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Draft Water Plan 2008-13 SOUTHERN RURAL WATER DRAFT WATER PLAN 2008-13 PROVIDING FEEDBACK This draft Water Plan is made available for consultation with customers, stakeholders, and the community. Whilst we have consulted with our customers committees and key stakeholders during development of this draft plan, we will continue and extend this consultation throughout August, prior to redrafting our final plan in September for submission to the Essential Services Commission by 8 October 2007. Written submissions in response to this plan will be accepted until Friday 31st August 2007, and should be addressed to: Lincoln Eddy Commercial & Policy Analyst Southern Rural Water PO Box 158 MAFFRA, Vic 3860 To discuss any aspect of this plan, please contact Lincoln Eddy on 1300 139 510. FOREWORD I am pleased to submit this draft Water Plan for Southern Rural Water to cover the five year period from 2008-09 to 2012-13. This Plan provides a framework within which to agree a vision and plan for the future of our shared water resources across southern Victoria. It helps establish consensus on the priorities for our programs and on the proper balance between the initiatives that we should promote and the level of charges that our customers and licence holders will need to pay. The Essential Services Commission plays an important role as an independent umpire checking that our proposed program is endorsed by our customers and meets the expectations of our regulators. They will scrutinise our projects to ensure that the costs are necessary and efficient, and that our prices are no more than is needed to ensure our continued financial viability. We will report annually on our performance against the commitments and targets within the plan. This approach provides us with certainty on our five year planning horizon within which we can manage our water businesses with their long-lived assets and major investment requirements. It provides our customers with confidence that costs and charges are reasonable. It reassures our regulators that we have plans in place to ensure compliance with critical obligations to ensure the future sustainability of the water resources we manage on behalf of the community. This Water Plan is drafted in challenging times. We are in the middle of the worst drought on record, while our customers are struggling to maintain their financial viability. At the same time we are keenly aware of the need to increase our level of activity and investment to respond to ever pressing needs to ensure the real sustainability of our resources. The central messages of the Water Plan are: • We recognise the severity of the challenges we face in acting as the steward for our water resources and wider catchment health, and we will meet that challenge in consultation with our customers and community; • We will drive decisions from well founded strategic plans that are based on a truly inclusive process. We are proud of the success of MID2030, which has set a benchmark for Victoria in developing a shared vision and detailed work program for the future of a regional irrigation business and the community that it supports. We will follow a similar course in developing plans for the future of the our western irrigation districts at Werribee and Bacchus Marsh to ensure that they are sustainable and viable well into the future; • We are committed to engaging fully with the regional communities that we serve. We will give a voice at a local scale to the interests and concerns of local people in decisions on the future allocation and management of scarce and valued water resources; • This Water Plan includes initiatives to improve our management and protection of groundwater resources across southern Victoria. We will implement these initiatives in partnership with the Department of Sustainability and Environment (DSE), local Catchment Management Authorities and wider stakeholders; • We will deliver this Water Plan through an effective, efficient and customer focussed business. We have established tough performance targets, and welcome the responsibility of demonstrating that we are living up to that challenge. This is a plan for the continued sustainability of our regional resources and the viability of our local communities. I invite your comments and feedback. A final Water Plan will be submitted to the Essential Services Commission in September 2007, taking account of the feedback received. JAN GREIG Chairperson EXECUTIVE SUMMARY OUR BUSINESS Southern Rural Water (SRW) is a Victorian Government water authority with four principal businesses: • Eastern Irrigation – supplying an average of 150,000 ML for irrigation and stock and domestic use in the Macalister Irrigation District around Maffra in central Gippsland; • Western Irrigation – supplying 4,000ML to the Bacchus Marsh and 10,000ML to Werribee Irrigation Districts for irrigation and stock and domestic use from the Werribee River; • Licensing – administering around 7,800 licences for surface and groundwater diversions, and licensing construction of bores and on-stream dams. Here SRW acts on behalf of the Minister for the benefit of the wider community and environment with a role closer to that of a regulator than a utility supplier; and • Headworks – managing seven major dams in the Werribee, Maribyrnong, Latrobe and Macalister basins to harvest, store and deliver bulk water entitlements for our own irrigation customers, urban water authorities and Latrobe Valley power generators. These four different businesses trigger a range of For further information on our different obligations, drivers and priorities. In this mission and our business, refer Water Plan we have indicated the expenditure and to Part A – Introduction, pricing issues relevant for each separate business. commencing on p. 2 i SOUTHERN RURAL WATER DRAFT WATER PLAN 2008-13 EXECUTIVE SUMMARY KEY OUTCOMES FOR THE WATER PLAN This Water Plan will deliver substantial outcomes across all four business sectors. Key examples for each business are provided below. IRRIGATED SUPPLY • Unbundling of Water Rights: The irrigation sector is undergoing major change, with policy initiatives to promote better use of scare resources. We will work with irrigators to implement the plan to separate the different component elements of the property right over water as from 1 July 2008, including developing a water register. • MID2030: MID2030 represents by far the largest and most significant focus of activity and expenditure by SRW and its customers over the Water Plan period. Works proposed include significant changes in the supply system including channel automation and piping of major areas. The final arrangements, including important questions about funding are still to be decided through our consultative processes. • WID Pipelining: We will complete strategic plans for both western districts. An early, pre-identified priority for the WID is the piping of channel No 4/1. The proposed expenditure forms part of the business-wide commitment to reduce system losses by 25% by 2015. STORAGE OPERATION • Dam Safety: We will develop and implement a dam safety program in line with the ANCOLD Guidelines and Clause 14 of the Statement of Obligations. Priority works will be at Melton, Glenmaggie and then Blue Rock. • Environment and Recreation Responsibilities: SRW also carries major responsibilities for the delivery of a range of other outcomes that are additional to its direct Headworks utility functions. These include environmental management and recreational objectives. SURAFACE AND GROUNDWATER LICENSING • Monitoring we will support enhanced groundwater monitoring through the State Observation Bore Network and Melbourne Stream Gauging Network and support development of effective data management systems and archives. • Mapping: we will publish an Atlas of groundwater systems in Southern Victoria and mapping of four stressed conjunctive systems. • Supporting Policy Development: We will recruit an extra member of staff to take the lead in developing legislative and management responses to key issues. • Streamflow and Groundwater Management Plans: We will promote streamflow management plans for six key river systems, and establish management plans in priority Groundwater Management Areas. We will also develop practical strategies to promote groundwater trading in consultation with users. • Metering: We will meter all water users across the region using 10ML or more a year whether from surface or groundwater sources, including all dairy sheds across the region. We will identify more effective treatments for iron bacteria that encrusts pipe work and meters with a fine brown sludge. For further information on our key outcomes, refer to Part C – Our Service Outcomes commencing on p 25 ii SOUTHERN RURAL WATER DRAFT WATER PLAN 2008-13 EXECUTIVE SUMMARY REVENUE REQUIREMENT AND TARIFF IMPACT Our average annual revenue required to deliver the initiatives and outcomes described in this plan represents an increase of around $4.5M on our first regulatory determination, as summarised below: FIRST ATTRIBUTABLE ATTRIBUTABLE TOTAL OF DETERMINATION TO REVENUE TO TARIFF PRESCRIBED NON 2007/08 CAP CONTROL ACTIVITIES PRESCRIBED TOTAL Operating Expenditure 15,643 15,044 2,570 17,613 302 17,916 Renewal Annuity 1,936 1,787 0 1,787 0 1,787 Depreciation & Return on Assets 1,287 2,102 31 2,134 75 2,209 Cost of Debt - Urban Pricing 1,077 1,077 0 1,077 0 1,077 Cost of Debt - Pre 2005/06 Sales Deficits 848 848 0 848 0 848 Cost of Debt - WID Recycled Scheme 0 195 195 0 195 First Period Revenue Recovery 565 0 565 0 565 Recovery of Flood Costs 74 0 74 0 74 TOTAL 20,791 21,497 2,796 24,293 378 24,671 Where these initiatives support a broader community or environmental outcome, we will apply funding from sale of savings as well as revenue generated though the application of cost of debt to our urban storage operator charges. Indicative tariff increases for our key customer groups range from 9.2% to 27.4%. These increases are indicative step changes, not annual increases.
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