orth EEast WatW ter Contents Report profile Mission & Values 1 North East Water’s 2004-05 Annual Report is a summary of our • Our Water Plan operations, programs and achievements over the reporting period. Report theme 1 • Current and previous Wastewater Treatment Plant (WWTP) Our 2004-05 Environment Report accompanies this document, performance reports Summary of Events 2 and we recommend the two be read in conjunction to gain a fuller • Current and previous Drinking Water Quality performance At a Glance 2 picture of our performance. reports Chairman / Chief Executive Report 3 The Annual Report has been prepared to inform our stakeholders You can obtain these at our head office at 1 Hovell St, Wodonga, Overview 5 of our activities, and to meet our statutory reporting or from our website, www.nerwa.vic.gov.au. responsibilities under the Financial Management Act 1994 and Case Study - Carter Holt Harvey 19 Our website also outlines a range of activities that help us meet the directions of the Minister for Finance. Our Operations 20 our economic, social and environmental objectives. Further information on North East Water’s economic, social and Our Customers 30 environmental performance is available from the following Our Staff 34 sources: Our Finances & Assets 38 • Previous annual reports Case Study - Bruck Textiles 41 • Current and previous environment reports Governance 42 • Corporate Plan 2005-06 to 2009-10, a statement of the Case Study - Wodonga Rendering/Norvic 51 company’s corporate intent for the current financial year, and a detailed plan for the next five years Performance Report 52 Financial Report 60 Disclosure Index 77 Glossary 78 Appendices 79 Mission Report theme: North East Water will provide water products and services in a sustainable manner Water for industry

ur Annual Report 2004-05 carries the theme ‘Water for O Industry’. We chose this theme in recognition of the invaluable contribution water makes to the many large manufacturers that operate in north- east Victoria. Whether they’re operating abattoirs or making pine products, the presence of clean, reliable water is an essential ingredient to their success. Furthermore, the success of these industries naturally contributes to the success and development of towns and cities across the entire Values region. However, like the rest of the community, industry has a responsibility to use water in the most efficient way possible. We will achieve our Mission through the following values: The Victorian Government’s White Paper Our Water Our Future makes it incumbent on manufacturing businesses to reduce their water usage in • Listening order to help preserve the State’s water supplies. • Responding We’re proud to say that, as a whole, industries in north-east Victoria have • Teamwork taken on board the mantle of water conservation, formulating ambitious • Legal and ethical behaviour but achievable goals and plans to cut down consumption. • Continuous improvement and innovation This report profiles some of our industries, and highlights their efforts to • Professionalism preserve our water supplies. • Rewarding and celebrating achievement

AnnualAnnual ReportReport 2004-20052004-2005 NorthNorth EastEast WaterWater 11 Summary of Events

July 2004 Table 1 – Summary of Key Statistics March 2005 • We achieve an overall customer satisfaction • We record a 17% reduction in summer water rating of 85% - page 31 At a glance 2002-03 Change (%) 2003-04 Change (%) 2004-05 use 81,773 • A community consultation committee to Population served (sewerage) 3.5S 84,607 1.3S 85,709 • The Board approves investigation of a 20 look at future planning for water services Population served (water) 93,200 0.5S 93,688 1.5S 95,051 megalitre treated water storage increase for in Yackandandah begins its strategic Connected properties (sewerage) 34,413 3.3S 35,545 1.8S 36,172 Wangaratta - page 28 sessions - page 32 Water sold (megalitres) 19,892 10.4T 17,828 10.3T 15,994 • The Board approves investigation into 350 August 2004 megalitre raw water storage for Bright, Sewage treatment volumes 9,476 0.3S 9,505 4.8S 9,959 • We call for public input to our draft Water Wandiligong and Porepunkah - page 28 Overall customer satisfaction (%) 83 3.6S 86 1.2T 85 Plan for the Essential Services Commission • The Board approves study on raw water (ESC) - page 3 Employee numbers 105.5 2.6S 108.2 6.0S 114.2* storage for Yackandandah - page 28 September 2004 No. of employee days lost to injury 9 1.1T 8.0 0.0 8.0 April 2005 • We host the Victorian Water Industry Total revenue ($’000) 28,551 10.4S 31,532 28.1S 40,407 • We present our submission on ESC draft Operators Association (VWIOA) annual Net operating result ($’000) -2,252 115.4S 347 1,064S 4,039 decision - page 3 conference in Wodonga - page 31 Total assets ($’000) 344,114 1.1T 340,222 24.9T 424,828 May 2005 • West Wodonga Wastewater Treatment Plant • Capital expenditure 16,020 66.3T 5,394 99.1S 10,740 The Board reviews and updates the Code Operator, Peter Tolsher, wins Victorian of Governance - page 47 Operator of the Year - page 31 * Measured as full time equivalent employees (FTE) • We review our strategic intent and establish • We submit our Water Plan to the ESC December 2004 Sewerage Program, which aims to develop a strategy taskforce to undertake an October 2004 • We call for nominations for future innovative solutions to service small environmental scan of the organisation - • The Victorian Government’s 5% development planning community communities - page 3 page 15 Environmental Contribution comes into committees in Benalla and Yarrawonga - February 2005 June 2005 effect page 32 • We sign a Memorandum of Understanding • We announce plans for a pipeline to supply • We host the annual regional conference of • Our Occupational Health and Safety (MoU) with cross-border neighbour, Tungamah, Devenish and St James from the Australian Water Association’s Victorian Management System (OHSMS) achieves Albury Water - page 3 Yarrawonga - page 28 branch in Beechworth - page 31 recommendation for certification - page 35 • North East Catchment Management • ESC releases final determination on Water November 2004 January 2005 Authority (North East CMA) begins Plan - page 3 • Contractors complete a $2.4 million • North-east Victorian towns Milawa and rolling out ‘Wet, Wild and Wonderful’, a upgrade to the Beechworth Water Bethanga included in the first phase of the joint education project with North East Treatment Plant - page 39 Government’s Country Towns Water and Water - page 31

2 North East Water Annual Report 2004-2005 Message from Chairman and CEO

elcome to North East Water’s 2004-05 Annual sharing, source potential joint funding opportunities and Report. This year’s report covers a busy and improve our approach to consultation within our Weventful period for our Authority, and for the communities Victorian water industry as a whole. • Our relationship with local councils has been further A major focus has been the preparation of our first Water Plan enhanced with the development of MoUs. These for the ESC. This comprehensive document acts as a agreements aim to improve working relationships and blueprint for the ESC to set our pricing path for the three ensure we are addressing community concerns about water years from 2005-06 to 2007-08. The Water Plan was and wastewater services. We have been encouraged by the submitted on 1 September 2004 after extensive consultation number of councils already committing to the MoUs, and with our community and stakeholders. We have welcomed anticipate the remainder to sign before the end of the year. the impressive level of community involvement during the The development of MoUs formalises our approach to consultation phase of its development. Dr Peter Box Jim Martin encourage sustainable regional growth within catchment Our Focus on Sustainability Chairman CEO capabilities. We are also working closely with councils on the development of a Water Supply-Demand Strategy During our Water Plan consultation, we were encouraged by (WSDS), a requirement of the Victorian Government’s the community’s increased awareness of sustainability issues. longer-term results of the community’s changed attitude to White Paper, Our Water Our Future water. As an Authority, we are also aware of the precious nature of Consulting with our Communities the resource we manage, and are committed to incorporating The By-Law’s effectiveness, combined with the price reform sustainability principles into our business operations for the and increasing community awareness, has seen a marked Our consultation with the community is a crucial component benefit of current and future generations. reduction in water demand, from an average residential of our program of town Future Development Planning. This year the Board endorsed an Ecologically Sustainable demand of 314 kilolitres per household in 2003-04 to 270 The program has further developed this year, with Development (ESD) strategy, which provides direction for kilolitres per household in 2004-05. This offers confidence community groups established in Yackandandah, Wangaratta, implementing sustainability concepts across the Authority. that our communities will deliver our sustainability Bright and Benalla. We prioritised the Wangaratta and Bright objectives. groups this year to address the impacts of the 2003 bushfires. This is the key strategy in our aim to reduce our environmental impact by 10%. Building Partnerships These community groups work with us to review the long- term water demand and service requirements for the towns. As part of this, we are continuing our push to gain Class A We have continued to improve our communication with The Yackandandah, Bright and Wangaratta groups have made verification for recycled water at the West Wodonga customers, and develop relationships with Albury Water, recommendations to the Board for future actions in their Wastewater Treatment Plant. This fit-for-purpose reuse is in North East CMA and local councils: respective communities. line with a general Government policy, and with our own • The Board has continued joint meetings with Albury objectives to invest in projects that have social, environmental Water to explore opportunities for resource sharing. This Enhancing Small Towns and economic benefit. arrangement also ensures that, where possible, the The implementation of the Country Towns Water and In line with the ESD strategy, we introduced our Water messages we send to our respective communities are Sewerage Program targets improvements to services in local Conservation (Smart Water) By-Law to our communities aligned; particularly those relating to water conservation communities. Two towns in our region, Milawa and prior to the 2004-05 summer via an extensive media and • We have expanded our relationship with North East CMA Bethanga, have been chosen to participate in the program, community awareness campaign. Our customers appear to from joint community education programs to joint which will pilot innovative and cost-effective solutions to have embraced the By-Law and we look forward to seeing the meetings of the Boards. The two Authorities initiated providing services for small rural communities. We have been these meetings to explore opportunities for resource involved in the statewide program since its inception. We Continued page 4 Annual Report 2004-2005 North East Water 3 Message from Chairman and CEO

From page 3 the appointment of a Business Compliance Manager. We works. We are currently working to reduce the impacts these have provided these new resources to meet the requirements decisions may have on the future pricing of our services. have acted as a conduit for small communities to seek funding of the new regulatory regime and provide accurate data to We are also in the initial stages of a nationwide cultural change from alternate sources. ensure we make fully informed business decisions. We are in our attitude to water, which has been reflected in Our Balancing the Scorecard achieving further improvements in our corporate data Water Our Future. integrity and capture with the continued development of our To varying degrees throughout the country, the policy makers The Board has continued to enhance its corporate governance Supervisory Control and Data Acquisition (SCADA), and are realising that the time-honoured ways of using water are and reporting framework with the ongoing development of asset management systems. no longer sustainable in the face of climate change, stressed our Balanced Scorecard (BSC), and refinement of our The release of Our Water Our Future has provided valuable quarterly reporting methodology. The BSC has provided a rivers and growing populations. Victoria has placed itself at direction, and its initiatives underpinned the Board’s strategic the forefront of sweeping changes that aim to mitigate the sophisticated tool for tracking and measuring the Authority’s workshop in November 2004. For full details on our strategic performance against key objectives. effects of more than a century of less-than-ideal water intent, refer to page 15. management practices. At North East Water, we have The improvement of our quarterly reporting has included the Major Expenditure Items embraced these changes, and we are active proponents of the incorporation of a risk management status report. This has philosophies of intelligent water use and environmental We spent $10 million on capital investments during 2004-05. resulted from extensive work by the Board and Management stewardship. in developing a comprehensive risk management framework. Major projects included: The framework documents our risk policy and strategy for • Renewal of existing infrastructure assets implementing and maintaining an effective risk management • Porepunkah sewerage scheme program. • Beechworth Water Treatment Plant upgrade Performance • Wangaratta Water Treatment Plant alum sludge processing We have experienced consistently high performance in the Looking Ahead areas of sewer overflows and water main breaks. In 2004-05 Peter Box, Chairman Jim Martin, CEO we experienced 3.2 sewer overflows per 100 kilometres of The Board and staff have developed a refreshed corporate main, compared with the 2003-04 average of 14.1 for similar strategy to carry our intentions forward. This encompasses sized Authorities. In the same period, we had 11.8 water main three major ideals – quality service, environmental breaks per 100 kilometres of main, compared with the state improvement and supporting regional development. This is average of 24. the model framework upon which we will build a bright and Our performance is reflected in another excellent result in our optimistic future. annual customer survey, which showed an overall satisfaction As we write these words, the Victorian water industry has rate of 85%. This year also brought the certification of our officially entered a new era. The end of the 2004-05 financial OHSMS, representing the realisation of a long-held Authority year marked the beginning of our life under the ESC regime. ambition. Similarly, our accredited Environmental This independent economic regulation allows us to offer Management System (EMS) continues to meet all customers certainty in pricing for the coming three years. expectations. One of the key challenges of this new era has been the Improving Governance Commission’s decision to cap developer contributions at $500 per lot. This creates a significant obligation on the Further governance initiatives include the provision of internal Authority to adjust to the shortfall in revenue, and audit functions by Deloitte Touche Tohmatsu (Deloitte) and potentially meet new obligations for funding some of the 4 North East Water Annual Report 2004-2005 Overview

AnnualAnnual ReportReport 2004-20052004-2005 NorthNorth EastEast WaterWater 55 Overview Organisational profile Who we are Our services - water & wastewater Our stakeholders North East Water is a public utility responsible to the We operated 34 water treatment plants and 18 wastewater We value our stakeholder relationships. Our key stakeholders Minister for Water, the Hon. John Thwaites MP. It was treatment facilities throughout the region during 2004-05. See include: constituted on 1 July, 1997, by Government Order following Table 2, page 8. • Our customers application under section 100(2) of the Water Act 1989 by the We operate water treatment facilities of three distinct types: • The communities in which we operate Ovens Region Water Authority and the Kiewa Murray Water ‘full treatment’, ‘disinfection only’ and ‘community choice’. • Our workforce and their families Authority. Our wastewater treatment plants also employ a range of processes, from lagoon-based facilities through to chemical • The ESC Our region treatment – for further information on our treatment • Government agencies – the Department of Sustainability We provide water and sewerage services to 36 cities, towns processes see pages 21-24 and for an overview of our and Environment (DSE), Department of Human Services and villages in north-east Victoria, serving an estimated treatment infrastructure, see Appendix 1, Page 77. (DHS), Environment Protection Authority (EPA), population of 95,000 people in an area of approximately Department of Treasury and Finance (DTF) and the 20,000 square kilometres. The region is bounded by Our services - reuse Energy and Water Ombudsman of Victoria (EWOV). Corryong, Yarrawonga, Benalla and Dartmouth. See map, • Local councils We operated 23 recycled water schemes in the region during the opposite. • reporting period. Catchment Management Authorities • Major industry These schemes range from pasture and cropping ventures to Regional water authorities community-benefit applications such as school grounds and golf Major industrial customers operate in the larger towns of courses. A full description of our recycled water schemes can be Wodonga and Wangaratta, as well as in Wahgunyah, Benalla found in the 2004-05 Environment Report. and Myrtleford. Approximately 90% of our customers are residential and the remainder commercial and industrial. Our assets Asset management is critical to achieving our business Head office objectives. Our asset management activities centre on the North East Water’s head office, which houses our delivery of customer service levels and extend to the broader administrative support and technical services functions, is concepts of land stewardship, including responsibility for the located in Wodonga. We employ 114.2 people (measured as preservation of biodiversity. full-time equivalent positions) throughout our head office and We manage our assets to achieve agreed performance operational centres. standards, including those identified in Part Two of the Water Plan, legislation and the Authority’s Customer Charter. Our current infrastructure assets have a replacement value of approximately $708 million (Page 39).

6 North East Water Annual Report 2004-2005 Overview

Area of Operations

Annual Report 2004-2005 North East Water 7 Overview

Table 2 – Water and wastewater infrastructure Infrastructure Number of Water treatment plants 34 Water pumping stations 49 Water tanks/towers 43 Water reservoirs 32 Water mains and pipes (km) 1,357 Wastewater treatment plants 18 Sewerage pumping stations 125 Recycled water reuse sites 23 Sewer mains (km) 950

The Water Cycle - a pictorial representation of our opera- tions

Sampling at the West Wodonga Wastewater Treatment Plant

8 North East Water Annual Report 2004-2005 Overview Strategic direction 2004-05 Our Board and Executive Management team discuss and develop the Authority’s future direction at a strategic retreat each November. In doing so, we aim to ensure we align our capacity and strategic direction with stakeholder expectations, and base them on sound business principles. This year the Authority took a different approach, opting to develop our strategic direction through the BSC philosophy. This method uses an organisation’s vision and strategy to derive measures that are both reflective (traditional financial measures) and forward-looking (those that drive future performance). We viewed the focus areas (incorporating many objectives) and measures adopted in 2004-05 in five perspectives: Financial; Customer; Community and Environment; Business Processes; and Learning and Growth. Our performance in terms of actions taken and the final outcomes within each focus area is shown in Table 3, Page 10.

Annual Report 2004-2005 North East Water 9 Overview

Table 3 - Summary of Strategic Performance (including references to additional pages in the report)

BSC Perspective Focus Area Actions Final Outcomes Annual Report Reference Financial Financial sustainability The main focus for the year was the development of The final charges as agreed with the ESC allow for price Pages our Water Plan as required by the ESC. In this certainty for our customers, while the increases in 3 & 4 document we set our charges for the next three years. revenue will improve the financial sustainability of the Authority.

Opex & Capex Throughout the year we have maintained prudent cost We delivered 92% of our planned capital projects, Pages controls and efficient delivery of capital investments. with our expenditure on these being 3% better than 39, 40 expected. & 62

Regulatory compliance costs Our regulatory compliance costs were constrained The regulatory costs have remained within budget. N/A throughout the year as we chose to complete all works using our own staff rather than consulting out.

Customer Water & wastewater quality & continuity We have continued to undertake water and sewer The renewals program aims to continuously improve Page 22 maintenance and renewal programs. our service reliability.

We have also introduced a new database for recording The new database has helped to improve the manage- Page 31 events such as water / wastewater incidents, com- ment of customer requirements. plaints, service requests, and enquiries.

Water solutions for new small towns We have been proactively involved with Government, Milawa and Bethanga were chosen to participate in Pages local council and communities in the investigation of the Country Towns Water and Sewerage Program. 3 & 26 innovative solutions to small towns’ sewerage systems.

We have also been actively participating in the We will continue to cooperate with and assist councils N/A development of wastewater management plans with in the development of wastewater management plans. local councils.

10 North East Water Annual Report 2004-2005 Overview

BSC Perspective Focus Area Actions Final Outcomes Annual Report Reference Customer Customer marketing This year’s customer survey focussed on specific Overall customer satisfaction was 85%. Pages questions relating to water quality, water supply and 31 & 33 our customers’ perceptions of their own conservation activities.

Customer market research We conducted an initial customer segmentation Quality customer contact & advise, and proactive Page 33 assessment, which identified three groups and seven communication were the two expectations sub-groups. consistently identified for all customer groups.

We also conducted research, through the customer We will use the information obtained from our Page 31 survey, into our communities’ participation in customer survey to help with forward planning and sustainability activities (e.g. water conservation), and improve our customer interactions in the areas customers’ willingness to contribute to the Authority identified. purchasing ‘Green Power’.

Community & Stakeholder compliance We are continuing to develop our Drinking Water We had an excellent water quality result this year, Pages Environment Quality Management System (DWQMS), which will meeting all targets. 21, 22 drive improvements for our customers. & 24

Our wastewater treatment plants remain a focus for Our overall compliance for discharges from our Pages improvement, with works continuing in the areas of wastewater treatment plants was 89%. 23 & 24 recycled water reuse, and discharge quality.

Community education & consultation This year we launched a joint education program with 75 schools participated in the program. This remains N/A North East CMA targeting primary schools and junior ongoing. high schools.

Environmental sustainability We employed a Water Conservation Officer this year, Our accounted-for water result was 91%. Page 21 whose role has been to identify potential areas to reduce our own water consumption, and working with major industries to improve their water-use efficiencies.

Annual Report 2004-2005 North East Water 11 Overview

BSC Perspective Focus Area Actions Final Outcomes Annual Report Reference Community & Environmental sustainability We have continued to develop our recycled water This year we recycled 30% of the water available Page 23 Environment reuse programs with significant improvements at our from our wastewater treatment plants. North Wangaratta site.

Stakeholder management We undertook extensive stakeholder consultation as Key stakeholders endorsed our Water Plan submis- Pages part of the development of our Water Plan. sion. 3 & 32

Councils & other water authorities We conducted regular meetings with the local councils We established MoUs with the councils of Wodonga, Page 3 management in our region to establish MoUs relating to improving Benalla, Moira, Wangaratta, Indigo and Towong. We our working relationships and ensuring we are address- are still in discussions with Alpine Shire. ing the concerns of our joint communities with relation to water and wastewater services. We will be establish- ing an MoU with Goulburn-Murray Water (GMW) during the next year.

Business Processes Risk Management Systems SAI Global undertook a triennial re-certification audit Continued certification of our EMS. Page 26 of our EMS.

We developed a risk management framework for the Risks are now monitored by the Board via our Pages management of all our risks from strategic to opera- quarterly report. 48 & 81 tional.

Asset renewal / upgrade Our capital investments for the year totalled $10 93% of planned works were delivered. Pages million. 39 & 40

Asset Management Systems We commenced development of a comprehensive The database is essentially functional. Refinement of N/A Asset Management Database to assist with the the system will continue into 2005-06. delivery of our Asset Management Strategy.

New industry connection A business model for new industry connections has The business model will enhance our interaction with N/A been developed. local councils for new industry contact, development and connections.

12 North East Water Annual Report 2004-2005 Overview

BSC Perspective Focus Area Actions Final Outcomes Annual Report Reference

Business Processes Future Development Planning We completed technical plans evaluating forward The plans identified forecast growth and water Pages planning needs for 11 towns. demands for each town and developed options to 28-29 meet forecast demand using current consumption patterns.

Corporate governance This year we adopted the BSC philosophy and a new Remuneration Committee’s annual assessment of Pages quarterly reporting framework. Authority and Chief Executive performance has been 4, 9 & enhanced. 48

The Works Committee charter was reviewed. The committee now has a more strategic focus on the Page 48 monitoring, review and reporting of the capital works program.

The Audit, Risk and Finance committee has played an The Audit, Risk and Finance committee oversees our Page 48 active role in implementing a number of initiatives to internal audit function, which incorporates reviews of improve the Board’s corporate governance our internal business processes. The committee has requirements. also overseen the development of our risk management framework and reporting mechanism.

As part of improving corporate governance, the Board Our Board and senior managers will continue to N/A and Executive have attended corporate governance improve their corporate governance awareness and sessions. understanding during 2005-06.

Learning & Growth Research & Development We investigated a partnership opportunity with a A project business case is being developed following Page 28 private company and the Sustainable Energy Author- an initial resource scan that indicated adequate ity Victoria (SEAV) to incorporate a bioenergy plant at biological material is available within the region. our West Wodonga Wastewater Treatment Plant.

Human resource management We have continued to develop our staff training The staff training database now includes the Page 35 database. competencies required for all outdoor staff, and improved capture of training requirements.

Annual Report 2004-2005 North East Water 13 Profile

BSC Perspective Focus Area Actions Final Outcomes Annual Report Reference Learning & Growth Human resource management We have developed a Human Resources Strategic Plan The Human Resources Strategic Plan will be imple- N/A for delivery during 2005-06 which is aligned with our mented in 2005-06. new Strategic Intent.

Safety This year we fully implemented our OHSMS We gained certification to AS/NZS 4801:2001 and Pages OHSAS 18001:1999. 35-36 Organisation development During 2004-05 we aimed to investigate and develop a We did not complete this objective as we decided to N/A new business model for the Authority. refresh our mission, and determine a vision and future game plan. This future direction is a valuable input into our business model. We are planning to compete this model in 2005-06.

Information technology enabling Using a consultant we conducted a series of staff The IT Strategic Plan includes a list of prioritised Page 37 interviews to establish information technology (IT) projects which will continue to be undertaken during needs. This information was consolidated into an IT 2005-06. Strategic Plan. An IT Steering Committee was formed to oversee the adoption of IT projects.

14 North East Water Annual Report 2004-2005 Profile The future - Strategic Intent 2005-06 During the year the Board has taken a fresh approach to the Business Strategy annual review of the Authority’s strategic direction. The To achieve our vision we will: process has involved the use of a cross-functional team, • which conducted an environmental scan of the business and Go beyond regulatory compliance with water quality, incorporated the outcomes of the Board’s November 2004 service and environmental standards Strategic Workshop. The Executive team then formulated a • Make every customer contact a quality one new Mission, Vision and Business Strategy, along with a raft • Deliver infrastructure within the capacity of the social, of objectives and measures that have been further refined and economic and natural environment enhanced by the Board. We believe this process has been • Be a recognised leader in environmental stewardship invaluable in refining our focus and setting our future direction. • Deliver our business in an efficient and effective manner Mission We have designed eleven high-level measures to determine our level of success in progressing towards and meeting our future To provide quality drinking water and wastewater services for direction, which are underpinned by the Authority’s strategic our customers in north-eastern Victoria. objectives. We look forward to reporting our progress on the Vision achievement of these measures and objectives in our 2005-06 Annual Report. Deliver exceptional water services, be an environmental champion, and encourage regional growth.

Annual15 Report 2004-2005North East Water North East Water 15 Year in review Table 5 - Regional water consumption (water sold) Table 4 - Authority-wide key performance (In megalitres for year ending June 30 2005 – Refer to appendix 2 for town details) Key Result Area 2002-03 2003-04 Target Actual Attained District 2001-02 Change 2002-03 Change 2003-04 Change 2004-05 2004-05 2004-05 (%) (%) (%)

Correspondence not measured not measured 95 94 2 response time Alpine - Bright, 1,493 8.2S 1,616 4.0T 1,551 4.0T 1,489 % answered within 7 business Wandiligong, Harrietville, days Porepunkah, Mt Beauty, Myrtle- ford, Tawonga, Tawonga Sth Reliability of water 9.6 13.6 no target set 11.8 no target set supply service Broken - Benalla, Devenish, 1,782 5.4S 1,878 10.3T 1,684 7.2T 1,563 Unplanned interruptions/100km Goorambat, St James, main Tungamah

Resoration of water 99 100 98 98 3 Central - Barnawartha, 344 10.8S 381 11.3T 338 10.9T 301 supply following un- Chiltern, Glenrowan planned interruption Springhurst % interruptions restored within 5 hrs King - Moyhu, Oxley, 102 5.9S 108 8.3T 99 10.1T 89 Water quality complaints 0.246 0.188 0.19 0.16 3 Whitfield No. of complaints as % customers Mitta Mitta - Dartmouth, Sewer service complaints 0.251 0.095 0.1 0.04 3 204 29.9S 265 23.0T 204 15.7T 172 No. of complaints as % customers Tallangatta Murray Bundalong, Water quality - 8,437 15.0S 9,706 11.7T 8,575 10.3T 7,688 Baranduda, Ebden, Kiewa- % E. coli compliance 99.0 99.9 98 99 3 Tangambalanga, Rutherglen/ % turbidity compliance 94.0 93.1 no % target set 98 no % target set Wahgunyah, Yarrawonga, Compliance with EPA 84.4 93.6 100 89 2 Wodonga discharge licences % individual tests at WWTPs Ovens - Wangaratta 4,683 1.4T 4,619 9.1T 4,199 10.8T 3,747 complying Sewer blockages 10.4 7.4 9 8.95 3 Sub-Alpine - Beechworth, 805 4.5S 841 10.7T 751 20.2T 599 Blockages/100km main Yackandandah Sewer overflows 3.2 3.4 4.4 3.2 3 Upper Murray - 380 16.3S 442 6.6T 413 16.2T 346 Overflows/100km main Bellbridge, Corryong, Containment of sewer 100 96.8 98 100 3 Cudgewa, Walwa overflows % of spills contained within 5 hrs Total 18,230 8.9S 19,856 10.3T 17,814 10.2T 15,994

16 North East Water Annual Report 2004-2005 North East Water 16 Year in Review

Table 6 - Regional water extractions Table 7 - Regional water connections (In megalitres for year ending June 30 2005 – Refer to appendix 2 for town details) (Refer to appendix 2 for town details) District 2001-02 Change 2002-03 Change 2003-04 Change 2004-05 District Est. % change Est. No. % change No. (%) (%) (%) permanent in popula- permanent properties in proper- properties popn tion popn served connected ties connected served at at 30 June at at Alpine - Bright, Wandiligong, 2,101 1.2S 2,127 8.2S 2,302 15.2T 1,953 30 June 2005 30 June 30 June Harrietville, Porepunkah, Mt 2004 2004 2005 Beauty, Tawonga, Tawonga Sth Alpine - Bright, Wandiligong, 10,603 2.4S 10,854 4,768 1.4S 4,835 Harrietville, Porepunkah, Mt Broken - Benalla, Devenish, 2,178 0.3S 2,185 11.9T 1,926 5.7T 1,817 Beauty, Myrtleford, Tawonga, Goorambat, St James, Tawonga Sth Tungamah Broken - Benalla, Devenish, 11,024 1.7S 11,213 4,850 1.3S 4,913 Central - Barnawartha, 474 1.5S 481 4.4T 460 10.0T 414 Goorambat, St James, Chiltern, Glenrowan Tungamah Springhurst Central - Barnawartha, King - Moyhu, Oxley, 134 6.7S 143 1.4T 141 5.7T 133 Chiltern, Glenrowan 2,291 2.5S 2,348 1,023 1.7S 1,040 Whitfield Springhurst Mitta Mitta - Dartmouth, 275 23.6S 20.3T 271 16.6T 226 340 King - Moyhu, Oxley, 627 3.7S 650 295 1.0S 298 Tallangatta Whitfield Murray - Bundalong, 10,104 15.1S 11,626 13.1T 10,104 2.0T 9,901 Mitta Mitta - Dartmouth, Baranduda, Ebden, Kiewa- 1,279 1.1S 1,293 611 0.8S 616 Tangambalanga, Rutherglen/ Tallangatta Wahgunyah, Yarrawonga, Murray - Bundalong, 42,952 2.2S 43,896 18,084 2.0S 18,453 Wodonga Baranduda, Ebden, Kiewa- Tangambalanga, Rutherglen/ Ovens - Wangaratta 5,425 0.3S 5,441 12.9T 4,737 12.9T 4,127 Wahgunyah, Yarrawonga, Wodonga Sub-Alpine - Beechworth, 1,054 4.6T 1,006 9.3T 912 17.3T 754 Yackandandah Ovens - Wangaratta 18,286 1.8S 18,613 8,045 1.5S 8,164

Upper Murray - 430 37.7S 592 2.4T 578 25.4T 431 Sub-Alpine - Beechworth, 3,934 1.7S 3,999 1,745 1.7S 1,775 Bellbridge, Corryong, Yackandandah Cudgewa, Walwa Upper Murray - 2,168 1.0S 2,190 1,037 1.0S 1,047 Bellbridge, Corryong, Total 22,174 8.0S 23,941 10.5T 21,431 6.6T 19,756 Cudgewa, Walwa Total 93,163 2.0S 95,056 40,458 1.7S 4,141

Annual Report 2004-2005 North East Water 17 Year in Review

Table 8 - Regional sewer connections Table 9 - Wastewater treatment plant volumes (For further information on individual town details refer to the accompanying Environment Report) (Annual inflow in megalitres) District Est. % increase Est. No. % increase No. Plant 2001-02 Change 2002-03 Change 2003-04 Change 2004-05 permanent in popula- permanent properties in proper- properties (%) (%) (%) popn served tion popn servedconnected at ties connected at 30 June at 30 June 30 June at 30 June 2004 2005 2004 2005 Barnawartha 17 11.8S 19 26.3S 24 8.3S 26 Alpine - Bright, Porepunkah, 8,237 1.3S 8,346 3,529 1.8S 3,593 Beechworth 414 4.1T 397 18.1S 469 1.3T 463 Mt Beauty, Myrtleford, Tawonga, Tawonga Sth, Bellbridge 24 29.2T 17 52.9S 26 0.00 26 Broken - Benalla 9,633 0.9S 9,721 4,101 1.0S 4,144 Benalla 851 8.6T 778 8.7S 846 3.4S 875

Central - Barnawartha, 1,459 1.6S 1,482 620 2.3S 634 Bright/Porepunkah 253 17.4T 209 26.3S 264 0.8S 266 Chiltern Bundalong * * 30 33.3T 20 0.00 20 King - Moyhu, Oxley, N/A N/A N/A N/A N/A N/A Chiltern 82 1.2S 83 3.6T 80 7.5S 86 Whitfield Corryong 170 11.8T 150 7.3S 161 1.9S 164 Mitta Mitta - Dartmouth, 1,261 0.6S 1,269 575 1.6S 584 Tallangatta Dartmouth * * 22 0.00 22 0.00 22 Mt Beauty/Tawonga 207 26.1T 153 37.9S 211 0.5T 210 Murray - Bundalong, 41,948 0.3S 42,078 17,229 2.2S 17,616 Baranduda, Ebden, Kiewa- Myrtleford 316 11.4T 280 21.4S 340 0.6T 338 Tangambalanga, Rutherglen/ Wahgunyah, Yarrawonga, Rutherglen/Wahgunyah 378 8.7T 345 4.1S 359 1.9T 352 Wodonga Tallangatta 89 13.5T 77 77.9S 137 10.2T 123 Ovens - Wangaratta 16,913 1.3S 17,134 7,245 1.5S 7,352 Wangaratta 2,036 12.2T 1,788 7.3S 1,918 2.3S 1,962 13.2S 4,350 Sub-Alpine - Beechworth, 3,242 0.7S 3,266 1,412 1.3S 1,430 Wodonga 1,994 26.1S 2,515 52.8S 3,842 Yackandandah Yackandandah 78 20.5T 62 9.7S 68 7.4S 73 Upper Murray - 1,812 0.9S 1,828 807 1.5S 819 Yarrawonga 600 15.5T 507 11.8S 567 6.3S 603 Bellbridge, Corryong Total Total 84,505 0.7S 85,124 35,518 1.9S 36,172 7,512 1.1T 7,432 25.9S 9,354 6.5S 9,959 * No accurate data available

18 North East Water Annual Report 2004-2005 Year in Review

Industry Case Study The installation of a pair of settling Name: Carter Holt Harvey tanks at the end of the ash- Location: Myrtleford quenching process allows Carter Nature of business: Sustainable timber processing, manufacture of pine timber Holt Harvey to separate the ash and plywood for the building and construction markets from the water, resulting in substantially cleaner trade waste Number of employees: 280 discharge and 60 cubic metres less Profile sludge entering the Myrtleford wastewater lagoons. The retained Australasia’s leading forest ash is removed every two months products company with and sold for use as a soil pulp, paper, packaging and conditioner. wood products operations in Australia, New Zealand Stage 2: The company is trialling a project to reuse water from the ash-quenching process and China. Carter Holt for the same purpose, rather than discharging it to sewerage. This would replace the water Harvey’s Myrtleford currently drawn from the town supply, potentially saving between 20% and 40% per year. sawmill processes around The project also has the potential to reduce the volume of trade waste discharged from the 250,000 tonnes of timber processing site by as much as 90%. North East Water wholeheartedly supports this sustainably managed initiative, and plans to work with Carter Holt Harvey to secure funding under the Victorian plantation pine log per year, Government’s Our Water Our Future program. enough to fill more than Recycling Stormwater: Carter Holt Harvey’s 7,000 trucks. The plant serves customers in the building and hardware industries environmental management ISO14001 accreditation has throughout the eastern seaboard, from Melbourne to northern Queensland. been a key driver for an idea to use the plant’s OurWater Usage Fi-nances & Assets stormwater detention lagoon as a source of water. The Myrtleford plant relies on a consistent water supply for its processes, and currently The company’s log yard staff promoted this excellent uses around 160 megalitres of potable water per year. Seventy five percent of this volume initiative that will see the substitution of 1 megalitre per is converted to steam used to control the drying of the timber; the remaining 25% is used year of treated water - used for on-site dust suppression mainly for the ash quenching process required in the operation of bio-fuel-fired boilers. in summer - with lagoon water. The plant’s fire truck is The plant is also a large trade waste customer, discharging about 40 megalitres per year to being modified for this purpose. Top left: Carter Holt Harvey’s the local sewerage treatment plant. Myrtleford plant. Top right: Water-Based Initiatives Innovative solutions to water conservation, reducing Timber processing. Above: Stack of processed timber Stage 1: Early in 2004, the company began a project to improve the quality of its trade pressure on the town supply and delivering savings to the waste discharge. Previously, the discharge contained a large amount of residue emanating customer. from the ash-quenching system.

Annual Report 2004-2005 North East Water 19 Our Operations

20 North East Water Annual Report 2004-2005 Our Operations Water systems We now have bulk entitlements for all our water supply The Safe Drinking Water Act 2003 (SDWA) required risk Water consumption systems, with the Minister for Water, the Hon. John management plans to be implemented by 1 July 2005. We A total of 19,756 megalitres of water was extracted from Thwaites, issuing those for Wangaratta, Moyhu, Oxley, have achieved this target for all of our supply systems. An catchments within the region in 2004-05 while 15,994 Devenish, Tungamah and St James in December 2004. independent external agency will audit the risk management megalitres were delivered to customers. We have complied with our bulk entitlement volume limits at plans in 2005-06 and we will continue to review and refine them throughout coming years. Not all water extracted actually gets delivered to the customer all sites during the year, and covered individual shortfalls at due to losses through the systems; water is lost through usage Whitfield, Glenrowan, Chiltern and Porepunkah with the The Authority regularly tests the bacteriological, physical and in the water treatment process (filter backwash water), mains temporary transfer of spare entitlement volume from other chemical quality of the water supplied to customers via an cleaning and burst mains. The overall efficiency of water towns. independent sampler taking random samples from all town delivery (water delivered as a percentage of water extracted) During the year we also purchased an additional: 285 supplies. In 2004-05 we assessed the performance of our was 91% this year compared with 96% in 2003-04. megalitres for the Yarrawonga entitlement, increasing it to water reticulation systems against the standards set out in the SDWA. These standards include limits for the parameters The appointment of our Water Conservation Officer has 2,087 megalitres; 184.5 megalitres for the Wodonga entitlement, increasing it to 8534.5 megalitres; and 24 E.coli, turbidity, aluminium and disinfection by-products such contributed to an improvement in the historical methodology as trihalomethanes. The SDWA came into force on 1 July we use to calculate this figure. Improvements in the meglitres for the Yackandandah entitlement, increasing it to 202 megalitres. 2004, meaning the parameters monitored and frequency of methodology have provided us with more accurate sampling during the year was substantially different than information regarding exactly where and what volume of previous years. water is being lost during our water treatment and distribution Drinking Water Quality Management System process. We determine the water’s bacteriological quality by counting the number of E.coli organisms present in a 100 megalitre Protecting the health of our customers through the provision Please see Appendix 2, Page 80, for full details on our water sample of water. E.coli bacteria live in the gut of warm- of high-quality treated drinking water is the cornerstone of consumption for 2004-05. blooded animals, and its presence in a water sample is a direct our business. To assist us in achieving this aim, we have indicator that faeces have contaminated the water. Bulk entitlements continued to implement our DWQMS in 2004-05. This system combines elements of established risk management We assess physical and chemical quality by measuring the amount of particles (turbidity), aluminium, colour, pH, and A bulk entitlement is the annual volume of surface water frameworks, including the National Health and Medical elements such as manganese and iron disinfection by-products North East Water has a legal right to extract from the supply Research Council (NHMRC) framework for drinking water in the supplies. source for each water supply system. Government has set quality management, the Hazard Analysis and Critical Control this volume based on the river systems’ ability to provide Point framework (HACCP), and International Standard For those parameters where standards are not indicated in the water for agriculture, urban consumers and the environment. ISO9000 for Quality Management Systems. SDWA, we assess our compliance against the NHMRC Once set, the entitlements can be traded between water users The main thrust of the DWQMS is the development and guidelines. These guidelines are set at a level that limits either on a temporary (annual) or permanent basis. implementation of comprehensive risk management plans that potential impacts on customer health and safety, as well as governing aesthetic quality. The majority of water we source is surface water. We also identify risks to water quality from the catchment to the extract small amounts of groundwater to supply Barnawartha customer’s tap. This allows us to identify the risks to water This year we met all of the water quality targets (Table 10, and Goorambat, and supplement or provide emergency quality and implement management controls to minimise and Page 24). This has continued the trend of the past few years supply at Chiltern, Springhurst, Wangaratta, Moyhu and mitigate their impacts. in which we have constantly improved our operations to Myrtleford. We hold licences for all groundwater extractions. deliver a very high standard of drinking water for our customers. Continued Page 22 Annual Report 2004-2005 North East Water 21 Our Operations

From Page 21 had increased from last year however, was still significantly Risk assessments carried out under the DWQMS have Water distribution better than the historical state average. highlighted areas for improvement, particularly in our Table 11 (Page 24) shows a snapshot of the performance of For sewer overflows our target was to achieve fewer than 4.4 maintenance programs. We have undertaken a large number of our water distribution network for 2004-05 compared with per 100 kilometres of sewer pipe. Overall this year we reticulation and tank cleaning works this year, which has the past three years. This year we have increased the number experienced 3.16 per 100 kilometres of sewer pipe, thus contributed to the improved turbidity results. of planned water interruptions in an effort to minimise the achieving better than the target. Our ‘community choice’ towns have continued to present frequency of unexpected bursts and leaks. These planned A number of towns individually experienced greater sewer challenges in terms of meeting the E.coli standards. We had maintenance activities are preventive actions to fulfil our overflows per 100 kilometres than the target. These included two incidents this year, at Mt Beauty and Whitfield, which ongoing commitment to improved customer service. As a Beechworth, Mount Beauty, Tallangatta and Wangaratta. This resulted in boil water notices. A third incident at Corryong did result we have reduced the number of unplanned water was due to a combination of blockages, wet weather and not necessitate a boil water notice, although we were required supply interruptions from 185 in 2003-04 to 160 this year. contractor problems during the year. With all other towns to chlorinate the system following community consultation. We have also achieved our targets for the restoration of water experiencing fewer overflows than the target. The contributing factors to these three incidents were: supplies following both planned and unplanned interruptions, Further details on the sewerage system performance, • Two possible sources were identified at Mt Beauty: and the average unplanned interruption time. However we did including town-by-town details, and causes of sewer backflow from an irrigation system in the town, and the not meet the target for the frequency of unplanned overflows are available in the 2004-05 Environment Report. Authority’s clearwater storage basin above the town. We interruptions, primarily due to a single water supply incident have since installed a backflow prevention valve on the in Wangaratta during April. This affected approximately 2,500 Trade waste management irrigation system, and undertaken maintenance works at customers, and was due to low stored water supplies as a the storage basin. These activities will help to prevent any result of a pumping problem. We have made electrical Trade waste is a discharge to sewer from industrial and further incidents modifications to improve pump operation and reduce the risk commercial premises. In managing our trade waste customers, of failure. the Authority supports the principles of the Victorian EPA’s • We have not fully identified the source of the Industrial Waste Management Policy (Waste Minimisation). contamination at Whitfield. We have however determined Wastewater collection In particular, we encourage trade waste dischargers to adopt high levels of organic material in the raw water storage environmental policies and apply Best Available Technology have contributed to the issue. We are planning to install a The Authority manages 949.81 kilometres of sewer pipes (BAT) to minimise the generation and concentration of trade filtration system at the town’s treatment plant in the across the region. Sewer chokes and collapses in the pipes are waste requiring disposal to sewer. coming year, which will reduce the possibility of an E.coli caused by the degradation of the sewer pipes, the intrusion of incident tree roots, and blockages from the build-up of fats or solid For management purposes we distinguish between major and minor trade water dischargers as defined in our Minor and • We suspected the high-level storage basin was the source material. Many of these chokes and collapses are minor in Major Trade Waste Control By-Laws. We currently have 781 of the contamination at Corryong. We have now sealed the nature and do not result in spillages of sewage to the active minor trade waste agreements and 29 major trade waste basin and have not had any further incidents environment. dischargers. Full details on individual supply / town water quality results Sewer incidents are minimised through our sewerage system Further information on our trade waste management is are included in the North East Water Annual Water Quality maintenance program that includes pressure cleaning and available from our website, and the 2004-05 Environment Report 2004-05. This report is available on request from the chemical removal of tree roots (root foaming) in problem Report. Authority, and our website. areas. The number of sewer chokes and collapses we experienced in 2004-05 was 8.95 per 100 kilometres, which

22 North East Water Annual Report 2004-2005 Our Operations

discharges, in conjunction with decreasing the volumes released. • Drainage works undertaken at North Wangaratta reuse Wastewater quality Table 14 (Page 24) is a summary of the quantities of nutrients, site. These works have optimised irrigation at the site Each of our 18 wastewater treatment plants has an EPA waste suspended solids and E. coli we have discharged over the past • Production of 1,600 tonnes of maize silage, 450 tonnes of discharge licence that stipulates monitoring and reporting four years. It shows we have made improvements in the lucerne hay, 110 tonnes of oats, 660 tonnes of pasture requirements, and limits for discharging to water or land. discharge water quality in the last two years. hay, 860 prime lambs and provided agistment for 200 Discharge limits are set for individual parameters such as Further details on the discharge quality from specific plants is head of cattle at properties managed and operated by suspended solids and nutrients (nitrogen and phosphorus) contained in the 2004-05 Environment Report. North East Water and we generally test for these monthly. As the licences We have managed biosolids at our wastewater treatment require, we reported all compliance failures to the EPA within Recycled water and biosolids reuse plants in accordance with the EPA approved sludge 28 days of occurrence. management plans. Table 15 (page 24) shows our recycled water quality During 2004-05 we achieved 89% overall compliance with our performance in terms of percentage compliance with the E.coli Major biosolids reuse activities during the year included: discharge licence requirements (Table 13, Page 24). Non- limits in our EPA Discharge Licences. The sites that did not • Reuse of biosolids from the West Wodonga plant to the compliances occurred at our wastewater treatment plants in achieve 100% compliance during the year were Benalla and Wodonga landfill, and on-site for landscaping. Biosolids at Beechworth, Benalla, Bright, Myrtleford, Yackandandah and Yarrawonga. Explanations for these are included in the the West Wodonga site are managed under contract with Yarrawonga. Performance Report on page 59. Anglian Water Pty Ltd Many of the non-compliances were the result of the inability Of our 18 treatment plants, 14 have some form of either part • Sludge management works at Wangaratta, including the of lagoon-based treatment systems to remove nitrogen during or full beneficial reuse of reclaimed water rather than discharge conditioning of sludge from Lagoon No 1 in preparation colder weather. Other failures are attributed to: to waterways. Eight of our plants had either 100% reuse or for beneficial reuse and the desludging of the first sludge • High rainfall events evaporation during the year. lagoon • A process failure resulting in the need to discharge lesser We have been working hard to maximise reuse in the region. • Transport and conditioning of biosolids from the quality water The Authority currently has 23 individual reuse sites where Corryong Treatment Plant in preparation for beneficial • Bird life inhabiting lagoons increasing E. coli levels 2,651 megalitres of recycled water was irrigated in 2004-05. reuse • Increased levels of algae causing a rise in pH As a result of resuming control of Authority-owned farmland • High evaporation and irrigation demand compromising the from third party leases, reuse in the region has increased from treatment process through reduced detention time 19% in the previous year to 30% of recycled water available for irrigation. Further details on the specific failures are included in the Performance Report on page 57, and in the 2004-05 This increase has been the result of optimising irrigation to match Environment Report. crop requirements as well as maximising the area available for irrigation at our own sites. The recycled water sites currently Increases in nutrients such as nitrogen and phosphorus can managed by us are located at Benalla, Beechworth, Chiltern, upset the natural balance within a stream or lake, which may Corryong, Wangaratta and Yackandandah. cause unwanted algal blooms. Major water recycling activities during the year included: The sources of these nutrients include run-off from agricultural • land, urban stormwater contaminated with garden fertilisers, Development of a new pipeline and supply of recycled industrial discharges, and poorly treated wastewater. We are water to the North Wangaratta Recreation Reserve from committed to continually improving the quality of our our Wangaratta Treatment Plant Annual Report 2004-2005 North East Water 23 Our Operations

Table 10 - Water quality performance Table 12 - Wastewater collection performance Table 14 - Wastewater discharge quality performance Water quality Actual 2004-05 Wastewater Actual 2004-05 Discharge quality Actual 2004-05 indicator 2001-022002-03 2003-04 Actual Target Attained service standards 2001-02 2002-03 2003-04 Actual Target Attained indicator 2001-02 2002-03 2003-04 Actual Target Attained E. coli 97.3 99.0 99.9 99.1 98.0 3 Sewer chokes N/D 10.4 7.4 8.95 9.0 3 Total nitrogen 56 63 57 57 N/A N/A % samples equalling zero & collapses Tonnes discharged to organisation per 100 ML No. per 100km sewer waterways Turbidity 1.9 2.4 2.2 1.0 5.0 3 mains Total P 5.8 12.1 5.4 5.0 N/A N/A (NTU) Sewer overflows 2.9 3.2 3.4 3.16 4.4 3 Tonnes dicharged to Aluminium 0.2 0.4 0.3 0.2 0.2 No. per 100km sewer waterways 3 mains (mg/L) Suspended solids 61 42 53 46 N/A N/A Containment 98.0 100.0 96.8 100.0 98.0 Tonnes discharged to 103 3 Trihalomethanes 110 122 94 250 3 of sewer waterways (ug/L) overflows E. coli 279 302 77 130 N/A N/A % spills contained No. of organisms per within 5 hours 100ML discharged to Table 11 - Water distribution performance Av. time to N/D 114* 180* 121 No N/A waterways Water service Actual 2004-05 unblock/repair target Total volume 5,298 4,446 5,885 5,975 N/A N/A standards 2001-02 2002-03 2003-04 Actual Target Attained sewer set discharged Total minutes to ML Unplanned supply 10.5 9.0 13.6 11.8 No N/A unblock sewer / the no. of sewer interruptions target blockages (including No. per 100km mains set spills) Table 15 - Recycled water quality performance Planned supply 0.1 0.6 2.1 6.2 No N/A Recycled water Actual 2004-05 interruptions target quality indicator No. per 100km mains set Table 13 - Wastewater treatment plant compliance 2001-02 2002-03 2003-04 Actual Target Attained Restoration of 94 99 100 98 98 3 Actual 2004-05 E. coli No 91.58 96.40 95.70 100.00 2 supply following 2001-02 2002-03 2003-04 Actual Target Attained % compliance with data all interruptions EPA licence Overall compliance for E. coli % interruptions 86.9 84.4 93.6 89.0 100.0 2 restored within 5 hours compliance % compliance with Unplanned 2.3* 1.2* 1.3* 1.3 2.0 3 EPA licence limits for interruption time all parameters Total hours of all Table notes: N/D Data not available unplanned * Data is based on an estimated time taken interruptions / no. of unplanned to repair the sewer interruptions Av. frequency 0.05* 0.05* 0.05* 0.10 0.04* 2 1 Internal Key Performance Indicator unplanned 2 interruptions 2004/05 Corporate Plan Targets No. customers 3 Data based on all interruptions (planned and affected /total no. water customers unplanned) 24 North East Water Annual Report 2004-2005 Our Operations Environmental sustainability production and use of energy. In support of this policy, we • Updated the detailed survey of the 32 high priority sites Ecologically Sustainable have a specific requirement to identify and manage greenhouse identified in the Biodiversity Assets Register with the gas emissions. By reducing our electricity consumption, we can associated management recommendations to be actioned Development Strategy assist in reducing climate change impacts. next year The ESD Strategy replaced the previous Sustainable Our electricity consumption across all water and wastewater • Enhanced 35.2 hectares of endangered Valley Grassland Development Strategy in August 2004. The release of Our facilities in 2004-05 was 11.8 million kilowatt hours. This Forest at the Beechworth Wastewater Treatment Plant Water Our Future and the required content of our Water Plan equates to 17,126 tonnes of greenhouse gases emitted during • Protected and enhanced 400 metres of Ovens River riparian for the ESC have highlighted the importance of sustainable 2004-05 through electricity use compared with 18,332 tonnes zone at the Myrtleford Wastewater Treatment Plant development issues across Victoria. By revisiting the existing in 2003-04, a reduction of 7%. • Undertaken Authority-wide noxious weed and pest control strategy, we have formalised our position on sustainability, and Fuel consumption associated with running our vehicle fleet also program, with works specifically at Lake Kerford storage officially mapped out our future actions. contributes to greenhouse gas emissions. During 2004-05 we Beechworth, Loombah and McCall Say Reservoirs at The key components of the ESD Strategy will help us foster a used a total of 375,807 litres of fuel which was responsible for Benalla, and Bakers Gully Reservoir at Bright sustainability culture and ensure we fulfil our regulatory and producing 964 tonnes of energy attributed greenhouse gases, The Biodiversity Strategy also ensures that we fulfil our policy obligations. These include: this is a reduction on last year’s total of 1,056 tonnes. obligations under the following regulations: During the year, we investigated purchasing ‘Green Power’ to Fostering a Sustainability Culture • Planning and Environment Act help reduce the emission of greenhouse gases through the use of The aim of this component of the strategy is to embed ESD more sustainable alternative electricity sources. We have now • Environment Protection Act considerations in our day-to-day business. We are developing a committed to buying 10% Green Power for our larger sites. • business case approval framework that will incorporate ESD Catchment, Land Protection Act principles and commitments. North East Water manages 62 hectares of tree plantations • National Strategy for the Conservation of Australia’s across the region, and 36 hectares of native bush land. The rate Water Conservation Strategy Biodiversity at which these plantations absorb carbon dioxide is dependent • Victorian Flora and Fauna Guarantee Act This component has been evolving since June 2003, and has on tree growth and biomass density. According to Australian been revisited to better reflect current water conservation Greenhouse Office methods, these assets absorbed the carbon Chemical Use Strategy directions. We have achieved the following objectives: dioxide equivalent of 30,266 tonnes in 2004-05. We use a range of chemicals in both water and wastewater • Development of a programmed maintenance database to Biodiversity Strategy treatment processes. Under our Chemical Use Strategy, we optimise maintenance of our water distribution network have undertaken several initiatives in 2004-05 to monitor and, We own approximately 1,400 hectares of land across the and monitor volumes used for cleaning the reticulation where possible, reduce chemical consumption. These include a region, along with more than 300 separate facilities associated • Overnight leak detection carried out in Porepunkah to chemical purchasing monitoring system, which is being used to with our water, wastewater and reuse activities. Many of these collect baseline data from which we will compare future targets. reduce water lost through unreported leakages activities and operations impact on the environment, hence we Further details on activities we have undertaken as part of our • The implementation of the Smart Water By-Law has have developed a Biodiversity Strategy to protect and enhance ESD are included in the 2004-05 Environment Report. developed community education and awareness and the flora and fauna. This aims to ensure our day-to-day actions reduced usage by means of efficient water use comply with the Victorian Biodiversity Strategy. Energy and Greenhouse Gas Management Strategy We have undertaken the following actions in line with our The Victorian Greenhouse Strategy, released in 2002, includes strategy: several actions to address greenhouse gas emissions in the

Annual Report 2004-2005 North East Water 25 Our Operations

Environmental Management System Our Water Our Future Our EMS achieved external certification to The Victorian Government’s White Paper – Our Water Our • We identified water recycling opportunities through ISO14001 in March 2001, and re-certification in Future - was released in June 2004. The document was several scoping studies funded under the Water for May 2004. Since then, we have made continual formed in consultation with all sectors of the Victorian Growth Program. In Wodonga, a recycled water pipeline improvements to achieve a higher degree of community and details strategies and actions to improve linking three high water use localities has the potential to environmental performance. We regard the water management across the State. reduce potable demand by between 750 and 1,000 continuation of the EMS certification highly We have been working actively to fulfil the new obligations megalitres per year. In Wangaratta, we have helped and use it as a key performance indicator (KPI). set down by Our Water Our Future. The key actions develop a major wastewater treatment and recycling The key components of the EMS include: undertaken throughout the year are detailed as follows: scheme that involves industry and private service providers. The scheme has the potential to link with • Our Environmental Policy • We have been actively engaged in the bulk entitlement irrigation developments in the local region • Environmental aspects (hazards) and impacts associated process, particularly for the Ovens and Broken Rivers. In • An important initiative has been our involvement with the with our operations and activities. Environmental aspects relation to long-term water resource planning, we have set communities of Milawa and Bethanga. We are working are elements of our operations and activities that can initial water conservation targets through our existing with the local government agencies, the respective potentially impact on the environment sustainability strategies communities and consultants in scoping innovative • We have begun the WSDS development process by • Annual Environmental Action Program (contains wastewater treatment systems as part of the Country establishing a project team and setting the scope and objectives and targets to be achieved each year) Towns Water and Sewerage Program resource requirements. We have also attended forums Further details of our EMS and our performance against our with the Victorian Water Industry Association (VWIA) 2004-05 Environmental Action Plan are available in the 2004- and DSE dealing with the draft guidelines 05 Environment Report. • We have introduced a Smart Water By-Law as part of our Environmental incidents long-term conservation measures • To further raise the community’s level of awareness of We class environmental incidents as unplanned events caused water-related issues, we have joined North East CMA in by us that impact negatively on the land, air, water, flora or the Waterwatch Program fauna either on or off our sites. Incidents we experienced • during the year included sewer overflows, overflows from We have continued to work with local government on wastewater treatment plants or relief structures, chemical conservation measures and providing alternative ‘fit-for- spills and odour events. We recorded 52 incidents in 2004-05, purpose’ water supplies. A feature of this project was our up from 42 last year. For further information on our June forum ‘Watering and Growing or Towns – A Co environment incidents refer to the 2004-05 Environment operative Approach’ that engaged local government, Report. industry and the general community. In addition, this year we appointed an officer dedicated to working with major stakeholders and industry on water conservation initiatives

26 North East Water Annual Report 2004-2005 Our Operations

Regional Catchment Management Strategy North East Water and the North East CMA have developed a strong relationship that exists at all levels of the organisations. Together we have scoped and developed an MoU to ensure the relationship remains focussed and provides ongoing benefits to our communities and the environment. A major benefit of this relationship is our active participation in the continuing development and implementation of the Regional Catchment Strategy. Our staff has participated in several catchment management activities, such as the development of the North East Regional River Strategy, catchment community forums, the Waterwatch Program, community education and the Water Advisory Committee. Regional river health The Victorian River Health Strategy is a long-term statewide initiative aimed at protecting and improving the health of our rivers and the ecosystems that live within them. Authority actions in 2004-05 that have assisted the strategy include: • The increased use of recycled water from 19% to 30%, thus reducing nutrient loadings discharged to the environment • Sewering of the Porepunkah township • The provision of efficient and environmentally sound biosolid drying and storage facilities at the West Wodonga Wastewater Treatment Plant The Authority will continue to pursue water-recycling opportunities to further reduce impacts on river health in our region. We are currently investigating the use of Class A recycled water for industry at Wodonga. The Murray River near Wodonga

Annual Report 2004-2005 North East Water 27 Our Operations Future planning Our Strategy and Development business unit is charged with meet future growth requirements for the Yackandandah involves the construction of a large-scale biogas plant, which the responsibility of ensuring our communities’ future township. would produce around 4.5 megawatt-hours of renewable development needs are planned for within a sustainability Wangaratta power (equivalent to 7,000 homes) and 15,000 tonnes of framework. Future development planning is a key business high-grade pelletised organic fertiliser from approximately tool we use to establish those future needs. North East Water to investigate the provision of a 20 100,000 tonnes of organic waste sourced from across the megalitre clear water storage for Wangaratta to improve region. The project would provide greenhouse gas abatement Future Development Planning the township’s security of supply. of approximately 300,000 tonnes per annum, which equates to the average fuel usage of 70,000 cars. Future Development Plans identify forecast growth and water Yarrawonga Clearwater Pipeline demands for each town and are intended to provide options to We are currently developing a business case to determine the meet forecast supply and demand patterns. The plans are During the year, we took the first steps towards supplying prospect of the project. An initial organic resource scan of used to: the communities of Tungamah, St James and Devenish with the Wodonga region indicated sufficient waste exists to source treated water from Yarrawonga, replacing these towns’ current the venture. • Provide baseline data for the development of water reliance on the irrigation channel system. This project supply demand strategies involves the construction of a 44-kilometre pipeline to the The bioenergy project would create improved sustainability outcomes for the Authority and provide a key regional outlet • Develop community consultation strategies (Table 16, three towns, which will be built as part of the Government’s for organic waste. It would also enhance opportunities for Page 29) water savings project. It will complement a $20.4 million GMW project to pipe the channel system to eliminate water regional development. If realised, the project would also • Engage communities in water conservation debates and losses. create many efficiency and environmental gains, including: initiatives The Yarrawonga pipeline initiative aligns with the Victorian • The ability to take all solid waste streams from the West • Implement and guide infrastructure development Government’s Our Water Our Future document, contributing Wodonga Wastewater Treatment Plant, eliminating state water savings initiatives and improving flows in the biosolids production During the year we undertook community consultation on Snowy and Murray rivers. • four of our Future Development Plans. Three of these An opportunity to shed peak trade waste loads and future community consultation committees completed a review of This is a key capital project for the Authority. It is currently additional organic loads to the bioenergy plant, creating the demand management strategies and technical options, and in the planning stage and will be implemented over the next efficiencies at the West Wodonga Wastewater Treatment provided recommendations to our Board in March 2005. The two years. We are sourcing $1.4 million in funding for the Plant committees’ key recommendations follow: project, which has an estimated total cost of $4 million. • A reduction in greenhouse gas emissions from the West Bright / Porepunkah / Harrietville / Wandiligong Once completed the new pipeline will deliver substantial Wodonga Wastewater Treatment Plant operational efficiencies, as we will no longer require the • Participation in renewable energy production North East Water to undertake a detailed feasibility current treatment facilities at Tungamah, St James and investigation for the construction of a 350 megalitre Devenish. storage at Bakers Gully, Bright to improve water quality Water for Growth and supply security for the Bright, Porepunkah and Research & Development With the $185,000 funding we received this year under the Wandiligong townships. State Government’s Water for Growth Program, we Yackandandah In a collaborative arrangement, SEAV, a private company, and completed six projects to investigate water recycling and North East Water have begun investigating the feasibility of water conservation opportunities. North East Water to investigate the provision of off- developing a renewable energy (bioenergy) project. This stream storage and additional system augmentations to Continued Page 29 28 North East Water Annual Report 2004-2005 Our Operations

From Page 28 Table 16 – Future Development Plans 2004-05 We will incorporate the outputs of all investigations into the Town System Consultation strategy development of our WSDS during 2005-06. The Water for Rutherglen & Water To be developed during Growth projects were: Wahgunyah Wastewater 2005-06 • The Wodonga Water Recycling Strategy (which combined Bright & Porepunkah Wastewater To be developed during funding for urban and rural recycling studies) identified 2005-06 options for both urban and rural recycling of treated Bright/Porepunkah/ Water Developed* wastewater from the West Wodonga Wastewater Treatment Harrietville/Wandiligong Plant. The study report provided indicative costing and a Kiewa/Tangambalanga Water To be developed during triple-bottom-line (TBL) analysis of the options that will be Wastewater 2005-06 valuable for future decision making on the use of the resource Chiltern Water To be developed during • The Wangaratta North Industrial Estate Recycling Strategy Wastewater 2005-06 identified options for: Barnawartha Water To be developed during • Water conservation at Alpine MDF by internal recycling, Wastewater 2005-06 and Myrtleford Water To be developed during Wastewater 2005-06 • Recycling from North East Water’s North Wangaratta Bellbridge Water To be developed during Wastewater Treatment Plant to the Industrial Estate. Wastewater 2005-06 North East Water is continuing to work with Alpine MDF to progress the development of options Benalla Water Developed* Wastewater To be developed during • The Chiltern Pilot Water Conservation Report produced 2005-06 valuable information on water consumption and unaccounted for water. The report will become the backbone for the Yackandandah Water Developed* development of a WSDS for Chiltern Wastewater To be developed during 2005-06 • The design of dual-pipe reticulation for large recreational Wangaratta Water Developed* facilities in Corryong will be made available to Towong Shire for implementation * In these instances the consultation strategy recommended the formation of community consultation committees, which have been established and are cur- • The Wangaratta Recycling Strategy addresses the collective rently active. needs for wastewater management from the trade waste treatment plant, currently operated by Cleanaway, and the North Wangaratta Wastewater Treatment Plant. Using TBL analysis, the project evaluated opportunities for at-source separation and treatment of high salt loads and recycling for new horticultural irrigation opportunities near the Warby Ranges. Communication with DSE and GMW is continuing to evaluate possible synergies with the Lake Mokoan water saving project Annual Report 2004-2005 North East Water 29 Photo courtesy of the Wangaratta Chronicle

Our Customers

3030 NorthNorth East East Water Water AnnualAnnual Report Report 2004-2005 2004-2005 Our Customers

uring the year we conducted an internal analysis of our Dcustomer groups, which included identifying their Customer survey Corporate Citizenship expectations. The results are presented in Table 17, Page 33. This year’s Customer Survey results are similar to 2004 and As with previous years, we have actively supported a range of This information will be used to continuously improve our indicate strong performance in our customer service activities local organisations. We believe that as a reasonably large local customer service. (Table 20, Page 33). We are committed to improving this employer, we have an obligation to support and assist other result in the more regulated market over the coming years, as companies and organisations. Customer complaints we understand the need for continuous improvement, and are Our Corporate Citizenship activities included: striving to remain a high achiever in our customer service Over the past 12 months we have further developed an • An increased number of water and wastewater treatment activities. electronic reporting system to capture complaints. Although plant tours. This increased activity followed the successful still to be fully refined in light of additional requirements of This year we conducted the survey during April / May, using launch and use of the joint Waterwatch initiative, ‘Wet, Wild the ESC, the Events Logging System (ELS) is a great help in an independent firm to contact more than 1,000 customers and Wonderful’ with North East CMA from early 2005 across all our towns via telephone. capturing more accurately the true number of complaints we • Hosting the VWIOA annual conference in Wodonga in receive. Along with the standard suite of questions, this year’s survey September, and the annual regional conference of the The complaints logged for 2004-05 include pressure included specific inquiries to a handful of towns across the Victorian branch of Australian Water Association in problems, dirty water events and reinstatement works. They Authority. We focussed on Benalla, Yarrawonga, Wangaratta Beechworth in October. Peter Tolsher, who operates the are shown in Table 18, Page 33. and Wodonga, asking specific questions relating to water West Wodonga Wastewater Treatment Plant, won Operator The substantial increase in customer complaints may be quality, water supply issues and our customers’ perceptions of the Year at the VWIOA conference of their own conservation activities. attributed to the introduction of our new ELS. The new • Ongoing sponsorship of the Christmas Party for Special system has allowed a vehicle for staff to record and capture The survey asked our Benalla and Yarrawonga residents if Children with additional money raised from the Corporate all of our customer complaints with a greater degree of they currently practice water conservation measures; 95.6% Golf Day, conducted late in the calendar year of Benalla residents and 93.3% of Yarrawonga residents accuracy. • Partial funding of a Wangaratta Council initiative to publish responded positively. This was a pleasing result and we and distribute a booklet outlining water conservation intend to use this data when formulating our water Energy & Water Ombudsman practices and water-efficient gardening conservation and sustainability targets over the coming years. • Free distribution of North East Water drink bottles to a of Victoria This year we also tested our customers’ acceptance of North range of local sporting clubs, schools and promotional East Water purchasing ‘Green Power’ and their willingness to During 2004-05, the number of EWOV cases we experienced events increased to 28 (Table 19, Page 33). This follows a drop from contribute towards the additional costs involved. We were • Joint Water Week displays with North East CMA 30 (2002-03) to 18 cases last year (2003-04). pleasantly surprised when nearly 38% of our surveyed customers said they would be willing to contribute. Against • Involvement in local training and development programs The increased number of referrals to EWOV may be that positive figure, 51% said ‘No’ and 11% abstained. conducted by local service providers attributed to increased tariffs, a renewed focus on the • restriction of supply for non-payment and a recent visit to All the information obtained from our customer survey will Joint promotional activities with Goulburn Valley Water, the area by EWOV staff. Throughout the year we have be used to assist us in our forward planning and to improve promoting both organisations’ Smart Water By-Laws continued to work closely with our customers and the EWOV our customer interactions in the areas identified. • Partial funding with Albury Water and local councils for a to improve customer service across the Authority. campaign to reduce phosphorous in the Murray River • Partial funding with Albury Water to support and promote smart and efficient water use over summer • Membership with Water Aid Australia Annual Report 2004-2005 North East Water 31 Our Customers

Harrietville: The committees’ recommendations were local councils, communities and our major water users on Community service obligations provided to the Board at the March 2005 Board meeting relevant matters, particularly those relating to future We deliver 18,334 direct community service obligations, • The production of Information Booklets for development planning and the development of our Water Plan mostly in the form of concessions to pensioners. These Yackandandah and Wangaratta following work carried out for the ESC. payments are funded through subsidies from the Victorian by the respective committees: the booklets are in draft Government (Table 21, Page 33). form and are awaiting committee review and acceptance Management of social & prior to distribution Community consultation committees All groups have established charters to formalise their role economic impacts and guide their activities. The committees at Yackandandah, With adequate rain falling throughout the year it was not During the past 12 months we have established an additional Wangaratta and Bright / Harrietville / Wandiligong / necessary to impose water restrictions in any of our community consultation committee at Benalla. Similar to Porepunkah have agreed to continue their roles past their communities. committees established in Yackandandah and Wangaratta in initial brief. As such, over the coming months we will work 2003-04, the Benalla group is charged with providing input to with the Committees in the revision of their charters to reflect The introduction of the ESC as our economic regulator means the forward planning issues for water and wastewater in the the changed roles. our customers now have the certainty of a three-year price town. path. We carried out extensive consultation during the The committee met four times during the first six months of Stakeholder engagement development of our Water Plan to gauge community support 2005, and will be reporting its recommendations to the Board for our proposed service upgrades and pricing strategies. later this year. Our Customer Consultation Strategy was finalised earlier this We are conscious of the effects price rises have on our In addition, our previously established committees continued year and has been successfully implemented throughout customers who are suffering hardship or facing difficulty in to operate through 2004-05. We have successfully used them 2004-05. paying their accounts. As such, we have a hardship policy to obtain feedback on several important issues, particularly We have a Customer Consultation Strategy that embraces a that details how we will assist and respond to those the development of a new Customer Charter under the ESC three-fold process in relation to Community Consultation: customers in need. regime. • An overarching Community Consultation Strategy, which Our committees have dealt with the following specific issues covers all aspects of consultation with the broader Drought response during 2004-05: community It was not necessary to invoke the Drought Response Plan • • Superozonation of the reticulation system at Myrtleford: A Community Consultation Policy which binds North for any of our water supply systems during the 2004-05 the committee met three times to establish a mechanism to East Water to a process consistent with and reporting period. ensure customers were fully informed of the requirements complementary to the Strategy for the superozonation process to work effectively • A Community Consultation Manual, which forms the • Water treatment enhancements at Corryong: the basis and background for Community Consultation within committee met twice before embarking on a project to our Authority enhance the treatment regime at Corryong within the We have put these processes in place to deal with a range of framework of a non chemical additive treatment process issues from formal strategic planning to individual • The formulation of recommendations for Board communities’ expectations and concerns about water consideration regarding actions to meet the requirements treatment and water quality issues. of Future Development Plans in Yackandandah, During 2004-05 we have continued to work closely with Wangaratta, Bright, Wandiligong, Porepunkah and Government agencies, Catchment Management Authorities, 32 North East Water Annual Report 2004-2005 Our Customers

Table 17 - Customer groups Table 19 – Referrals to the EWOV 2004-2005 No. of Referrals Explanation of EWOV case categories: Customer group Expectations Case Category 2001-02 2002-03 2003-04 2004-05 Enquiry Passive management (satisfied majority) 21 25 15 22 The customer requests information, advice or assistance on an issue. Cases Enquiry can usually be resolved within three days directly with the customer. An General public Value for money Level 1 1 3 3 5 example may be an explanation of a supply charge. Institutions Proactive communication Water, Level 1 Complaint Level 2 0 2 0 1 Minor industry Reliable service (quality, Involves the Ombudsman’s office taking up issues with North East Water Emergency services consistent, pressure) Level 3 0 0 0 0 that requires further investigation. EWOV usually allows 14 days for Good customer contact/ resolution. An example may be determining the reasons for a higher than advice Table 20 - Customer satisfaction usual bill / account. Water, Level 2 Complaint Active management (monitor regularly) Questions 2003 (%) 2004 (%) 2005 (%) Can be an unresolved Level 1 Complaint that requires detailed investigations. EWOV usually allows 28 days for resolution. An example Major customers Value for money Quality of product 87 91 94 Reuse customers Proactive communication may be where the customer has a financial claim against the company relating to the supply charge. Community choice Guaranteed reliable service Ease of access 88 95 93 Water, Level 3 Complaint supplies Personalised customer Satisfied with service received 84 85 82 contact/advice Is an unresolved Level 2 Complaint, which is unlikely to be resolved within Authority performance (manages) 90 91 92 the time frames allocated. Price path certainty Products & services 69 65 62 Ability to negotiate Overall satisfaction 83 86 85 Reactive management (planned response/unplanned event) Incident-based customer Proactive direct Rebates given No. Total rebates given $ contact communication Table 21 - Community Service Obligations Good customer contact/advice 2002-03 2003-04 2004-05 2002-03 2003-04 2004-05 Timely response Provision of concessions to pensioner 17,062 16,696 17,644 1,365,679 1,342,672 1,550,703 Compensation Rebates paid to not-for-profit organisations under the 653 666 678 142,379 148,117 151,522 Empathetic accountability water and sewerage rebate scheme Utility relief grant scheme payments 14 18 12 2,055 2,594 2,054 Table 18 - Customer complaints (complaints per 1,000 customers) 2002-03 2003-04 2004-05 Water quality 11 74 69 Water supply reliability 77 56 98 (including pressure) Sewerage service 78 30 37 quality & reliability (including odour) Affordability 0710 Other 30 19 81 Annual Report 2004-2005 North East Water 33 Our Staff

34 North East Water Annual Report 2004-2005 Our Staff

insight into work-life in a medium-sized organisation, and in several years. In December 2004 we achieved this milestone, Employment the case of university placements, put theory into practice making us one of a handful of Victorian water authorities to Our workforce numbered 114.2 full time equivalent (FTE) and gain valuable knowledge and experience in their chosen do so. positions (including vacancies) at 30 June 2005. This compares discipline. In addition, we also requested to be certified against the global with 108.2 FTE’s at 30 June 2004 (Table 22, Page 37). standard OHSAS 18001, and were successful. Training & education Our OHSMS framework is based on the following key aspects: Years of service We recognise that learning does not cease at the completion of • During the reporting period, several staff reached service an employee’s formal eduction. Further education, training Prevention of incidents and injuries in the workplace milestones in their continuous years of employment with and development programs can supplement the acquisition of • Commitment to compliance with relevant OHS laws, North East Water (and its predecessors). Staff achieving such skills and knowledge in the work environment and provide regulations, codes of practice, Australian Standards and service milestones are shown in Table 23, Page 37. benefits to employees and employers alike. other related requirements Our training and development programs are primarily based • Continual improvement in our health and safety Enterprise Bargaining Agreement (EBA) on the person / position competency profiles we are in the performance process of completing. This will ensure we source and deliver North East Water’s 2003 EBA expired in March 2005. All We have a dedicated OHS Officer who is responsible for the right programs at appropriate stages of an employee’s parties had reached an in-principle three-year agreement by developing and maintaining the OHSMS, and an active OHS development while maximising our return on investment. that date. We submitted it to the relevant government steering committee. departments as required by Industrial Relations Victoria for Through our Education Assistance Policy we also encourage Key components of the OHSMS include systems that: and support the cycle of life-long learning. We provide its various levels of approval and staff vote. We gained these • Provide and maintain safe plant and systems of work financial and leave assistance to employees to undertake approvals and anticipated the EBA would be certified in July • further education courses through Australian educational Actively identify, then eliminate or control health and 2005. The EBA contains three 4% wage rises over its three- safety hazards year life, with the second and third payments being ‘at risk’ institutions or professional bodies during the course of their • amounts partnered to the efficiency targets set out in the development. Several employees continue to undertake Ensure compliance with OHS-related legislation Agreement. further education courses at either certificate / diploma, • Regularly set and review objectives and targets to undergraduate, post-graduate or professional certification minimise work-related injury and illness and improve Industrial relations levels. health and safety performance • We continue to enjoy good employer / employee working Provide appropriate information, training and supervision relationships experiencing no industrial disputes in 2004-05. Occupational Health & Safety for all employees, contractors and visitors to ensure their safety We have a strong commitment to maintaining a • Work experience safe and healthy work environment for all Support the establishment and operation of an OHS employees, contractors, customers, visitors committee We support the principle of providing work or industry and the public. • Provide adequate resources to ensure that the OHS policy experience opportunities for students from secondary schools To assist us in doing this, we have been and the OHSMS are implemented and maintained or university / TAFE institutions. working towards externally certifying our All staff members are fully committed to maintaining the During the reporting period we sponsored two three-month OHSMS to AS4801 for Occupational Health OHSMS, and receive ongoing training on health and safety- paid university industry placements over their summer and Safety (OHS) Management Systems for related issues through regular toolbox meetings. vacation. These opportunities allow students to gain an Continued Page 36 Annual Report 2004-2005 North East Water 35 Our Staff

From Page 35 OHSMS Video OHS Training We use many external contractors for both minor works and Our pre-certification audit identified that staff had a limited We carried out various training programs throughout 2004-05, major construction jobs. understanding of what an OHSMS entailed. As a result, we including: During 2004-05, we further developed our contractor filmed a video / DVD to portray the specific risks associated • Confined space training management system, which requires contractors and all their to our business and how we can apply the elements of an • First aid employees to be inducted into our OHSMS prior to starting OHSMS to mitigate those risks. The production used our • work. We believe this is a step forward in protecting the own staff members as actors and is regarded as an innovative Traffic management & control safety of everyone working for North East Water. approach to training OHS awareness. • OHS construction course (Green Card) Policies The production has recently been submitted to the • Driver training and awareness Victorian Worksafe Awards. • Ergonomics training (office-based staff) Throughout 2004-05, North East Water has continued its commitment to the health, safety and well-being of all Table 24 (Page 37) shows our performance in OHS for 2004- employees, contractors, customers, visitors and the public 05. through our OHS policy. This policy is regularly updated and is available on our website. Programs CEO’s Award We have implemented the following proactive programs as The annual CEO’s Innovation Award is given to employees part of our commitment to ensure a safe workplace: who have shown exceptional levels of innovation and Internal and External Audit Program initiative in conducting their duties. This is an integral component of our OHSMS The 2004 award went to OHS Officer, Brent Janetzki, for his certification. Staff members conduct internal audits against innovative approach in gaining accreditation for the elements of the system to ensure we are complying with Authority’s OHSMS. the procedures and policies that have been developed and Auditing firm SAI Global awarded the certification early this implemented year after an exhaustive audit of our operations and field Internal OHS Worksite Inspection Program activities. Jim Martin and Brent Janetzki celebrate the OHS certification In gaining accreditation under Australian Standard AS This is a new initiative that allows office-based staff to go the production of a home-made video that explained the 4801:2001, we are one of just a few Victorian water into the field and conduct inspections of our manned system in a light-hearted and entertaining way. worksites. This exercise facilitates communication and Authorities to achieve this feat. In a further coup, SAI Global relationship building with outdoor staff, job role also certified the system under the Global Standard OHSAS The video was written in-house, filmed by a local production appreciation, information sharing and the identification of 18001:1999. house, and featured a selection of indoor and outdoor staff as ‘actors’, including the CEO, Jim Martin. hazards that may not be obvious to operators Brent took over the role of OHS Officer in May 2003 charged Employee Assistance Program with the challenge of gaining accreditation. One major hurdle It is now shown as part of the induction procedure of new staff. to overcome for accreditation was the need to communicate We implemented this program to tackle the issue of an ageing The video project is an example of Brent’s ability to ‘think the OHSMS to the staff. workforce. The program allows our staff to attend a partially outside the square’, a quality that enabled him to achieve subsidised gymnasium program to keep fit and healthy Recognising that this had the potential to be dry and tedious, something North East Water had been aiming for since 1997. Brent decided that the outcome would be better served with Congratulations to Brent.

36 North East Water Annual Report 2004-2005 Our Staff

Information technology Table 23 - Service milestones Years 2003-04 2004-05 We value the impact of information technology on the 10 years 2 2 organisation, and the role it plays in assisting us to achieve our corporate goals. We continue to explore and take 15 years 5 3 advantage of new developments in technology for the benefit 20 years 0 2 of both customers and staff. 25 years 2 2 During the past 12 months we undertook several IT projects, 30 years none so definitive as the development of the IT Strategic Plan 0 1 2005-2008. This involved a review of the current and future 35 years 0 1 strategic IT requirements to ensure alignment with corporate 45 years 0 1 strategies and objectives. The Strategic Plan recommended 26 Average years of service 11 11 initiatives to be undertaken over the next three years that are linked to the organisational business objectives and strategic The GIS has undergone a corporate review. Table 24 - Performance measures direction. Work has already begun on several of these projects, some of which have been refined by the newly We also undertook further development and enhancement of 2003-04 2004-05 created IT Steering Committee - one of the initiatives our SCADA systems during the year and the development of Lost-time injury 1 1 identified in the Strategic Plan. a Process Information Portal (PIP) is nearing completion. Medical treatment injury 9 6 With Regional Urban Water Authorities coming under ESC This will allow us to view and interrogate SCADA data (asset regulation for the first time, we have spent a lot of time and performance information) in an easy-to-use format, and Lost days 8 8 effort to ensure we have quality IT support services to provide accurate, timely, easy-to-access information, enabling Audits N/D 7 facilitate our compliance. To this end, we continued to the business to make more informed decisions. Inspections 190 38 develop our Business Management System. This is designed to have full integration of all corporate systems, and will Hazards reported 118 27 improve data integrity and business intelligence to positively Table 22 - North East Water workforce 2004-05 Notes: impact on our performance across all areas of the Profile of staff at June 30 2005 Male Female Total Lost Time Injury (LTI): Number of injuries that lost one day or organisation. Executive Management 5.0 0.0 5.0 more During the year we reviewed the corporate Geographic Medical Treatment Injury: Number of injuries that required medical Technical Services (Office) 21.0 3.0 24.0 Information System (GIS), one of our core IT support treatment Technical Services (Field) 56.0 1.0 57.0 systems. The review identified that we require a significant Lost Days: Number of days lost as a result of an LTI upgrade or replacement of our existing GIS to enable us to Business Services 2.8 9.8 12.6 Audits: Number of OHSMS audits completed Finance 2.0 4.6 6.6 Inspection: Number of OHS Workplace inspections completed further enhance the new Asset Management System currently Hazards Reported: Number of hazards that were identified through being implemented. The upgrade is also required if we are to Information Systems 3.0 3.0 6.0 various means meet the requirements of both internal and external Human Resources 1.0 1.0 2.0 N/D: No data available stakeholders. We developed a functional specification and Executive Assistant 0.0 1.0 1.0 invited several vendors to put forward proposals to supply Total* 90.8 23.4 114.2 software, training and consultancy services. We anticipate * Full time equivalent and including two trainees hosted from making a decision on the GIS early in the new financial year. group training company. Annual Report 2004-2005 North East Water 37 Our Finances & Assets

38 North East Water AnnualAnnual Report Report 2004-2005 2004-2005 Our Finances & Assets

Financial performance Australian Equivalent - International Capital expenditure We have continued to improve our financial sustainability with a Financial Reporting Standards The strong operating result this year has enabled us to continue strong trading result for 2004-05. Our operating revenue important investments in infrastructure without the need to exceeded budget by 5%, and we constrained our total expenses to The Authority has experienced several key changes as a result of raise new loans. Our $10 million of capital investments for the 3% below budget. As a result, our operating activities produced the transition from our Australian Accounting Standards to the year include: Australian Equivalents – International Financial Reporting $10 million cash flow, which has been reinvested in customer- • Renewals of Existing Infrastructure Assets: $2,252,000 serving assets, including $2.2 million worth of renewals. Standards (A-IFRS). This transition is part of the international harmonisation of financial reporting standards, which aims to • Porepunkah Sewer (total $3 million): $2,107,000 The stronger-than-forecast result has also enabled us to improve consistency in financial reporting across international • Beechworth Water Treatment Plant Upgrade: $1,995,000 significantly reduce existing loans and avoid raising new ones. jurisdictions. Avoiding large borrowings is a key component of keeping our • Wangaratta Water Treatment Plant Alum Sludge Processing: tariffs competitive. For the first time, the Authority will report in compliance with $850,000 A-IFRS when results for the financial year ended 30 June 2006 Our new three-year price path set by the ESC is a major Table 27 (Page 40) highlights our commitment to renewals and are released. In summary the main items include: advantage. It gives customers confidence in the future price of disaggregates the total investments by asset type as disclosed water while providing us with certainty in the future income • Recognition of past tax losses as an asset in the statement of cash flows. required to fund our operations (Tables 25 & 26, Page 40). • Modification to the periodic asset valuation process for our Our assets infrastructure assets Subsequent events Our current infrastructure assets have a replacement value of The estimates included in this Annual Report are our best approximately $707.9 million. We are not aware of any events that have occurred after the assessments of the significant quantitative impact of the balance date which materially affect the financial position transition to A-IFRS as at the date of preparing the 30 June 2005 To reflect the reality that our infrastructure is already disclosed at 30 June 2005. financial report. The actual effects of the transition may differ approximately half way through its service life, we write from the estimates disclosed due to: down the gross replacement value to reflect that a significant Financial Management proportion of the assets’ value has been used. • Change in facts and circumstances This lower value of approximately $411.5 million more Compliance Framework • Ongoing work being undertaken by the A-IFRS project team accurately reflects the current in-service worth of the assets in The Financial Management Compliance Framework (FMCF) their role of providing water and wastewater services to the • Potential amendments to A-IFRS and interpretations was implemented on 1 July 2003. DTF developed the region’s communities (Table 28, Page 40). framework in response to the Government’s initiative of • Emerging accepted practice in the interpretations and promoting responsible financial management in the public application of A-IFRS and UIG (Urgent Issues Group) Heritage assets sector. The framework provides a vehicle for DTF to monitor Interpretations and report on the Authority’s financial management obligations. We own two sites that are listed on the Victorian Historical Further disclosure on the impacts of the A-IFRS are provided in Buildings Register consisting of: The last 12 months has seen us make significant progress in our Note 30 of the Financial Statements on page 74 of the Annual • compliance with the requirements of the FMCF. The annual Report. The 1903 steel water tower located in Millard St, Wangaratta certification for 2004-05 rated our compliance at 100%. • The Benalla Depot complex in Riverview Rd, Benalla During the year our internal auditors Deloitte conducted an consisting of two iron water towers, blacksmith shop, independent review of the self-assessment process, offering carpenter’s shop and pump house built in the late 1800s valued suggestions and validating the result. Annual Report 2004-2005 North East Water 39 Our Finances & Assets

Table 25 – Financial Highlights Table 27 – Capital Investments Actual ($’000) Actual ($’000) 2002-03 2003-04 2004-05 2000-01 2001-02 2002-03 2003-04 2004-05 Wastewater Environmental Improvements 12,720 6,068 2,959 Total Revenue 22,946 28,234 28,551 31,532 40,407 Renewal of Wastewater Infrastructure 1,160 1,376 1,060 Total Expenses 27,283 27,119 30,803 31,185 36,368 Water Quality & Reliability Improvements 840 909 4,309 Profit / (Loss) (4,337) 1,115 (2,252) 347 4,039 Renewal of Water Infrastructure 680 893 1,192 Total Assets 342,823 342,625 344,114 340,222 424,828 Corporate & Fleet Management 620 859 795 Capital Expenditure 14,900 10,900 16,020 5,394 10,610 Total 16,020 10,105 10,315 Accumulated Borrowings 7,152 5,488 6,054 6,529 2,431 Table 28 - Value of Assets Owned by North East Water June 2005 (excluding works in progress) Table 26 – Financial Performance Indicators Assets Replacement cost ($’000)1 Written down value ($’000)2 2001-02 2002-03 2003-04 2004-05 Wastewater reticulation 228,260 140,280 Actual % Actual % Actual % Actual %Business Variance Variance 204,704 103,071 plan % No. % Water reticulation Long Term Profitability 0.5 -0.5 0.2 1.1 -0.9 2.0 -222.3 Water infrastructure 152,386 85,445 Owners 0.3 -0.7 0.1 1.1 -1.3 2.4 -180.8 Wastewater infrastructure 103,164 69,158 Long Term Financial 2.0 2.0 2.0 0.6 4.4 3.4 -86.9 Land 9,108 9,108 Viability Plant equipment and motor vehicles 8,780 3,637 Liquidity & Debt 302.0 -432.0 177 1,221 -545 1,756 324 Buildings 1,518 791 Servicing Total 707,920 411,490 Notes: 1. Replacement cost - The cost of replacing an asset, including the cost of installation with an asset in new condition, and having similar output or service potential. 2. Written-down value - The current value of an asset less accumulated depreciation calculated to reflect the already consumed service potential of the asset.

40 North East Water Annual Report 2004-2005 Industry Case Study Name: Bruck Textiles approximately half way through its first Location: Wangaratta cycle, but has already identified a number of Nature of business: Manufacture of woven fabrics for window furnishings, and savings: industrial, corporate and uniform apparel products • A review of the number of rinses Number of employees: 390 required after some dyeing processes has the potential to reduce water usage by 10 Profile megalitres per year Bruck Textiles was founded in 1946, and is now • An audit on the frequency of machine Australia’s largest manufacturer of woven fabrics. cleaning found that many machines could It is 100% Australian owned. The company’s be cleaned less often, and that work manufacturing base is located in Wangaratta, could be rescheduled to facilitate fewer where it employs almost 90% of its 390 staff. washes. This has the potential to save 3 megalitres of water per year, reduce salt The plant produces enough finished woven fabric discharges to trade waste by 10% and reduce greenhouse gas emissions by 47 tonnes per per day to cover the distance from Wangaratta to year Wodonga. Water Usage • The simple application of a tap timer on wash bays – which are used daily to clean containers and drums – has the potential to save up to 7 megalitres per year Bruck is one of North East Water’s major water consumers. The plant uses water in its dyeing, printing, coating and finishing processes. The company is also a large producer of • Improved recovery of waste heat to preheat cold trade waste, which is treated at the Wangaratta Trade Waste Treatment Plant. water is reducing greenhouse gas emissions by 750 tonnes per year Environmental Initiatives The company is also investigating the potential for Bruck adopted a new environmental policy early in 2004. The policy commits the replacing potable water with recycled wastewater, and is company to a range of initiatives to improve water, chemical and energy efficiency, and to actively looking at alternative supplies such as bore reduce waste. water. In line with its environmental policy, Bruck has recently installed new high-efficiency low Bruck’s environmental policy has been driven by the water usage jet dyeing machines. The new machines require 26% less water than the company’s commitment to reduce water usage and trade machines they replace, reducing water usage by about 20 megalitres per year. The new waste loads and recognition that environmental Top left: rolls of fabric. Top machines will also reduce salt discharges to trade waste by about 21%. Energy savings due improvement and cost savings go hand-in-hand. right: feeding the new jet dyeing to reduced hot water demand and the installation of variable speed drives will reduce machine. Above: a maze of reels. greenhouse gas emissions by about 370 tonnes of carbon dioxide per year. A key element of the environmental policy is the application of formal waste assessments Water and energy savings resulting from a strong commitment to continuous improvement. of all major production processes to identify cleaner production opportunities and reduce waste. Small teams undertake these assessments, each comprising a machine operator, along with technical and environmental staff. The waste assessment audit program is

Annual Report 2004-2005 North East Water 41 Governance

42 North East Water AnnualAnnual ReportReport 2004-20052004-2005 Governance Policies Merit & Equity North East Water is a respondent to the Public Administration We are also aware of our responsibilities with respect to Disclosures of improper conduct by the Authority or its Act 2004, which enshrines public sector values and community inclusiveness in the areas of: employees may be made to the following: employment principles in legislation. These values underpin • Culturally and linguistically diverse communities Protected Disclosure Coordinator DSE the public sector and the government, the public sector and • Women P.O Box 500, East Melbourne, Vic, 3002 the community, and between those who work in the public sector. The principles provide Victorian public sector • Youth Phone: 03 9637 8575 employers with a framework for ensuring all employment • Indigenous communities Fax: 03 9637 8128 processes are fair and merit based. We will continue to plan for and monitor against our Email: [email protected] Our behaviour and performance will always aim to promote community inclusiveness obligations. these values in the workplace while being underpinned by the The Ombudsman Victoria Victorian public sector Code of Conduct and a range of Whistleblowers policies and procedures adopted by the Authority. Level 3, 459 Collins Street, Melbourne, Vic, 3000 The Whistleblowers Protection Act 2001 came into effect on 1 A series of employee Equal Opportunity awareness and Phone: 1800 500 509 January 2002. The Act is designed to protect people who supervisor management training programs were conducted disclose information about serious wrongdoing within the Fax: 1800 500 549 throughout the year to support compliance with legislative Victorian Public Sector and to provide a framework for the Email: [email protected] and Authority Equal Opportunity requirements. investigation of these matters. Community Inclusiveness The protected disclosure coordinator for DSE acts as an agent National Competition Policy for the Authority to receive disclosures under the act and We are committed to the principles within the National We are mindful of the State Government’s Multicultural applies DSE procedures in managing disclosures. Policy and share its commitment to promoting programs and Competition Framework, and are working actively to meet strategies aimed at delivering culturally appropriate services. these obligations. The Board and management endeavours to ensure that our systems and staff are sensitive to cultural and language diversity within our customer base and community.

Annual Report 2004-2005 Annual Report 2004-2005 North East Water 43 Governance Executive & Board Organisational Structure

BoardBoard

ChiefChief Executive Executive

ChiefChief Financial Financial Officer Officer ExecutiveExecutive Manager Manager Business Business HumanHuman Resources Resources Manager Manager ExecutiveExecutive Manager Manager Technical Technical ExecutiveExecutive Manager Manager Info ServicesServices ServicesServices InformationSystems Systems

PlumbingPlumbing & & Minor Minor Tradewaste Tradewaste BusinessBusiness OperationsOperations Manager Manager ManagerManager Strategy Strategy AssetsAssets Manager Manager ServicesServices && Development Development

Treatment Distribution Operations Treatment Distribution AdministrationSystems

44 North East Water Annual Report 2004-2005 Governance

Executive Management Team

Jim Martin Don Jackson Craig Heiner John Morris Eamonn Tobin Bruce Gardiner Chief Executive Technical Finance Business Information Operations Services Services Systems

Jim Martin - Jim has been involved in the water industry for Craig Heiner - Craig has experienced a wide variety of both Eamonn Tobin - Eamonn brings 26 years of water industry more than 20 years. He has been involved at state level financial and technical roles within the organisation, and experience to North East Water. He possesses specific through the Victorian Water Industry Association (VWIA) brings a strong internal customer focus and refined economic information technology and water industry management and has served twice as president of the Institute of Water analysis skills to the position. skills, as well as local government experience and local Administration (IWA). He is the inaugural winner of the John The Financial Services group delivers financial functions, knowledge. He is past chair of the Institute of Water Robbins Award, which recognises distinguished contribution including asset management, payroll, accounts payable, Administration’s IT special Interest Group. to the institute and the Victorian water industry. taxation, budgeting, treasury, revenue control, fleet A long-term resident of north-east Victoria, Eamonn manages Jim possesses both dedicated water industry management management, risk management and statutory financial a small but dedicated Information Systems (IS) team, which skills and local knowledge. Innovative and determined, he reporting. looks after the wide-ranging areas of IT, GIS, document places great emphasis on team management and is quick to John Morris - John has been in the water industry since July control and telecommunications. The IS team is also charged appreciate the value of staff contributions in achieving the 2000, and has brought a strong background of customer with looking at new and innovative initiatives that will greater goals of the organisation. service to the organisation. continue to drive North East Water into the future. Don Jackson - Don has been involved in the water, The Business Services Unit covers the areas of: Bruce Gardiner - Bruce joined North East Water in late engineering and consulting industry for more than 30 years. • Customer service (internal and external, including 1999 after five years with the NSW Environment Protection During that time he has experienced the different perspectives community consultation) Authority in both scientific advisory and operations roles. He previously worked with Sydney Water, and in the Northern of water and reclaimed water development, and therefore • Corporate services brings a lateral view on technical issues and their implications Territory’s Office of the Supervising Scientist monitoring to North East Water. • Media and Public Relations particularly in the area of press mining impacts in Kakadu National Park. releases, educational material and regular customer updates The Technical Services workforce focuses on the development The Operations Manager is responsible for the treatment, and efficiency of the Authority’s assets and the provision of • Plumbing and Minor Trade Waste, which deals with minor distribution, environmental activities, OHS and water quality water and wastewater services to all customers within the trade waste enquiries, plumbing connections and plans. areas of North East Water. This role oversees the largest region. A major thrust in the group’s activities is providing This area of responsibility has only recently become part workforce contingent of around 70 staff. quality and quantity of products to all customers and of the Business Services group. Bruce resigned from this position in June 2005 to take up the stakeholders. In keeping with the group’s objectives, the In addition to these areas of responsibility John is also the post of General Manager at Cairns Water. development of environmental benefits and sustainability contact officer for privacy matters and the EWOV in relation remains paramount. to customer complaints.

Annual Report 2004-2005 North East Water 45 Governance

Board Members

Peter Box Barbara Murdoch Prudence Dobbin Elizabeth Parkin John Lawless (Chair) Deputy Chair

Peter Box (Chair) - Peter Box was reappointed Chairperson former Kiewa Murray Water Authority. She is also an active Elizabeth lives in Melbourne and is a trustee of the Northcote of the Board of North East Water on 1 October 2003. member of the Rutherglen-Chiltern Community Education Trust, a philanthropic organisation that helps young people An organisational development consultant, Peter is director Committee, the Red Cross, and a Board member of the further their education. She is also a director and member of and founder of his own company, which specialises in Chiltern Hospital. the Audit and Risk Committees of Port of Melbourne strategic planning for natural resource-based organisations Prudence Dobbin - Prudence Dobbin was reappointed to Corporation, Yarra Valley Water and First Samuel Ltd, a across eastern Australia. the Board of North East Water on 1 October 2003. boutique private client wealth management company. A Benalla resident, Peter is a member of the Institute for From Lima East, Prudence is a director of her own company, Elizabeth holds a Bachelor of Business (Accounting) and is a Cultural Affairs, Australia and the International Association of which consults to the fire, emergency management and natural member of the Institute of Chartered Accountants, the Facilitators. He holds a Bachelor of Education resource management industries. Her background is in staff Securities Institute of Australia and the Institute of Company (Environmental Studies) and a PhD in Geography. development within these industries. Directors. Barbara Murdoch - Barbara Murdoch was reappointed to Prudence is a past Board member of the Mt Stirling Alpine John Lawless - John Lawless was reappointed to the Board the Board of North East Water on 1 October 2003. Resort and a current Board member of the Benalla and of North East Water on 1 October 2004. A former teacher, Barbara has a Batchelor of Education and District Memorial Hospital. John has been a primary producer in the Yarrawonga district lives in Chiltern. She has been a proprietor of several small Elizabeth Parkin - Elizabeth Parkin was reappointed to the for 38 years. He has 12 years experience as a councillor in businesses across Victoria over the past 27 years. Barbara’s Board of North East Water on 1 October 2004. local government, including six years with the former Shire of Tungamah. He is a former Mayor and councillor with the active involvement with North East Water has also included Elizabeth is a director of a business advisory company. Prior membership of the Chiltern Community Consultation Shire of Moira. John also spent six years as a member of the to its establishment she was a director with KPMG former Tungamah Water Board, which has since been Committee. Prior to that she was a member of the Chiltern- Corporate Finance. Barnawartha Community Consultation Committee for the amalgamated into the North East Water district. For the past nine years John has been the director of the Yarrawonga and District Rural Co-op.

46 North East Water Annual Report 2004-2005 Governance Board Members (continued) Corporate Governance

Lin Crase Don Chambers Susan Benedyka Brian Goss The Board’s Code of Governance, which was adopted at the May 2004 Board meeting and is now reviewed annually, sets the standards and principles to assist Members in carrying out Board duties and responsibilities. Lin Crase - Lin Crase was appointed to the Don is an Indigo Shire councillor and two-time Susan has also been an active Board member of As part of improving corporate Board of North East Water on 1 October 2003. Mayor. He has also held a range of community several regional and national bodies, further governance, the Board participated Lin is a senior lecturer in economics and service positions including member of the enhancing her understanding of corporate North East CMA Water and Land Care governance and strategic planning. She is in a workshop focussing on strategic business, and Head of the School of Business at skills for Board meetings in May Advisory Committee, Chair of the North East currently a member the Council of Charles Sturt the Wodonga campus of the La Trobe 2005. The Board and Executive Victorian Waste Management Group and Chair University, a position she has held since 1996. University. His main research interests have attended a further corporate of Keep Australia Beautiful National and In addition, she is a passionate community revolved around resource management issues in governance session in June 2005. regional communities, particularly water. Victoria. He is also a Board member of member having been recently inducted as a EcoRecycle Victoria. member of the Appin Park Rotary Club. To provide a continual focus on Lin holds a Bachelors degree in Economics, improvements in governance the Susan holds several qualifications, including a several postgraduate qualifications and has Susan Benedyka - Susan Benedyka was Board conducts an evaluation at the Graduate Diploma in Business. completed his PhD examining water markets. appointed to the Board of North East Water on end of each Board meeting to note 1 October 2004 Don Chambers - Don Chambers was Brian Goss - Brian Goss was a member of the areas of improvement. This has appointed to the Board of North East Water on Susan is the founding company director and North East Water Board since its inception in proved to be a valuable task and has 1 October 2003. principal consultant of the Regional 1997. Brian’s appointment to the Board ceased improved the quality of our Board Development Company, a Wangaratta-based on 30 September 2004. meetings. A chemical engineer, Don has a vast range of consultancy company specialising in the A resident of Mt Beauty, Brian is a former The Board participates in an annual practical experience gleaned from the food strategic development of regional communities, production, supermarket and wine industries. A councillor and shire president of the Shire of performance review incorporating tourism, and local governance, as well as individual, group and Chair keen sustainability advocate, Don’s areas of Bright. He was also chairman of the former building industry and community capacity Kiewa Valley Water Authority and then a performance. expertise include maximising resource recovery within rural centres. by minimising waste. director of the former Kiewa Murray Water North East Water harnesses the Authority before being appointed to the Board benefits of good corporate of North East Water. governance through improving Board performance and addressing individual governance. This ensures the framework is effective, efficient and contributes to performance of the Authority as a whole.

Annual Report 2004-2005 North East Water 47 Governance

Throughout the year the Audit, Risk and Finance committee Members: Peter Box (Chair) Attendance at Board meetings has played an active role in implementing a number of Prue Dobbin initiatives to improve the Board’s corporate governance The Board conducted a total of 11 meetings during the 2004-05 John Lawless year (Table 29, Page 50). requirements. The provision of an internal audit function by Deloitte is overseen by the committee and incorporates The Remuneration Committee’s process for the annual Register of Interests reviews of our internal business processes. The committee assessment of Authority and Chief Executive performance has has also overseen the development of our risk management been greatly enhanced this year due to the introduction of the Board members and Executive Management fulfilled pecuniary framework and reporting mechanism. BSC reporting methodology. interest requirements of Section 95 of the Water Act 1989. Works Committee Risk Management Board Committees The Works Committee assists the Board in determining contracts that involve amounts in excess of management We continued to focus on risk management during 2004-05, An Audit, Risk and Finance Committee, Remuneration delegation and also: and updated our risk management framework. The framework Committee and Works Committee assist the Board to fulfil its • Ensures the capital works program is aligned with the documents the Authority’s risk policy and strategy for responsibilities. Each committee has a charter that clearly Authority’s strategic direction implementing and maintaining an effective risk management defines its role, procedures, functions and boundaries. program. It is based on the principles contained in the • Monitors and reviews the current year’s capital works Committee charters are reviewed annually. Australian Standard AS/NZS 4360:2004 Risk Management program Audit, Risk and Finance Committee Standard. • Ensures effective project management policies and The North East Water Board through the Audit, Risk and We have significantly refined our risk profile during the year. procedures are in place Finance Committee recognises its responsibility to ensure the We developed a tiered approach in the form of a risk tree, appropriateness of the Authority’s accountability and control Members: Prue Dobbin (Chair) which clearly outlines the differing levels within the profile, frameworks. This will be achieved through the review, John Lawless and the links between strategic and operational risks. A monitoring and, where necessary, recommendation of Don Chambers diagrammatic representation is shown on page 50. improvements to: Brian Goss (Brian was a member of the We have identified 10 key strategic risks, which are linked to • The internal control process committee until 30 September 2004) 36 organisational risks (Appendix 3, Page 81). • The financial reporting process A revision of the Works Committee charter in May 2005 has The risk management framework is overseen by the Board and • The functioning of the Authority’s internal audit function enabled the committee to expand its activities to include a monitored on a quarterly basis while the Executive Management team is responsible for reviewing and acting on • The risk management process more strategic focus on the monitoring, review and reporting of the capital works program. identified risks. Members: Elizabeth Parkin (Chair) Executive Remuneration Committee Barbara Murdoch Emergency Response The Executive Remuneration Committee advises the Board on Lin Crase remuneration policies and practices for Authority Executives Our emergency management arrangements include a 24-hour, Susan Benedyka in line with the Government Sector Executive Remuneration seven-day-a-week emergency response system. We may be Note: All members of the Committee are independent as Panel (GSERP) guidelines. The Remuneration Committee alerted to emergency situations by customers, community defined by DTF’s Financial Management Compliance also conducts the Chief Executive and Authority performance members, alarms from plant and equipment or through our Framework. review annually. paging service. We have a duty roster system that ensures

Continued page 49

48 North East Water Annual Report 2004-2005 Governance

From page 48 during six-monthly EMS surveillance audits and our external Government Grants OHSMS certification audit in October 2004. No non- staff members are available 24 hours a day to respond to North East Water received $185,000 from the North East CMA conformances were found during these audits. emergency situations should they arise. for our Water-for-Growth projects (Pages 28 & 29). The duty roster system has ten regionally based duty Compliance Information Auditors officers, an on-call electrician and a duty manager. Their Auditor General Victoria respective roles are: Freedom of Information Level 34, 140 William Street, Melbourne, 3000 • Duty officer – direct on-ground response to emergencies North East Water did not receive any requests for access to and incidents documents between 01 July 2004 and 30 June 2005. Agent: Haines Norton, Chartered Accountants GPO Box 1735P, Melbourne, 3001 • Electrician – provide or coordinate electrical support in The Authority is considered to be a ‘Government Agency’ Environmental / Systems Auditors the event of emergencies under the terms of the Freedom of Information Act 1982. SAI Global Assurances Services • Duty manager – provide back-up support to duty officer Accordingly, we are required to comply with the procedures Locked Bag 90, South Melbourne, 3205 and activate incident escalation processes through the that have been prescribed under the Act whereby members of Internal Auditor Incident Command Organisation. The Incident Command the public may gain access to information held by agencies. A Organisation is the team structure and sets out the roles decision to release information is made by either the Principal Deloitte Touche Tohmatsu and responsibilities for the three tiers of response (relating Officer or an Authorised Officer. The Authority has GPO Box 788, Melbourne, 3001 to the level of incident) determined that the Authorised Officer is Lexie Grady, Legal Advisors Business Services Manager (Phone 02 6022 0555). We revised and updated our Emergency Response Trivett Keating Management Framework in 2004-05 as a result of Building Act P.O Box 678, Wodonga, 3689 recommendations made by Marsh Pty Ltd. Our aim is to North East Water ensures that all building and maintenance works Gary Katz & Associates prevent and minimise the impact of emergencies on the undertaken by the Authority comply with the relevant sections 71A Burwood Road, Hawthorn, 3122 Authority and community. of the Building Act 1993. Clayton Utz In 2005, the Authority experienced two boil water incidents Information Privacy Act Level 18, 333 Collins Street, Melbourne, 3000 in our ‘community choice’ towns, and a temporary loss of supply incident in Wangaratta. Our improved emergency North East Water adopted a Privacy Policy consistent with the Bankers requirements of the Information Privacy Act 2000 and provided management arrangements meant we handled these incidents ANZ Bank training to staff on the requirements of the Act and the Policy. in a timely and appropriate manner. 170 High Street, Wodonga, 3690 The Policy appears on the Authority’s website and customers During the year we have also continued to participate in received a summary of the Policy. There were no complaints or Insurance Brokers Municipal Emergency Management Committee meetings and breaches of customer privacy in 2004-05. Jardine Lloyd Thomspon Australia response exercises in the seven local government areas in 1/601, Corner Olive & Wilson Street, Albury, 2640 which we operate. We participated in a multi-agency exercise Minor Consultancies on dam failure facilitated by the Indigo Shire, and ran three North East Water engaged consultants to undertake various internal emergency response simulations for Wangaratta projects with individual costs less than $100,000. The collective (sewage spill), Wodonga (fire and evacuation) and Yarrawonga cost of the 11 projects was $520,028. (water supply contamination). Major Consultancies We have also internally audited our emergency response systems, and our external EMS Auditor has reviewed them We did not engage any consultants to undertake projects exceeding $100,000 during the year. Annual Report 2004-2005 North East Water 49 Governance

Risk profile diagram Table 29 - Board members meetings attendance 2004-05 Operational risk 1 No. member was No. of meetings Organisational risk 1 Member Name eligible to attend attended 2004-05 Peter Box - Chair 11 11 Operational risk 2 Barbara Murdoch 11 10 Prudence Dobbin 11 11 Key strategic risk 1 Elizabeth Parkin 11 10 Operational risk 3 Lin Crase 11 9 Don Chambers 11 11 Organisational risk 2 John Lawless 11 11 Operational risk 4 Susan Benedyka 9 7 Brian Goss 3 2

Operational risk 5

Organisational risk 3

Operational risk 6

Key strategic risk 2

Operational risk 7

Organisational risk 4

Operational risk 8

50 North East Water Annual Report 2004-2005 Our Operations

Industry Case Study Name: Wodonga Rendering/Norvic Food Processing Environmental initiatives Location: Wodonga WR has in place both an Environmental Management Plan (EMP) and an Environmental Nature of business: Abattoir, rendering plant and skin shed Improvement Plan (EIP). Both the EMP and EIP identify four main basic strategies to further reduce trade waste from the WR site. These are: Number of employees: Up to 450 a) Reduction in water consumption Profile b) Reduction of nutrients and contaminants discharged to the Wodonga Rendering Pty Ltd (WR) is located in effluent stream Wodonga. A rendering plant and abattoir c) Treatment and removal of nutrients from the effluent stream operate at the site. d) Re-use of treated effluent Rendering Operations The EIP pinpoints a range of issues within WR’s operations that WR operates a high temperature rendering impact on the environment. As the company is a large water user, plant. It processes inedible mixed abattoir the plan contains a raft of actions to reduce water usage and improve wastewater quality, material (MAM), fat, bones and raw blood including: from abattoirs, boning rooms and butcher • Replacing old hot and cold water wash systems in the smallstock tray wash, and installing a shops from within Victoria and southern NSW Above and far right: views inside the abattoir new cold water spray system to reduce tray temperature. These measures, completed in July that do not have the facilities to process their 2005, reduce daily hot and cold water use from 360 kilolitres to 120 kilolitres own. This raw material is then processed to • produce tallow, meat meal and dried blood, which are marketed directly to domestic and export Replacing 10 millimetre copper pipes on steriliser inlets with 6 millimetre stainless steel markets by WR. pipes. This measure, to be completed in September 2005, is expected to save 90 kilolitres per day, and will reduce wastewater volumes The plant has been constructed for a processing capacity of 15 tonnes per hour - 360 tonnes • per day - on a continuous 24-hour a day, seven days a week basis. On average about 90 tonnes Upgrading the screwing system in the beef and mutton paunch room, reducing daily potable per day is sourced from the on site abattoirs operations. water use by 70 kilolitres. This projected is due for completion by November 2005 • Abattoir Operations Replacing the use of potable water with effluent water in the wastewater discharge channel, reducing daily potable water use by 50 kilolitres. This project was completed in June 2005 WR has an export-registered abattoir on the site that is sub leased to a company called Norvic Food Processing (NFP). The abattoir operates as a service works for the processing of cattle, In addition, WR and NFP have been close observers of North East Water’s endeavour to achieve sheep, deer, calves and goats. NFP sells to worldwide markets, including the United States. Class A reclaimed water at the West Wodonga Wastewater Treatment Plant. The companies see the potential to use this resource in washing down several areas, including stockyards and Water Usage condemned areas. WR uses potable water throughout the site, with the largest usage occurring in the abattoir process. The company is a large trade waste customer, but is currently investigating options to upgrade its pre-treatment process to reduce its wastewater nutrient loads. Targeted upgrades of existing assets and processes to achieve substantial water savings.

Annual Report 2004-2005 North East Water 51 Performance Report

52 North East Water Annual Report 2004-2005 Performance Report

Auditor General’s Report Certification to the Performance Statements

Annual Report 2004-2005 North East Water 53 Performance Report

Introduction Indicator definitions Our Performance Report is Financial Performance Indicator Definitions prepared pursuant to section 51 of Earnings before interest and tax and after abnormals X100 F1 Long-Term Profitability (%) the Financial Management Act 1994 Average total assets under direction from our Minister Operating profit after tax X100 the Hon. John Thwaites. F2 Owners Investment (%) Average total equity As part of the report of Interest bearing debt X100 operations, the Performance Report F3 Long Term Financial Viability (%) Total assets details actual results achieved Earnings before net interest and tax expense before abnormal expenses compared with targets for specified F4 Liquidity and Debt Servicing – Interest Cover (times) performance indicators. Where Net interest expense there is a significant variation Cash flow from operations before net interest between a business plan target and F5 Immediate Liquidity and Debt Servicing – Cash Cover (times) Net interest expense the actual performance, a variation report stating the reasons for the F6 Operating Efficiency – Water Supply / Wastewater Collection difference is included. This Performance Report consists F6.1 Water supply bulk Operations, maintenance and administration expenses per ML transported or treated of two parts: • Indicator Definitions F6.2 Water supply reticulation Operations, maintenance and administration expenses per ML transported or treated • Indicator Results (schedules 1, 2 and 3) and F6.3 Water supply treatment Operations, maintenance and administration expenses per ML transported or treated Notes on Variations F6.4 Sewerage reticulation Operations, maintenance and administration expenses per ML transported or treated

F6.5 Sewerage treatment Operations, maintenance and administration expenses per ML transported or treated

54 North East Water Annual Report 2004-2005 Performance Report

Service Delivery Performance Indicator Definitions Customer Complaints Performance Indicator Definitions Number of water quality complaints X1,000 S1 Reliability - Urban Supplies C1 Water Quality Complaints (number) Number of water customers No. properties that experienced a service interruption X100 Water Supply Reliability Number of water supply reliability complaints X 1,000 S1.1 Properties Interrupted Ratio C2 (%) Total properties receiving water Complaints (number) Number of water customers Sewerage Service Quality & No. of sewerage service quality & reliability complaints X1,000 S1.2 Interruption Time (hours) Average time taken in hours to restore an interrupted service C3 Reliability Complaints (number) Number of sewerage customers S2 Reliability of Wastewater Total no.confirmed sewage overflows X100 Affordability Complaints Number of affordability complaints X1,000 Collection Services - by C4 Kilometres of sewerage mains (number) sewerage system (number) Number of water customers S3 Quality of Wastewater Number of all other complaints X1,000 Disposal - by treatment or C5 Other Complaints (number) Number of water customers disposal S.3.1 Aggregate Annual No. individual test results meeting EPA licence conditions X100 Performance of a Treatment No. routine tests for the year or Disposal Facility (%) S3.2 Short-term/Persistent No. sets of test results meeting EPA licence conditions X100 Compliance with EPA No. sets of routine tests for the year Licence (%) Environmental Performance Indicator Definitions E1 Waste Management for Wastewater (by treatment or disposal facility) Wastewater Effluent Reused Volume of effluent reused X100 E1.1 (%) Total volume of effluent produced Wastewater Sludge Reused / Volume of sludge reused / recycled X100 E1.2 Recycled (%) Total volume of sludge produced Network Reliability Performance Indicator Definitions No. unplanned interruptions restored within 5 hours X100 R1 Restoration of Water Supply (%) Total unplanned interruptions Containment of Sewer R2 No. sewer spills (priority 1&2) contained within 5 hours X100 Spillages (%) Total sewer spillages

Annual Report 2004-2005 North East Water 55 Performance Report

Indicator results

Note Bus. Plan Actual Variance Ref. 2004-05 2004-05 % Financial Performance Indicators F1 Long Term Profitability 1 -0.9% 1.1% -222.3 F2 Owners Investment 2 -1.3% 1.1% -180.8 F3 Long Term Financial Viability 3 4.4% 0.6% -86.9 F4 Liquidity & Debt Servicing 3 -544.8% 1,221.4% 324 F5 Immediate Liquidity & Debt 3 1,086% 2,711.0% 150 Servicing - Cash Cover F6.1 Water supply bulk N/A N/A N/A F6.2 Water supply reticulation 4 $196 $212 8% F6.3 Water supply treatment 4 $245 $316 29% F6.4 Sewerage reticulation 4 $223 $246 10% F6.5 Sewerage treatment 4 $923 $757 -18% Service Delivery Performance Indicators S1.1 Properties Interrupted Ratio 5 4.0 20.5 410.6 S1.2 Interruption Time (Hours) 6 2.0 1.7 -15 Network Reliability Performance Indicators R1 Restoration of Water Supply 96 98 2 R2 Containment of Sewer Spillages 96 100 4 Customer Complaints Performance Indicators C1 Water Quality Complaints 7 12.72 1.68 -87 C2 Water Supply Reliability Complaints 7 10.18 2.38 -77 C3 Sewerage Service Quality & 7 6.35 1.02 -84 Reliability Complaints C4 Affordability Complaints 7 12.72 0.24 -98 C5 Other Complaints 7 5.09 1.97 -61 Note: A red variance indicates a negative result for the Authority A green variance indicates a positive result for the Authority 56 North East Water Annual Report 2004-2005 Performance Report

Indicator results

S2 - Reliability of S3 - Quality of Wastewater Disposal E1 - Waste management for wastewater Wastewater Collection S3.1 - Aggregate Annual S3.2 - Short Term / Persistent E1.1 - Wastewater effluent E1.2 - Wastewater sludge Services (overflows per Performance of a Treatment Compliance with EPA Licence reused reused/recycled 100km sewer main) or Disposal Facility Business Business Business Business Business Plan Actual Variance % Plan Actual Variance % Plan Actual Variance % Plan Actual Variance % Plan Actual Variance % 2004-05 2004-05 2004-05 2004-05 2004-05 2004-05 2004-05 2004-05 2004-05 2004-05

Baranduda Includedxxx in xxxWodonga xxx 100 N/A N/A 100 N/A N/A 0 0 0 0 0 0 Barnawartha 0 0 0 100 100 0 100 100 0 100 100 0 0 0 0 Beechworth 5.1 22.9 347 88 74 -16 62 44 -29 37 22 -40 0 0 0 Bellbridge 0 0 0 100 100 0 100 100 0 100 100 0 0 0 0 Benalla 0 0 0 100 73 -27 100 46 -54 55 73 33 0 0 0 Bright 0 0 0 100 91 -9 100 85 -15 15 7 -55 0 0 0 Bundalong 0 0 0 100 N/A N/A 100 N/A N/A 0 0 0 0 0 0 Chiltern 8.3 0 -100 100 100 0 100 100 0 100 100 0 0 0 0 Corryong 4.2 0 -100 100 100 0 100 100 0 100 100 0 0 0 0 Dartmouth 0 0 0 100 N/A N/A 100 N/A N/A 0 0 0 0 0 0 Mt Beauty 6.5 16.2 151 100 100 0 100 100 0 10 2 -77 0 0 0 Myrtleford 0 0 0 100 75 -25 100 50 -50 0 0 0 0 0 0 Rutherglen 0 2.1 0 100 100 0 100 100 0 100 100 0 0 0 0 Tallangatta 10.5 21.7 107 100 100 0 100 100 0 100 100 0 0 0 0 Wangaratta 1.3 2.0 49 100 100 0 100 100 0 50 37 -27 0 0 0 Wodonga 2.9 2.1 -29 100 100 0 100 100 0 8 8 0 0 102 102 Yackandandah 0 0 0 100 95 -5 100 82 -18 100 73 -27 0 0 0 Yarrawonga 0 1.4 0 100 83 -17 100 83 -17 100 100 0 0 0 0

Note: A red variance indicates a negative result for the Authority A green variance indicates a positive result for the Authority

Annual Report 2004-2005 North East Water 57 Performance Report

Indicator notes S1.2 - Interruption Time (Note 6) F1 – Long-Term Profitability (Note 1) The average interruption time has decreased compared to the Business Plan target as we are This variance has occurred due to the actual result being more favourable than forecast. The continually improving our response time, as well as efficiencies in restoring services. majority of this variance is attributed to cash and non-cash contributions received from C1, C2, C3, C4, C5 – Customer Complaints Performance Indicators (Note 7) developers being $4.6 million greater than budget and the adjustment of $3.7 million relating to The combination of setting conservative targets and improved data capture has resulted in the asset values that prior to the revaluation were not recognised. high variation from target numbers of complaints. Specifically, far fewer complaints than F2 – Owners Investment (Note 2) expected were received relating to: This variance has occurred due to the actual result being more favourable than forecast. The • The pricing reform (affordability) majority of this variance is attributed to cash and non-cash contributions received from developers being $4.6 million greater than budget and the adjustment of $3.7 million relating to • Seasonal taste, odour and colour complaints (water quality) asset values that prior to the revaluation were not recognised. S2 - Reliability of Wastewater Collection Services F3 – Long Term Financial Viability, F4 – Liquidity & Debt Servicing (Interest Covering), F5 – The total number of sewer overflows during 2004-05 was 30. Several towns, Chiltern, Immediate Liquidity & Debt Servicing (Cash Cover) (Note 3) Corryong and Wodonga, experienced fewer overflows than expected, while Beechworth, Mt This variance has occurred as a result of the Authority not requiring any additional borrowing Beauty, Tallangatta and Wangaratta experienced more. This was due to a combination of in the reporting period due to the timing delays of some major capital works items that have blockages, wet weather and contractor problems during the year. been pushed out into future years. Our sewer relining and maintenance programs will continue in 2005-06. Further details on these F6.2 – Water Supply Reticulation, F6.3 - Water Supply Treatment, F6.4 - Sewerage Reticulation, are provided on Page 22. F6.5 – Sewerage Treatment (Note 4) S3 - Quality of Wastewater Disposal The variations from budget on a unit basis are strongly influenced by water sales being 10% The only wastewater treatment plant that had a target that differed from the EPA Licence below the targets used in the Business Plan. In total, actual recurrent expenses for 2004/05 requirements was Beechworth. At this site the licence limits are stringent for the type of were below the targets set in the Business Plan. the variations as reported highlight that treatment process undertaken. Despite upgrading the plant to tertiary standard, it will continue reductions in supply volumes do not result in proportional decreases in total costs. to struggle to meet the 100% compliance for the reasons set out below. S1.1 - Properties Interrupted Ratio (Note 5) During 2004-05, non-compliances occurred at our wastewater treatment plants in Beechworth, Overall this year there were 244 interruptions to customers’ water supplies. This comprised Benalla, Bright, Myrtleford, Yackandandah and Yarrawonga. 160 (66%) unplanned and 84 (33%) planned interruptions. Beechworth The total number of properties interrupted was higher than expected due to a single water The failures at Beechworth were for pH, ammonia, phosphorus, suspended solids and supply incident in Wangaratta in April 2005. This incident was due to low stored water nitrogen. This plant is a lagoon-based system with chemically assisted sedimentation for supplies as a result of a pumping problem. Electrical modifications have been made to improve phosphorus and suspended solids removal. It has no additional sedimentation and relies on pump operation and reduce the risk of failure. natural processes to remove nitrogen. These processes are inefficient in cold weather. Hence The large variance to the Business Plan target was due to the target being based on the number ammonia and nitrogen levels are higher in the discharge water during cooler months. of unplanned interruptions only, whereas the actual results were based on the number of Two high rainfall events during the year and a tertiary plant pump failure resulted in the need planned as well as unplanned interruptions. The Performance Reporting Direction from the to discharge secondary treated wastewater to Spring Creek. This water was not tertiary treated Minister for Water states that this ratio should be based on both planned and unplanned and as a result phosphorus and suspended solids exceeded compliance limits. interruptions. Research is continuing at Beechworth into site management and treatment options to improve compliance. Continued Page 59 58 North East Water Annual Report 2004-2005 Performance Report

From Page 58 by a combination of high evaporation and irrigation demand. Large numbers of birds have also been observed inhabiting the lagoon, which can increase E.coli levels. Benalla Site management of lagoon levels and irrigation demand has been improved to avoid a The failures at Benalla were for phosphorus, ammonia and E.coli. The treatment at this site reoccurrence. There are no plans to reduce bird numbers at this site. comprises an aerated primary lagoon, and a maturation lagoon, with no chemical treatment to E1 - Waste Management for Wastewater remove phosphorus. The aeration is used mainly to treat biological oxygen demand and hence the plant relies on natural processes to reduce ammonia. The colder weather has affected the The volume of treated wastewater reused in any one year is subject to climatic influences and plant in a similar manner to Beechworth in limiting nitrogen removal. The source of the high E. irrigation practices. For example, if the irrigation season is wetter than expected, then the amount coli numbers was not identified, and all resample results came back as compliant. of reuse will be less than predicted. The plant is moving to 100% reuse during 2007-08 with a dedicated winter storage facility, Beechworth thereby eliminating any impact on receiving waters beyond that date. We are currently awaiting Wet weather during the peak of the irrigation season, in February and March, prevented us from final planning approval with three of the four permits having been issued. achieving our target. There is no onsite storage to cater for these situations hence water is discharged Bright rather than irrigated. The failures at Bright were for E.coli. The wastewater treatment at this site requires at least 30 Benalla days of exposure to sunlight to achieve adequate disinfection. Large populations of birds can In a typical year this site has a shortage of irrigation water, however during 2004-05 there was often increase E. coli levels, which is suspected as the cause for the non-compliances. extra available. The farm has been able to operate very efficiently and made effective use of this There are no plans to reduce bird numbers at this site. opportunity. Myrtleford Bright The failures at Myrtleford were for pH and ammonia. Abundant plant life in the final lagoon Similar to Beechworth, wet weather during the peak of the irrigation season, in February and has from time to time altered the pH while creating a beneficial aquatic ecosystem. This is not March, prevented us from achieving our target. considered a significant environmental issue; hence it is simply being monitored. The colder Mt Beauty weather has affected the plant in a similar manner to Beechworth in limiting nitrogen removal; Irrigation at Mount Beauty is opportunistic only with water being supplied to a tree lot when hence the failure for ammonia. needed. The wetter weather in February and March reduced the requirement for irrigation. Further improvements to the aeration at the plant will be made during 2005-06 that will Wangaratta improve nitrogen removal. Similar to Beechworth, wet weather during the peak of the irrigation season, in February and Yackandandah March reduced the demand by approximately 150 megalitres. The third party user at the site The failures at Yackandandah were for E.coli, suspended solids and biological oxygen demand. reduced his irrigation requirement by approximately 90 megalitres due to agronomic problems. This plant does not discharge to water under normal operating conditions. All available treated Yackandandah effluent is recycled through the site’s irrigation scheme. These non-compliances occurred under At Yackandandah we irrigated to maximum levels during 2004-05, however reduced inflows from an EPA Emergency Discharge Licence in Spring 2004. The need to discharge arose as a result of the town, compared to previous years prevented us from achieving the target. the plant’s inability to store all winter flows in readiness for summer irrigation. We are currently reviewing the capacity of the Winter Storage Facility and our requirements for future years, with an aim to reduce the need for future emergency discharges. Yarrawonga The failure at Yarrawonga was for E.coli. This system requires at least 30 days of exposure to sunlight to achieve adequate disinfection of the wastewater. This exposure was compromised Annual Report 2004-2005 North East Water 59 Annual Financial Statements

60 North East Water Annual Report 2004-2005 Financial Statements

Auditor General’s Report Certification to the Financial Statements

Annual Report 2004-2005 North East Water 61 Financial Statements Statement of Financial Performance Statement of Financial Position for year ended 30 June 2005 as at 30 June 2005 Note 2005 2004 Note2005 2004 $’000 $’000 $’000 $’000

Revenue from Ordinary Activities Current Assets Operating activities 2 35,456 30,644 Cash assets 6 3,135 7,239 Revenue from outside the operating activities 2 4,951 888 Receivables 7 2,278 2,746 Self generating and renewable assets 1 53 - Expenses from Ordinary Activities Inventory 1 3 - Employee benefits (7,483) (7,219) Other 8 2,600 1,976 Depreciation and amortisation expense 10 (13,412) (11,141) Total Current Assets 8,069 11,961 Borrowing costs expense 3 (358) (450) Environmental Contribution 1 (890) - Non-Current Assets 9 132 164 Other operating expenses 3 (13,658) (12,375) Receivables 10 416,627 328,097 Impairment Loss 1 (567) - Property, plant and equipment Total Non-Current Assets 416,759 328,261 Profit/(Loss) from ordinary activities before 4,039 347 TOTAL ASSETS 424,828 340,222 income tax expense Current Liabilities 11 2,859 2,875 Income tax expense relating to ordinary activities 5 - - Payables Interest bearing liabilities 12 700 753 13 798 682 Profit/(Loss) from ordinary activities after 4,039 347 Provisions 4,357 4,310 income tax expense Total Current Liabilities Non-Current Liabilities Increment on revaluation during the year 18 84,214 - Payables 14 494 235 Interest bearing liabilities 15 1,731 5,776 Total changes in equity other than those 88,253 347 Provisions 16 1,219 1,127 resulting from transactions with the Victorian Total Non-Current Liabilities 3,444 7,138 State Government as owners TOTAL LIABILITIES 7,801 11,448 The above Statement of Financial Performance should be read in conjunction with the accompanying notes. NET ASSETS 417,027 328,774

Equity 17 257,436 257,436 Contributed equity 18 161,380 77,166 Reserves 18 (1,789) (5,828) Retained profit/(loss) TOTAL EQUITY 417,027 328,774 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 62 North East Water Annual Report 2004-2005 Financial Statements Statement of Cash Flows for year ended 30 June 2005 Note 1 - Summary of Significant Accounting Policies Note 2005 2004 The financial statements are a general purpose financial report prepared in accordance with the $’000 $’000 requirements of the Financial Management Act 1994, applicable Australian Accounting Standards, and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views). Cash Flows from Operating Activities Receipts from customers 27,162 23,667 The financial statements have been prepared on an accrual basis and in accordance with the GST rebated from Government 2,094 1,794 historical cost convention, except for certain assets which, as noted, have been shown at Other revenues (Inclusive of GST) 4,224 4,752 valuation. Payments to suppliers and employees (Inclusive of GST) (23,773) (20,566) The accounting policies adopted in preparing the financial statements are consistent with those 9,707 9,647 of the previous year, except where otherwise stated. All amounts shown in the financial statements are expressed to the nearest thousand dollars. Interest received 324 190 Amounts described in text are expressed in whole dollars. Interest paid (358) (461) (a) Fixed Interest Bank Deposits Net cash inflow from operating activities 23 9,673 9,376 Fixed interest bank deposits are brought to account at cost with interest revenue recognised in Cash flows from investing activities the operating statement when it is earned. All deposits expected to be disposed of within 12 Payments for property, plant & equipment (10,315) (10,105) months of balance date are classified as current Proceeds from sale of non-current assets 636 540 assets and all others are classified as non-current assets. Fixed interest bank deposits have an Proceeds from sale of investments - - average maturity of 45 days and effective interest rates of 5.30% to 5.67%. Net cash used in investing activities (9,679) (9,565) (b) Income Recognition Revenue is brought to account when services have been provided or when a rate/tariff is levied Cash flows from financing activities or determined. Proceeds from borrowings - 1,500 Repayment of borrowings (4,098) (1,025) Water and sewerage charges are recognised as income when the services are provided. Meter Government capital contributions - 461 reading is undertaken progressively during the year. When meters have not been read at balance Net cash from / (used in) financing activities (4,098) 936 date, an estimation of the outstanding revenue is made by multiplying the number of days between the last reading and balance date by each customer’s average annual usage charge. Net movement in cash (4,104) 747 The value of all goods and services received free of charge is recognised as revenue when North East Water gains control of them. The benefits derived from these goods and services are Cash at the beginning of the financial year 7,239 6,492 recorded at their estimated cost of construction in the financial statements. Fees paid by developers to connect new developments to North East Water’s existing water Cash at the end of the financial year 6 3,135 7,239 supply and sewerage systems or for new capital works are recognised as revenue when they are received. The above Statement of Cash Flows should be read in conjunction with the accompanying notes. Grants and contributions for capital works from all sources are brought to account as received except for any grants and contributions received from the Victorian State Government which the Minister for Finance and the Minister for Water have indicated are in the nature of owners’ contributions, which are accounted for as Equity – Contributed Equity. In accounting for the sale of fixed assets, gross proceeds from the sales are included as revenue. Continued Page 64 Annual Report 2004-2005 North East Water 63 Notes to Financial Statements

From Page 63 (c) Employee Entitlements to the International Financial Reporting Standards. North East Water expects to revalue land The calculation of employee entitlements includes all relevant on-costs. and buildings on a three year cycle. Wages and Salaries, Annual Leave and Sick Leave Revaluation increments are credited to a revaluation reserve and decrements are recognised as an expense in the Statement of Financial Performance. To the extent that a revaluation Liabilities for wages and salaries and annual leave are recognised, and are measured at their decrement reverses a revaluation increment previously credited to and still included in the nominal amounts in respect of employees’ services up to balance date including on-costs. The balance of the asset revaluation reserve, the decrement is debited directly to that reserve up to nominal basis of measurement uses employee remuneration rates that are expected to be paid at the value of that prior increment. each reporting date and does not discount cash flows to their present value. Non-vesting sick leave is not expected to exceed future sick leave entitlements and, accordingly, no liability is A key benefit of the revaluation process is the opportunity the detailed site audits present for recognised in these financial statements. improving the quality of asset data including renewals forecasts. In realising the enhanced data quality, adjustments are required to recognise assets held that were not previously valued; and Long Service Leave conversely derecognise assets previously valued that are no longer controlled by North East A liability for long service leave is recognised and is measured as the expected value of future Water. Revenue of $3,703,358 (see Note 2) represents the assets recognised and expenditure of payments to be made in respect of services provided by employees up to the reporting date $293,963 (see Note 3) represents assets derecognised. including on-costs. Consideration is given to expected future wage and salary levels, experience In accordance with the requirements of Australian Accounting Standard AAS 10: Recoverable of employee departures and periods of service. The amount expected to be paid in the next 12 amount of Non-current Assets, North East Water applies the recoverable amount test in months is accounted for as a current liability. determining the value of the assets to ensure that the values are fully recoverable through the Superannuation net cash flows expected to arise through the continued use and subsequent disposal of the The purpose of a superannuation scheme is to accumulate assets to meet members’ benefits as assets. Where the carrying value of an asset is greater than its recoverable amount the asset is they accrue. North East Water contributes in respect of its employees to two defined benefits revalued to its recoverable amount. No discount factor was used in applying the recoverable superannuation schemes administered by the Government Superannuation Office and the Local amount test. Authorities Superannuation Board. The amounts of these contributions are determined by In relation to intangible assets (bulk water entitlements) we are required to consider impairment each scheme’s actuary in accordance with statutory requirements. indicators in ensuring the fair value of the assets remains above their carrying value. This North East Water also contributes to a number of accumulation superannuation funds in assessment was performed in recognition of the state government’s active commitment to respect to certain employees. increasing environmental flows, with high priorities on the Murray and Snowy rivers. The North East Water contributions to these schemes are recorded as a superannuation expense (see conclusion reached was if North East Water held water entitlements beyond those reasonably Note 28). required to service our communities they would be attributed to the government’s environmental commitments rather than disposed at any prevailing market rate. The (d) Acquisitions of Assets application of this assessment results in the purchases of entitlement in the current year, Non-current assets include land, buildings, infrastructure, heritage assets, plant, equipment and required to service growth in customer numbers, of $567,465 being impaired to a fair value of motor vehicles. Items with a useful life to North East Water of more than one year are zero at 30 June 2005. capitalised. All other assets acquired are expensed. Non-current assets are brought to account Under the transitional provisions of AASB1041, Plant and Equipment was recorded at deemed at acquisition cost or in the case of assets acquired at no cost, at a fair value determined by cost, effective 30 June 2002. North East Water in conjunction with the grantor, at the date they are acquired. Maunsell Australia Pty Ltd conducted the 1 July 2004 revaluation. The principle consultant (e) Valuation of Non-current Assets for Maunsell was Mr. Russell Smith BE (Hons) MIEAust (Civil) CPEng. With the exception of plant, equipment and motor vehicles, non-current assets are revalued on The process adopted the fair value methodology which considers: the fair value basis of valuation under the transitional provisions of AASB1041. These non- current assets were valued under this principle effective 1 July 2004. This revaluation will be Market values where an active and liquid market exists i.e. land and buildings. used as the ‘deemed cost’ values under the transitional provisions of the Australian equivalents Continued Page 65 64 North East Water Annual Report 2004-2005 Notes to Financial Statements

From Page 64 In the absence of quoted market prices is there available market evidence for similar assets that Self generating and renewable assets comprise of livestock and unharvested crops held for sale would represent a fair value. at 30 June 2005. These assets are valued at fair value. Where no market exists for the assets the replacement cost of the asset’s remaining future (j) Other Current Assets economic benefits is considered the best indicator of fair value i.e. infrastructure assets. An accrual is raised for rates/tariffs earned but not billed at balance date. Interest earned on (f) Depreciation of Non-Current Assets investments but not received as at balance date is accrued. Depreciation is calculated on a straight line basis to write off the cost or revalued amount of (k) Creditors and Accruals each non-current asset item (excluding land) over its expected useful life to North East Water. Creditors and accruals are recognised for future amounts to be paid in respect of goods and Additions to non-current assets in the financial year are depreciated from their respective dates services received as at year end. of acquisition. Works in progress are not depreciated until taken up as a non-current asset. Settlement of creditors is normally effected within a 30 day term. These represent assets under construction but not yet commissioned. (l) Bank Loans Estimates of remaining useful lives of all non-current asset items are made on a regular basis with an annual review of all major non-current assets. Bank Loans are carried at their principal amounts. Interest is charged as an expense as it accrues. Depreciation rates currently applied to each class of asset are as follows: Interest rates on loans range from 5.11% to 6.40% and payments are predominantly quarterly. Buildings 1 – 4% Loan payments are either principal and interest or interest only. Infrastructure (m) State Government Dividend - Water 1 – 10% The Treasurer of Victoria has determined that in relation to the year ended 30 June 2004 no - Wastewater 1 – 10% dividend is payable by North East Water. This determination has been made under the Public Reticulation Authorities (Dividends) Act 1983. The dividend calculation is based on a prescribed percentage - Water 1.25 – 2.5% of the previous financial year’s reported profit adjusted in accordance with the - Wastewater 1.25 – 2.5% recommendations of the Water Sector Dividends Policy Implementation Report issued on 30 June 1998 to the Minister for Agriculture and Resources and the Treasurer of Victoria. Plant, Equipment 10 – 20% It is anticipated that no dividend will be payable in respect to the year ended 30 June 2005. & Motor Vehicles (n) Reserves (g) Cash Assets The asset revaluation reserve disclosed in the financial statements represents the net value of For purposes of the statement of cash flows, cash includes deposits at call which are readily revaluations conducted since the formation of North East Water. Revaluation decrements are convertible to cash on hand and are subject to an insignificant risk of changes in value, net of recognised immediately as expenses in the Statement of Financial Performance, except that, to outstanding bank overdrafts. the extent that a credit balance exists in the asset revaluation reserve in respect of the same (h) Receivables class of assets, they are debited directly to the asset revaluation reserve. Debtors are carried at the nominal amounts due less any provision for doubtful debts. A (o) Taxation doubtful debts provision is made for any amounts which are considered unlikely to be From 1 July 2002, North East Water has been subject to a National Tax Equivalent Regime. collectable. As North East Water is forecasting a sustained period of both tax and accounting losses no Credit is allowed for a 28 day term. future income tax benefit is disclosed in these financial statements prepared in accordance with (i) Inventory and Self Generating and Renewable Assets Australian Accounting Standards. Refer to note 30 for disclosure of expected changes to this Inventories comprise of farming produce held for sale at 30 June 2005. All inventories are treatment under Australian equivalents to the International Financial Reporting Standards. valued at the lower of cost and net realisable value. Continued Page 66 Annual Report 2004-2005 North East Water 65 Notes to Financial Statements

From Page 65 (p) Environmental Contributions Note 3 - Expenses from Ordinary Activities The Water Industry (Environmental Contributions) Act 2004 amended the Water Industry Act Profit / (Loss) from ordinary activities includes the following specific expenses: 1994 to make provision for environmental contributions to be paid by water supply authorities. 2005 2004 The Act establishes an obligation for authorities to pay into the consolidated fund annual $’000 $’000 contributions for the first period, from 1 October 2004 to 30 June 2008 in accordance with the Expenses pre-established schedule of payments, which sets out the amounts payable by each authority. Borrowing costs - Interest and finance charges paid/payable 358 450 The purpose for the environmental contribution is set out in the Act, and the funding may be used for the purpose of funding initiatives that seek to promote the sustainable management of Other expenses water or address adverse water-related initiatives. Direct costs 8,624 7,947 Administration 3,918 3,542 The environmental contribution paid is disclosed separately within the expenses on the Asset Derecognition 294 - Statement of Financial Performance. Carrying value of non-current assets sold / disposed 822 886 13,658 12,375 Note 2 - Revenue 2005 2004 Note 4 - Reconciliation of Net Loss from Sale of Non-Current Assets $’000 $’000 Revenue from operating activities Gross proceeds from sale of non-current assets 636 540 Water volume 8,635 7,972 Less - Carrying value of non-current assets sold 505 453 Water service fees 5,039 4,630 - Carrying value of non-current assets disposed 317 433 Wastewater volume 2,253 1,987 Net loss on disposal - Property, plant and equipment (186) (346) Wastewater service fees 9,124 8,083 Tradewaste charges 1,902 1,437 Note 5 - National Equivalent Income Tax Licences and fees 719 643 The prima facie income tax expense on pre-tax accounting profit reconciles to the income tax Contributions - Government Grants 185 - expense in the accounts as follows : Developer Contributions - Cash 3,067 3,350 Developer Asset Contributions - Non cash 4,532 2,542 Profit/(Loss) before income tax 4,039 347 Total Operating Revenue 35,456 30,644 Income tax calculated @ 30% 1,212 104 Permanent differences : Revenue from outside the operating activities Non-deductible depreciation 24 24 Proceeds from sale of non-current assets 636 540 Non-deductible expenses - (3) Interest Income 322 192 1,236 125 Asset Recognition 3,703 - Future income tax benefit relating to losses not recognised - - Other 290 156 Recoupment of prior tax losses - Not previously recognised as FITB (1,236) (125) Total Non Operating Revenue 4,951 888 Income tax attributable to profit before income tax 0 0 Total Revenue from ordinary activities 40,407 31,532 Continued Page 67 66 North East Water Annual Report 2004-2005 Notes to Financial Statements

From Page 66 Forecasting of North East Water’s financial position indicates that the potential for a tax liability to actually become payable is not likely to occur for a significant number of years. Accordingly Note 8 - Current Assets - Other Assets the virtually certain criteria of AASB1020 (7) for the bringing to account of future income tax 2005 2004 benefits as an asset has not been satisfied. $’000 $’000 North East Water will continue to monitor the likelihood of recouping the tax benefit from losses, Accrued income 2,600 1,976 and modify its disclosure by reference to the following criteria: 2,600 1,976 • North East Water expects to derive future assessable income of a nature and amount sufficient Note 9 - Non-Current Assets - Receivables to enable the benefit from the deduction for the loss to be realised; Other debtors 132 164 • North East Water continues to comply with the conditions for deductibility imposed by tax 132 164 legislation; and

• No changes in tax legislation adversely affect North East Water in realising the benefit from the Note 10 - Non-Current Assets - Property, Plant and Equipment deductions for the loss. Land At valuation 01/07/00 - 8,897 Note 6 - Current Assets - Cash Assets At valuation 01/07/04 8,940 - 2005 2004 At cost subsequent to valuation 168 1,480 9,108 10,377 $’000 $’000 Buildings At valuation 01/07/00 - 1,876 Cash at bank and on hand 135 739 At valuation 01/07/04 1,518 - 3,000 6,500 Term deposits At cost subsequent to valuation - 33 3,135 7,239 Accumulated Depreciation (727) (946) 791 963 The above figures are reconciled to cash at the end of the financial year as shown in the Water Infrastructure statement of cash flows as follows: At valuation 01/07/00 - 114,212 Balances as above 3,135 7,239 At valuation 01/07/04 147,850 - Less: Term deposits not readily convertible to cash - - At cost subsequent to valuation 4,536 10,559 Accumulated Depreciation (66,941) (55,700) Balances per statement of cash flows 3,135 7,239 85,445 69,071 Water Reticulation Note 7 - Current Assets - Receivables At valuation 01/07/00 - 136,693 Trade debtors 1,907 2,547 At valuation 01/07/04 201,936 - Less : Provision for doubtful debts (73) (73) At cost subsequent to valuation 2,768 6,940 1,834 2,474 Accumulated Depreciation (101,633) (70,282) Other debtors 444 272 103,071 73,351 2,278 2,746 Continued Page 68 Annual Report 2004-2005 North East Water 67 Notes to Financial Statements

Note 10 - Non-Current Assets - Property, Plant and Equipment (continued) From Page 67 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Wastewater Infrastructure Work in Progress 5,137 2,820 At valuation 01/07/00 - 55,644 At valuation 01/07/04 102,130 - Gross Total 416,627 328,097 At cost subsequent to valuation 1,034 37,787 Accumulated Depreciation (34,006) (23,504) 69,158 69,927 Wastewater Reticulation At valuation 01/07/00 - 194,275 At valuation 01/07/04 225,176 - At cost subsequent to valuation 3,084 11,803 Accumulated Depreciation (87,980) (108,217) 140,280 97,861 Plant Equipment and Motor Vehicles At deemed cost 1,714 1,845 Contributed Assets At cost 7,066 6,683 Accumulated Depreciation (5,143) (4,801) Physical asset contributions made to North East Water by private developers of $4,532,000 3,637 3,727 are disclosed below. In certain circumstances North East Water contributes to these works to meet additional capacity requirements. These North East Water contributions are disclosed as Reconciliations additions for water and wastewater reticulation. Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below.

Carrying amount Asset Asset Asset Contributed Carrying amount at 1 July 2004 Revaluation Recognition Derecognition Additions Disposals Transfers Assets Depreciation at 30 June 2005 Increments Land 10,377 (1,480) 64 (21) - - 168 - - 9,108 Buildings 963 (145) ------(26) 791 Water Infrastructure 69,071 15,015 17 (76) - (71) 4,247 289 (3,048) 85,445 Water Reticulation 73,351 28,517 2,191 (41) 7 (96) 1,082 1,679 (3,618) 103,071 Wastewater Infrastructure 69,927 983 34 (48) - (24) 1,042 - (2,756) 69,158 Wastewater Reticulation 97,861 41,324 1,397 (108) 21 (127) 499 2,564 (3,151) 140,280 Plant Equipment & Motor Vehicles 3,727 - - - - (504) 1,227 - (813) 3,637 Work in Progress 2,820 - - - 10,582 - (8,265) - - 5,137 328,097 84,214 3,703 (294) 10,610 (822) - 4,532 (13,412) 416,627

68 North East Water Annual Report 2004-2005 Notes to Financial Statements

Note 11 - Current Liabilities - Payables Note 16 - Non-Current Liabilities - Provisions 2005 2004 2005 2004 $’000 $’000 $’000 $’000 Trade Creditors 1,893 1,108 Non-current Employee Benefits Accruals 675 1,436 - Long Service Leave 1,219 1,127 Deposits and Retentions 291 331 1,219 1,127 2,859 2,875 The current employee benefit provisions reflect 107.4 (108.2 for 2004) fulltime equivalent Note 12 - Current Liabilities - Interest Bearing Liabilities employees at the reporting date. Bank Loans 700 753 Note 17 - Contributed Equity - Government 700 753 Opening Balance - 1 July 2004 257,436 256,975 Note 13 - Current Liabilities - Provisions Grant Monies Received - 461 Closing Balance - 30 June 2005 257,436 257,436 Current Employee Benefits - Annual Leave 670 600 - Long Service Leave 128 82 Note 18 - Reserves And Retained Profits/(Losses) 798 682 (a) - Asset Revaluation Reserve The current employee benefit provisions reflect 107.4 (108.2 for 2004) fulltime equivalent Balance at the beginning of the financial year 77,166 77,166 employees at the reporting date. Increment on revaluation during the year 84,214 - Balance at the end of the financial year 161,380 77,166 Note 14 - Non-Current Liabilities - Payables Deposits and Retentions 494 235 (b) - Retained Profits/(Losses) 494 235 Retained profit/(loss) at the beginning of the financial year (5,828) (6,175) Net profit/(loss) 4,039 347 Note 15 - Non-Current Liabilities - Interest Bearing Liabilities Retained profit/(loss) at the end of the financial year (1,789) (5,828) Bank Loans 1,731 5,776 1,731 5,776

In May 2005 North East Water completed an early redemption of a Bendigo Bank loan with a principle amount of $3,345,000. No penalty charges were incurred on this transaction. Bank Loans are secured against the revenue earning capacity of North East Water.

Annual Report 2004-2005 North East Water 69 Notes to Financial Statements

Note 19 - Fiancial Instruments 2005 Note 19(a) - Interest Rate Risk Fixed Interest maturing in: Financial Instruments Floating 1 year or Over 1 More Non- Total Carrying Weighted North East Water’s exposure to interest less to 5 than 5 interest Amount per Average interest rate risks and the $’000 $’000 years years bearing Statement of Effective effective interest rates of financial $’000 $’000 $’000 Financial Interest Position Rate assets and financial liabilities, $’000 % both recognised and unrecognised (i) Financial Assets at the balance date, are as follows: Cash 135 135 3.70 Receivables – Debtors 19 2,391 2,410 4.50 Receivables – Other 2,600 2,600 - Fixed Interest bearing 3,000 3,000 5.59 Deposits (ii) Financial liabilities Loans 700 1,681 50 2,431 5.52 Creditors and Accruals 3,353 3,353 - 2004 Fixed Interest maturing in: Financial Instruments Floating 1 year or Over 1 More Non- Total Carrying Weighted interest less to 5 than 5 interest Amount per Average $’000 $’000 years years bearing Statement of Effective $’000 $’000 $’000 Financial Interest Position Rate $’000 % (i) Financial Assets Cash 739 739 3.71 Receivables – Debtors 30 19 2,862 2,911 4.50 Receivables – Other 1,976 1,976 - Fixed Interest bearing 6,500 6,500 5.29 Deposits (ii) Financial liabilities Loans 753 5,676 100 6,529 6.59 Creditors and Accruals 3,110 3,110 - 70 North East Water Annual Report 2004-2005 Notes to Financial Statements

Note 19 (b) - Net Fair Values Financial Liabilities carried at amounts below their net fair values: The aggregate net fair values of financial assets and financial liabilities, both recognised and The carrying values of bank loans are brought to account at below their respective fair values. unrecognised at the balance date, are as follows: North East Water intends to repay these loans in accordance with their maturities and, having assessed the immaterial variance between the carrying amount and the fair value we have continued Carrying Net Fair Carrying Net Fair to account for the liabilities at their carrying value. Amount Value Amount Value Note 19 (c) - Credit Risk Exposure 2005 2005 2004 2004 North East Water’s maximum exposure to credit risk at balance date for each class of recognised $000 $000 $000 $000 financial assets is the carrying amount of those assets as disclosed in the statement of financial position. (i) Financial Assets Cash 135 135 739 739 Note 20 - Retail Operations Receivables – Debtors 2,410 2,410 2,911 2,911 Receivables – Other 2,600 2,600 1,976 1,976 Water Wastewater Total Fixed Interest bearing Deposits 3,000 3,000 6,500 6,500 Total Financial Assets 8,145 8,145 12,126 12,126 2005 2004 2005 2004 2005 2004 (ii) Financial Liabilities $’000 $’000 $’000 $’000 $’000 $’000 Bank Loans 2,431 2,453 6,529 6,719 Creditors and Accruals 3,353 3,353 3,110 3,110 Operating Revenue: Total Financial Liabilities 5,806 9,639 5,784 9,829 Service and usage charges 13,674 12,602 13,279 11,507 26,953 24,109 Other 5,998 3,036 6,056 3,378 12,054 6,414 Total Segment Revenue 19,672 15,638 19,335 14,885 39,007 30,523

Recognised Financial Instruments Unallocated revenues 1,400 1,009 Cash, Cash Equivalents and Short-term Investments Total Revenue 40,407 31,532 These financial instruments have a short-term to maturity, accordingly, it is considered that Expenses: carrying amounts reflect fair values. Supplies and consumables 4,176 3,156 5,564 3,573 9,740 6,729 Receivables and Creditors & Accruals Direct employee costs Carrying amounts reflect fair values. and depreciation 9,496 8,514 7,257 8,157 16,753 16,671 Short Term Borrowings Total Segment Expenses 13,672 11,670 12,821 11,730 26,493 23,400 Carrying amounts reflect fair values Unallocated retail expenses 9,875 7,785 Long Term Borrowings Total Expenses 36,368 31,185 The fair value of these borrowings is estimated using discounted cash flow analysis, based on current incremental borrowing rates for similar types of borrowing arrangements. The Operating Profit/(Loss) from Retail Operations 4,039 347 borrowings will be repaid in accordance with the agreed terms. Continued Page 72 Annual Report 2004-2005 North East Water 71 Notes to Financial Statements

From Page 71 Unallocated revenues represents revenue from investment interest, grant monies, hire charges, Note 24 - Commitments for Expenditure certificate fees and gross proceeds from the sale of mobile and motor vehicle assets not routinely allocated between the water and wastewater operations. Capital Commitments Unallocated retail expenses represents administrative labour and overheads, and borrowing expenses Commitments for the acquisition of plant and equipment contracted for at the reporting date but not routinely allocated between the water and wastewater operations. Likewise assets, other than fixed assets, and liabilities are not allocated between the segments. not recognised as liabilities, payable: 2005 2004 Note 21 - Wholesale Operations $’000 $’000 The Authority has no material wholesale operations. - Within one year 2,547 6,344 Note 22 - Contingent Liabilities - Later than one year but not later than five years - - The Authority has no known contingent liabilities. - Later than five years - - 2,547 6,344 Note 23 - Cash Flow Statement Reconciliation of net cash provided by operating activities to operating surplus Lease Commitments Commitments in relation to leases contracted for at the reporting date but not recognised as 2005 2004 liabilities, payable: $’000 $’000 - Within one year 164 109 Operating Result 4,039 347 - Later than one year but not later than five years - - - - Non cash items: - Later than five years 164 109 Depreciation and amortisation 13,412 11,141 Net (profit)/loss on sale of non-current assets 186 346 Note 25 - Related Parties Non cash contributed assets (4,532) (2,542) The names of persons who were Responsible Persons at anytime during the financial year were: Recognition/derecognition of assets (3,409) - Change in operating assets and liabilities: Minister: Honourable J. Thwaites Decrease (increase) in receivables/other (179) (51) Increase (decrease) in creditors (52) (17) Members: Dr P. Box Miss E. Parkin Mr B. Goss Dr L. Crase Increase (decrease) in other provisions 208 152 Mrs B. Murdoch Mr D. Chambers Net cash from operating activities 9,673 9,376 Ms P. Dobbin Ms S, Benedyka Mr J. Lawless

Chief Executive: Mr J. Martin As the Chief Executive is not a member of the governing body his remuneration forms part of the Executive Officers Remuneration. 72 North East Water Annual Report 2004-2005 Notes to Financial Statements

Note 26 - Remuneration of Responsible Persons Note 27 - Remuneration of Executives Income received, or due and receivable by responsible persons of North East Water. The number of executive officers, other than Responsible Persons, whose total remuneration falls within the specified bands above $100,000 are as follows: 2005 2004 $’000 $’000 Band 2005 2004 $’000 No. No. Remuneration 157 155 100 – 110 - 1 157 155 110 – 120 1 - The number of Responsible Persons whose remuneration from North East Water was within the 120 – 130 1 1 specified bands is as follows: 130 – 140 1 1 Band 2005 2004 140 – 150 - - $’000 No. No. 150 – 160 - - 0 – 10 1 2 160 – 170 - 1 7 10 – 20 7 170 – 180 1 - - 20 – 30 - - Total remuneration for the reporting period of executive officers included above amounted to: 30 – 40 - 1 40 – 50 1 2005 2004 $’000 $’000 The relevant Minister’s remuneration is reported separately in the financial statements of the Department of Premier and Cabinet. Remuneration 553 541 During the financial year ended 30 June 2005, the following related party transactions 553 541 occurred: • Ms S. Benedyka is a Director of The Regional Development Company. North East Water Note 28 (a) - Superannuation had a contract at commercial rates with The Regional Development Company to facilitate North East Water contributes in respect of its employees, to the following superannuation schemes: the Yackandandah Community Consultative Committee to the value of $8,910. • Miss E. Parkin was an employee of KPMG and is now a consultant to KPMG. North East • Vision Super Defined Benefits Superannuation Scheme Water had a contract at commercial rates with KPMG for risk management consulting to the value of $15,995. • Vision Super Accumulation Superannuation Scheme There were no other transactions between North East Water and responsible persons and their Government Superannuation Office Revised Scheme related parties during the financial year. • • Other various schemes

Continued Page 74 Annual Report 2004-2005 North East Water 73 Notes to Financial Statements

From Page 73 Contribution details are shown in the following table: Note 30 - Impact of Adopting Australian Equivalents to International Financial Type of Rate 2005 Rate 2004 Reporting Standards scheme % $’000 % $’000 Following the adoption of Australian equivalents to International Financial Reporting Standards Government Superannuation Office, (AIFRS), North East Water will report for the first time in compliance with AIFRS when Revised Scheme Defined Benefits 15.50 13 15.50 12 results for the financial year ended 30 June 2006 are released. North East Water operates to deliver the objectives of government within a triple bottom line Vision Super Defined Benefits 9.25 285 9.25 278 framework. In achieving these environmental and social outcomes our activities are inconsistent Vision Super Accumulation 280 261 9.00 9.00 with profit generation as the primary objective. In acknowledgement of this there are Other various Accumulation 51 33 requirements under A-IFRS that apply specifically to not-for-profit entities that are not consistent with IFRS requirements. Consequently, where appropriate, North East Water Total contributions to all Funds 629 584 applies those paragraphs in A-IFRS applicable to not-for-profit entities. An A-IFRS compliant financial report will comprise a new statement of changes in equity in As at balance date there were no outstanding contributions payable to the above funds and no addition to the three existing financial statements, which will all be renamed. The Statement of balances repayable in respect of loans made to the Authority from any fund. Financial Performance will be renamed as the Operating Statement, the Statement of Financial Position will revert to its previous title as the Balance Sheet and the Statement of Cash Flows Note 28 (b) - Unfunded Superannuation Liabilities will be simplified as the Cash Flow Statement. Government Superannuation Office With certain exceptions, an entity that has adopted AIFRS must record transactions that are reported in the financial report as though A-IFRS had always applied. This requirement also The unfunded liability in respect of employees who are members of schemes administered by extends to any comparative information included within the financial report. Most accounting the Government Superannuation Office as at 30 June 2005 is $363,000. The State policy adjustments to apply AIFRS retrospectively will be made against accumulated funds at Government has assumed this liability. the 1 July 2004 opening balance sheet date for the comparative period. The exceptions include Local Authorities Superannuation Schemes deferral until 1 July 2005 of the application and adjustments for: • AASB 132 Financial Instruments: Disclosure and Presentation As at 30 June 2003 North East Water had discharged its liability for its share of the unfunded superannuation liabilities of the Vision Super Schemes. North East Water has been informed • AASB 139 Financial Instruments: Recognition and Measurement that as at 30 June 2005 these schemes remain fully funded and accordingly North East Water • AASB 4 Insurance Contracts has no liability in respect of these schemes. • AASB 1023 General Insurance Contracts (revised July 2004), and Note 29 - Remuneration of Auditors • AASB 1038 Life Insurance Contracts (revised July 2004) 2005 2004 The comparative information for transactions affected by these standards will be accounted for $’000 $’000 in accordance with existing accounting standards. Financial Statements Audit 37 32 North East Water has taken the following steps in managing the transition to A-IFRS and has 37 32 achieved the following scheduled milestones:

Continued Page 75 74 North East Water Annual Report 2004-2005 Notes to Financial Statements

From Page 74 • Engaged the Audit, Risk and Finance Committee to oversee the transition to and Reconciliation of net result as presented under Australian GAAP and that under AIFRS implementation of the A-IFRS Note Year ended • Established an A-IFRS project team to review the new accounting standards to identify key 30 June issues and the likely impacts resulting from the adoption of A-IFRS and any relevant Financial Reporting Directions as issued by the Minister for Finance 2005 ($’000) • Participated in an education and training process for stakeholders to raise awareness of the changes in reporting requirements and the processes to be undertaken Net result as reported under Australian GAAP 4,039 • Initiated reconfiguration and testing of user systems and processes to meet new Estimated A-IFRS impact on revenue - requirements Estimated A-IFRS impact on expenses This financial report has been prepared in accordance with current Australian accounting Income tax expense 1 (1,268) standards and other financial reporting requirements (Australian GAAP). A number of Employee benefits 2 (30) differences between Australian GAAP and A-IFRS have been identified as potentially having a material impact on North East Water’s financial position and financial performance following Net result under A-IFRS 2,741 the adoption of A-IFRS. The following tables outline the estimated significant impacts on the Reconciliation of total assets and total liabilities as presented under Australian GAAP and that under A-IFRS financial position of North East Water as at 30 June 2005 and the likely impact on the current year result had the financial statements been prepared using A-IFRS. Total assets under Australian GAAP 424,828 Estimated A-IFRS impact on assets The estimates disclosed below are North East Water’s best estimates of the significant Deferred tax asset 14,792 quantitative impact of the changes as at the date of preparing the 30 June 2005 financial report. 1 The actual effects of transition to A-IFRS may differ from the estimates disclosed due to: Total assets under A-IFRS 439,620 • Change in facts and circumstances Total liabilities under Australian GAAP 7,801 • Ongoing work being undertaken by the A-IFRS project team Estimated A-IFRS impact on liabilities • Potential amendments to A-IFRS and Interpretations, and Provisions (30) Deferred tax liability 2 43,124 • Emerging accepted practice in the interpretation and application of A-IFRS and UIG 1 Interpretations Total liabilities under A-IFRS 50,895

Reconciliation of total equity as presented under Australian GAAP and that under A-IFRS Total equity under Australian GAAP 417,027 Estimated A-IFRS impact on equity Reserves 3 (161,380) Retained earning 3 133,078

Total equity under A-IFRS 388,725

Annual Report 2004-2005 North East Water 75 Notes to Financial Statements

Explanatory Notes 1. Income Taxes – AASB 112 The new standard requires North East Water to recognise deferred tax assets and liabilities on the Statement of Financial Position as well as income tax expense on the Statement of Financial Performance. This methodology contrasts significantly to the current standard. The impact of this change in accounting policy will result in the booking of deferred tax assets of $14,792,000, deferred tax liabilities of $43,124,000 and income tax expense of $1,268,000. 2. Employee Benefits – AASB 119 On adoption of A-IFRS, a distinction is made between short-term and long-term employee benefits and AASB 119 Employee Benefits requires liabilities for short-term employee benefits to be measured at nominal amounts and liabilities for long-term employee benefits to be measured at present value. AASB 119 defines short-term employee benefits as those that fall due wholly within 12 months after the end of the period in which the employees render the related service. Therefore, liabilities for employee benefits such as wages and salaries, annual leave and sick leave are required to be measured at present value where they are not expected to be settled within 12 months of the reporting date. The effect of the above requirement on North East Water’s Statement of Financial Position as at 30 June 2005 will be an estimated decrease in employee benefits liability of $30,000. Accordingly, employee benefits expense in the Statement of Financial Performance is expected to decrease by $30,000. North East Water is not required to comply with the requirements of AASB 119 in recognising an obligation to a defined benefits fund. Vision Super is not able to identify each employer’s share of the underlying financial position of the fund with any sufficient reliability. 3. Property, Plant and Equipment – AASB 116 North East Water revalued its infrastructure assets effective 1 July 2004 and accordingly under the transitional provisions these values will form the basis of deemed cost. All remaining assets not subject to a revaluation will have their existing values recorded as deemed cost. This transitional requirement will have a nil impact on the Statement of Financial Performance, it will result in the clearing of $161,380,000 from reserves to retained earnings on the Statement of Financial Position. 76 North East Water Annual Report 2004-2005 Disclosure Index

The 2004-05 Annual Report of FRD Disclosure Page North East Water is prepared in 22 Manner of establishment and the relevant Minister 6 accordance with all relevant 22 Objectives, function, powers and duties 6,7,9-14 Victorian legislation. This index 22 Nature and range of services provided 6 has been prepared to facilitate 22 Organisational structure, names and functions areas of responsibility of senior officers 44,45 identification of the Authorities’ 22 Names of Board members (major committees) 46-48 compliance with statutory 22 Statement of workforce data for current and previous financial year 35,37 requirements. 22 Merit and equity 43 Reports and general information 15 Executive officer disclosures 73 related to the Authority are 22 5 year summary of the financial results 40 available for inspection at our 22 Significant changes in financial position during the year 39 Wodonga office. Any person 22 Objectives and performance against objectives 9-14 seeking access to a particular 22 Major changes or factors affecting performance 3,4,39 document produced by the 22 Subsequent events which will affect operations in future years 39 Authority should write to North 22 Details of consultancies >$100,000 49 East Water, describing in as much 22 Details of consultancies – total No. and cost <$100,000 49 detail as possible, the nature of the 12 Disclosure of major contracts N/A document required. 22 Application and operation of FOI Act 1982 49 22 Application and operation of the Whistleblowers Protection Act 2001 43 22 Compliance with building and maintenance provisions of the Building Act 1993 49 22 Statement on National Competition Policy 43 22 OHS 35,36 10 Disclosure Index 77 22 Statement of availability of other information 77

Annual Report 2004-2005 North East Water 77 Glossary Accounted for water The volume of water whose ultimate use is known IWA Institute of Water Administration A-IFRS Australian Equivalent International Financial Reporting Standards kL Kilolitre – 1,000 litres AS/NZ 4360:2004 Australian Standard for Risk Management KPI Key Performance Indicator AS/NZ 4801:2001 Australian Standard for Occupational Health and Safety Management Systems KRA Key Result Area AWA Australian Water Association ML Megalitre – 1,000,000 litres BAT Best Available Technology MoU Memorandum of Understanding BE Bulk entitlement - the annual volume of surface water North East Water has a NHMRC National Health & Medical Research Council legal right to extract from the supply source for each water supply system. NCC National Competition Council Biodiversity The variability among living organisms on the earth, including the variability NTU Nephelometric Turbidity Units (see Turbidity) within and between species and within and between ecosystems Nutrients Elements that are beneficial for organism growth, such as nitrogen, phosphorus Biosolids Organic solids derived from biological wastewater treatment processes that are and potassium in a state in which they can be managed to utilise their nutrient, soil conditioning, OHS Occupational Health and Safety energy or other value. The solids that do not meet these criteria are defined as OHSMS Occupational Health and Safety Management System wastewater solids or sewage sludge OHSAS 18001:1999 Occupational Health and Safety Management System Global Standard BSC Balanced Scorecard – a tool organisations can use to monitor and report on their Our Water Our Future The Victorian Government’s White Paper on water reform strategic performance / direction pH Measure of the acidity or basicity of water e.g.: pH = 7 is neutral (e.g. blood, 7.4); Class A water Recycled water that has been treated to a standard that enables unrestricted pH < 7 is acidic (e.g. lemon juice, 2.3); pH > 7 is basic (e.g. ammonia, 11) public use PIP Process Information Portal CMA Catchment Management Authority Potable Drinkable, suitable for human consumption DHS Department of Human Services SCADA Supervisory Control and Data Acquisition DSE Department of Sustainability and Environment SDWA Safe Drinking Water Act DTF Department of Treasury and Finance SEAV Sustainable Energy Authority Victoria DWQMS Drinking Water Quality management System SEPP State Environment Protection Policy EBA Enterprise Bargaining Agreement Suspended Solids Organic and clay material dispersed in liquid solution E. coli Escherichia coli – organism that indicates faecal contamination. Used as an TBL Triple Bottom Line (Social/Environmental/Economic) indicator of safe drinking water TER Tax Equivalent Regime – In the interest of competitive neutrality we have a tax ELS Event Logging System system that subjects us to similar tax obligations to the private sector. EMS Environmental Management System Total coliforms Name of a group of bacteria that can be both faecally or environmentally EPA Environmental Protection Authority derived. This is used mainly as an indicator of system cleanliness ESC Essential Services Commission Turbidity A measure of the muddiness of water which may be caused by suspended fine clay ESD Strategy Ecologically Sustainable Development Strategy particles, silts, algae, organic plant and animal debris EWOV Energy and Water Ombudsman of Victoria UV Ultra Violet – using light to disinfect water FMCF Financial Management Compliance Framework VECCI Victorian Employers Chamber of Commerce and Industry FOI Freedom of Information VWIA Victorian Water Industry Association FTE Full Time Equivalent VWIOA Victorian Water Industry Operators Association GIS Geographic Information System Water for Growth State Funding Initiative GMW Goulburn-Murray Water Water Plan North East Water’s pricing submission to the ESC Green Power A scheme in which an energy supplier agrees that the equivalent amount of Waterwatch An school education program run by NECMA energy you nominate is produced from renewable sources, avoiding the use WSDS Water Supply-Demand Strategy of coal-derived power WWTP Wastewater Treatment Plant HACCP Hazard Analysis & Critical Control Point ISO 14001:1996 Environmental Management Systems specifications with guidance for use.

78 North East Water Annual Report 2004-2005 Appendices Town Population Water Treatment Process Sewage Treatment Services Appendix 1 – Towns and services provided by North East Water Wodonga 32,438 Full treatment Full treatment Wangaratta 18,613 Full treatment Lagoons & Tertiary Benalla 10,462 Full treatment Lagoon – primary aerated Yarrawonga 7,314 Full treatment Trickling filter & lagoons Myrtleford 3,458 Ultra-violet disinfection (ozone capability) Aerated lagoons Bright / Wandiligong 3,282 Chlorine disinfection only Lagoons – primary aerated (no service in Wandiligong) Rutherglen / Wahgunyah 3,279 Full treatment Lagoons – primary aerated Beechworth 3,229 Full treatment Lagoons &Tertiary Mt Beauty / Tawonga / 2,954 Ozone and Granulated Activated Carbon only Tertiary – Tawonga Sth and part of Tawonga Tawonga Sth pumped to Mt Beauty Corryong 1,516 Ultra-violet disinfection only Lagoons Chiltern 1,264 Full treatment Lagoons Tallangatta 1,095 Full treatment Trickling filter & Lagoons Yackandandah 770 Full treatment Lagoons Kiewa / Tangambalanga 756 Full treatment (from Wodonga supply) Pumped to Wodonga Porepunkah 723 Sodium hypochlorite disinfection only Pumped to Bright lagoons Barnawartha 556 Chlorine disinfection only Lagoons Harrietville 437 Sodium hypochlorite disinfection Simmons Creek, No service Chlorine disinfection Ovens River Bellbridge 411 Full treatment Biodisc &Lagoon Tungamah 400 Chemical dosing and chlorine disinfection No service Glenrowan 338 Full treatment No service Oxley 294 Full treatment No service Moyhu 239 Full treatment No service Dartmouth 198 Sodium hypochlorite disinfection only Trickling filter & Lagoons Springhurst 190 Full treatment No service Cudgewa 143 Chlorine disinfection only (from Corryong Supply) No service at Cudgewa Goorambat 143 Chlorine disinfection only No service Walwa 120 Full treatment No service Whitfield 117 Ultra-violet and chlorine dioxide disinfection only No service Devenish 112 Full treatment No service Bundalong 109 Full treatment Lagoons St James 96 Chemical dosing and chlorine disinfection No service Annual Report 2004-2005 North East Water 79 Appendices

Appendix 2 - Water consumption

Actual Annual Consumption (ML) and Number of Assessments (No.) Actual Average Annual Retail Urban Retail Urban Non- Total Annual Annual Consumption / Av. Annual Residential Residential Consumption Demand Demand Town ML No. ML No. ML No. % Barnawartha 66.64 215 8.22 17 83.26 107.4 77.5 Beechworth 321.42 1260 147.79 146 604.35 778.0 77.7 Bellbridge 48.47 161 4.42 7 63.40 63.8 99.4 Benalla 1,044.95 4,069 422.97 488 1,673.59 1,869.2 89.5 Bright/Wandiligong 255.95 1,287 165.71 203 679.92 616.6 110.3 Bundalong 10.65 42 0.54 1 15.53 15.0 103.5 Chiltern 125.72 493 24.29 61 209.69 240.6 87.2 Corryong/Cudgewa 172.99 659 98.72 145 336.62 407.8 82.5 Dartmouth 9.55 78 8.33 7 32.83 38.6 85.1 Devenish 9.28 47 1.46 10 20.72 20.0 103.6 Glenrowan 33.15 138 19.97 33 90.92 76.4 119.0 Goorambat 13.60 57 4.82 8 24.37 22.0 110.8 Harrietville 33.94 187 29.62 24 72.28 56.4 128.2 Moyhu 26.02 95 6.87 19 46.44 44.8 103.7 Mt Beauty/Tawonga 221.53 1,161 75.35 129 403.10 475.0 84.9 Myrtleford 343.22 1,356 280.00 176 628.00 628.0 83.0 Oxley 34.22 115 1.37 5 51.76 58.2 88.9 Porepunkah 58.88 285 24.61 27 169.96 164.4 103.4 Rutherglen/Wahgunyah 447.32 1,283 245.57 174 742.28 948.6 78.3 Springhurst 19.31 75 3.31 8 30.39 27.2 111.7 St James 7.40 40 1.61 9 19.64 14.6 134.5 Tallangatta 102.60 426 51.81 105 193.07 253.2 76.3 Tungamah 51.71 163 5.31 22 77.76 76.4 101.8 Walwa 12.22 49 9.20 26 30.67 33.6 91.3 Wangaratta 2,006.70 7,200 1,739.90 964 4,126.50 5,008.8 82.4 Whitfield 11.43 49 8.83 15 35.32 24.8 142.4 Wodonga 3,665.32 12,819 2,116.21 956 7,513.56 7,444.2 100.9 Yackandandah 82.35 302 47.76 67 150.36 190.2 79.1 Yarrawonga 913.35 2,862 289.42 316 1,629.82 1,771.6 92.0 TOTALS 10,149.89 36,973 5,843.99 4,168 19,756.11 21,475.4 92.0

80 North East Water Annual Report 2004-2005 Appendices

Appendix 3 - Key Strategic and Organisational Risks Appendix 4 - Publications North East Water produces a number of Key strategic risk Organisational risk publications in our endeavours to keep our customers and stakeholders informed of our Risk of failing to provide for the safety of all employees, contractors Risk of workplace injury various activities, and to comply with the and members of the public Victorian Government’s reporting regulations. Risk of failing to provide a safe and acceptable water supply in terms Failure to maintain adequate water quality of quality (Product) Risk of un-seasonal weather / natural disaster They are: • Risk of failing to provide an acceptable water supply in terms of Failure to provide required water supply quantity (community perspective) Annual reports (current and previous) quantity (Product) Failure to provide water service continuity to major customers (quantity) • Environment reports (current and previous) Risk of failing to provide a reliable water system (Assets) Risk of inappropriate water asset base Risk of inappropriate water asset maintenance / renewals • Corporate plans (current and previous) • Risk of failing to provide a reliable wastewater system (Assets) Risk of inappropriate wastewater asset base Water Plan Risk of inappropriate wastewater asset maintenance / renewals • Developers Handbook Failure to provide wastewater service continuity to major customers • Wet, Wild and Wonderful educational Risk of failing to adequately protect the security of the Authority’s Inadequate physical security of critical infrastructure assets resource book assets Risk of IT Security failure • Risk of IT System failure Various informational brochures • Quarterly customer newsletter Risk of environmental damage Risk of environmental damage • Press releases and community information Risk of failing to manage existing employees and recruiting Failure to capture, harness, protect and exploit corporate knowledge flyers appropriately Risk of adverse industrial relations Failure to recruit and retain appropriately skilled personnel All our publications are available by request Risk of inappropriate organisational culture from our head office at Level 1 Hovell St, Risk of not developing skilled workforce Wodonga, and many can be downloaded from our website www.nerwa.vic.gov.au. Risk of damage to key stakeholder relations (customers, government Inadequate / inappropriate governance structure and regulators) Risk of inappropriate developer management Failure to comply with other regulatory and legislative requirements Failure to meet stakeholder expectations Risk of customer service failure Risk of unplanned structural reform within industry Failure to respond / adapt to changes in public policy Failure to deliver water conservation and recycling outcomes Risk of inadequate community / end use engagement and education

Risk of failing to manage financial viability of the Authority Risk of inadequate contract management processes Risk of inadequate project management processes Failure to maintain adequate / appropriate insurance coverage Risk of inappropriate strategy formulation and execution Failure to optimise property portfolio Risk of inappropriate financial management Risk of fraud / corruption Lack of long-term financial viability of North East Water Annual Report 2004-2005 North East Water 81 Appendices

Appendix 5 - Index Contents inside front cover Water for Growth 28-29 Emergency Response 48-49 About this Report inside front cover Our Customers 30 Compliance Information 49 Report Theme 1 Customer Complaints 31 Freedom of Information 49 Mission 1 Energy & Water Ombudsman of Victoria 31 Building Act 49 Values 1 Customer Survey 31 Information Privacy Act 49 Summary of Events 2 Corporate Citizenship 31 Minor Consultancies 49 At a Glance 2 Customer Service Obligations 32 Major Consultancies 49 Message from Chairman & CEO 3 Community Consultation Committees 32 Government Grants 49 Overview 5 Stakeholder Engagement 32 Auditors 49 Organisation Profile 6 Management of Social & Economic Impacts 32 Legal Advisors 49 Our Region 6 Drought Response 32 Bankers 49 Major Industry 6 Our Staff 34 Insurance Brokers 49 Head Office 6 Employment 35 Industry Case Study - Wodonga Rendering/Norvic 51 Our services – Water and Wastewater 6 Years of Service 35 Performance Report 52 Our Services – Reuse 6 Enterprise Bargaining Agreement (EBA) 35 Certification to the Performance Statements 53 Our Assets 6 Industrial Relations 35 Auditor General’s Report 53 Our Stakeholders 6 Work Experience 35 Introduction 54 Strategic Direction 2004-05 9 Training and Education 35 Indicator Definitions 54-55 The Future - Strategic Intent 2005-06 15 Occupational Health and Safety 35-36 Financial Performance Indicator Definitions 54 Year in Review 16 Policies 36 Service Delivery Performance Indicator Definitions 55 Table 4 - Authority-Wide Key Performance 16 Programs 36 Environmental Performance Indicator Definitions 55 Table 5 - Regional Water Consumption (Water Sold) 16 OHS Training 36 Network Reliability Performance Indicator Definitions 55 Table 6 - Regional Water Extractions 17 CEO’s Award 36 Customer Complaints Performance Indicator Definitions 55 Table 7 - Regional Water Connections 17 Information Technology 37 Indicator Results 56-57 Table 8 - Regional Sewer Connections 18 Our Finances & Assets 38 Indicator Notes 58-59 Table 9 - Wastewater Treatment Plant Volumes 18 Financial Performance 39 Annual Financial Statements 60 Industry Case Study - Carter Holt Harvey 19 Subsequent Events 39 Disclosure Index 77 Our Operations 20 Financial Management Compliance Framework 39 Glossary 78 Water Systems 21 Australian Equivalents - International Financial Reporting Appendices 79-83 Water Consumption 21 Standards 39 Appendix 1 – Towns and Services provided by North East Water Bulk Entitlements 21 Capital Expenditure 39 79 Drinking Water Quality Management System 21 Our Assets 39 Appendix 2 - Water Consumption 80 Water Distribution 22 Heritage Assets 39 Appendix 3 - Key Strategic and Organisational Risks 81 Wastewater Collection 22 Case Study - Bruck Textiles 41 Appendix 4 - Publications 81 Trade Waste Management 22 Governance 42 Appendix 5 - Index 82 Wastewater Quality 23 Policies 43 Appendix 6 - Environmental Report Index 83 Recycled Water and Biosolids Reuse 23 Merit & Equity 43 Environmental Sustainability 25 Community Inclusiveness 43 Ecologically Sustainable Development Strategy 25 Whistleblowers 43 Environmental Management System 26 National Competition Policy 43 Environmental Incidents 26 Organisational Structure 44 Our Water Our Future 26 Executive Management Team 45 Regional Catchment Management Strategy 27 Board 46-47 Regional River Health 27 Corporate Governance 47 Future Planning 28 Attendance at Board Meetings 48 Future Development Planning 28 Register of Interests 48 Yarrawonga Clearwater Pipeline 28 Board Committees 48 Research and Development 28 Risk Management 48

82 North East Water Annual Report 2004-2005 Appendices

Appendix 6 - Environment Report Index 1 Foreword 2 Overview 2.1 Environmental Policy 2.2 Environmental Achievements 2.3 Water & Wastewater Services

3 Environmental Management System 3.1 Environmental Aspects 3.1.1 Significant Environmental Aspects 3.2 Environmental Action Program 3.2.1 Program Performance Summary 3.2.2 Environmental Action Program In Detail 3.3 Environmental Audits 4 Environmental Performance 4.1 Wastewater Management 4.1.1 Trade Waste Management 4.1.2 Wastewater Collection 4.1.3 Treatment Plant Performance & Wastewater Quality 4.1.4 Recycled Water and Biosolids Reuse 4.2 Groundwater Management 4.3 Environmental Incidents 4.4 National Pollutant Inventory 5 Ecologically Sustainable Development 5.1 Fostering a sustainability culture 5.2 Water Conservation 5.3 Energy Use & Greenhouse Gas Management 5.4 Biodiversity Management 5.5 Chemical Use 6 ‘Smart Water’ 7 Glossary 8 Contact Details

Annual Report 2004-2005 North East Water 83 n behalf of the North East Water Board, Executive Oand Staff, I am please to present your CD-Rom copy of the North East Water 2004-05 Environment Report. While hard copies of the report are available on request, we view a predominantly electronic delivery of this and similar documents as a significant component of our progression towards a sustainable future. I am proud of North East Water’s environmental achieve- ments during 2004-05, and I am sure you will find reading our Environment Report both rewarding and informative.

Jim Martin Chief Executive North East Water vel 1 Hovell St odonga Box 863 onga Victoria 3689 300 361 622 2) 6024 7454 erwa.vic.gov.au