference Group, which focuses on Education Project issues that affect residential and small business customers. The meetings provide delegates The department has worked with the Department with the opportunity to share their perspectives of Local Government, Community Recovery and on matters such as retail pricing, customer Resilience (DLGCRR) to deliver the Northern protections, business regulation, and Queensland Queensland Councils Community Education and national energy market reforms that have Project, which was completed in June 2013. The implications for every Queenslander. Consumer project received Australian Government funding of around $270 000.
Department of Energy and Water Supply | 2012–13 Annual Report Page 35 The objectives of the project were for the: funded project to examine the conversion of the Collinsville coal-fired power plant into solar • DLGCRR to assist North Queensland councils to thermal. The centre is working with Australian engage qualified operators to work with them in implementing effective water management and overseas partners to develop commercially practices for water loss identification in the competitive geothermal and solar power water main, distribution and reticulation generation alternatives for Queensland’s systems remote communities. • Department of Energy and Water Supply to National energy sector reform agenda develop and implement a community water demand education program with the local This work is being undertaken through the governments and the community to manage Standing Council on Energy and Resources (SCER). future water issues. The details of the work can be found in the Council of Australian Governments (COAG) The department worked with the Cooktown, endorsed energy market reform package Putting Yarrabah, WujalWujal and Hope Vale councils consumers first. in Far North Queensland over the past year to promote better community understanding of water The department is implementing the COAG reforms use and efficiency. This work has been conducted that are in the best interests of Queensland in conjunction with the system leakage program to consumers, in particular, strengthening the improve water use practices. A capacity-building accountability of the Australian Energy Regulator. approach was adopted to provide council officers The department is also working on reforms in the with resources and ideas that will enable them to gas market. For example, establishing the gas continue with the program. trading exchange at Wallumbilla is an important change that will benefit Queensland’s future Support for water service providers economic development.
The department continues to provide support to SCER is also developing a new consumer advocacy water service providers through: body to give consumers a voice in decisions that • monitoring of water quality incidents and affect electricity prices. reviewing and approving drinking water quality management plans, ensuring plans Future directions are developed in accordance with legislative requirements Interim irrigator boards • assisting referable dam operators to meet their The department will establish interim irrigator legislated safety obligations. boards to develop locally based business Queensland Geothermal Energy Centre of proposals in consultation with irrigators. Excellence Seqwater recreation facilities The centre is the largest geothermal energy The department will participate in the review of research centre in Australia and is acknowledged Seqwater recreation facilities, with the release of a as one of the world’s leading research centres in discussion paper on the future recreation options this field. for Wivenhoe, Somerset and Atkinson dams, The Queensland Government is investing and lead the consultation process with other $15 million over 5 years in the centre in government departments. partnership with The University of Queensland. Safety-net support The centre is governed by an advisory board, which includes 2 state representatives. In addition to the increased protections provided under the National Energy Customer Framework, The centre has recently expanded its program the department is undertaking further work to brief to include solar thermal energy through a identify opportunities to strengthen safety net $6 million grant from the Australian Government support for electricity customers, consistent with over the next 8 years. It is also working with the recommendations of the Interdepartmental RATCH Australia in an Australian Government Committee on Electricity Sector Reform.
Department of Energy and Water Supply | 2012–13 Annual Report Page 36 Customer and wastewater code 4.3 Represent portfolio Minister’s interest in ensuring compliance with shareholder service We will continue to administer the Customer requirements and Wastewater Code under s. 93 of the South East Queensland Water (Distribution and Retail 4.4 Optimise government-owned entities’ Restructuring) Act 2009. The code provides the performance standard and conditions of service that SEQ service providers must meet in providing services Key achievements to residential and small business customers. Manage the portfolio Minister’s shareholding Proposed electricity network developments interests in government-owned entities A working group has been formed to develop Along with the Treasurer and Minister for Trade, options for improving community engagement the Minister for Energy and Water Supply is a on proposed electricity network developments shareholding minister of each of the Queensland to balance the need to maintain reliability energy and water government-owned corporations of electricity supply with the least cost for (GOCs) under the Government Owned Corporations consumers. Act 1993. The portfolio Minister’s interests lie in The results of the stakeholder satisfaction survey the performance of the industries for the benefit of have informed the department of its performance the community. in this area and will be used to assist in shaping The department focuses on the non-financial the approach to engagement in the future. aspects of GOCs’ performance, including safety 30-year electricity strategy and customer service levels, as well as ensuring the GOCs appropriately consider government The 30-year electricity strategy discussion policy and planning frameworks within their own paper will be released early in 2013–14 for a business planning and project analysis activities. period of public consultation. This will inform the development of the strategy, which will be Specific activities undertaken by the department released in 2014. in fulfilling this role include: • attending monthly meetings with the CEO Objective 4: Optimise and senior executives of GOCs to receive and provide updates on issues pertinent to the shareholder value Minister’s interests
• providing advice where portfolio performance Performance 2012–13 2012–13 Notes criteria have not been met, and more generally indicator Target Actual report on issues as they arise and resolve the Level of compliance issues to the satisfaction of the Minister with shareholder • liaising regularly with the GOCs to gather service requirements 1 95% 100% information necessary to resolve issues by energy and water entities • examining business cases in conjunction 1. This indicator measures compliance by electricity with Projects Queensland to ensure that the government-owned corporations and state-owned business cases support the government’s and water entities with shareholder service reporting Minister’s strategic interests in the industry requirements. and GOC
Strategies • providing advice to senior executives and the Minister on matters relating to the GOCs 4.1 Actively manage portfolio Minister’s • providing portfolio advice on quarterly reports, shareholding interests in government-owned business cases and current and emerging entities issues to GOCs and water entities 4.2 Represent portfolio Minister’s interest in • advising the Minister on specific issues relating ensuring financially sustainable and viable to GOCs activities (e.g. customer or stakeholder government-owned entities complaints, dam safety, recreation areas, energy facilities and property strategies)
Department of Energy and Water Supply | 2012–13 Annual Report Page 37 • liaising with Queensland Treasury and Trade The entities responded to the request with the (Commercial Monitoring) to ensure the submission of revised statements of corporate Minister’s strategic interests in the GOCs is intent and corporate plans outlining their expected reflected in strategic planning documents savings, in line with the expectations expressed (i.e. statements of corporate intent and by the shareholding ministers. Both entities’ corporate plans) actual operational expenditure outcomes for • assessing the GOCs’ performance as reported 2012–13 exceeded their respective targets through in their quarterly reports to ensure these a range of internal efficiency initiatives, cost strategic interests are being actioned, controls and reductions in sponsorship, corporate particularly with respect to the department’s entertainment and travel expenditures. specific issues The responsibility for how these operational • monitoring progress on enterprise bargaining expenditure savings were achieved lies with the agreement processes and facilitating approval board of directors of each entity. The boards of the of agreements by the Cabinet Budget Review energy GOCs are independent and operate under Committee once negotiated settlements have the corporatised model. They are accountable for been reached their performance to the shareholding ministers, • monitoring and reporting on the progress of and ultimately to all Queenslanders. It should be the GOCs in meeting shareholding Ministers’ pointed out that no direction was given to Energex targets (e.g. savings, efficiencies, Queensland and Ergon Energy under the Government Owned Competition Authority recommendations) Corporations Act 1993 to carry out or cease a • in cooperation with Queensland Treasury and particular activity to achieve the savings. Rather Trade (Commercial Monitoring), facilitating the the letters sent from shareholding ministers were annual reporting arrangements for the GOCs. aimed at setting a strategic expectation of improving efficiency. Statement of obligations for Seqwater SunWater operational review The department prepared the first statement of obligations for Seqwater, which was issued by The department, in conjunction with Queensland the responsible ministers under the South East Treasury and Trade, has commenced a review Queensland Water (Restructuring) Act 2007 and of the operations of state-owned bulk water commenced on 1 February 2013. The statement infrastructure developer and manager SunWater, outlines the authority’s obligations with respect to as highlighted in the Queensland Commission operational and strategic planning; water security; of Audit report. The first stage of the review will water quality; customers; employees; community; focus on governance. A report by the shareholding assets; environment; safety and emergency ministers will be delivered by 30 September 2013. management; and governance, including risk management and compliance. Category 1 water authorities board structure review The statement of obligations expires on 1 February 2016 but will be reviewed within 18 months of its During 2012–13, the department undertook commencement and at least once every 3 years by a review of the existing board structure the responsible ministers. arrangements applicable to the 2 category 1 water authorities, Mount Isa Water Board and Gladstone Cost reduction in Energex and Ergon Energy Area Water Board. The aim of the review was to network businesses identify and recommend the most appropriate structure (including considering appropriate In September 2012, shareholding ministers wrote skills) to facilitate strategic planning to allow the to Energex and Ergon Energy asking them to authorities to best meet the water requirements deliver cost efficiencies. A performance target of their local communities well into the future. outlined in the letters was a 10% reduction in operational expenditure with no compromise to operational performance or safety.
Department of Energy and Water Supply | 2012–13 Annual Report Page 38 After seeking and considering feedback from Strategies stakeholders, the Minister has endorsed a change in board structure. The majority of the board will to 5.1 Ensure accountable, transparent and effective be appointed on a merit and skills basis. However, corporate governance in recognition of their valuable contribution, 5.2 Build a flexible, skilled and performance- the local council will have an ongoing power to orientated workforce nominate 1 board member. 5.3 Value staff through effective communication The department is now in the process of and engagement implementing the recommended changes. 5.4 Foster a zero-harm culture Energy—future directions 5.5 Ensure business continuity and retention of corporate knowledge New electricity supply arrangements for 5.6 Develop systems to support robust advice, Ergon Energy decision-making, monitoring and reporting In May 2013, the government announced new electricity supply arrangements for Ergon Key achievements Energy’s retail load in Queensland. The review targeted increasing efficiency in wholesale energy The activities undertaken by the department procurement arrangements for the electricity to meet this objective are reported on in the Community Service Obligation, which supports Governance—Structure and management and uniform electricity tariffs for Queenslanders across Governance—Human resources sections of this the state. The new arrangements will deliver on report. Some of the highlights are: a short- to medium-term strategy to ensure that • developed a corporate governance framework electricity is supplied to regional Queensland in (including EMT subcommittees) the most cost-effective manner for customers and shareholders. • developed and implemented a risk management framework across the department Objective 5: A capable, flexible and • implemented a fraud control plan and a system proud workforce for reviewing internal controls • led the development of an ethics and integrity framework and systems for reporting gifts and Performance 2012–13 2012–13 Notes benefits and contact with lobbyists indicator Target Actual • commenced the implementation of a 0.5% 0.25% compliance framework across the department below below Absenteeism below public public the public sector 1 • developed and improved financial controls sector sector average including the Financial management practices average average manual, financial delegations and procurement (4.11%) (3.86%) limits of authority Percentage of employees with Available • implemented a training program for the code of 2 100% personal development end 2013 conduct and ethical decision-making. plans
1. The target is calculated at 0.5% below the public sector average for any given quarter. The target is therefore established once the actual quarterly data is available. 2. The Executive Management Team has agreed that managers should put in place interim performance and development agreements (PDAs) with staff with the objective of having agreed PDAs in place for all staff by 31 August 2013 for the 2013–14 financial year. Human Resources is investigating the potential to use the Employee Self Service (ESS) system to record data on PDAs following the payroll system migration in late 2013.
Department of Energy and Water Supply | 2012–13 Annual Report Page 39 Financial performance
Chief Finance Officer’s message The department was created on 3 April 2012 as a result of Public Service Departmental In accordance with my responsibilities as Chief Arrangements Notice (No. 1) 2012 and the Finance Officer under theFinancial Accountability Public Service Departmental Arrangements Act 2009 and Financial and Performance (No. 2) 2012. However, pursuant to s. 80(2) of the Management Standard 2009, I have provided the Financial Accountability Act 2009, for financial Director-General with a statement that: statement purposes, transfer is deemed to have • the financial records of the department have occurred from the first day of the month following been properly maintained throughout the the gazettal date, that is, from 1 May 2012. year ended 30 June 2013 in compliance with Transactions for the period 3 April 2012 to prescribed requirements 30 April 2012 are recorded in the financial statements of the Department of State • the risk management and internal compliance Development, Infrastructure and Planning and and control systems of the department relating to financial management have been operating the Department of Environment and Heritage efficiently, effectively and economically Protection. throughout the financial year • since the balance date of 30 June 2013 there Our financial performance have been no changes that may have a material The department delivered a sound policy, effect on the operation of the risk management planning and regulatory environment to support and internal compliance and control systems of cost-effective energy and water supply services. the department As shown in our Statement of Comprehensive • external service providers have given an Income on page 51, the department’s operating assurance about their controls. result (expenses minus revenue) was $0.2 million. The Department of Energy and Water Supply 2012–13 Statement of Assurance provided to the Our income Director-General satisfies all requirements of s. 57 Income for 2012–13 was $73.1 million and of the Financial and Performance Management was predominantly departmental services Standard 2009. It indicated no deficiencies or appropriation to deliver energy and water breakdowns in internal controls which would supply services. impact adversely on the department’s financial governance or financial statements for the year. Our expenditure Financial summary Expenses for the year amounted to $72.9 million, The financial statements contain comprehensive which included grants and subsidies expenditure financial data on: of $29.2 million, employee expenses of $32.3 million and supplies and services of • controlled entity, which refers to the funds and $10.4 million. Grants and subsidies are our assets within the control of the department largest area of expenditure and mainly relate • administered activities, which refers to to funds provided for dam spillway upgrades activities where the department does not have and water-related community service obligation control but is charged with administering the payments. funds on a whole-of-government basis.
Department of Energy and Water Supply | 2012–13 Annual Report Page 40 Our financial position We remain committed to managing our financial performance and minimising our liabilities Our department maintains a strong net assets and risks. Our financial performance is closely position. As shown in our Statement of Financial monitored within our corporate governance Position on page 46, the department ended the framework, which was established during 2012–13 year with total equity of $18.7 million. to align with priorities of the department. To help us manage risks, the Audit and Risk Committee Assets oversees audit activities, implementation of audit recommendations, financial reporting and Total assets amounted to $54 million and primarily compliance and risk management practices. related to cash ($46.6 million) and receivables ($6.3 million). For more information on governance committees see Governance—Structure and management. For more information on our financial performance Liabilities please see our financial statements provided Total liabilities amounted to $35.3 million primarily from page 42. relating to payables of $20.8 million.
Administered items The department’s main administered activity related to subsidies in the form of community service obligation payments to Ergon Energy Queensland Pty Ltd under the Queensland Government’s uniform tariff policy, which seeks to ensure most Queenslanders are able to pay the same amount for electricity regardless of their geographic location. Refer to note 1(c) and note 10 for further information.
Department of Energy and Water Supply | 2012–13 Annual Report Page 41 Department of Energy and Water Supply Financial statements for the year ended 30 June 2013 Financial Statements for the year ended 30 June 2013
Foreword and General information
The Department of Energy and Water Supply (DEWS) is a Queensland Government Department established under the Public Service Act 2008. DEWS is controlled by the State of Queensland which is the ultimate parent.
As a result of a Public Service Departmental Arrangements Notice (No1), 2012 and the Public Service Department Arrangements (No2) 2012, DEWS was created on 3 April 2012 to assume the following functions:
That part of the Department of Employment, Economic Development and Innovation responsible for energy including the Office of the Queensland Energy Regulator and the associated executive support services Office of the Gas Commissioner from the Department of Employment, Economic Development and Innovation That part of the Department of Environment and Resource Management responsible for water supply policy and associated planning and regulation
However, pursuant to section 80(2) of the Financial Accountability Act 2009, for financial statement purposes, transfer is deemed to have occurred from the first day of the month following the gazettal date, that is, from 1 May 2012.
2012 comparative figures reflect transactions for the period 1 May 2012 to 30 June 2012 only. Transactions for the period 3 April 2012 to 30 April 2012 were recorded in the financial statements of the Department of State Development, Infrastructure and Local Planning and the Department of Environment and Heritage Protection.
The approach applies to both the primary statements and note disclosures, including the disclosures for Key Executive Management Personnel and Remuneration.
The head office and principal place of business of the department is:
Level 13 41 George Street Brisbane Qld 4000
A description of the nature of the operations and principal activities of the department is included in the notes to these financial statements. For information in relation to these financial statements please call (07) 3166 0102, or visit the website at http://www.dews.qld.gov.au
Department of Energy and Water Supply | 2012–13 Annual Report Page 42 Department of Energy and Water Supply Statement of Changes in Equity for the year ended 30 June 2013
Notes 2013 2012 $'000 $'000
Income from Continuing Operations Departmental services revenue 2 69,109 22,295 User charges, fees and fines 3 - 88 Grants and other contributions 4 683 - Interest revenue 5 115 13 Other revenue 6 3,199 179
Total Income from Continuing Operations 73,106 22,575
Expenses from Continuing Operations Employee expenses 7 32,299 4,231 Supplies and services 9 10,375 2,966 Grants and subsidies 10 29,242 10,672 Depreciation and amortisation 11 277 48 Other expenses 12 676 384
Total Expenses from Continuing Operations 72,869 18,301
Operating Result for the year 237 4,274
Total Comprehensive Income 237 4,274
The accompanying notes form part of these statements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 43 Department of Energy and Water Supply Statement of Changes in Equity for the year ended 30 June 2013
Administered on a Whole-of-government basis
Restated # Notes 2013 2012 $'000 $'000 Income from Continuing Operations Departmental services revenue 2 736,441 72,834 User charges, fees and fines 3 1,538 743 Grants and other contributions 4 6,883 360 Other revenue 6 167 5,667
Total Income from Continuing Operations 745,029 79,604
Expenses from Continuing Operations Supplies and services 9 2,250 (112) Grants and subsidies 10 735,485 72,315 Depreciation and amortisation 11 5,379 906 Other expenses 12 8,922 - Revaluation decrement 13 - 1
Total Expenses from Continuing Operations 752,036 73,110
Net operating Result from transfers to government (7,007) 6,494 Transfers of administered item revenue to government 1,314 6,387
Operating result for the year (8,321) 107
Other Comprehensive Income
Items that will not be reclassified subsequently to Operating Result: Increase/(decrease) in asset revaluation surplus 22 - 170,687
Total Other Comprehensive Income - 170,687
Total Comprehensive Income (8,321) 170,794
# The department has restated the depreciation expense in note 11 and revaluations in note 22 relating to a number of non-commercial assets. This is described in note 29 as a correction of error in accordance with AASB 108 para 49.
The accompanying notes form part of these statements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 44 Department of Energy and Water Supply Statement of Changes in Equity as at 30 June 2013
Notes 2013 2012 $'000 $'000 Current Assets Cash and cash equivalents 14 46,596 20,367 Receivables 15 5,015 2,593 Other 16 - 1,919
Total Current Assets 51,611 24,879
Non Current Assets Receivables 15 1,259 2,759 Property plant and equipment 17 1,028 685 Intangible assets 18 82 128
Total Non Current Assets 2,369 3,572
Total Assets 53,980 28,451
Current Liabilities Payables 19 20,831 10,332 Accrued employee benefits 20 1,392 744 Other liabilities 21 13,042 1,265
Total Current Liabilities 35,265 12,341
Total Liabilities 35,265 12,341
Net Assets 18,715 16,110
Equity Contributed equity 24 14,204 11,836 Accumulated surplus 4,511 4,274
Total Equity 18,715 16,110
The accompanying notes form part of these statements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 45 Department of Energy and Water Supply Statement of Financial Position as at 30 June 2013
Administered on a Whole-of-government basis
Restated # Notes 2013 2012 $'000 $'000 Current Assets Cash and cash equivalents 14 123,208 77,891 Receivables 15 16,304 6,556
Total Current Assets 139,512 84,447
Non Current Assets Property plant and equipment 17 169,039 178,120
Total Non Current Assets 169,039 178,120
Total Assets 308,551 262,567
Current Liabilities Payables 19 131,390 44,403 Other liabilities 21 9,806 42,311
Total Current Liabilities 141,196 86,714
Total Liabilities 141,196 86,714
Net Assets 167,355 175,853
Equity Contributed equity 24 4,882 5,059 Asset revaluation surplus 22 170,687 170,687 Accumulated surplus (deficit) (8,214) 107
Total Equity 167,355 175,853
# The department has restated the balances for Property, Plant & Equipment in note 17 and revaluations in note 22 relating to a number of non-commercial assets. This is described in note 29 as a correction of error in accordance with AASB 108 para 49.
The accompanying notes form part of these statements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 46 for theyear ended 30 June 2013 Statement of Changes in Equity Department of Energy and Water Supply statements. form part of these notes accompanying The Balance as at 30 June 2012 Net transfer of assets/liabilities from other government agencies Non appropriated equity withdrawal Balance as at 30 June 2013 Net transfer of assets/liabilities from other government agencies Balance as at 1 July 2012 Balance as at 1 May 2012 Equity withdrawal Transactions with Owners as Owners Operating Result from Continuing Operations Machinery of Government adjustment Transactions with Owners as Owners Operating Result from Continuing Operations Notes 28 24 24 24
Accumulated Surplus $'000 4,274 4,511 4,274 4,274 237 ------
Contributed 11,836 14,204 11,836 12,266 Equity $'000 2,665 (330) (100) (297) - - - Total
12,266 16,110 18,715 16,110 $'000 2,665 4,274 (330) (100) (297) 237 -
Department of Energy and Water Supply | 2012–13 Annual Report Page 47 The accompanying notes form part of these statements form part of these notes accompanying The 49. 108 para as described for equity balances the restated has department # The basis a Whole-of-government on Administered for theyear ended 30 June 2013 Statement of Changes in Equity Department of Energy and Water Supply
Increase/(Decrease) in Other Comprehensive Income Operating Result from Continuing Operations Balance as at 1 July 2012 Balance as at 30 June 2012 # Net transfer of assets/liabilities from other government agencies Transactions with Owners as Owners Balance as at 1 May 2012 Restated Balance as at 30 June 2013 Administered Equity adjustment Other Comprehensive Income Operating Result from Continuing Operations Asset Revaluation Surplus . in note 22 and note 24. This is as described in note 29 as a as 29 note in described as is 24. This note and 22 note in Notes 24 17 22
Accumulated Surplus (8,214) (8,321) $'000 107 107 107 - - - -
Revaluation 170,687 170,687 170,687 170,687 $'000 A sset ------correction of error in accordance with AASB accordance in of error correction
Contributed Equity $'000 5,059 5,059 4,882 5,059
(177) - - - Total
175,853 175,853 167,355 170,687 (8,321) $'000 5,059 (177) 107 -
Department of Energy and Water Supply | 2012–13 Annual Report Page 48 Department of Energy and Water Supply Statement of Cash Flows for the year ended 30 June 2013
Notes 2013 2012 $'000 $'000 Cash flows from operating activities Inflows: Departmental services receipts 80,664 22,855 Grants and other contributions 62 - Interest received 115 - GST input tax credits received from Australian Taxation Office 1,103 - GST collected from customers 385 - Other 13,130 (306)
Outflows: Employee expenses (29,693) (4,081) Supplies and services (17,757) (4,613) Grants and subsidies (19,499) (8,254) GST paid to suppliers (1,355) - GST remitted to Australian Taxation Office (298) - Other (628) (54) Net cash provided by (used in) operating activities 23 26,229 5,547
Cash flows from investing activities Inflows: Sales of property, plant and equipment - -
Outflows: Payments for property, plant and equipment - - Net cash provided by (used in) investing activities - -
Cash flows from financing activities Inflows: Enquity injections 24 380 -
Outflows: Equity withdrawal 24 (380) (100) Net cash provided by (used in) financing activities - (100)
Net increase (decrease) in cash and cash equivalents 26,229 5,447 Cash and cash equivalents at beginning of financial year 20,367 - Cash transfers from Machinery of Government restructure - 14,920
Cash and cash equivalents at end of financial year 14 46,596 20,367
The accompanying notes form part of these statements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 49 Department of Energy and Water Supply Statement of Cash Flows for the year ended 30 June 2013
Administered on a Whole-of-government basis
Notes 2013 2012 $'000 $'000
Cash flows from operating activities Inflows: Administered appropriation revenue received from Queensland Treasury and Trade 703,936 115,145 Fees and fines 2,552 743 Grants and other contributions 7,060 360 GST input tax credits received from Australian Taxation Office 46,129 - GST collected from customers 13 - Other 167 (712)
Outflows: Administered appropriation revenue returned to Queensland Treasury and Trades (1,314) (325) Grants and subsidies (87,255) (88) Community service obligation payments (562,720) (33,973) Supplies and services (773) 199 GST paid to suppliers (57,068) - GST remitted to Australian Taxation Office (13) - Net cash provided by (used in) operating activities 23 50,714 81,349
Cash flows from investing activities Inflows: Sales of property, plant and equipment --
Outflows: Payments for property, plant and equipment 17 (5,397) (740) Net cash provided by (used in) investing activities (5,397) (740)
Cash flows from financing activities Inflows: Equity injections - -
Outflows: Equity withdrawal - - Net cash provided by (used in) financing activities - -
Net increase (decrease) in cash and cash equivalents 45,317 80,609 Cash and cash equivalents at beginning of financial year 77,891 - Less: Cash transfers from Machinery of Government restructure - (2,718) Cash and cash equivalents at end of financial year 14 123,208 77,891
The accompanying notes form part of these statements.
Department of Energy and Water Supply | 2012–13 Annual Report Page 50 The accompanying notes form part of these statements. form part of these notes accompanying The by arrangement are hosted for DEWS services *Corporate for theyear ended 30 June 2013 Statement of Comprehensive Income by Major Departmental Services Department of Energy and Water Supply Grants & other contributions User charges Departmental services revenue Incomecontinuing from operations Depreciation and amortisation Expenses from ordinary activities Allocation of corporate services income and expenses to outputs (disclosure only)*: Grants and subsidies Interest revenue Income fromIncome ordinary activities Total Comprehensive Income year for the result Operating Total expenses from continuing operations Other expenses Supplies and services incomeTotalcontinuing from operations Other revenue Employee expenses Expenses from continuing operations with the Department of Natural Resources and Mines. Mines. and Resources of Natural with the Department 0803,997 10,890 2931,658 12,993 28,595 29,577 78012,573 27,850 ’0 $’000 $’000 2,509 ,6 2,318 4,269 1,422 032012 2013 Energy 982 307 259 982 136 46 - - 12,764 4,646 4,646 8,118 111 173 18 34 - - - - Water Supply and Sewerage 8326,675 18,352 1299,722 41,259 9362,573 19,306 3599,811 43,529 44,274 3,709 6,106 ’0 $’000 $’000 1,777 75 (372) (745) 75 (372) (745) 032012 2013 Services 369 424 141 69 - - 10,183 648 273 (5) 88 14 6 - - - 10,375 69,109 29,242 32,299 73,106 72,869 6,218 $’000 3,199 2013 237 237 676 683 115 277 Total - - 22,295 10,672 22,575 18,301 2,966 $’000 4,231 4,274 4,274 2012 384 179 88 13 48 - - -
Department of Energy and Water Supply | 2012–13 Annual Report Page 51 The accompanying notes form part of these statements. statements. form part of these notes accompanying The adj of 29 for details * Refer to note basis a Whole-of-government on Administered for theyear ended 30 June 2013 Statement of Comprehensive Income by Major Departmental Services Department of Energy and Water Supply Items that will not be reclassified subsequently to Operating Administered appropriation revenue Incomecontinuing from operations Increase/(decrease) in asset revaluation surplus Result: Oth Grants and other contributions Fees and fines Total Comprehensive Income Income Comprehensive Other Total Depreciation and amortisation Supplies and services Expenses from continuing operations incomeTotalcontinuing from operations Other revenue Other expenses Grants and subsidies Operating result for the year for the result Operating Transfer of administered item revenue to government Net operating result before transfers to government to transfers before result Net operating Total expenses from continuing operations Revaluation decrement er er C ompre h ens i ve ve I ncome ustments made to 2012 comparatives. comparatives. made to 2012 ustments 4,3 72,227 648,230 653,585 5,2 73,554 655,123 4,3 72,227 648,230 134 (720) (1,314) ,9 1,327 6,893 ’0 $’000 $’000 1,538 5,579 5,579 032012 2013 Energy ------1-1 - -1 ------72,834 720 607 607 - - - - * Water Supply and Sewerage (13,900) (13,900) 1,0)(500) (13,900) 103,806 87,255 9966,050 89,906 82,856 5,379 2,250 8,922 ’0 $’000 $’000 6,883 032012 2013 Services 167 - - 170,687 - 170,687 170,187 (5,667) 5,667 5,167 (112) 360 906 883 23 88 - - * 735,485 736,441 745,029 752,036 (7,007) (1,314) (8,321) (8,321) 1,538 6,883 2,250 5,379 8,922 $’000 2013 167 Total - 170,687 - 170,794 170,687 (6,387) 72,315 72,834 79,604 73,110 5,667 6,494 $’000 (112) 2012 743 360 906 107 - *
Department of Energy and Water Supply | 2012–13 Annual Report Page 52 as at 30 June 2013 Statement of Assets and Liabilities by Major Departmental Services Department of Energy and Water Supply Totalcurrent assets Receivables Non-current assets Other current assets Cash and cash equivalents Current assets Property, plant and equipment Total assets Total non-current assets Intangibles Receivables Other liabilities Accrued employeebenefits Payables Current liabilities Total currentTotal liabilities Total liabilities Net assets 87920,448 18,799 22,509 14,227 14,227 14924,642 21,419 ,2 2,275 2,620 ,6 1,265 5,262 ’0 $’000 $’000 ,0 3,508 8,404 8,282 ,9 3,274 1,090 032012 2013 Energy 0 2,759 508 561 500 82 1,919 - 27,916 22,809 5,107 5,107 2 - 125 334 390 Water Supply and Sewerage 10,433 27,797 30,192 2476,824 12,427 31,471 21,038 21,038 2,395 7,780 ’0 $’000 $’000 2013 1279 Services 751 831 528 - (6,699) 7,234 7,234 2012 (81) 318 237 410 295 535 298 3 - - - 51,611 13,042 20,831 18,715 46,596 53,980 35,265 35,265 1,259 5,015 1,392 1,028 $’000 2,369 2013 82 Total - 24,879 10,332 16,110 20,367 28,451 12,341 12,341 1,919 2,759 2,593 1,265 $’000 3,572 2012 128 685 744
Department of Energy and Water Supply | 2012–13 Annual Report Page 53 * Refer to note 29 for details of adj of 29 for details * Refer to note basis a Whole-of-government on Administered as at 30 June 2013 Statement of Assets and Liabilities by Major Departmental Services Department of Energy and Water Supply Total assets Total non-current assets Property, plant and equipment Non-current assets currentTotal assets Receivables Cash and cash equivalents Current assets Total liabilities currentTotal liabilities Other liabilities Payables Current liabilities Net assets ustments made to 2012 comparatives. comparatives. made to 2012 ustments 4,4 78,573 146,143 127,243 5,8 84,952 157,082 84,952 157,082 3,4 86,627 137,049 137,049 0996,379 10,939 20,033 9,806 ’0 $’000 $’000 032012 2013 Energy - - (1,675) 86,627 42,311 44,316 - - * Water Supply and Sewerage 1,7)(505) (682) (17,570) (22,935) 5,6 177,615 151,469 6,3 178,120 178,120 169,039 169,039 4,2 177,528 147,322 5,365 ’0 $’000 $’000 4,147 4,147 4,147 2013 Services - 2012 177 87 87 87 - ** 0,5 262,567 308,551 139,512 123,208 141,196 131,390 6,3 178,120 178,120 169,039 169,039 141,196 167,355 16,304 9,806 $’000 2013 Total 175,853 42,311 84,447 77,891 86,714 44,403 86,714 6,556 $’000 2012
Department of Energy and Water Supply | 2012–13 Annual Report Page 54 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
1. Objectives and principal activities of the department
Role of the department
Develop and deliver innovative policy, planning and regulatory solutions in partnership with our stakeholders.
Departmental vision
Reduce cost of living pressures through innovative and efficient energy and water supply services.
Objectives of the department
The objectives and principal activities of the department are detailed in the body of the Annual Report in the Appendix headed Legislation administered by our department.
Sources of departmental funding The department is principally funded for the services it delivers by parliamentary appropriations.
Summary of significant accounting policies
(a) Statement of Compliance The department has prepared these financial statements in compliance with section 42 of the Financial and Performance Management Standard 2009.
These general purpose financial statements have been prepared on an accrual basis, in accordance with Australian Accounting Standards and Interpretations. In addition, these financial statements comply with the Queensland Treasury and Trade’s Minimum Reporting Requirements for the period ending 30 June 2013 and other authoritative pronouncements.
Being a not for profit entity, the department has applied the requirements of Australian Accounting Standards and interpretations applicable to not-for-profit entities.
Except where stated, the historical cost convention is used.
(b) The reporting entity These financial statements include the value of all revenues, expenses, assets, liabilities and equity of the department where these items are material.
As a result of the effective abolition of the Queensland Water Commission at the end of 31 December 2012, “Designation of Transfer” notices by the Minister for Energy and Water Supply together with a “Departmental; Arrangements” Notice were made. The assets, liabilities and commitments of the Queensland Water Commission were transferred by the end of 31 December 2012 to other government agencies/departments including the Department of Energy and Water Supply, the Department of Natural Resources and Mines, Queensland Bulk Water Supply Authority and the Department of Housing and Public Works.
The major services undertaken by the department are:
Energy
Is responsible for policy development, reform and regulation of the Queensland energy sector to ensure cost- effective, secure and reliable energy supply. It is also responsible for establishing a long-term electricity strategy, informed by the outcomes of the Government’s review on electricity sector reform, to address cost of living pressures and sustainability of the sector.
Water Supply and Sewerage Services
Is responsible for implementing water sector reform to address cost of living pressures. It is also responsible for establishing a long-term strategy for Queensland’s water sector and regulating water supply and sewerage services so that agriculture, mining, industry, regional and urban communities have access to cost-effective, safe, secure and sustainable water supply.
Department of Energy and Water Supply | 2012–13 Annual Report Page 55 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(c) Administered transactions and balances The department administers, but does not control, certain resources on behalf of the Government. In doing so, it has responsibility and is accountable for administering related transactions and items, but does not have the discretion to deploy the resources for the achievement of the department’s objectives.
The department administers funds on behalf of the State including:
Community Service Obligation (CSO) Transactions
Under the Electricity Act 1994, electricity retailers must charge customers who have not entered into market contracts for their electricity supply at Notified Prices determined in accordance with the Act. The Notified Prices for customers of a particular customer class are uniform across the State.
The supply of electricity to customers in regional and remote parts of Queensland generally involves costs which are significantly higher than what the retailer can cover under the Notified Prices due mainly to the vast electricity grid required to serve these customers.
Through an appropriation administered by the department, the Government provides CSO payments to Ergon Energy Queensland Pty Ltd, the electricity retailer responsible for supplying the majority of non-market customers in regional Queensland. A small amount is paid through Origin Energy Electricity Limited for non-market customers in the Goondiwindi, Texas and Inglewood areas. The increase in 2013 is due to a rise in network costs together with inclusion of revenue foregone under the Government's freeze on the standard residential electricity tariff (Tariff 11) for both the Ergon and Energex distribution areas.
The department also provides CSO payments to SunWater and SEQwater for the provision of rural irrigation services and to SunWater in relation to the Cloncurry pipeline. These payments are currently reflected as controlled transactions, and from 2013-14 onwards, will be reflected in the Administered transactions.
Water Rebate
The Queensland Government provided funding of $92 million during 2012-13 to deliver rebates of up to $80 per domestic water connection in South East Queensland. The payment of the water rebate was administered by the department.
The Queensland Government SEQ Household Water Rebate delivered the Government’s commitment to provide early price relief to SEQ households who have experienced high water bills. The rebate is a total once-off payment of $80 to South East Queensland (SEQ) households. The rebate was provided to SEQ households who received a water bill from a SEQ water service provider. The rebate will also be provided to residents of retirement villages including relocatable homes (also know as manufactured homes) where the relocatable home was specifically established for retirees within SEQ.
(d) Departmental services revenue/administered revenue Appropriations provided under the Appropriation Act 2012 are recognised as revenue when received. Approval has been obtained from Queensland Treasury and Trade to recognise specific adjustments to departmental services revenue. Refer to note 2.
Amounts appropriated to the department for transfer to other entities in accordance with legislative or other requirements are reported as ‘administered’ item appropriations with the related payments being recorded as administered expenses.
(e) User charges, fees and fines User charges and fees controlled by the department are recognised as revenues and are invoiced when revenue has been earned and can be measured reliably with a sufficient degree of certainty. This involves either invoicing for related goods/services and or the recognition of accrued revenue. User charges and fees are controlled by the department where they can be deployed for the achievement of departmental objectives. Refer to note 3.
Fees and fines collected, but not controlled, by the department are reported as administered revenue. Refer to note 3.
Department of Energy and Water Supply | 2012–13 Annual Report Page 56 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(f) Grants and other contributions Grants, contributions, donations and gifts, non reciprocal in nature, are recognised as revenue in the year in which the department obtains control over them. Where grants are received that are reciprocal in nature, revenue is recognised over the term of the funding arrangements.
Contributed assets are recognised at their fair value. Contributions of services are recognised only when a fair value can be determined reliably and the services would have been purchased, had they not been donated.
(g) Cash and cash equivalents For the purposes of the Statement of Financial Position and the Statement of Cash Flows, cash assets include all cash on hand, cash at bank and cash and cheques receipted but not banked at 30 June 2013, as well as deposits at call with financial institutions.
(h) Receivables Trade debtors are recognised at the amounts due at the time of sale or service delivery, i.e. the agreed purchase/contract price. Settlement of these amounts is required within a trading term range of 14 days to 30 days from invoice date depending on the service provided.
The collectability of receivables is assessed periodically with provision being made for impairment.
(i) Acquisitions of assets Actual cost is used for the initial recording of all non-current physical and intangible asset acquisitions. Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use, such as architects’ fees and engineering design fees. However, any training costs are expensed as incurred.
Where assets are received free of charge from another Queensland Government department (whether as a result of a machinery-of-Government or other involuntary transfer), the acquisition cost is recognised as the gross carrying amount in the books of the transferor immediately prior to the transfer together with any accumulated depreciation.
Assets acquired at no cost or for nominal consideration, other than from an involuntary transfer from another Queensland Government department, are recognised at their fair value at date of acquisition in accordance with AASB 116 Property, Plant and Equipment.
(j) Property, plant and equipment Items of property, plant and equipment with a cost or other value equal to or in excess of the following thresholds are recognised for financial reporting purposes in the year of acquisition:
Asset Class Threshold Buildings $ 10,000 Infrastructure $ 10,000 Land $ 1 Plant and equipment $ 5,000
Items with a lesser value are expensed in the year of acquisition.
Repairs and maintenance Expenditure incurred in maintaining an asset within its normal operating capacity until the conclusion of its useful life is regarded as repairs and maintenance and is expensed. Expenditure that enhances an existing asset, significantly replaces or refurbishes an asset, or extends the asset’s useful life, capacity, function and/or efficiency is capitalised into the carrying amount of the asset.
(k) Intangibles Intangible assets with a cost or other value greater than $100,000 are recognised in the financial statements, items with a lesser value being expensed. Each intangible asset is amortised over its estimated useful life to the department, less any anticipated residual value. The residual value is zero for all the department's intangible assets.
Department of Energy and Water Supply | 2012–13 Annual Report Page 57 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(k) Intangibles (continued)
It has been determined that there is not an active market for any of the department's intangible assets. As such, the assets are recognised and carried at cost less accumulated amortisation and accumulated impairment losses. No intangible assets have been classified as held for sale or form a part of a disposal group held for sale.
Purchased software The purchase cost of this software has been capitalised and is being amortised on a straight-line basis over the period of the expected benefit to the department, namely 5 years.
(l) Amortisation of intangibles and depreciation of property, plant and equipment Land is not depreciated as it has an unlimited useful life.
All intangible assets of the department have finite useful lives and are amortised on a straight line basis.
Property, plant and equipment is depreciated on a straight-line basis so as to allocate the net cost or re-valued amount of each asset, less its estimated residual value, progressively over its estimated useful life to the department.
Assets under construction (work in progress) are not depreciated or amortised until they reach service delivery capacity. Service delivery capacity relates to when construction is complete and the asset is first put to use or is installed ready for use in accordance with its intended application. These assets are then reclassified to the relevant classes with property, plant and equipment.
Where assets have separately identifiable components that are subject to regular replacement, these components are assigned useful lives distinct from the asset to which they relate and are depreciated accordingly.
Infrastructure assets are valued using the depreciated replacement cost method. Any accumulated depreciation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals the revalued amount.
Any expenditure that increases the originally assessed capacity or service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to the department.
For each class of depreciable asset the following depreciation and amortisation rates are used:
Physical asset class Rate % Buildings 2 -20 Infrastructure Water purification plants 2 -5 Plant and equipment Scientific and technical equipment 3.3 -33.3 Office equipment 6.7 -33.3 Computer equipment 7.7 -33.3 Leasehold improvements 2 -20
Intangible Assets: Purchased software 12.5-25 Internally generated software 12.5-25
(m) Impairment of non-current assets
All non-current physical assets are assessed for indicators of impairment on an annual basis. If an indicator of possible impairment exists, the department determines the asset's recoverable amount. Any amount by which the asset's carrying amount exceeds the recoverable amount is recorded as an impairment loss.
The asset's recoverable amount is determined as the higher of the asset's fair value less costs to sell and depreciated replacement cost.
Department of Energy and Water Supply | 2012–13 Annual Report Page 58 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(m) Impairment of non-current assets (continued)
An impairment loss is recognised immediately in the Statement of Comprehensive Income, unless the asset is carried at a re-valued amount. When the asset is measured at a re-valued amount, the impairment loss is offset against the asset revaluation surplus of the relevant class to the extent available.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income, unless the asset is carried at a re-valued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
(n) Revaluations of non-current physical and intangible assets Land, buildings, infrastructure, major plant and equipment and heritage and cultural assets are measured at fair value in accordance with AASB 116 Property, Plant and Equipment and Queensland Treasury and Trade’s Non- Current Asset Policies for the Queensland Public Sector. In respect of these classes, the cost of items acquired during the financial year has been judged by management to materially represent their fair value at the end of the reporting period.
Where intangible assets have an active market they are measured at fair value, otherwise they are measured at cost.
Plant and equipment are measured at cost in accordance with Queensland Treasury and Trade’s Non-Current Asset Policies for the Queensland Public Sector.
Any revaluation increment arising on the revaluation of an asset is credited to the asset revaluation surplus of the appropriate class, except to the extent it reverses a revaluation decrement for the class previously recognised as an expense. A decrease in the carrying amount on revaluation is charged as an expense, to the extent it exceeds the balance, if any, in the revaluation surplus relating to that class. On revaluation, accumulated depreciation is restated proportionately with the change in the carrying amount of the asset and any change in the estimate of remaining useful life.
Only those assets, which are material compared to the value of the class of assets to which they belong, are comprehensively re-valued.
Separately identified components of assets are measured on the same basis as the assets to which they relate.
The revaluation methodology for individual asset classes is as follows:
Infrastructure
Following the corporatisation of SunWater in 2000, the State retained ownership and responsibility for the maintenance of water related non-commercial assets. The assets consist of dams, weirs and a system of levies on the lower Mary River. The assets were transferred to the department as part of the 2012 Machinery of Government changes. During the 2012-13 financial year, the department has undertaken a review of these assets including the most appropriate valuation methodology. The department has identified that seven of these assets meet the definition of an asset under Non-Current Asset Policy 1 (NCAP1).
Accordingly, the department has arrived at a valuation for each of these assets using the Depreciated Replacement Cost (DRC) method. In doing so, the department utilised qualified department engineers to assess the replacement cost of these assets by applying the Modern Engineering Equivalent Replacement Asset (MEERA) approach.
The resulting valuations and useful lives have been assessed with the Proportional Restatement Method utilised to calculate accumulated depreciation in accordance with Non-Current Asset Policy 6 (NCAP6).
(o) Leases Operating lease payments are representative of the pattern of benefits derived from the leased assets and are expensed in the periods which they are incurred.
Department of Energy and Water Supply | 2012–13 Annual Report Page 59 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(p) Payables Trade creditors are recognised upon receipt of the goods or services ordered and are measured at the agreed purchase/contract price, gross of applicable trade and other discounts. Amounts owing are unsecured and are generally settled on 30 day terms.
(q) Financial instruments Recognition Financial assets and financial liabilities are recognised in the Statement of Financial Position when the department becomes party to the contractual provisions of the financial instrument.
Classification Financial instruments are classified and measured as follows: Cash and cash equivalents – held at fair value through profit or loss Receivables – held at amortised cost Payables – held at amortised cost
The department does not enter into transactions for speculative purposes, nor for hedging. Apart from cash and cash equivalents, the department holds no financial assets classified at fair value through profit or loss. All other disclosures relating to the measurement and financial risk management of financial instruments held by the department are disclosed in note 27.
(r) Finance costs The department does not incur any finance costs.
(s) Allocation of Revenues and Expenses from Ordinary Activities to Corporate Services In addition to the corporate services delivered from within the department, it also participates in a corporate partnership arrangement whereby certain agencies “host” a number of strategic and operational corporate services provided to DEWS as “recipient” department.
The “host” agency of each corporate service function receives the appropriation of funds and reports full time equivalent positions in the respective agency. The model is multi-layered for different corporate services functions. That is, some functions are provided to two agencies, and some provided to six agencies with any combination in between.
As a “recipient” agency, DEWS receives defined services from the following agencies:
Department of Agriculture, Forestry and Fisheries (Information Management; Fleet Management; Telecommunications) Department of Natural Resources and Mines (Accommodation Services; Legal Services; Human Resources; Corporate Communications; Privacy and Ethics) Department of Environment and Heritage Protection (Strategic Procurement; Right to Information; Internal Audit).
Corporate services income and expenses attributable solely to the department are apportioned across the major departmental services while corporate services income and expenses attributable under the corporate partnership arrangements are outlined in the Statement of Comprehensive Income by Major Departmental Services of the respective department.
Department of Energy and Water Supply | 2012–13 Annual Report Page 60 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(t) Insurance The department’s non-current physical assets, apart from its non-commercial water assets, are insured through the Queensland Government Insurance Fund with premiums being paid on a risk assessment basis. In addition, the department pays premiums to WorkCover Queensland in respect of its obligations for employee compensation.
(u) Taxation The department is a State body as defined under the Income Tax Assessment Act 1936 and is exempt from Commonwealth taxation with the exception of Fringe Benefits Tax (FBT) and Goods and Services Tax (GST). As such, input tax credits receivable from and GST payable to the Australian Taxation Office (ATO), along with FBT, are recognised and accrued (refer to note 15).
(v) Issuance of Financial Statements The financial statements are authorised for issue by the Director-General and Chief Finance Officer at the date of signing the Management Certificate.
(w) Employee Benefits Employer superannuation contributions, annual leave levies and long service leave levies are regarded as employee benefits.
Payroll tax and workers' compensation insurance are a consequence of employing employees, but are not counted in an employee's total remuneration package. They are not employee benefits and are recognised separately as employee related expenses.
Wages, Salaries and Sick Leave
Wages and salaries due but unpaid at reporting date are recognised in the Statement of Financial Position at the current salary rates. For unpaid entitlements expected to be paid within 12 months, the liabilities are recognised at their undiscounted values.
Prior history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that existing accumulated entitlements will be used by employees and no liability for unused sick leave entitlements is recognised. As sick leave is non- vesting, an expense is recognised for this leave as it is taken.
Annual Leave
The Queensland Government’s Annual Leave Central Scheme (ALCS) covers departments, commercialised business units and shared service providers. Under this scheme, a levy is made on the department to cover the cost of employees' annual leave (including leave loading and on-costs). The levies are expensed in the period in which they are payable. Amounts paid to employees for annual leave are claimed from the scheme quarterly in arrears.
No provision for annual leave is recognised in the department's financial statements as the liability is held on a whole-of-government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting.
Long Service Leave
Under the Queensland Government’s long service leave scheme, a levy is made on the department to cover the cost of employees' long service leave. The levies are expensed in the period in which they are payable. Amounts paid to employees for long service leave are claimed from the scheme quarterly in arrears.
No provision for long service leave is recognised in the 's financial statements, the liability being held on a whole-of- government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting.
Department of Energy and Water Supply | 2012–13 Annual Report Page 61 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
Superannuation
Employer superannuation contributions are paid to QSuper, the superannuation scheme for Queensland Government employees, at rates determined by the Treasurer on the advice of the State Actuary. Contributions are expensed in the period in which they are paid or payable. The department’s obligation is limited to its contribution to QSuper.
The QSuper scheme has defined benefit and defined contribution categories. The liability for defined benefits is held on a Whole-of-government basis and reported in those financial statements pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting.
(x) Key Management Personnel and Remuneration
Key executive management personnel and remuneration disclosures are made in accordance with section 5 of the Financial Reporting Requirements for Queensland Government Agencies issued by Queensland Treasury and Trade. Refer to note 8 for the disclosures on key management personnel and remuneration.
(y) Contributed equity Non reciprocal transfers of assets and liabilities between wholly-owned Queensland State Public Sector entities as a result of machinery-of-Government changes are adjusted to ‘Contributed equity’ in accordance with Interpretation 1038 Contributions by Owners Made to Wholly Owned Public Sector Entities. Appropriations for equity adjustments are similarly designated.
(z) Accounting Estimates and Judgements The preparation of financial statements necessarily requires the determination and use of certain critical accounting estimates, assumptions, and management judgements that have that potential to cause a material adjustment to the carrying amounts of assets and liabilities within the next financial year. Such estimates, judgements and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods as relevant.
Estimates and assumptions that have a potential significant effect are outlined in the following financial statement notes:
Valuation of Property, Plant and Equipment - note 17 Contingencies - note 26
The Australian Government passed the Clean Energy Act 2011. The legislation will result in the introduction of a price on carbon emissions made by Australian businesses from 1 July 2012. The flexible market-based price phase of the carbon pricing mechanism will commence on 1 July 2015. It will be preceded by a three-year period during which the price of permits will be fixed at $23 per tonne or carbon dioxide equivalent in year one, $24.15 in year two and $25.40 in year three.
Section 4.3.4 of Queensland Treasury and Trade's report on 'Carbon Price Impacts for Queensland' dated August 2011 indicates that, for non-residential construction activities, costs may increase by between 0.7 per cent and 0.8 per cent over the period 2012-13 to 2015-16. The introduction of the carbon pricing mechanism has not had a significant impact on the Department of Energy and Water Supply critical accounting estimates, assumptions and management judgements.
(aa) Rounding and comparatives Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where that amount is $500 or less, to zero, unless disclosure of the full amount is specifically required.
(ab) New and revised accounting standards
The department did not voluntarily change any of its accounting policies during 2012-13. Australian accounting standard changes applicable for the first time for 2012-13 have had minimal effect on the department's financial statements, as explained below.
The department is not permitted to early adopt a new or amended accounting standard ahead of the specified commencement date unless approval is obtained from Queensland Treasury and Trade. Consequently, the
Department of Energy and Water Supply | 2012–13 Annual Report Page 62 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(ab) New and revised accounting standards (continued) department has not applied any Australian accounting standards and interpretations that have been issued but are not yet effective. The department applies standards and interpretations in accordance with their respective commencement dates.
At the date of authorisation of the financial report, the expected impacts of new or amended Australian accounting standards with future commencement dates are as set out below.
AASB 13 Fair Value Measurement applies from reporting periods beginning on or after 1 January 2013. AASB 13 sets out a new definition of “fair value”, as well as new principles to be applied when determining the fair value of assets and liabilities. The new requirements will apply to all of the department's assets and liabilities (excluding leases) that are measured and/or disclosed at fair value or another measurement based on fair value. The potential impacts of AASB 13 relate to the fair value measurement methodologies used, and financial statement disclosures made in respect of, such assets and liabilities.
The department has commenced reviewing its fair value methodologies (including instructions to valuers, data used and assumptions made) for all items of property, plant and equipment measured at fair value to determine whether those methodologies comply with AASB 13. To the extent that the methodologies don't comply, changes will be necessary. While the department is yet to complete this review, no significant changes are anticipated, based on the fair value methodologies presently used. Therefore, at this stage, no consequential material impacts are expected for the department's property, plant and equipment as from 2013-14.
AASB 13 will require an increased amount of information to be disclosed in relation to fair value measurements for both assets and liabilities. To the extent that any fair value measurement for an asset or liability uses data that is not "observable" outside the department, the amount of information to be disclosed will be relatively greater.
AASB 9 Financial Instruments (December 2010) and AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] become effective from reporting periods beginning on or after 1 January 2013. The main impacts of these standards on the department are that they will change the requirements for the classification, measurement and disclosures associated with financial assets. Under the new requirements, financial assets will be more simply classified according to whether they are measured at amortised cost or fair value. Pursuant to AASB 9, financial assets can only be measured at amortised cost if two conditions are met. One of these conditions is that the asset must be held within a business model whose objective is to hold assets in order to collect contractual cash flows. The other condition is that the contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
The department has commenced reviewing the measurement of its financial assets against the new AASB 9 classification and measurement requirements. However, as the classification of financial assets at the date of initial application of AASB 9 will depend on the facts and circumstances existing at that date, the department's conclusions will not be confirmed until closer to that time. At this stage, and assuming no change in the types of transactions the department enters into, it is not expected that any of the department's financial assets will meet the criteria in AASB 9 to be measured at amortised cost. Therefore, as from the 2013-14 financial statements, all of the department's financial assets are expected to be required to be measured at fair value, and classified accordingly. The same classification will be used for net gains/losses recognised in the Statement of Comprehensive Income in respect of those financial assets. In the case of the department's current receivables, as they are short-term in nature, the carrying amount is expected to be a reasonable approximation of fair value.
The following new and revised standards apply as from reporting periods beginning on or after 1 January 2014 –
• AASB 10 Consolidated Financial Statements; • AASB 11 Joint Arrangements; • AASB 12 Disclosure of Interests in Other Entities; • AASB 127 (revised) Separate Financial Statements; • AASB 128 (revised) Investments in Associates and Joint Ventures; and
Department of Energy and Water Supply | 2012–13 Annual Report Page 63 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
(ab) New and revised accounting standards (continued)
• AASB 2011 -7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards [AASB 1, 2, 3, 5, 7, 9, 2009-11, 101, 107, 112, 118, 121, 124, 132, 133, 136, 138, 139, 1023 & 1038 and Interpretations 5, 9, 16 & 17] .
These standards cannot be applied by not-for-profit entities prior to their effective date, as the AASB is presently considering modifying them for application by not-for-profit entities in an Australian context. Any such modifications are likely to clarify how the IASB’s principles should be applied by not-for-profit entities. Whilst it is unlikely these new and revised standards will have an impact on the department, it is not yet in a position to reliably determine the future implications of these new and revised standards for the financial statements.
A revised version of AASB 119 Employee Benefits applies from reporting periods beginning on or after 1 January 2013. The revised AASB 119 is generally to be applied retrospectively. Given the department's circumstances, the only implications for the department are that the revised standard clarifies the concept of “termination benefits”, and the recognition criteria for liabilities for termination benefits will be different. If termination benefits meet the timeframe criterion for “short-term employee benefits”, they will be measured according to the AASB 119 requirements for “short-term employee benefits”. Otherwise, termination benefits will need to be measured according to the AASB 119 requirements for “other long-term employee benefits”. Under the revised standard, the recognition and measurement of employer obligations for “other long-term employee benefits” will need to be accounted for according to most of the requirements for defined benefit plans.
The revised AASB 119 includes changed criteria for accounting for employee benefits as "short-term employee benefits". However, as the department is a member of the Queensland Government central schemes for annual leave and long service leave, this change in criterion has no impact on the department’s financial statements, as the employer liability is held by the central scheme. The revised AASB 119 also includes changed requirements for the measurement of employer liabilities/assets arising from defined benefit plans, and the measurement and presentation of changes in such liabilities/assets. The department only contributes to the QSuper defined benefit plan, and the corresponding QSuper employer benefit obligation is held by the State. Therefore, those changes to AASB 119 will have no impact on the department.
AASB 1053 Application of Tiers of Australian Accounting Standards applies as from reporting periods beginning on or after 1 July 2013. AASB 1053 establishes a differential reporting framework for those entities that prepare general purpose financial statements, consisting of two tiers of reporting requirements – Australian Accounting Standards (commonly referred to as “tier 1”), and Australian Accounting Standards – Reduced Disclosure Requirements (commonly referred to as “tier 2”). Tier 1 requirements comprise the full range of AASB recognition, measurement, presentation and disclosure requirements that are currently applicable to reporting entities in Australia. The only difference between the tier 1 and tier 2 requirements is that tier 2 requires fewer disclosures than tier 1.
Details of which disclosures in standards and interpretations are not required under tier 2 reporting are set out in amending standards AASB 2010-2, AASB 2011-2, AASB 2011-6 and AASB 2011-11 (which also apply from reporting periods beginning on or after 1 July 2013). However, Queensland Treasury and Trade’s Financial Reporting Requirements effectively do not allow application of AASB 2011-6 in respect of controlled entities, associates or interests in jointly controlled entities.
Pursuant to AASB 1053, public sector entities like the department may adopt tier 2 requirements for their general purpose financial statements. However, AASB 1053 acknowledges the power of a regulator to require application of the tier 1 requirements. In the case of the department, Queensland Treasury and Trade is the regulator. Queensland Treasury and Trade has advised that its policy decision is to require adoption of tier 1 reporting by all Queensland Government departments and statutory bodies that are consolidated into the Whole-of-government financial statements. Queensland Treasury and Trade policy also prohibits the early adoption of the arrangements outlined in AASB 1053 and it’s accompanying amending standards. Therefore, the release of AASB 1053 and associated amending standards will have no impact on the department.
All other Australian accounting standards and interpretations with future commencement dates are either not applicable to the department's activities, or have no material impact on the department.
Department of Energy and Water Supply | 2012–13 Annual Report Page 64 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013 2013 2012 $’000 $’000
2. Reconciliation of payments from consolidated fund
Reconciliation of payments from Consolidated Fund to departmental services revenue recognised in the Statement of Comprehensive Income
Budgeted departmental services appropriation 151,926 - Transfers from/to other departments Redistribution of public business - 46,574 Equity - 100 Administered - (23,819) Lapsed departmental services appropriation (71,262) - Net departmental services receipts 80,664 22,855 Less opening balance departmental services revenue receivable (705) Plus opening balance departmental services revenue payable 1,265 - Closing balance of Appropriation adjustment receivable/payable (12,115) (560) Departmental services revenue recognised in Statement of Comprehensive Income 69,109 22,295
Reconciliation of payments from Consolidated Fund to equity adjustment recognised in Contributed Equity Budgeted equity adjustment appropriation 500 - Lapsed equity adjustment (500) - Departmental service revenue - (100) Equity adjustment recognised in Contributed Equity - (100)
Administered on a whole-of-government basis Reconciliation of payments from Consolidated Fund to administered appropriation revenue recognised in the Statement of Comprehensive Income
Budgeted departmental services appropriation 717,645 - Transfers from/to other departments redistribution of public business - 58,585 Administered service revenue - 23,819 Lapsed departmental services appropriation (13,709) - Unforeseen expenditure - 32,741 Total appropriation service receipts 703,936 115,145
Plus opening balance departmental services revenue payable 42,311 - Closing balance of appropriation adjustment receivable/payable (9,806) (42,311)
Administered services revenue recognised in Statement of Comprehensive Income 736,441 72,834
3. User charges, fees and fines Services rendered - 88 Tot al - 88
Administered on a whole-of-government basis
Fees 1,538 743 Tot al 1,538 743
Department of Energy and Water Supply | 2012–13 Annual Report Page 65 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013 2013 2012 $’000 $’000
4. Grants and other contributions Grants 42 - Goods and services received below fair value 641 - Tot al 683 -
Administered on a whole-of-government basis
Dam spillway grant for Ibis Dam 6,883 360 Tot al 6,883 360
5. Interest revenue Interest received on fund balances 115 18 Other - (5) Tot al 115 13
6. Other revenue Recoveries 222 173 Other 2,977 6 Tot al 3,199 179
Administered on a whole-of-government basis
Other 167 5,667 Tot al 167 5,667
7. Employee expenses Em ployee benefits
Wages and salaries 25,441 3,180 Employer superannuation contributions * 2,767 497 Long service leave levy* 478 278 Other employee benefits 2,092 9
Employee related expenses
Salary related taxes * 1,236 219 Workers' compensation premium * 228 48 Other employee related expenses 57 -
Total Employee expenses 32,299 4,231
* Refer to note 1 (w). The number of employees as at 30 June 2013 including both full-time employees and part-time employees measured on a full-time equivalent basis is: 238 (2012: 266). * Employer superannuation contributions and the long service leave levy are regarded as employee benefits. Cost of workers' compensation insurance and payroll tax are a consequence of employment, but are not counted in employees' total remuneration package. Accordingly they are not treated as employee benefits, but rather employee related expenses. Refer to note 1 (w).
Department of Energy and Water Supply | 2012–13 Annual Report Page 66 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
8. Key management personnel and remuneration a) Key Management Personnel
The following details for key executive management personnel include those positions that had authority and responsibility for planning, directing and controlling the activities of the agency during 2012-13. Further information on these positions can be found in the body of the Annual Report under the section relating to Executive Management.
Current Incumbents
Position Responsibilities Contract Date appointed to classification position (Date and resigned appointment from position) authority Director-General The Director General is responsible for the CEO3 21 May 2012 efficient, effective and economic administration of employed the department. under Section 92 of the Public Service Act 2008
Deputy Director- The Deputy Director-General is responsible for the CEO5.5 4 June 2012 General, Energy efficient, effective and economic administration of employed the Energy functions and responsibilities of the under s122 of department. the Public Service Act 2008 Acting Deputy The Deputy Director-General is responsible for the SES4.1 19 December 2012 Director-General, efficient, effective and economic administration of employed Energy the Energy functions and responsibilities of the under s122 of department. the Public Service Act 2008 Deputy Director- The Deputy Director-General is responsible for the SES4.1 27 August 2012 General, Water efficient, effective and economic administration of employed Supply and the Water Supply and Sewerage Services under s122 of Sewerage Services functions and responsibilities of the department. the Public Service Act 2008 Deputy Director- The Group Executive is responsible for the SES4.2 1 July 2011 General, Business efficient, effective and economic administration of employed and Corporate the Human Resource, ICT, Business Services, under s122 of Partnership Media, Communications, and Corporate the Public Partnership functions of the department. Service Act 2008 General Manager, The General Manager, Planning Performance and SES2.3 27 October 2011 Planning Governance and Chief Finance Officer is employed Performance and responsible for the efficient, effective and under s 110 of Governance and economic administration of departmental planning, the Public Chief Finance performance and governance responsibilities, Service Act Officer strategic leadership and financial administration. 2008
General Manager, The General Manager, Liaison Office is SES2.3 7 December 2011 Liaison Office responsible for the efficient, effective and employed (17 January 2013) economic administration of energy and water under s122 of governance and liaison functions for the the Public department. Service Act 2008
Department of Energy and Water Supply | 2012–13 Annual Report Page 67 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
8. Key management personnel and remuneration (continued)
Current Incumbents
Position Responsibilities Contract Date appointed to classification position (Date and resigned appointment from position authority Acting General The General Manager, Liaison Office is SES2.3 13 January 2013 Manager, Liaison responsible for the efficient, effective and employed (19 April 2013) Office economic administration of energy and water under s122 of Position ceased 19 governance and liaison functions for the the Public April 2013. department Service Act 2008 Director, Floods The Director is responsible for the efficient, SO(1) 7 February 2012 Inquiry Response effective and economic administration of the employed and Delivery natural resources operations functions and under the responsibilities of the agency in regards to Floods Public Service Inquiry Response and Delivery Act 2008 b) Remuneration
Remuneration policy for the agency's key management personnel is set by the Public Service Commission (PSC) as provided for under the Public Service Act 2008. The remuneration and other terms of employment for the key executive management personnel are specified in employment contracts.
For the 2012-13 year, remuneration of key management personnel increased by 2.2% in accordance with government policy. Remuneration packages for key management personnel comprise the following components:
• Short term employee benefits which include: o Base - consisting of base salary, allowances and leave entitlements paid and provided for the entire year or for that part of the year during which the employee occupied the specified position. Amounts disclosed equal the amount expensed in the Statement of Comprehensive Income. o Non-monetary benefits - consisting of provision of vehicle together with fringe benefits tax applicable to the benefit.
• Long term employee benefits include long service leave accrued. • Post employment benefits include superannuation contributions. • Redundancy payments are not provided for within individual contracts of employment. Contracts of employment provide only for notice periods or payment in lieu of notice on termination, regardless of the reason for termination.
Total fixed remuneration is calculated on a 'total cost' basis and includes the base and non-monetary benefits, long term employee benefits and post employment benefits.
The remuneration package for the Director General includes a potential performance payment up to a maximum of 15 per cent of that position’s total fixed remuneration, which equates to approximately $ 59,368. Eligibility for such a performance payment is conditional on the achievement of objectives that are documented in that position’s performance agreement.
Eligibility to a performance payment is determined based on:
analysis by the PSC of relevant performance data; consultation with the Under Treasurer and the Director-General of the Department of the Premier and Cabinet; recommendations from the PSC Chief Executive and Chair of the PSC Board; and the Premier’s ultimate discretion regarding whether the incumbent will be paid a performance payment and, if so, how much.
As at the date of management certification of these financial statements, the eligibility to a performance payment for the Director General had not yet been confirmed. With respect to the process to determine eligibility, recommendations are yet to be made by the PSC Chief Executive and Chair of the PSC. The Premier’s ultimate
Department of Energy and Water Supply | 2012–13 Annual Report Page 68 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
8. Key management personnel and remuneration (continued) decision is expected to be made during September 2013. Therefore, any performance payment approved by the Premier will be reported as an expense within the 2013-14 financial year.
The remuneration package for the Deputy Director General, Energy includes a potential performance payment up to a maximum of 15 per cent of that position’s total fixed remuneration, which equates to approximately $ 42,290. Eligibility for such a performance payment is determined by the Director General and is conditional on the achievement of objectives that are documented in that position’s performance agreement.
As at the date of management certification of these financial statements, the eligibility to a performance payment for the Deputy Director General, Energy had not yet been confirmed. A decision by the Director General is expected to be made during September with any approved performance payment to be reported as an expense within the 2013-14 financial year.
1 July 2012 – 30 June 2013
Position (date Long Term Post Term resigned if Short Term Employee Employee Employment Benefits Total applicable Benefits Benefits Benefits Remuneration Non- Base Monetary Benefits $’000 $’000 $’000 $’000 $’000 $’000
Director-General 408 7 8 26 - 449 Deputy Director- General, Energy 267 7 5 30 - 309 Acting Deputy Director- General, Energy 122 1 2 11 - 136 Deputy Director- General, Water Supply and Sewerage Services 178 2 4 19 - 203 Deputy Director- General, Business and Corporate Partnership* ------General Manager, Planning Performance and Governance and Chief Finance Officer 168 7 3 18 - 196 General Manager, Liaison Office 46 3 1 5 - 55 Acting General Manager, Liaison Office 20 - - 2 - 22 Director,Floods Inquiry Response and Delivery 54 - 3 6 - 63
* This position is shared with the Department of Natural Resources and Mines (DNRM) and is fully funded by DNRM to 30 June 2013 as per the Corporate Partnership arrangement. Remuneration is disclosed in the financial statements of DNRM.
Department of Energy and Water Supply | 2012–13 Annual Report Page 69 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
1 May 2012 – 30 June 2012
Position (date Long Term Post resigned if Short Term Employee Employee Employment Termination Total applicable Benefits Benefits Benefits Benefits Remuneration Non- Base Monetary Benefits $’000 $’000 $’000 $’000 $’000 $’000
Director-General 43 1 1 2 - 47
Acting Deputy Director- General, Energy 6 3 - 2 - 11 Deputy Director- General, Energy 20 1 1 1 - 23 Group Executive, Business and Corporate Partnership* ------
General Manager, Water Supply Policy and Management 25 2 - 3 - 30 General Manager, Planning Performance and Governance and Chief Finance Officer 32 2 1 3 - 38 Director,Floods Inquiry Response and Delivery 22 - - 3 - 25 General Manager, Queensland Water Regulator, Office of the Water Supply Regulator 25 5 1 3 - 34
* This position is shared with DNRM and is fully funded to 30 June 2012 as per the Corporate Partnership arrangement. The title of the position changed to Deputy Director-General in 2012-13.
Department of Energy and Water Supply | 2012–13 Annual Report Page 70 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013 2013 2012 $’000 $’000
9. Supplies and services Operating lease rentals 2,734 - Consultants and contractors 2,925 146 Queensland Government Solar Hot Water Rebate 990 1,899 Shared service provider costs 955 234 Building services 462 - Telephone and electricity 134 - Service delivery costs 261 - Travel 273 84 Miscellaneous supplies 105 118 Computing expenses 1,142 171 Subscriptions and memberships 44 24 Motor vehicle 48 28 Other 302 262 Total 10,375 2,966
Administered on a whole-of-government basis Consultants and contractors 1,439 (100) Other 811 (12) Total 2,250 (112)
10. Grants and subsidies Community service obligation payments (Water)* 16,299 3,884 Grants and subsidies 12,943 6,788 Tot al 29,242 10,672
* Full year payments in 2011-12 was: $15.074 million
Administered on a whole-of-government basis
Communitiy service obligation (Energy)* 648,230 72,227 Water rebate 87,255 - Other - 88 Total 735,485 72,315
*Full year payments in 2011-12 was: $420.8 million. The increase in 2013 is due to a rise in network costs together with inclusion of revenue foregone under the Government's freeze on the standard residential electricity tariff (Tariff 11) for both the Ergon and Energex distribution areas.
11. Depreciation and amortisation Depreciation and amortisation were incurred in respect of:
Plant and equipment 231 40 Intangibles 46 8 Tot al 277 48
Department of Energy and Water Supply | 2012–13 Annual Report Page 71 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
2013 2012 $’000 $’000
11. Depreciation and amortisation (continued) Administered on a whole-of-government basis Depreciation and amortisation were incurred in respect of:
Buildings 31 Infrastructure 5,376 905 # Tot al 5,379 906 #
# Refer to note 29 for details of adjustments made to 2012 comparatives.
12. Other expenses Legal fees 385 86 External audit fees * 168 8 Bad and impaired debts 35 3 Special payments 67 - Other 21 287 Total 676 384
*External audit fees payable to the Queensland Audit Office and relating to 2013 financial year are estimated to be $129,000 (2012:$70,000). There are no non-audit services included in this amount.
Administered on a whole-of-government basis
Loss on Disposal of Infrastructure Assets* 8,922 - Total 8,922 -
*Relates to transfer of the Ibis Dam to the Tablelands Regional Council.
13. Revaluation decrement Administered on a whole-of-government basis
Revaluation decrement (Land) - 1 Total -1
14. Cash and cash equivalents Imprest accounts 11 Cash at bank 46,595 20,366 Tot al 46,596 20,367
Departmental bank accounts grouped within the Whole-of-government set-off arrangement with the Queensland Treasury Corporation do not earn interest on surplus funds.
Administered on a whole-of-government basis
Cash at bank 123,208 77,891 Tot al 123,208 77,891
Department of Energy and Water Supply | 2012–13 Annual Report Page 72 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
2013 2012 $’000 $’000
15. Receivables Trade debtors 1,751 597 Less: Allowance for impairment loss 25 26 1,726 571
Annual leave claim receivable 243 381 Long service leave reimbursements 454 76 Loans and Advances 979 13 Departmental service revenue 927 1,507 Other 686 45 3,289 2,022
Total current assets 5,015 2,593
Non-current Loans and advances 1,259 2,759 1,259 2,759
Movem ents in the allowance o f provision for impairment Balance at 1 July 26 - Impairment through Machinery of Government - 26 Amounts written-off during the period (1) - Balance at 30 June 25 26
Administered on a whole-of-government basis
Trade debtors 5,391 6,405 Less: Allowance for impairment loss 26 26 5,365 6,379
GST receivable 10,939 - Departmental service revenue - 177 10,939 177
Total current assets 16,304 6,556
Movem ents in the allowance o f provision for impairment Balance at 1 July 26 - Impairment through Machinery of Government - 26 Balance at 30 June 26 26
Department of Energy and Water Supply | 2012–13 Annual Report Page 73 Department of Energy and Water Supply Notes to and forming part of the Financial Statements for the year ended 30 June 2013
2013 2012 $’000 $’000
16. Other current assets
Prepayments - 1,919 Tot al - 1,919
17. Property, plant and equipment Non-current Plant and equipment: A t cost 2,143 1,580 Less: accumulated depreciation 1,115 895 Tot al 1,028 685
Administered on a whole-of-government basis
Non-current L an d At valuation 677 854
Buildings At valuation 98 98 Less: accumulated depreciation 18 15 80 83
Infrastructure At valuation 330,893 349,381 # Less: accumulated depreciation 162,611 172,938 # 168,282 176,443 #
Work in progress - 740
Tot al 169,039 178,120 #
# Refer to note 29 for details of adjustments made to 2012 comparatives.
Department of Energy and Water Supply | 2012–13 Annual Report Page 74 17. as at 30 June 2013 Notes to and Forming Part of the Financial Statements Department of Energy and Water Supply
Plant and equipment is valued at cost as is valued equipment Plant and Property, Plant and Equipment Reconciliation Plant and equipment Plant and equipment Property, plant and equipment (continued) 1 July 2012 1 Ma 1 Opening Opening Opening Opening Balance Balance y 2012 $'000 $'000 685 685 prescribed in Queensland Treasury and Trade’s Trade’s and Treasury in Queensland prescribed - - through MoG through MoG Acquisition Acquisition chan change $'000 $'000 725 725 g e - - custo ercainExternal Depreciation Acquisition custo ercainExternal Depreciation Acquisition $'000 $'000 564 564 - Non-current Asset Policies for the Queensland Public Sector Public for the Queensland Asset Policies Non-current $'000 $'000 (231) (231) (40) (40) through MoG Transfer in Transfer '0 $'000 $'000 '0 $'000 $'000 12 12 - - assets held assets held Transfer to Transfer to for sale for sale - - - - (Decreaments) ( Decrements Revaluation Revaluation Increments Increments '0 $'000 $'000 '0 $'000 $'000 - - - - ) . ipsl Balance 30 Disposals ipsl Balance 30 Disposals (2) (2) - - June 2012 June 2013 1,028 1,028 $'000 $'000 685 685
Department of Energy and Water Supply | 2012–13 Annual Report Page 75 # Refer to note 29 for details of adj 29 for details # Refer to note Administered on a whole-of-government basis 17. Property, plant and equipment (continued) as at 30 June 2013 Notes to and Forming Part of the Financial Statements Department of Energy and Water Supply
Infrastructure Buildings Work in progress Work Buildings Land Work in progress Work Infrastructure Land Property, Plant and Equipment Reconciliation 1 July 2012 1 May 2012 ustments made to 2012 comparatives. comparatives. made to 2012 ustments Opening Opening Opening Opening Balance Balance 178,120 176,443 $'000 $'000 854 740 83 - - - - - through MoG through MoG Acquisition Acquisition change change 6,682 7,600 $'000 $'000 855 63 ------# custo ercainExternal Depreciation Acquisition custo Depreciation Acquisition 5,397 5,397 '0 $'000 $'000 '0 $'000 $'000 740 740 - - - (5,379) (5,376) (905) (906) (1) (3) - # through MoG Transfer out Transfer External External '0 $'000 $'000 '0 $'000 $'000 (177) (177) ------assets held Transfer to between between Transfer classes for sale (740) 740 - -- 170,666 - - - - 170,686 - - (Decreaments) (Decreaments) Revaluation Revaluation Increments Increments Increments Increments $'000 $'000 (1) 21 ------# ipsl Balance 30 Disposals ipsl Balance 30 Disposals (8,922) (8,922) '0 $'000 $'000 '0 $'000 $'000 - 7,4 # 176,443 - - - 178,120 - - - June 2012 June 2013 169,039 168,282 677 740 854 83 80 # #
Department of Energy and Water Supply | 2012–13 Annual Report Page 76 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
2013 2012 $’000 $’000
18. Intangibles Software Purchased At cost 125 793 Less: accumulated amortisation 43 668 82 125
Software Internally Generated At cost 33 Less: accumulated amortisation 3 - -3
Total 82 128
Intangibles Reconciliation
Software Internally Software Purchased Total
2013 2012 2013 2012 2013 2012 $'000 $'000 $'000 $'000 $'000 $'000
Carrying amount at 1 July 3 - 125 - 128 - Acquisition ------Acquisition through MOG changes - 3 - 793 - 796 Transfer between classes ------Disposal ------Amortization (3) - (43) (668) (46) (668) Carrying amount at 30 June 0 3 82 125 82 128
19. Payables
Current Trade creditors 575 3,661 Grants and subsidies payable 9,743 6,503 Taxes payable - 167 Other creditors 10,513 1 Tot al 20,831 10,332
Administered on a whole-of-government basis
Current Transfer of administered item revenue to government payable 6,062 6,062 Community service obligations 123,764 38,254 Other creditors 1,564 87 Total 131,390 44,403
Department of Energy and Water Supply | 2012–13 Annual Report Page 77 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
2013 2012 $’000 $’000
20. Accrued employee benefits
Annual leave levy payable 846 659 Long Service leave levy payable 236 84 Other 310 1 Tot al 1,392 744
21. Other liabilities Current Unearned Revenue 13,042 1,265 Tot al 13,042 1,265
Administered on a whole-of-government basis
Current Unearned Revenue 9,806 42,311 Tot al 9,806 42,311
22. Asset revaluation surplus by class
Administered on a whole-of-government basis
Water asset revalation surplus by class
Revaluation Opening Balance Increments Balance 1 July 2012 (Decrements) 30 June 2013 Buildings 21 - 21 Infrastructure 170,666 - 170,666 Total 170,687 - 170,687
Revaluation Opening Balance Increments Balance 1 May 2012 (Decrements) 30 June 2012 Buildings - 21 21 Infrastructure - 170,666 170,666 # Total - 170,687 170,687 #
# Refer to note 29 for details of adjustments made to 2012 comparatives.
The asset revaluation surplus represents the net effect of upward and downward revaluations of assets to fair value.
Department of Energy and Water Supply | 2012–13 Annual Report Page 78 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
2013 2012 $’000 $’000
23. Reconciliation of operating result from continuing operations to net cash
Operating surplus/(deficit) 237 4,274
Depreciation and amortisation expense 277 48 Bad and impaired debts 35 3 Assets write-off - 285 Interest received - (25) Loss on disposal of non current asset 2- Goods and services received below fair value (621) -
Change in assets and liabilities: (Increase)/decrease in receivables (758) (1,545) (Increase)/decrease in other current assets 1,919 (5,473) (Increase)/decrease in GST input tax credits receivable (164) - Increase/(decrease) in accounts payable 12,535 2,931 Increase/(decrease) in accrued employee benefits 3,016 463 Increase/(decrease) in other current liabilities 9,751 4,586 Net cash provided by (used in) operating activities 26,229 5,547
Administered on a whole-of-government basis
Operating result from continuing operations (8,321) 953
Depreciation expenses 5,379 60 Revaluation decrement - 1 Loss on disposal of non current asset 8,922 -
Changes in assets and liabilities (Increase)/decrease in net operating receivable (9,748) (6,379) Increase/(decrease) in payables 54,482 86,714
Net cash (used in) in operating activities 50,714 81,349
24. Contributed equity reconciliation Openin g balance 11,836 - Appropriated equity injections 380 - Appropriated equity withdrawals (380) (100) Non appropriated equity withdrawls - (330) Machinery of Government adjustment (297) - Net assets received via machinery of Government 2,665 12,266 Closing balance at 30 June 14,204 11,836
Administered on a whole-of-government basis
Opening balance 5,059 - Non appropriated equity transfer (177) - Net assets received via machinery of Government - 5,059 # Closing balance at 30 June 4,882 5,059
# Refer to note 29 for details of adjustments made to 2012 comparatives.
Department of Energy and Water Supply | 2012–13 Annual Report Page 79 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
2013 2012 $’000 $’000
25. Commitments for expenditure (a) Non-cancellable operating lease Commitments under operating leases at reporting date are inclusive of anticipated GST and are payable as follows: Operating expenses 27 274 Building, car park and storage leases 25,048 3,712 25,075 3,986
Not later than one year 2,905 1,516 Later than one year and not later than five years 12,263 1,582 Later than five years 9,907 888 Total 25,075 3,986
(b) Other expenditure commitments Other expenditure committed at the end of the period but not recognised in the accounts are as follows:
Operating expenses 588 3,030 Building, car park and storage leases - 3,389 588 6,419
Not later than one year 588 1,089 Later than one year and not later than five years - 4,442 Later than five years - 888 Total 588 6,419
(c) Grants and subsidies
Grants and subsidies commitments inclusive of anticipated GST, committed at the end of period but not recognised in the accounts are as follows:
Grants and subsidies 1,810 26,090 1,810 26,090
Not later than one year 1,810 25,353 Later than one year and not later than five years - 737 Later than five years - - Total 1,810 26,090
(d) Capital expenditure commitments
Material classes of capital expenditure commitments inclusive of GST, contracted for at reporting date but not recognised in the accounts are payable as follows:
Plant and equipment - 67 - 67
Not later than one year - 67 Later than one year and not later than five years - - Later than five years -- Total - 67
Department of Energy and Water Supply | 2012–13 Annual Report Page 80 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
2013 2012 $’000 $’000
25. Commitments for Expenditure (continued)
Administered on a whole-of-government basis
Administered on a Whole-of-government basis
(a) Other expenditure commitments Other expenditure committed at the end of the period but not recognised in the accounts are as follows:
Operating expenses 405 - 405 -
Not later than one year 405 - Later than one year and not later than five years - - Later than five years - - Total 405 -
26. Contingencies
Contingent liabilities
(a) Guarantees and undertakings
During 2012-13 the department has been a party to numerous indemnity capped procurement arrangements. These contracts are primarily with suppliers of information technology infrastructure and software and related maintenance, statistical methodologies and water infrastructure. Contract lives are short term in nature.
(b) Litigation in progress
As at 30 June 2013 the following claims against the department were filed in the courts or lodged with the department:
Claims Claims 2013 2012 Jurisdiction not available - lodged with department 1 1 Queensland Civil and Administration Tribunal 1 - 21
It is not possible to make a reliable estimate of probable outcome of this claims, or of any financial effect. Depending on the outcome of the litigation process, indemnity for the department may be sought in respect of some of the above matters through the Queensland Government Insurance Fund.
Department of Energy and Water Supply | 2012–13 Annual Report Page 81 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
27. Financial instruments
(a) Categorisation of financial instruments
The department has the following categories of financial assets and financial liabilities:
Category Note 2013 2012 $'000 $'000 Financial Assets Cash and cash equivalents 14 46,596 20,367 Receivables 15 6,274 2,593 Tot al 52,870 22,960
Financial Liabilities Payables 19 20,831 10,332 Tot al 20,831 10,332
(b) Financial risk management
The department’s activities expose it to a variety of financial risks – interest rate risk, credit risk, liquidity risk and market risk.
Financial risk management is implemented pursuant to Government and departmental policy. These policies focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the financial performance of the department.
All financial risk is managed under approved departmental financial management policies. The department utilises written principles for overall risk management, as well as policies covering specific areas.
The department measures risk exposure using a variety of methods as follows:
Risk Exposure Measurement Method Credit risk Ageing analysis, earnings at risk Liquidity risk Sensitivity analysis Market risk Interest rate sensitivity analysis
(c) Credit risk exposure
Credit risk exposure refers to the situation where the department may incur financial loss as a result of another party to a financial instrument failing to discharge their obligation.
The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any provisions for impairment.
The following table represents the department’s maximum exposure to credit risk based on contractual amounts net of any allowances:
Maxim um Exp osure to Cred it Risk Note 2013 2012 Category $'000 $'000 Financial Assets Cash and cash equivalents 14 46,596 20,367 Receivables 15 6,274 2,593
Tot al 52,870 22,960
Department of Energy and Water Supply | 2012–13 Annual Report Page 82 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
27. Financial instruments (continued)
Financial Assets
No collateral is held as security and no credit enhancements relate to financial assets held by the department.
The department manages credit risk through the use of the credit management strategy. This strategy aims to reduce the exposure to credit default by ensuring that the department invests in secure assets and monitors all funds owed on a timely basis. Exposure to credit risk is monitored on an ongoing basis.
No financial assets and financial liabilities have been offset and presented net in the Statement of Financial Position.
No financial assets have had their terms renegotiated so as to prevent them from being past due or impaired and are stated at the carrying amounts as indicated.
Ageing of past due but not impaired as well as impaired financial assets are disclosed in the following tables: 2013 Financial assets past due but not impaired
O ve r due Less than 30 - 60 61-90 More than 2013 30 days Days Days 90 days Total $'000 $'000 $'000 $'000 $'000 Receivables 6,274 - - - 6,274 Total 6,274 - - - 6,274
2012 Financial assets past due but not impaired O ve r due
Less than 30 - 60 61-90 Mo re th an 2012 30 days Days Days 90 days Total $'000 $'000 $'000 $'000 $'000 Receivables 2,593 - - - 2,593 Total 2,593 - - - 2,593
(d) Liquidity risk
Liquidity risk refers to the situation where the department may encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
The department manages liquidity risk through the use of a liquidity management strategy. This strategy aims to reduce the exposure to liquidity risk by ensuring the department has sufficient funds available to meet employee and supplier obligations as they fall due. This is achieved by ensuring that minimum levels of cash are held within the various bank accounts so as to match the expected duration of the various employee and supplier liabilities.
Department of Energy and Water Supply | 2012–13 Annual Report Page 83 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
27. Financial instruments (continued)
The following table sets out the liquidity risk of financial liabilities held by the department. It represents the contractual maturity of financial liabilities, calculated based on undiscounted cash flows relating to the liabilities at reporting date.
2013 Payable in Total <1 years 1-5 years > 5 years Note $'000 $'000 $'000 $'000 Financial Liabilities Payables 19 20,831 - - 20,831 Total 20,831 - - 20,831
2012 Payable in Total <1 years 1-5 years > 5 years Note $'000 $'000 $'000 $'000 Financial Liabilities Payables 19 10,332 - - 10,332 Total 10,332 - - 10,332
(e) Market risk
The department does not trade in foreign currency and is not materially exposed to commodity price changes. The department is exposed to interest rate risk through its finance leases. The department does not undertake any hedging in relation to interest risk and manages its risk as per its liquidity risk management strategy.
(f) Interest rate sensitivity analysis
The department does not have any assets and liabilities that are affected by the interest rate risk.
Administered on a Whole-of-government basis
(a) Categorisation of financial instruments
The department has the following categories of financial asset and liabilities:
Administered on a whole-of-government basis 2013 2012 Category Note $'000 $'000 Financial Assets Cash and cash equivalents 14 123,208 77,891 Receivables 15 16,304 6,556
Tot al 139,512 84,447
Financial Liabilities Payables 19 131,390 44,403 Tot al 131,3 90 44,403
(b) Financial risk management
The department’s activities expose it to a variety of financial risks – interest rate risk, credit risk, liquidity risk and market risk.
Department of Energy and Water Supply | 2012–13 Annual Report Page 84 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
27. Financial instruments – Administered on a whole-of-government basis (continued)
Financial risk management is implemented pursuant to Government and departmental policy. These policies focus on the unpredictability of financial markets and seek to minimise potential adverse effects on the financial performance of the department.
All financial risk is managed under approved departmental financial management policies. The department utilises written principles for overall risk management, as well as policies covering specific areas.
The department measures risk exposure using a variety of methods as follows:
Risk Exposure Measurement Method Credit risk Ageing analysis, earnings at risk Liquidity risk Sensitivity analysis Market risk Interest rate sensitivity analysis
(c) Credit risk exposure
Credit risk exposure refers to the situation where the department may incur financial loss as a result of another party to a financial instrument failing to discharge their obligation.
The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any provisions for impairment.
The following table represents the department’s maximum exposure to credit risk based on contractual amounts net of any allowances:
Administered on a whole-of-government basis 2013 2012 Maximum Exposure to Credit Risk Note $'000 $'000 Financial Assets Cash and cash equivalents 14 123,208 77,891 Receivables 15 16,304 6,556
Tot al 139,512 84,447
Financial Assets
No collateral is held as security and no credit enhancements relate to financial assets held by the department.
The department manages credit risk through the use of the credit management strategy. This strategy aims to reduce the exposure to credit default by ensuring that the department invests in secure assets and monitors all funds owed on a timely basis. Exposure to credit risk is monitored on an ongoing basis.
No financial assets and financial liabilities have been offset and presented net in the Statement of Financial Position.
The method for calculating any provision for impairment is based on past experience, current and expected changes in economic conditions and changes in client credit ratings. The main factors affecting the current calculation for provisions are disclosed below as loss events. These economic and geographic changes form part of the department's documented risk analysis assessment in conjunction with historic experience and associated industry data.
No financial assets have had their terms renegotiated so as to prevent them from being past due or impaired and are stated at the carrying amounts as indicated.
Ageing of past due but not impaired as well as impaired financial assets are disclosed in the following tables:
Department of Energy and Water Supply | 2012–13 Annual Report Page 85 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
27. Financial instruments – Administered on a whole-of-government basis (continued)
2013 Financial assets past due but not impaired
Administered on a whole-of -government basis Overd ue Less than 30-60 61-90 More than 30 days D ay s D ay s 90 days Total $'000 $'000 $'000 $'000 $'000 Receivables 16,301 2 1 - 16,304 Total 16,301 2 1 - 16,304
2012 Financial assets past due but not impaired
Administered on a whole-of -government basis Overd ue
Less than 30-60 61-90 More than 30 days D ay s D ay s 90 days Total $'000 $'000 $'000 $'000 $'000 Receivables 6,556 - - - 6,556 Total 6,556 - - - 6,556
(d) Liquidity risk
Liquidity risk refers to the situation where the department may encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
The department manages liquidity risk through the use of a liquidity management strategy. This strategy aims to reduce the exposure to liquidity risk by ensuring the department has sufficient funds available to meet employee and supplier obligations as they fall due. This is achieved by ensuring that minimum levels of cash are held within the various bank accounts so as to match the expected duration of the various employee and supplier liabilities.
The following table sets out the liquidity risk of financial liabilities held by the department. It represents the contractual maturity of financial liabilities, calculated based on undiscounted cash flows relating to the liabilities at reporting date.
Administered on a whole-of -government basis
2013 Payable in Total <1 years 1-5 years > 5 years $'000 $'000 $'000 $'000 Financial Liabilities Payables 131,390 - - 131,390 Total 131,390 - - 131,390
Administered on a whole-of -government basis
2012 Payable in Total <1 years 1-5 years > 5 years $'000 $'000 $'000 $'000 Financial Liabilities Payables 44,403 - - 44,403 Total 44,403 - - 44,403
Department of Energy and Water Supply | 2012–13 Annual Report Page 86 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
27. Financial instruments – Administered on a Whole-of-government basis (continued)
(e) Market risk
The department does not trade in foreign currency and is not materially exposed to commodity price changes. The department is exposed to interest rate risk through its finance leases. The department does not undertake any hedging in relation to interest risk and manages its risk as per its liquidity risk management strategy.
(f) Interest rate sensitivity analysis
The department does not have any assets and liabilities that are affected by the interest rate risk.
(g) Fair value
The fair value of financial assets and liabilities must be estimated for recognition and measurement and for note disclosure purposes. The fair value of cash and non-interest bearing monetary financial assets and financial liabilities approximate their carrying amounts as reported in the Statement of Financial Position.
The fair value of other monetary financial assets and financial liabilities is based on market prices where a market exists. The fair value of trade receivables and payables are assumed to approximate their nominal value less estimated credit adjustments. The carrying amounts of all financial assets are representative of their fair value.
Department of Energy and Water Supply | 2012–13 Annual Report Page 87 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
28. Restructuring of administrative arrangements
As a result of the effective abolition of the Queensland Water Commission at the end of 31 December 2012 “Designation of Transfer” notices by the Minister for Energy and Water Supply together with a “Departmental Arrangements” Notice were made. The following assets and liabilities of the Commission were transferred by the end of 31 December 2012 to the department at the pre-transfer carrying value disclosed in Queensland Water Commission Final Financial Statements.
Queensland Water Commission (Decommissioned 31 December 2012) 31 Dec 2012
Current assets Cash and cash equivalents 4,700 Receivables 570 Other assets -
Total current assets 5,270
Non-current assets Property, plant and equipment - Receivables - Intangibles - Total Non-current assets -
Total assets 5,270
Current liabilities Payables 2,237 Accrued employee benefits 368 Other liabilities - Total current liabilities 2,605
Total liabilities 2,605
Net assets 2,665
29. Correction of Error
The 2012 figures includes a correction of error as the carrying value of a number of non-commercial assets transferred to the department as part of the 2012 Machinery of Government changes were understated as at 1 May 2012. The impact as at 1 May 2012 was an understatement of Property, Plant & Equipment by $328.5 million, an understatement of accumulated depreciation by $165.9 million and understatement of Asset Revaluation Reserve by $170.6 million.
This error also had the effect of understating depreciation expense (and overstating operating result) by $846,000 for the period ending 30 June 2012. This error had the effect of understating accumulated depreciation for infrastructure assets by $166.7 million for the period ending 30 June 2012.This error had the effect of understating the Property, Plant & Equipment and total equity by $161.7 million for the period ended 30 June 2012.
The error has been corrected by restating each of the affected financial statement line items (refer to notes 11, 17, 22 and 24) for the prior year, as described above. Refer to note 1(n) for further information on the nature of these assets.
Department of Energy and Water Supply | 2012–13 Annual Report Page 88 Department of Energy and Water Supply Notes to and forming part of the Financial Statements As at 30 June 2013
Management Certificate
Department of Energy and Water Supply
These general purpose financial statements have been prepared pursuant to section 62(1) of the Financial Accountability Act 2009 (the Act), relevant sections of the Financial and Performance Management Standard 2009 and other prescribed requirements. In accordance with section 62(1)(b) of the Act we certify that in our opinion:
a) the prescribed requirements for establishing and keeping the accounts have been complied with in all material respects; and b) the statements have been drawn up to present a true and fair view, in accordance with prescribed accounting standards, of the transactions of the Department of Energy and Water Supply for the financial year ended 30 June 2013 and of the financial position of the department at as 30 June 2013.
Danny Short BCom CPA Jonathan (Jon) PC Black Chief Finance Officer Director-General
29 August 2013 29 August 2013
Department of Energy and Water Supply | 2012–13 Annual Report Page 89 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
INDEPENDENT AUDITOR’S REPORT
To the Accountable Officer of the Department of Energy and Water Supply
Report on the Financial Report
I have audited the accompanying financial report of the Department of Energy and Water Supply, which comprises the statement of financial position and statement of assets and liabilities by major departmental services as at 30 June 2013, the statement of comprehensive income, statement of changes in equity, statement of cash flows and statement of comprehensive income by major departmental services for the period ended, notes comprising a summary of significant accounting policies and other explanatory information, and the certificates given by the Director-General and Chief Finance Officer.
The Accountable Officer’s Responsibility for the Financial Report
The Accountable Officer is responsible for the preparation of the financial report that gives a true and fair view in accordance with prescribed accounting requirements identified in the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, including compliance with Australian Accounting Standards. The Accountable Officer’s responsibility also includes such internal control as the Accountable Officer determines is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
My responsibility is to express an opinion on the financial report based on the audit. The audit was conducted in accordance with the Auditor-General of Queensland Auditing Standards, which incorporate the Australian Auditing Standards. Those standards require compliance with relevant ethical requirements relating to audit engagements and that the audit is planned and performed to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control, other than in expressing an opinion on compliance with prescribed requirements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Accountable Officer, as well as evaluating the overall presentation of the financial report including any mandatory financial reporting requirements approved by the Treasurer for application in Queensland.
I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion.
Independence
The Auditor-General Act 2009 promotes the independence of the Auditor-General and all authorised auditors. The Auditor-General is the auditor of all Queensland public sector entities and can be removed only by Parliament.
The Auditor-General may conduct an audit in any way considered appropriate and is not subject to direction by any person about the way in which audit powers are to be exercised. The Auditor-General has for the purposes of conducting an audit, access to all documents and property and can report to Parliament matters which in the Auditor- General’s opinion are significant.
Department of Energy and Water Supply | 2012–13 Annual Report Page 90 Department of Energy and Water Supply Notes to and forming part of the Financial Statements as at 30 June 2013
Opinion
In accordance with s40 of the Auditor-General Act 2009 – (a) I have received all the information and explanations which I have required; and (b) in my opinion – (i) the prescribed requirements in relation to the establishment and keeping of accounts have been complied with in all material respects; and (ii) the financial report presents a true and fair view, in accordance with the prescribed accounting standards, of the transactions of the Department of Energy and Water Supply for the financial period 1 July 2012 to 30 June 2013 and of the financial position as at 30 June 2013.
Other Matters - Electronic Presentation of the Audited Financial Report
This auditor’s report relates to the financial report of the Department of Energy and Water Supply for the period ended 30 June 2013. Where the financial report is included on the Department of Energy and Water Supply website the Accountable Officer is responsible for the integrity of Department of Energy and Water Supply website and I have not been engaged to report on the integrity of Department of Energy and Water Supply website. The auditor’s report refers only to the subject matter described above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements or otherwise included with the financial report. If users of the financial report are concerned with the inherent risks arising from publication on a website, they are advised to refer to the hard copy of the audited financial report to confirm the information contained in this website version of the financial report.
These matters also relate to the presentation of the audited financial report in other electronic media including CD Rom.
A M Greaves FCA FCPA Queensland Audit Office Auditor-General of Queensland Brisbane
Department of Energy and Water Supply | 2012–13 Annual Report Page 91 Annual report compliance checklist
Compliance checklist Annual report Summary of requirement Basis for requirement reference • A letter of compliance from the Letter of accountable officer or statutory body ARRs–section 8 Page 2 compliance to the relevant Minister
• Table of contents Pages 1 ARRs–section 10.1 • Glossary Page 103
• Public availability ARRs–section 10.2 Inside front cover
Queensland Government • Interpreter service statement Language Services Policy Inside front cover Accessibility ARRs–section 10.3 Copyright Act 1968 • Copyright notice Inside front cover ARRs–section 10.4
Queensland Government Enterprise Architecture— • Information licensing Information licensing Inside front cover ARRs–section 10.5
• Introductory information ARRs–section 11.1 Page 3
General • Agency role and main functions ARRs–section 11.2 Pages 4–5 information • Operating environment ARRs–section 11.3 Page 7
• Machinery-of-government changes ARRs–section 11.4 n/a
• Government objectives for the community ARRs–section 12.1 Page 6
• Other whole-of-government plans/specific ARRs–section 12.2 n/a initiatives Non-financial • Agency objectives and performance performance ARRs–section 12.3 Pages 25–39 indicators
• Agency service areas, service standards ARRs–section 12.4 Pages 4–5 and other measures
Financial • Summary of financial performance ARRs–section 13.1 Pages 40–1 performance • Chief Finance Officer statement ARRs–section 13.2 Page 40
Department of Energy and Water Supply | 2012–13 Annual Report Page 92 Compliance checklist Annual report Summary of requirement Basis for requirement reference • Organisational structure ARRs–section 14.1 Page 9
• Executive management ARRs–section 14.2 Pages 9–11
Governance— • Related entities ARRs–section 14.3 Page 16 management and • Boards and committees ARRs–section 14.4 Pages 11–15 structure Public Sector Ethics Act • Public Sector Ethics Act 1994 1994 (s. 23 and Schedule) Page 20 ARRs–section 14.5
• Risk management ARRs–section 15.1 Page 17
• External scrutiny ARRs– section 15.2 Page 18
Governance— • Audit committee ARRs–section 15.3 Page 17 risk management • Internal audit ARRs–section 15.4 Pages 18–19 and accountability • Public Sector Renewal Program ARRs–section 15.5 Pages 15–16
• Information systems and recordkeeping ARRs–section 15.7 Page 24
• Workforce planning, attraction, retention ARRs–section 16.1 Pages 20–1 and performance
Directive no. 11/12 Early Governance— • Early retirement, redundancy and retirement, redundancy Page 22 human resources retrenchment and retrenchment ARRs–section 16.2
• Voluntary Separation Program ARRs–section 16.3 n/a
Open data • Open data ARRs–section 17 Page 24
FAA–section 62 FPMS–sections 42, 43 • Certification of financial statements Page 89 and 50 ARRs–section 18.1
FAA–section 62 Financial • Independent auditor’s report FPMS–section 50 Pages 90–1 statements ARRs–section 18.2
Financial reporting requirements for • Remuneration disclosures Queensland Government Pages 89 agencies ARRs–section 18.3
FAA: Financial Accountability Act 2009
FPMS: Financial and Performance Management Standard 2009
ARRs: Annual report requirements for Queensland Government agencies
Department of Energy and Water Supply | 2012–13 Annual Report Page 93 Appendix 1 Legislation
Legislation administered by the department as at 30 June 2013:
Clean Energy Act 2008
Electricity Act 1994
Electricity–National Scheme (Queensland) Act 1997
Energy and Water Ombudsman Act 2006
Gas Supply Act 2003
Gladstone Power Station Agreement Act 1993
Liquid Fuel Supply Act 1984
Metropolitan Water Supply and Sewerage Act 1909
National Gas (Queensland) Act 2008
Nuclear Facilities Prohibition Act 2007
South-East Queensland Water (Distribution and Retail Restructuring) Act 2009
South East Queensland Water (Restructuring) Act 2007
In so far as the Minister is a jointly responsible Minister for the purpose of Chapter 2 of this Act
Water Act 2000
Chapter 2, Part 2 Division 2A and 4 (except for section 34C), Chapter 2A, Chapter 4 (to the extent that it is relevant to category 1 water authorities), Chapter 9 Part 2 and, to the extent relevant to all these parts, Chapters 5, 6 and 7
Chapter 8, section 999 and Part 4A and Part 5 jointly administered with the Minister for Natural Resources and Mines
Water Efficiency Labelling and Standards Act 2005
Water Supply (Safety and Reliability) Act 2008
Department of Energy and Water Supply | 2012–13 Annual Report Page 94 Appendix 2 Schedule of statutory authorities and instrumentalities
Legislation Type of statutory Annual under which Control of Class and name authority or reporting Notes the body was funds instrumentality arrangements established Advisory Council Statutory body Energy and Water No funds Included to the Energy and Ombudsman Act in Energy Water Ombudsman 2006 and Water Queensland Ombudsman Queensland’s annual report
Energy and Water Statutory position Energy and Water Controls Annual report to Ombudsman Ombudsman Act own funds Parliament Queensland 2006
Gladstone Area Body corporate Water Act 2000 Controls Annual report to Water Board own funds Parliament
Mount Isa Water Body corporate Water Act 2000 Controls Annual report to Board own funds Parliament
Seqwater Statutory body South East Controls Annual report to (Queensland Queensland Water own funds Parliament bulk water supply (Restructuring) Act authority) 2007
LinkWater Statutory body South East Controls Annual report to Transferred to (Queensland bulk Queensland Water own funds Parliament Seqwater on 1 water transport (Restructuring) Act January 2013 authority) 2007
Queensland Water Statutory body Water Act 2000 Controls Annual report to Amendments to Commission own funds Parliament the Water Act 2000 by the South East Queensland Water (Restructuring) and Other Legislation Amendment Act 2012 abolished the QWC with effect from the end of 31 December 2012
SEQ Water Grid Statutory body South East Controls Annual report to Transferred to Manager Queensland Water own funds Parliament Seqwater on (Restructuring) Act 1 January 2013 2007
Department of Energy and Water Supply | 2012–13 Annual Report Page 95 Appendix 3 Schedule of government-owned corporations
Government-owned Legislation under which the Annual reporting corporation Control of funds body was established arrangements
CS Energy Limited Government Owned Corporations Controls own funds Annual report to Act 1993 Parliament
Energex Limited Government Owned Corporations Controls own funds Annual report to Act 1993 Parliament
Ergon Energy Corporation Limited Government Owned Corporations Controls own funds Annual report to Act 1993 Parliament
Queensland Electricity Government Owned Corporations Controls own funds Annual report to Transmission Corporation Limited Act 1993 Parliament (Powerlink Queensland)
Stanwell Corporation Limited Government Owned Corporations Controls own funds Annual report to Act 1993 Parliament
SunWater Limited Government Owned Corporations Controls own funds Annual report to Act 1993 Parliament
Department of Energy and Water Supply | 2012–13 Annual Report Page 96 Appendix 4 Service performance
The department’s functions are delivered through 2 main service areas: Energy, and Water Supply and Sewerage Services.
Energy is responsible for policy development, reform and regulation of the Queensland energy sector to ensure cost-effective, secure and reliable energy supply. It is also responsible for establishing a long- term electricity strategy, informed by the outcomes of the government’s review on electricity sector reform, to address cost-of-living pressures and sustainability of the sector.
Water Supply and Sewerage Services is responsible for implementing water sector reform to address cost-of-living pressures. It is also responsible for establishing a long-term strategy for Queensland’s water sector and regulating water supply and sewerage services so that agriculture, mining, industry, regional and urban communities have access to cost-effective, safe, secure and sustainable water supply.
Service standards The performance statement below outlines the department’s performance against its service standards and other measures as contained in the 2012–13 Service Delivery Statement (SDS), as part of the Queensland State Budget papers.
Performance statement 2012–13 2012–13 2012–13 Notes Target/est. Est. actual* Actual Service area: Energy
Service standards Relative reduction in peak electricity 92 MW 110 MW 110.5 MW network demand capacity from demand 1 Cumulative Cumulative Cumulative management/energy efficiency target target target initiatives and projects facilitated
Other measures Level of compliance with energy regulatory and shareholder service 2 95% 100% 99.5% requirements by energy retailers, distributors and generators
Consultative and engagement forums with industry and community 3 185 173 181 stakeholders
30-year plan for Queensland’s energy sector developed within agreed time 4 100% 100% 100% frames and endorsed by Cabinet
Energy sector regulatory reduction 5 1 1 1 initiatives completed
(Continued)
Department of Energy and Water Supply | 2012–13 Annual Report Page 97 Performance statement 2012–13 2012–13 2012–13 Notes Target/est. Est. actual* Actual Service area: Water Supply and Sewerage Services
Other measures Percentage of the state's drinking water services that have appropriate drinking 6 100% 92% 93.7% water quality monitoring and response frameworks in place
30-year plan for Queensland’s water supply sector developed within agreed 7 100% 100% 100% time frames and endorsed by Cabinet
Water supply and sewerage services regulatory reduction initiatives 5 7 7 7 completed
Notes: * This value reflects the estimated actual performance presented in the department’s 2013–14 SDS as part of the Queensland State Budget papers. 1. This measure contributes to the department’s strategic objective to ensure cost-effective, safe, secure and reliable energy and water supply. The reduction to peak electricity demand is maintained across financial years so the target and reported actual is a cumulative reduction, i.e. the reported actual in 2011–12 plus reductions achieved in 2012–13. Actual performance was over target due to a number of outcomes being achieved ahead of schedule, as well as significantly increased interest from Energex commercial and industrial customers due to the impact of tariff restructuring after July 2012, which made participation in these programs more attractive. 2. This measure contributes to the department’s strategic objective to optimise shareholder value. The actual figure represents the average level of compliance achieved during the year. (The measure has been discontinued in the 2013–14 SDS as it is a measure of activity and not an indication of the efficiency or effectiveness of the service area.) 3. This measure contributes to the department’s strategic objective to engage our stakeholders. Actual performance was under target due to there being fewer meetings of the Interdepartmental Committee on Electricity Sector Reform and Independent Review Panel on Network Costs than originally anticipated. (The measure has been discontinued in the 2013–14 SDS as it is a measure of activity and not an indication of the efficiency or effectiveness of the service area.) 4. This measure contributes to the department’s strategic objective to ensure cost-effective, safe, secure and reliable energy supply. Although the final 30-year electricity strategy has not yet been approved by Cabinet, the target was based on meeting 100% of agreed milestones for each quarter. (This measure has been discontinued in the 2013–14 SDS and replaced with a new service standard to measure the department’s efficiency in leading implementation and delivering relevant initiatives of the 30-year electricity strategy once approved by Cabinet.) 5. This measure contributes to the department’s strategic objective to ensure effective reform and addresses the government’s commitment to reduce red tape. (The measure has been discontinued in the 2013–14 SDS as it is a measure of activity and not an indication of the efficiency or effectiveness of the service area.) 6. This measure contributes to the department’s objective to ensure cost-effective, safe, secure and reliable energy and water supply. The measure is comprised of the percentage of drinking water service providers who have an approved drinking water quality management plan or are operating under transitional arrangements by monitoring for Escherichia coli (E. coli) and responding to reported incidents appropriately. The performance percentage varies as it represents a level of compliance by service providers in meeting regulatory obligations and fluctuations due to issues such as natural disasters, capacity and service provider staff turnover. 7. This measure contributes to the department’s strategic objective to ensure cost-effective, safe, secure and reliable energy supply. Although the final 30-year water sector strategy has not yet been approved by Cabinet, the target was based on meeting 100% of agreed milestones for each quarter. (This measure has been discontinued in the 2013–14 SDS and replaced with a new service standard to measure the department’s efficiency in leading implementation and delivering relevant initiatives of the 30-year water sector strategy once approved by Cabinet.)
Department of Energy and Water Supply | 2012–13 Annual Report Page 98 Appendix 5 Report of the regulator’s activities under the Water Supply (Safety and Reliability) Act 2008
On 1 July 2008, the Water Supply (Safety and Reliability) Act 2008 (the Act) introduced new provisions to protect public health by regulating recycled water and drinking water quality, and by incorporating the existing service provider provisions of Parts 1–5 of Chapter 3 of the Water Act 2000.
The Act provides for the chief executive of the department, as the regulator, to undertake certain duties under these provisions, which may include the preparation of an annual report (Chapter 2, Part 2 of the Act). This summary is the regulator’s report for the period 1 July 2012 to 30 June 2013.
Recycled water Chapter 3 of the Act requires a recycled water provider to have either an approved recycled water management plan (RWMP) or a granted exemption by the time frames stipulated in accordance with the uses below: • augmenting drinking water supplies, dual reticulation or the irrigation of minimally processed food crops defined in the Public Health Regulation—these schemes must have an approved RWMP prior to commencing supply • any other purposes—schemes that existed before 1 July 2008 must have an approved RWMP or exemption by 1 July 2014. Those that commenced supply on or after 1 July 2008 must have an approved RWMP or exemption by the later of 1 July 2014, or 1 year of first supplying recycled water.
Schemes that are declared critical, such as those that plan to augment a drinking water supply and dual reticulation schemes (where recycled water is used to flush toilets or used at residential premises for a cold-water laundry tap connected to a washing machine, irrigating lawns or gardens or washing down external parts such as driveways) cannot apply for an exemption from having an approved RWMP for the scheme.
All RWMPs are assessed against criteria in the Act and the Recycled water management plan and validation guidelines relating to hazard identification, risk assessment and risk management. These requirements reflect the approach outlined in theAustralian guidelines for water recycling 2006. Recycled water providers must comply with the requirements detailed in the information notice for the decisions (approval) as well as requirements specified in the Act.
Regulatory guidelines have been prepared by the regulator to assist recycled water providers to comply with the recycled water provisions of the Act. These are: • recycled water management plan and validation guidelines • recycled water management plan exemption guidelines • water quality guidelines for recycled water schemes • recycled water management plan audit reporting guidelines • annual reporting guideline for recycled water schemes • public reporting guideline for recycled water schemes.
A non-statutory incident reporting guideline, RWMP and exemption application templates and frequently asked questions for recycled water schemes have also been published on the department’s website.
Department of Energy and Water Supply | 2012–13 Annual Report Page 99 The regulator provides ongoing advice on the regulatory requirements for the RWMP for the Western Corridor Recycled Water Project as well as numerous other water recycling projects for dual reticulation, the irrigation of a range of minimally processed food crops and many other uses. To date, the department has granted: • 1 validation program • 10 RWMP approvals • 9 exemptions.
In addition, 1 approved exemption has been cancelled and 1 application has been refused.
As at 30 June 2013, the department has received an additional 12 formal applications seeking approval of a RWMP or exemption. These applications are either being processed or are awaiting additional information to be submitted by the recycled water provider.
Recycled water providers are required to keep their plans and procedures current through audits and review processes. Exemption holders must also notify the regulator if circumstances under which an exemption was given have changed—9 amendment applications have been processed or are being assessed by the regulator.
The regulator also works closely with Queensland Health to ensure that providers appropriately manage recycled water incidents and protect public health. In 2012–13 there were 33 incidents reported, with the majority of these incidents relating to low chlorination levels, missed sampling or levels of Escherichia coli (E. coli) above requirements specified in the information notice for the decision. As part of the regulator’s role in ensuring compliance, 2 recycled water schemes have had compliance inspections completed this year.
Drinking water quality The regulatory framework for managing drinking water quality in Queensland, introduced in 2008, aims to protect public health. The regulatory requirements are managed through a phased approach, commencing with mandatory monitoring and reporting requirements and culminating with the requirement for all registered drinking water service providers to have an approved risk-based drinking water quality management plan (DWQMP). To support the regulatory framework and establish a consistent approach, procedures and processes for communicating with, and providing technical support to, providers are in place. The regulator also works closely with Queensland Health to ensure that providers appropriately manage drinking water quality incidents and protect public health.
Water service providers are required to meet the following requirements to have an approved DWQMP: • monitor their drinking water quality • submit quarterly reports summarising this monitoring to the regulator • report drinking water quality incidents to the regulator.
The total number of drinking water quality incidents reported since January 2009 is 1070. In 2012–13 there were 183 incidents reported, with the majority of these incidents relating to detections of E. coli. The number and pattern of incidents reported has not significantly changed over time, with a general increase in the number of incidents reported during the wet season. The presence of E. coli in a sample does not necessarily indicate that the water is unsafe; however, it is a trigger for providers to ensure that the water supply system is functioning normally.
All DWQMPs must comply with the requirements detailed in the Act and DWQMP guidelines relating to hazard identification, risk assessment and risk management. These requirements reflect the approach outlined in the Australian drinking water guidelines 2011, which require the provider to assess and manage any risks associated with their drinking water supply and monitor for particular water quality parameters to verify that public health is being protected.
Department of Energy and Water Supply | 2012–13 Annual Report Page 100 The information gathered through the monitoring and reporting requirements has been useful in moving into the final phase requiring approved DWQMPs. Under the Act, large providers are required to have an approved plan by 1 July 2011, medium providers by 1 July 2012 and small providers by 1 July 2013. Providers that are registered after the commencement of the Act are considered ‘new’ providers and are required to have an approved DWQMP in place within 1 year of registration. As at 30 June 2013, the regulator has approved 29 DWQMPs. A further 36 DWQMPs are currently under assessment and 9 DWQMPs remain outstanding. Processes have been implemented to ensure the submission of those plans. There have been 4 additional DWQMPs approved for new providers and amendment applications have been received from 5 providers, with 1 amended DWQMP approved and 4 under assessment.
The regulator has established robust support programs to assist providers to meet their regulatory responsibilities. The focus for 2012–13 has been on assisting small providers and Indigenous providers to develop their DWQMP. The support program included:
• regional workshops and scheduled one-on-one sessions for small providers, to guide these providers through specific aspects of the DWQMP, such as how to identify hazards, operational and verification monitoring and information management
• tailored workshops for providers in Indigenous communities to assist with the development of their DWQMP
• provision of a CD including copies of the guidelines, supporting information, worked examples from the regional workshops and a template to develop a DWQMP
• development and dissemination of fact sheets providing further guidance on identified areas of concern, such as incident and emergency planning, risk assessment methodologies and incident reporting under approved DWQMPs.
Planning has also been completed for a support program focusing on implementation of approved DWQMPs.
These support activities have resulted in the submission of DWQMPs that are generally consistent in approach and presentation of the information, which in turn streamlines the assessment and decision- making process for the department. The support activities have also resulted in the submission of DWQMPs from 14 of 16 Indigenous service providers.
Providers have been, and continue to be, responsible for the safety and quality of their drinking water supplies.
Coal seam gas water The Act was amended in December 2010 to capture discharges of coal seam gas (CSG) waters that affect an urban community’s drinking water source. The Act requires CSG companies to hold either an approved CSG recycled water management plan (CSG RWMP) or an approved exclusion decision (ED) prior to the commencement of any discharge of CSG water to a water source if a drinking water supply used by a drinking water service provider is downstream of the discharge or the discharge is into the same aquifer the drinking water service provider draws from.
A CSG RWMP is a documented, risk-based system for managing the production and supply of CSG water. The implementation of a CSG RWMP is intended to ensure the safe use of CSG water through the identification and minimisation of public health risks. For a single-entity recycled water scheme, a CSG RWMP must be prepared by the provider for the scheme. For a multiple-entity recycled water scheme, a CSG RWMP must be prepared, consisting of: • a scheme manager plan prepared by the scheme manager • scheme provider plan/s, prepared by each recycled water provider and other declared entity/s for the scheme.
Department of Energy and Water Supply | 2012–13 Annual Report Page 101 To obtain an ED, a responsible entity must demonstrate to the regulator that the supply of water under the scheme has no material impact on the drinking water supply of a drinking water service provider downstream of their point of discharge or within the aquifer to which the CSG water is being injected. If an ED is made by the regulator, it excludes the responsible entity from having to submit a CSG RWMP but the responsible entity for the scheme must comply with any conditions contained in the ED notice.
In the 2012–13 year, a CSG regulatory guideline titled Coal seam gas recycled water management plan guideline including exclusion decision guideline and a fact sheet titled CSG water quality requirements fact sheet were approved and published by the regulator to assist CSG recycled water providers to comply with the CSG recycled water provisions of the Act.
In the 2012–13 year, 4 new ED applications were received by the department and an increased number of ED applications are expected in 2013–14. There were 6 ED applications (including an ED amendment) approved, 3 ED applications currently in the assessment phase and 2 ED approvals repealed by the department (as the responsible entity notified the department of a cessation of CSG water discharge under their approval). No ED applications were refused in 2012–13.
In 2012–13, 1 single-entity interim RWMP application, 1 single-entity RWMP amendment application and 1 multiple-entity interim RWMP application were received by the department and are in the assessment phase and at least 3 more CSG RWMP applications are expected in 2013–14. No CSG RWMP application was refused in 2012–13.
Other matters Parts 1–5 of Chapter 2 of the Act give certain rights and responsibilities to the providers of water and sewerage services.
The regulator continued to formally register organisations as service providers, as required by the Act. In 2012–13, 6 new service providers were registered and 13 service providers amended their registration details. The number of registered service providers in each of the defined size categories as at 30 June 2013 were:
Small 100
Medium 29
Large 36
Total 165
Unless they have an exemption, all service providers must prepare a strategic asset management plan for approval by the regulator and customer service standards. The Act includes further provisions requiring drought management plans and system leakage management plans. The requirements relating to these plans are under review and the department determined that during this review and transition to the new requirements, the plans would not be required to be submitted, reviewed or audited. Customer service standards are not included in this review process.
Department of Energy and Water Supply | 2012–13 Annual Report Page 102 Glossary and acronyms
Term Definition Agency A department or a statutory body as defined in theFinancial Accountability Act 2009
CEO Chief executive officer
COAG Council of Australian Governments
CPA Certified Practising Accountant
CSG Coal seam gas
DEWS Department of Energy and Water Supply
DNRM Department of Natural Resources and Mines
DPC Department of the Premier and Cabinet
DSDIP Department of State Development, Infrastructure and Planning
DWQMP Drinking water quality management plan
ED Exclusion decision
EMT Executive Management Team
FBT Fringe benefits tax
GOC Government-owned corporation
ICT Information and communication technology
IDC Interdepartmental Committee on Electricity Sector Reform
QGIAS Queensland Government Internal Audit Service
RWMP Recycled water management plan
SDS Service Delivery Statement
SEQ South East Queensland
Seqwater Statutory authority for bulk water services in South East Queensland
Together Queensland Industrial union of employees
WHS Workplace health and safety
Department of Energy and Water Supply | 2012–13 Annual Report Page 103 Contacts
Head office 41 George Street BRISBANE QLD 4000 Australia
Post PO Box 15456 CITY EAST QLD 4002 Australia
Phone Energy enquiries: 13 43 87 Water supply enquiries: 13 74 68
Web www.dews.qld.gov.au
Feedback The Department of the Premier and Cabinet is coordinating feedback on agency annual reports at www.getinvolved.qld.gov.au
Department of Energy and Water Supply | 2012–13 Annual Report Page 104