Seq Water Grid Manager Annual Report 2009–10

SEQ WATER GRID MANAGER ANNUAL REPORT 2009–10

Secure and efficient water through partnership and innovation

6 September 2010

Hon Andrew Fraser MP Treasurer of Queensland, Minister for Employment and Economic Development GPO Box 611 Brisbane Q 4001

Hon Stephen Robertson MP Minister for Natural Resources, Mines and Energy, and Minister for Trade PO Box 15216 Brisbane Q 4001

Dear Sirs I am pleased to present the Annual Report 2009–2010 for the SEQ Water Grid Manager. I certify that this Annual Report complies with: the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, and the detailed requirements set out in the Annual Reporting Guidelines for Queensland Government Agencies. A checklist outlining the annual reporting requirements is available at www.seqwgm.qld.gov.au.

Yours faithfully

Gary Humphrys Chair SEQ Water Grid Manager Our vision Our values To be recognised as being at the Our organisational values are: forefront of delivering innovative innovation water services to ensure the security of supply for South East Queensland. delivering value motivation adaptability Our mission professionalism. Safe, secure and efficient bulk water services for South East Queensland through partnership and innovation.

Contents

2 3 4 6 About this report Operational Our business Chair and highlights Chief Executive 2009–10 Officer’s overview

8 12 15 25 The SEQ Operational Priority area 1 Priority area 2 Water Grid performance Provision of water Operational security efficiency

31 37 42 47 Priority area 3 Priority area 4 Corporate Our people Customer and Innovative and governance stakeholder capable culture satisfaction and systems

51 54 88 Glossary Financial Appendix statements 2009 –10 Delivering safe, secure and efficient water services with new levels of transparency and SEQ WATER GRIDSEQ MANAGER WATER customer confidence. 2

About this report

This Annual Report is an Contact us Translating and integral part of the SEQ Water Grid Manager’s Corporate For information about us, or for interpreting assistance Governance Framework. This copies of this Report, please contact: The Queensland Government is Report records our commitment SEQ Water Grid Manager committed to providing accessible to accountability and transparency Level 15, 53 Albert Street services to Queenslanders from and is the primary way in which Brisbane QLD 4000 culturally and linguistically diverse we report our achievements to the backgrounds. If you need an Government and the community. PO Box 16205 interpreter, please call the Translating City East QLD 4002 and Interpreting Service (TIS This Annual Report is prepared National) on 131 450 and have in line with the Financial Phone: +61 7 3247 3012 them contact our organisation Accountability Act 2009, the www.seqwgm.com.au on +61 7 3247 3012 between Financial and Performance 8am and 5pm, Monday to Friday Management Standard 2009 (except public holidays). and the South East Queensland Water (Restructuring) Act 2007. Access to safe and secure drinking water is critical to community health and wellbeing and a fundamental expectation of our community. We actively manage this expectation by not only monitoring water quality and supply levels, but also through directing the strategic operation of bulk water across the region. Our role ensures the efficient and effective operations of the SEQ Water Grid, for now and the future. This Report is one element in how we communicate to customers about their bulk water supply and how it is being managed. Fast fact

Our organisation operates under two core modes: Cost effective operational mode – when permanent water conservation restriction levels apply (during average rainfall periods). Our focus is to manage the supply of water from the available sources to meet demand, while focusing on minimising SEQ Water Grid operational costs. Water security mode – when medium, high or extreme water restriction levels apply (during drought conditions). Our focus is to maximise water security to local council areas and power ANNUAL REPORT 2009–10 stations, using alternative water supplies (non-dam supplies) to increase the amount of water storage in the dams. 3

Operational highlights 2009–10

The past 12 months have seen Shifted our operations from Completed an Electricity South East Queensland come out a focus on maximising Optimisation Study, identifying of drought for the first time in nine water security to also taking potential opportunities for years. Hence, 2009–10 allowed into account cost, flexibility future cost savings. the SEQ Water Grid Manager to and system reliability. Completed a study into change the strategic focus of its Connected the Toowoomba laboratory capacity operations from maximising security region as a customer of the and capability in South of supply to also further take into SEQ Water Grid with the supply East Queensland. account efficient and cost effective of raw water from Wivenhoe operations of the SEQ Water Grid. Released the draft SEQ Dam to Cressbrook Dam. This mode of operation, cost Water Grid Technology effective operational mode, began Introduced the monthly Strategy (Technology on 1 December 2009 with the Customer Confidence Report Strategy) for consultation introduction of permanent water (Bulk Water), providing bulk with the Grid Participants. conservation measures. It also water quality testing results for Completed the first SEQ coincided with the release of the 80 per cent of the water supplied Water Grid Operating Strategy Queensland Water Commission’s through the SEQ Water Grid, (Operating Strategy), providing new South East Queensland System providing residents and industry a framework for the operation Operating Plan (System Operating with added confidence in their of the SEQ Water Grid for Plan). This Plan provides the water supply. In June 2010, the next 12 months. overarching rules within which we 12 months of data showed a operate the SEQ Water Grid. 100 per cent compliance record A significant achievement in 2009–10 against the Australian Drinking has been the reduction of the SEQ Through these decisions, we Water Guidelines 2004. Water Grid’s variable operating costs have been able to identify and by approximately $2.5 million per harness operational savings, while Undertook a major 48 hour month (water security mode versus delivering improved water security emergency response exercise cost effective operational mode) since and water quality. involving all State-owned December 2009 through optimising SEQ Water Grid entities and Some of our operational highlights SEQ Water Grid operations. a number of major council for 2009–10 were: distributor–retailers to assess and refine the SEQ Water Grid Emergency Response Plan. SEQ WATER GRIDSEQ MANAGER WATER

Our business

Who we are greater transparency in product During our second year, 2009–10, specifications and monitoring of our focus shifted to actively optimising The SEQ Water Grid Manager is product performance, resulting in the operation of the SEQ Water a statutory body established under higher levels of customer service Grid, delivering innovation and the South East Queensland and confidence. It also means increased operational benefit across Water (Restructuring) Act 2007. service delivery risks are allocated the entire urban water supply chain. We commenced operation on across the SEQ Water Grid to where We worked collaboratively with our 1 July 2008, when the SEQ Water they can best be managed and SEQ Water Grid partners to find and Market changed substantially with allows the specialist entities to take implement improvements across the the establishment of the SEQ Water accountability in operating each part SEQ Water Grid. We also established Grid. We operate the SEQ Water of the SEQ Water Grid supply chain. and implemented a number of Grid to maintain regional water whole-of-Grid plans and strategies We sell water to our customers—the security; ensuring adequate water to support the efficient and effective three new SEQ Distributor-Retailers supplies are provided efficiently, cost operation of the SEQ Water Grid. effectively, safely and sustainably (from 1 July 2010), power stations throughout South East Queensland. and other rural and industrial entities. Development of our organisation also continued, with a new We report to the Queensland To do this, we work in partnership with organisational structure and new Parliament through two responsible Grid Participants and Queensland services being offered such as Minsters: the Treasurer and Minister Government stakeholders to the Customer Confidence Report for Employment and Economic develop innovative ways to (Bulk Water) and the whole-of- Development and the Minister operate the SEQ Water Grid. Grid communications function. for Natural Resources, Mines and We are a not-for-profit entity and do Energy and Minister for Trade. not own infrastructure assets but hold the urban water entitlements for South What we do East Queensland. We make strategic Our first two years Our key responsibility is to manage and operational decisions that are the operation of the SEQ Water During our first year of operation, based on ensuring water is produced Grid in the most efficient and 2008–09, our focus was on and moved to where it is needed effective manner, consistent with the establishing our organisation from the most, at the least possible cost, System Operating Plan, the Market grassroots, while taking responsibility rather than based on a proprietary Rules and associated legislative for our core business of managing interest in infrastructure assets. and regulatory requirements. the operation of the SEQ Water The other three bulk water Grid. This included establishing Our primary accountabilities entities (Seqwater, WaterSecure governance and compliance under legislation are: and LinkWater – our SEQ Water requirements under the relevant purchasing water services Grid partners) are specialist asset legislation and The Market Rules and selling water (South owning entities. This disaggregated SEQ Water Market (Market Rules). supply chain encourages East Queensland Water (Restructuring) Act 2007) ANNUAL REPORT 2009–10

ensuring desired levels of service innovations to increase the Financial management under the System Operating Plan performance and reliability of the We manage the financial aspects (Water Act 2000) SEQ Water Grid, and providing and costs of the SEQ Water Grid advice, upon request, on planning on behalf of the Queensland ensuring financial and corporate for its future capacity and Government. We forecast governance compliance capability. cash flows, set working capital applicable to statutory bodies requirements, negotiate borrowing (Financial Accountability Act Customer/contract management with an appropriate risk profile, 2009, State Water Authorities We consult customers on service apply bulk charges according to Governance Framework 2008 compliance and improvement contracts and monitor compliance and Statutory Bodies Financial opportunities, inform the public of service provider charges within Arrangements Act 1982) in response to emergencies and approved costs. manage contractual issues, as complying with the Market Rules appropriate, under the Market Whole-of-Grid facilitation (Water Act 2000). Rules. We also liaise with We facilitate whole-of-Grid We achieve this through the customers regarding product projects in collaboration with operational functions listed below: specifications in terms of water other SEQ Water Grid entities, quality and service reliability, and coordinate responses to strategic Strategic operations assess whole-of-Grid performance issues and provide training on We direct the operation of the and risk. We undertake whole-of-Grid functions, including SEQ Water Grid to deliver water assessments of the market for new emergency management. We security across the South East water products and services and do this through the SEQ Water Queensland region in the most consult with customers regarding Grid Skills Formation Strategy cost efficient manner possible, their requirements. We record (Skills Formation Strategy), the while meeting customer demands, feedback on our performance Technology Strategy and our water quality objectives and through the use of regular surveys, Customer and Stakeholder considering system reliability data collection and liaison with Engagement Plan. risks. This entails the preparation Grid Customers. of an Operating Strategy in line with the System Operating Risk management Plan, and the issuing of monthly We identify, plan and mitigate Grid Instructions to direct the whole-of-Grid risks through the production and transfer of development, implementation water throughout the region. and review of the SEQ Water Grid It also involves providing Risk Management Plan (Risk recommendations to the Management Plan). We manage Queensland Water Commission incidents under the SEQ Water and Queensland Government Grid Emergency Response Plan on possible improvements and and act as emergency managers as required. SEQ WATER GRIDSEQ MANAGER WATER

6 Gary Humphrys Chair

Chair and Chief Executive Officer’s overview

The past 12 months have been an We have introduced new procedures This year we ran a major exercise exciting and productive time for the to improve our organisation’s and on a whole-of-Grid emergency. It SEQ Water Grid Manager. We have the SEQ Water Grid’s efficiency. tested our emergency response consolidated the excellent working We have also focused on providing planning and our coordination with relationship with our SEQ Water Grid increased transparency of SEQ other Grid Participants and provided partners and improved our processes Water Grid operations and in the further evidence that the SEQ Water for the benefit of the whole of the process, we believe, have set new Grid contributes to the security of SEQ Water Grid. standards for the rest of the water supply by assisting in move effective industry to follow. responses to emergencies. With improved dam levels following the excellent rainfall in late 2009, We are particularly proud of the With the SEQ Water Grid all but we shifted our operation into the introduction of the monthly complete, an Infrastructure Australia cost effective operational mode. Customer Confidence Report report released in May 2010 Efficient SEQ Water Grid operation (Bulk Water). This initiative really recognised South East Queensland became the focus of water service sets the SEQ Water Grid apart by as having the best water security of delivery in South East Queensland. providing our customers with a never all Australian capital city regions. Our team set about identifying how before seen level of information With the finalisation of the South we could reduce the SEQ Water about the quality of the water we East Queensland Water Strategy the Grid’s operating costs, while still are supplying. In an age of concern community now has a water security maintaining our commitment to about the health effects of the guarantee backed by the SEQ Water ensuring water supply security to products we consume, and with the Grid with sufficient supply capacity South East Queensland. variety of potential supply sources until at least 2017, or even as far making up our product, this is a as 2032. Efficient SEQ Water Grid significant achievement. operation now becomes the future focus of water service delivery in South East Queensland. ANNUAL REPORT 2009–10

7 Barry Dennien Chief Executive Officer

As we enter 2010–11, we welcome the three newly formed SEQ Distributor-Retailer entities who will manage the distribution of water to the customer. We look forward to working closely with these three new entities to further improve the operation of the SEQ Water Grid and to provide even greater levels of service to our customers. We would like to close by thanking our dedicated, highly committed team for their efforts over the past year. We are only a small organisation and rely on the input of each and every member of our team to make our vision a reality. Every person is to be congratulated for their efforts in delivering our organisation’s objectives for the year. Gary Humphrys Chair

Barry Dennien Chief Executive Officer SEQ WATER GRIDSEQ MANAGER WATER

The SEQ Water Grid

Safe, secure, sustainable Safe The Customer Confidence Report (Bulk Water) is an important This year ended with South East Water is a part of our everyday life. tool in helping increase public Queensland’s dams being more than It is used without giving a second understanding of, and confidence 95 per cent full. This was a huge thought to where it has come from in, our ability to supply high quality contrast to the 39 per cent level that or how it is managed. Whether for water from a variety of sources. existed when the SEQ Water Grid was drinking, washing, gardening or It demonstrates how we ensure established in 2008, and an even showering, the same high quality drinking water safety and supply greater contrast to the record levels standards are expected by our reliability through a well managed of below 17 per cent during the worst customers. and coordinated system. months of the drought in 2007. The SEQ Water Grid institutional As a result, we have moved from arrangements provide for greater operating the SEQ Water Grid to transparency and accountability to Secure maximise security of supply to also South East Queensland residents in South East Queensland’s water taking into account cost, flexibility relation to the quality of the water security position is now stronger than and system reliability. This occurred being supplied. ever before. Since the establishment along with the introduction of During this financial year, we of the SEQ Water Grid in 2008, permanent water conservation developed and launched the South East Queensland’s supply measures on 1 December 2009 Customer Confidence Report capacity has increased from 350,000 and the release of a new version of (Bulk Water). This Report supports megalitres of water per year to the System Operating Plan. our commitment to water quality, 485,000 megalitres. The Gold Coast The SEQ Water Grid delivers transparency and ongoing Desalination Plant and the Western three key commitments to the monitoring and compliance against Corridor Recycled Water Scheme community – safe, secure and the Australian Drinking Water are capable of supplying up to sustainable water services. Guidelines 2004—all essential to 25 per cent of current demand through the management of the SEQ Water these climate resilient water sources. Grid. June 2010 saw our first 12 months of water quality data publicly reported. We achieved 100 per cent compliance against health (microbial and chemical) and aesthetic parameters meeting the values set by the Australian Drinking Water Guidelines 2004. Fast fact

This year, the introduction of the Customer Confidence Report (Bulk Water) was a major achievement for us and for the Australian water industry. It represents best practice in water quality reporting. This Report provides results of samples taken from 19 sampling sites across South East Queensland. These sites collectively represent approximately 80 per cent of the water supplied through the SEQ Water ANNUAL REPORT 2009–10 Grid, providing residents and industry with information on the quality of their water and added confidence in their supply. 9

The SEQ Water Grid was designed Sustainable The SEQ Water Grid also enables to ensure continued water security the longevity of our healthy and across South East Queensland, Our environment is a key green open spaces and natural protecting us from future droughts consideration in the operation of the wildlife through releasing water into and long-term climate changes, SEQ Water Grid. our local creeks and rivers to sustain while catering for the regions’ rapidly The SEQ Water Grid is a system environmental flows. The SEQ Water growing population. This security has that manages our water from Grid supports many recreational been recognised within the Australian various sources (catchments and areas around our dams, offering water industry. An independent manufactured water facilities) to picnic and green spaces for our local report by Infrastructure Australia provide safe and secure water communities; as well as greening found that the annual water supply to our customers. Through the our urban landscapes. capacity in South East Queensland is operation of the SEQ Water Grid The SEQ Water Grid is a now 50 per cent more than current we are able to transfer water from sustainable water supply that demand, providing a security buffer areas of excess supply to areas underpins the region’s economic of 160,000 megalitres per annum. in need. In times of plentiful dam prosperity and population growth, South East Queensland now has water, we are able to use that water now and into the future. the best water security position of all first. In times where dam water is Australian capital city regions. low, we are able to increase supply The SEQ Water Grid consists of through our climate resilient water a network of treatment facilities sources such as desalinated and and connecting pipelines. It is purified recycled water. capable of moving water from The Gold Coast Desalination Plant sources across the region to where is one of the most energy efficient it is needed most. The SEQ Water desalination plants in the world. Grid is not used to move water In producing water, it uses less from one dam to another within energy per household than a typical South East Queensland, instead it refrigerator. Further, the Gold Coast moves treated drinking water from Desalination Plant fully offsets its water treatment plants directly to energy usage through the purchase distribution-retail networks for supply of renewable energy certificates. to households. During 2009–10, we transferred over 71,600 megalitres of water within South East Queensland. Engaging our community

In 2010–11, the SEQ Water Grid will continue to engage and educate our local communities through existing and new visitors’ centres; interactive DVDs; new and existing websites and school education. This, coupled with site visits and general information through the local media, SEQ WATER GRIDSEQ MANAGER WATER will assist people in understanding the role of the SEQ Water Grid in supplying safe, secure and sustainable water. 10

Our supply chain Our organisation is one of the four As at 30 June 2010, we sold bulk bulk entities and we buy services water to the 10 regional councils partners from Seqwater, WaterSecure and in the South East Queensland The institutional arrangements for LinkWater. region—Brisbane, Gold Coast, water in South East Queensland have Ipswich, Lockyer Valley, Logan, Seqwater – provides storage been simplified, allowing entities Moreton Bay, Redland, Scenic Rim, and treatment of bulk water and to specialise in different parts of Somerset and Sunshine Coast— manages the region’s dams, weirs the SEQ Water Grid supply chain, as well as to power stations and and water treatment plants. Seqwater ensuring focused and effective other smaller wholesale customers. is also responsible for catchment services. The 22 separate entities, From 28 January 2010, we also management, the quality of water which previously owned and operated commenced the sale of raw water from these assets and the production the water treatment, storage and from Wivenhoe Dam to Toowoomba of drinking water. transport infrastructure, have been Regional Council. This water is amalgamated into four bulk water WaterSecure – operates the Gold transported to Cressbrook Dam. entities and, from 1 July 2010, three Coast Desalination Plant and the From 1 July 2010, the 10 regional council-owned SEQ Distributor- Western Corridor Recycled Water council distribution and retail Retailer entities. Scheme and is responsible for functions commenced operation as the production and treatment of, three combined SEQ Distributor- desalinated and purified recycled Retailer entities—Queensland Urban water, respectively. Utilities (Brisbane, Ipswich, Lockyer LinkWater – uses its network of bulk Valley, Scenic Rim, Somerset), pipelines to move drinking water Unitywater (Moreton Bay, Sunshine from water treatment plants and Coast) and Allconnex Water (Gold reservoirs through bulk pipelines into Coast, Logan, Redland). the distribution network. Safe, secure, sustainable –

the approach that defines ANNUAL REPORT 2009–10

the SEQ Water Grid. 11

The SEQ Water Grid Manager owns the urban water entitlements in South East Queensland and is responsible for managing the SEQ Water Grid. It purchases services to store, treat, produce and transport bulk water from Seqwater, LinkWater and WaterSecure. It then sells treated water to council-owned retail distribution businesses and power stations.

This is the distribution and retail business for Brisbane, Scenic Rim, Ipswich, Somerset and Lockyer Valley areas. Queensland Urban Utilities sells and delivers drinking water to customers and collects, transports and treats wastewater and sewage.

Seqwater supplies water from dams, weirs and boreﬁ elds; and is responsible for the catchment, treatment and This is the distribution and retail business for Gold storage of bulk water for the Coast, Logan and Redlands areas. Allconnex Water SEQ Water Grid Manager. sells and delivers drinking water to customers and collects, transports and treats wastewater and sewage.

LinkWater moves drinking water from treatment plants and reservoirs through bulk This is the distribution and retail business for pipelines and into the distribution Sunshine Coast and Moreton Bay areas. Unity Water WaterSecure supplies water networks, for the SEQ Water Grid sells and delivers drinking water to customers and from the Gold Coast Desalination Manager. collects, transports and treats wastewater and sewage. Plant and the Western Corridor Recycled Water Scheme to the SEQ Water Grid Manager. State-owned statutory authorities Council-owned authorities

Legend Water supply Recycling/desalination

Contractual Bulk water transport transaction Customer − households and businesses SEQ Water Grid Water and wastewater Manager distribution/retail

Water storage Customer – households and treatment and businesses SEQ WATER GRIDSEQ MANAGER WATER

Operational performance

The SEQ Water Grid Manager Using the balanced scorecard uses a balanced scorecard approach, we have translated approach to advance our vision and strategy into a its strategy, combining comprehensive set of performance management and measurement measures built on four priority areas: into an integrated quality provision of water security process – measure, manage, operational efficiency improve and re-measure. customer and stakeholder The balanced scorecard has a full satisfaction range of efficiency and effectiveness measures. This enables assessment innovative and capable culture of indicators such as relevance of and systems. our services, operational efficiency, The deliverables of these priority customer and stakeholder satisfaction areas are essential for our core and innovation and capability. business. We are committed to As the primary tool used to inform monitoring and measuring our the SEQ Water Grid Manager performance against these four Board (Board) on performance, the priority areas that make up our balanced scorecard is also essential in balanced scorecard. enabling our Executive Management Group to identify areas where resources should be focused. The balanced scorecard provides a

consistent measure of our success in ANNUAL REPORT 2009–10 meeting all strategic goals. 13

How efficiently does the organisation operate?

Operational efficiency • Manage Water Grid and Water Grid Manager operating budget. • Downward pressure on Water Grid short run operational costs. • Optimise Water Grid system performance standards. • Manage Water Grid debt profile. How do customers and What must the stakeholders see the organisation excel at? Water Grid Manager?

Customers and Provision of water security stakeholders • Deliver water security • Build and maintain strong and system reliability stakeholder and Grid by complying with the Customer relationships. Mission strategy Market Rules, System Operating Plan and • Understand stakeholder legislative/regulatory and Grid Customer needs requirements to meet to deliver professional water security objectives. water services. • Water sold meets • Proactive management of How can the organisation contractual standards. incidents and issues. sustain its ability to change • Manage Water Grid risk. and improve? Innovative and capable culture and systems • Implement technological solutions to enable efficiencies for the Water Grid Manager’s management of the Water Grid and sharing of information. • Ensure organisational wellbeing. • Quality assurance and corporate governance. Individual scorecard • Whole-of-Grid capability strengthened. Corporate scorecard SEQ WATER GRIDSEQ MANAGER WATER

14 ANNUAL REPORT 2009–10

Priority area 1 Provision of water security

Our goals and objectives Our activities Performance highlights Water security is our core business. We deliver water security through: We supplied 286,713 megalitres of Our objective is to effectively and water to our customers in 2009 –10. strategically directing the efficiently operate the SEQ Water This included over: operation of the SEQ Water Grid Grid to provide water security 23,000 megalitres via the Gold for the South East Queensland performing all our obligations Coast Desalination Plant to the region. We must also ensure the under the Market Rules and Grid Gold Coast and Brisbane regions water we sell meets the values set Contract Documents by the Australian Drinking Water 14,800 megalitres via the administering and enforcing Grid Guidelines 2004. We constantly aim Western Corridor Recycled Water Contract Documents entered to proactively identify, manage and Scheme to power stations into with Grid Participants mitigate key operational risks and 11,300 megalitres via the we strive to optimise the operation managing the implementation Northern Pipeline Interconnector of the SEQ Water Grid to achieve and evaluation of the SEQ Water from the Sunshine Coast region defined performance standards Grid Quality Management Plan to the Brisbane region and service levels to minimise the and the SEQ Water Grid Quality likelihood for the need to introduce Monitoring Plan in accordance 20,200 megalitres via the water restrictions in the future. with the Market Rules Southern Regional Water Pipeline from the Gold Coast For 2009–10, our key objective was implementing and evaluating the region to the Brisbane region to facilitate an efficient supply chain Risk Management Plan 2,300 megalitres via the Eastern and enable our operations to move implementing, managing, testing Pipeline Interconnector from the from a focus of maximising water and evaluating the SEQ Water Redland region to the Brisbane security to also taking into account Grid Emergency Response Plan cost, flexibility and system reliability. region. developing an optimisation We also focused on implementing We issued Grid Instructions for the model for SEQ Water Grid open and transparent water quality production of 242,343 megalitres operations monitoring and data sharing with of treated water from 35 individual the community. preparing SEQ Water Grid water treatment plants, over 14,800 Performance Standards and the megalitres of purified recycled water, monthly Customer Confidence and directed over 33,800 megalitres Report (Bulk Water). of drinking water transfers to optimise regional water security. SEQ WATER GRIDSEQ MANAGER WATER

We prepared the first interim We prepared SEQ Water Grid We met all statutory deadlines for Operating Strategy, establishing Performance Standards in the submission of reports, plans and how we will operate the SEQ Water consultation with Grid Participants, Grid Instructions. Grid over the next 12 months setting targets for the efficient We effectively managed any and submitted it to the Rules operation of the SEQ Water Grid. incidents that arose during the year. Administrator for approval in These were approved by the Rules May 2010. Administrator in May 2010.

Activities 2009–10 Key performance indicators Achieved Strategic operation of Reporting timeframes in the System Operating Plan, Market Rules  the SEQ Water Grid and other legislative requirements met Water security obligations met  Water quality Customer water quality contract parameters complied with  management Grid Participant drinking water quality management plans reviewed  and updated South East Queensland bulk water quality results reported monthly  Risk management and Risk Management Plan implemented by all Grid Participants x1 emergency response SEQ Water Grid Emergency Response Plan reviewed and updated  SEQ Water Grid Emergency Response Plan test exercise completed  Performance standards SEQ Water Grid Performance Standards completed and approved  optimisation

Note 1: The Risk Management Plan was lodged with the Rules Administrator but had not been approved as at 30 June 2010. ANNUAL REPORT 2009–10

Our performance submitting quarterly reports, This was a change from our first required by the System year of operation, during which Focus Operating Plan, to the dam levels were still relatively low and the focus was on achieving During 2009–10, we changed our Queensland Water Commission regional water security. focus of operation from maximising within the required timeframes. security of supply to also taking into This year, in line with the cost account cost, flexibility and system Water security effective operational mode, we reliability. This required a concerted The Enoggera Water Treatment sought to reduce the use of the effort to identify measures to reduce Plant was brought online this higher cost water sources, including the operational costs of the SEQ year, adding more than 1,000 pumped regional transfers and the Water Grid, while still ensuring our megalitres per annum to the SEQ Gold Coast Desalination Plant. supply obligations were achieved. Water Grid’s total capacity. The Where possible, the use of higher As part of this, we commenced transfer capacity of the SEQ Water cost water treatment plants was and completed a number of Grid’s interconnecting pipelines also minimised if suitable supplies plans, investigations and reviews remained at 65,000 megalitres per could be sourced from other areas. to optimise the SEQ Water Grid’s annum. The construction of a new The Grid Service Providers are performance, achieving better than pipeline from Wivenhoe Dam to the required to maintain their assets forecast operational outcomes. in an operable state and have Toowoomba region provided for the them available when needed, to transfer of bulk water supplies to Compliance contribute to ensuring the region’s Cressbrook Dam. While this pipeline ongoing water security. We met our reporting requirements does not form part of the SEQ Water within the required timeframes, Grid, the Toowoomba Regional including those under the System Operating the SEQ Council is an important customer to Operating Plan, Market Rules Water Grid our organisation and demonstrates and the National Water Initiative. The System Operating Plan the flexibility of the SEQ Water Grid Compliance achievements included: establishes the maximum volume to assist neighbouring regions. of water that we can contract in developing and submitting Grid Instructions are the lever we any one year. Based on this, we SEQ Water Grid Performance determine the sequence, quantity Standards to the Rules operate to give practical effect to and choice of water source on a Administrator our management role, and direct water transfers, to ensure optimal rolling monthly program, and issue developing and submitting the use of all water sources. Since Grid Instructions to the bulk water annual Market Rules review to 1 December 2009, Grid Instructions entities who own and operate the the Rules Administrator focused on achieving the efficient individual SEQ Water Grid assets. In 2009–10, the System Operating issuing all Grid Instructions operation of the SEQ Water Grid. Plan allowed us to sell a maximum of 450,000 megalitres. SEQ WATER GRIDSEQ MANAGER WATER

Total sales for the year were demand for water is met, while not was only 4.3 per cent. Table 1 shows 286,713 megalitres while demand breaching the System Operating the comparison by month, between was forecast to be 274,106 Plan requirements. Throughout the our total water sales and our megalitres. The SEQ Water Grid year, the average variance between demand forecasts. is designed to ensure that daily forecast demand and actual sales

Table 1: Water sales versus demand forecasts by month Total sales Forecast 30000

25000

20000

15000 megalitres

10000

5000

Jul 09 Aug 09 Sept 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Fast fact

Every month across the SEQ Water Grid, over 18,500 laboratory tests are completed to make sure our drinking water supplies are safe. In addition, the Grid Service Providers also conduct online water quality monitoring ANNUAL REPORT 2009–10 across the whole region. This comprehensive testing program helps us to ensure our bulk water supply is safe. 19

Water quality Key achievements for the Drinking The following parameters are tested and reported on. The first SEQ Water Grid Quality Water Quality Management Plan Technical Committee included Management Plan was approved on Health (potential impact on facilitating the alignment of Grid 6 November 2009. This Plan aims public health): to ensure water quality standards Participant drinking water quality copper and parameters are met across management plans and the SEQ Water Grid Quality Management the SEQ Water Grid. An updated E. coli Plan will be submitted to the Rules Plan. fluoride Administrator in November 2010 for Since February 2010, we have approval. released the monthly Customer lead The whole-of-Grid Water Quality Confidence Report (Bulk Water), manganese Technical Committee was expanded providing the most comprehensive, total trihalomethanes. into two separate committees in publicly available, drinking water 2009–10; namely the SEQ Water quality reporting program for Grid Water Quality Technical bulk water supply in Australia. Aesthetic (impact on taste and Committee to review the outcomes The monthly reports focus on clarity of the water): various health, taste and clarity of water quality testing and alkalinity incident response; and the Drinking parameters within the bulk water aluminium Water Quality Management Plan supply chain from key locations within the SEQ Water Grid. Technical Committee to review the hardness management of water quality across This Report provides test results iron all Grid Participants. from nationally accredited pH Key achievements for the SEQ laboratories of samples taken Water Grid Water Quality Technical from 19 sampling sites across the total dissolved solids Committee included: SEQ Water Grid. This collectively represents approximately 80 per true colour organising an intra-Water Grid cent of the water supplied through turbidity. water quality information sharing the SEQ Water Grid. The Customer arrangement Confidence Report (Bulk Water) organising a whole-of-Grid details: chlorate investigation for input results of testing against key into the review of the Australian water quality parameters Drinking Water Guidelines 2010 results for the previous month assisting with the review of the draft Australian Drinking Water performance over the previous Guidelines 2010. 12 months. Fast fact

This year, we have achieved exceptional results in the area of water quality management. We have: successfully used the flexibility of the SEQ Water Grid to manage aesthetic (taste, colour and odour) water quality issues with little or no impact on customers delivered new levels of water quality reporting and set new industry standards through the

SEQ WATER GRIDSEQ MANAGER WATER implementation of the monthly Customer Confidence Report (Bulk Water) achieved compliance through stronger contractual and water quality management planning. 20

Risk management This year, we prepared and The Risk Management Plan addresses the essential areas of: Risk mitigation was one of the submitted the Risk Management Plan to the Rules Administrator. This guiding principles behind the water strategic and operational Plan was required under the Market reform in South East Queensland. business risk management These reforms involved grouping Rules and provides the foundations business continuity planning entities’ common asset types and and organisational arrangements for the management of risk across functional processes. This enables critical infrastructure security the concentration of operational skills the SEQ Water Grid. We also emergency response planning. and experience within each entity, completed and implemented the and increased organisational focus interim SEQ Water Grid Emergency These functions are facilitated on the risks associated with each Response Plan. As at 30 June 2010, by, and directed at, the four key specific asset type and function. this Plan was in the final stages functional components of the SEQ of completion, prior to being Water Grid: people, processes, As our organisation is charged with approved by the Minister for Natural systems and assets — as illustrated managing the SEQ Water Grid, we Resources, Mines and Energy and in Figure 1. are responsible for: Minister for Trade. coordinating whole-of-Grid risk assessment, business continuity, Risk Management Plan security risk and emergency The core purpose of the Risk response planning Management Plan is to enhance the resilience of the SEQ Water the SEQ Water Grid Risk Register Grid by strategically integrating the Risk Management Plan preventative monitoring and contingent controls across its the SEQ Water Grid Emergency operations. This ensures the ability Response Plan to prevent, prepare, respond the SEQ Water Grid Business and recover from strategic and Continuity Plan operational risks that threaten the SEQ Water Grid’s ability to deliver a facilitating engagement with secure water supply for South East State and Federal entities for Queensland. risk management and critical infrastructure protection guidelines communicating whole-of- Grid risk issues and treatment measures to Grid Participants. ANNUAL REPORT 2009–10

Figure 1: SEQ Water Grid Risk Management Framework

Risk Managem rid ent er G Fra at me W Whole-of-Grid w Q or SE risk management k line Cr de itic ui al G ty C In t ui r fra en tin itic s m n al tr e o In u g C f ct a ss n ra u n e la Grid Participant s r in P tr S a s t u e u n risk management c c M t y B e C u u t d y rit r r i i m it ic e it u r e u a y G g in l R in t n S In G t r a n la ec f e n e n o P u r g u t C t a i o a ri s s i a s n t t t d s e y r e C M u e W e m P r l s n e l c i s i a t n Q s g n u e a e E u r n n e i S B a le P s p ro u M o c e e B P s s

Safe, secure and efficient water supply t

S e y s m t s e E e t m m e g S s ss a E e A n Q r a g n e M a W n k l c is P a y R n e t P R l n e la in L la e a l io e r p n P t n so io e c v G n at d e se rn i A l ri pe u 1 d O d − G E t n 5 m n a e r in e te c rg m is id e e g e n g e n c a R t y R an k es e M is ca sp k R la on Ris rid tio se P -G n lan -of ole Wh Fast fact

Under our SEQ Water Grid Emergency Response Plan, incidents are rated as Level 1 to 5 based on the impact and potential outcomes of SEQ WATER GRIDSEQ MANAGER WATER each. A Level 3 or above incident generally involves more than one Grid Participant and requires a public interface. 22

SEQ Water Grid Emergency operational response to the making disinfection processes more Response Plan issue, particularly in relation to standardised and cost effective. gathering appropriate information This year, following extensive We will continue to report to the for communication purposes and consultation with all our stakeholders, public on water quality through issuing Grid Instructions to manage including Grid Participants, the monthly Customer Confidence water flows as required. Queensland Health and Emergency Report (Bulk Water). Management Queensland, we updated the SEQ Water Grid Outlook for 2010–11 Operating Strategy Emergency Response Plan. We will continue to review and In 2010–11, the SEQ Water Grid The updated Plan was extensively refine the Operating Strategy in Quality Management Plan will be tested under the Exercise Matrix, 2010–11. This will include providing updated based on requirements a 48 hour emergency response a more detailed framework for the specified by the Rules Administrator exercise involving all State-owned optimal operation of the SEQ Water and the Office of the Water SEQ Water Grid entities and Grid, given current dam levels. Key Supply Regulator, Department two major council distributor- issues that will be addressed as part of Environment and Resource retailers (Brisbane Water and of the optimisation include cost, Management. The updated Plan will Gold Coast Water). The response water quality and energy use. The support continued improvement of during the exercise was assessed Operating Strategy will be integrated water quality management across by an independent emergency with the updated SEQ Water Grid the SEQ Water Grid. management company who Quality Management Plan. The advised that the interim SEQ Water This Plan will be integrated with the Operating Strategy will continue to Grid Emergency Response Plan drinking water quality management be used to develop monthly Grid was appropriate for adoption. plans that are being prepared Instructions. A range of measures to further for specific assets by the entities As an input to the Operating enhance the Plan, and support our that own and operate them. For Strategy, an even more sophisticated responses under the Plan, were example, it will specify how the optimisation and modelling also recommended. A revised Plan entities will interact with each other approach for the management will be submitted to the Minister for and our organisation if there is a of the SEQ Water Grid will be approval in 2010–11. water quality incident or if there developed. This approach will are any current or emerging water As we are not the owner, operator provide tools and processes to quality issues. The Plan will also or maintainer of any infrastructure, further improve the efficiency and outline and initiate a Coordinated managing on-the-ground responses effectiveness of whole-of-Grid Improvement Plan across the SEQ to incidents is not part of our day- operations, taking into account long- Water Grid. For example, it will to-day operational responsibilities. term water security, water quality include an action to undertake a However, when an incident classed and cost considerations. study into disinfection options for as Level 3 or above occurs, we the SEQ Water Grid with the aim of lead the coordination and strategic ANNUAL REPORT 2009–10

Managing aesthetic water quality

An inherent part of the SEQ Water Grid’s value, is the flexibility it provides by enabling supply to be managed and blended to address aesthetic water quality issues—issues that affect the taste, colour and odour of the water — but do not pose a risk to health. When a water quality issue is identified in a particular supply area, we issue Grid Instructions to reduce the flow of the affected supply and redirect unaffected flows to that area. This allows the affected water to ‘mix’ with a larger volume of unaffected water, thereby diluting any taste, colour or odour impacts. This flexibility has enabled us to better manage the quality of supplies to customers, within expected parameters, and has significantly reduced the volume and duration of complaints in relation to these types of issues. SEQ WATER GRIDSEQ MANAGER WATER

24 ANNUAL REPORT 2009–10

Priority area 2 Operational efficiency

Our goals and objectives Our activities Performance highlights Our objective is to provide water We achieve operational efficiency We commenced operating in cost security in the most efficient and through: effective operational mode on cost effective manner possible. 1 December 2009, when permanent matching supply to demand water conservation measures During 2009–10, our key objective using lower cost supply options were introduced to South East was to deliver operational efficiency wherever possible Queensland. Since then, we have through understanding the cost issued Grid Instructions that have drivers of the SEQ Water Grid and investigating options to place saved up to $2.5 million per month using this information to optimise smaller water treatment plants in in SEQ Water Grid operational costs the cost of its operations. Further, standby mode compared to the operation of the we committed to managing our investigating cost drivers and SEQ Water Grid at capacity. This organisational budget and identified areas of efficiency within the saving relates to the comparison of actions to improve our bottom line. SEQ Water Grid operating the SEQ Water Grid under optimising energy management in water security mode compared collaboration with Grid Participants to the cost of operating the SEQ Water Grid under cost effective investigating and obtaining new operational mode. water customers for different sources of water During 2009–10, we sold 286,713 megalitres of water at $352,639 considering possible incentive million. We achieved above budget regimes through new water sales figures and below budget supply contracts expenses, resulting in a financial monitoring how the SEQ Water position that is 48 per cent better Market performed and assessing than budget. We managed our areas for improvement borrowings to $354.5 million, well under the approved total through managing our debt profile through the State Borrowing Program of forecasting debt and working $550 million. capital profiles and identifying opportunities to improve utilisation of existing debt facilities managing and monitoring our operating budget. SEQ WATER GRIDSEQ MANAGER WATER

Activities 2009–10 Key performance indicators Achieved Operational budget Maintain our expenditure within approved budgets  management Maintain variance between forecast and actual customer demand  within target levels (+/- 20%) Activity based Exchange of information between us and Grid Service Providers in  operational costing relation to operational costs Electricity Optimisation Study completed  Optimised performance SEQ Water Grid Performance Model completed  and level of service SEQ Water Grid Performance Standards published within required  timeframes SEQ Water Grid debt SEQ Water Grid interest expense lower than budgeted  profile management

Our performance continuous improvement of our Financial results organisation’s operation and that of Revenue from the sale of water Focus the SEQ Water Grid. was 3.31 per cent over budget Our focus in 2009–10 was to We also worked collaboratively ($352,639 million versus a budget of use the data gathered during our with Grid Participants to build $341,353 million), due mainly to the inaugural year of operation to a unified understanding of the easing of water restrictions and the analyse the operation of the SEQ SEQ Water Grid and each Grid increased demand this generated. Water Grid and identify potential Participant’s role within it. Areas of This resulted in the sale of 286,713 measures to reduce overall costs. potential operational overlap were megalitres of water compared with identified and actions put in place a forecast amount of 274,106 We further developed our processes, to consolidate these operations to megalitres. standards, guidelines and systems provide improved whole-of-Grid as part of our commitment to efficiency. ANNUAL REPORT 2009–10

The strong culture of water saving In conjunction with the Queensland Optimised performance generated within the community Treasury Corporation, we explored Systems and processes introduced during the drought continued even options to effectively manage our this year to build consistent data with the lifting of the restrictions. debt and reduce our debt financing parameters resulted in improved The average water consumption costs. This included long-term cost data being received from the across the region was around borrowing initiatives when interest bulk water supply entities. This 153 litres per person per day, rates were low. As a result of this, enabled more effective formulation well under the established target and the lower than anticipated of Grid Instructions while operating of 200 litres per person per day. expense requirements reducing the the SEQ Water Grid to balance During times of water restrictions, need for drawdown on approved water security, water quality and the average water consumption funding, interest expenses for system reliability objectives. across the region was well under the 2009–10 were also $11,211 million target of 140 litres per person per day. under budget. We implemented a program of monitoring to ensure we comply with Additional bulk water sales were The Queensland Government has the Market Rules, legislation and generated by Toowoomba Regional confirmed its continued financial contract requirements. This program Council becoming a Grid Customer support of our organisation, through is monitored monthly and reported at the end of January 2010, adding the provision of access to debt on each quarter to the Board’s Audit 2,705 megalitres in sales to our funding. This access to debt funding and Risk Management Committee. revenue stream. will allow us to continue to fund the immediate pricing differential Expenses for the purchase of bulk between the bulk water price path water services were below that and the full cost of the provision initially forecast by the bulk water of services, until such time as entities ($658,013 million versus a the bulk water price path is fully budget of $848,166 million). implemented. This commitment Our employee expenses were remained in place for the 2009 –10 $1 million under budget due to financial year and will continue over lower than anticipated full-time the duration of the pricing period. equivalent employee requirements and the prudent use of contract staff for specific projects. SEQ WATER GRIDSEQ MANAGER WATER

Stage one of our Cost Optimisation Outlook for 2010–11 Project was completed. This involved development of a model to enable In 2010–11, we will partner with us to consider optimised operating Queensland Treasury and the scenarios and to select the most Queensland Treasury Corporation efficient for implementation. Stage to further implement effective two will be implemented in 2010–11. strategies to manage our interest rate risk. We will also work with the We completed an Electricity Queensland Water Commission Optimisation Study, identifying to enhance the accuracy of our potential opportunities for cost medium-term operational forecasts, savings which will be targeted in allowing us to better manage our 2010–11. debt profile. Monitoring the We will continue to operate the SEQ Water Market SEQ Water Grid in the cost effective operational mode until rainfall During the year, we prepared our conditions require a shift back to the first annual Market Rules Review water security mode. Report. Required under the Market Rules, this Report provided us Review of the findings of the with an opportunity to assess the Electricity Optimisation Study operations of the SEQ Water Market will be completed and key and report activity and opportunities recommendations implemented. for refinement to the Queensland We will also investigate future Water Commission. The Report, revenue sources through attracting completed in October 2009, made new wholesale water customers. a number of recommendations that have been incorporated into the new version of the Market Rules, published on 1 July 2010. ANNUAL REPORT 2009–10

Electricity optimisation

Water treatment and transfer can be an energy intensive activity, due to the power requirements of water treatment plants and pump stations that push the water through the network of distribution pipelines. We undertook an Electricity Optimisation Study which identified the potential for operational cost savings among the Grid Service Providers. These opportunities will be targeted in 2010 –11. SEQ WATER GRIDSEQ MANAGER WATER

30 ANNUAL REPORT 2009–10

Priority area 3 Customer and stakeholder satisfaction

Our goals and objectives Our activities Performance highlights The SEQ Water Grid Manager’s We deliver customer and stakeholder In conjunction with the Grid goal is to be an effective and satisfaction through: Service Providers, we successfully efficient strategic operator of the established the SEQ Water Grid understanding the needs of our SEQ Water Grid. To do this we Communications Unit to improve customers and their customers must deliver value to our customers the timeliness and consistency of (water users) to better refine and and stakeholders. We must build communications. deliver bulk water services and maintain strong relationships In collaboration with the Grid and effectively engage with our implementing an internet portal Service Providers, we developed customers and stakeholders accessible to all Grid Participants communications about the operation while understanding and, to the to share information of the SEQ Water Grid as a whole. extent possible, exceeding their implementing, monitoring and expectations. We must proactively We introduced Product Quality evaluating our organisation’s manage incidents and issues. Notifications, Q&As and fact sheets Communication Strategy to inform our customers in times of In 2009–10, our key objective negotiating and resolving water incidents. was to take a strategic leadership Grid Contract issues between role in coordinating consistent our organisation and Grid communications regarding the Participants operation of the SEQ Water Grid. implementing a full contracts management system implementing, monitoring and evaluating our organisation’s Customer and Stakeholder Engagement Plan managing incidents and operational issues to minimise the impact on our customers and stakeholders, and on the reputation of the SEQ Water Grid. SEQ WATER GRIDSEQ MANAGER WATER

Activities 2009–10 Key performance indicators Achieved Stakeholder and Customer and Stakeholder Engagement Plan completed  customer relationship Grid Participant information sharing portal developed and trialled  management Primary customers and stakeholders provide positive feedback on  our stakeholder engagement strategy and methods Contracts management Stakeholder workshops attended  Contractual issues negotiated with customers within  required timeframes Contract meetings held with each customer twice a year  Customer satisfaction Customers provide positive feedback on service,  role and responsiveness Reputation management Media coverage received in response to incidents is balanced 

Our performance The new SEQ Water Grid environmental performance of Communications Unit will be the SEQ Water Grid the single point of contact for SEQ Water Grid recreational use of dams and communications on the following Communications Unit surrounding land issues relating to the operation of This year saw the establishment the SEQ Water Grid: emergency events and status. of the SEQ Water Grid Communications Unit. This Unit dam levels in South East As part of this shift to consolidating aims to provide a consolidated Queensland the whole-of-Grid communications approach to SEQ Water Grid efforts, we also commenced movement of water across the communications, providing ‘one development of the SEQ Water Grid SEQ Water Grid voice’ for all SEQ Water Grid Communications Plan, which will communications. We led the quality of bulk water in South provide direction for whole-of-Grid development of the SEQ Water Grid East Queensland corporate communications. This Communications Unit, collaborating Plan will take effect in 2010–11. operation of the Gold Coast with the Grid Service Providers; Desalination Plant Seqwater, WaterSecure and LinkWater. operation of the Western Corridor Recycled Water Scheme ANNUAL REPORT 2009–10

Corporate communications metals To improve our customers’ and stakeholders’ knowledge of how the This year we initiated our first pH and alkalinity customer feedback survey, receiving SEQ Water Grid is managed and taste and odour positive results, particularly in operated, we developed and delivered ‘SEQ Water Grid 101’ relation to the accuracy and total trihalomethanes relevance of information provided in sessions. Approximately 25 turbidity. response to customer enquiries. This participants attended across two included information on the ease We also participated in a whole-of- sessions. Another four sessions are of contacting the most appropriate Grid exhibition and promoted the planned for 2010–11. person within our organisation. SEQ Water Grid at OzWater ‘10, As the transition of the water industry Areas of improvement related to the largest water industry into the new arrangements continued the timeliness of responses and the conference in Australia, held in in 2009–10, we built relationships with proactive management of whole-of- Brisbane, March 2010. and provided information to the three Grid issues. new SEQ Distributor-Retailer entities Customer service and that commenced formal operation A communications library of stakeholder engagement pre-prepared materials was from 1 July 2010. This included developed, including Product Quality Customer and stakeholder relations providing copies of our fact sheets Notifications, Q&As and fact sheets, are an integral part of our business. and Q&A documentation, as well to support our response to incidents We are focused on becoming a as Product Quality Notifications to and emergencies under the SEQ customer-centric business and our provide advice on water quality issues Water Grid Emergency Response success will be measured through as they were identified. Compliance Plan. These included topics such as: recognition of the value of our role sessions were held with all three by our customers and stakeholders. SEQ Distributor-Retailer entities conductivity and total To achieve this recognition we have to inform them of their reporting dissolved solids developed a dedicated Customer requirements to our organisation. colour and taste of water and Stakeholder Engagement We also held contract meetings Plan to provide a coordinated facilitated by the Queensland Water E. coli approach to building awareness Commission and customer service fluoride and confidence in the performance meetings as part of our regular of our organisation among our engagement with our stakeholders. hardness customers and stakeholders. SEQ WATER GRIDSEQ MANAGER WATER

Media relations We continued to manage ongoing Outlook for 2010–11 A media schedule was developed reactive media enquiries across a range of issues. 2010–11 will see a concerted in 2009–10 to guide the placement effort to communicate and of media articles in industry Incidents promote the SEQ Water Grid to publications. Several articles were stakeholders and the community. We successfully managed the media placed this year, including: The aim of this communication will and communications components as be to increase the understanding ‘Risk management as key to part of our overall management of of the SEQ Water Grid, its function Australia’s largest urban drought SEQ Water Grid incidents this year. and management, to ensure response’ – Risk Management Of note was the 2-methylisoborneol enquiries are channelled to the Magazine, April 2010. This (MIB) and geosmin level in the water correct entities and the benefits article was based on our Chief supply in March–April 2010. During of the SEQ Water Grid become Executive Officer, Barry Dennien’s this incident, which represented no widely known and recognised. This presentation of the SEQ Water risk to public health, we coordinated will include a public education Grid’s risk management media responses while ensuring program as well as corporate methodology at the Queensland appropriate customer notification communications. Chapter of the Risk Management of the issues and the safety of the Institution of Australasia. drinking water supply. Moving forward, the formation of the SEQ Water Grid ‘SEQ Water Grid strategy for We participated in Exercise Matrix, a Communications Unit will be skills formation’ Australian mock emergency response exercise, finalised, with key positions filled, the Water Association’s Water providing communication support SEQ Water Grid Communications Magazine. This article was on in accordance with the SEQ Water Plan completed and the systems and our Organisational Change Grid Emergency Response Plan. This processes identified as a result of and Capability Development identified a number of measures to Exercise Matrix implemented. Manager, Sean Rhode’s, be taken to improve communication OzWater ‘10 presentation on the support in emergency situations and Skills Formation Strategy. led directly to the formation of the ‘SEQ Water Grid Manager’ SEQ Water Grid Communications Australian Water Association’s Unit, the Product Quality Water Magazine. This article Notifications system and the was on our business and the establishment of a 24/7 on-call Customer Confidence Report communications person. (Bulk Water). ANNUAL REPORT 2009–10

Product Quality Notifications

Product Quality Notifications are issued to our customers (SEQ Distributor-Retailer entities) when there is a water quality incident that is defined as Level 3 or above under the SEQ Water Grid Emergency Response Plan. This Notification informs the customer of the incident, if it is an aesthetic (affects taste, colour or odour of the water) or a public health issue, when we became aware of it, what is being done to address the cause and what the customer is required to do. It is distributed to customers with an information sheet on the specific incident, so they can communicate the required information and messages to the consumers of the water. SEQ WATER GRIDSEQ MANAGER WATER

36 ANNUAL REPORT 2009–10

Priority area 4 Innovative and capable culture and systems

Our goals and objectives Our activities Performance highlights The SEQ Water Grid Manager’s We achieve innovative and capable We redesigned our organisational people, culture and systems culture and systems through: structure to enhance performance underpin its operational and service delivery. developing an Information, performance. We aim to Communication and Technology We planned the implementation of develop, implement and evaluate Strategy a more efficiently managed desktop technological solutions to ensure we and network services arrangement are efficient and maintain a highly implementing a Performance to provide improved day-to-day engaged, motivated, empowered, Management Framework that technology support to our people. healthy and skilled workforce. We aligns individual performance need to implement and monitor to the strategic and operational We prepared the Technology Strategy our Quality Assurance Framework plans and balanced scorecard and the Skills Formation Strategy. to ensure compliance with outcomes We received AS/NZS ISO 9001: 2008 legislative, regulatory and corporate developing, implementing, certification on 10 July 2009. governance requirements and to monitoring and evaluating improve our organisational capacity. We completed and released the staff leadership skills and a South East Queensland Laboratory In 2009–10, our key objective development program Capacity and Capability Study. was to continue embedding the implementing a quality mission of our organisation and assurance process to receive values important to our staff. ISO 9001 accreditation Further, we committed to facilitating, in collaboration with our partners, facilitating implementation, improvements in technology monitoring and evaluation of to provide efficiencies and deliver a whole-of-Grid Workforce a more effective service to Planning and Capability our customers. Development Strategy reviewing the capacity and capability of laboratory services in South East Queensland for water quality assessments building whole-of-Grid knowledge through information sharing protocols. ‘ Because we are the first Water Grid of our kind in the world, we are setting the standard and leading the way. We have space to be innovative and bold

SEQ WATER GRIDSEQ MANAGER WATER – and that is an exciting place to be.’

Storm Stickland – Graduate 38 Water Engineer

Activities 2009–10 Key performance indicators Achieved Information, Technology options reviewed and solutions implemented Communication and  Technology Strategy Team culture and Cascading balanced scorecard implemented  development Individual staff performance plans developed  Leadership Development Program and other staff training (Note 1) initiatives implemented Quality assurance AS/NZS ISO 9001:2008 certification received  Capability planning Our Workforce Capability Development Plan implemented  South East Queensland Laboratory Capacity and Capability  Study completed

Note 1: However, our June 2010 staff survey results identified the request for further staff development and training initiatives. This will be further progrssed in 2010 –11.

Our performance A new managed desktop and In 2009–10, our organisation’s network services arrangement was values were refined and redeveloped Information technology also developed to improve day-to-day in collaboration with our staff for technology support for our people, review and approval by our Board. In 2009 –10, we developed three including a new computer help desk draft technological documents to We completed performance plans and telephone support services. This improve whole-of-Grid operational for all staff, aligning each person’s initiative will increase productivity efficiency. These were the: individual role, responsibilities and by providing reliable external access training plans to the organisation’s Technology Strategy to our organisation’s information strategic and operational plans. technology network, reducing ‘down SEQ Water Grid Enterprise time’ and operating costs. The organisational structure was Architecture redesigned to enhance performance SEQ Water Grid Manager Culture and people and service delivery by adding a Risk Enterprise Architecture. Our people are critical to our and Technology Unit and consolidating the communication teams of each of We are currently consulting with organisation’s success. Alignment the bulk water entities into a single all Grid Participants on the of their values, needs, skills and SEQ Water Grid Communications Unit. finalisation and implementation of aspirations to the organisation’s these documents. strategic and operational aspects will drive a culture of achievement and commitment to organisational objectives. Kim Marshall – Graduate Chris Owens – Graduate Accountant Water Quality Officer ANNUAL REPORT 2009–10

Graduates bring fresh perspective to water industry

Our organisation is proud to have three graduates as part of our team, contributing to the secure and efficient management and delivery of South East Queensland’s water supplies. A well-documented issue of skills shortages is an emerging risk for the Australian water industry. The effects of a diminishing labour supply require a concerted effort and investment in the attraction, recruitment, development and retention of young, highly-skilled workers. We are currently establishing a whole-of-Grid Skills Formation Strategy, to further attract workers to the sector and promote the development of industry practice, education and training offerings.

Quality assurance This includes the introduction Risk Register and is reviewed and governance of new debt reduction initiatives and monitored until each audit We successfully achieved a key focused on forward borrowing recommendation is completed. objective of our strategic and to lock in access to funding, and Progress reports are provided operational plans at the beginning favourable interest rates and quarterly to the Audit and Risk of the year, when we received cash flow management to reduce Management Committee. drawdowns on loan funding. AS/NZS ISO 9001:2008 Implementation of our accreditation for our quality Introduction of a document organisational SEQ Water Grid assurance processes. disposal and retention scheme Risk Management Framework A number of new initiatives or to ensure we maintain our (Risk Management Framework) enhanced processes, aimed at records in accordance with including monitoring and achieving effective corporate relevant legislation. reporting on our risk mitigation governance, were developed and strategies to the Board. Implementation of a new Audit introduced, including: Register to effectively track Introduction of a Compliance Enhanced assessment and and monitor compliance with Register, which assists us in monitoring of the organisation’s internal and external audit managing our legislative and financial risk in conjunction recommendations. The Audit regulatory requirements. with the Queensland Treasury Register operates as part of our Corporation. SEQ WATER GRIDSEQ MANAGER WATER

Whole-of-Grid capability In addition, the SEQ Water Grid CEOs’ A Capability Framework for our Enhancing the capability of the SEQ Forum approved Phase one of the functional areas and business will be Water Grid is critical to an efficient, Skills Formation Strategy, analysing developed and we will standardise cost effective future. A common the current workforce skills and our work practices and operating vision, aligned goals and coordinated demographic profile of SEQ Water procedures within our Quality systems and processes are critical Grid entities and identifying the factors Assurance Framework. impacting skills requirements over the to achieving this. Some of the Phase two of the Skills Formation next five years. Commencement of actions implemented to enhance this Strategy will commence to support Phase two of this Strategy was also capability are detailed below: building the capacity and resilience approved. This second phase will of the SEQ Water Grid. Phase Hosting the Vision 2020 workshop focus on preparation of a Workforce two will focus on the preparation to establish a 10 year operating and Capability Development Plan, of a Workforce and Capability vision for the SEQ Water Grid involving the development of standard Development Plan, involving the with the Chief Executives and roles with core competencies, establishment of an ongoing Chairs of the Grid Service supported by TAFE and university workforce planning and development Providers. Key outcomes courses to deliver nationally model, identification of whole-of- from this workshop included recognised training courses. a confirmed commitment to Grid Occupational Pathways and a a whole-of-Grid Information, Competency Framework. During this Communication and Technology Outlook for 2010–11 phase we will commence the design Strategy and Workforce Plan to of the skills development initiatives As part of our ongoing focus improve the overall efficiency of including contemporary training on implementing whole-of-Grid the SEQ Water Grid operation. modules in common competency technology outcomes, we will areas, and a SEQ Water Grid A study into the capacity and implement the SEQ Water Grid Graduate Development Program. capability of laboratory services Emergency Management Information Some of these initiatives will be in South East Queensland to and Communication Technology aligned to nationally recognised identify potential issues around Solution, and the SEQ Water Grid qualifications with the aim of future access to these services Governance, Risk and Compliance delivering them in partnership with and to ensure quality assurance Information and Communication the higher education and vocational requirements are met. Technology Solution. education and training sector. A SEQ Water Grid careers marketing and We will also commence the phased promotional campaign will also be implementation of the Technology initiated. Strategy. ANNUAL REPORT 2009–10

Laboratory Capacity and Capability Study

A South East Queensland Laboratory Capacity and Capability Study was completed in 2009–10, involving a review of 13 Grid Participant organisations, 21 laboratories and 68 different types of water quality tests. This Study found current routine laboratory testing demand is about one third of the maximum available capacity and that testing requirements over the next one to three years would rise by approximately 20 per cent. Thus, routine water quality testing demand can be catered for within existing laboratory capacity. However, microbiological testing capacity was found to be the most limited, with only 17 per cent spare capacity. The Study recommended that Grid Participants procure laboratory services under contractual arrangements with associated service level agreements to ensure adequate response to testing needs. It also recommended that Government-owned laboratories consider rationalising their services to address staffing issues and improve knowledge sharing opportunities. SEQ WATER GRIDSEQ MANAGER WATER

Corporate governance

The SEQ Water Grid Manager is To ensure compliance with our Our Board a statutory authority established statutory responsibilities, we under the South East Queensland undertake a rigorous reporting Chair Water (Restructuring) Act 2007. It regime. We report on our operations Gary Humphrys is governed by a Board of Directors to our stakeholders through a range Members reporting to Ministers of the of channels, including: Gordon Jardine Queensland Government. this Annual Report Dr David Cunliffe In 2009–10, the responsible Teresa Dyson the annual Market Rules review Ministers were: Jamie Quinn the quarterly System Operating the Treasurer and Minister for Plan review Responsibilities Employment and Economic Under the Board charter, the Development the Quarterly Report against the Board’s key responsibilities and strategic and operational plans the Minister for Natural activities are to: Resources, Mines and Energy the Quarterly Report against the approve strategic and and Minister for Trade. State Borrowing Program operational plans We prepared a five year Strategic monthly reports to the Minister. provide guidance on the Plan and an annual Operational opportunities to strengthen the Plan reflecting our strategic direction operation of the SEQ Water Grid and business priorities. These plans serve as a performance contract ensure the establishment of with our responsible Ministers. an appropriate framework for the operation of the SEQ Water Grid, in particular; terms of contractual arrangements, performance and reporting Attendance obligations The Board met 11 times during 2009–10.

Member Number eligible Number attended to attend Gary Humphrys 11 11 Gordon Jardine 11 11 Dr David Cunliffe 11 11 Teresa Dyson 11 10 Jamie Quinn 11 11 ANNUAL REPORT 2009–10

approve and monitor the ensure effective communications Responsibilities progress of major contracts and with stakeholders The Audit and Risk Management capital expenditure communicate results and Committee assists the Board in delegate authority for the performance outcomes to the discharging its financial and risk operation of our organisation to responsible Ministers and other governance responsibilities. It the Chief Executive Officer and stakeholders. oversees the financial reporting Executive Management Group, processes that ensure the accuracy, In undertaking its responsibilities where appropriate transparency and integrity of and activities, the Board promotes reported financial information. appoint the Chief Executive a culture of the highest ethical Officer and Senior Executives standards, has implemented a Under the Committee’s Charter, the Code of Conduct and embraced the Committee’s roles and responsibilities review and evaluate the Chief values developed by our staff. relate to the following: Executive Officer’s performance financial management policies promote an efficient and and internal control system effective operation and pricing Audit and Risk structure Management preparation of the annual financial statements ensure the establishment of Committee a monitoring regime for our audit process, undertaken Chair Compliance Framework by internal audit and the Jamie Quinn Queensland Audit Office ensure the establishment of Members a monitoring regime for an Gary Humphrys appropriate Risk Management Teresa Dyson Framework

Attendance The Audit and Risk Management Committee met four times in 2009–10.

Member Number eligible Number attended to attend Jamie Quinn 4 4 Gary Humphrys 4 4 Teresa Dyson 4 4 SEQ WATER GRIDSEQ MANAGER WATER

effectiveness and outputs of the Our Board members Gordon Jardine audit function, including reports Deputy Chair and recommendations Gary Humphrys Gordon Jardine is the Chief effectiveness of our Chair Executive Oficer of Powerlink organisation’s risk management Gary Humphrys was an inaugural Queensland, which owns, develops system Board member and Deputy Chair in and operates the high voltage 2008–09. On 1 July 2009, he was electricity grid in Queensland. He development of the Risk appointed as Chair, thus continuing has held this position since 1995, Management Framework to help lead our organisation in its and during his tenure, Powerlink our organisation’s risks and formative years. has grown its asset base from $1.3 the implementation of risk billion to $6 billion. Gary is a Chartered Accountant and mitigations a graduate of the Australian Institute Gordon is the Chairman of Grid process for monitoring of Company Directors. Australia, the representative compliance with laws, body for the owners of Australia’s He has a strong background regulations, internal standards electricity transmission networks, in finance, treasury and risk and policies. and Chairman of ElectraNet SA, management with over 30 years the South Australian electricity In addition, the Committee experience in the mining and energy transmission utility. He is also a oversees the development and industries, both in the public and foundation member of the System implementation of our Risk private sectors. Gary has held a Reliability Panel of the National Management Plan. number of other Board appointments Electricity Market. to corporations in the mining, energy In May 2010, the Committee and health industries. Gordon brings to our Board a strong conducted an assessment of background in commercial business the achievement of its roles and in implementing utility industry and responsibilities as set out in reforms. He holds bachelor degrees the Committee’s Charter. The in engineering and commerce, and Committee determined that it had a masters degree in environmental successfully achieved its roles and science. He is a Fellow of the responsibilities for 2009–10, with Australian Institute of Company the exception of the process for Directors, Australian Institute of monitoring compliance, which was Management and the Australian under development at the time. This Academy of Technological Sciences is due for completion in 2010–11. and Engineering. ANNUAL REPORT 2009–10

Dr David Cunliffe Teresa Dyson Jamie Quinn Member Member Member David Cunliffe is the Principal Water Teresa Dyson is a partner with Jamie Quinn is a former Quality Adviser with the South Blake Dawson. Teresa is a Commissioner of the Queensland Australian Department of Health. leading practitioner in taxation Water Commission and was a He has over 25 years experience in law, particularly in relation to the member of our inaugural Board. dealing with public health aspects of taxation of financial arrangements, He has extensive local government drinking water and recycled water. infrastructure and public-private experience and specialist knowledge partnership developments, leasing, in sustainable development, including David has contributed to a range and debt/equity. water and transport infrastructure. of national and international For more than 30 years, he held guidelines including Australian Teresa has tertiary qualifications executive positions on councils and World Health Organization in arts, law, taxation and applied throughout Queensland. Jamie was guidelines for drinking water quality finance, and brings to our Board the Chief Executive Officer of Ipswich and use of recycled water. He is a wealth of knowledge from the City Council for 16 years to 2006. a member of the World Health financial, government and not-for- He is a senior associate of the Eidos Organization’s Drinking Water profit sectors. Institute, a Fellow of the Australian Quality Committee, the National Institute of Company Directors and Health and Medical Research a Fellow of the Local Government Council’s Water Quality Advisory Managers Australia. Committee and the Joint Steering Committee for the Australian Jamie was the 2005 recipient of Guidelines for Water Recycling. the Queensland Local Government Managers Australia Award for Excellence in Leadership and Management. SEQ WATER GRIDSEQ MANAGER WATER

Executive Susan Middleditch Scott Denner Management Group Director, Finance and Acting Director, Operations Corporate Services Scott joined our team in July 2009. Barry Dennien Susan came to us from His previous roles, including Head Chief Executive Officer Commerce Queensland, where of Department (Security, Risk and Formerly the Executive Director, she was General Manager of Compliance) for G4S in London, Regional Planning and Policy for Internal Operations. Susan is an have seen him gain extensive the Queensland Water Commission, accountancy graduate and Certified knowledge across areas including Barry was responsible for the draft Practising Accountant. risk management, business South East Queensland Water continuity management and Susan has international experience Strategy and system operation plans business process improvement. as a senior policy advisor with for the new SEQ Water Grid. Scott is a Graduate of the Royal New Zealand Treasury, has held Military College and is a Certified Barry has been instrumental in accounting roles for a range of Practising Risk Manager. Scott holds establishing our organisation, businesses and worked in senior a Bachelor of Management and leading us during our formative executive levels within Queensland Professional Studies and an Associate phase and guiding the development Government, with a focus on Diploma of Personnel Administration. of our foundation operations, major infrastructure projects. processes and values. Susan is a graduate of the Mt Eliza Barry has qualifications in Business School and is a member engineering and an MBA in of the Australian Institute of International Business, together Company Directors. with 28 years experience in water industry operations and planning, and a successful track record of managing commercial enterprises in the tourism industry. ANNUAL REPORT 2009–10

Our people

The SEQ Water Grid Manager’s Workforce profile Our core skill sets include: workforce is highly skilled and water operations professional. We are committed to We have an established team delivering on our mission through with extensive experience in both hydraulic and hydrology our expertise in the strategic, water operations and business modelling operational and commercial aspects management. financial management of water delivery. We had provision in our 2009–10 emergency management We employ a select team of water organisational structure for 20 planning industry professionals and other full-time equivalent staff. By the specialists to achieve our core end of 2009–10, we had filled 16 water quality of these positions. The remaining business objectives. Where skills system reliability engineering are required outside of our core four positions were either recruited area of focus, we contract in on a part-time basis or filled by risk management appropriately skilled contractors. professionals for specific projects business development and to ensure high quality outcomes contract negotiation for these projects and their role within the SEQ Water Grid. communications and policy information technology. 48 SEQ WATER GRID MANAGER

Our organisational structure

ANNUAL REPORT 2009–10

Workforce statistics through its formation and manage To achieve high-level workplace During 2009–10, our workforce its ongoing operational requirements satisfaction, we reinforce our gender balance shifted from into 2009–10. values through our leadership. Our organisation values are : 54 per cent female full-time In 2009–10, our organisational equivalent staff in 2008–09, structure expanded to include innovation to 56 per cent male at the end seven additional roles and skill sets delivering value of June 2010. Our permanent not in existence in our first year of retention rate remained almost the operation. We continue to monitor motivation same at 81 per cent compared to our workforce requirements at the adaptability 85 per cent in 2008–09. professionalism. Number Percentage of We demonstrate and encourage workforce innovation, professionalism and Women 7 44 adaptability in our day-to-day Men 9 56 operations. We continually focus on delivering value to our customers Permanent retention rate 13 81 and the South East Queensland Permanent separation rate 3 19 community. We encourage our people to actively and collaboratively manage Workforce Planning Executive Management Group level, the complex requirements of change recruiting new staff or engaging within our evolving workplace. Framework contractors as required by any Workforce planning forms an emerging operational and business To deliver the desired outcomes, we integral part of our organisation’s needs. It is anticipated our workforce need to retain skilled and motivated corporate planning process, to will continue to expand throughout people who want to be part of the ensure our business objectives can 2010–11, as our organisation organisation and the business of be delivered successfully through evolves and the need for new skill managing our water supplies. We do the appropriate allocation of skilled sets are identified. this, in part, through a Performance human resources. Planning and Evaluation Framework Workforce retention that recognises and rewards staff, In 2008–09, our Executive and turnover and supports their ongoing learning Management Group developed needs and aspirations. a Workforce Plan to guide the We have built a culture of open establishment of our organisation’s engagement across all levels of the In 2009–10, we provided corporate people. Its focus was to establish a organisation. We actively encourage training opportunities to our people small team of specialist professionals input and innovation at all levels, in the areas of writing, editing and to successfully steer the organisation and promote a team approach to project management. In addition, our business and operations. many of our people attended SEQ WATER GRIDSEQ MANAGER WATER

professional and supervisory Team charter – further tele-commuting courses offered externally. Two details the expected actions flexible start and finish times. of our people are undertaking of our staff under our values further tertiary level study and are system, including leveraging Our healthy staff program includes supported in this as required. of collective wisdom, doing providing staff with access to what we say we will, acting as influenza vaccinations and health Key workforce polices one, communicating openly information. and honestly and providing We have established policies to Employment conditions a challenging workplace with ensure we have a safe workplace, Our people are employed under opportunities for growth and and these policies include: the South East Queensland Water work/life balance. (Restructuring) Act 2007 and a Freedom from Harassment Code of Conduct – outlines remunerated under the State and Violence Policy the expected manner in which Government Departments Certified staff will conduct themselves in a Grievance Policy Agreement, to which we became a relation to the law, other persons, signatory in June 2010. a Workplace Health and Safety conflicts of interest, resource Policy Our values and how we act allocation and usage, and how any breaches will be managed. an Employee Assistance Policy. We value, actively support and promote a fair, safe and ethical Every new staff member receives an work environment. We are induction on these policies and they committed to the highest standards are reinforced regularly through our of integrity, honesty, ethical day-to-day operation. behaviour and accountability. Workplace health and safety To ensure our people understand We recognise that happy and their responsibilities and carry them healthy people mean better out with respect and integrity, we services for our customers through have the following policies in place: greater productivity and reduced Values – outlines the expected absenteeism. behavioural elements of our We promote flexible working organisation’s operation. arrangements, to allow staff to balance work and family commitments such as: ANNUAL REPORT 2009–10

Glossary

Alkalinity Total measure of the acid-neutralising compounds within water. Australian Drinking Water Developed by the National Health and Medical Research Council in Guidelines 2004 collaboration with the Natural Resource Management Ministerial Council. The Australian Drinking Water Guidelines 2004 incorporates the Framework for the Management of Drinking Water Quality and provides the Australian community and the water supply industry with guidance on what constitutes good quality drinking water. The SEQ Water Grid Manager measures water quality provided to its customers against these guidelines. Balanced scorecard Process of managing and measuring operational performance considering all aspects of service delivery, including provision of water security, operational efficiency, customer and stakeholder satisfaction and innovative and capable culture and systems. Bulk water Water supplied from dam, desalination and recycled sources by a Grid Service Provider to the SEQ Water Grid Manager for sale to Grid Customers. Conductivity Electrical conductivity (often shortened to ‘conductivity’) is a measurement used to approximate the concentration of total dissolved solids in water. Refer to total dissolved solids below. Desalinated water Salt water converted to drinking water through a process involving reverse osmosis membranes. Distribution Service A person or organisation who distributes water supplied by a declared Grid Provider Service Provider to a customer. E. coli ‘Escherichia coli’ – a bacterial species found in the gut of warm blooded animals that can be detected in the water supply. It is used as an indicator of faecal contamination. Fluoride A chemical ion added to the water supply to reduce tooth decay. Grid Customer A person or organisation that purchases water supplied by a declared water service provider from the SEQ Water Grid Manager and is registered as a Grid Customer under the Market Rules. Grid Instructions Directions issued by the SEQ Water Grid Manager to optimise SEQ Water Grid operating performance and water supply security. Grid Participant A Grid Service Provider, Grid Customer or Distribution Service Provider. SEQ WATER GRIDSEQ MANAGER WATER

Grid Service Provider The Queensland Bulk Water Supply Authority trading as Seqwater, the Queensland Bulk Water Transport Authority trading as LinkWater and the Queensland Manufactured Water Authority trading as WaterSecure, who supply declared water services to the SEQ Water Grid Manager and are registered as Grid Service Providers under the Market Rules. Hardness ‘Hard’ water is caused primarily by the presence of dissolved calcium and magnesium salts. LinkWater The Queensland Government statutory authority responsible for the management, operation and maintenance of drinkable bulk water pipelines and related infrastructure throughout South East Queensland. Metals Elements including aluminium, copper, iron, lead and manganese. Megalitre One million litres. pH Measures the strength of an acid or base in water. Purified recycled water Wastewater that has been purified to a standard that is ready for consumption under the Australian Drinking Water Guidelines 2004. Raw water Raw water that has not yet been treated by a Grid Service Provider. Rules Administrator The Queensland Water Commission has been appointed as the Rules Administrator for the purposes of the Market Rules. SEQ South East Queensland. SEQ Distributor-Retailer Local government level organisations responsible for the distribution of water supplies to customers, replacing previous individual council management of this function. Seqwater South East Queensland’s bulk water supply provider, delivering innovative and efficient management of catchments, water storages and treatment services, to ensure the quantity and quality of the region’s water supplies. SEQ Water Grid The SEQ Water Grid is a network of treatment facilities and existing pipelines. It moves water from selected sources across the region to where it is needed most. ANNUAL REPORT 2009–10

SEQ Water Grid Manager The Queensland Government statutory authority responsible for managing the strategic operation of the SEQ Water Grid. The SEQ Water Grid Manager holistically manages the water supply chain and capacity to deliver water to Grid Customers while maintaining regional water security for the South East Queensland community. Total dissolved solids Measures the combined content of all inorganic and organic substances, including salt, contained in water in molecular, ionised or micro-granular suspended form. Total trihalomethanes Chemical compounds present in drinking water, principally as the result of disinfection using chlorination. Chlorine, when added to water, can react with naturally occurring organic material to produce trihalomethanes. Treated water Water that has undergone a cleansing process to a standard that is ready for consumption under the Australian Drinking Water Guidelines 2004. Turbidity Fine, suspended particles present in water, including natural matter such as clay, silt, plankton and other microscopic organisms. Can make water appear ‘cloudy’ or ‘hazy’. WaterSecure Queensland Manufactured Water Authority, supplying a new source of water to South East Queensland through its desalination plant and water recycling scheme. Water security Management of the water supply to meet the demands of current and future population growth and climate change across the South East Queensland region.

Water transfers Moving water around the SEQ Water Grid. Whole-of-Grid Refers to the collaboration of the organisations with unique functions that complement each other in operating the SEQ Water Grid. SEQ WATER GRID MANAGER Financial statements 2009–10 ANNUAL REPORT 2009–10

Contents

56 57 58 59 General Statement of Statement of Statement of information comprehensive financial position changes in equity income

60 61 85 86 Statement of Notes to and Management Independent cash flows forming part of the certificate auditor’s report financial statements SEQ WATER GRIDSEQ MANAGER WATER

General information

These financial statements A description of the nature of provide information on the the SEQ Water Grid Manager’s financial activities of the operations and its primary activities SEQ Water Grid Manager. are included in the notes to the financial statements. The SEQ Water Grid Manager is a not-for-profit Queensland For information in relation to the Government statutory body SEQ Water Grid Manager’s Financial established under the South East Report please call +61 7 3247 3012, Queensland Water (Restructuring) email [email protected] or Act 2007. visit www.seqwgm.com.au. The head office and principal place Amounts shown in these financial of business of the SEQ Water Grid statements may not add to the correct Manager is: sub-totals or totals due to rounding. Level 15, 53 Albert Street Brisbane QLD 4000 Statement of comprehensive income For the year ended 30 June 2010 ANNUAL REPORT 2009–10

57 Statement of financial position As at 30 June 2010 SEQ WATER GRIDSEQ MANAGER WATER

58 Statement of changes in equity For the year ended 30 June 2010 ANNUAL REPORT 2009–10

59 Statement of cash flows For the year ended 30 June 2010 SEQ Water Grid Manager Statement of cash flows For the year ended 30 June 2010

Notes 2010 2009

SEQ WATER GRIDSEQ MANAGER WATER $’000 $’000

60 Cash flows from operating activities Inflows: User charges 346,281 211,011 Grants and other contributions 46,131 - Interest received 406 246 GST input tax credits received 56,867 27,725

Outflows: Employee expenses (2,268) (1,675) Supplies, services and other (762,727) (525,120) GST remitted to Australian Taxation Office (1,775) (1,058) Other (265) (33)

Net cash flows used in operating activities 18 (317,350) (288,904)

Cash flows from investing activities Inflows: Security deposit 10 - Outflows: Payments for intangibles (49) (198)

Net cash flows used in investing activities (39) (198)

Cash flows from financing activities Inflows: Borrowings 328,247 290,700

Net cash flows provided by financing activities 328,247 290,700

Net increase in cash held and cash equivalents 10,858 1,598 Cash and cash equivalents at beginning of financial 1,719 121 year

Cash and cash equivalents at end of financial year 9 12,577 1,719

The accompanying notes form part of these financial statements.

5 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

Objectives and principal activities of the SEQ Water Grid Manager

Note 1 Summary of significant accounting policies ANNUAL REPORT 2009–10

61 Note 2 Other revenue

Note 3 Employee expenses

Note 4 Supplies and services

Note 5 Depreciation and amortisation

Note 6 Finance/borrowing costs

Note 7 Other expenses

Note 8 Income tax

Note 9 Cash and cash equivalents

Note 10 Trade and other receivables

Note 11 Other current assets

Note 12 Plant and equipment

Note 13 Intangible assets

Note 14 Trade and other payables

Note 15 Accrued employee benefits

Note 16 Other financial liabilities

Note 17 Other liabilities

Note 18 Reconciliation of operating deficit to net cash from operating activities

Note 19 Financial instruments

Note 20 Commitments

Note 21 Recognition of leasehold incentive

Note 22 Going concern

6 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

Objectives and principal activities of the SEQ Water Grid Manager The SEQ Water Grid Manager’s key objective is to manage the operation of the SEQ Water Grid in the SEQ WATER GRIDSEQ MANAGER WATER most efficient and effective manner; consistent with the South East Queensland System Operating 62 Plan, The Market Rules SEQ Water Market, and associated legislative and regulatory requirements. The SEQ Water Grid Manager is involved in the purchase of bulk water services and the sale of bulk water.

The SEQ Water Grid Manager is a not-for-profit entity, and does not own infrastructure assets but holds the urban water entitlements for South East Queensland. The SEQ Water Grid Manager makes strategic and operational decisions that are based on ensuring water is produced and moved to where it is needed most, at the least possible cost, rather than based on a proprietary interest in infrastructure assets.

1. Summary of significant accounting policies (a) Statement of compliance The SEQ Water Grid Manager has prepared these financial statements in compliance with section 42 of the Financial and Performance Management Standard 2009.

The financial statements have been prepared in accordance with Australian Accounting Standards. In addition, the financial statements comply with the Queensland Treasurer's Minimum Reporting Requirements for the year ending 30 June 2010, and other authoritative pronouncements of the Australian Accounting Standards Board.

These financial statements constitute a general purpose financial report.

With respect to compliance with Australian Accounting Standards and Interpretations, the SEQ Water Grid Manager has applied those requirements applicable to not-for-profit entities. Except where stated, the historical cost convention is used.

(b) The reporting entity The SEQ Water Grid Manager is a not-for-profit Queensland Government statutory body established under the South East Queensland Water (Restructuring) Act 2007 and became a separate legal entity on 2 May 2008.

The financial statements include the value of all revenues, expenses, assets, liabilities and equity of the SEQ Water Grid Manager. The SEQ Water Grid Manager does not control any other entity.

(c) User charges User charges and fees controlled by the SEQ Water Grid Manager are recognised as revenue after services are delivered. User charges and fees are controlled by the SEQ Water Grid Manager where they can be deployed for the achievement of the SEQ Water Grid Manager’s objectives. User charges shown in these financial statements represent the revenue derived through selling bulk water to regional councils, power stations and other industrial and rural customers.

(d) Grants and other contributions Grants, contributions, donations and gifts that are non-reciprocal in nature are recognised as revenue in the year in which the SEQ Water Grid Manager obtains control over them. Where grants are received that are reciprocal in nature, revenue is accrued over the term of the funding arrangements.

7 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

Included in revenue for grants received in 2009–10, is $52,391,000 from Queensland Treasury. This additional ongoing revenue stream is for the return of competitive neutrality fees that have been paid by the Grid Service Providers, as Queensland Government statutory bodies to Queensland ANNUAL REPORT 2009–10 Treasury. 63

(e) Cash and cash equivalents For the purpose of the statement of financial position and statement of cash flows, cash assets include all cash and cheques receipted but not banked as at 30 June 2010 as well as deposits at call with financial institutions.

(f) Trade and other receivables Trade debtors are recognised at the nominal amounts due at the time of sale or service delivery. Settlement of these amounts is required within 20 business days from invoice date.

The collectability of receivables is assessed periodically and if required a provision will be made for impairment. For 2009–10, no provision has been deemed necessary.

(g) Acquisitions of assets The actual cost of the asset is used for the initial recording of all non-current physical and intangible asset acquisitions. Cost is determined as the value given as consideration plus costs incidental to the acquisition, including all other costs incurred in getting the assets ready for use. Any training costs are expensed as incurred.

Assets acquired at no cost or for nominal consideration, other than from an involuntary transfer from another Queensland Government entity, are recognised at fair value at the date of acquisition in accordance with AASB 116 Property, Plant and Equipment.

(h) Plant and equipment Items of plant and equipment with a cost or equivalent value in excess of $5,000 are recognised in the year of acquisition. Items with a lesser value are expensed as incurred.

Items of plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.

The cost of replacing part of an item of plant and equipment is recognised in the carrying amount of the item if it is probable that future economic benefits embodied within the part will flow to the SEQ Water Grid Manager and can be reliably measured. The cost of day-to-day maintenance of plant and equipment is recognised in the statement of comprehensive income as incurred.

(i) Intangibles Intangible assets with a cost or other value greater than $100,000 are recognised in the financial statements. Items with a lesser value are expensed as incurred. Each intangible asset is amortised over its estimated useful life to the SEQ Water Grid Manager, less any anticipated residual value. The residual value is zero for all the SEQ Water Grid Manager's intangible assets.

It has been determined that there is no active market for any of the SEQ Water Grid Manager's intangible assets. As such, the assets are recognised and carried at cost less accumulated amortisation and accumulated impairment losses.

8 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

(j) Amortisation and depreciation of intangibles and plant and equipment Plant and equipment is depreciated on a straight-line basis so as to allocate the net cost or revalued SEQ WATER GRIDSEQ MANAGER WATER amount of each asset, less its estimated residual value, progressively over its estimated useful life to 64 the SEQ Water Grid Manager.

Intangible assets under construction (work-in-progress) are not amortised until they reach service delivery capacity.

Any expenditure that increases the originally assessed capacity of the service potential of an asset is capitalised and the new depreciable amount is depreciated over the remaining useful life of the asset to the SEQ Water Grid Manager.

For each class of depreciable asset the following depreciation and amortisation rates are used:

Class Rate % Plant and equipment Computers and communications 33.33 Furniture, fixtures and fittings 15 Leasehold improvements 12 Office equipment 30

Amortisation Amortisation is recognised on a straight-line basis over the estimated useful life of the asset less any anticipated residual value from the date the intangible is available for use. The residual value for the SEQ Water Grid Manager’s intangible assets is zero.

Class Rate % Intangible assets Internally generated software 20

(k) Impairment of non-current assets All non-current physical and intangible assets are assessed for indicators of impairment on an annual basis. If an indicator of possible impairment exists, the SEQ Water Grid Manager determines the asset's recoverable amount. Any amount by which the asset's carrying amount exceeds the recoverable amount is recorded as an impairment loss.

The asset's recoverable amount is determined as the higher of the asset's fair value less costs to sell and depreciated replacement cost.

An impairment loss is recognised immediately in the statement of comprehensive income.

(l) Trade and other payables Trade creditors are recognised upon receipt of the goods and services ordered and are measured at the agreed purchase or contract price, gross of applicable trade and other discounts. Amounts owing are unsecured and are generally settled on 30 day terms.

9 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

(m) Financial instruments Recognition Financial assets and financial liabilities are recognised in the statement of financial position when the ANNUAL REPORT 2009–10 SEQ Water Grid Manager becomes party to the contractual provisions of the financial instrument. 65

Classification Financial instruments comprise cash and cash equivalents; trade and other receivables; loans and borrowings; and trade and other payables.

Other Trade and other receivables, other financial liabilities, and trade and other payables are measured at amortised cost using the effective interest rate method less any impairment losses.

Any borrowing costs are added to the carrying amount of the borrowing to the extent they are not settled in the period in which they arise. All interest incurred on the SEQ Water Grid Manager’s borrowings are capitalised.

The SEQ Water Grid Manager does not enter into transactions for speculative purposes or hedging purposes.

All disclosures relating to the measurement basis and financial risk management or other financial instruments held by the SEQ Water Grid Manager are included in note 19.

Impairment A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the original effective interest rate.

All impairment losses are recognised in the statement of comprehensive income.

(n) Employee benefits Wages, salaries, recreation leave and sick leave Wages, salaries and recreation leave due but unpaid at the reporting date represent present obligations resulting from employees' services and are recognised in the statement of financial position at the remuneration rates expected to apply at the time of settlement. Payroll tax and workers' compensation insurance are a consequence of employing employees, but are not counted in an employee's total remuneration package. They are not employee benefits and are recognised separately as employee related expenses. Employer superannuation contributions, annual leave and long service leave accruals are regarded as employee benefits.

For unpaid entitlements expected to be paid within 12 months, the liabilities are recognised at their undiscounted values. For those entitlements not expected to be paid within 12 months, the liabilities are classified as non-current liabilities and recognised at their present value, calculated using yields on Fixed Rate Commonwealth Government bonds of similar maturity.

10 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

Prior history indicates that on average, sick leave taken each reporting period is less than the entitlement accrued. This is expected to continue in future periods. Accordingly, it is unlikely that SEQ WATER GRIDSEQ MANAGER WATER existing accumulated entitlements will be used by employees and no liability for unused sick leave 66 entitlements is recognised.

As sick leave is non-vesting, an expense is recognised for this leave as it is taken.

Long service leave The SEQ Water Grid Manager provides for long service leave liability for all employees on the following basis: - Employee with 5–7 years service, long service leave is recognised at 95% of the total liability. - Employee with greater than 7 years service, long service leave is recognised at 100% of the total liability.

The SEQ Water Grid Manager’s net obligation in respect of long service leave is the amount of future benefit that employees have earned in return for their service in the current and prior periods.

For unpaid long service leave entitlements expected to be paid within 12 months, the liabilities are recognised at their undiscounted values. For those entitlements not expected to be paid within 12 months, the liabilities are classified as non-current liabilities and recognised at their present value, calculated using yields on Fixed Rate Commonwealth Government bonds of similar maturity.

Superannuation Employer superannuation contributions are paid to QSuper, the superannuation plan for Queensland Government employees, at rates determined by the State Government. Contributions are expensed in the period in which they are paid or payable. The SEQ Water Grid Manager’s obligation with regard to employees is limited to its contributions to QSuper.

No liability is recognised for accruing superannuation benefits in the financial statements. The liability is held on a whole-of-Government basis and reported in the financial report prepared pursuant to AASB 1049 Whole of Government and General Government Sector Financial Reporting.

Board members superannuation contributions are paid to their nominated fund. Contributions are expensed in the period in which they are paid or payable. The SEQ Water Grid Manager’s obligation with regard to Board members is limited to its contributions to the nominated fund.

Executive remuneration The executive remuneration disclosures in the employee expenses note (note 3) in the financial statements include: - The aggregate remuneration of all senior executive officers (including the Chief Executive Officer) whose remuneration for the financial year is $100,000 or more. - The number of senior executives whose total remuneration for the financial year falls within each successive $20,000 band, commencing at $100,000.

11 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

The remuneration disclosed is all remuneration paid or payable, directly or indirectly, by the SEQ Water Grid Manager or any related party in connection with the management of the affairs of the SEQ Water Grid Manager or any subsidiaries. For this purpose, remuneration includes: ANNUAL REPORT 2009–10 - wages and salaries 67 - accrued leave (that is, the increase/decrease in the amount of annual and long service leave owed to an executive, inclusive of any increase in the value of leave balances as a result of salary rate increases or the like) - performance pay paid in relation to the financial year, provided a liability exists (namely a determination has been made prior to the financial statements being signed), and can be reliably measured - accrued superannuation (being the value of all employer superannuation contributions during the financial year, both paid and payable as at 30 June 2010) - car parking benefits and the cost of motor vehicles, such as lease payments; fuel costs; registration and insurance; repairs and maintenance; and fringe benefits tax on motor vehicles incurred by the SEQ Water Grid Manager during the financial year, both paid and payable as at 30 June 2010, net of any amounts subsequently reimbursed by the executives - housing, being the market value of the rent or rental subsidy, where rent is part-paid by the executive during the financial year, both paid and payable as at 30 June 2010 - allowances (which are included in remuneration agreements of executives, such as airfares or other travel costs paid to/for executives whose homes are situated in a location other than the location they work in) - fringe benefits tax included in remuneration agreements.

The disclosures apply to all senior executives appointed by the Board and classified as SES1 and above, with remuneration above $100,000 in the financial year. 'Remuneration' means any money, consideration, or benefit but excludes amounts in payment of reimbursement of out-of-pocket expenses incurred for the benefit of the SEQ Water Grid Manager.

In addition, separate disclosure of separation and redundancy/termination benefits payments is included.

(o) Finance/borrowing costs Finance costs are recognised as an expense in the period in which they are incurred. Finance costs include interest on bank overdrafts, finance lease charges and ancillary administration charges.

Borrowing costs are capitalised into the base level of the loan. Borrowing costs include long term borrowings and working capital facilities provided by the Queensland Treasury Corporation.

(p) Insurance The SEQ Water Grid Manager’s non-current physical assets and other risks are insured through the private insurance market with premiums being paid on a risk assessment basis. In addition, the SEQ Water Grid Manager pays premiums to WorkCover Queensland in respect of its obligations for employee compensation and provides Directors’ and Officers’ insurance to the SEQ Water Grid Manager’s Board members and officers.

(q) Leases Operating lease payments are representative of the pattern of benefits derived from the leased assets and are expensed in the period in which they are incurred.

12 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

(r) Taxation The SEQ Water Grid Manager pays Fringe Benefits Tax and Goods and Services Tax as required by SEQ WATER GRIDSEQ MANAGER WATER Commonwealth legislation. 68 i) Tax equivalents The SEQ Water Grid Manager makes tax equivalent payments on its taxable income to the Queensland Government. These taxation payments are made pursuant to Section 62 of the SEQ Water (Restructuring) Act 2007. These payments are administered by the Australian Taxation Office under the National Tax Equivalent Regime. The National Tax Equivalent Regime broadly utilises the provisions of the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 and associated legislation, as well as rulings and other pronouncements by the Australian Taxation Office, in order to determine the tax payable by the SEQ Water Grid Manager. The SEQ Water Grid Manager is not required to maintain a franking account.

ii) Income tax Income tax expense comprises current tax payable and deferred tax. Income tax expense is recognised in the statement of comprehensive income except to the extent that it relates to items directly in equity, in which case it is recognised in equity.

Current tax equivalents is the expected tax equivalents payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment in respect of previous years.

Deferred tax equivalent is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for temporary differences occurring from the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss or differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantially enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be released simultaneously.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(s) Issuance of financial statements The financial statements are authorised for issue by the Chairman and Director, Finance and Corporate Services at the date of signing the Management Certificate.

13 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

(t) Judgements and assumptions The preparation of the financial statements requires management to make judgements and assumptions that affect the application of accounting policies and the reported amounts of assets, ANNUAL REPORT 2009–10 liabilities, revenues and expenses. Estimates and underlying assumptions are reviewed on an ongoing 69 basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected.

The SEQ Water Grid Manager has made no judgements or assumptions that may cause a material adjustment to the carrying amounts of assets, liabilities, income or expenses within the next reporting period.

(u) Rounding and comparatives Amounts included in the financial statements are in Australian dollars and have been rounded to the nearest $1,000 or, where that amount is $500 or less, to zero, unless disclosure of the full amount is specifically required.

Comparative information has been restated where necessary to be consistent with disclosures in the current reporting period.

(v) New and revised accounting standards The SEQ Water Grid Manager did not voluntarily change any of its accounting policies during 2009–10. The new or amended Australian Accounting Standards that were applicable for the first time in 2009–10 financial year and that had a significant impact on the SEQ Water Grid Manager’s financial statements are detailed below.

The SEQ Water Grid Manager complied with the revised AASB 101 Presentation of Financial Statements as from 2009–10. Pursuant to the change of terminology used in the revised AASB 101, the balance sheet is now re-named to the statement of financial position, and the cash flow statement has now been re-named to the statement of cash flows. The former income statement has been replaced by the statement of comprehensive income.

The SEQ Water Grid Manager is not permitted to adopt a new accounting standard ahead of the specified commencement date unless approval is obtained from Queensland Treasury. Consequently, the SEQ Water Grid Manager has not applied any Australian Accounting Standards and Interpretations that have been issued but are not yet effective. The SEQ Water Grid Manager will apply these standards and interpretations in accordance with their respective commencement dates.

2010 2009 $’000 $’000 2. Other revenue

Interest 369 273 Other 11 - Total 380 273

14 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

3. Employee expenses 2010 2009 $’000 $’000 SEQ WATER GRIDSEQ MANAGER WATER Employee benefits 70 Wages and salaries 1,559 1,291 Annual leave* 179 187 Employer superannuation contributions* 214 124 Long service leave* 26 69 Other employee benefits 107 43

Employee related expenses Workers’ compensation premium** 6 2 Payroll tax** 90 21 Other employee related expenses 138 161 Total 2,319 1,898

*Employer annual leave, superannuation contributions and long service leave are regarded as employee benefits.

**Costs of workers' compensation insurance and payroll tax are a consequence of employing employees and are not included in employee's total remuneration package. They are not employee benefits, but rather employee related expenses.

The number of employees as at 30 June 2010 including both full-time and part-time employees measured on a full-time equivalent basis is:

2010 2009 Number of employees: 16 13

Executive remuneration The number of senior executives who received total remuneration of $100,000 or more:

2010 2009 $200,000 to $219,999 1 - $240,000 to $259,999 - 2 $260,000 to $279,999 1 - $320,000 to $339,999 - 1 $440,000 to $459,999 1 - Total 3 3

2010 2009 $’000 $’000 Total remuneration of executives shown above* 929 821

* The amount calculated as executive remuneration in these financial statements includes the direct remuneration received, as well as items not directly received by senior executives, such as the leave accruals and fringe benefits tax paid on motor vehicles. This amount will therefore differ from advertised executive remuneration packages which do not include the latter items.

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4. Supplies and services

2010 2009 ANNUAL REPORT 2009–10 $’000 $’000 71 Water services purchases* 658,013 596,706 Consultants and contractors 3,082 1,445 Service providers 672 498 Travel and accommodation 22 23 Supplies and consumables 130 76 Other 48 234 Total 661,967 598,982

*Under the South East Queensland Water (Restructuring) Act 2007, the SEQ Water Grid Manager is responsible for the efficient operation of the SEQ Water Grid. In undertaking these duties, the SEQ Water Grid Manager contracts with other State Government water entities for the storage, treatment, transportation and manufacture of water.

5. Depreciation and amortisation

Depreciation and amortisation were incurred in respect of:

2010 2009 $’000 $’000 Plant and equipment 12 9 Leasehold improvements* 102 43 Internally generated software 89 60 Total 203 112

*Refer to note 21

6. Finance/borrowing costs

2010 2009 $’000 $’000 Interest 24,152 3,495 Borrowing costs 532 175 Total 24,684 3,670

16 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

7. Other expenses

SEQ WATER GRIDSEQ MANAGER WATER 2010 2009 72 $’000 $’000 External audit fees* 65 30 Internal audit fees 122 58 Insurance 196 181 Miscellaneous 64 4 Board expenses 265 63 Total 712 336

*Total external audit fees relating to the 2009–10 financial year are estimated to be $54,900 (2009 $50,000). There are no non-audit services included in this amount.

8. Income tax

There is no income tax expense for 2010 (2009: nil).

Reconciliation between tax expense and pre-tax operating result:

2010 2009 $’000 $’000 Operating result before income tax (284,475) (354,089)

Prima facie income tax effect using tax rate of 30% (2009: 30%) (85,343) (106,227) Tax effect of current year tax losses for which no deferred tax asset 85,293 106,227 was recognised Under/(over) provided in prior periods 50 - Total - -

Deferred tax assets have not been recognised in respect of unrecognised deferred tax assets:

2010 2009 $’000 $’000 Deductible temporary differences 300 74 Tax effect of current year tax losses 191,354 106,153 Offset of deferred tax liabilities (218) - Total 191,436 106,227

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these because it is not probable that future taxable profit will be available against which the SEQ Water Grid Manager can utilise the benefits. The aggregate amount of deferred tax assets not recognised at 30 June 2010 was $191,436,000 (2009: $106,227,000).

17 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

9. Cash and cash equivalents

2010 2009 ANNUAL REPORT 2009–10 $’000 $’000 73 Imprest accounts 1 1 Cash at bank 12,576 1,718 Total 12,577 1,719

Cash held during 2010 earned between 2.85% and 4.35% (2009: 2.85% to 7.1%).

10. Trade and other receivables

2010 2009 $’000 $’000 Trade debtors 49,141 40,842 GST receivable 4,422 8,037 Interest receivable 13 39 Grants receivable 6,260 - Total 59,836 48,918

11. Other current assets

2010 2009 $’000 $’000 Prepayments 23 20 Total 23 20

12. Plant and equipment

2010 2009 $’000 $’000 Plant and equipment at cost 858 858 Less: accumulated depreciation (166) (52) Total 692 806

The leasehold incentive component of plant and equipment has been restated for 2009 in note 21. Plant and equipment is valued at cost in accordance with Queensland Treasury's Non-Current Asset Policies for the Queensland Public Sector.

18 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

2010 Plant and equipment reconciliation Plant and equipment Leasehold incentive Total SEQ WATER GRIDSEQ MANAGER WATER $’000 $’000 $’000 74 Carrying amount at 1 July 2009 31 775 806 Acquisitions - - - Depreciation (12) (102) (114) Carrying amount at 30 June 2010 19 673 692

2009 Plant and equipment reconciliation Plant and equipment Leasehold incentive Total $’000 $’000 $’000 Carrying amount at 1 July 2008 29 - 29 Acquisitions 11 818 829 Depreciation (9) (43) (52) Carrying amount at 30 June 2009 31 775 806

13. Intangible assets

2010 2009 $’000 $’000 Internally generated software at cost 445 397 Less: accumulated amortisation (148) (60) Total 297 337

The SEQ Water Grid Manager has developed a contracts and settlements system to assist in the management of its Grid Contracts. This system was developed in-house and the costs associated with the development of the system have been capitalised and are reported as an intangible asset. This system has been in use since August 2008 and has been amortised during the current financial year. This asset will be amortised on a straight-line basis over the period of expected benefit to the SEQ Water Grid Manager, namely five years. The system has undergone further development in the current financial year which has captured data in accordance with the Market Rules SEQ Water Market.

Expenditure on research activities relating to internally-generated intangible assets is recognised as an expense in the period in which it is incurred.

The water entitlements received by the SEQ Water Grid Manager on 1 July 2008 represent an intangible asset under the requirements of AASB 138 Intangible Assets. The restructure of water arrangements in South East Queensland resulted in the transfer of the water entitlements from existing holders to the SEQ Water Grid Manager on 1 July 2008 which represented a contribution under the requirements of AASB 1004 Contributions. AASB 1004 requires a contribution to be recognised by a not-for-profit entity as income at the fair value of the contribution received or receivable. The water entitlements have a fair value of $nil.

19 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

Intangible asset reconciliation

Internally generated software ANNUAL REPORT 2009–10 Generated Work in Progress Total 75 2010 2009 2010 2009 2010 2009 $’000 $’000 $’000 $’000 $’000 $’000 Carrying amount at 1 July 337 - - 199 337 199 Acquisitions 48 198 - - 48 198 Transfers between classes - 199 - (199) - - Amortisation (88) (60) - - (88) (60) Carrying amount at 30 June 297 337 - - 297 337

14. Trade and other payables

2010 2009 $’000 $’000 Trade creditors 63,176 110,030 GST payable 167 106 Total 63,343 110,136

15. Accrued employee benefits

2010 2009 $’000 $’000 Current Annual leave 189 138 Long service leave - 16 Total 189 154

Non-current Long service leave 81 62 Total 81 62

16. Other financial liabilities

2010 2009 $’000 $’000 Current Queensland Treasury Corporation borrowings 244 1,823 Security deposit 10 - Total 254 1,823

Non-current Queensland Treasury Corporation borrowings 648,858 294,348 Total 648,858 294,348

No assets have been pledged as security for any liabilities.

20 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

A working capital facility and a long-term debt facility have been established with the Queensland Treasury Corporation, and are available for use in future periods. The working capital facility of $70 SEQ WATER GRIDSEQ MANAGER WATER million (2009: $8.5 million) was available during the year along with a long-term debt facility of $550 76 million (2009: $541.5 million) for 2009–10 to meet the operating costs of the SEQ Water Grid.

All borrowings are denominated in Australian dollars and carried at amortised cost.

The facility interest rate applied during 2009–10 was 3.05% to 4.55% (2009: 3.05% to 7.30%).

The fair value of the SEQ Water Grid Manager’s borrowings at 30 June 2010, as notified by the Queensland Treasury Corporation, was $666,551,090 (2009: $290,949,895). The Queensland Treasurer has approved a borrowing allocation of $404 million for the SEQ Water Grid Manager under the 2010–11 State Borrowing Program.

17. Other liabilities

2010 2009 $’000 $’000 Current Lease incentive 102 102 Total 102 102

Non-current Lease incentive 571 673 Total 571 673

18. Reconciliation of operating deficit to net cash from operating activities

2010 2009 $’000 $’000 Operating loss (284,475) (354,089)

Depreciation and amortisation expense 203 112 Lease incentive (102) (43) Queensland Treasury Corporation loan interest and borrowing 24,684 3,670 expense

Change in assets and liabilities (Increase)/decrease in trade debtors (8,299) (40,842) (Increase)/decrease in GST input tax credits receivable 3,615 (7,975) (Increase)/decrease in interest receivable 26 (27) (Increase)/decrease in grant receivable (6,260) (Increase)/decrease in prepayments/other (3) 49 Increase/(decrease) in trade creditors (46,854) 110,020 Increase/(decrease) in accrued employee benefits 54 174 Increase/(decrease) in GST payable 61 106 Increase/(decrease) in other payables - (59) Net cash from operating activities (317,350) (288,904)

21 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

19. Financial instruments

(a) Categorisation of financial instruments ANNUAL REPORT 2009–10 The SEQ Water Grid Manager has the following categories of financial assets and financial liabilities: 77

2010 2009 Category Notes $’000 $’000

Financial assets Cash and cash equivalents 9 12,577 1,719 Trade and other receivables 10 59,836 48,918 Other current assets 11 23 - Total 72,436 50,637

Financial liabilities Trade and other payables 14 63,343 110,136 Other financial liabilities 16 649,112 296,171 Other liabilities 17 673 775 Total 713,128 407,082

(b) Financial risk management The SEQ Water Grid Manager’s activities expose it to financial risks – interest rate risk, credit risk, liquidity risk and market risk.

Financial risk is managed pursuant to Government and the SEQ Water Grid Manager’s financial policies. These policies seek to minimise potential adverse effects on the financial performance of the SEQ Water Grid Manager.

All financial risk is managed by the Chief Executive Officer under policies approved by the Board.

The SEQ Water Grid Manager measures risk exposure using a variety of methods as follows:

Risk exposure Measurement method Credit risk Ageing analysis, earnings at risk Liquidity risk Maturity analysis Market risk Interest rate sensitivity analysis

(c) Credit risk exposure Credit risk exposure refers to the situation where the SEQ Water Grid Manager may incur financial loss as a result of another party to a financial instrument failing to discharge their obligation.

The maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the gross carrying amount of those assets inclusive of any provisions for impairment.

The following table represents the SEQ Water Grid Manager’s maximum exposure to credit risk based on contractual amounts net of any allowances:

22 of 29 Notes to and forming part of the financial statements 2009–10 SEQ Water Grid Manager Notes to and forming part of the financial statements 2009–10

19. Financial instruments

SEQ WATER GRIDSEQ MANAGER WATER (a) Categorisation of financial instruments 78 The SEQ Water Grid Manager has the following categories of financial assets and financial liabilities: