-
Sydney Water Annual Report 2009
About Sydney Water: Chairman and Managing Director's review
 
As part of our aim to reduce carbon emissions by 60% by 2012, we are generating hydroelectricity from wastewater flows.

Thomas Parry

Thomas G Parry
Chairman

Kerry Schott

Kerry Schott
Managing Director

 

 

-

In this section:

 

-

Faced with major external and internal changes during 2008–09, Sydney Water achieved full Operating Licence compliance, successfully delivered its largest capital program and carried out a major refresh of staff accommodation.

During 2008–09

With highly variable rainfall in the catchments and a growing population, Sydney can no longer rely only on dam water storages. To increase the water supply, Sydney Water has almost finished building a desalination plant, continued to increase the volume of recycled water and helped households and businesses to use water efficiently.

Construction of the desalination plant and pipeline was almost half of the $1.7 billion capital expenditure program. The plant will begin providing water this summer.

The volume of water recycled increased to 27 billion litres a year. Sydney is on track to recycle 70 billion litres of wastewater a year by 2015.

Late in the year, with dam storage levels steady at around 60%, the NSW Government introduced Water Wise Rules to replace drought restrictions. The rules are simple, common sense, everyday actions to save water.

Investment also continued on renewing water and wastewater infrastructure and building services for growth areas.

Sydney Water continued to fully meet its Operating Licence targets to protect public health and environment and system performance standards, while controlling expenditure.

Sydney Water’s revenue was $1,958 million, about $89 million below budget. The shortfall was due to lower demand for water and regulated developer charges being abolished. Operating costs were $1,027 million. These were well contained and $43 million below budget.

The consolidated net profit after tax was $178 million, which was $194 million below budget. This result was caused by the lower revenue and a large asset impairment charge. Interest costs and depreciation were below budget.

Borrowing costs were kept under control during the financial crisis as Sydney Water’s debt portfolio was actively managed to take advantage of the liquidity provided by the Federal Government guarantee. Suppliers of key inputs, such as chemicals used in water and wastewater treatment, were severely affected by the financial crisis and supplies to us were constrained and costs increased significantly.

Also due to the financial crisis, increasing numbers of customers needed help to pay their bills. There was a 25% increase in the number of requests for instalment or deferred payment arrangements. The number of Payment Assistance Scheme vouchers issued by welfare agencies, worth $25 each, increased by 15.7% to 17,550.

Sydney Water is one of the largest energy users in NSW, consuming almost one per cent of the state’s electricity. As part of our aim to reduce carbon emissions by 60% by 2012, we are generating hydroelectricity from wastewater flows. Biogas from wastewater is also being converted to electricity through state-of-the-art cogeneration technology. This year, we achieved our target of a 24% reduction in greenhouse emissions.

The rupture of a critical water main in Bellevue Hill, and subsequent collapse of a section of roadway, highlighted some problems with our information systems. As a result, we did not visit the correct site when the leak was first reported. Since then, the job-allocation system has been updated to ensure crews are sent to the correct location. New field leak detection procedures are being implemented, with priority given to mains located in potential land slip areas.

Trade waste discharges have caused serious corrosion to sewerage pipes in the Smithfield area. Over the past year, six local companies with large discharges significantly reduced their trade waste. Four of these companies agreed to major upgrades of their own wastewater treatment plants.

Over 60% of Sydney Water’s 3,153 staff moved from 1950s conditions into modern, open plan and environmentally sustainable buildings. This included moving the head office to a new building in Parramatta, relocating staff to modern facilities in Liverpool and Coniston and refurbishing and building new depots. Emphasis was placed on co-locating groups to improve overall efficiency in operations.

With a new field technology system introduced late in 2007–08, field crews began receiving job requests via wireless computers. This allowed crews to attend jobs more quickly and achieved annual efficiencies of $2.4 million.

A review found that combining all operating and maintenance business units could improve service to customers. Staff were reorganised into Operations and Maintenance divisions and, in a two-year change program, they are working on better coordination of day-to-day operations and maintenance functions.

For the first time, staff had no new lost time injuries for five months during the year. However, a staff member was seriously injured when a pipe containing sodium hypochlorite burst. This led to a review of chemical storage at all facilities. In the same period, contractor lost time injuries increased, despite our intensive work with them to improve safety.

Our focus continued to be on improving workforce capability through training and development, apprenticeships and traineeships and a graduate program. During the year, Sydney Water took on four mechanical and two electrical apprentices, keeping the total at 24 apprentices. We welcomed four new water industry trainees who are working to complete their two-year traineeship. Applications for graduate positions increased from 1,500 in 2007–08 to 2,280 in 2008–09. This year, Sydney Water recruited 38 graduates.

In 2009–10

Sydney Water is planning to ensure water, wastewater and recycled water systems can meet customer demands and deliver services when needed in all major growth areas. The capital works budget for the coming year is over $1.14 billion and includes:

  • completing the plant and distribution pipelines of the desalination project
  • completing NSW Government programs, mainly the Priority Sewerage Program and Replacement Flows, Sydney's largest water recycling project
  • renewing and rehabilitating assets to meet regulated system performance standards and customer service levels
  • constructing new water, wastewater, recycled water and stormwater infrastructure to meet the needs of urban growth in the northwest and southwest of Sydney
  • implementing new regulatory standards such as wastewater system performance under environmental protection licences
  • realising business efficiencies such as information technology, energy efficiency and energy generation projects.

From 2010–11, capital expenditure will decline and then stabilise at around $700 million a year, in real terms; the level needed for normal growth and asset replacement.

The campaign to increase the community’s understanding of the four main parts of the Metropolitan Water Plan: dams, recycling, desalination and water efficiency, will continue. The NSW Government is updating the plan to factor in new information such as population growth and potential impacts from climate change. The update will be released in 2010.

By 2015, recycling will provide 12% of greater Sydney’s water needs. The desalination plant can provide up to 15% of the water supply. Sydney Water has designed the plant so it can be upgraded to twice its size, if there’s a prolonged drought.

A variety of water efficiency initiatives, together with the community continuing to be water wise, will save about 24% of Sydney's water needs by 2015.

Eight hydroelectricity and gas cogeneration plants are due for completion in late 2009. Together with three existing plants, they will generate around 22% of Sydney Water’s energy.

Greenhouse gas emissions will be reduced by about 80,000 tonnes a year. This is equivalent to over 15% of total emissions and supports Sydney Water’s aim to be 100% carbon neutral for energy and electricity use by 2020.

The NSW Government has granted the first licences under the Water Industry Competition Act, which encourages competition to help secure Sydney’s water supply. Veolia Water Australia and Aquanet Sydney are making significant progress on the Rosehill/Camellia Recycled Water Project, which will initially deliver 4.3 billion litres of recycled water a year to local industry by 2011.

The consolidation of staff accommodation will continue in 2009–10 by:

  • redeveloping the Potts Hill reservoir site into a modern operations headquarters and warehouse for around 450 office and field staff
  • building a new depot at Daceyville
  • refurbishing of staff facilities at several sewage treatment plants, Liverpool and Ryde depots and at the West Ryde laboratory.

Stage 2 of the new field technology system will be introduced so staff can access updated network maps, safety information and work instructions from the field.

As part of the NSW Government’s strategy to streamline plumbing and drainage regulation, Sydney Water’s Plumbing Inspections and Assurance Services team will transfer to the Office of Fair Trading in early 2010.

Thank you

We would like to thank the Board, management and especially the staff for their continued dedication and hard work. This has been a year of very solid performance amidst some major changes.

Yours sincerely

Thomas G Parry signature Kerry Schott signature
Thomas G Parry
Chairman
Kerry Schott
Managing Director

For more information on our Board structure, please see the Corporate governance section.