Yarra Valley Water ABN 93 066 902 501 Lucknow Street Mitcham Victoria 3132 Private Bag 1 Mitcham Victoria 3132 DX 13204 The Sustainability Journey Telephone: (03) 9874 2122 Facsimile: (03) 9872 1353

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Call us on 131 721 visit our web site www.yvw.com.au or email us at [email protected]

For language assistance call TIS 131 450. Y arra Valley Water The Sustainability Journey Annual Report 2002–03 nulRpr 2002–03 Annual Report Contents

2 Our Journey 54 Culture 3Chairman’s Report 55 High Performing Business Culture 9 Highlights for 2002–03 56 Employees 10 Managing Director’s Statement 61 Occupational Health and Safety 13 Our Business at a Glance 62 Service Providers and Contractors 15 Summary of Long-term Targets and Our Strategic Intent 64 Stakeholders 16 Environment 67 Community 18 Water Conservation 70 Financial Performance 24 Drought 71 Overview of Financial Performance 26 Sewage Management 76 Operating Expenditure 34 Recycling 78 Ongoing Investment 38 Aurora — Sustainable Urban Development 80 Risk Management 39 Greenhouse Gas Emissions and Energy Use 81 Auditing and Verification 41 Environment Improvement Plan (EIP) 82 Annual Financial Report 42 Customer Service 110 Environment Improvement Plan 44 Water Quality 124 Corporate Governance 46 Service Responsiveness 130 Licensed Area Map 51 Pricing 131 Feedback Form 52 Programs for Customers Experiencing Financial Difficulty

1 2

Our Journey Environment

This includes our Chairman’s This section contains the key Report, highlights for the year, environmental challenges we Managing Director’s face, how we are performing Statement and a look at our and our commitments to business including a summary further improvement. of our new Statement of Strategic Intent.

Where to find Key Issues Statement of Strategic Intent 12 Environmental Policy 17 Long-term Targets 15 Water Consumption by Customers 19 Non-Revenue Water 22 Impact of Drought on Our Business 25 Sewage Treatment Plants 26 Biosolids 29 Sewer Spills 30 Trade Waste 32 Unsewered Areas 33 Recycling Projects 36 Car Usage 40

This report is printed on 50% recycled paper. 3 4 5 6

Customer Service Culture Financial Performance Appendices

We discuss the key issues for This section looks at our This section details our Environment Improvement Plan customers and our response organisational culture, our financial summary, including Corporate Governance to these needs. We also detail people and partners in the our efficiency framework, Licensed Area Map our community involvement community. ongoing investments, and risk and support. management. It also explains Feedback Form how our performance is verified.

Water Quality Treatment Our People 56 Financial Summary 73 and Testing 44 Industrial Relations 61 Revenue 74 Water Quality Complaints 45 Occupational Health and Expenses 74 Response to Customer Safety Policy 61 Profit 75 Enquiries 47 Consultative Committees 64 Shareholder Returns 75 System Reliability 49 Stakeholder Consultation 64 Debt 75 Rebates to Customers 50 Yarra Valley Water and the Credit Rating 75 Customer Complaints 50 Plumbing Industry 66 Community Service Sponsorship and Community Obligations 75 Support 67 Management of Debtors 76 Education Program 68 Efficiency Framework 76 Young Achievement Australia 68 Efficiency Targets 77 Work Experience and E Teams 69 Emergency Response 80 Infoxchange, Green PC 69 IT Risk Mitigation 80 Triennial Audit 81 GST Review 81 Annual Financial Report 82 1

Our Journey

Yarra Valley Water has to one that aims to do these embarked on a journey things in a way that fully towards a sustainable addresses economic, social business. This is our second and environmental combined Annual Report requirements. Defining what incorporating environment, this transition will mean to social and financial the company is a major reporting. It is a critical time challenge for us, as we for the business, as we embark on a journey make the transition from through the development of a company with a primary our Sustainability Strategy. focus on service There is a lot to be learnt improvement and efficiency along the way… 1 Our Journey

Chairman’s Report This is Yarra Valley Water’s second We welcome comments on our Annual Report with a sustainability performance and Annual Report. focus. It is a critical time for the business A feedback form is provided with this as we make the transition from a Report and is also available on our web company with a primary focus on site at www.yvw.com.au. We invite service improvement and efficiency to you to email us at any time with one that aims to do these things in a comments ([email protected]) or call way that fully addresses economic, our general enquiries line on 131 721 social and environmental requirements. with any questions relating to our Defining what this transition will mean to business. the company is a major challenge for us, The past year has been an important as we embark on a journey through the one in Yarra Valley Water’s history. Peter development of our Sustainability Harford, our Managing Director did not Strategy. There is a lot to be learnt Alan Cornell, Chairman seek renewal of his contract after eight along the way. years leading the company. Peter was This report reflects our transitional state Managing Director since the company’s and presents a snapshot of Yarra Valley inception in 1995 and his legacy is a Water’s progress towards integrating very strong and enduring customer environmental, social and financial service ethos. We extend our sincere elements of our business, to produce thanks to Peter for his efforts. better outcomes and a better future for The Board appointed Tony Kelly to the our customers and for the environment role of Managing Director in January we all share. It looks forward as well as 2003. Under Tony, the company has reflecting on the past year, reporting on developed its Statement of Strategic our significant challenges, dilemmas, 3 Intent, which replaces the Mission and successes and short-comings, as well Vision. We have chosen to organise as providing a road map for the next our Annual Report 2002–03 around the 12 months and beyond. four elements of our Statement of Feedback on our Annual Report Strategic Intent. Our Journey 2001–02 was sourced through forms I would like to take this opportunity included in the Report. We also engaged to thank my fellow Board Directors an independent consultant to review our for their significant contribution over report. Feedback suggested a need for the last year and extend my thanks to further details regarding our future plans.

Yarra Valley Water staff for their Annual Report 2002–03 In this year’s report we have provided continued dedication. clarification of our long-term targets and Statement of Strategic Intent.

Both of our external stakeholder groups, … This report reflects our transitional state and arra Valley Water arra Valley the Environmental Consultative should be viewed as a snapshot of Yarra Valley Y Committee and our Customer Consultative Committee assisted Water’s progress towards integrating environmental, with the preparation of this Annual Report, providing comments and input. social and financial elements of our business … Figure 1: Return on Average Assets % Financial Performance The Water Resources Strategy for Our financial results for 2002–03 include Melbourne recommended that the 12 a profit after tax of $64.43 million community reduce their water 10.7% (2001–02: $58.9 million) and dividends consumption by 15% by 2010. Yarra 10 9.6% 9.6% 9.1% 8.7% paid or recommended totalling $58.19 Valley Water already has processes in 8 million (2001–02: $49.2 million). Water place to ensure this target will be met. usage and sewage disposal charges Our actions include reducing demand, 6 were $1.3 million less than our budgeted reducing water lost from our system and

4 figures due to the introduction of Stage recycling treated water where One Water Restrictions. However, appropriate. 2 revenue from developers was stronger The current drought had a big impact than budgeted by $14.8 million and 0 on our business during the year. 1998–99 1999–00 2000–01 2001–02 2002–03 represented a 40.8% increase on the Water conservation became an issue previous year. of increasing importance as Victoria’s I am very satisfied with our governance drought entered its sixth year. Figure 2: Net Profit After Tax $M systems. Yarra Valley Water has an Stage One Water Restrictions were introduced in November 2002 and since 99.9 accredited Quality Management System 100 (ISO9001), Environmental Management then the community in Yarra Valley System (ISO14001) and Hazard Analysis Water’s licensed area has managed to 80 * 68.9 and Critical Control Points (HACCP) save 13,400 Megalitres (ML) of water 64.4 58.9 System. In April 2003, we were subject compared to the expected consumption. 60 57.1 to our triennial systems audit and We wish to thank our customers for their ongoing contribution to water 40 retained our certification. conservation. 4 Environment 20 Of the projects identified under our Yarra Valley Water is committed to 2002–03 Environment Improvement Plan 0 creating water and sewerage services 1998–99 1999–00 2000–01 2001–02 2002–03 (a total of 67 actions) 34 were completed that meet the needs of our customers or achieved, 15 are ongoing, eight were Our Journey and operate within the carrying capacity on target and 10 are behind schedule. of nature. We are working towards The latter results were largely due to Figure 3: Dividends Paid, Payable having the least impact possible on the design and construction delays, and are or Estimated $M environment and we are striving to listed for completion in this year’s become a sustainable water company. Environment Improvement Plan. Key 80 To guide our goals we draw upon the environmental achievements included

Annual Report 2002–03 70 Kenyan proverb contained in our 62.7 100% compliance with our sewage 58.2 Environmental Policy: 60 56.0 treatment plants’ licences and 48.7 49.2 50 “Treat the earth well. It was not containing all sewer spills within five hours. While our capital works on sewer 40 given to you by your parents. It improvements fell behind schedule

arra Valley Water arra Valley is lent to you by your children.” 30 Y largely due to unforeseen planning 20 Our major impacts on the environment issues, this program is expected to be 10 are extraction of water from the completed during 2003–04. 0 environment for consumption by 1998–99 1999–00 2000–01 2001–02 2002–03 customers, discharge of treated water back into waterways and Port Phillip Bay, and greenhouse gas emissions from power consumption. * One megalitre equals one million litres. 1 Our Journey

5 Our Journey Annual Report 2002–03 arra Valley Water arra Valley Y Our greenhouse gas emissions have We are working towards having the least impact been calculated at about 28,000 tonnes per year. We are actively working to possible on the environment and we are striving to reduce this in our Mitcham office and at our operational sites. become a sustainable water company. … As a consequence Customer Service cleaning water mains in order to save During the year, we continued to water. Our higher water quality complaint of the dry weather, implement our Customer Service numbers have been affected by the Strategy, which aims to increase suspension of our cleaning program. which causes soil to customer satisfaction and reduce costs. As a consequence of the dry weather, We strongly believe that good customer contract and pipes which causes soil to contract and pipes service costs less. We exceeded most to crack, we had a rapid and significant of our customer service performance to crack, we had a increase in the number of burst and targets and billing-related customer leaking water mains during summer. rapid and significant complaints reduced by 14%. We did not, Although we met our performance however, meet our target of answering increase in the number indicators for response time to water 97% of emergency telephone calls supply interruptions, our forecast for within 30 seconds. This result was due of burst water mains breaks in water mains was exceeded. to a combination of a higher than We also did not meet our target of during summer … forecast volume of calls during summer, repairing 80% of leaks in our water due to a high number of water main supply system within 24 hours, achieving bursts and leaks, and extra calls only 71%, as our priority shifted to received on our emergency line repairing major bursts. We would like to regarding water restrictions. extend our thanks to our staff and our Approximately 95.8% of emergency maintenance contractor, Abigroup Asset calls were answered within 30 seconds, Services – Water Pty Ltd, for their in part due to a temporary increase in outstanding efforts in coping with the call centre resources. extra workload during summer. We were pleased that our commitment 6 We maintained our program of renewing to customer service was recognised water mains and we are confident that in when our Customer Contact Centre the long-term this will reduce the won the Victorian Call Centre of the frequency of burst water mains and the Year Award (>50 seats) at the annual resulting disruption to water services.

Our Journey Australian Teleservices Association Awards. In addition, staff member The dry conditions also caused tree Anne Mills was recognised as the roots to seek water in sewer pipes and Victorian Teleprofessional of the Year. increased the number of sewer Our Customer Contact Centre is an blockages beyond our forecast. integral part of our service delivery and As a result, we exceeded our target

Annual Report 2002–03 this external recognition of our approach of customers who experienced more is very encouraging. than two sewer interruptions in 2002–03.

The number of water quality complaints Culture was less this year than the previous Yarra Valley Water is committed to

arra Valley Water arra Valley two years, however we did not meet

Y developing a high performance business our self-imposed target of less than five culture. Using a 360 degree feedback customer complaints per 1,000 tool we have identified gaps between connected properties. The introduction our preferred and actual culture. of Stage One Water Restrictions meant To bridge these gaps we have invested that we suspended our program of in a number of training initiatives and 1 Our Journey

other programs. During the year 173 We thank our Committee members for staff were involved in training related to their ongoing contribution to improving achieving our preferred culture. More of our performance. We would particularly this training is planned for 2003–04. like to recognise the dedication of Allen Martin who recently retired as Chairman An independent consultant conducted of the Customer Consultative Committee our eighth annual Employee Opinion after taking up this post in 1995. Survey, which resulted in a 79% participation rate and identified that We believe that our performance and the employee satisfaction had risen by programs that we have in place position 12.3% from the last survey. Other results us to achieve our goal of delivering truly were also pleasing. Against external sustainable water and sewerage benchmarks, two core issues were services and we are proud of our above best practice and three core achievements to date. We were issues were close to best practice. particularly honoured to be recognised by the Committee for Melbourne in Our existing Enterprise Bargaining 2002 with one of their leading awards Agreement expired on 30 June 2003, in sustainability. and a new agreement has been finalised. We achieved all of our operating licence We have continued to work to improve targets and recognise that we still have Occupational Health & Safety (OH&S) the potential to improve and we are for our staff and contractors, and already working on that. We are pleased implemented an OH&S system with our results for 2002–03 and excited compliant with AS 4801. Significant by our improvement plans for the progress was made towards coming year. certification, which is scheduled for 7 2003–04. However we were very Just as we appreciate the decisions disappointed to incur three Lost Time made by our forefathers in laying the Injuries during the year. Fortunately none foundation of our existing water supply

of these injuries were permanent. and sewerage system, we are now Our Journey focused on leaving a system of which Stakeholder consultation is an integral future generations will be proud. part of our business. We rely heavily on input from our Customer Consultative Committee and our Environmental Consultative Committee in the Annual Report 2002–03 development and implementation of our strategies. These independent Alan Cornell, Chairman committees comprise external representation from a diverse range of organisations, businesses and arra Valley Water arra Valley customer groups. Y Yarra Valley Water Sub-Brands and Initiatives A range of sub-brands ensure targeted savewater!™ program, a joint venture communication with specific groups. established to promote water Other intitiatives include the conservation.

Yarra Valley Water Sub-Brands

Y arra Valley Water

A targeted program for business customers The Leakline service is a toll free 24 hour providing information, education and support telephone number for the reporting of leaks. on water conservation, trade waste, and other Our commitment is to repair reported leaks business environmental issues. within 24 hours. Leakline 1800 003 097.

An application system for new water and Water efficient gardening techniques based sewerage plumbing connections available on planning, soil care, selection of plants, lawn at plumbing franchises. care, irrigation, mulching and maintenance. From the Greek word ‘xeros’ meaning dry. 8

Our Journey An on-line system for conveyancers/solicitors A temporary water supply system for the to lodge property information requests. provision of drinking water to customers when the normal below ground reticulation pipes are taken out of service.

Annual Report 2002–03 Yarra Valley Water — Other Initiatives arra Valley Water arra Valley Y

A program to promote water conservation through initiatives including savewater.com.au, savewater!™ awards, savewater!™ education program and savewater!™ efficiency service. 1 Our Journey

Highlights for 2002–03

Our Journey

Development of Statement of Strategic Intent Committee for Melbourne Sustainability Award in 2002

Environment

Engaged The Natural Step consultancy to help develop a Sustainability Strategy Water conservation programs exceeded all targets (56% increase in rainwater tank installations; 95% increase in bulk mulch orders; 5% increase in bagged mulch orders) Signed Memorandum of Understanding with the International Council for Local Environmental Initiatives (ICLEI) 100% sewage treatment plant compliance 100% sewer spills contained within five hours Established Recycling Team

Customer Service

Victorian Call Centre of the Year Award Water Quality Test Results (E.coli 99.94% — target 95%; total coliforms 99.29% — target 90%) 18% reduction in billing related customer contact 9 14% reduction in complaints 38% reduction in the number of estimated bills Exceeding targets for restoring unplanned water supply interruptions (within 5 hrs 99.9% —

Operating Licence target 95%; within 4hrs 99.7%; within 3hrs 93.4%) Our Journey

Culture

Significant steps taken towards achieving our preferred organisational culture 12.3% increase in employee satisfaction Annual Report 2002–03 The Yarra Valley Water-sponsored Young Achievement Australia (YAA) team won the YAA Company of the Year Continued partnership with the Centre for Education and Research in Environmental Strategies (CERES) arra Valley Water arra Valley

Financial Performance Y

Profit before tax was $13.3 million above budget, and $15.7 million higher than 2001–02 (primarily due to a 40.8% increase in developer revenue) A profit after tax of $7.4 million above budget Managing Director’s Statement Water is Life. This statement is With this in mind, we are determined that recognised and used globally to express Yarra Valley Water plays an effective role the importance of water. Unfortunately in this exciting and challenging future. fresh water has been abused and Our strategy has four key elements – overused to the stage where the world continuous improvement in customer is facing the reality of serious shortages. service, building a high performing business culture, improvements in Here in Victoria, the current drought has efficiency and reducing our impact on highlighted the importance of managing the environment. The latter presents our our water resources in a way that pays greatest challenge. due consideration to the needs of the environment as well as those of our At the highest level, our environmental economy and people in both urban and strategy intends to reduce the rural areas. company’s ecological footprint, which in Tony Kelly, Managing Director turn will improve and restore the carrying With an additional one million people capacity of nature and help to preserve expected to live in Melbourne by the biodiversity. This will require us to do year 2030, the challenge of servicing this more with less and reduce consumption population, while maintaining high levels in all areas of the business. This is not of water and sewerage services and to say that we have all the answers. lowering our environmental impact, We acknowledge the complexity that is very demanding. We therefore see ecological sustainability presents, and our purpose at Yarra Valley Water as we are currently sourcing models and two-fold. The first is to manage the daily putting programs into place that will functions of the business in a way that build our knowledge so that protects public health and exceeds our 10 we can progressively work toward these customers’ needs and expectations. ideal outcomes. Many of these The second is to constantly challenge environmental programs are described and test the way we provide water and in the body of this report, together with sewerage services to ensure that they those relating to the other three Our Journey are truly sustainable over the long term. elements of our strategy. We also believe that a more sustainable In essence, water conservation is our approach is good business. Products major and long-term priority. Using less and services that help mankind reduce water for urban purposes means less its impact on the environment while wastewater is produced, treated and

Annual Report 2002–03 maintaining standards of living will be in discharged into the environment which, great demand. In the next century, only in turn, allows more water to be made businesses that can demonstrate they available for the environment. Treatment are operating in an ecologically and disposal of sewage is also a priority sustainable way will have licence to and must be undertaken in a manner arra Valley Water arra Valley

Y trade and the most successful will be that doesn’t exceed nature’s capacity. the first to commercialise sustainable Recycling of water used to convey products and services. wastes may also play an important role in this regard. Several targets that demonstrate a tangible commitment to achieving improvements in these areas have been included in this report. 1 Our Journey

People may question our motives in We intend to build on this strong making water conservation a priority foundation to further improve our because of the adverse effect on our consultative processes in the coming revenue. Water conservation, however, year. Engagement of our employees is makes good economic as well as also essential. During the year we have environmental sense. While the price of involved our managers and staff in a water will inevitably rise over time, we number of brainstorming activities to believe it will rise less if customers help develop our understanding of conserve water. By conserving water we sustainability and our contribution to it. will avoid the high financial and We believe that our Strategic Intent fits environmental cost associated with well with the principles of sustainability. having to build another dam and more The environment is explicitly included sewage treatment plants. Steadily and the combination of our focus on reducing consumption also provides customers and organisational culture, more certainty for our business than the including the welfare of our staff, contention and doubt associated with addresses the social element. gaining community approvals for new Our continuous push for efficiency, sources of supply and the related price given an already strong financial rises required to fund them. foundation, addresses the economic In relation to price rises, we are also aspects of sustainability. keen to investigate innovative tariff structures. Tariff design should be revenue neutral for us but give … At the highest level our environmental strategy customers the incentive to conserve intends to reduce the company’s ecological footprint, water and, in so doing, hold their 11 household bills at a relatively static level. which in turn will improve and restore the carrying In designing these tariffs we will consider the needs of those customers who may capacity of nature and help to preserve biodiversity. have difficulty paying. Ultimately, This will require us to do more with less and reduce Our Journey decisions regarding pricing will be made by the Essential Services Commission consumption in all areas of the business. This is who will canvass views from a broad cross-section of stakeholders. not to say however, that we have all the answers.

We also recognise that the development We acknowledge the complexity that ecological of improvement programs and tariff Annual Report 2002–03 structures is something that we sustainability presents, and are currently sourcing should not do in isolation from our models and putting programs into place that will customers and other important stakeholders. The broader and more build our knowledge so that we can progressively arra Valley Water arra Valley effective our stakeholder participation, Y the better the future we will help work toward these ideal outcomes … create. In this regard we are extremely grateful for the tireless efforts of our independent Customer Consultative and Environmental Consultative Committees. … we feel a Yarra Valley Water’s Statement of Strategic Intent responsibility to be advocates for Yarra Valley Water exists to provide water and sewerage services that contribute to the sustainability across health and wellbeing of its Customers and the Environment. the whole water cycle. In this regard We strive to lead the global water industry in serving the Customer and the Environment We will make ourselves supported by available to assist and a high performing business Culture and continuously improving our Efficiency. influence policy-making, standard setting and regulations in Government and share Customer Environment our experiences and knowledge with other interested stakeholders, Culture Efficiency including other water 12 businesses. In doing this With over a hundred years of water achieved enviable combinations of we also recognise that industry experience behind us, we have low cost and high levels of service in expertise and knowledge that falls many areas of our business. We will Our Journey we will be more effective outside the direct responsibilities of a not, however, rest on this record. by committing most of retail water business. In this regard we We will strive for continuous improvement feel a responsibility to be advocates for in everything we do, with a strong focus our energies to our sustainability across the whole water on the longer term and positioning the cycle. We will proactively contribute to company to make a positive contribution direct areas of influence policy-making, standard setting and to the economy, society and environment Annual Report 2002–03 and responsibility … regulations in Government and share our of which we are an essential part. experiences and knowledge with other I look forward to reporting our progress interested stakeholders, including other on our exciting journey towards water businesses. In doing this we also sustainability next year. recognise that we will be more effective arra Valley Water arra Valley Y by committing most of our energies to I am proud to present the Yarra Valley our direct areas of influence and Water Annual Report 2002–03. responsibility.

I am confident that we have the capability and passion to achieve our objectives. Our performance to date is very good by international and national Tony Kelly, Managing Director water industry standards. We have 1 Our Journey

Our Business at a Glance Melbourne’s largest retail water business commenced operations in 1995. Although owned by the Victorian Government, Yarra Valley Water is a commercial concern with a Board of Directors appointed by the Government and operates under the Corporations Act 2001. We have an Operating Licence that covers over 4,000 square kilometres in the northern and eastern suburbs of Melbourne and we provide water and sewerage services to more than 1.5 million customers.

To explain fully what we mean by providing water and sewerage and related services to customers in our licensed area, we need to explain the Melbourne water industry, which is unique in the world. Melbourne has one water wholesaler, Melbourne Water Corporation, and three water businesses, of which we are one. Metropolitan Melbourne is divided into three geographical segments, and each water business is licensed to provide 13 services in one of those segments, which is its licensed area.

Melbourne Water collects the water in the water catchments, purifies or treats Our Journey the water if required, then distributes the water through its pipe network to our pipe network. We then distribute the water to our customers, ensuring Yarra Valley Water provides water and sewerage that the highest water quality standards

related services to customers in our licensed area Annual Report 2002–03 are maintained.

The water discharged from toilets and (see page 130 for our licensed area map). other internal fittings goes from customer pipes into our sewerage arra Valley Water arra Valley

system. We then transport the waste Y to a site where it can be treated. Some of the wastewater is treated at our own treatment plants, but most of the sewage we receive from customers is transported via our sewerage system to Melbourne Water’s two large treatment plants. Yarra Valley Water owns and manages Our Regulatory Environment assets valued at more than $1.3 billion The retail water industry is a well dollars and had an annual revenue of regulated industry. We are accountable more than $370 million. to a range of different Government departments and regulatory bodies. Yarra Valley Water’s Assets The complexity of our regulatory 8,643 km water pipes framework, and the fact that the State Government is our shareholder, means 8,207 km sewer pipes that we need to obtain input from a 10 elevated water supply tanks broad range of stakeholders before we 40 ground-level water supply tanks can effect significant change. 62 water pumping stations Compliance with our Operating Licence 72 sewer pumping stations is monitored and measured by the 42 water pressure reducing stations Essential Services Commission (ESC) to 9 sewage treatment plants ensure we are meeting customer service standards. The Commission publishes Total Water Purchased and an annual comparative report on Supplied Melbourne’s retail water businesses. 187,811 ML (megalitre = 1 million litres) Our Operating Licence sets out bulk water purchased standards for customer service and management responsibilities and 164,466 ML water supplied to customers specific reporting requirements relating to water quality, trade waste, The difference in water purchased and environmental performance and water 14 water supplied to customers is referred conservation. to as ‘non-revenue water’ and includes water used for fire-fighting, water lost in bursts, metering inaccuracies, water theft, pipe leakage and our own usage

Our Journey for cleaning pipes (see page 22).

Total Sewage Transported and Treated 113,605 ML sewage transported to Melbourne Water Corporation’s Western Annual Report 2002–03 Treatment Plant at Werribee and Eastern Treatment Plant at Bangholme (formerly Carrum).

8,269 ML sewage treated by Yarra Valley arra Valley Water arra Valley

Y Water sewage treatment plants. 1 Our Journey

Summary of Long-term Targets and Our Strategic Intent

98% first contact resolution by June 2006 (98% of customer Recycle 20% of water produced by our sewage treatment contacts resolved in first instance) plants by 2008 Reduce the number of avoidable customer billing contacts by 10% Recycle all biosolids by June 2005 per annum Reduce sewage spills by 30% by June 2008 Reduce volumes of water quality complaints to Achieve a 25% reduction in non-revenue water per household 4 per 1,000 customers by June 2007 by June 2008 Reduce volumes of customers experiencing: Implement water conservation strategies to help customers – >3 unplanned water supply interruptions by 30% by reduce water consumption by 15% by 2010 June 2006 Develop the Aurora project as a showcase of sustainable –>5 water supply interruptions by 35% by June 2006 development (see page 40) Increase customer satisfaction as monitored in our annual survey, Establish the savewater!™ alliance as Victoria’s pre-eminent from the current 56% for Excellent and Very Good categories to source of water conservation information, to assist in delivering 60% by June 2006 a consistent approach to water conservation across Victoria by Significantly enhance services to developers by implementing the December 2004 “EasyDevelop” system by April 2004 Reduce water main bursts through our water pressure reduction project

Customer Environment

15

Culture Efficiency Our Journey

By October 2003 achieve a 5% improvement in the behaviours Decrease controllable operating expenditure by at least 2.4% in real identified in the October 2001 Organisational Cultural Inventory, terms, during 2003–04 to 2005–06. This will be achieved by: with a further 5% improvement by October 2005 – Implementing process efficiencies leading to a reduction in contact Gain OH&S certification and meet our target of zero Lost Time volumes Injuries – Redesign of IT architecture to produce lower IT maintenance costs

Improve the ‘recognition and feedback’ score by 5% in the October –Implementing mobile computing for field activities Annual Report 2002–03 2004 Employee Opinion Survey Continue to participate in industry benchmarking programs such as By October 2004 achieve a 3% improvement in the 10 lowest the Water Services Association of Australia (WSAA) asset scored categories from the October 2002 Employee Opinion management and customer service benchmarking programs Survey results 18% of the 2003–04 capital expenditure program to be undertaken arra Valley Water arra Valley Fill 50% of vacancies through internal promotion/rotation with annual or longer term contracts Y by end 2004 Target a 10% capital (compared to conventional methods) cost- reduction by adopting low pressure sewer systems, in backlog areas by June 2006, where cost effective Review of infrastructure design parameters Undertake water pressure reduction to lower water pipe repair costs. 2

Environment

We are committed to Water conservation has water compared to the creating water and become an issue of expected consumption. sewerage services that meet increasing community We wish to thank our the needs of our customers importance as Victoria’s customers for their ongoing and operate within nature’s drought entered its sixth contribution to water carrying capacity. We are year. With the introduction conservation. working towards having the of Stage One Water least impact possible on the Restrictions in November environment and are striving 2002 the community in Yarra to become a sustainable Valley Water’s licensed area water company. has saved 13,400 ML of 2 Environment

There is increasing evidence globally that the current rates of consumption Environmental Policy of natural resources such as water and energy are not sustainable in the longer term. We need to move beyond Yarra Valley Water is committed to enhancing our environment by providing water and sewerage minimising our environmental impact, services in a sustainable way to meet the needs of current and future generations. In pursuit of to taking an active role in reducing our this objective we will continuously improve our environmental performance and address the consumption of natural resources and expectations of customers, the community and government. thereby creating a sustainable balance between the needs of the natural We are: Consulting and Communicating environment and human life. By broad consultation to determine community expectations and inclusion of those views in We have engaged the assistance of our decision-making The Natural Step, a not-for-profit By publication of our policy, targets and performance organisation dedicated to helping By education of our customers on the benefits of water conservation and responsible use of businesses become more sustainable, the sewerage system to help develop our Sustainability Reducing Consumption Strategy. The guiding principles are: By encouraging customers to save water and reduce sewage flows In a sustainable society, By selecting processes that avoid producing waste wherever possible nature is not subjected to By reducing waste and consumption in all aspects of our business systematically increasing: By developing innovative and sustainable processes for recycling and reusing 1. concentrations of substances extracted from the earth’s Improving Performance crust; By making and honouring public commitments to improved environmental performance By complying with the spirit and the letter of environmental laws 2. concentrations of substances 17 produced by society; By benchmarking ourselves against other leading organisations By setting objectives and targets that lead to continuous improvement in our environmental 3. degradation by physical performance means; By being proactive in the development of new standards and in that society; By stimulating our staff to strive for excellence in environmental management Environment 4. human needs are met By securing the commitment of our suppliers and contractors to our environmental objectives worldwide. and requirements.

Our work with The Natural Step to Minimising Impacts develop our Sustainability Strategy will By striving to prevent pollution include: By responding immediately when environmental incidents occur Annual Report 2002–03 Business planning By selecting, handling and using products and materials in an environmentally responsible manner Education and training By ensuring that environmental assessments are an integral part of our planning processes Sustainability auditing for new projects. Imagining a successful future arra Valley Water arra Valley Y Strategy formulation and action “Treat the earth well. It was not given to you by planning your parents. It is lent to you by your children.”

Stakeholder engagement Kenyan proverb Project and process mentoring Figure 4: Expected Water Savings by 2010 Under Each Initiative

STRATEGIC PROJECTS Water Savings (ML) AREA by 2010

DEMAND REDUCTION Low flow shower roses (market penetration and regulation) 1,115 AAAA washing machines (market penetration) 1,990 Pricing (regulation) 600 Gardening practises 300 Water management plans for industries and open spaces 2,575 Ongoing education 2,560 Sub-Total 9,140

NON-REVENUE WATER Pressure management 3,000 Active leakage control, meters and theft monitoring 2,400 We provide our customers with practical ways to save water Sub-Total 5,400 within the home WATER RECYCLING Craigieburn sewage treatment plant recycling 100 Potable water substitution Aurora Project 360 Sub-Total 460

ONGOING TREND Market penetration of dual flush toilets, lower housing densities etc. 2,500

TOTAL 17,500

Source: Water Conservation and Recycling Plan,Yarra Valley Water (2003)

We expect the development and Water Conservation 18 implementation process to be In October 2000, the State Government completed by December 2003. Once our established a Committee to develop a Sustainability Strategy is developed, we Water Resources Strategy for Melbourne will have a much clearer idea on where for the next 50 years. The Committee our efforts to improve environmental Environment published its final report in October outcomes should be directed. However, 2002. The preferred scenario allows for it is clear that reducing water only a small increase in water supply consumption is critically important to by 2050, without the development of avoid the need to extract more water new water sources or the construction from rivers as our population grows, and of new dams. Hence, water conservation

2002/03 Annual Report to increase the flow of water in rivers and recycling activities will be required that are already dammed. to meet the needs of a growing Other major environmental issues for population. Yarra Valley Water is actively us include managing sewage and trade working with the State Government to waste, recycling treated water, reducing achieve its target of a 15% reduction in arra Valley Water arra Valley Y greenhouse gas emissions and reducing Melbourne’s average per capita water energy use. consumption by 2010. 2 Environment

The Water Resources Strategy identified Figure 5: Water Consumption for an Average Climatic Year reductions in water consumption from a range of initiatives. A significant amount Non-Revenue 27.2 GL of the water savings will be achieved by the regulation of low flow showers and water efficient washing machines. The State Government’s Department of Sustainability and Environment is taking Business 37.0 GL the lead role in these areas. Residential 130.3 GL Garden 40.8 GL We have set the following target: Bathroom 44.7 GL Toilet 17.5 GL “Implement water conservation Laundry 17.5 GL and recycling strategies to help Kitchen 7.8 GL customers reduce water Other 2.0 GL consumption by 15% by 2010” Source: Yarra Valley Water (residential breakdown is based on estimated averages) The elements of water consumption for an average climatic year are as shown in Figure 5 for a total bulk water purchase Figure 6: Water Smart Gardens & Homes Rebates of 194.5 gigalitres (GL)*.

Rebate Statewide Yarra Valley Water Water Consumption by Type Total* Total Customers For the past three years, we have $20 Rebate (water saving products) 2,819 1,305 provided our customers with tangible $150 Rainwater Tank Rebate 997 357 and practical ways to save water. These 19 include the installation of rainwater tanks $150 Greywater Rebate# 12 4 and offering quality mulch products directly to our customers. Total Number of Approved Applications 3,828 1,666

Customers of Yarra Valley Water Source: Yarra Valley Water Environment * Source: Department of Sustainability and Environment are leading the way in water # Greywater rebate increased from $150 to $500 on 8 May 2003 conservation. This is demonstrated by the consistently high number of customers in our licensed area who have qualified for the State Figure 7: Water Conservation Products Government’s Water Smart Gardens Annual Report 2002–03 and Homes Rebates. From 1 January Year Rainwater Tank Rainwater Tank Bulk Mulch Bagged Mulch to 17 June 2003 the scheme achieved Site Visits Installation Orders Orders results as shown in Figure 6. 2001–02 533 298 546 5,062 arra Valley Water arra Valley

Our water conservation programs Y 2002–03 770 467 1,070 5,325 are growing each year, as exhibited in Figure 7. % Increase 44% 57% 96% 5%

Source: Yarra Valley Water * One gigalitre equals one million kilolitres, one kilolitre equals one thousand litres. The 1,000th rainwater tank sold by Yarra Valley Water was installed during the year and, to celebrate this milestone, we donated the tank to a customer in Research who, in turn, decided to donate the money she had saved for the tank to a local charity. During the year, we also sold our 100,000th bag of mulch.

Other initiatives to assist customers to reduce their water consumption in 2002–03 included: Yarra Valley Water’s savewater!™ Efficiency Service –A service for commercial and industrial water users to identify and quantify potential water savings. A key feature of the service is a report that includes a business case for implementing recommendations and payment options. These aim to reduce costs and save water.

20 –To date, over 120 large and small business customers have benefited from the service including Chadstone Shopping Centre, Monash University and Boroondara Environment Council. – Following this success, Yarra Valley Water is now working with other water businesses and authorities to provide the service to their customers under the savewater!™ Annual Report 2002–03 brand. School visits to educate the next generation of water users about To celebrate the 1,000th rainwater tank sold, we water conservation arra Valley Water arra Valley Y donated the tank to a customer in Research who, Four technical water conservation seminars delivered to community in turn, donated the money she had saved for the groups tank to a local charity. Major sponsorship of the savewater!™ program to encourage water conservation, including major awards and the savewater.com.au web site 2 Environment

Ambassadors Program, where we A key element of this is the savewater!™ … the savewater!™ visited community groups to discuss Efficiency Service (see page 20) which water restrictions and how to save identifies and quantifies savings Efficiency Service … water based around a commercial business identifies and quantifies Participation in Housing Industry case. This differs considerably from Association (HIA) Home Show and the traditional compliance approach savings based around a National Water Week to environmental management plans in that it presents a very clear and The signing of a Memorandum of commercial business commercially based action plan Understanding with International with pay-back periods generally less case. This differs Council for Local Environmental than two years. Initiatives (ICLEI) to assist local considerably from the governments to save water. Nine To accommodate the increase in councils in our area have signed resources required to develop and traditional compliance the Memorandum of Understanding facilitate these plans, our existing Key approach to to date. Account Management function will be undertaking a re-alignment. The role of environmental On 30 June 2003, we presented our Key Account Managers will become Water Conservation Plan to the partnership management and facilitation management plans in Department of Sustainability and to help our customers to develop water Environment, as required under our that it presents a very conservation plans. Operating Licence. Our Plan covers clear and commercially the period until 2010. Our water Ongoing Community Education: conservation priorities for 2003–04 Promotional activities, school education, based action plan … include: inserts to customer accounts and participation in National Water Week. Gardening: Develop alliance with the 21 gardening industry, including retail Development of savewater!™ nurseries and other stakeholders, to program: We have been working to promote water saving plant selection, establish an alliance between the water watering design and gardening

industry and the community, to promote Environment practices. water conservation through a program including: savewater.com.au web site, Water Management Plans for Industry savewater!™ awards and savewater!™ and Open Space Managers: Working education program. We have set the with our largest water users we will following target: assist them with the development of water management plans. These plans “Establishment of the Annual Report 2002–03 cover a range of issues and savewater!™ alliance as opportunities to improve efficiency in Victoria’s pre-eminent source of both the use of water and our water conservation information, relationship with large customers. to assist in delivering a arra Valley Water arra Valley consistent approach to water Y conservation across Victoria by December 2004” … In 2002–03, we Non-Revenue Water Leakage is an important issue for The reduction of water lost in the system our business. We have a hotline number conducted a review (non-revenue water) is an important part for the reporting of leaks (Toll free 1800 of achieving our water conservation 003 097) and focus on repairing and of Australian and target. Non-revenue water comprises monitoring leaks as soon as they occur. leakage, water lost from bursts, metering overseas best practice In 2002–03, we conducted a review of inaccuracies, theft, provisions for Australian and overseas best practice to fire-fighting and water used for flushing to find the best find the best available leakage mains during cleaning. In 2002–03, technology. The outcomes of this review available leakage non-revenue water represented are being used in our leakage studies to 12.4% of bulk water purchased. technology. The find more leaks and further reduce our outcomes of this There has been a declining trend in the leakage levels. Our zone metering and proportion of non-revenue water since pressure reduction proposals are review are being used 1997–98 and while we are actively arguably the most extensive and reducing the amount of non-revenue comprehensive in Australia. in our leakage studies water, the breakdown of non-revenue Our target for 2002–03 was to repair water shows that an estimated 9.6% to find more leaks and 80% of leaks within 24 hours, however of all bulk water purchased comprises our performance was only 71%. The real system losses, such as bursts further reduce our sudden increase in burst water mains and leakage. leakage levels … over the summer period resulted in a It is critical that we further reduce backlog of work, which meant many leakage from our system. It is untenable minor leaks took longer than 24 hours to that we ask our customers to reduce repair. The unusually high number of 22 their water consumption unless we water main bursts and leaks also are doing everything possible to resulted in a loss of water from the reduce leakage in our system. system. To try and prevent bursts and

Environment Figure 8: Reduction in Non-Revenue Water (NRW, GL)

50

40.90 40

32.60 30 Annual Report 2002–03 27.28 25.44 25.33 23.57

NRW (GL) 20

10 arra Valley Water arra Valley Y

0 1997–98 1998–99 1999–00 2000–01 2001–02 2002–03

Please note: An annual audit is conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. 2 Environment

Figure 9: Water system and water main breaks

Number of water system breaks Number of water main breaks* 7000 6,329 6,401 6000 5,345 4,855 5000 4,759 4,605

4000 3,561 3,487

3000

2000

1000

0 1999–00 2000–01 2001–02 2002–03

* Water main breaks are counted in total water system breaks, which also includes hydrants and valves.

Please note: An annual audit has been conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. improve our service to customers, our with completion due in October 2003. water mains renewal program targets We are behind schedule due to the need water mains that experience multiple to install extra meters on large mains. bursts and those nearing the end of their Complex system shutdowns are required service life. to enable the meters to be installed whilst maintaining water supply to our By lowering the water pressure in areas customers. with unusually high pressure, we will 23 reduce the flow rate from leaks and We have set the following target for reduce the incidence of burst water reducing non-revenue water: mains. We have set ourselves the target: “Achieve a 25% reduction in

“Reduction in water main bursts non-revenue water per Environment by 9% through water pressure household by June 2008” reduction project” The programs for reducing non-revenue Another important step in reducing water in 2003–04 includes: non-revenue water has been improving Finalise our program to meter 102 our bulk and customer metering. Only water supply zones. Annual Report 2002–03 through accurate measurements can we Reduce water pressure for customers account for and manage non-revenue who have unusually high pressure. water. Accurate metering means we can identify losses, and we have extended Use electronic listening and locating equipment to find and remedy leaks in our program of metering all water supply Water arra Valley Y zones. Our zone metering program to 500 km of water main. monitor water usage and identify leakage in 102 water supply zones is behind schedule by three months, Drought The introduction of water restrictions in November 2002 for the first time in 20 years was a reminder of the importance of saving water. Our water supply system is designed so that restrictions are only required on average once every 20 years. While the restrictions have presented some challenges, overall community feedback on our response to the drought has been positive. Market research conducted in April 2003 across metropolitan Melbourne (1,500 people) showed 96% of people were aware of restrictions. Three quarters of those surveyed claimed they were doing more than required under Stage One Restrictions to save water.

Our Environmental and Customer Consultative Committees expressed disappointment with some aspects of our response to drought. Both Committees expressed frustration that the drought restrictions were not 24 implemented earlier. Market research showed that almost all respondents believe that restrictions were not too severe and two thirds state that current water restrictions were Environment introduced too late.

While we understand the views of our Committees and the general public, we do not believe that restrictions should have been implemented earlier than is

Annual Report 2002–03 defined in the Drought Response Plan. We believe that it is essential to adhere to the Drought Response Plan, which was prepared prior to the drought after community consultation. The Plan arra Valley Water arra Valley Y The introduction of water restrictions for the first provides a quantifiable balance between time in 20 years was a reminder of the importance of community inconvenience and cost of restrictions and the long-term security saving water. We have been very impressed with the of supply. public’s cooperation in reducing water use. 2 Environment

The Plan is based on 90 years of future generations and reduce impacts … We have been very historical data and includes an analysis on the environment. of rainfall and water consumption impressed with the patterns. The Drought Response Plan Impact of Drought on Our sets out a series of monthly water Business public’s willingness savings targets to be achieved under We experienced many operational and cooperation in each stage of restrictions. difficulties caused by the drought and we had to readjust some of our The fundamental principles underlying reducing individual operations, strategies and targets. the Drought Response Plan are: The most notable consequence of the water consumption in sharing the responsibility of saving drought was the significant increase in response to the drought. water across the whole community and burst water mains during summer, as fairly and as equitably as possible. where the predominantly clay soils We thank everyone for minimising economic hardship so dried and contracted, causing pipes that as many business segments as to move and crack (refer to Figure 10 their support and possible remain viable. on page 26). efforts. We strongly restricting discretionary water use, to Our works program was reprioritised, reduce demand on our water supply. additional repair crews commissioned believe that all efforts The Drought Response Plan is a public, and others reassigned, to deal with the to conserve water are statutory document and can be found sudden increase in workload during the on www.yvw.com.au. The Plan will be summer. All bursts and leaks were about working in reviewed in coming years, based on our prioritised to ensure the most urgent were partnership with the experience of implementation. done first, but we were unable to repair all lower priority leaks in our targeted community, and that it It is important to distinguish between timeframe. At the time when the public 25 water saving activities in response to was making an enormous effort to is only by everyone drought and long-term water reduce water usage during the summer conservation behaviour. Different actions months, it was critically important that working together that are required by the community and our we improved our response rates. We we can ensure water Environment business to address these two issues. recognise the exceptional effort from all While it is possible that we can all adopt our staff and our maintenance contractor, supply for future more stringent practices in the short- Abigroup Asset Services – Water Pty term during water restrictions, it is vital Ltd, in dealing with this extra workload generations … that long-term water conservation as well as they did. behaviour becomes a permanent part Annual Report 2002–03 of our everyday behaviour. Towards the end of summer, the rate of water main bursts declined, only to be We have been very impressed with the replaced by a gradual but significant public’s willingness and cooperation in increase in the rate of sewer blockages. reducing individual water consumption Tree roots in search of water tapped into arra Valley Water arra Valley in response to the drought. We thank the sewer causing the sewer pipes to Y everyone for their support and efforts. block. While we managed to respond to We strongly believe that all efforts to these blockages and contain all sewer conserve water are about working in spills in less than five hours, it continued partnership with the community, and that to stretch our resources. The combination it is only by everyone working together of the water main bursts and sewer that we can ensure water supply for blockages directly resulted in $2 million of extra costs in maintenance alone. Figure 10: Water System Breaks / 100 km

12 Water Mains Breaks / 100km Budgeted Water Main Breaks Water System Breaks / 100km

10

8

6

4 Breaks per 100km of Main Breaks 2

0 Jun 2002 Jul 2002 Aug 2002 Sept 2002 Oct 2002 Nov 2002 Dec 2002 Jan 2003 Feb 2003 Mar 2003 Apr 2003 May 2003 Jun 2003

Water restrictions meant that the of the cost of laying a pipeline. We thank planned program to flush naturally all those involved in these construction occuring sediment from our water mains activities for the way they managed this was untenable. Improvements to the transition. aesthetic quality of the water were deemed a lower priority and the planned Sewage Management flushing program was postponed until One of our key roles in protecting the restrictions are withdrawn. environment is achieved by the Growing grass to restore sites after management and operation of our construction was also difficult during sewerage network that consists of 26 water restrictions. We seeded, 8,207 km of sewers, 72 pump stations, hydromulched and planted, but did nine sewage treatment plants and the not water and while this increased transfer of sewage to Melbourne the number of customers dissatisfied Water’s large treatment plants in with the restoration, we were grateful Werribee and Bangholme. Environment for the community’s understanding The community within Yarra Valley and tolerance. Water’s licensed area generates around Water restrictions also made the 122,000 ML of sewage every year. common practice of using water to Of this, about 7% is treated by our compact material when refilling trenches treatment plants, with the remainder

Annual Report 2002–03 unacceptable. A large diameter hose is transported to Melbourne Water’s typically left running on top of an treatment plants. Sewage comprises excavation site for at least 12 hours to approximately 99% water and a range compact the backfilled material. This of other materials including organic caused significant changes to our material, nutrients, micro organisms and arra Valley Water arra Valley Y methods and increased the cost of a variety of inorganic materials. compacting backfill, a large component 2 Environment

Sewage Treatment Plants treatment plants. Our target for the year We operate nine small sewage treatment was 100% compliance and our target for plants in the outer suburban fringes, 2003–04 is also 100%. Results are located in Avonsleigh, Brushy Creek shown in Figure 11 below and Figure 12 (Chirnside Park), Craigieburn, Emerald, on page 28. Healesville, Lilydale, Monbulk, For many years we have monitored the Whittlesea, and Upper Yarra biological health and water quality of the (Launching Place). waterways to which our treatment plants Each of these sewage treatment plants discharge treated water. With the EPA, has a licence from the Environment we have determined what actions need Protection Authority (EPA) that defines to be undertaken to ensure we meet the the quality of treated water that is objective of the State Environment returned to the environment. During Protection Policy by June 2004. This 2002–03 we achieved full compliance Policy ensures discharges from our with our licence requirements for all our sewage treatment plants cause no

Figure 11: Sewage treatment plant compliance 2002–03

Treatment Plant Total Nitrogen Total Phosphorus

Samples Taken Samples Complying % Samples Taken Samples Complying %

Brushy Creek 52 52 100 52 52 100 27 Craigieburn 52 52 100 52 52 100

Healesville 12 12 100 12 12 100

Upper Yarra 26 26 100 26 26 100 Environment

Lilydale 52 52 100 52 52 100

Emerald: Ferres Rd 12 12 100 12 12 100

Avonsleigh: Symons Rd 12 12 100 12 12 100

Monbulk* N/A N/A N/A N/A N/A N/A Annual Report 2002–03

Whittlesea 12 12 100 12 12 100

Summary Totals 2002–03 230 230 100 230 230 100 arra Valley Water arra Valley * Please note: N/A (not applicable) means either no EPA licence limits for this parameter at the plant or the number of samples taken were insufficient for valid statistical results. Y Figure 12: Sewage treatment plant compliance 2002–03

Treatment Treatment Volume % Overall Biochemical Oxygen Suspended E.coli Plant Method Treated Compliance Demand (BOD) Solids

KL All Samples Samples % Samples Samples % Samples Samples % Parameters Taken Complying Taken Complying Taken Complying

Brushy Creek TERTIARY 3,885,049 100 52 52 100 52 52 100 52 52 100

Craigieburn TERTIARY 818,407 100 52 52 100 52 52 100 52 52 100

Healesville TERTIARY 340,022 100 12 12 100 12 12 100 12 12 100

Upper Yarra TERTIARY 602,496 100 26 26 100 26 26 100 26 26 100

Lilydale TERTIARY 2,295,180 100 52 52 100 52 52 100 52 52 100

Emerald: Ferres Rd TERTIARY 50,091 100 12 12 100 12 12 100 12 12 100

Avonsleigh: Symons Rd TERTIARY 92,538 100 12 12 100 12 12 100 12 12 100

Monbulk TERTIARY 10,653 100 12 12 100 12 12 100 12 12 100

Whittlesea TERTIARY 174,143 100 12 12 100 12 12 100 12 12 100

28 Summary totals 2002–03 8,268,579 100 242 242 100 242 242 100 242 242 100

Please note: An annual audit has been conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. Environment detrimental change in the environmental from the Symons Road (Avonsleigh) quality of the waterways. The actions sewage treatment plant, by include: decommissioning the plants as part of Installing sand filters at the Brushy the Emerald-Cockatoo Sewerage Creek (Chirnside Park) and Lilydale Scheme.

Annual Report 2002–03 sewage treatment plants to reduce Our original plan to close Craigieburn phosphorus. sewage treatment plant was revised Cease discharge to Plenty River from after the discovery that the endangered the Whittlesea sewage treatment Southern Bell Frog may be harmed by plant by achieving 100% reuse of the reduction in flows to Merri Creek if arra Valley Water arra Valley Y treated effluent. the plant was closed. Additional Cease discharges to Menzies Creek environmental studies will determine the from the Ferres Road (Emerald) sewage future of the plant. treatment plant, and to Wattle Creek 2 Environment

In 2003–04, we propose to further improve our treatment plant performance by: Assessing the requirements, and developing an ongoing stream monitoring program, for Lilydale and Brushy Creek sewage treatment plants. Constructing a new plant at Whittlesea to increase capacity from 500,000 litres/day to 1.5 million litres/day to accommodate population growth. Installing an ultraviolet disinfection system at Craigieburn plant, to replace the existing chlorine system.

Biosolids Biosolids refer to the processed solid material left behind after sewage is treated. Biosolids are rich in nutrients and organic material, which makes them a good soil additive. Only two of our plants, Lilydale and Craigieburn, currently store the solid material that can be processed into biosolids (refer to 29 Figure 13 on page 30). The remaining plants have the raw product transferred to Melbourne Water’s treatment plants. We have set ourselves a target of: All sewage treatment plants achieved 100%

“Recycling all biosolids compliance with EPA standards for water returned Environment by 2005” to the environment. We were unsuccessful in establishing a green organic and biosolids recycling project at our Lilydale sewage treatment

plant as none of the proposed treatment Annual Report 2002–03 methodologies were commercially viable. We have not stopped looking for viable solutions for biosolids, and are currently seeking expressions of interest arra Valley Water arra Valley from the open market for long-term Y solutions in recycling biosolids. 30 Yarra Valley Water Annual Report 2002–03 Environment wet weather… sewers overflow during number ofspillswhen system toreduce the thesewerageupgrading for ongoing program … We have anextensive omsin toverifythatrobustsystemsareinplaceandusedensuretheaccuracyofdatabeingreported. Commission, onbehalfoftheEssentialServices Anannualaudithasbeenconductedbyindependentauditors,CH2MHillPtyLtd, Please note: Relief Structures are installedonthe overflow duringwetweather. Emergency r for upgradingtheseweragesystem to We self-imposed target of2,000spills. spills, whichwaswellbelowour r exceeding ourOperatingLicence within fivehoursduringtheyear, We to copewiththeflow. and whensewersare notlarge enough rainfall aswaterleaksintothesewers, Spills canoccurduringperiodsofhigh spills from enteringtheenvironment. and publichealthistoprevent sewer A keyrole inprotecting theenvironment Sewer Spills educe thenumberofspillswhen sewers equirement of90%.We had595 haveanextensiveongoingprogram contained100%ofallsewerspills htlsa5 0 0 0 0 0 0 15,915 0 0 0 0 0 0 0 0 0 12,519 0 0 51 0 2,927 0 0 4 0 0 3,396 totals Summary 0 0 23 0 Whittlesea 851 24 Monbulk 0 138 SymonsRd Emerald: 77 0 FerresRd Emerald: 288 Lilydale Upper Yarra 1,471 Healesville Craigieburn Brushy Creek Tr Sewage treatment plantbiosolidsvolumesandstorage 2002–03 Figure 13: amn ln Biosolids eatment Plant asPoue Ms esd asSoe % MassStored MassReused Mass Produced dytne)(ons dytne)Reused tonnes) (dry (tonnes) tonnes) (dry only 59were compliant. design standard, howeverby30June, compliant withthe‘one-in-five-year’ 106 Emergency ReliefStructures tobe Our target for2002–03was 63 ofour on average,onceeveryfiveyears. except inextreme stormswhichoccur, means thatsewersshouldnotspill standard by2011–12.Thisstandard Relief Structures (ERSs)tomeettheEPA Our target istoupgradeallEmergency prioritise theupgradeofsystem. monitored andthespillhistoryisusedto stormwater system.Thesesitesare means ofacontrolled overflowtothe manholes orcustomerproperties by structures prevent uncontrolled spillsat in particularduringrainfallevents.These sewer systemduringtimesofhighflow, sewer networktoprovide relief tothe 2 Environment

Figure 14: Volume of sewage spilled

1999–00 2000–01 2001–02 Target 2002–03 Actual 2002–03 Target 2003–04

Volume of sewage spilled from all ERSs 22.3 3 0 N/A 0.9 N/A due to extreme rainfall event (ML)

Volume of sewage spilled from all ERSs 24 59 1 N/A 0.3 N/A due to hydraulic deficiency (ML)

Total spill volume from ERSs (ML) 46 62 1 N/A 3.0 N/A

Volume of sewage spilled from ERSs as 0.04 0.05 0.0007 0.0319 0.0026 0.0303 a total of sewage collected (%)

Annual rainfall (mm) 697 701 628 N/A 478 N/A

Sewer spills contained within five hours (%)* 100 99.8 99.9 100 100 100

Please note: An annual audit has been conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. This process has been audited by GHD Pty Ltd as part of our environmental audit program to ensure the accuracy of the data.

*The Operating Licence target for sewer spills contained within five hours is 90%.

Functional designs for five, detailed Upgrading pumping station emergency designs for three and construction work or storage capacity, to allow sufficient construction tenders for 10 are in progress. time for work crews to attend a breakdown without spillage. This 31 In order to further protect the environ- program is behind schedule and may ment we have set the following target: require an alternative design solution. “Reducing sewage spills by 30% The final completion date will be by June 2008” subject to these issues being resolved. Environment Ongoing cleaning of sewers as The following activities were undertaken identified. in 2002–03 to reduce the number of sewer spills: The Hydraulic Improvement Program Hydraulic Improvement Program. for 2002–03 is behind schedule due to Includes pipe upgrades for the Ivanhoe the fact that we had not anticipated

Branch Sewer (Pascoe Vale) and the the level of design issues in developing Annual Report 2002–03 Faversham Road Branch Sewer these projects (eg land purchase, (Balwyn). Underground storages were planning permits and route selection). constructed in Diamond Creek, This includes the construction of Eltham, Ringwood North and Branch Sewers in Balwyn, Ivanhoe arra Valley Water arra Valley Warrandyte. and Darebin and a flow control facility Y Continuing our process of renewing in Mont Albert. All of these projects are our existing sewerage network (13 km due to be completed by February renewed). 2004. Construction of emergency storages at several locations was also Ranking poor performing sections of initially delayed but these are expected the sewerage network and scheduling to be completed by the end of them for investigation and upgrade September 2003. where needed. In 2003–04 the following activities are proposed to reduce the number of sewer spills: Spend $10.5M to continue our current program of upgrading sewers. Continue planning and design for the Merri Creek Diversion Sewer to cater for growth in the northern suburbs and reduce the incidence of sewer spills. Upgrade 11 pumping stations to have three hours emergency storage, at a cost of approximately $1M.

Trade Waste Trade waste is wastewater produced from the operation of industry and commercial businesses. We are required to accept trade waste discharges to our sewerage system providing that it complies with the Trade Waste Standards contained in our Operating Licence. These standards are set by the State Government after taking into consideration the sewage treatment 32 plant capabilities, the need to maximise the life of our assets, the need to protect the health and safety of sewerage workers and the need to protect the

Environment environment.

We currently have approximately 6,000 customers who are licensed to discharge trade waste into our sewers. The vast majority are low risk discharges, such as fast food outlets Annual Report 2002–03 and small businesses. The remainder are ranked in accordance with the risks they present and are audited and monitored in accordance with the

arra Valley Water arra Valley risk ranking. Y Throughout the year we continued our program of Frequency of inspection is determined by the content of the discharge, with upgrading sewers. high risk discharges audited more frequently. In addition to our auditing and inspections, risk profile plans and waste management plans are produced 2 Environment

by the higher risk customers. We review The primary obstacle is that the program … We currently have these plans to rank the discharge risk requires significant expenditure on and operational profiles, and we also infrastructure for relatively few approximately 6,000 consult with customers to promote properties. For example, during 2002–03 waste minimisation and cleaner we spent $540,000 to sewer 16 customers who are production processes. properties. We also have difficulty in licensed to discharge quantifying the environmental benefits We almost met our target to have all high of the program. Currently the program is risk trade waste customers submit a trade waste into our ranked on the basis of value for money, Waste Management Plan in 2002–03, public health and environmental sewers. The vast however one of the 35 Waste outcomes. We need to improve our Management Plans was not received by majority are low risk environmental ranking and have started 30 June. The customer responsible has work with councils to try to achieve this. engaged a consultant to prepare the discharges, such as Plan which has since been submitted. There is also a financial impact to fast food outlets and customers, who are required to pay a Unsewered Areas connection fee plus the cost of the small businesses. Our sewerage backlog program targets plumbing services to connect the The remainder regional areas that are currently household plumbing to the sewerage unsewered and treat waste through system. We believe this has discouraged are ranked in septic tanks. Unsewered properties can customers from connecting to the newly cause environmental and health risks, provided infrastructure. accordance with the as well as problems with odour and To put the whole program into visual amenity. risks they present perspective, a quarter of a billion and they are audited The backlog program is an important dollars is required to sewer 33 issue for us, because of the potential approximately 16,000 properties. and monitored in environmental and health issues Our average annual expenditure on associated with poorly functioning septic this program is $5.5 million. accordance with the systems, in addition to the ‘nuisance’

The majority of the money spent on Environment aspect to customers. One of the risk ranking … backlog during 2002–03 was for the criticisms from customers and local delivery of the Emerald Cockatoo councils is that the program, which Sewerage Scheme. After many years of will require 40 years to complete, investigation, planning and design, the is too slow. scheme is coming together with the

construction of the Emerald Cockatoo Annual Report 2002–03 Sewage Transfer underway.

Figure 15: Trade waste compliance Water arra Valley Y

1999–00 2000–01 2001–02 Target 2002–03 Actual 2002–03 Target 2003–04

Trade waste compliance (%) 94.3 92.8 94.1 90 94 90

Please note: An annual audit is conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. … By establishing a This system will improve current sewage 13,000 ML/annum of drinking water treatment and disposal methods in the substitution within 50 years, from new Recycling Team, areas of Cockatoo, Avonsleigh, Emerald, recycled water initiatives and the Clematis and Menzies Creek and it will installation of rainwater tanks, has been we have dedicated the allow the closure of two sewage set to help achieve the objective of no resources in order to treatment plants. The system comprises new storage dams for Melbourne. six sewage pumping stations and 15.8 By establishing a new Recycling Team, km of pipelines, extending from understand, establish, we have dedicated the resources in Cockatoo to the existing Monbulk Creek order to understand, establish, manage manage and deliver our Main Sewer within South East Water’s and deliver our strategy for recycling. licensed area. Stage one of the pipeline, strategy for recycling. Through this, we are aiming to exceed from Cockatoo to Avonsleigh, was the State Government water recycling completed in 1998 and stage two is Through this, we are target of 20% for Victoria by 2010, by currently under construction. aiming to exceed the doing so by 2008. Design also started on the Monbulk The majority of our sewage is treated at State Government Transfer Main that links the Monbulk Melbourne Water’s treatment plants and, township to the Emerald Cockatoo to achieve the State Government’s 20% water recycling target Transfer Main. This will allow us to close reuse target by 2010, major reuse the Monbulk sewage treatment plant and of 20% for Victoria schemes will need to be developed ultimately service around 7,500 around these two plants. We shall by 2010, by doing so properties in the Emerald, Cockatoo and continue to work in partnership with Monbulk areas. by 2008 … Melbourne’s other water businesses to Recycling achieve this target. 34 Recycling of treated wastewater is of Recycled water can significantly benefit growing importance for both water the community in the following areas: conservation and environmental Drinking water replacement. Reduced reasons. It is a complex matter with demand on our drinking water supplies Environment many recycling issues generally not well by substituting drinking water with understood – we are still learning. recycled water via a third pipe system to To date, most recycling schemes flush toilets, water gardens and irrigate across the State have been driven by public open spaces and recreational environmental needs. Our Operating areas such as golf courses. Licence and EPA discharge licences are Annual Report 2002–03 Environmental. Improving the quality of geared towards maximising reuse and our local waterways by either increasing are supported by State Environment or reducing discharges where Protection Policies to protect inland appropriate. waterways.

arra Valley Water arra Valley Economic development. Using Y The Water Resources Strategy for recycled water to develop high Melbourne acknowledges that recycled value industry, agriculture and water is a key component of water horticultural crops. resources management. A target of 2 Environment

Figure 16: Recycled water volumes provided by our sewage treatment plants — 2002–03

Treatment plant Treated Water

Total Volume Produced kL *Total Volume Recycled kL % Reused

Brushy Creek 3,885,049 69,203 1.78

Craigieburn 818,407 150,139 18.34

Healesville 340,022 0 0

Upper Yarra 602,496 300 0.05

Lilydale 2,295,180 0 0

Emerald: Ferres Rd 50,091 0 0

Emerald: Symons Rd 92,538 0 0

Monbulk 10,653 0 0

Whittlesea 174,143 35,661 20.48

Summary totals 8,268,579 255,303 3.09

An annual audit conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. 35

We have set the following target: Development of targeted schemes where clusters of high volume users “Achieving a 20% effluent reuse are situated. Potential high users target for our sewage treatment include agriculture, industry, Environment plants by 2008” recreational facilities and golf courses. We believe that recycled water should Recycling around existing sewage be an integral part of the urban water treatment plants. cycle. However, to date, recycled water schemes have been expensive and will To achieve our 20% target by 2008, it is need to be justified by a consistent triple estimated we will need to recycle Annual Report 2002–03 bottom line analysis in the future. It is approximately 1,900 ML/year. We are likely that our greatest opportunity to currently investigating reuse schemes at recycle water in our area will be: all of our treatment plants to achieve this target. The volume of reuse we could Implementation of third pipe schemes arra Valley Water arra Valley

potentially achieve is summarised in Y to flush toilets, water gardens and Figure 17 on page 36. irrigate public open space in targeted new growth areas and developments. Figure 17: Potential Annual Reuse Volumes (ML Recycled)

3500

3000 KEY

2500 Aurora 3rd Pipe Aurora Irrigation 2000 Yering Stage 2 Yering Stage 1 1500

ML Recycled Healesville 1000 Whittlesea Reuse Craigieburn 500 Brushy Creek

0 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12 2012–13

Source: Based on Yarra Valley Water estimates

Recycling Projects The Whittlesea reuse scheme has been We have not committed to beyond our designed to manage a total effluent flow 20% target at this stage. In 2002–03, of 400ML/annum. The current flows are we conducted numerous studies to approximately 170ML/annum. Initially, investigate and promote recycling the scheme will service the new golf opportunities in our licensed area. Major course in Donnybrook Road being recycling studies were undertaken in: constructed by the City of Whittlesea. We are also looking at providing recycled 36 Whittlesea water to the Northern Metropolitan We continued to work towards our Institute of TAFE on Plenty Road. goal of 100% reuse for the Whittlesea Yering sewage treatment plant. The completed components of the project include a six The Yarra Valley Irrigation Strategy, Environment kilometre pipeline from the treatment developed last year, investigated the plant to the new golf course in the City potential for establishing a recycled of Whittlesea, a pump station to supply water scheme in the Yarra Valley. recycled water to the golf course, design It examined the demand for recycled of a dam to store recycled water during water in the areas surrounding our four sewage treatment plants in the area –

Annual Report 2002–03 winter for irrigation during summer and a chlorine dosing facility on the outlet of Brushy Creek, Lilydale, Healesville the winter storage dam to ensure the and Upper Yarra. water meets Class B water quality standards. The project also involves arra Valley Water arra Valley

Y acquiring land for the storage dam and negotiating with potential customers for the scheme. 2 Environment

The Yering area was identified as the The Goulburn Scheme most viable, however further We developed a concept of diverting investigations indicated that while there sewage from the northern parts of is a strong demand, a significant Melbourne, and treating it to produce financial subsidy is required to establish high quality recycled water to then the reuse scheme. We are working transfer to the Goulburn Valley. The towards identifying the most appropriate project would: ways to progress this scheme further, Avoid the need to spend $150M to and plan to engage the community in provide new sewers to cater for growth the next stages of the project. and reduce wet weather sewage spills Healesville Provide around 33 GL per annum of The initial study in the Healesville area recycled water for irrigation and/or to provide environmental flows in the did not identify sufficient demand or The Yering area is currently being investigated for a water significant opportunity to establish a Murray-Darling Basin reuse scheme recycled water scheme. However, further Reduce discharges from the Western investigations identified an opportunity Treatment Plant (Werribee) to Port to provide recycled water to the RACV Phillip Bay by 12%, thereby reducing Golf Course and Healesville Racing the amount of nitrogen discharged to Club. If implemented, this reuse scheme the Bay will achieve 20% reuse from the Meet around half of the industry’s 20% Healesville sewage treatment plant. recycling target for Melbourne. Craigieburn Preliminary costing concluded that the The Craigieburn Recycled Water project is not presently as financially 37 Strategy aims to determine the demand viable as alternative recycling projects. for recycled water in the northern suburbs of Melbourne, focusing on To meet our recycling target the following industry, agriculture, municipal use activities will be undertaken in 2003–04: (sports fields, parks and gardens) and Develop an irrigation and third pipe Environment new developments. recycling scheme at Aurora (see page 38) Continue work to achieve 100% We are conducting market research to recycling at Whittlesea sewage determine the quantity of water currently treatment plant used, potential to use recycled water, quality requirements, seasonality of Establish market and start design of the demand, willingness to pay and so on. Healesville reuse scheme Annual Report 2002–03 This information will be used to Establish market and start design of the determine the most appropriate way to first stage of the reuse scheme in the implement water recycling in the area. Yering area. Investigate the agricultural use of recycled water in the Yering area arra Valley Water arra Valley Y Investigate recycling schemes for watering sporting fields and public open space near Scotch College and golf courses adjacent to the Eastern Freeway. Aurora – Sustainable Urban Development Aurora is a new housing development potable water and sewerage services located north of Epping, comprising up to this unique development with an to 9,000 homes. It is being developed emphasis on sustainability principles. by VicUrban (formerly the Urban and It is anticipated that customers living in Regional Land Corporation). Yarra Valley Aurora will: Water is working in partnership with VicUrban to deliver recycled water, Use at least 50% less potable water than traditional suburbs; and Discharge less nutrients to local waterways and Port Phillip Bay, compared to traditional developments.

We believe that Aurora gives us an opportunity to be involved in a practical example of what a sustainable develop- ment will look like in the future. This will create knowledge and technology that can be applied to achieve more sustainable water management for our customers in other developments.

Aurora represents a steep learning curve for our business. One of the challenges facing us is to identify what is and what is not truly sustainable. We need to 38 ensure that what we achieve through water conservation is not at the expense of increased energy usage or waste production. Aurora is a great opportunity for self-contained holistic analysis

Environment because the project is seeking to be a sustainable urban development, simultaneously addressing social, transport, habitat, water, energy and materials issues in a truly integrated way.

Annual Report 2002–03 Aurora will feature: Local treatment of water-borne wastes and reuse of the treated wastewater. Wastewater will be treated to at least Class A standard arra Valley Water arra Valley

Y for use in toilets, gardens and car washing, and to class B for irrigation of pasture*

This example illustrates one of the types of drainage * Class A water is defined by EPA Guidelines as being suitable for non-potable (non-drinkable) systems that will be used at Aurora. uses with unrestricted public access. Class B is defined as suitable for agricultural and some industrial use. 2 Environment

Greenhouse Gas Emissions and Energy Use Use of low water and energy We are fortunate to have one of the … Aurora represents a consumption appliances (where lowest energy consuming infrastructure possible) systems of any water company in the steep learning curve for Pilot of rainwater (tanks) for use as a world. Harvesting water from our our business. One of the hot water source. Rainwater will be protected catchments means very used to supply hot water to little energy is consumed in treatment challenges facing us is bathrooms and kitchens. A series and our water flows by gravity to of trials will be conducted over the most houses in Melbourne (refer to to identify what is and next year, to ensure the safety of the Figure 18 on page 40). Sewage also water, and to address the energy flows mainly by gravity to the Werribee what is not truly consumption of pumps and and Bangholme treatment plants (refer sustainable. We need to disinfection units. to Figure 19 on page 40). ensure that what we Numerous changes to our business Our operations generate approximately are required to accommodate the 24,571 tonnes of CO2 equivalent achieve through water Aurora project. Some of these include: per year (results GHD Pty Ltd Audit 2002 — refer to Figure 20 on page 40). conservation is not at Development of engineering design Our initiatives to reduce greenhouse standards for third pipe systems. gas emissions during the year included: the expense of increased Development of plumbing standards Continued commitment by the whole for third pipe systems and rainwater energy usage or waste business to the Greenhouse tanks. Challenge program. Previously the production … Changes to our pricing to Challenge only related to our accommodate recycled water and Mitcham office. possibly rainwater tank systems. Upgrading our commitment to the 39 Installation of two meters – one on Greenfleet program by offsetting with the recycled water pipe and one on additional tree-planting the extra the potable supply. kilometres our company vehicles Development of maintenance and record each year, some 14,000 km

ownership strategies for rainwater per vehicle, as opposed to the Environment tanks. standard Greenfleet provisions.

One of the dilemmas posed by the Our actions in the Mitcham office have Aurora project is that the initial resulted in actual greenhouse gas construction cost of sustainable abatement totalling 764 tonnes of development is higher than traditional CO -equivalent emissions. Actions 2 Annual Report 2002–03 development in the short term. Given included an improved building also that many of the environmental management system, changing the benefits that Aurora creates accrue to set temperature point of computers the broader community, it poses the and air conditioners, installation of a question as to who should pay this new chiller system with energy Water arra Valley Y additional cost. VicUrban and Yarra saving features and removal and Valley Water are currently discussing replacement of fluorescent with options with the State Government. triphosphor lamps.

We have set ourselves the target of:

“Meeting VicUrban’s timetable to develop Aurora as a showcase of sustainable development” We also have a number of actions to Car Usage reduce greenhouse gas emissions from The majority of our staff drive cars to our our infrastructure system. Actions Mitcham office, in Melbourne’s eastern completed at our operational sites suburbs. While we offset our greenhouse during the year included energy audits gas production via the Greenfleet conducted across our operations, program we believe that we could do variable speed drives installed at more to reduce our car dependence. Surrey Hills pump station, installation These include the installation of bicycle of high efficiency motors and racks and the purchase of a “hybrid” car. registering the vehicle fleet with the Greenfleet program.

Figure 18: Energy consumption for water supplied

Yarra Valley Water Australian average

kWh/ML 19 300

kWh/Property 6 123

Source: WSAAfacts, The Australian Urban Water Industry, (2001)

40 Figure 19: Energy consumption for wastewater services

Yarra Valley Water Australian average

kWh/ML 70 374 Environment kWh/Property 18 133

Source: WSAAfacts, The Australian Urban Water Industry, (2001)

Annual Report 2002–03 Figure 20: Our energy consumption

2001–02 2002–03

Total electricity used for Mitcham office 1,576 MWh 1,388 MWh arra Valley Water arra Valley Y Total electricity used for operational sites 13,286 MWh 13,139 MWh

Total diesel used for operations and Mitcham office 10,500 litres 7,536 litres

Total unleaded fuel used 330,000 litres 363,410 litres

Source: Yarra Valley Water (figures based on 2002–03 accounts available at time of print) 2 Environment

Figure 21: Proposed Activities for 2003–04

Action Reduction in greenhouse gases Target

Greater control of air blowers at Brushy Creek sewage treatment plant 140 tonnes/year By June 2004

Review pump stations to reduce the number of times each pump is started per year Reduction of 28 tonnes annually By June 2004

Increase account with Greenfleet to ensure all vehicle emissions are A reduction of 450 tonnes Ongoing offset by trees being planted for the year

In April 2003, we purchased a Toyota Environment Improvement Prius, which uses unleaded petrol and Plan (EIP) electric power generated from a self- Our Environment Improvement Plan (EIP) charging battery. The Prius uses up to is a series of programs designed and 50% less fuel and has up to 80% less implemented in consultation with the emissions than regular unleaded independent Environmental Consultative vehicles as the petrol engine is only Committee (ECC) and overseen by the activated when more power is required. EPA. Its purpose is to help us ensure The hybrid car was trialled by employees continuous improvement in our during the year, with staff encouraged to environmental outcomes. use the car whenever possible. Feedback indicates that the car is easy The full EIP is detailed from page 110. to use and comfortable to drive, with From a total of 67 actions, 34 are 41 performance and responsiveness similar complete or achieved, 15 are ongoing, to a petrol engine vehicle. The eight are on target and 10 are behind economics associated with this car is schedule, largely due to unforesenn less certain. The initial purchase price is planning issues. This plan is expected higher than the equivalent petrol only to be completed during 2003–04. Environment cars and the resale value after the three year lease is unknown. These factors and the environmental benefits will be considered during 2003–04 to help us to decide whether to purchase more in the future. Annual Report 2002–03 arra Valley Water arra Valley Y 3

Customer Service

During the year, we due to a combination of a in call centre resources. continued to implement our higher than forecast volume We would like to extend our Customer Service Strategy, of calls during summer, thanks to our staff and our which aims to increase due to a high number of maintenance contractor, customer satisfaction and water main bursts and Abigroup Asset Services — reduce costs. Although we leaks, and extra calls Water Pty Ltd, for their exceeded most of our received on our emergency outstanding efforts in customer service line regarding water coping with the extra performance targets we did restrictions. Approximately workload during summer. not meet our target of 95.8% of emergency calls answering 97% of were answered within emergency calls within 30 30 seconds, in part due seconds. This result was to a temporary increase 3 Customer Service

Our previous Managing Director, The Essential Services Commission … we have learnt a lot Peter Harford, was passionate about publishes an annual report that customer service and this service ethos compares the performance of the three about communicating is an enduring legacy throughout our retailers across a broad suite of common business today. Yarra Valley Water’s Key Performance Indicators (KPIs). water restrictions to commitment to customers has been We take these KPIs very seriously and our customers and recognised on many occasions in the the ability to regularly and accurately past, with the business winning State benchmark our performance against we anticipate that this and National awards for customer similar businesses has created the service excellence from the Australian impetus for service and environmental will be reflected in Customer Service Association and the improvement. an improvement in Customer Service Institute of Australia. We monitor customer satisfaction We operate as a monopoly within our through a range of market research customer satisfaction licensed area. Our customers cannot techniques. Results have remained results … choose their water supplier and we consistently positive for our major believe that imposes an even greater customer groups, however the results obligation on us to strive for excellence for January–May 2003 declined primarily in customer service. in our business segment. This may have been due to the addition of a new High levels of customer service are also question “Management of Water driven by the comparative competition Restrictions”. We have learnt a lot about model used to stimulate innovation and communicating water restrictions and continuous improvement in Melbourne’s we anticipate that this will be reflected in three water businesses. an improvement in customer satisfaction results in future. 43

Figure 22: Customer Satisfaction Index Results (Excellent, Very Good and Good)

Customer satisfaction Dec 99– Jun 00– Dec 00– Jun 01– Dec 01– Jun 02– Jan 03– Customer Service May 00 Nov 00 May 01 Nov 01 May 02 Nov 02 May 03*

Residential customers (%) 86.0 88.9 89.1 90.6 90.2 91.3 90.3

Business customers (%) 83.2 86.1 88.1 87.8 91.0 92.4 85.2

Source: Millward Brown Australia, 2003 Annual Report 2002–03

Figure 23: Customer Satisfaction Index — (Excellent and Very Good) arra Valley Water arra Valley Y Customer satisfaction Dec 99– Jun 00– Dec 00– Jun 01– Dec 01– Jun 02– Jan 03– May 00 Nov 00 May 01 Nov 01 May 02 Nov 02 May 03*

Residential customers (%) 51.5 52.3 52.5 52.5 56 55.9 56.9

Business customers (%) 44.9 47.7 48 51.9 54.4 56.4 50.8

Source: Millward Brown Australia, 2003

* Please note: Research review conducted in December 2002 We have set ourselves the following target:

“Our target for customer satisfaction is to achieve an increase in customers rating us ‘very good’ and ‘excellent’ from 56% to 60% by 2006”

This new target presents a significant challenge to ensure that the business remains focused on customers. Water Quality Our market research over the years consistently identifies the quality of the water that we provide to be the highest priority for our customers.

We measure our water quality using two main indicators — laboratory testing for safety and aesthetic compliance to standards, and water quality complaints from customers for aesthetic quality at the customer’s tap.

44 Treatment and Testing Most of Melbourne’s water is drawn from catchments in pristine, natural mountain areas. Melbourne is one of the few places in the world where the water is protected from the pressures of urban

Customer Service and rural development. This means the risk of contamination is low. Our water supply catchment is stored in large reservoirs over a long period of time, allowing for natural purification by sunlight and time for sediment to settle.

Annual Report 2002–03 Consequently, Melbourne’s water requires very little treatment, which also avoids the high energy costs of producing quality water incurred by the vast majority of western cities. arra Valley Water arra Valley Y The process of ensuring safety of the Most of Melbourne’s water is drawn from water supply includes disinfection of all sources of supply and routine monitoring catchments in pristine, natural mountain areas. to confirm compliance with guidelines set by health regulations and the 3 Customer Service

National Health and Medical Research water and we felt that it was inappropriate … Melbourne’s water Council. This involves collecting samples during periods of water restrictions (refer on an ongoing basis along the supply to Figure 25 on page 46). requires very little system at customer taps, reservoirs and The number of water quality complaints storage tanks. The samples are analysed treatment, which in 2002–03 was lower than last year by an independent laboratory, which is even though minimal pipe cleaning was also avoids the high licensed by the Department of Human conducted. The decline in complaints is Services and accredited by the National believed to be because customers used energy costs of Association of Testing Authorities. less water on hot days due to water producing quality Water Quality Complaints restrictions, resulting in lower flow rates in our water mains and minimal water incurred by Water quality complaints are primarily resuspension of natural sediments in the about ‘dirty’ water caused by sediment pipes (refer to Figure 26 on page 46). the vast majority of from our dams and catchment areas. Complaints about dirty water are We have set the following target: western cities … generally higher for Yarra Valley Water “Reduce volumes of water than for the other two metropolitan quality complaints to 4 per water businesses. This is because 1,000 customers by June 2007” our customers are closer to the source of supply from Silvan Reservoir and One of our dilemmas is that we are not therefore sediment settles in our water sure that recording water quality supply system and periodically complaints is a good measure of how our resuspends when flow rates in pipes water quality is perceived by our change. This may result in a variable customers. Our market research quality of supply to our customers. suggests that some people who are 45 unhappy with water quality do not make a One of the ways we endeavour to complaint. However, we are yet to find a improve water quality is by flushing satisfactory alternative. Market research water mains to clear naturally occuring also indicates that some of our customers sediment from the pipes. However, we are reluctant to drink water directly from suspended this program during the year

the tap at home. This is of concern to us Customer Service as the flushing of mains uses potable

Figure 24: Water Quality Test Results

2000–01 2001–02 Target 2002–03 Actual 2002–03 Target 2003–04 Annual Report 2002–03

% of samples with zero E.coli/100mL* 99.90 99.98 99.5 99.94 99.5

% of samples with no more than 20 total coliforms/100mL* 96.00 98.30 95.0 99.29 95.0 arra Valley Water arra Valley

An annual audit was conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy Y of the data being reported. Samples are analysed and reported by WSL Consultants Pty Ltd, an external organisation with NATA certification. Results are reported to the Department of Human Services.

*The Operating Licence target is 95% for E.coli and 90% for Total Coliforms.

Please note: Full details of all water quality tests are contained in our Annual Water Quality Report. For a copy of this report refer to our web site www.yvw.com.au or by calling 131 721. 46 Yarra Valley Water Annual Report 2002–03 Customer Service the databeingreported. toverify Commission, onbehalfoftheEssentialServices An annualauditisconductedbyindependentauditors,CH2MHillPtyLtd, * Mainscleaningprogramreducedbecauseofdroughtandwaterrestrictions. of our service … of ourservice increasing theefficiency by problems experienced the volumeofservice strategy are toreduce The key elementsofthe costsless. service that bettercustomer … We stronglybelieve customerswhile iue2:Water mainscleaned Figure 25: per 1,000connections Wa Water Qualitycomplaints Figure 26: Wa e ult opans524542545550515.2 5.1 5.0 353* 5.5 5.4 827* 4.2 4.5 5.2 1,303 ter qualitycomplaints 1,482 ter mainscleaned(km) 979 989 990 000 010 agtAta Target Actual Target 2001–02 2000–01 1999–00 1998–99 1997–98 990 000 010 2002–03 2001–02 2000–01 1999–00 customer servicefunction. and underpinsthefuture direction ofthe our businessinasustainabilitycontext The Strategycontinuestoberelevant for increasing theefficiency ofourservice. experienced bycustomerswhile the volumeofserviceproblems elements ofthestrategyare toreduce customer servicecostsless.Thekey efficiency. We strongly believethatbetter of improving serviceandincreasing Service Strategywiththedualobjectives In 2001,wedevelopedaCustomer Service Responsiveness and generatesgreenhouse gases. transport ofbottledwaterusesenergy significant packagingwaste,andthe is comparativelyexpensive,generates purchasing bottledwater. Bottledwater feel thatmanypeopleare unnecessarily because weknowitissafetodrinkand that robustsystemsareinplaceandusedtoensuretheaccuracyof 2002–03 achieved: r Our focusondeliveringhighqualityand eliable servicestocustomersin experiencing financialdifficulty. of ourprograms forassistingcustomers with thefinancialcounsellingindustry) Continued development(inconjunction to customers. more efficient telephoneservices to simplifycallhandlingandprovide our CustomerContactCentre designed Implementation ofnewsystemsin telephone billpaymentsystem. Implementation ofanewautomated need forfurthercontact. r Over 95%ofcontactsbycustomers estimated billssenttocustomers. A reduction of38%inthenumber of complaints of14%. Centre of18%andareduction in by customerstoourCustomerContact A reduction inbilling-related contacts 020 020 2003–04 2002–03 2002–03 esolved inthefirstinstancewithout 3 Customer Service

We also consolidated our integrated approach to call handling, where our multi- skilled staff handle both emergency and account enquiry functions. This has attracted much interest from other utilities where, traditionally, emergency and account call handling are separately managed functions.

During the year, we accepted an invitation by the American Water Works Association to participate in a research project of best practice in customer service. Yarra Valley Water was the only non-USA water utility invited to participate in this project. We are looking forward to the results of this benchmarking to enable us to further improve our customer service.

Response to Customer Enquiries Our targets for customer contact are:

“98% First Contact Resolution by June 2006” 47 This means we will aim to resolve 98% of all contacts received by customers in the first instance, without the need for Our Customer Service Strategy aims to improve further contact by the customer or service and increase efficiency. ourselves to resolve the issue. Customer Service

Figure 27: Response to Customer Enquiries

1999–00 2000–01 2001–02 Target 2002–03 Actual 2002–03 Target 2003–04

%%% % % % Annual Report 2002–03

Response to Correspondence — 4 Days 95.6 96.0 98.1 96.0 97.3 96.0

Telephone Response time Emergency Service Phone arra Valley Water arra Valley

Enquiries — 15 Sec 92.0 90.0 93.4 90 92.4 90 Y Emergency Service Phone Enquiries — 30 Sec 96.0 94.0 96.3 97 95.8 97 Account Phone Enquiries — 15 Sec 90.0 89.0 90.9 90 90.4 90

An annual audit conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported. … In 2002–03, we “Reduction in avoidable Centre of the Year (>50 seats). Yarra customer billing contact Valley Water was a finalist for the State entered three categories volumes by 10% per annum in all three categories and won Victorian until June 2006” Call Centre of the Year. Staff member — Call Centre Champion, Anne Mills also won Victorian Tele- We did not meet the 97% target for professional of the Year. Anne and Yarra Teleprofessional and answering emergency phone enquiries Valley Water will represent Victoria at the largely due to significantly higher than National ATA Awards in September 2003. Call Centre of the Year. forecast volumes of calls received during Yarra Valley Water was summer (refer to Figure 27 on page 47). Our customer service improvement These calls were mainly in relation to the plans for 2003–04 include: a finalist for the state in unexpectedly high number of water main Improving services to builders and bursts and leaks, which were a developers. all three categories and consequence of the drought conditions. Increasing customer service training However, we also had a won Victorian Call Centre across the business and our high volume of calls on our emergency contractors. of the Year. Staff line from customers asking about water restrictions. Redeveloping our web site — member Anne Mills www.yvw.com.au Despite this result, we were able to Improving customer brochures. also won Victorian achieve high levels of response to Redesigning our account to make it customers with our Customer Contact Teleprofessional of easier to understand. Centre answering over 40,000 calls the Year … relating to Stage One Water Restrictions. We are currently working on a significant redesign of our processes The annual Australian Teleservices and our service offering for developers 48 Association (ATA) Awards recognise and and plumbers wishing to connect to acknowledge excellence in the customer our system. This is a response to service industry with State and National significant changes in the development award winners. In 2002–03, we entered industry with subdivision and building three categories — Call Centre now often undertaken by the same party. Champion, Teleprofessional and Call Customer Service

Table 28: Restoring water supply

1999–00 2000–01 2001–02 Target 2002–03 Actual 2002–03 Target 2003–04 Annual Report 2002–03 Unplanned water supply interruptions restored within 5 hours (%) * 99.6 99.8 99.9 99.5 99.9 99.5

Unplanned water supply interruptions restored within 4 hours (%) 98.4 99.5 99.9 98.5 99.7 98.5 arra Valley Water arra Valley Y Unplanned water supply interruptions restored within 3 hours (%) 91.5 93.9 95.2 N/A 93.4 N/A

An annual audit is conducted by independent auditors,CH2MHill Pty Ltd, on behalf of the Essential Services Commission, to verify that robust systems are in place and are used to ensure the accuracy of the data being reported.

*The Operating Licence target is 95%. 3 Customer Service

We have set the following target:

“Significantly enhance services by implementing “EasyDevelop” by April 2004”

System Reliability Reliability of water supply is an important component of customer satisfaction. During the year we met all of our Operating Licence and self-imposed targets for response to water supply interruptions.

Despite the unusually high number of water main bursts, we achieved 99.8% of customers experiencing no more than five combined water and sewer interruptions during the year, exceeding our target of 99.5%.

We have set the following target to further improve our reliability performance:

“Reduce volumes of customers experiencing: 49 • >3 unplanned water supply interruptions by 30% by June 2006 • >5 water supply interruptions by 35% by June 2006” Customer Service We used a range of actions during the year to address the broad objective of further reducing the number of customers experiencing more than five unplanned interruptions in a year.

We did not meet this objective due to Annual Report 2002–03 the large number of water main bursts during summer. The dry weather resulted in a higher number of arra Valley Water arra Valley water main bursts during the year. Y One of our actions in 2002–03 involved Rebates to Customers case management of customers We are committed to exceeding the experiencing multiple interruptions. minimum service standards in our Another was to insert valves in pipes Operating Licence. We provide rebates in priority areas to reduce the number to our customers when we fail to meet of customers affected by a shutdown our self-imposed service levels and we of the water supply for the repair of remain the only Melbourne water burst water mains. business to do so. Our Customer Contract outlines a range of rebates to We also fast-tracked the program of be provided to customers. A full list of renewing 19.5 km of water mains where our rebates is shown on our web site at customers had experienced unplanned www.yvw.com.au. water supply interruptions due to four or more bursts. During the year, The high number of unplanned water we renewed a total of 68.1 km of water supply interruptions caused by the dry mains that had reached the end of their conditions resulted in an increase in service life. customer rebates in 2002–03.

We did not meet our self-imposed target Customer Complaints for sewer blockages during the year. Blockages were 43.3 per kilometre of A key measure of our success or failure sewer, against our target of 34. We also is how many complaints we receive and aim to have less than 100 customers how we handle them. To ensure experience more than two sewer complaints are recorded and handled interruptions in one year. However, in in a fair and reasonable manner, Yarra Valley Water has a complaints 50 2002–03, 154 customers experienced more than two sewer interruptions. register and is required to report The sewer blockage rates were higher regularly to the Board and the than expected as a result of tree roots Essential Services Commission. seeking water from sewer pipes in the dry conditions. Customer Service

Figure 29: The total volume and value of rebates paid to our customers

1999–00 2000–01 2001–02 2002–03

Annual Report 2002–03 Rebates paid to customers (total volume) 12,116 4,835 3,098 3,730

Rebates paid to customers (total value) $246,800 $98,960 $64,510 $70,100 arra Valley Water arra Valley Y 3 Customer Service

Figure 30: Energy and Water Ombudsman Victoria Contacts

Customer Contacts Yarra Valley Water All Victorian water businesses Yarra Valley Water % of total

Total contacts 236 990 23.8

Making enquiries 185 801 23.1

Seeking advice 40 87 46.0

Making complaints 9 88 10.2

Escalating to disputes 2 14 14.3

Yarra Valley Water’s share of customers throughout Victoria is 29%

Source: Energy and Water Ombudsman Victoria, 2003

We are also a member of the Energy Pricing and Water Ombudsman Victoria Currently, the State Government sets Scheme, which provides customers prices for our major water and sewerage with an independent body to review products. From January 2004, it is complaints if they are not satisfied with expected that this role will be transferred our processes. to the Essential Services Commission The Ombudsman does not judge who (ESC), so that pricing and performance is right or wrong but simply facilitates will come under the control of a single 51 ongoing discussion. authority.

A fundamental aspect of our Customer Each year, a maximum price is set by the Service Strategy is to use complaints to State Government. For 2002–03, the identify potential service and business price was set at the previous year’s price improvements. In 2002–03, we plus Consumer Price Index (CPI) +1%. Customer Service established an in-house Energy and The State Government has directed us Water Ombudsman Victoria (EWOV) to spend extra revenue generated from Complaints Analysis Committee to increased prices above CPI on analyse and review complaints received environmental programs. through the EWOV. The Committee’s Our market research indicated that a role is to identify root causes of small percentage of our customers did Annual Report 2002–03 complaints and potential long-term not support paying more for water and solutions to reduce complaints. sewerage services even if it meant The solutions usually involve policy, improvement to the environment. processes, systems or training. There is also a significant number of arra Valley Water arra Valley

people who think that the price of Y water is too low to encourage water conservation. The current price of water only includes the cost of the infrastructure used to collect, store and deliver the water to customers. Programs for Customers Experiencing Financial Difficulty … The Smart Homes It does not include any estimate of We are committed to continuously environmental cost or any type of improving our programs that support program is a joint resource rent for water extracted. customers in financial difficulty. We are effectively getting water from We were one of the first utilities to initiative with the the environment for “free”. develop a comprehensive hardship policy in December 1999. The policy Concessions Unit of the We support an increase in the price of covers provision of information, credit water so the environment can be “paid” management, restrictions, staff training Department of Human and to encourage water conservation. and a commitment to continuous We are fully committed to continuously Services, which aims to improvement in our program improving our operating efficiency to development. Key features of our reduce the size of ensure that our customers are not program have been adopted by several paying higher bills than necessary. other utilities. customers’ water We are also committed to ensuring accounts, while that price increases consider the We have a range of initiatives to support impact on those of our customers who customers in financial difficulty: promoting water experience difficulty in paying their bills. Customer Support Team conservation. Eligible We are investigating alternative ways of We established a specialist team structuring our bills to encourage water to manage all our programs and customers receive a free conservation. This could be done by individually support and address the reducing the fixed service fee and water audit and, where needs of any customer identified to increasing the variable price. We are be in financial difficulty. Customers sometimes criticised by customers who appropriate, free have access to our trained and make concerted efforts to reduce their experienced Customer Support Team installation of water water consumption but are frustrated 52 on our free call number (1800 637 316). efficient appliances … by not being able to lower their bills dramatically because of the relatively Arrange & Save Program large fixed component of the bill. This is a loyalty program aimed at At the end of 2003–04, Yarra Valley encouraging and supporting customers Water and the other water businesses who have difficulty in paying their water Customer Service will make submissions to the Essential account. Arrange & Save rewards Services Commission (ESC) on what we customers who meet their agreed believe water prices for the next five payment plan, by waiving a payment years should be. Submissions from the after five consecutive payments have water businesses will be made available been made. This program was by the ESC to all interested parties expanded in July 2002 to include the Annual Report 2002–03 for comment. We have sought advice write-off of long-term debt if the from our Customer Consultative customer continues to meet their Committee and will continue to work repayment amounts over a period of with the Committee to finalise our approximately six months. pricing proposals. arra Valley Water arra Valley Y 3 Customer Service

Smart Homes Program Financial Counselling Workshop … We are committed to The Smart Homes program is a joint We conduct an annual financial initiative with the Concessions Unit of counselling workshop with all the continuously improving the Department of Human Services, financial counselling agencies in which aims to reduce the size of our licensed area and other key our programs that customers’ water accounts, while stakeholders, including the Department support customers in promoting water conservation. Eligible of Human Services. The workshop aims customers receive a free water audit to further develop our relationship with financial difficulty. and, where appropriate, free installation the financial counselling sector, provide of water efficient appliances. an opportunity for direct feedback We were one of the first on our programs and to identify joint utilities to develop a Site Visits solutions for our customers. In July 2002, we introduced site visits comprehensive hardship In 2002–03, we received numerous to customers in financial difficulty. requests to share our practices and We give the customer the opportunity policy in December experiences in dealing with customers to complete pension/concession forms in financial difficulty. We presented our 1999. The policy covers and we explain our other programs and practices to the Australian Gas Light discuss affordable payment options provision of information, Company (AGL) Customer Consultative if appropriate. Committee and the Australian credit management, Communications Authority, No Interest Loan Schemes as well as responding to requests from restrictions, staff training For the past two years we have funded other utilities and local government to a total of $90,000 to the No Interest and a commitment to share our knowledge and experiences. Loans Scheme (NILS) program through continuous improvement the financial counselling sector across Finally, as part of our commitment to 53 our licensed area. This program supports supporting the community, we also in our program those people in financial difficulty who provide financial counsellors operating in need to borrow money for emergency our area, as well as the Financial and development … purposes such as white goods. Consumer Rights Council, with an unconditional $2,000 donation each year.

Kildonan Child & Family Customer Service Services We have established a strong relationship with Kildonan Child & Family Services to support customers identified to be in hardship. Customers are given advice and information, Annual Report 2002–03 where appropriate, for self-referral to either Kildonan or back to their existing financial counsellor. We also use Kildonan’s advice in preparation arra Valley Water arra Valley of our strategies and to assess Y the effectiveness of our programs and practices. 4

Culture

Yarra Valley Water is Stakeholder consultation strategies. These committed to developing is an integral part of our independent Committees a high performance Sustainability Strategy, comprise external business culture. We value both in its development representation from a our people and place the and implementation. diverse range of highest priority on the We rely heavily on input organisations, businesses preservation of their health from our Customer and customer groups. and safety. We strongly Consultative Committee We thank our Committee support their development and our Environmental members for their ongoing in job skills, careers, Consultative Committee contribution to improving management skills and in the development and our performance. personal growth. implementation of our 4 Culture

High Performance Business Culture

Our commitment to developing a high The constructive culture cluster, termed performance business culture is critical the “Blue Zone”, contains the behaviours in meeting our expectations in serving which Yarra Valley Water values and customers and managing responsibilities encourages. These behaviours are to the environment, while also achievement, self actualizing, humanistic- maintaining a financially viable business. encouraging and affiliative. We believe We believe that further developments in that by encouraging “Blue Zone” our preferred culture will help improve behaviours we will experience a the performance of Yarra Valley Water, decrease in the other types of enable us to achieve our strategic goals behaviours and that the business will and greatly enhance employee move forward, reinforcing its high satisfaction with consequent benefits to performance business culture. the company and its employees. As a To assist our transition to the desirable company we have shared values Yarra Valley Water staff members. behaviours we are using a further including being customer driven, doing feedback tool on a personal level for all better things, respecting each other, managers. Our managers are given acting with integrity, working as a team, feedback from general managers, staff, respecting the environment, taking and peers about how their behaviour responsibility and enjoying the journey. and actions are perceived or interpreted. In October 2001, we audited our This process enables our managers to organisational culture using a 360 understand how their behaviour impacts degree feedback tool, the on our culture. During the past two years, ‘Organisational Culture Inventory’. The all members of the management team results showed that our existing culture have undertaken this process, received did not reflect the desired behaviours of feedback about the results and 55 our preferred culture. developed personal improvement plans.

The feedback tool provides a point-in- We have also developed business-wide Culture time picture of the organisation’s culture action plans to support culture change in terms of 12 specific behavioural and 173 staff have attended training days norms which can be grouped into three to introduce them to the cultural model general clusters: constructive, passive/ and the preferred behaviours. Further defensive and aggressive/defensive. training is planned, with all employees invited to attend these sessions. Successful service organisations, Annual Report 2002–03 organisations committed to quality Our target is: improvement and organisations where “By October 2003 achieve a there is a high level of motivation and job 5% improvement in behaviours satisfaction generally display behaviours

identified in the October 2001 Water arra Valley in the constructive cultures cluster rather Y Organisational Culture than in the other two clusters. Inventory, with a further 5% improvement by October 2005” Employees … We recognise and Our People Employee of the Year We currently have 353 employees and Kate Bradshaw reward staff skills and six non-executive Directors. Our Improvement Initiatives — Asset Services employees have a wide range of skills Kate Bradshaw, a member of the commitment to our including engineering, accounting and Improvement Initiatives Team in Asset financial management, information values, with Team and Services, was awarded Employee of the technology, customer service, Year for continually looking at better administration, human resources, Employee of the Year ways to improve processes and strategy, marketing and management. Awards … systems. Kate was one of the driving We recognise and reward staff skills and forces to focus on improvements for commitment to our values, with Team customers who have five sewer and Employee of the Year Awards. blockages or more in five years. This resulted in improvements for over 1,300 Team of the Year customer properties, and ultimately savewater!™ Awards 2003 Team reducing sewer spills to the environment. Throughout the year, Kate exhibited Kerry Grenfell (Communication Services behaviours that reflect our desired values, Division) and Nicole Button (Marketing particularly do better things, respect the Division) were awarded Team of the Year environment, take responsibility and for the successful delivery of the enjoy the journey. Kate’s positive savewater!™ Awards 2003. The awards attitude, strong business ethics and are managed by Yarra Valley Water on caring attitude towards work colleagues behalf of the water industry and aim to earned her Employee of the Year. provide an incentive to all Victorian

56 commercial water users to improve their water efficiency. The awards program took nine months to plan and would not have been such a success if not for Culture Kerry and Nicole’s commitment and ability to work as a team. Annual Report 2002–03

Employee of the Year, Kate Bradshaw arra Valley Water arra Valley Y

Team of the Year, Kerry Grenfell and Nicole Button 4 Culture

Our Executive Team TERRY SWINGLER JENNY BAILEY TONY KELLY Dip Bus (Acc), FCPA, FCIS, FAICD, CFTP BE (Agr), Grad Dip (Env Sc), MBA General Manager, Finance and Company General Manager, Strategy and CPEng, SFCDA Secretary Communications Managing Director Terry is responsible for funding, Jenny is responsible for overseeing Tony has extensive experience in the accounting and reporting of all business strategic communications and business water industry and, following roles as activities. His role includes property development, while also participating in General Manager across most areas of management, supply, legal services, water industry policy and reform the Company during the past five years, internal and external environmental activities. She is our primary liaison with Tony was appointed Managing Director audits, insurance, records management, the Essential Services Commission and in January 2003. risk management and statutory government departments and is SAM AUSTIN compliance. Terry is also accountable for responsible for the corporate business BE (Civil) systems development, IT infrastructure, plan. Jenny’s role also incorporates General Manager, Asset Services integration and support. responsibility for marketing. Sam is responsible for optimising the ANNE FARQUHAR PAT McCAFFERTY service level performance of our Cert Bus Mgt BBus, Exec. MBA, MCSIA investments in water and sewerage General Manager, Human Resources General Manager, Customer Operations assets. He manages our environmental Anne is responsible for developing and Pat oversees the company’s customer and operational risks, playing a key role implementing the human resources service function, covering billing, servicing new urban growth areas. strategy for the business, including metering, collection and credit Sam is ultimately responsible for organisational change, employee management. He is also responsible for ensuring our water and sewerage relations, management development and our Customer Contact Centre systems meet daily and future needs of skills training. Anne also maintains operations, new connections and retail our customers. Sam also manages the systems for performance management, services, as well as our programs for primary regulatory interface with the 57 recruitment, Occupational Health & customers in financial difficulty. Environment Protection Authority and Safety and Equal Employment the Department of Human Services.

Opportunity. Culture Annual Report 2002–03 arra Valley Water arra Valley Y

Pat McCafferty, Jenny Bailey, Terry Swingler, Tony Kelly, Anne Farquhar, Sam Austin 58 Yarra Valley Water Annual Report 2002–03 Culture eae111 21 160 199 3 4 5 1 Total 10 18 Board 22 18 Human 19 Strategy & 96 Finance& 101 62 Asset T Female Customer Male Gender Employee Breakdown —Gender Figure 31: tl13154 867359 7 6 28 40 115 163 otal prtosSrie oprt evcsCmuiain eore ofDirectors Resources Communications Corporate Services Services Operations breastfeeding. pregnancy orpotentialpregnancy and r features, parental status,familyorcarer disability orimpairment,physical r marital status,nationalorethnicorigin, grounds ofissuessuchasgender, age, harassment ordiscriminationonthe that noindividualissubjecttobias, discrimination ingeneralandtoensuring We and off site. and outsideworkhours,bothon agents ofYarra Valley Water, bothwithin experience students,suppliersand participants, includingcontractors,work employees andotherworkplace and Harassmentpolicycoversall all employees.OurEqualOpportunity equitable treatment intheworkplacefor We Equal Opportunity esponsibilities, sexualpreference, eligious orpoliticalbeliefactivity, are committedtotheelimination of are committedtoproviding fairand since beenresolved. of sexualharassment.Thismatterhas that thecompanyhadreceived aclaim In ourAnnualReport2001–02,wenoted and Workplace Relations. Sex Discrimination,RacialDiscrimination Opportunity, DisabilityDiscrimination, Acts relating toEqualEmployment discrimination isillegal,includingthe establish grounds onwhich Federal andStatelegislationthat are required tocomplywithrelevant contractors andsuppliers.Allemployees each otherandtowards ourcustomers, commitment inourbehaviourtowards We processes. improve ourrecruitment andselection diverse workforce andwillcontinue to We Diversity intheWorkforce aimtoreflect anddemonstratethis welcomethebenefitsgainedfrom a 4 Culture

As detailed in Figure 31, the overall We have set the following target: … We will continue to gender ratio is reasonably balanced. “By October 2004 achieve a However, in last year’s Annual Report we 3% improvement in the 10 seek to attract and noted that we have a poor proportion of lowest scored categories employ the very best women at divisional management level. based on the October 2002 While three of our seven Board members Employee Opinion Survey people in all areas of our and two of the six Executive Team Results” members are women, only 11% business, and, over time, of our divisional managers are female. Our measure of ‘recognition and Investigating solutions to this imbalance, feedback’ is 58% positive and 27% we believe the gender we are faced with several realities: neutral around the question of balance will change as our workforce is predominantly recognition and feedback, which we engineering-based and we are limited consider to be lower than we would like. more women participate in the recruitment of graduates Accordingly, we have set the following from tertiary and technical engineering target: in both the academic courses, where the majority of enrolled “Improve the ‘recognition system and our own students are male. and feedback’ score by 5% in senior management today is the result the October 2004 Employee process of internal of the academic output of a decade or Opinion Survey” promotion … more ago.

We will continue to seek to attract and employ the very best people in all areas of our business, and, over time, we Figure 32: Employee Breakdown — Employment believe the gender balance will change 59 as more women participate in both the Full time Part time Turnover Casual academic system and our own process of internal promotion. Total 301 53 12.1% 5 Culture

Employee Satisfaction In October 2002, we undertook our eighth annual Employee Opinion Survey. Satisfaction with Yarra Valley Water has consistently improved over time and Annual Report 2002–03 currently rates as 64%. The median is 60% for all companies in the benchmark survey, with best practice at 86%. arra Valley Water arra Valley Y Employee Turnover Internal Promotions Staff turnover was 12.1% last year, During the year, internal applicants filled compared to the target of 10%. We 41% of vacancies. We have set the value our staff and recognise the following target: importance of retaining valuable “Ability to fill 50% of vacancies, knowledge and experience (refer to through internal promotion/ Figure 32 on page 59). rotation by end 2004” We also recognise that restructuring is We feel that this target achieves a sometimes essential to ensure a focused balance between developing our own and efficient organisation. A change in staff and bringing new talent and ideas priorities within our organisation resulted into the organisation. in some restructures across the business. Affected staff whose roles Training became redundant undertook a career We have a significant commitment to transition (outplacement) program and training and development of our received other entitlements. employees. For a summary of staff Staff turnover in our Customer Contact development please refer to Figure 33. Centre was 15.1% which compares favourably to the industry benchmark of Work/Home Balance approximately 30%. This is a significant Yarra Valley Water recognises that improvement on our previous results, but finding the appropriate work/home is still a little higher than we would like. balance may be difficult for many people, particularly those with children. 60 We believe that the best way to support staff in difficult circumstances is by Figure 33: Staff Development 2002–03 ensuring managers can provide flexibility

Culture and customised work arrangements to Development Program No. of employees suit individual employees.

Mt Eliza Business School To provide flexibility and support, – Finance 27 – Leadership 30 the following initiatives have been put into place: Myers Briggs Type Indicator 62 Part-time work Annual Report 2002–03 OH&S 733 employee sessions 48/52 program, enabling staff to work fewer weeks in a year “Blue Zone” Training 173 (further 200 planned) Parental leave, family leave, paid Customer Service 818 employee sessions maternity leave arra Valley Water arra Valley

Y (5 hrs/FTE per month) Financial and personal counselling for Learning Network 100 employees and their partners Home computers to enable staff to Channels of Change — change management 22 work at home Service Leadership 14 Company-sponsored childcare places

Coaching 46

Please note: The above is a summary. Specific training has also been undertaken in relation to relevant areas of the business. 4 Culture

Figure 34: Lost Time Injuries

1999–00 2000–01 2001–02 Target 2002–03 Actual 2002–03 Target 2003–04

Number of Lost Time Injuries 4 5 0 0 3 0

Despite our achievements in work/home Occupational Health balance, we believe that many and Safety Occupational Health and Safety Policy employees work long hours. We are Although our Occupational Health and challenged by the conflict between Safety (OH&S) program is operational, ensuring an efficient organisation we are aiming to achieve AS4801 At Yarra Valley Water we value our people without making unreasonable demands certification in November 2003. This is and place the highest priority on the on our employees’ time. We are looking preservation of their health and safety. five months later than we originally at ways to address this issue. The commitment to the health and safety planned. The delay in certification of employees, contractors and customers Health and Wellbeing allows our system time to be is critical to achieving our Mission. established properly before being Yarra Valley Water runs a number of While we will ensure compliance with audited. Our challenge for the coming programs to support the health and the Occupational Health and Safety Act year is to continue to develop a culture wellbeing of employees. Our activities in 1985 and all associated regulations that supports our OH&S objectives and 2002–03 included: and codes, the Occupational Health ensure that our system is effective and & Safety policy goes beyond meeting Flu injections not overly bureaucratic. legal obligations and is a shared and Health fair fundamental commitment by managers Our target for Lost Time Injuries was and all employees: 61 Stress management seminars zero; we were disappointed to Health needs assessments experience three Lost Time Injuries in to prevent disease and injury in the workplace; QUIT program for smokers 2002–03. Fortunately none of the three Culture to continuously improve systems and Employee counselling injuries were permanent. practices aimed at preserving health Employee/company funded Our OH&S targets are: and preventing injury; yoga classes “Achieving and retaining our to provide the essential involvement, OH&S Certification and meeting education and training of employees Industrial Relations in the processes of occupational

our target of zero Lost Time Annual Report 2002–03 health and safety. Our Enterprise Agreement expired on 30 Injuries” June 2003. A committee comprising employees, union representatives and OH&S training was extensive in management drafted the new Enterprise 2002–03:

Agreement which was accepted in 213 employees attended OH&S Water arra Valley Y principle by staff on 1 July 2003. Management System Overview 156 attended Manual Handling/ Induction/Vehicles/Record Keeping 159 attended Hazard Management/ Accident Investigation/Inspection 178 attended Ergonomics 27 attended Manual Handling … We require service Service Providers and A suite of contract documents for our Contractors civil construction program supported this increase in standards. providers and contractors We rely on many of our service to share the same providers and contractors to meet our There are a significant number of sewer company objectives. Outsourcing and water contractors, including standards that we set increases our efficiency by allowing designers and a range of consultants, specialists to focus on particular areas who help us deliver our capital works for ourselves including of the business. program. Those involved in major projects during 2002–03 include: Occupational Health & We require service providers and Safety, Environmental contractors to share the same standards Baromatic Construction Pty Ltd that we set for ourselves including Berry Pipelines Pty Ltd Management, Customer Occupational Health & Safety, Civil Landscape & Design Pty Ltd Environmental Management, Customer Connell Wagner Pty Ltd Contract and Privacy Contract and Privacy obligations. Our Coomes Consulting Group Pty Ltd obligations … construction contract standards moved from AS2124 to AS4000 during the year. Dalton Consulting Engineers

Figure 35: Major Service Providers

SERVICE PROVIDER SERVICES YEARS OF SERVICE

Abigroup Asset Services – Water Pty Ltd Maintenance of the water supply and sewerage infrastructure 3 62 Australian Postal Corporation Bill payment processing 8

Baycorp Advantage Pty Ltd Debt collection 2 Culture Hermes Precisa Pty Ltd Bill printing 3

Logica CMG Pty Ltd Information technology 8

Melbourne Water Corporation Supply of water and collection, treatment, transfer and disposal of wastewater 8

Annual Report 2002–03 Schultz Holdings Australia Pty Ltd. Meter installation 7 Trading as National Metering Service Plumbing referral service Trading as Schultz Plumbing Meter replacement

Skilltech Consulting Services Pty Ltd Meter reading 3

arra Valley Water arra Valley Westpac Banking Corporation Banking 5 Y

WSL Consultants Pty Ltd Water quality testing 6 4 Culture

DKM Utilities Pty Ltd EarthTech Engineers Pty Ltd Gerristone Excavations Pty Ltd GHD Pty Ltd Interflow Pty Ltd Lanco Group Pty Ltd LRM Contractors Pty Ltd Maunsell Australia Pty Ltd MFJ Constructions Pty Ltd Millar & Merrigan Montgomery Watson Harza Parsons Brinkerhoff Pty Ltd Pintech Pty Ltd Scariff Construction Co Pty Ltd Sewerfix Vic Pty Ltd Simpson Construction Pty Ltd Sinclair Knight Mertz Pty Ltd Water Engineering Solutions Pty Ltd Water Environmental Solutions Pty Ltd

As well as our contractors we regularly work with a range of associations and 63 authorities such as the Civil Contractors Federation, Association of Land

Development Engineers, VicUrban, Culture Environment Protection Authority, VicRoads, Centro Properties, Transfield Corporation, Thiess Infraco (M> Trams), councils and a range of consultants.

We would like to thank and acknowledge Annual Report 2002–03 the support and commitment of all our service providers, contractors and suppliers in upholding our standards. Contracting specialists contribute to particular areas A key challenge in developing and

of the business. Water arra Valley implementing our Sustainability Strategy Y will be to engage our suppliers and to develop closer partnerships with all those involved in our processes. Stakeholders

As well as employees, we have many contributed to the success and stakeholders and have undertaken broad effectiveness of the Committee. stakeholder consultation throughout the Our Customer Consultative Committee year. We are planning to enhance our met six times during the year and made stakeholder consultation as we develop valuable contributions to a range of our Sustainability Strategy. Once we issues including the review of the have completed our sustainability Customer Contract and Customer audit we will develop a stakeholder Charters, tariff structures, the project on consultation program. Our existing customers’ willingness to pay for service Environmental and Customer improvements and communications on Consultative Committees will be water restrictions. instrumental in this project. During the year we undertook a Consultative Committees performance review of our Customer The principal way the company consults Consultative Committee and the on broad environmental issues is effectiveness of our support to further through our Environmental Consultative increase its effectiveness. Committee. The high level of expertise We wish to take the opportunity to thank and the commitment of the Committee, the Committee, particularly Allen Martin, which was established in 1996, provide Neil Abbott, Liana Benini, Ron Rogers us with ongoing advice to help improve and Rob Wall, who all retired from the our environmental performance. … The principal way Committee at the end of the year after the company consults The Committee met six times during the many years of valuable contribution to year and focused on issues including Yarra Valley Water. 64 on broad environmental monitoring progress on actions in our existing Environment Improvement Plan Stakeholder Consultation issues is through our and identification of new actions for the Yarra Valley Water stakeholders cover Culture Environmental updated Plan. The Committee also made a wide range of people. Our key valuable contributions to the review of stakeholders include customers, State Consultative Committee. our Environmental Policy, energy saving Government and related agencies techniques and Recycling Plan. (including the Department of The high level of Sustainability and Environment, Our enthusiastic and experienced Department of Treasury and Finance,

Annual Report 2002–03 expertise and the Customer Consultative Committee Treasury Corporation of Victoria, represents the interests of a variety of Environment Protection Authority (EPA), commitment of the customer segments. The members of Department of Human Services, the Committee have developed good Committee, which was Department of Justice, Essential working relationships in the consultation Services Commission, Minister for arra Valley Water arra Valley

Y process. The diverse range of established in 1996, Environment and Water, other politicians membership often brings disparate and local councils), employees, provide us with ongoing views and members have agreed to contractors, environmental groups, differ on some issues. These differences advice to help improve plumbers, suppliers, VicWater, Water however, have often acted as the Services Association of Australia catalyst for a more complete interchange our environmental (WSAA), community groups, schools, of ideas and better outcomes. The Melbourne Water, other water performance … attitude of members and management in businesses, developers and the accepting these diverging views has general community. 4 Culture

Figure 36: Environmental Consultative Committee

NAME REPRESENTING

Allen Martin (Chairman) Independent Chairman

Fraser Brindley Friends of the Earth

Glenda Salter Domestic Customers

Ron Hodges River Basin Management Society

Anne Hingston Environment Victoria

Wes Douglass Environment Protection Authority Environmental Committee Chairman, Allen Martin

Diana Haby Australian Conservation Foundation

Ted Whitfield Yarra Catchment Committee

Figure 37: Customer Consultative Committee

NAME REPRESENTING

Allen Martin (Chairman) Domestic Customers 65

Glenda Salter Domestic Customers

Liana Benini Domestic Customers Culture

Netta Griffin Domestic Customers

Ron Rogers Urban Development Institute of Australia

Rob Wall Victorian Employers’ Chamber of Commerce & Industry Annual Report 2002–03 Anne Hingston Environment Victoria

Gavin Dufty St Vincent de Paul

Susan Fraser Financial and Consumer Rights Council of Victoria arra Valley Water arra Valley Y Denise Budge Consumer and Tenant Resource Centre Outer East

Neil Abbott Victorian Farmers Federation

Robert Lorenzon Australian Industry Group … We believe that We believe that we can significantly The plumbing industry is a good improve our stakeholder consultation. example of where our stakeholder we can significantly A recent stakeholder review undertaken management can be improved. by an independent consultant, Fenton improve our stakeholder Communications, indicated that Yarra Valley Water and the consultation. A recent although many of our stakeholders hold Plumbing Industry us in high regard, some were critical of We established Yarra Valley Water stakeholder review our understanding of their issues and Plumbing in February 2000, in response lack of communication. to customer demand, to provide a undertaken by premium plumbing service. Customers Our consultation processes in 2002–03 had expressed frustration that after an independent included: calling us to report a domestic plumbing consultant, Fenton Bi-monthly meetings of the Customer problem we could only advise that they Consultative Committee and contact a plumber. Communications, Environmental Consultative Committee The introduction of our plumbing Monthly meetings with the Department services resulted in complaints being indicated that although of Sustainability and Environment made in Parliament and a review of our Weekly meetings with Melbourne many of our plumbing business by the Competition Water stakeholders hold us Neutrality Unit (CNU) in Government. Fortnightly meetings with City West The CNU is part of the Department in high regard, some Water and South East Water of Treasury and Finance and its role Quarterly meetings with the is to ensure that Government were critical of our Department of Treasury and Finance businesses are not competing unfairly Emerald Cockatoo Consultation with private businesses. 66 understanding of their issues and lack of Program The original business model for Lilydale Biosolids Consultation providing these services to customers Program involved creation of a business unit Culture communication … Plumbing industry consultation on offering plumbing services under the new procedure to manage OH&S on name of Yarra Valley Water Plumbing. our assets In February 2003, we conducted a Customer focus groups review of the plumbing services function Customer consultation on Pressure and, as a consequence, we decided to Annual Report 2002–03 Management Program change the way this service is provided Focus groups to review our schools to customers. The key reason for this education program change was to improve the efficiency of the service. As of 1 July 2003, plumbing Market research including Customer services are facilitated for customers by arra Valley Water arra Valley

Y Contact Monitor and Customer Yarra Valley Water on a referral basis to a Satisfaction Monitor. separate plumbing contractor. Following In 2003–04, we plan to develop a an extensive open tender process aimed stakeholder management framework at ensuring high quality, customer- and an improved set of communication focused provision of these services, tools. We also remain committed to we selected Schultz Plumbing as the improving relationships with councils. referral plumbing service provider. 4 Culture

The interface between the plumbing industry and water businesses has traditionally been complex as it is often difficult to determine on the phone whether customer problems are in our pipes or the customer’s pipes.

While the CNU found that Yarra Valley Water was not in breach of Government Guidelines, the previous existence of Yarra Valley Water Plumbing, and our recent policy change to prevent plumbers working on our assets, damaged our relationship with plumbers. Water filtration at CERES Environment Park Premier Steve Bracks, Treasurer John Brumby and Tony Kelly Consultation processes so far have at the CERES Water Project launch found it very difficult to find a win-win solution. We believe that our policy is essential to minimise the risk to the health and safety of people working on assets for which we are responsible, however we need to look at ways to improve our relationship with the plumbing industry and address its concerns effectively.

Community 67 Sponsorship and Community Support Culture Our sponsorship policy focuses on the environment and the community. We Matt Welsh, world swimming champion, launches the Healesville Sanctuary plan to review our sponsorship program Yarra Valley Water Safety Fun Days (VICSWIM) to streamline our community support and focus our contributions and

participation around water conservation. Annual Report 2002–03

Yarra Valley Water’s community partnership with the Centre for Education and Research in Environmental Strategies (CERES) arra Valley Water arra Valley Community Environment Park in Y Brunswick, works on a range of water conservation projects including the development of an Urban Water Conservation Demonstration and Research Facility. This exciting project will showcase the latest technologies Sustainability Street, Coburg for water conservation, recycling Heide Museum of Modern Art and reuse in a variety of settings, … We sponsored including the home, nursery, café, Sewage treatment plant tours were also organic farm and community centre. available to schools, with a total of six numerous local For further information go to tours undertaken during the year. www.ceres.org.au and click on CERES An education consultant was hired in community events and Water Project. 2003 to review the existing education fundraisers including Community activities and industry activities and make recommendations support in 2002–03 included on how to improve their effectiveness. in-kind support for sponsorship of Healesville Sanctuary, The final recommendations of the school sporting clubs, councils, VICSWIM Safety Fun Days, Master education review suggested that a joint Plumbers Association of Victoria, Box approach be adopted by Melbourne’s church groups and Hill Institute, Heide Museum of Modern water businesses. The review Art, Sustainability Street, Lighthouse recommendations are being used to schools … Foundation, Sustainable Living Festival inform the development of this joint and Monash Environment Institute. approach, and a new schools education program will be put in place in 2003–04. We sponsored numerous local community events and fundraisers Community presentations increased including in-kind support for sporting from 14 (last year) to 36 this year. We will clubs, councils, church groups and review our community speakers program schools. In response to community in 2003–04 to meet growing demands needs we also donated the use of a and to support the water conservation mobile water fountain for major message. community events and we continued to provide our bottled water at a Young Achievement Australia 68 number of events. Our involvement with the Young Achievement Australia (YAA) program Education Program continued in 2002–03. The YAA scheme Presentations to primary schools and is designed to provide both secondary Culture community groups continued to focus and tertiary students with an opportunity on the water cycle and the importance of to learn about every aspect of setting up water conservation. Additional and running a business, from developing information on water restrictions, a business plan through to selling a primarily for community presentations, product and learning about shares and

Annual Report 2002–03 was also included. the share market listing process. Local tertiary students sponsored and mentored We completed 31 of the anticipated 100 by Yarra Valley Water through YAA, school presentations by June 2003. collected the scheme’s ultimate award, However, schools were able to access Company of the Year, in November 2002. other education activities maintained by arra Valley Water arra Valley Y the business during the calendar year. The ‘Cloudia Raindrop and Friends’ water conservation theatre program target of 100 performances was met and our education web site continued to receive increasing numbers of visits. 4 Culture

Work Experience and E Teams … An education consultant was hired in 2003 to We provided work experience to a number of students during the year and review the existing education activities and make we also continued to support the E Team program. In association with the recommendations on how to improve their Whitehorse Quality Network, we actively effectiveness … participate in developing students through E Team programs. The programs involve a selection of Year 10 and Year 11 students from local schools who spend a week at various organisations to investigate a business process and recommend improvements. We hosted three E Teams in 2002–03, one each from Ringwood Secondary College, Templestowe College and Box Hill College.

Infoxchange, Green PC In 2002–03, we entered into an agreement with the Infoxchange, Green PC group for disposing of defunct computers and associated accessories. Infoxchange is a Government-funded not-for-profit organisation which 69 recycles computers and accessories and makes them available at a nominal cost

to families, students and community Culture groups on limited incomes.

The Infoxchange group employ long- term unemployed staff and train them in the basic skills of refurbishing and operating the donated computers. ‘Cloudia Raindrop and Friends’ water conservation theatre presentation for students. Annual Report 2002–03 arra Valley Water arra Valley Y 5.1

Financial Performance

We believe that our financial analysis of risks and returns It is crucial that we achieve statements demonstrate our to the business, it involves this by maximising the use balanced approach of both long-term and short- of internal and external providing a high level of term planning and resources, with customer service, measuring actual outcomes consideration for the environmental improvement against budgets and environment, the customer, and financial returns to our targets. This means the the community, our shareholder, the State organisation must ensure employees, and our Government. sufficient revenue is shareholder. generated to meet operating We endeavour to deliver expenses, debt and business outcomes that are employee entitlements, as in line with business well as deliver infrastructure strategy and enable requirements while meeting responsible financial the shareholder’s management. This involves expectation of adequate the management and returns. 5.1 Financial Performance

Overview of Financial Performance We provide water, sewerage and related Figure 38: Where Our Revenue Comes From services to customers in our licensed area connected to our water supply Other Revenue Water Service Charges and/or sewerage systems. Continual Developer Contributions improvement in our operational efficiency is essential for us to be able Trade Waste Charges to deliver our key objectives of serving customers and the environment.

Water Usage Charges Our financial performance is outlined in our Annual Financial Report Sewage Disposal Charges on page 82. We believe that these statements demonstrate our balanced approach between providing a high level of customer service, environmental improvement and Sewerage Service Charges financial returns to our shareholder, the State Government.

We endeavour to deliver business Figure 39: What We Spend Our Money On outcomes that are in line with business strategy and enable responsible financial Finance Charges management. This involves the management and analysis of risks Wholesaler Charges and returns to the business, and Dividend to State Government involves both long-term and short-term 71 planning and measuring actual outcomes against budgets and targets. It means the organisation must ensure sufficient revenue is generated to meet operating expenses, debt and Capital Works employee entitlements, as well as deliver infrastructure requirements and meet Financial Performance the shareholder’s expectation of adequate returns. Operating Expenses

All of this must be achieved by maximising the use of both internal and external resources, with … We endeavour to deliver business outcomes consideration for the environment, our Annual Report 2002–03 customers, community, employees and that are in line with business strategy and enable shareholder. Our financial management must comply with legislation and deliver responsible financial management. This involves against short-term requirements while

the management and analysis of risks and returns Water arra Valley ensuring an equal or improved outcome Y for future generations. to the business … 72 Yarra Valley Water 2002–03 Annual Report Financial Performance T Net Profit After Tax $M Before InterestEarnings and Tax $M T Financial Summary otal DividendsPaidorPayable(or Advised) $M otal Revenue$M 100 150 200 250 300 350 400 100 100 120 140 50 20 40 60 80 10 20 30 40 50 60 70 20 40 60 80 0 0 0 0 1998 1998 1998 1998 106.30 332.80 57.10 48.70 – – – – 91999 99 1999 99 1999 99 91999 99 128.40 356.60 99.90 62.70 – – – – 02000 00 2000 00 2000 00 02000 00 118.70 343.20 68.90 56.00 – – – – 12001 01 2001 01 2001 01 12001 01 111.60 336.00 58.90 49.20 – – – – 2Target 2002 02 Target 2002 02 Target 2002 02 02 Ta rget 2002 116.60 354.60 56.90 50.10 – – – – 32002 03 03 32002 03 32002 03 2002 127.60 371.00 64.40 58.20 – – – – 03 03 03 03 100 200 300 400 500 600 10 12 10 20 30 40 50 60 70 80 Accounts Receivable>90 Days$M Capital Expenditure $M Borrowings $M % on Average Assets Return 0 1 2 3 4 5 6 7 8 0 0 2 4 6 8 0 989 990 000 010 agt20–32002–03 Target 2002–03 2001–02 2000–01 1999–00 1998–99 1998 1998 1998 508.40 47.20 9.10 7.20 – – – 91999 99 1999 99 1999 99 0.0502.00 502.00 46.60 10.70 3.50 – – – 02000 00 2000 00 2000 00 49.20 9.60 2.70 – – – 12001 01 2001 01 2001 01 506.90 52.50 8.70 2.30 – – – 2Target 2002 02 Target 2002 02 Target 2002 02 537.90 77.00 8.80 3.10 – – – 32002 03 32002 03 32002 03 510.30 59.90 9.60 2.50 – – – 03 03 03 significantly larger licensedarea, W base thanSouthEastWater andCity comprises alowerdensitycustomer Y of Directors. philosophies adoptedbyourBoards our licensedareas anddifferent primarily relate tothediffering nature of The reasons forthesedifferences as Melbourne’s otherwaterbusinesses. key financialindicatorsare not asstrong Although proud ofourperformance, our Financial Summary Reports asauditedbythe Auditor-General Victoria Theactualamountshavebeenextractedfromthe Company’s Annual Financial Please note: Gearing Ratio% Interest Cover (Times) arra Valley Water’s geographicarea 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 10 15 20 25 30 35 40 45 est Water. This,combinedwithour 0 5 1998 1998 42.90 3.40 – – 91999 99 1999 99 41.00 4.00 – – 02000 00 2000 00 39.80 3.60 – – 12001 01 2001 01 39.70 3.40 – – 2Target 2002 02 Target 2002 02 depreciation andreduced profit. hasincreased which, inturn, improved environmental outcomes better servicetoourcustomersand investing incapitalworkstoprovide a We reduces profit.which inturn r borrowings, andthelarger asset base expenditure, limitingtheabilitytoreduce r two-fold effect: additionalcash is asset base.Thelarger assetbasehasa r 40.00 3.30 esults inahigherdepreciation charge equired tofundbaselevelcapital equires arelatively larger infrastructure haveplacedanemphasison – – 32002 03 32002 03 37.70 3.90 – – 03 03 10 12 14 16 18 20 Return onEquity% Return 0 2 4 6 8 1998 11.10 – 91999 99 18.70 – 02000 00 12.20 – 12001 01 9.60 – 2Target 2002 02 Financial Performance 9.30 – 32002 03 10.30 – 03 5.1

Yarra Valley Water 2002–03 Annual Report Financial Performance 73 … In servicing our Revenue We also receive revenue from property We charge customers a fixed fee each developers who operate in our licensed customers, we deliver quarter for the right to access our water area. These developers pay us a fee system, and the right to dispose certain which is used to provide large clean drinking water, waste products into our sewerage infrastructure required for the larger collect sewage, maintain system. Commercial trade waste water zones and sewerage catchments. customers are charged an additional fee The developers are also required to our assets, monitor for the right to dispose of their waste construct the local water and sewerage products, as these waste products mains and pipes, and then “gift” these and maintain water generally require a higher level of assets to us. When this occurs, we are quality, educate our treatment than normal household and required to treat the value of these business waste. assets as revenue. The total of the customers and promote connection fees and the assets gifted The fixed fees, including the Water represented around 10% of the total water conservation. Service Charge, Sewerage Service revenue we earned in 2002–03. Charge and Trade Waste Charge, In 2002–03, these represented 31% of the total revenue The remaining 4% of the revenue earned we earned in 2002–03. in 2002–03 came from a range of other operating expenses products and services we provided. In addition to the fixed fees, we also represented 28% charge our customers for water usage Total revenue for 2002–03 was $371.0 of our total expenses … and sewage disposal. These charges are million compared with $336.0 million for based on the actual volume of water the previous year. This result was $14.2 used and an estimated amount of million above budget. Revenue from sewage disposed to the sewerage developers was stronger than budget by 74 system. We need to estimate the volume $14.8 million and represented a 40.8% disposed to the sewer because it is not increase on the previous year. metered. Formulae are used to arrive at this estimated amount, as seasonal Expenses factors are considered. That is, we We are required to pay Melbourne assume that a lesser percentage of the Water for the services it provides to us, water used in summer goes to the including the supply of water and sewerage system, because in summer collection, treatment, transfer and Financial Performance most people water their gardens. disposal of wastewater. These charges represented 33% of our total expenses In 2002–03, these volumetric usage for 2002–03. charges represented 55% of the total revenue earned. In servicing our customers, we deliver clean drinking water, collect sewage,

2002–03 Annual Report 2002–03 We collect revenue for Melbourne Water maintain our assets, monitor and to cover the cost of the provision of maintain water quality, educate our drainage and we collect a charge on customers and promote water behalf of the Minister for Environment conservation. In 2002–03, these and Water relating to Parks Victoria to operating expenses represented 28% arra Valley Water arra Valley

Y cover the cost of maintaining of our total expenses. Melbourne’s parks and gardens. 5.1 Financial Performance

Where insufficient money is generated Credit Rating internally to fund our activities, money is Our current credit rating of AA- reflects borrowed. Like any other business, we our strong business position as a are charged interest on these monopoly supplier of water and borrowings. For 2002–03, interest sewerage services, stable customer expense and other finance charges numbers, low operational risk and sound represented 8% of our total expenses. financial position.

Profit Community Service Obligations We recorded a profit before tax of $94.7 Community Service Obligations (CSO) million in 2002–03, representing an refer to concessions provided to certain increase of more than $15.7 million on customers, rebates to certain not-for- the previous year and more than $13.3 profit organisations and payments under million above budget. The increase is the Rates and Charges Relief Grant predominantly a result of increased Scheme. The State Government funds development activities. Profit after tax these CSOs in a transparent manner. was $64.4 million after incurring $30.3 million for income tax expense. The Our Community Service Obligations for result was 13.1% higher than budget. the past two years include:

Shareholder Returns Dividends are paid to our shareholder, Figure 40: Community Service Obligations 2001–03 the State Government, in return for its investment in our business. These Value of Community Service Obligation (CSO) provided ($) 2001–02 ($) 2002–03 payments are based on the 75 Government’s dividend payment ratio of Pensioner concessions 18,562,916 19,094,049 65% of pre-tax profits. Dividends paid to Water and Sewerage Rebate Scheme 67,341 70,100 the State Government in 2002–03 totalled $60.4 million, made up of a final Utility Relief Grant Scheme 89,505 56,473 dividend of $26.2 million for the 2001–02 financial year and an interim dividend of Water Usage Dialysis Rebate 6,311 6,309 $34.2 million for the half-year ended Total CSOs provided 18,726,073 19,226,931 Financial Performance 31 December 2002. The final dividend for the year ended 30 June 2003 is Source: Figures based on Yarra Valley Water’s 2002–03 accounts expected to be $24 million.

Debt

We continue to maintain our debt at a Annual Report 2002–03 manageable level, choosing to invest surplus funds in enhancing the infrastructure network rather than using it to reduce debt. Capital expenditure for the financial year was in excess of $59.9 Water arra Valley Y million, $14.9 million lower than budgeted but still 14.1% higher than the previous year. Operating Expenditure … Participation in One of our major business challenges is In 2003–04, we will be changing our to balance the competing interests of meter reading and billing cycle from external benchmarking delivering the highest possible levels of eight weeks to ten weeks. The extension customer service, while also minimising to the billing cycle will allow efficiencies comparisons has our operating costs. In many cases we to be realised. The change will result in indicated our debt have been able to achieve both an increase in forecast overdue debtors increases in service and lowering of to 11.9 debtor days. We will continue to management practices costs through innovation. Nevertheless focus on assessing the effectiveness of we undertake ongoing customer our credit collection steps, improved are considered best consultation and research to determine follow up processes for customers on practice in the water that we deliver services at a level that payment arrangements and further customers need. process improvement opportunities with our debt collection agency. industry. During the Our operating costs decreased each past three years, we year since the establishment of the Efficiency Framework company in 1995 through to 1999–00. We have achieved improvements in have achieved This was a result of a number of efficiency since inception of the business efficiency improvements and company in 1995. This means the continuous improvement tight management of costs. In 2000–01 company has continued to deliver and 2001–02, we experienced a small in the effectiveness significant operating cost reductions, real increase in operating costs, which and consequent real price reductions, of debt collection was predominantly due to prolonged dry since it was established. Striving for weather causing a substantial increase efficiency through continuous with significant in water system breaks. The trend improvement is our internal culture from continued in 2002–03 where operating reduction in the size the governance level to the ‘shop floor’. 76 costs rose in real terms by less than 1%. of long-term debtors … The framework under which we operate Management of Debtors has driven these efficient service delivery Our continued management of customer outcomes. This framework comprises accounts has allowed us to further the following elements: reduce overdue debtors to 7.0 days of average daily billings, from 8.8 days 1. Robust corporate governance

Financial Performance in 2001–02. Key projects which arrangements: have enabled debtors to be reduced As a State-owned company under included improvements in our the Corporations Act 2001, we are processes and further outsourcing driven to act in the interests of the of debt management activities. company and our shareholder, to produce ongoing efficiency gains Participation in external benchmarking 2002–03 Annual Report 2002–03 and deliver an appropriate level of comparisons has indicated our debtor dividend payments to the State management practices are considered Government. best practice in the water industry. During the past three years, we have We have a commercially autonomous and independent arra Valley Water arra Valley achieved continuous improvement in Y the effectiveness of debt collection Board, principally with persons with with significant reduction in the size private sector backgrounds, of long-term debtors. appointed by the State Government. 5.1 Financial Performance

Our triple bottom line outcomes, Our efficiency target means we will including customer service and continue to compare our performance financial outcomes, are monitored with best practice standard: by a separate Governance Unit in “Continue to participate in the Department of Treasury and industry benchmarking Finance through an annual programs such as the WSAA corporate planning process, asset management and quarterly monitoring of results and customer service benchmarking public annual reporting. programs” We are subject to the Trade Practices Act. Efficiency Targets 2. An Operating Licence issued by the We believe that we must continue to Governor-in-Council, which stipulates drive efficiency and find the funds to minimum performance standards. address our targets of improved 3. A Customer Contract, overseen by the customer service and environmental Essential Services Commission (ESC), outcomes. We have set ourselves a which outlines the minimum acceptable range of challenging targets to help us service outcomes for customers and is achieve this: reviewed each year with community “Controllable Operating participation. Expenditure decreases by at 4. Competition by comparison regime for least 2.4% in real terms, during the metropolitan retail water businesses 2003–04 to 2005–06. This will operated by the ESC, which has driven be achieved by: continual improvement in customer • Further developing capability 77 service outcomes in an environment of and expertise in identifying declining operating cost. and implementing process 5. Active customer and environmental efficiencies leading to a consultative committees involved in reduction in contact volumes policy development. • Redesign of Information Technology (IT) architecture to 6. Public water quality and environmental produce lower IT maintenance

performance reporting. Financial Performance costs We benchmark our activities to ensure •Implementing mobile that we remain at the forefront of best computing for field activities” practice efficiency levels. These benchmarks often involve interstate Our efforts to reduce customer contact and international water businesses. volumes are addressed in the Customer For example, we participate in Service section of this report. Annual Report 2002–03 econometric and process benchmarking Most organisations continually strive to projects carried out by the Water achieve a balance between the need to Services Association of Australia keep core IT infrastructure up to date (WSAA), which represents the major and operating efficiently, provide a cost Water arra Valley Y urban water businesses in Australia, effective and responsive service, and to ensure that we continue to provide implement new systems to meet the the most efficient customer service- needs of the business. focused outcomes. … After paying In 2002–03, we completed a number of maintenance contractor Abigroup, key IT infrastructure upgrades and bringing benefits to both. It is expected dividends to the business system improvements that the mobile computing system will State Government the including: be fully operational in early 2004. Introduction of a new electronic bill remaining funds are presentment and payment system. Ongoing Investment Upgrade of our desktop systems to After paying dividends to the State reinvested back into Windows XP. Government the remaining funds are the business, so that Upgrade of key business systems reinvested back into the business, so including Asset Management, Financial that we can continue to provide services we can continue Management and File Management to our customers in the future. to provide services System. The business also invests in new assets A new Information Technology Strategic through our capital expenditure program. to our customers in Plan (ITSP) was also developed to guide While capital expenditure increases the the future … us through the next 10 years. This is the value of our assets, it is not considered first time the business has had a 10-year an expense. Instead, as these assets strategy for IT. Significant improvements decline in value, either through use, planned for 2003–04 include the ageing, technical obsolescence or other upgrade of key enterprise servers, factors, they are depreciated. further essential hardware and software Depreciation is an expense which upgrades, and the introduction of reduces our profit. integration software. During 2002–03, we spent $59.93 million One of the core aims of the ITSP is to on capital items. We spend this money 78 facilitate the minimisation of total capital to ensure that we continue to provide and recurrent costs of IT over the long top quality service to our customers and term. In 2002–03, the Board approved a to ensure that our assets continue capital expenditure of $9.1 million to working at the optimum level. This upgrade the main computers, provide an investment reflects our sustainable Offsite Disaster Recovery Facility and approach to the long-term viability of provide IT infrastructure that will help to our infrastructure. Financial Performance reduce longer term IT operating costs Determining the appropriate level of and maintain a secure and robust reinvestment into water infrastructure is environment for business operations. difficult as it can take many years for Mobile computing refers to a new evidence of under investment to project that made significant progress manifest itself. While we believe that we are reinvesting in our infrastructure at an

2002–03 Annual Report 2002–03 during the year. The aim of the project is to provide a mobile computing platform appropriate rate, we experienced a to our field staff so we can deliver more significant under expenditure of $14.9 accurate data to our asset information million in our capital program in systems and allow our maintenance 2002–03. This was due to delays and

arra Valley Water arra Valley planning issues (eg land purchase,

Y contractor to capture and store data more efficiently. The system will be planning permits and route selection). accessible by both our staff and our Most projects will be delivered in the 2003–04 program. 5.1 Financial Performance

Figure 41: Capital Expenditure Program

Capital Expenditure 1995–96 1996–97 1997–98 1998–99 1999–00 2000–01 2001–02 2002–03 2003–04

Actual $M 43.64 43.11 49.86 44.81 43.92 47.53 50.14 59.93 –

Budget $M 41.72 47.30 53.70 44.74 43.85 45.90 57.22 77.04 88.04

Despite the under expenditure, A total of $6.59 million was spent compared with budget, a record level of renewing or relining sewers and $12.84 expenditure on infrastructure investment million on water main renewals. was achieved, accompanied by record Our capital expenditure program for levels of activity from our business. We 2003–04 includes the target: spent $59.93 million on delivery of new and improved assets to provide “18% of the 2003–04 capital reductions in sewer spills, water supply expenditure program to be interruptions and sewer blockages. The undertaken with annual or capital program also provided benefits in longer term contracts” terms of growth of the pipe network, We will achieve this by providing network operations management, long-term contracts for water and sewer leakage reduction and reducing our renewals and valve insertion programs. environmental impact. This will provide economies of scale, We started a total of 51 construction security of tenure, increased knowledge, 79 projects in 2002–03 and completed a reduced administration and reduced further 37 projects, with another 37 tendering costs. projects involving other authorities.

Figure 42: Water mains renewed Financial Performance

1999–00 2000–01 2001–02 2002–03

Water mains renewed (km) 75 90 75 68

An annual audit is conducted by independent auditors, CH2MHill Pty Ltd, to ensure that robust systems, processes and plans are in place to manage our assets. 2002–03 Annual Report 2002–03

Figure 43: Sewers relined or replaced arra Valley Water arra Valley Y 1999–00 2000–01 2001–02 2002–03

Sewers relined or replaced (km) 6.6 13.4 15.16 12.44

An annual audit is conducted by independent auditors, CH2MHill Pty Ltd, to ensure that robust systems, processes and plans are in place to manage our assets. Risk Management … our more extreme It is important that we are aware of We have a suite of plans that enable a potential events that could cause coordinated response to potential risks are operational disruption. All potential risks to the emergencies ranging from water supply business, our customers, the community disruptions, failures in our sewerage failures such as and the environment have been system, a loss of our major office contamination of the identified and reviewed and these are facilities and major IT/corporate systems documented in a Consolidated Risk failures. The plans are regularly reviewed water supply or failure Profile, which is submitted to the State and tested. Government annually with our Business of water and sewer Plan. This profile enables the business IT Risk Mitigation assets. In response to proactively manage the risks rather Failure of key business systems which than reacting to problems as they arise. are heavily reliant on IT is also a key risk to this we have Our annual internal audit program is for the business. During the year, we referenced to the Risk Profile. completed a number of programs to comprehensive upgrade our IT risk management and To minimise our exposure to loss, we security. We also undertook a security emergency response have a number of insurance policies with review with a view to gaining appropriate cover and deductibles. protocols agreed accreditation under AS/NZS 7799.2 – Many of our tasks and obligations have Information Security Management by between the to be performed within certain early 2004. timeframes. To meet or exceed these metropolitan water In November 2002, we joined in the obligations, we have a comprehensive global initiative for Computer Security Compliance Calendar that identifies industry and Victoria Day to increase the company’s these tasks and ensures they are Computer Security Awareness by Police, and also with performed within the required timeframe. 80 implementing a number of focused This approach helps us to meet the the Department of activities including specific vendor service obligations and the expectations presentation, seminars and training of all our stakeholders. Human Services … for all staff. Operating procedures and manuals for Upgrades were completed in 2002–03 the water supply and sewerage for: infrastructure have been developed

Financial Performance and are in use. directory services software meter recording integration software Emergency Response the majority of our corporate databases As identified by the Consolidated Risk security, including the introduction of Profile our more extreme risks are new firewalls and additional access operational failures such as controls 2002–03 Annual Report 2002–03 contamination of the water supply or Intranet computer equipment failure of water and sewer assets. In response to this we have imaging computer equipment comprehensive emergency response test and development computer protocols agreed between the equipment arra Valley Water arra Valley Y metropolitan water industry and Victoria Payroll/HR systems. Police, and also with the Department of Human Services, which focus on ensuring a cooperative and appropriate response to emergency events. 5.1 Financial Performance

Auditing and Verification An integral part of transparency is to Yarra Valley Water is certified to these have key reported facts and figures three Standards. To achieve recognition independently verified by respected third as a certified company an organisation parties. To this end we have provided, in must be independently assessed by a context throughout this report, specific third party. Every three years the system references to the source of independent is fully audited. data and audits that validate the In April 2003, we were subject to a statements, results or performance Triennial System Audit. Four auditors measures reported. visited the organisation for a week to Some of the verification is undertaken on review the company’s compliance. behalf of, or in conjunction with third The auditors found that we adhered parties. For example, the Essential to all the requirements and Services Commission (ESC) endorses a recommended that our certified status third party auditor to assess compliance remain and that we also be upgraded with our Licence obligations and to to the ISO 9001/2000 version of the validate the accuracy of the key Quality Management Standard. performance indicators used in the ESC’s annual Comparative Performance GST Review Report. The Auditor-General Victoria is In August 2002, we were subject to the company’s external auditor. Ernst & a review of Goods and Services Tax Young provides internal audit services (GST) by the Australian Taxation Office. and reports to the Board Risk The review focused on Business Management and Audit Committee. Activity Statements (BAS) analysis Maunsell Australia Pty Ltd provides and land sales. audits of environmental aspects and 81 reports to the Board Environmental The samples taken in the BAS analysis Committee. found that all amounts had been correctly allocated and classified. The Triennial Audit review found that the GST was correctly calculated and treated on land sales. Being certified to the Quality The outcome of the review was that the Management System Standard business was fully compliant for GST, (ISO9001) requires an organisation to Financial Performance based on the testing by the Australian have consistent practices. Taxation Office. Being certified to the Environmental Management System Standard (ISO 14001) requires an organisation to be competent environmental managers. 2002–03 Annual Report 2002–03

Being certified to Hazard Analysis and Critical Control Points (HACCP) requires an organisation to deliver healthy and safe products. arra Valley Water arra Valley Y 5.2

82 Annual Financial Report Yarra Valley Water ABN 93 066 902 501

Directors’ Report ...... 83 12 Non-Current Interest Bearing Liabilities . . . . . 98 13 Non-Current Liabilities — Provisions...... 98 Statement of Financial Performance. . . . . 86 14 Contributed Equity ...... 98 Statement of Financial Position...... 87 15 Reserves ...... 99 Statement of Cash Flows...... 88 16 Retained Profits...... 99 17 Financial Instruments ...... 100 Notes to the Financial Statements ...... 89 18 Related Party Disclosures ...... 101 1Summary of Significant Accounting Policies . . 89 19 Remuneration of Directors...... 103 2 Revenue from Ordinary Activities ...... 93 20 Remuneration of Auditor ...... 103 3 Expenses and Losses (Gains)...... 93 21 Contingent Liabilities and Contingent Assets . 103 4 Income Tax ...... 94 22 Commitments ...... 104 5 Dividends Paid...... 95 23 Employee Benefits...... 105 6 Current Assets — Cash ...... 95 24 Economic Dependency ...... 105 7 Current Assets — Receivables ...... 95 25 Cash Flow Information...... 106 8 Infrastructure, Property, 26 Executive Remuneration ...... 106 Plant and Equipment ...... 96 27 Segment Information...... 107 9 Current Liabilities — Payables...... 97 Directors’ Declaration ...... 108 10 Current Interest Bearing Liabilities...... 97 11 Current Liabilities — Provisions...... 98 Auditor-General’s Report ...... 109 5.2 Annual Financial Report

Directors’ Report The Directors of Yarra Valley Water Limited present their report for the financial year ended 30 June 2003.

Directors The following persons were Directors of the Company during the financial year up to the date of this Report:

Alan K Cornell (Chairman) Vincent A (Tony) Kelly (Managing Pauline Y Ladiges Geoffrey R Phillips (Deputy Chairman) Director from 27 January 2003 to JoAnne M Stephenson Peter F Harford (Managing Director 30 June 2003) Bryan L Kelly from 1 July 2002 to 15 January 2003) Judith M Dwyer

The Directors have no interests in the shares of the Company.

Details of the qualifications, age, experience and special responsibilities of Directors are set out on pages 125–128 of this Annual Report.

Directors’ Attendance at Meetings The number of Directors’ meetings (including meetings of Committees of Directors) and the number of meetings attended by each Director during the financial year are shown below.

All Directors also attended a one day Board Sustainability Workshop designed to develop an understanding of the theory and concepts underpinning sustainability, and as an introduction to the development of the Company’s Sustainability Strategy.

Figure 44: Directors’ Attendance at Meetings

Board of Risk Management Environmental Executive Marketing and Occupational Health Directors and Audit Committee Remuneration Customer Service and Safety 83 Committee (1) Committee Committee Committee

Number of meetings held 12 6 4 3 4 4

Number of meetings attended by: A K Cornell 11 * * 3 3 * G R Phillips 8 6 3 2 * *

J M Dwyer 11 * * 3 4 1 Annual Financial Report P F Harford (2) 5 * * * * * B L Kelly 12 5 4 * * 4 V A Kelly (2) 6 * * * * * P Y Ladiges 11 * 3 * * 3

J M Stephenson 8 5 * * 1 * Annual Report 2002–03

* Not a member of the Committee

(1) The change of name from Audit Committee to Risk Management and Audit Committee, to better reflect the role and responsibility of the Committee, was approved by the Board on 19 February 2003.

(2) Eligible to attend six meetings of the Board of Directors. arra Valley Water arra Valley Y 84 Yarra Valley Water Annual Report 2002–03 Annual Financial Report environment belowspecifiedconditions.Duringtheyear, theCompanycomplied withalllicencerequirements. Authority undersection20ofthe The Companyalsoholdslicencesforitssewagetreatment plants.Thelicenceshavebeen issuedbytheEnvironment Protection ensure thatappropriate actionsare takeninrelation totherecommendations madebytheauditors. audits are undertakenwhichfocusonkeyareas requiring regulatory compliance.Theissuesraisedintheauditsare monitored t with environmental regulation andmanageanyareas environmental ofnoncompliance.AspartthisSystem,regular external The CompanymaintainsanEnvironmental ManagementSystemcertifiedtoISO14001which isdesignedtoensure compliance Environmental Regulation Annual Report. Likely developmentsintheoperationsofCompanyknownatdatethisReporthavebeencovered generallywithinthis Likely Developments of theCompanyinfuture financial years. significantly affected ormay significantlyaffect theoperationsofCompany, theresults ofthoseoperations, orthestate Since 30June2003tothedateofthisReport,nomatterorcircumstance hasarisenthat,intheopinionofDirectors, has Events SubsequenttoBalanceDate disclosed inthisReportortheAnnualFinancialReport. There were nosignificantchangesinthestateofaffairs oftheCompanyduring yearended30June2003nototherwise State ofAffairs in earliersectionsofthisAnnualReport. A review oftheoperations theCompanyduringyearended30June2003andresults ofthoseoperationsare contained Review ofOperations The Directors’ estimateofthe finaldividendfortheyearended30June2003is$24.0million. The followingdividendshavebeenpaidorrecommended bytheDirectors sincethestartoffinancialyear: Dividends There were nosignificantchangesinthenature oftheseactivitiesduringtheyear. water supplyandsewerageservicesthecollectionoftradewaste. The principalactivitiesoftheCompanyduringcoursefinancialyearwere theprovision, withinitslicensedarea, o Principal Activities Directors’ Report An interimdividendof$34.2millionfortheyearended30June2003waspaidonApril2003. This dividendwaspaidon31October2002. As showninlastyear’s Directors’ Report,afinaldividendof$26.2millionfortheyearended30June2002wasrecommended. (Cont.) Environment ProtectionAct1970 . Thelicencesallowthedischarge oftreated effluent tothe ofaffairs f retail o 5.2 Annual Financial Report

Directors’ Report (Cont.) Indemnification of Officers and Auditor The Company has entered into a deed with each Director of the Company under which the Company agrees to:

Provide the relevant Director with the right to inspect and if necessary copy Board papers during the Director’s term of office and for a period of seven years after the relevant Director ceases to be a Director of the Company. Maintain Directors’ and officers’ insurance in respect of the relevant Director both during the Director’s term of office and for a period of seven years after the relevant Director ceases to be a Director of the Company.

The Company’s Constitution provides that every person who is or has been an officer or auditor of the Company will be indemnified out of the property of the Company against liabilities to the extent allowed by the Corporations Act 2001.

No amounts have been paid out under this indemnity during or since the end of the financial year.

Insurance of Officers During or since the end of the financial year, the Company paid or agreed to pay premiums in respect of contracts insuring Directors, former Directors and Officers of the Company against certain liabilities.

The contracts of insurance prohibit disclosure of the nature of the liabilities insured and the amount of the premium.

Rounding of Amounts to Nearest Thousand Dollars The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this Report and the Annual Financial Report have been rounded off to the nearest thousand dollars, unless otherwise stated.

This Report is made in accordance with a resolution of the Directors of the Company on the 20th day of August 2003.

85

Alan K Cornell Vincent A (Tony) Kelly Chairman Managing Director Annual Financial Report Annual Report 2002–03 arra Valley Water arra Valley Y 86 Yarra Valley Water Annual Report 2002–03 Annual Financial Report xessfo riayAtvte a 2336 (224,378) (243,346) 3(a) Expenses from Ordinary Activities Revenue from Ordinary Activities e nraei se eauto eev 5()1,8 40 17,584 (32,620) 15(b) (32,932) 3(a) 2002 The aboveStatementofFinancialPerformanceshouldberead inconjunctionwiththeaccompanyingnotes. with ownersas 2003 To T Note Net increase inAssetRevaluation Reserve NET PROFIT Profit from Ordinary ActivitiesafterIncomeTax Expense Income Tax Expenserelating toOrdinary Activities Profit from Ordinary Activitiesbefore IncomeTax Expense Borrowing costsexpense For theyearended30June2003 Statement ofFinancialPerformance otal valuationadjustmentsrecognised directly inequity tal changesinequityotherthanthoseresulting from transactions 2 4 371,002 335,985 02020,136 30,290 20858,891 40 82,018 58,851 17,584 58,851 64,434 64,434 78,987 94,724 '0 $'000 $'000 5.2 Annual Financial Report

Statement of Financial Position As at June 2003 Note 2003 2002 $'000 $'000 Current Assets Cash 6, 17 383 848 Receivables 7, 17 39,856 37,876 Deferred tax assets 4 6,315 2,395 Prepayments 495 759 Total Current Assets 47,049 41,878

Non-Current Assets Receivables — trade debtors 120 169 Infrastructure, property, plant and equipment 8 1,305,233 1,239,580 Deferred tax assets 4 1,273 11,906 Total Non-Current Assets 1,306,626 1,251,655 TOTAL ASSETS 1,353,675 1,293,533

Current Liabilities Payables 9, 17 43,932 33,889 Interest bearing liabilities 10, 17 56,528 53,113 Deferred tax liabilities 4 375 96 Provisions 11 3,069 2,702 87 Total Current Liabilities 103,904 89,800

Non-Current Liabilities Interest bearing liabilities 12, 17 453,800 453,800 Deferred tax liabilities 4 155,494 132,196 Provisions 13 4,841 3,719

Total Non-Current Liabilities 614,135 589,715 Annual Financial Report TOTAL LIABILITIES 718,039 679,515 NET ASSETS 635,636 614,018

Equity

Contributed equity 14 43,503 43,503 Annual Report 2002–03 Reserves 15 (a) 442,620 425,036 Retained profits 16 149,513 145,479 TOTAL EQUITY 635,636 614,018 arra Valley Water arra Valley Y

The above Statement of Financial Position should be read in conjunction with the accompanying notes. 88 Yarra Valley Water Annual Report 2002–03 Annual Financial Report neetadohrcsso iac ad(305 (32,570) (33,015) (204,477) (217,766) Interest andothercostsoffinancepaid Goods andservicestaxrefunded Interest received Payments tosuppliersandemployees Receipts from customers Cash Flowsfrom OperatingActivities rcesfo aeo nrsrcue rpry ln n qimn 2 26 (50,248) CASH AT THEENDOFPERIOD Cash atthebeginningofperiod (55,370) NET DECREASEINCASHHELD 123 2002 NET CASHOUTFLOWFROMFINANCINGACTIVITIES Repayment ofborrowings Proceeds from borrowings Dividends paid 2003 Advances /Loans Cash Flowsfrom FinancingActivities Note NET CASHOUTFLOWFROMINVESTINGACTIVITIES Proceeds from saleofinfrastructure, property, plantandequipment Payments forinfrastructure, property, plantandequipment Cash Flowsfrom InvestingActivities NET CASHINFLOWFROMOPERATING ACTIVITIES For theyearended30June2003 Statement ofCashFlows The above Statement of Cash Flows should be read inconjunctionwiththeaccompanyingnotes. The aboveStatementofCashFlowsshouldberead 5()117097,729 111,700 25 (a) 6 1418 (142,096) (124,178) 5,0 328,237 354,803 2,9 147,009 127,593 5,1)(47,871) (56,918) (52,693) (60,400) (50,222) (55,247) ,4 6,399 7,447 $'000 $'000 45 (364) (465) 3 140 231 4 1,212 848 8 848 383 7(91) 67 5.2 Annual Financial Report

Notes to the Financial Statements For the year ended 30 June 2003

1 Summary of Significant Accounting Policies The accounting policies which have been adopted in the preparation of the Financial Statements are:

(a) Basis of Accounting The Financial Statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 which includes applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with.

The Financial Statements have been prepared on an accruals basis in accordance with the historical cost convention, except where stated.

(b) Changes in Accounting Policies The Company has adopted the revised Accounting Standard AASB 1028 ‘Employee Benefits’ which has resulted in a change to the measurement of employee benefit liabilities. Previously, the Company measured the provision for employee benefits based on remuneration rates at the date of recognition of the liability. In accordance with the revised Standard, the provision for employee benefits is now measured based on the remuneration rates expected to be paid when the liability is settled.

The Company has adopted the new Accounting Standard AASB 1044 “Provisions, Contingent Liabilities and Contingent Assets”. In accordance with the new provision, a note relating to contingent assets is now included in the financial statements and a reconciliation in the movements in provisions is also disclosed. For completeness, the comparative figures have also been disclosed.

All other accounting policies adopted are consistent with those of the previous year.

(c) Infrastructure, Property, Plant and Equipment 89 (i) Depreciation of Infrastructure, Property, Plant and Equipment Items of infrastructure, property, plant and equipment, including buildings but excluding freehold land, are depreciated by asset class over their estimated useful lives to the Company on the following basis:

Buildings 60 years Straight Line Infrastructure 7 to 100 years Straight Line Plant and Equipment 3 to 15 years Straight Line Annual Financial Report

(ii) Recoverable Amount of Non-Current Assets Expected net cash flows are discounted to their present value in determining the recoverable amount of assets. Non-current assets are not carried at an amount above their recoverable amount.

(iii) Revaluation of Non-Current Assets

Land and buildings are revalued in accordance with AASB 1041 “Revaluation of Non-Current Assets” and AASB 1010 Annual Report 2002–03 “Recoverable Amount of Non-Current Assets”. Revaluation of land and buildings is made on the basis of fair value. Assets are revalued with sufficient regularity to ensure that the carrying amount of each asset in the class does not differ materially from its fair value at the reporting date. Potential capital gains tax is not taken into account in determining revaluation amounts unless there is an intention to sell the assets concerned. All other assets are carried at cost. arra Valley Water arra Valley Y 90 Yarra Valley Water Annual Report 2002–03 Annual Financial Report Notes totheFinancialStatements e EmployeeBenefits (e) RevenueRecognition (d) f Doubtful Debts (f) Employee benefitexpensesandrevenues arisinginrespect ofthefollowingcategories: bonds, whichhavetermstomaturityapproximating thetermsofrelated liability, are used. determining thepresent value offuture cashoutflows,themarketyieldasatreporting dateonnationalgovernment the estimatedfuture cashoutflow tobemadeinrespect ofservicesprovided byemployees uptothereporting date.In expected tobepaidwhentheliabilityissettled.Allotheremployeebenefitliabilitiesare measured atthepresent valueof within 12monthsofthereporting dateare measured attheirnominalamountsbased onremuneration rateswhichare Liabilities arisinginrespect of wagesandsalaries,annualleaveanyotheremployeebenefitsexpectedtobesettled date. Thesebenefitsincludewagesandsalaries,annualleave,sickleavelongserviceleave. Provision ismadeforemployee benefitsaccumulatedasaresult ofemployeesrendering servicesuptothereporting (ii) OtherEmployeeBenefits assets atthatdate. difference betweenthevestedbenefitsatreporting dateandthenetmarketvalue ofthesuperannuationfund’s A liabilityinrespect ofdefined benefitsuperannuationisrecognised, where appropriate, andismeasured asthe (i) Superannuation r connect newdevelopmentstotheCompany’s existingwatersupplyandseweragesystems.Theseare recognised as gaining ofcontrol oftheasset. Cashnewconnectioncontributionsrepresent feespaid bydeveloperssotheycan Assets acquired atnocostto theCompany(developercontributions)are recognised asrevenue atfairvalueuponthe Property salesare recognised onthesigningofanunconditionalcontractsalewithadepositatleast10%. number ofdayssincethelastreading bydailyaveragewaterconsumptionforthatperiod. disposal bycustomersandrecorded onmeterswhichhave notyetbeenread. Theestimateismadebymultiplyingthe meter reading iscyclical,anestimationmadeattheendofaccountingperiodforwaterusageandsewage W The paymentinadvancebycustomersofaccountswhichatreporting datewere unbilledisclassifiedastradecreditors. Revenue isbrought toaccountwhenserviceshavebeenprovided orwhenausageservicecharge hasbeenmade. is raisedwhere somedoubtastocollectionexists. The collectibilityofdebtisassessedeachaccountingperiodfor usageandothercharges. Aprovision fordoubtfuldebts are recognised againstprofits whendue. In respect oftheCompany’s definedbenefitssuperannuationplan,anycontributionsmadetothe plan evenue whenthecontributionhasbeenreceived. ater usagecharges andsewagedisposalcharges are recognised asrevenue whenthe servicehasbeenused.As Other types of employee benefits are r Other typesofemployeebenefitsare W ages andsalaries,annualleave,longservicesickleave andotherleave; (Cont.) ecognised againstprofits onanetbasisintheirrespective categories. 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) (g) Taxation (i) Income Taxes The Company, in accordance with the State Owned Enterprises Act 1992, is liable to pay an income tax equivalent to the Victorian Government calculated on a similar basis as the Income Tax Assessment Act 1936 (as amended) and the Income Tax Assessment Act 1997.

Tax-Effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences.

To the extent timing differences occur between the time items are recognised in the Financial Statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

(ii) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except: Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising 91 from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(h) Cash and Cash Equivalents For the purpose of the Statement of Cash Flows, cash includes deposits at call which are readily convertible to cash and which is used in the cash management function on a day-to-day basis. Interest is charged as an expense as it accrues. Annual Financial Report

(i) Foreign Currencies

Transactions in foreign currencies are converted to local currency at the rate of exchange ruling at the date of the transaction. All resulting exchange differences arising on re-statement are brought to account in determining the net profit or loss for the financial year. Annual Report 2002–03

(j) Receivables All debtors are recognised at the amounts receivable less any provision for doubtful debts. Credit is generally allowed for a period of 14 days. Bad debts are written off when the debt is determined to be uncollectible. arra Valley Water arra Valley Y 92 Yarra Valley Water Annual Report 2002–03 Annual Financial Report Notes totheFinancialStatements q RoundingofAmountstoNearest ThousandDollars (q) SegmentReporting (p) FinalDividendEstimate (o) Leases (n) Advances (m) Borrowings (l) Creditors andAccruals (k) Amounts intheAnnualFinancialReporthavebeenrounded tothenearest thousanddollars. Where nodirect attributionexists,theamountshavebeenreported asunallocated. Report. Directly attributable revenue, expenses,assetsandliabilitieshavebeenreported againstaparticularsegment. The accountingpoliciesadoptedforSegmentReportingare consistentwiththoseusedthroughout thisAnnualFinancial estimate inrespect of2002–03 is$24.0million. meeting. Althoughthisprocess hadnotbeencompletedatthereporting date,theBoard’s preliminary finaldividend Tr An obligationtopayadividendonlyarisesafterconsultationbetweentheBoard, therelevant portfolioMinisterandthe not usefinanceleases. charged againstprofits inequalinstalmentsovertheaccountingperiodscovered bytheleaseterm.TheCompanydoes agreement soastoreflect therisksandbenefitsincidentaltoownership.Paymentsmadeunderoperatingleasesare Leases are classifiedattheir inceptionaseitheroperatingorfinanceleasesbasedontheeconomicsubstanceof The advancesare non-interest bearing. Advances represent amountsadvancedtotheCompany bydevelopersforcapitalandrecurrent worksnotcompleted. over theperioditbecomesdue.Interest isrecorded aspartofcreditors andaccruals. Loans are repaid onmaturityandare carriedattheirprincipalamounts.Interest ispayablesemi-annuallyandaccrued amounts are unsecured andare usuallypaidnet30daysofrecognition. Creditors andaccrualsare recognised forfuture amountstobepaidinrespect ofgoodsandservicesreceived. The easurer. Following thisconsultation,anagreement onthedividendpayableispassedbymembersingeneral (Cont.) 3 2R Notes totheFinancialStatements rcesfo aeo o-urn ses1079 34 130 88 Expenses (a) T T Proceeds from saleofnon-current assets Recovery ofdebtpreviously writtenoff asbad Interest Rent Revenue from outsidetheOperatingActivities T T Rendering ofservices Sewage disposalcharges W Revenue from OperatingActivities Expenses andLosses b Losses (b) eeoe otiue ses1,3 8,050 17,034 17,677 19,201 Other Cash newconnectioncontributionsbydevelopers Developer contributedassets rade wastecharges otal Revenuefrom Ordinary Activities otal Revenuefrom outsidetheOperatingActivities otal Revenuefrom OperatingActivities evenue from Ordinary Activities ater usagecharges e oso ipslo rpry ln qimn 0 5 (1,215) 22,885 505 32,620 2,778 1,417 21,670 32,932 1,683 Net lossondisposalofproperty, plant&equipment T Other expenses Salary andemployeebenefitsexpense Contract payments Operating leaseminimumpayments Bad anddoubtfuldebts Borrowing costsexpense T Depreciation of: Wholesaler charges tldpeito xes 84928,635 28,429 otal depreciation expense otal Expensesfrom Ordinary Activities ln n qimn ,7 7,242 6,173 Plant andequipment Infrastructure Buildings (Cont.) 7,0 335,985 371,002 334,933 369,476 101,073 111,793 106,789 122,324 7,7 256,998 276,278 3,1 124,113 131,713 01372,336 80,143 69621,797 26,746 26,936 30,137 21121,286 22,121 03310,801 10,343 36213,203 13,642 ,2 1,052 1,526 799 1,077 ’0 $’000 $’000 Annual FinancialReport 032002 2003 3 140 231 135 107 5.2

Yarra Valley Water Annual Report 2002–03 Annual Financial Report 93 94 Yarra Valley Water Annual Report 2002–03 Annual Financial Report 4 Notes totheFinancialStatements Operating Profit before IncomeTax r The aggregate amountofincometaxexpenseattributabletothefinancialyearis rvso o eerdIcm a 2,7)(17,297) (23,577) 96 132,196 375 2,395 11,906 155,494 6,315 1,273 To Provision forDeferred IncomeTax Future IncomeTax Benefit Income Tax ExpenseComprises: T Provision fordeferred incometax—non-current Provision fordeferred incometax—current Deferred Tax Liabilities 23,696 T Future incometaxbenefit— non-current Future incometaxbenefit— current 28,417 Deferred Tax Assets be generatedinthefuture to recoup thevalueoftheselosses. The Companybelievesthere isvirtualcertaintythatsufficient taxableincomewill T Income Tax ExpenseattributabletoOrdinary Activities T Prima facieincometaxcalculated@30% Income Tax econciled totheprimafacieincometaxexpenseonoperatingprofit asfollows: ax lossincludedinfuture income taxbenefitshownbelowamountsto$4.9million. ax effect ofpermanentdifferences: otal Deferred Tax Liabilities otal Deferred Tax Assets tal IncomeTax Expense ne rvso npiryas230255 11 296 (8) 2,350 (11) (4,139) 689 (8) (1,165) Environmental impactandprotection allowances Research anddevelopment allowance Under provision inprioryears Non-assessable customercontributions Non-deductible depreciation Non-deductible expenses (Cont.) 5,6 132,292 155,869 3,9)(20,136) (30,290) 47478,987 94,724 02020,136 30,290 673 (2,839) (6,713) ,8 14,301 7,588 ’0 $’000 $’000 032002 2003 18 25 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) 2003 2002 $’000 $’000 5Dividends Paid Dividends paid by the Company to the Victorian Governent are: Unfranked interim dividend paid 34,200 23,000 Unfranked final dividend paid for prior year 26,200 29,693 Total Dividends Paid 60,400 52,693 The Company, under National Income Tax Equivalent, is not required to maintain a franking account. The final dividend estimate for the year, as disclosed in Note 1(o) is $24.0 million.

6Current Assets — Cash Cash at bank 383 848 Total Current Assets — Cash 383 848

7Current Assets — Receivables Trade debtors 41,540 39,464 Less: Provision for doubtful debts (1,804) (1,748) 39,736 37,716 Other debtors 120 160 Total Current Assets — Receivables 39,856 37,876 95 Annual Financial Report Annual Report 2002–03 arra Valley Water arra Valley Y 96 Yarra Valley Water Annual Report 2002–03 Annual Financial Report 8I Notes totheFinancialStatements tidpnetvlain19–01151,185 2,167 34,501 – 1,185 3,173 – 52,085 Accumulated depreciation At cost—yettobeprogressively revalued At independentvaluation1999–00 Buildings At independentvaluation2000–01 At independentvaluation2002–03 Freehold Land esacmltddpeito 2353 (177,646) (203,533) Less accumulateddepreciation tidpnetvlain19–01151,185 34,501 – – 1,185 52,085 Edward Rushton AustraliaPtyLtdusingfair marketvaluebasedonexisting use. The 1999–00valuationofbuildings (withtheexceptionofbuildingswithminorvalue)wasindependently determinedby The 2000–01valuationoffreehold landwasindependently determinedbyUrbisPtyLtdusingfairvalueasat30June2001. The 2002–03valuationoffreehold landwasindependently determinedbyUrbisPtyLtdusingfairvalueasat30June2003. V T Capital worksinprogress At cost At independentvaluation1999–00 At independentvaluation2000–01 At independentvaluation2002–03 To (137,777) Capital Works inProgress (157,646) T Accumulated depreciation At cost Plant andEquipment T Tota Accumulated depreciation At cost Infrastructure nfrastructure, Property, PlantandEquipment otal Written DownAmount otal PlantandEquipment otal LandandBuildings aluations tal Infrastructure, Property, PlantandEquipment l Infrastructure (Cont.) ,1,5 1,175,548 1,217,957 ,0,6 1,417,226 1,508,766 ,0,3 1,239,580 1,305,233 1,366,999 1,435,641 1,313,325 1,375,603 4,9)(39,602) (45,490) 98514,541 19,855 14,541 11,905 19,855 51,507 11,375 37,586 56,865 56,046 ’0 $’000 $’000 ,6 3,085 3,961 032002 2003 37 (267) (397) 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) 2003 2002 $’000 $’000 8Infrastructure, Property, Plant and Equipment (Cont.) Reconciliations Infrastructure Carrying amount at beginning 1,175,548 1,146,543 Additions 65,149 50,291 Disposals (619) – Depreciation expense (22,121) (21,286) Total Infrastructure 1,217,957 1,175,548

Freehold Land Carrying amount at beginning 34,501 34,521 Disposals – (20) Net amount of revaluation increments less decrements 17,584 – Total Freehold Land 52,085 34,501

Buildings Carrying amount at beginning 3,085 2,233 Additions 1,011 959 Depreciation expense (135) (107) 97 Total Buildings 3,961 3,085

Plant and Equipment Carrying amount at beginning 11,905 11,471 Additions 5,651 7,687 Disposals (8) (11) Annual Financial Report Depreciation expense (6,173) (7,242) Total Plant and Equipment 11,375 11,905

9Current Liabilities — Payables Trade creditors 13,904 10,287 Annual Report 2002–03 Advances 269 269 Accruals 29,759 23,333 Total Current Liabilities — Payables 43,932 33,889 arra Valley Water arra Valley 10 Current Interest Bearing Liabilities Y Borrowings 56,528 53,113 Total Current Interest Bearing Liabilities 56,528 53,113 98 Yarra Valley Water Annual Report 2002–03 Annual Financial Report 4ContributedEquity 14 Non-Current Liabilities—Provisions 13 Non-Current Interest BearingLiabilities 12 Current Liabilities—Provisions 11 Notes totheFinancialStatements riaysae f1dla ahflypi 4,0 43,503 43,503 (3,786) 5,815 (2,354) – 6,159 (364) The shares are beneficially ownedbytheVictorian Government. Ordinary shares of1dollar eachfullypaid Paid upCapital Carrying amountatend Amounts utilisedduringyear Additional provision Carrying amountatbeginning Other Provisions Carrying amountatend Amounts utilisedduringyear Reduction ofprovision following remeasurement Additional provision Carrying amountatbeginning Employee Benefits Movements inProvisions T Employee benefits T Borrowings Other provisions includeamounts relating tominorclaimsmadeagainsttheCompany. service leave,andunfundedsuperannuationliabilityamounts. Employee benefitsincludesamountsrelating toaccruedannualleave,long T Other Employee benefits otal Non-Current Liabilities —Provisions otal Non-Current Interest BearingLiabilities otal Current Liabilities—Provisions (Cont.) 5,0 453,800 453,800 453,800 453,800 ,2 6,159 4,130 7,720 4,279 3,719 3,719 4,841 4,841 2,702 2,440 3,069 2,879 ’0 $’000 $’000 032002 2003 56 (712) (586) 9 262 647 327 190 514 262 262 190 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) 2003 2002 $’000 $’000 15 Reserves a) Composition Capital Reserve 392,357 392,357 Asset Revaluation Reserve 50,263 32,679 442,620 425,036 b) Movement Asset Revaluation Reserve Opening balance 32,679 32,639 Prior year increment realised on sale of freehold land – (20) Reinstatement of prior year increments realised – 60 Revaluation increments on revaluation of land 17,584 – Closing balance 50,263 32,679

The Capital Reserve represents an amount equivalent to the net assets transferred to the Company following its formation and forms part of the Company’s general reserves and is not part of its capital under the Corporations Act 2001

The Asset Revaluation Reserve is used to record certain increments and decrements in the value of non-current assets.

99 16 Retained Profits Balance at the beginning of the year 145,479 139,361 Net profit after income tax 64,434 58,851 Total available for appropriation 209,913 198,212 Dividends provided for or paid (60,400) (52,693) Amounts transferred from asset revaluation reserve – (40) Annual Financial Report Balance at end of year 149,513 145,479 Annual Report 2002–03 arra Valley Water arra Valley Y 100 Yarra Valley Water Annual Report 2002–03 Annual Financial Report 7FinancialInstruments 17 Notes totheFinancialStatements 2002 2003 ah––– – 39,856 – 383 – – 383 39,856 Receivables Cash FINANCIAL ASSETS orwns62%2,2 82012802100–510,328 241,000 – – 269 269 192,800 48,200 28,328 6.26% Advances Borrowings orwns62%2,1 82012802100–506,913 241,000 – – 269 269 192,800 48,200 24,913 6.24% (Liabilities) Net FinancialAssets T Advances Borrowings T FINANCIAL LIABILITIES To (Liabilities) Net FinancialAssets T T FINANCIAL LIABILITIES To Interest RateRiskExposures (a) ah––– – 37,876 – 848 – – 848 37,876 Receivables Cash FINANCIAL ASSETS rade creditors andaccruals aeceiosadacul – – 36033,620 33,620 – – – – rade creditors andaccruals otal FinancialLiabilities otal FinancialLiabilities tal FinancialAssets tal FinancialAssets interest rateforeachclassoffinancialassetsandliabilitiesissetoutbelow. The Company’s exposure tointerest rateriskandtheeffective weightedaverage interest rate interest rate W W fetv rate effective rate effective vrg interest average interest average ihe laigFxditrs auigi:NnTotal Non Fixedinterest maturingin: Floating eighted Total Non Fixedinterest maturingin: Floating eighted (Cont.) 2,1)(820 1280 2100 ,3 (502,078) 4,835 (241,000) (192,800) (48,200) (24,913) (514,021) (3,693) (241,000) (192,800) (48,200) (28,328) 4934,0 9,0 4,0 389540,802 33,889 241,000 192,800 48,200 24,913 554,260 43,932 241,000 192,800 48,200 28,328 ’0 ’0 ’0 ’0 ’0 $’000 $’000 $’000 $’000 $’000 $’000 ’0 ’0 ’0 ’0 ’0 $’000 $’000 $’000 $’000 $’000 $’000 –3 ,2 38,724 – – 38,724 40,239 – – 40,239 –4 ,6 43,663 – – 43,663 rls er years years or less years years or less er1t over5 1to5 1 year over5 1 to 5 1 year bearing bearing interest interest 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) 17 Financial Instruments (Cont.) (b) Net Fair Value All financial assets and liabilities are recognised in the Statement of Financial Position. Cash, cash equivalents and non-interest bearing financial assets and financial liabilities are carried at a cost which approximates the net fair value. The net fair value of other financial assets and financial liabilities is determined by discounting the expected future cash flows at current interest rates. The carrrying amounts and net fair values of financial assets and liabilties at balance date are as follows:

2003 2003 2002 2002 Carrying Net fair Carrying Net fair amount value amount value $’000 $’000 $’000 $’000 FINANCIAL ASSETS Cash 383 383 848 848 Receivables 39,856 39,856 37,876 37,876 Total Financial Assets 40,239 40,239 38,724 38,724

FINANCIAL LIABILITIES Trade creditors and accruals 43,663 43,663 33,620 33,620 Borrowings 510,328 548,136 506,913 521,054 Advances 269 269 269 269 Total Financial Liabilities 554,260 592,068 540,802 554,943 101

(c) Credit Risk Exposure The Company’s exposure to credit risk for each class of financial assets recognised on the Statement of Financial Position is generally the carrying amount, net of any provision for doubtful debts.

18 Related Party Disclosures (a) Directors

The names of persons holding the position of Director of Yarra Valley Water Limited at any time during the financial Annual Financial Report year ended 30 June 2003 were: Alan K Cornell (Chairman) Geoffrey R Phillips (Deputy Chairman) Vincent A (Tony) Kelly (Managing Director) (appointed 27 January 2003)

Peter F Harford (Managing Director) (contract expired on 15 January 2003 and Mr Harford did not seek renewal.) Annual Report 2002–03 Judith M Dwyer Bryan L Kelly Pauline Y Ladiges arra Valley Water arra Valley JoAnne M Stephenson. Y

Remuneration of Directors is reported in Note 19. 102 Yarra Valley Water Annual Report 2002–03 Annual Financial Report 8RelatedPartyDisclosures (Cont.) 18 Notes totheFinancialStatements f Relationship withtheTreasury CorporationofVictoria (f) (e) Victorian Government related Victorian parties—disclosure Government exemption (e) RelationshipwiththeMinisterforEnvironment andWater (d) Water RelationshipwiththeMelbourne Corporation (c) Transactions withDirectors (b) operating profit before incometaxis: payable atreporting dateandtheamountsofinterest revenue andinterest expenseincludedinthedeterminationof The Companyborrows from andinvestswiththeTreasury Corporation ofVictoria. Theaggregate amountofborrowings in thewholly-ownedgroup. appliestodisclosure oftransactionsduringthefinancialyearwithrelated parties “Related PartyDisclosures”. Therelief oprtosAt2001 Corporations Act The Company, undersection340(1)ofthe Environment andWater relating toParksVictoria services. The Company, underanormalcommercial agency arrangement,billsandcollectsratesonbehalfoftheMinisterfor Corporation drainageratesandcharges. sewage. TheCompany, Water underanormalcommercial agencyarrangement,billsandcollectsonbehalfofMelbourne WaterThe CompanytransactssolelywiththeMelbourne Corporationforthepurchase ofpotablewateranddisposal There were noothertransactionswithDirectors. or payableinthenormalcourseofbusiness.Alltransactionswere atarmslength. Group, whichhasprovided servicestotheCompanyfor whichanamountof$16,120(2002:$13,296)infeeswere paid Mr GRPhillipsistheFinanceDirector oftheTransurban LtdisapartoftheTransurban Group. CityLinkMelbourne business. AlltransactionswithBlakeDawsonWaldron were atarmslength. the Companyforwhichanamountof$560,770(2002:$192,273)infeeswere paidorpayableinthenormalcourseof isaseniorpartnerinthelawfirm,BlakeDawsonWaldron,Mr AKCornell whichhasprovided certainlegalservicesto W W ater’s licensedarea undernormalcommercial termsandconditions. ater andsewerageserviceswere provided toDirectors orDirector-related entitiesforproperties withinYarra Valley grgt muto orwns5038506,913 510,328 Interest expense Interest revenue Aggregate amountofborrowings , specificallyinrelation toclauses 5.1and5.2oftheAustralianAccountingStandard 1017 (Cont.) oprtosAt2001 Corporations Act a obtainedrelief from section296(1)ofthe , has 17131,488 31,701 ’0 $’000 $’000 032002 2003 208 116 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) 2003 2002 $’000 $’000 19 Remuneration of Directors Income received, or due and receivable, by Directors of the Company from the Company 720 528

The number of Directors of the Company whose income from the Company was within the specified bands is as follows: 2003 2002 No. No. $30,000 – $39,999 55 $70,000 – $79,999 11 $90,000 – $99,999 1– $270,000 – $279,999 –1 $360,000 – $369,999 1–

The Directors do not receive share options as part of their remuneration.

Where applicable, the table above includes performance bonuses paid during the year, based on performance of the previous year. For the current year, the table also includes a pro-rata performance bonus paid to Mr Peter Harford who departed during the year. The remuneration for this Director also includes annual leave and long service leave, which had been accruing since 1986, but was paid to that Director on departure.

The above table excludes remuneration earned by Mr Tony Kelly as an executive of the company prior to his appointment as Managing Director on 27 January 2003.

20 Remuneration of Auditor 103 2003 2002 $’000 $’000 Amount received, or due and receivable, by the auditor of the Company for auditing the accounts of the Company 86 82

21 Contingent Liabilities and Contingent Assets (a) Contingent Liabilities Annual Financial Report The Company is unaware of any material contingent liabilities. Claims to which the Company is aware and which may result in a liability being incurred have been provided for as other provisions. (Refer Note 11).

A Western Australian Supreme Court Writ issued in September 2000 and a Victorian Supreme Court Writ issued in October 2001 seek damages from the Company (and others) in respect of an allegedly defective product known as SAIF-T. The SAIF-T product was developed by a group of which Yarra Valley Water was one of the participants. The product recall claim is yet to be quantified. Yarra Valley Water does not have product recall cover for this product under Annual Report 2002–03 its existing insurance program.

(b) Contingent Assets The Company enters into agreements with land developers whereby assets are transferred to the Company at no cost. arra Valley Water arra Valley These assets are brought to account as revenue and capitalised. Y

At reporting date, land developers had commenced construction of assets that would eventually be transferred to the Company contingent upon the release of Statements of Compliance by the Company. Due to the nature of the industry and the assets involved, a contingent asset amount cannot be reliably measured. Notes to the Financial Statements (Cont.) 2003 2002 $’000 $’000 22 Commitments (a) Capital Commitments Total capital expenditure contracted for at balance date but not provided for in the accounts Payable: Not later than one year 21,004 4,637 Later than one year but not later than five years – 1,760 21,004 6,397 (b) Lease Commitments Total lease expenditure contracted for at balance date but not provided for in the accounts Payable: Not later than one year 1,112 1,198 Later than one year but not later than five years 802 671 Later than five years 12 1,915 1,871 Representing: Cancellable operating leases 146 179 Non-cancellable operating leases 1,769 1,692

104 Commitments in relation to non-cancellable operating leases Payable: Not later than one year 1,036 1,110 Later than one year but not later than five years 732 580 Later than five years 12 1,769 1,692 There are no commitments in relation to finance leases. Annual Financial Report

(c) Other Commitments — SmartWater Fund The SmartWater Fund was established by Melbourne’s four water businesses and the Victorian Government for the purpose of providing grant funding to support the development of sustainable water use projects. Each water business has a 25% interest in the fund and will contribute $2 million over a two year period to 30 June 2004 (providing a Fund

Annual Report 2002–03 Total of $8 million).

Contributions made to the SmartWater Fund are intially recognised as assets in the water businesses’ Statements of Financial Performance. Expenses are subsequently recognised by the water businesses when incurred by the Fund.

Yarra Valley Water’s share of the Fund disbursements for the year is $107,804 and is included in the Statement of arra Valley Water arra Valley Y Financial Performance. As at 30 June 2003, Yarra Valley Water’s Statement of Financial Position reflects its share of cash in the Fund totalling $342,196. 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.) 2003 2002 $’000 $’000 23 Employee Benefits Aggregate employee benefit liability 8,006 7,272 The aggregate employee benefit liability includes amounts for annual leave, long service leave, salaries and wages and superannuation. Where applicable, employees are covered for superannuation benefits by the equipsuper Superannuation Fund defined benefits scheme. An agreed percentage of salaries is contributed to the fund by the Company as recommended by an actuary. The following amounts were measured as at 30 June, or in the case of employer contributions in relation to the period ended 30 June. The excess of any present value of employees’ vested benefits over assets held to meet future benefit payments is recognised as a liability.

equipsuper Superannuation Fund Vested benefits 21,600 20,967 Net market value of assets held by the Fund to meet future benefit payments 20,700 20,948 Deficit of the assets held to meet future benefit payments over vested benefits (900) (19) Employer contributions to the Fund 616 306 Present value of employees’ accrued benefits 20,500 19,918

2003 2002 105 No. No. Number of Employees Number of employees, including Company Directors, at year end 359 368

24 Economic Dependency Annual Financial Report The normal trading activities of the Company depend on the provision of bulk water and sewerage services from Melbourne Water. The normal trading activities of the Company also depend to a significant extent on the provision of finance from the Treasury Corporation of Victoria. Annual Report 2002–03 arra Valley Water arra Valley Y 106 Yarra Valley Water Annual Report 2002–03 Annual Financial Report 6ExecutiveRemuneration 26 CashFlowInformation 25 Notes totheFinancialStatements oa eueaini oeta 1000 ,6 1,080 1,263 The numberofexecutiveswhoseremuneration waswithinthespecifiedbandsare: total remuneration ismore than$100,000. Aggregate incomereceived ordueandreceivable byexecutiveofficers whose Reconciliation ofNetProfit toNetCashInflowfrom OperatingActivities (a) management functiononaday-to-daybasis. which are readily convertibletocashonhandandwhich are usedinthecash For thepurposeofStatementCashFlows,cashincludesdepositsatcall The above table excludes remuneration earned by MrKellyafterhisappointment asManagingDirectorThe abovetable excludesremuneration on 27January2003. earned as accruedannual leaveandlongservice paidtothatexecutiveondeparture. current year, thetablealsoincludesapro-rata performancebonuspaidto an executivewhodepartedduringtheyear,well as The tableaboveincludesperformance bonusespaidduringtheyear, basedon performance oftheprevious year. Forthe The executivesdonotreceive share optionsaspartoftheirremuneration. b Financingarrangements (b) 2000–$239,999 $230,000 –$209,999 $200,000 –$199,999 $190,000 –$189,999 $180,000 –$169,999 $160,000 –$159,999 $150,000 –$149,999 $140,000 Net CashInflowfrom OperatingActivities rvso o obfldbs5 (3,613) 5 28,635 56 505 28,429 Change inoperatingassetsandliabilities V Net lossonsaleofnon-current assets Provision fordoubtfuldebts Depreciation andamortisation Net profit of Victoria inaccordance withapprovals from theTreasurer ofVictoria. The Company’s borrowings are madeexclusivelywithTreasury Corporation leo ok ae vrfo eeoes(706 (8,051) (17,036) alue ofworkstakenoverfrom developers nraei te rvsos289479 20,136 3,538 2,899 50 30,290 1 (2,174) 3,994 (82) (128) (1,587) 264 (466) Increase inotherprovisions Increase intaxprovisions (Decrease) Increase ininterest creditors Increase intradecreditors Increase ingoodsandservices taxreceivable Decrease inpaymentsadvance Increase intradedebtors (Cont.) 1,0 97,729 111,700 44458,851 64,434 ’0 $’000 $’000 032002 2003 032002 2003 o No. No. 1 – 1 1 2 1 1 – 1 1 5.2 Annual Financial Report

Notes to the Financial Statements (Cont.)

27 Segment Information Business Segments Water Sewerage Consolidated 2003 2002 2003 2002 2003 2002 $’000 $’000 $’000 $’000 $’000 $’000

Revenue Sales to customers outside the 164,075 145,179 162,820 152,167 326,895 297,346 consolidated entity Other revenue from customers 12,535 8,613 23,540 17,374 36,075 25,987 outside the consolidated entity Total segment revenue 176,610 153,792 186,360 169,541 Unallocated revenue 8,032 12,652 Total Consolidated Revenue 371,002 335,985

Results Segment result 87,685 73,785 89,983 77,755 177,668 151,540 Unallocated expenses (90,976) (85,205) Unallocated revenue 8,032 12,652 Consolidated entity profit from ordinary 94,724 78,987 activities before income tax expense Income tax expense 30,290 20,136 107 Net Profit 64,434 58,851

Assets Segment assets 471,112 438,124 831,544 804,151 1,302,656 1,242,275 Unallocated assets 51,019 51,258

Total Assets 1,353,675 1,293,533 Annual Financial Report

Liabilities Unallocated liabilities 718,039 679,515 Total Liabilities 718,039 679,515 Annual Report 2002–03

Other segment information Acquisitions of infrastructure, property, plant and equipment 30,270 27,249 34,879 24,512 arra Valley Water arra Valley

Depreciation 8,564 8,355 13,558 13,149 Y

The water segment purchases bulk potable water and transports it to properties within the Company’s licensed area. The sewer segment removes wastewater and trade waste from properties within its licensed area and treats or transports the waste for treatment. The Company operates in one geographical area. Directors’ Declaration In the opinion of the Directors of Yarra Valley Water Limited:

(a) the Financial Statements and notes of the Company are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the financial position of the Company as at 30 June 2003 and its performance for the year ended on that date; and

(ii) complying with Accounting Standards and the Corporations Regulations; and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This Declaration is made in accordance with a resolution of the Directors of the Company on the 20th day of August 2003.

Alan K Cornell Vincent A (Tony) Kelly Chairman Managing Director

108 Annual Financial Report Annual Report 2002–03 arra Valley Water arra Valley Y In my opinion, the financial report of report In my opinion,thefinancial Yarra Valley Water Limitedisinaccordancewith: A ontheabove hasbeenformed The auditopinionexpressed inthisreport basis. f requirements in Australia, soastopresentaview which isconsistentwithmy understandingoftheCompany’s accordance with requirementsandstatutory professionalreporting Accounting Standardsandothermandatory ispresentedfairly in anopinionastowhether, report toform undertaken inallmaterialrespects,thefinancial accounting estimates. and theevaluationThese procedureshave ofaccountingpoliciesandsignificant been e isfreeofmaterialmisstatement. report The auditproceduresincludedan assurance astowhether thefinancial The audithasbeenconductedinaccordancewith Australian Auditing Standardstoprovide reasonable by Members oftheParliament of Victoria, theresponsible MinistersandtheMembersofCompany asrequired outinordertoexpress anopiniononittothe hasbeencarried report independant auditofthefinancial itcontains. andtheinformation report An responsible forthepreparationandpresentationoffinancial Declaration,hasbeenaudited. The Company’s statementsandtheDirectors’ notes tothefinancial directorsare position,statementofcashflows, the statementoffinancial performance, comprising thestatementoffinancial of report The accompanying financial Yarra Valley Water year ended 30June2003, Limitedforthefinancial A w presentedonthis report includedintheauditedfinancial theinformation toconfirm report the auditedfinancial with theinherentrisksarisingfromelectronicdatacommunicationsthey areadvisedtoreferthehardcopy of whichinformation may have beenhyperlinked areconcerned toorfromthesestatements.Ifusersofthisreport w oftheCompany’sthe integrity web site.Ihave oftheCompany’s ontheintegrity notbeenengagedtoreport 30 June2003includedontheCompany’s web site. The ManagingDirectoroftheCompany isresponsible for of report relatestothefinancial YarraThis auditreport Valley Water year ended Limitedforthefinancial Matters relating totheelectronic presentation ofthe Audited FinancialReport V To 20 August 2003 20 August MELBOURNE inancial position, financial performance anditscashflows. performance inancial position,financial xamination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, xamination, onatestbasis,ofevidence theamountsandotherdisclosuresinfinancial supporting alley WaterLimited udit Opinion udit Scope eb site. eb site. refersonlyThe auditreport tothestatementsnamedbelow. An opinionisnotprovided onany other theCorporations Act a theCorporations Act (a) (b) other mandatory professional reporting requirementsin professionalreporting othermandatory Australia. (b) teMmeso h alaeto itra theresponsible Ministers andtheMembers theMembers of oftheParliament of YarraVictoria, T i)complying with Accounting Standardsin Australia andthe (ii) view giving andfair oftheCompany’s atrue positionasat 30June2003andofitsfinancial financial (i) elephone (03)86017000Facsimile (03)[email protected] Website www.audit.vic.gov.au performance fortheyearperformance endedonthatdate;and Victorian Auditor-General’sOffice 2001 andtheAuditAct 2001, including: A UDITOR-GENERAL’S REPORT A uditing inthePublic Interest Level 34,140 William Street, Melbourne Victoria 3000 1994. Corporations Regulations J.W. CAMERON Auditor-General 2001; and

Yarra Valley Water Annual Report 2002–03 Annual Financial Report 109 6.1

Environment Improvement Plan 2002–03

Overview...... 111 Proposed 2003–04 ...... 120 Reducing Water Consumption...... 120 Progress 2002–03...... 111 Reducing Sewage Spills ...... 121 Consulting and Communicating ...... 111 Improving Sewage Treatment Plant Reducing Consumption...... 114 Performance...... 122 Improving Performance...... 116 Increasing Our Recycling ...... 122 Minimising Impacts ...... 118 Improving Stakeholders, Customers and Staff Involvement, Understanding and Behaviours...... 123 6.1 Environment Improvement Plan

Overview

Our Environment Improvement Plan to the ECC and the Board Environmental (EIP) has been developed in conjunction Committee. with our Environmental Consultative Some typical examples of EIP activities Committee (ECC) and the Environment include: preventing sewage spills, Protection Authority (EPA). The EIP managing trade waste, being prepared is reviewed regularly to update and for emergencies, and improving our add new actions in response to sewage treatment plant management. investigations, progress on other A full summary of the EIP actions and improvements and community progress on these is set out below. expectations. Our progress on these improvements is reported regularly

Progress 2002–03

Consulting and Communicating

Action (Ongoing/New) and Actions In Progress When Progress

We will work with Melbourne Water on streamflow As requested by No requests received in 2002–03. management plans where we have a sewage treatment plant Melbourne Water discharging to a river or stream.

Commence program of educating and auditing owners of fire October 2002 Completed. 3,000 letters were sent to customers with an services to manage unauthorised water usage from fire educational message. Random audits that commenced in services. November 2002 are continuing. As of June 2003, 600 sites had 111 been audited. 14 sites are being investigated further for potential theft.

Review Environmental Policy. October 2002 Completed.

Continue to work with community consultative groups to Ongoing We are currently conducting community consultative committees obtain customer feedback on major projects such as the for the following projects. Emerald Water Supply Strategy, Northern Suburbs Sewerage Northern Suburbs Sewerage Strategy; Strategy, Gembrook Sewerage Scheme and Lilydale Gembrook Sewerage Scheme; composting scheme. Whittlesea sewage treatment plant upgrade; Monbulk Sewerage Scheme; and Lilydale composting facility.

The consultative committee for the Gembrook Sewerage Scheme Plan 2002–03 Improvement Environment is being incorporated into a new consultative committee for the Emerald Cockatoo Sewerage Scheme. It is now planned to service Gembrook under this strategy. The consultative committee will be involved initially in the construction of the transfer system and design and delivery of the reticulation system.

A community consultation group has now been formed for the Annual Report 2002–03 Whittlesea sewage treatment plant upgrade. This committee has now met to discuss the upgrade process in preparation for submitting the Works Approval to EPA. arra Valley Water arra Valley Y 112 Yarra Valley Water Annual Report 2002–03 Environment Improvement Plan 2002–03 with otherwaterbusinesses. Develop amodelforthesavewater!™programinconsultation the mostcomprehensivewebsiteofitstypeinworld. Continue toexpandsavewater.com.au tomaintainitsstatusas in residentialcustomerusage. Undertake customerendusestudytoincreaseunderstanding Wa Participate inthedevelopmentandimplementationof initiatives. to waterconservation Improve knowledgeofcustomerattitudesandlikelyresponses order toencouragewaterconservation. wewillfacilitatethesavewater!™awardsin Progress In 2002–03, advice onenvironmentalissues. Environmental ConsultativeCommitteetoobtaininputand Continue toholdfiveormoremeetingseachyearwith When Environment ImprovementPlan. Participate indevelopmentofEdwardsLakeNeighbourhood Action (Ongoing/New)and Actions InProgress Consulting andCommunicating ter ResourcesStrategy. Ongoing Ongoing September 2002 March 2003 Ongoing Ongoing Ongoing to include: savewater.com.au hasbeenexpandedinthelast12months measurement studyusingdataloggerstobeginin2003–04. Enduse measurement techniquehasbeenunsuccessful. Researchintoalternativeenduse to takesixmonths. fieldwork beganMay2003, Residential appliancestocksurvey mid-October 2002. forwarded totheMinisterforEnvironmentand Water Therecommendedstrategywas the SteeringCommittee. strategy viarepresentationontheIndustry Working Groupand We activelyparticipatedindevelopmentofthe Completed. savewater!awardswereheldon28March2003. Completed. Achieved. being amendedbasedonfeedbackfromtheworkshop. Thedocumentiscurrently Environment ImprovementPlan. comments onthethirddraftofNeighbourhood A workshopwasconductedon26March2003toprovide products. targeting of Yarra Valley Water customers withconservation segmentation methodologyisbeingdevelopedtoenablebetter A on customerbehaviourcompletedinDecember2002. Research ontheawarenessofwaterrestrictionsanditsimpact conserving devicesbothinsideandoutsidethehome. conserving on thesitetoenablevisitorsviewdifferent water New SustainableHousehasbeendeveloped andincluded partnerships more State-basedwaterissuesthroughstrategic The sitewillexpandinthenext6–12monthstoincorporate websitesingoogle. conservation savewater.com.au isnowinthetopthreewater casestudies industry Nine newbusinessandindustrialsectorswith25 T developed byeminenthorticulturistsRichardFrancis, Thesitecontentwas at Kirks Water Wise Garden inBallarat. A newgardeningsectorthatwasdevelopedandlaunched eena Crawford and Rosemary Davies eena CrawfordandRosemary 6.1 Environment Improvement Plan

Consulting and Communicating

Action (Ongoing/New) and Actions In Progress When Progress

Continue with quarterly account communications program Ongoing The January 2003 account and associated insert promoted to provide customers with water conservation tips, advice the savewater!™ web site, Yarra Valley Water mulch and and services. rainwater tanks.

The April 2003 account included information on water consumption, water saving tips and related websites.

The July 2003 account included information on Stage Two Water Restrictions, details of the water efficiency service and the SmartWater Fund.

Undertake “Alternative Services Strategy” to identify the most Ongoing Sustainability workshop held with Board on 12 May 2003. The appropriate method of delivering services to our customers. Natural Step engaged in June 2003 to prepare a Sustainability Strategy by December 2003.

Continue program of trade waste seminars to promote waste Ongoing Achieved. Seminars have been broadened in response to minimisation and cleaner production processes to our customer demand. As a result seminars have been delivered customers. on topics including business efficiency and irrigation practises.

Continue with ongoing and targeted market research Ongoing Customer Satisfaction Monitor (CSM) programs to gain knowledge of customer attitudes and likely The CSM has been developed to identify and help the business responses to environmental initiatives. monitor the key drivers of customer satisfaction and perceived customer service quality amongst business and residential customers. 113

Customer Contact Monitor (CCM) The CCM is conducted with customers who have initiated a recent contact with Yarra Valley Water. It monitors our customers’ perceptions of our customer service/problem resolution, and identifies areas for improvement.

A review of the key drivers of satisfaction is underway to improve the ability to convert these research tools into business improvements.

Conduct seminars for trade waste customers to improve September 2002 Completed. Briefings held in October 2002 to communicate knowledge and understanding of trade waste management. Drought Response programs and impact on business. Environment Improvement Plan 2002–03 Improvement Environment Two technical seminars were held in November 2002 to address irrigation practices and efficiency in business.

Presented to a Trade Waste seminar in December 2002 (topic – business efficiency). Annual Report 2002–03 arra Valley Water arra Valley Y 114 Yarra Valley Water Annual Report 2002–03 Environment Improvement Plan 2002–03 Undertake lifecycleassessmentofrainwatertank. Actively encouragecustomerstoadoptrainwatertanks. identification ofkeyopportunities. benefitanalysisand cost, technology assessment, includingmarketand Prepare waterrecyclingplan, efficient leakagepractices. Conduct researchandtrialnewtechnologytoidentify part ofthestrategicreviewaccesstobuilding. stairwell ofthe Yellingbo buildingattheMitchamofficeas Review thedirectimpactofcoolingandheatingin identify targetareasforleakagereduction. Implement zonemeteringtomonitorwaterusageand cin(non/e)adAtosI rges hnProgress When and biosolidsatLilydalesewagetreatmentplant. Set updemonstrationofcompostinggreenorganics Action (Ongoing/New)and Actions InProgress Reducing Consumption December 2002 November 2002 June 2003 June 2003 June 2003 December 2003 August 2003. withanewtendershort-listexpectedbyearly 4 July2003, ExpressionsofInterestareduetocloseon processing project. have calledfornewExpressionsofInterestabiosolidsonly processingofgreenorganicsfromtheprojectand compulsory Leastwaste its currentformwascommerciallyunacceptabletoboth proposed compostingfacilityitwasdecidedthattheprojectin Followingtheassessmentoftendersfor Behind schedule. Statewide Rainwater Tank Rebatesapproved. Thisrepresents36%ofthe and16June. between 1January number applicationsforthe$150Rainwater Tank Rebate wehaveapproved413 Gardens andHomesRebateScheme, Since theintroductionofStateGovernment’s Smart 2001–02 were298tanks. Salesfor Salesfor2002–03 totalled467tanks. program. Our customershaverespondedpositivelytoourrainwatertank Findings weresubmittedlateDecember2002. rainwater tank. was commissionedtoundertakealifecycleassessmentof RoyalMelbourneInstituteof Technology (RMIT) Completed. Completed. leakage contractor. various acousticmethodsat Yarra Glenusinganexpert practice leakageinvestigationmethodsandthetrialof Includesreviewof Australian andoverseasbest Completed. and energyefficiencyreview. Reviewcompletedasanitemofthesafeaccess Completed. Contract underwayforthefinalstageofmeterinstallations. Completion expectedbyOctober2003. Behind schedule. and Yarra We havenowremovedthe Valley Water. 6.1 Environment Improvement Plan

Reducing Consumption

Action (Ongoing/New) and Actions In Progress When Progress

Work with VicUrban to develop a water sensitive design for the Ongoing Yarra Valley Water has continued to work with VicUrban to proposed green suburb at Epping North (Aurora). facilitate the development of a water sensitive suburb at Aurora. During the year we have appointed a dedicated project manager to coordinate our activities across our business. Many key investigations have commenced or been completed by VicUrban consultant Coomes or by Yarra Valley Water. These include: An expert panel review completed in September 2002. Soil capability for irrigation report completed in April 2003. Risk of using rainwater tanks in September 2002. Memorandum of Understanding signed with VicUrban in January 2003. A consultant has been engaged to assess risks and develop management plans. A consultant has been engaged to develop the conceptual design for the sewage treatment facility.

Offer practical advice to customers on how to save water. Ongoing Recent communications to customers have concentrated on providing information about Stage One Water Restrictions, water consumption and water savings tips taken from the ‘Save Water Now! Your Household Guide to Saving Water’ booklet, distributed in November 2002. Activities include: Advertorials in local papers Print ads in metropolitan, local and multicultural papers Radio ads on mainstream and multicultural stations 115 Ongoing media releases (both joint and Yarra Valley Water-specific) Ongoing media interviews Public Relations activities such as the media event with Stephen Silvagni and Jo Bailey in March 2003 (highlighted using mulch and washing cars properly during restrictions)

Provide water saving solutions in the form of innovative and Ongoing Yarra Valley Water Mulch Program 2002–03 was launched to re- effective products and services. buy customers on 11 September 2002. The mulch campaign (via account inserts) to targeted districts occurred in October 2002.

A second re-buy campaign was also successfully launched during January 2003, resulting in a strong sale performance.

Total number of sales orders for 2002–03 = 6,395 orders Plan 2002–03 Improvement Environment compared with 5,602 total orders for the full year in 2001–02.

Continue to promote a water efficiency evaluation service for Ongoing South East Water and City West Water have agreed to deliver the schools, councils and manufacturers. service to their customers. To date over 100 businesses have A partnership is being entered into with the Sustainable

used the service. Melbourne Fund to finance works recommended by this service. Annual Report 2002–03

Establishment of Water Conservation Targets Study. Research June 2003 Completed. Weather model built using CSIRO recommended in this area is being conducted with the Commonwealth approach. Model can be used to adjust actual consumption for Scientific and Industrial Research Organisation (CSIRO). the impact of unusual weather. arra Valley Water arra Valley Y 116 Yarra Valley Water Annual Report 2002–03 Environment Improvement Plan 2002–03 compliant withthe ‘1-in-5-year’ designstandard. willbe 63 ofour106emergencyreliefstructures(ERS) Ongoing CERES Sponsorship. (Mont Albert) BranchSewers. Creek(Darebin)andBox Hill Construction ofDry West Branch (Ivanhoe)Sewers. andIvanhoe Construction ofFavershamRoad(Canterbury) Progress upgrades. Complete BlackburnBranchandBoxHillsewer When Action (Ongoing/New)and Actions InProgress Progress Environment and Water. When Submit a PlantotheMinisterfor Water Conservation Applewood developmentinDoncaster. Implement andpromotedemandmanagementprogramat Action (Ongoing/New)and Actions InProgress Improving Performance Reducing Consumption July 2003 30 June2003 December 2003 Behind schedule. Construction works for Dry CreekBranch ConstructionworksforDry Behindschedule. December 2003 Detailed ConstructionofIvanhoeBranchupgradeiscomplete. October 2003 Completed. December 2002 Thedeveloperisinstallingflowcontrolvalvesonall Completed. December 2002 work orconstructiontendersfortenERSsareinprogress. detailed designsforthreeandconstruction designs forfive, In addition tothesewehavefunctional phase ofprojects. delays occurringineithertheplanningorconstruction We havenotcompletedtheremainingfourdueto compliant. 59emergencyreliefstructuresare Behind schedule. (water featuresite). RMITstudentprojectprogressing flow controlvalves. including rainwatertankandtheinstallationofnumerous Implementation of completed, Water EfficiencyService Completed. to be completed in February 2004. to becompletedinFebruary Works areexpected Sewer followingdetaileddesignreviews. Detailed designisbeingfinalisedforBoxHill West Branch December 2003. Sewer havecommencedandareexpectedtobecompletedin be completedinOctober2003. Construction oftheassociatedsewerhascommencedandwill ThisisexpectedinlateJuly2003. Permit isissued. finalised butconstructioncannotproceeduntilaPlanning design fortheFavershamRoadPumpStationhasbeen new unitsandapartmentsasthedevelopmentproceeds. 6.1 Environment Improvement Plan

Improving Performance

Action (Ongoing/New) and Actions In Progress When Progress

Construct emergency storage capacity at Switchback Road June 2003 Behind schedule. Construction of Eucalyptus Drive and James West, Switchback Road East, Switchback Road Middle, Cook Drive have commenced and are due for completion in Eucalyptus Drive (Eltham) and James Cook Drive (Diamond late July 2003. A review of the concept design is being Creek) sewage pump stations. undertaken for Switchback Road West, Switchback Road East and Switchback Road Middle due to constructability issues. This may require an alternative solution. Final completion will be subject to resolution of these issues.

Restore 98.5% of unplanned water supply interruptions in four June 2003 Achieved. Performance to end of June was 99.7% hours in 2002–03.

We will aim to progressively reduce the number of reticulation Not achieved. Achieved a rate of 43.3 blockages/100km for sewer blockages according to the following targets: 2002–03. High number of blockages attributed to the 2002–03 34.0 blockages/100km June 2003 continuing dry weather. 2003–04 33.5 blockages/100km June 2004 2004–05 33.0 blockages/100km June 2005

Undertake an investigation into the available options for the June 2003 Completed. The sludge risk assessment was completed and management of biosolids from our sewage treatment plants. submitted to the EPA for comment. We received comments from the EPA during mid May 2003 and will be amending our risk assessment to address the issues in discussion with the EPA. We are currently working to complete our sustainable sludge management strategy for our treatment plants which is required to be submitted to the EPA by 25 July 2003. 117

Repair 80% of leaks within 24 hours. June 2003 Not achieved. The percentage of leaks repaired within 24 hours was 71% due to the sudden increase in bursts over the summer period. This resulted in a backlog of work which meant many minor leaks took longer than 24 hours to repair.

Complete new lighting (Australian Standard lighting levels) at June 2003 Completed. Energy efficiency at the Mitcham site has achieved the Mitcham office to reduce energy consumption. an audited reduction of 22%. A significant part of this was due to modification of the lighting to Australian Standards.

Preparation of a xeriscape landscaping plan for the carpark and June 2003 Completed. A consultant prepared a design in conjunction with adjacent areas to the entry to the Mitcham office, Lucknow Street. the redesign of the front entry.

To identify and prepare a suitable management plan for Radio March 2003 Completed. Prepared as part of the OH&S management Plan 2002–03 Improvement Environment Frequency (RF) and Electromagnetic (EMR) radiation hazards system. Readers issued to operations for both daily and after at sites let to telecommunications companies. hours access to sites.

Continue to maintain the Company’s certification to ISO 14001. June 2003 Completed. Triennial System Audited was conducted in April 2003. Result of audit recommended that certification to ISO 14001 continue. Annual Report 2002–03

Cease the use of chlorine for disinfection of treated effluent June 2004 On target. A contract has been awarded for the installation of from Craigieburn sewage treatment plant. UV disinfection at Craigieburn sewage treatment plant. Works planned to be completed by 1 April 2004. arra Valley Water arra Valley Y 118 Yarra Valley Water Annual Report 2002–03 Environment Improvement Plan 2002–03 plant to Whittlesea GolfCourse. Provide recycledwaterfrom Whittlesea seweragetreatment December2002 next threeyears. Review currentauditprogramandpreparenewfor Six externalenvironmentalauditswillbecarriedout. major event. responseplantoa Conduct anexercisetotesttheindustry State EnvironmentProtectionPolicy. consistentwiththeobjectivesof treatment plantsatEmerald, Cease dischargeofFerresRoadandSymonssewage treatment plantstoassesstheirimpactontheenvironment. 2003 January Undertake monitoringattheHealesvilleandLilydalesewage All high-risktradewastecustomerstosubmitaRiskProfile. W All high-risk(rank1and2)tradewastecustomerstosubmita rank 1to4Customers. Conduct 1,400tradewasteauditsforcomplianceonourrisk improvements works. Complete MalvernNorthBranchsewer hydraulic hydraulic improvementsworks. Complete CoonansRoad(Pascoe Vale South)Branchsewer customers. Conduct areviewofRiskRankingformulafortradewaste Progress When Action (Ongoing/New)and Actions InProgress Minimising Impacts aste ManagementPlan. June 2003 2003 January July 2003 June 2004 June 2003 June 2003 June 2003 eebr20 ntre.Thedesigniscurrentlybeingfinalised. Ontarget. December 2003 AconstructioncontractwasletinDecember Behindschedule. April 2003 Thereviewrecommends Completed. June 2003 commence inJuly2003. Construction worksforthepumpstationwill 90% complete. Contracts2and3areinconstruction complete. Constructionofpressurepipeline(Contract1)is On target. receive recycledwater. golf courseisstillfinalisingitsonsiteinfrastructurerequiredto The treatment planttothegolfcoursehasbeencompleted. Thepipelineandpumpstationfromoursewage Completed. Management System Audit conductedinMarch. NewprogramcommencedwithanEnvironmental February. ProgrampresentedtoEnvironmentCommitteein Completed. wascompletedinDecember2002. Reservoir roleplayforlossofwatersupplyatSilvan Industry Completed. interim report. sewage treatmentplanthasbeencompletedandawaitingan ThefirstroundofmonitoringatHealesville awaiting finalreport. Monitoring atLilydalehasbeencompletedand Completed. 1,652auditsconductedin2002–03 Completed. reported totheBoardEnvironmentalCommittee. AllauditscompletedbyDecember2002and Completed. Allriskprofilesreceived. Completed. to preparethePlanwhichhassincebeensubmitted. the outstandingplanhasadviseditengagedaconsultant Thecustomerresponsibleforpreparing been receivedtodate. 34of35 Waste ManagementPlanshave Behind schedule. completion isJuly2003. Anticipated 2002 andconstructioniscurrentlyunderway. n iceia xgnDmn,andnitrogen compounds). and BiochemicalOxygenDemand, highsuspendedsolids chlorine, Phosphorus, discharge limits(i.e. significantly impactonthelocalsewagetreatmentplant account forcompaniesdischargingsubstancesthatcan changes totheformula 6.1 Environment Improvement Plan

Minimising Impacts

Action (Ongoing/New) and Actions In Progress When Progress

Complete Macleod Branch sewer hydraulic improvements July 2004 On target. Currently assessing possible sites for the proposed flow works. control facility. Due to potential delays in finalising the site for the flow control facility, this project has been substituted by another hydraulic improvement project for Rosanna Branch Sewer.

We aim to have less than 100 customers experience June 2003 Rescheduled to 2003–04. 154 customers experienced >2 >2 sewer interruptions in 12 months. sewer interruptions for 2002–03 as a result of ongoing dry conditions causing higher levels of tree root blockages.

Resolve the problem of 374 customers experiencing >5 sewer June 2003 Completed. All 374 customer blockages/spills have been blockages/spills in five years. resolved.

Gain agreement with the EPA regarding the appropriate December 2004 On target. We are working with the EPA to develop a strategy effluent quality to ensure that the objectives of State for the Craigieburn sewage treatment plant. A framework was Environment Protection Policy are achieved at Craigieburn submitted to the EPA at the end of November 2002. Biological sewage treatment plant. monitoring in Merri Creek has commenced.

Undertake first round of biological monitoring of Craigieburn June 2003 Completed. We are working with the EPA to develop a strategy sewage treatment plant to assess its impact on the for the Craigieburn sewage treatment plant. Biological environment. monitoring commenced in Autumn 2003.

Construction of the Monbulk transfer sewer to allow December 2004 On target. The tender has been awarded for the preliminary decommissioning of the Monbulk sewage treatment plants. design on the Monbulk transfer sewer. The construction of the transfer sewer is dependent on gaining community acceptance 119 of the project and receiving the appropriate planning permits.

Cease discharging effluent to the Plenty River from the Whittlesea June 2004 On target. Construction of the reuse pipeline has been sewage treatment plant and achieve 100% reuse, consistent with completed, with construction of the storage dam planned for the objectives of State Environment Protection Policy. the summer of 2003–04.

Install sand filters at Brushy Creek and Lilydale sewage June 2004 On target. A contract has been awarded for the construction of treatment plants to achieve no detrimental change in the sand filters at Brushy Creek and Lilydale sewage treatment environmental quality of the receiving waters, consistent with plants. Works planned to be completed by 1 April 2004. the objectives of State Environment Protection Policy.

Achieve 100% compliance with licence requirements for our June 2003 Achieved. sewage treatment plants. Environment Improvement Plan 2002–03 Improvement Environment

Complete assessment of Environmental Impacts of flushing October 2002 Completed. Report from LaTrobe University’s Centre for water mains. Environmental Stress and Adaptation Research (CESAR) identified a need to undertake an additional study that assesses whether or not there is a biological impact on receiving waterways. CESAR has submitted a proposal to undertake these works. This project has been deferred whilst water restrictions are in place. The study will be scheduled Annual Report 2002–03 when water restrictions are lifted.

Continue membership of the Greenfleet Program to offset June 2003 Completed. The additional offset measures have been carbon dioxide emissions through tree planting. negotiated with Greenfleet and finalised. arra Valley Water arra Valley Y 120 Yarra Valley Water Annual Report 2002–03 Environment Improvement Plan 2003–04 Proposed 2003–04 Initiatives (ICLEI)toassisttheminpromoting anddeliveringtheir area. Water Campaigntoallcouncils inourservice Deliver accordingtoourMemorandum of UnderstandingwithInternationalCouncilforLocalEnvironmental • • • space managers. Develop openspacewatermanagementplansfor Yarra Valley water’s localgovernmentandotheropen Continue toprovideandpromotethe forbusinesscustomers Water EfficiencyService • • • watermanagementplansfor Develop industry Yarra Valley Water’s largestcustomers Account Managers. informationto business Deliver waterconservation our SmartHomesproject. Conduct waterefficiencyauditsandreplaceinefficient Commission pricingsubmission. impactswhenestablishingalternative Consider waterconservation professionallyinstalledproducttocustomers. Promote theuseofrainwatertanksbyofferinghighquality, Encourage gardenmulchingbycontinuingtomarkethighqualitymulch. gardening practices. Develop andimplementacoordinatedprogramtoachieveconsistentcommunityeducationinwatersmart available forourcustomers. toreduceflowratesinshowers In conjunctionwiththeStateGovernmentdistribute50,000flowcontrolvalves, andjointmarketingcampaigns. Savewater!™ awardsforbusiness, delivering aconsistentapproachacross Victoria toreduce waterconsumptionthroughSavewater!™.comwebsite, Establish thesavewater!™allianceas Victoria’s pre-eminent Melbourne. W eieta utmr,includingweeklyadvertorials. residential customers, sustainabilityandtheenvironmenttobusiness and Communicate importantmessageson water conservation, cin(non/e)adAtosI rges When the 23recommendationsin Water ResourcesStrategy(WRS). W Action (Ongoing/New)and Actions InProgress Reducing Water Consumption Reducing Water r ihMloreWtr iyWs ae,andSouthEast City planfor Water toprepareajointwaterconservation West ork withMelbourne Water, Water, ork withtheStateGovernmentandStakeholderstoachievea15%reductioninwaterconsumptionbyaddressing 2005–06 —next10customers. 2004–05 —next10customers 2003–04 —top10customers 2005–06 —workwiththenext15customers 2004–05 —next15customers 2003–04 —top15customers uine i uiesfrm,ntok,conferencesandKey networks, audiences viabusinessforums, water appliancesfreeforcustomersinfinancialhardshipvia source of water conservation information to assistin source ofwaterconservation tariff proposalsfortheEssentialServices Ongoing June 2004 75 Audits peryear • • 4 sessionsperyear Ongoing April 2004 Ongoing October 2003 December 2003 November 2004 June 2004 September 2003 Ongoing June 2010 June 2004 December 2003 6.1 Environment Improvement Plan

Reducing Water Consumption

Action (Ongoing/New) and Actions In Progress When

Participate in National Water Week to promote water conservation October 2003

Work with the water industry to develop a comprehensive and consistent education program. April 2004

Undertake a survey of existing water-using appliances in households to improve our water consumption models. 800 homes by June 2004

Undertake measurement of all appliances for 100 homes to improve our water consumption models. June 2004

Implement zone metering in all zones to improve our ability to target leakage from our pipe network. June 2004

Implement stage one of a pressure management strategy which will reduce supply pressures to 34% of our June 2006 customers and 26% of our water mains. This will involve establishing 46 new pressure managed zones.

Conduct research and trial new technology to identify efficient leakage practices. June 2004

Repair 80% of leaks within 24 hours. June 2004

Reducing Sewage Spills

121 Action (Ongoing/New) and Actions In Progress When

Reduce sewage spills by 30%. June 2008 Driven by the following strategies: • 64 of our 106 emergency relief structures will be compliant with the ‘1-in-5-year’ design standard June 2004 • All emergency relief structures will be compliant with the ‘1-in-5-year’ design standard. June 2011

• Complete Cardinal Road and Hartington Branch sewer hydraulic improvements works. October 2005 •Complete Camberwell Branch sewer hydraulic improvements works. June 2005 • Complete Faversham Road (Canterbury) sewer hydraulic improvements works. May 2004 • Complete Dry Creek (Darebin) sewer hydraulic improvements works. December 2003 •Complete Box Hill West sewer hydraulic improvements works. May 2004 • Complete Malvern North Branch sewer hydraulic improvements works. April 2004 • Complete Rosanna Branch sewer hydraulic improvements works September 2004 Environment Improvement Plan 2003–04 Improvement Environment • Complete Coonans Road (Pascoe Vale South) Branch sewer hydraulic improvements works. July 2003 • Complete Beresford Road (Lilydale) sewer hydraulic improvements works June 2004 • Construct emergency storage capacity at Eucalyptus Drive (Eltham) and James Cook Drive (Diamond Creek) August 2003 sewage pump stations.

Continue to implement the Northern Suburbs Sewerage Strategy in conjunction with Melbourne Water’s own June 2004 hydraulic improvement strategy. Annual Report 2002–03 • Deliver the functional design for the Merri Creek relieving sewer and the Bundoora and Janefield flow control facilities. arra Valley Water arra Valley Y Improving Sewage Treatment Plant Performance

Action (Ongoing/New) and Actions In Progress When

Cease discharge of Ferres Road and Symons Road sewerage treatment plants at Emerald, consistent with the June 2004 objectives of State Environmental Protection Policy.

Construct a new sewage treatment plant at Whittlesea to service growth and improve the quality of water produced June 2004 by the plant.

Cease the use of chlorine for disinfection of treated water from Craigieburn sewage treatment plant. June 2004

Undertake monitoring at the Healesville and Craigieburn sewage treatment plant to assess their impact on the June 2004 environment in their receiving waters.

Gain agreement with EPA regarding the appropriate water quality produced by the plant to ensure that the December 2004 objectives of State Environmental Protection Policy are achieved at Craigieburn.

Install sand filters at Brushy Creek and Lilydale sewage treatment plants to improve the environmental quality of the June 2004 receiving waters, consistent with the objectives of State Environmental Protection Policy.

Six independent environmental audits will be undertaken to assess our performance. June 2004

We aim to have less than 100 customers experience >2 sewer interruptions in 12 months. June 2004

Introduce a system of Blower Control Optimisation at the Brushy Creek sewage treatment plant, reducing 140 June 2004 122 tonnes pa of greenhouse gas by June 2004.

Undertake a review of high energy consumption equipment at Brushy Creek sewage treatment plant to determine June 2004 the viability of replacing it with more energy efficient equipment.

Increasing Our Recycling

Action (Ongoing/New) and Actions In Progress When

Develop a detailed recycling strategy for the Craigieburn area. February 2004 Environment Improvement Plan 2003–04 Improvement Environment Work with VISY Industries / Pratt Water to examine recycling opportunities at their Coolaroo site. Ongoing

Achieve 30% recycling of water from Lilydale and Brushy Creek sewage treatment plants. June 2008

Achieve 20% recycling of water produced from Yarra Valley Water owned sewage treatment plants by: June 2008 • Ceasing discharge of water to the Plenty River from the Whittlesea sewage treatment plant and achieve 100% June 2004

Annual Report 2002–03 reuse, consistent with the objectives of State Environmental Protection Policy • Develop irrigation and third pipe recycling scheme for Aurora June 2004 • Establish market and design for the Healesville reuse scheme June 2004 • Establish market and start design of the first stage of the Yering reuse scheme June 2004 • Investigate recycling schemes for sporting fields near Scotch College and golf course adjacent to the Eastern Freeway. June 2004 arra Valley Water arra Valley Y 6.1 Environment Improvement Plan

Increasing Our Recycling

Action (Ongoing/New) and Actions In Progress When

Commence biosolids recycling with the objective of eliminating on-site storage practises at Lilydale and Craigieburn June 2005 sewage treatment plants.

Investigation options to treat and process the existing stockpile of biosolids at Craigieburn sewage treatment plant. June 2004

Improving Stakeholder, Customer and Staff Involvement, Understanding and Behaviours

Action (Ongoing/New) and Actions In Progress When

In conjunction with the water industry, develop a joint schools education program to promote water conservation. December 2003

Continue to work with community consultative groups to obtain customer feedback on major projects such as the Northern Ongoing Suburbs Sewerage Strategy, Emerald, Cockatoo and Monbulk sewerage scheme and Lilydale biosolids processing facility and the Whittlesea sewage treatment plant upgrade. Each consultative group will meet at least once per year.

Participate in development of Edwards Lake Neighbourhood Environment Improvement Plan (NEIP). Ongoing

Hold five or more meetings each year of the Environmental Consultative Committee to obtain input and advice on June 2004 environmental issues. 123 Restore 98.5% of unplanned water supply interruptions in four hours in 2003-04. June 2004

Continue to maintain the Company’s certifications to ISO 14001 via the two independent surveillance audits by June 2004 SAI Global.

Continue membership of the Greenfleet Program to offset all carbon dioxide emissions through tree planting. Ongoing

Complete investigations into energy efficiencies in the Lucknow St, Mitcham buildings to achieve energy efficiency December 2004 standards as set by the Sustainable Energy Authority of Victoria for government buildings.

Include greenhouse information in internal company communications. Results of our Greenhouse review to be Ongoing published in our internal staff newsletter.

Consider the issues, environmental benefits and our hybrid car experience to help us decide whether to purchase June 2004 Plan 2003–04 Improvement Environment more in the future.

Develop a Sustainability Strategy by working with the Natural Step guiding principles. April 2004

Support the State Government’s ‘Our water, Our future’ campaign. Ongoing

Work in partnership with CERES Environmental Park to enhance our understanding of sustainability and alternative Ongoing Annual Report 2002–03 ways of delivering water and sewer services. arra Valley Water arra Valley Y 6.2

Corporate Governance

Board of Directors ...... 125 Performance Review of the Board . . . . . 128

Role of the Board ...... 125 Freedom of Information ...... 128

Board Membership ...... 125 Whistleblowers Protection Act ...... 128

Profile of Board Members ...... 125 Privacy Compliance ...... 129

Board Committees ...... 127 Business Risks ...... 129

Independent External Advice ...... 128 Compliance Calendar ...... 129

Ethical Standards ...... 128

Declaration of Pecuniary Interests . . . . . 128

Inspections of Assets by Directors . . . . . 128 6.2 Corporate Governance

Board of Directors Profile of Board Members Role of the Board The Board of Directors is responsible for the strategic direction and monitoring of the Company’s business on behalf of the shareholder, the State Government of Victoria. Day-to-day responsibility for ALAN CORNELL TONY KELLY LLB, JD, MAICD CPEng, SFCDA operations and administration is Alan Cornell, 65, was appointed Tony Kelly, 50, was appointed Managing delegated by the Board to the Managing Chairman in June 1997. He is a senior Director on 27 January 2003. He has Director and his Executive Team. partner in the law firm Blake Dawson extensive experience in the water Members of the Executive Team are Waldron and practises company and industry and has worked at Yarra Valley invited to Board meetings when their commercial law in its Melbourne office. Water since its inception in 1995. Over areas of operational responsibility are Mr Cornell is a Director of Colorado this time, Mr Kelly has undertaken a considered. The Board ensures that the Group Limited, ICI Holdings (Australia) number of executive roles and has a Company’s funds are used to maintain a Pty Ltd, Océ Australia Limited and is sound understanding and experience in viable commercial business that meets also Chairman of the Co-operative all facets of the business. shareholder requirements. Research Centre for Bioproducts. Mr Board Membership Cornell has also served as President of The Board has seven Directors, the Law Council of Australia, as comprising an independent non- President of the Law Institute of Victoria executive Chairman, five independent and as a Council Member of the non-executive Directors and one International Bar Association. executive Director (the Managing JUDITH DWYER BA, MBA, MAICD, CHE Director). All Directors are appointed by 125 Judith Dwyer, 52, became a Director in and accountable to the shareholder. The late December 2000. As Associate Company’s Constitution provides for a Professor in Health Services proportion of the Directors to retire by Management at LaTrobe University, she rotation each financial year. Retiring GEOFF PHILLIPS is involved in teaching, research and Directors are eligible for re-election. BE (Chem), MBA, MAICD consulting to the health industry. She Geoff Phillips, 59, became a Director in chairs the Board of the Australian

March 1995 and was appointed Deputy Resource Centre for Hospital Corporate Governance Chairman in January 2001. He is the Innovations and was formerly the Chief Finance Director of the Transurban Executive Officer of Southern Health Group. Mr Phillips was formerly a senior Care Network, and of Flinders Medical executive at the oil and gas company Centre in Adelaide. Associate Professor Santos Limited and Chief Operating Dwyer has worked in most areas of the

Officer – Corporate Finance and Fixed health industry over the last 20 years. Annual Report 2002–03 Interest at Potter Warburg Pty Ltd (now UBS Warburg Australia Limited). arra Valley Water arra Valley Y 126 Yarra Valley Water Annual Report 2002–03 Corporate Governance Industry. Committee, CSIRODivisionofPlant Resources Study, andtheAdvisory Committee oftheAustralianBiological also beenamemberoftheAdvisory Parks Victoria. Professor Ladigeshas member oftheEnvironment Committee, Sheisa Botanic Gardens, Melbourne. and amemberoftheBoard of theRoyal Botany attheUniversityofMelbourne Science, theHeadofSchool Fellow oftheAustralianAcademy in February1998.Professor Ladigesisa Pauline Ladiges,55,becameaDirector Petroleum Limited. of ShellAustraliaLimitedandWoodside Authority and,priortothat,wasaDirector Limited andWestern RegionWater is aformerChairmanofEcogenEnergy r through hisinvolvementinpetroleum, technical andmanagerialexperience alongwith corporate governance, wide experienceinBoard processes and Board inlateDecember2000.Hehas Bryan Kelly, 65,wasappointedtothe esources andutilitybusinesses. MrKelly P MAICD PhD, MSc,DipEd,FAA, BE (Chem)MAICD BRYAN KELLY AULINE LADIGES Remembrance. Centre Trust and theShrineof a Trustee oftheQueenVictoria Women’s wide rangeoforganisations. Sheisalso practicewithina corporate governance development andadvancementof r has participatedinmajorcorporate MsStephenson corporate governance. of practiceare riskmanagement and Division atKPMG.Herspecialtyareas Management AssuranceServices She ispartnerincharge oftheNational Director inlateDecember2000. JoAnne Stephenson,41,becamea estructuring assignmentsandthe STEPHENSON JOANNE BCom, LLB,MAICD 6.2 Corporate Governance

Board Committees The Risk Management and Audit remuneration of the Managing Director is The Board has set up five Committees Committee comprised the following approved by the State Government on to assist it in carrying out its members: the recommendation of the Board. responsibilities. The Managing Director JoAnne Stephenson (Chairman) The Executive Remuneration Committee attends all Committee meetings, Geoffrey Phillips comprised the following members, all of together with executives and senior Bryan Kelly. whom are non-executive Directors: managers as required. Minutes of Alan Cornell (Chairman) Committee meetings are presented to The Environmental Committee is the full Board of Directors. responsible for reviewing the Company’s Judith Dwyer environmental performance and Geoffrey Phillips. The Risk Management and Audit sustainability and water quality risks and Committee liaises with the internal and The Marketing and Customer Service standards. GHD Pty Ltd undertook external auditors, approves the audit Committee oversees and appraises the environmental audits in accordance with plan, reviews the Annual Financial scope and quality of the Company’s the three year environmental audit Report, accounting policies, internal marketing, external communications and program until December 2002. controls, audit performance, business media strategies and activities. It also risks and adequacy of the Company’s In January 2003, following a tender monitors customer and community insurance policies. process, the Company appointed perceptions of the Company’s image and Maunsell Australia Pty Ltd to conduct customer satisfaction and service levels. In February 2003, the Board approved the three year environmental audit a change in the Terms of Reference and The Marketing and Customer Service program and review the Consolidated a name change of the Audit Committee Committee comprised the following Risk Profile. The environmental auditors to Risk Management and Audit members: report directly to the Environmental Committee to better reflect the role Committee and attend Committee Judith Dwyer (Chairman) and responsibility of the Committee. meetings by invitation. Alan Cornell The change in the Committee’s Terms 127 of Reference related to management’s The members of the Environmental JoAnne Stephenson assessment of business risks to Committee during the year were: Ken Carnie (Marketing Consultant). strengthen the Company’s commitment, Pauline Ladiges (Chairman) The Occupational Health and Safety by specifying that this be conducted on Geoffrey Phillips (OH&S) Committee assists the Board in an annual basis to ensure key risk areas fulfilling its duties and responsibilities were identified and managed. Bryan Kelly relating to the OH&S standards and

Peter George (Minter Ellison, Lawyers) Corporate Governance The Auditor-General Victoria is the practises of the Company and its Anne Hingston (Environment Victoria) auditor under the authority of the Audit contractors. It has a focus on improving (retired as a member on 21 August Act 1994 and has been appointed as the the Company’s OH&S performance and 2002) Company’s external auditor. Ernst & ensuring our contractors review and Young provided internal audit services Brian Robinson (Environmental improve their OH&S performance. The for the Company and report directly to Consultant) (appointed to Committee Committee also ensures that the Annual Report 2002–03 the Risk Management and Audit on 25 September 2002). business is proactive in identifying risks Committee. Representatives of the and hazards and takes appropriate The Executive Remuneration external and internal auditors attend measures to avoid incidents. Committee advises the Board on Committee meetings by invitation. remuneration policies for executives and arra Valley Water arra Valley

In early 2003, following a tender senior managers of the Company. In Y process, Ernst & Young was re- accordance with the Company’s appointed to provide internal audit Constitution, the remuneration for the services for a further three years. non-executive Directors is determined by the State Government. The 128 Yarra Valley Water Annual Report 2002–03 Corporate Governance of pecuniaryinterests. have completedtherequired declaration All Directors andnominatedofficers Interests Declaration ofPecuniary Company are membersofthe AICD. All nonexecutiveDirectors of the Institute ofCompanyDirectors (AICD). Conduct issuedbytheAustralian The Directors haveadopted theCodeof of theCompany. Directors, employeesandcontractors practices andethicalconductbyall standards ofcorporategovernance acknowledge theneedforhighest The Directors oftheCompany Ethical Standards right duringtheyear. Chairman. NoDirector exercised this subject tothepriorapproval ofthe V matters relating tothebusiness ofYarra independent professional advice on Each Director hastherighttoseek Independent ExternalAdvice members: The Committeecomprisedthefollowing alley Water attheCompany’s expense, Tr Pauline Ladiges Judith Dwyer Bryan Kelly(Chairman) evor Sweeny(OH&SConsultant). identify thedocumentssought. accompanied bya$20feeand clearly 3132. Eachapplicationmustbe Ltd, PrivateBag1MitchamVictoria Corporate Services,Yarra Valley Water writing andaddressed to:Manager, W Requests foraccesstoYarra Valley documents inallcases. 2002–03. Accesswasgrantedtothe Act1982 ofInformation Freedom for accesstodocumentsunderthe The Companyreceived sevenrequests Freedom ofInformation August/September 2003. Board. Thereview istobeconductedin conduct aPerformanceReviewofthe Executive Search Consultants, to engagement ofPro:Ned, Board and In June2003,approval was given forthe Performance ReviewoftheBoard Integrated ManagementSystem. of issuessuchastheCompany’s Centre andreceived briefingsonarange Office includingtheCustomer Contact inspections attheCompany’s Head Directors alsoundertookanumber of Directors ontheinspectionof assets. Consultative Committeeaccompanied Committee andtheEnvironmental Members oftheCustomerConsultative W Reservoirs andVisy IndustryMill/Trade Sugarloaf, Greenvale andYan Yean station atYarra Water’s Glen,Melbourne October 2002includedawaterfilling industry assets.Theinspectionin familiarise themselveswithwater assets duringtheyearinorder tobetter Directors undertookaninspectionof Directors Inspections ofAssetsby ater documentsare tobemadein aste Discharge Point. during T T Victoria 3000 Melbourne Level 22,459CollinsStreet The OmbudsmanVictoria Email: [email protected] Facsimile: (03)98722609 T Mitcham Victoria 3132 Private Bag1 Y Protected Disclosure Co-ordinator T be madetothefollowing: Y Disclosures ofimproper conductby activities orofficers ofYarra Valley Water. Ombudsman inrelation tothe operation, r investigations ofdisclosedmatterswere No disclosures ordisclosed mattersor below). the publicatourRegistered Office (see These procedures are alsoavailableto by Yarra Valley Water oritsemployees. improper conductordetrimental action appointed tohandleanydisclosures of obligations undertheAct,andofficers understand therequirements and help employeesandcontractors Procedures havebeendevelopedto as aresult ofdisclosures. disclosures andwhomaysuffer reprisals provide protection ofpersonswhomake by publicofficers andpublicbodies, facilitate disclosures ofimproper conduct Protection Act2001 The purposeofthe Whistleblowers Protection Act eceived byYarra Valley Water ortheState oll free: 1800806314 elephone: (03)96136222 elephone: (03)98721427 erry Swingler arra Valley Water arra Valley Water oritsemployeesmay Whistleblowers is toencourageand 6.2 Corporate Governance

Privacy Compliance To maintain the high standards of As the custodian of a large volume of service, the Company recognises the confidential and personal information of importance of being aware of potential our customers, we are very conscious of events that could cause disruption. the need to ensure this information is Potential risks have been identified and protected and that any unauthorised reviewed and these are documented in access to, and improper use of that a Consolidated Risk Profile. This profile information is prevented. facilitates the business pro-actively managing the risks rather than reacting We have in place our own Privacy Policy to problems as they arise. Our annual and Code of Practice for our employees, internal audit programs are derived with contractors and agency staff to ensure reference to the Risk Profile. that customer information is protected. We also maintain a Register of Privacy Compliance Calendar issues raised and actions taken which is Being a highly regulated business and reviewed on a half yearly basis to one which strives to achieve its own high measure the Company’s performance in internal standards places the Company this important area. in a position where many tasks or During the year, internal audit reviewed obligations must be performed within our compliance with these policies and certain timeframes. To meet or exceed Code of Practice and the results were these obligations, a comprehensive satisfactory. We are continuing to Compliance Calendar has been maintain a leading standard of Privacy developed that identifies these tasks and implementation. ensures they are performed within the required timeframe. 129 Business Risks Established procedures at Board and management level are designed to maintain the Company’s viability and to safeguard its assets and interests and ensure the integrity of its reporting. These include accounting, financial Corporate Governance reporting and internal control polices and procedures. The operation of the Company is managed through a comprehensive set of policies, procedures and limits, which are subject to internal

and external audit review. Annual Report 2002–03 arra Valley Water arra Valley Y VICTORIA

Torourrong Reservoir MURRINDINDI

MURRINDINDI Yan Yean WHITTLESEA Reservoir

Greenvale Reservoir NILLUMBIK Maroondah Reservoir

HUME Sugarloaf Upper Yarra Reservoir Reservoir

DAREBIN MORELAND BANYULE YARRA RANGES MANNINGHAM MAROONDAH YARRA MELBOURNE YVW HEAD OFFICE BOROONDARA WHITEHORSE Silvan Reservoir

STONNINGTON MONASH

CARDINIA

PORT PHILLIP BAY

Licensed Area Map

Yarra Valley Water is the largest of We serve more than 600,000 residential Melbourne’s three retail water and business customers in an area over businesses established in January 1995. more than 4,000 square kilometres Melbourne Water Corporation is the across Melbourne’s northern and wholesaler to the retail water eastern suburbs. businesses, which are divided according to geographic area.

As a retail water business, we provide water supply and sewerage services to more than 1.5 million people who live and work in the Yarra River catchment area of Melbourne. Yarra Valley Water Annual Report 2002–03 FEEDBACK FORM Help us to learn what we do well and what we can do better. We value your feedback on our new integrated reporting style and encourage you to complete and return this reply-paid questionnaire to Tony Kelly, Managing Director, Yarra Valley Water, Reply Paid 66193, Mitcham Victoria 3132 or you can lodge your feedback on our website at: www.yvw.com.au

Poor Average Good Very Good Excellent 1. What was your overall impression of this Annual Report?

2. How would you rate this Annual Report for: Meeting your information needs Clarity and ease of understanding Relevance of information Level of technical information Accuracy of technical information Credibility of data and information Overall usefulness

3. How would you rate Yarra Valley Water’s performance, in terms of: Addressing the needs of customers Addressing the needs of other stakeholders Contributing to the sustainability of the environment Making a contribution to economic growth Openness and transparency in reporting

4. How would you rate our explanation of future plans and activities?

5. Can you indicate areas for improvement? (a) in this report (b) in our activities

Please specify:

6. Comments on the tone and style (including language and layout):

7. Did this Annual Report meet your expectations as a sustainability report?

8. Any other comments:

If you wish to tell us your name and/or the organisation you represent, please complete this section.

Name: Organisation: Address: Postcode: Telephone: Email:

Please add me to the mailing list for future reports Yes No I am happy to be contacted for further comment Yes No No stamp required if posted in Australia

Tony Kelly Managing Director Yarra Valley Water Reply Paid 66193 MITCHAM VIC 3132 Contents

2 Our Journey 54 Culture 3Chairman’s Report 55 High Performing Business Culture 9 Highlights for 2002–03 56 Employees 10 Managing Director’s Statement 61 Occupational Health and Safety 13 Our Business at a Glance 62 Service Providers and Contractors 15 Summary of Long-term Targets and Our Strategic Intent 64 Stakeholders 16 Environment 67 Community 18 Water Conservation 70 Financial Performance 24 Drought 71 Overview of Financial Performance 26 Sewage Management 76 Operating Expenditure 34 Recycling 78 Ongoing Investment 38 Aurora — Sustainable Urban Development 80 Risk Management 39 Greenhouse Gas Emissions and Energy Use 81 Auditing and Verification 41 Environment Improvement Plan (EIP) 82 Annual Financial Report 42 Customer Service 110 Environment Improvement Plan 44 Water Quality 124 Corporate Governance 46 Service Responsiveness 130 Licensed Area Map 51 Pricing 131 Feedback Form 52 Programs for Customers Experiencing Financial Difficulty

1 2

Our Journey Environment

This includes our Chairman’s This section contains the key Report, highlights for the year, environmental challenges we Managing Director’s face, how we are performing Statement and a look at our and our commitments to business including a summary further improvement. of our new Statement of Strategic Intent.

Where to find Key Issues Statement of Strategic Intent 12 Environmental Policy 17 Long-term Targets 15 Water Consumption by Customers 19 Non-Revenue Water 22 Impact of Drought on Our Business 25 Sewage Treatment Plants 26 Biosolids 29 Sewer Spills 30 Trade Waste 32 Unsewered Areas 33 Recycling Projects 36 Car Usage 40

This report is printed on 50% recycled paper. Yarra Valley Water ABN 93 066 902 501 Lucknow Street Mitcham Victoria 3132 Private Bag 1 Mitcham Victoria 3132 DX 13204 The Sustainability Journey Telephone: (03) 9874 2122 Facsimile: (03) 9872 1353

For Further Information

Call us on 131 721 visit our web site www.yvw.com.au or email us at [email protected]

For language assistance call TIS 131 450. Y arra Valley Water The Sustainability Journey Annual Report 2002–03 nulRpr 2002–03 Annual Report