annual report - parliament of nsw · hunter water is a statutory state owned corporation (soc). as...

Annual Report

2002 - 03

3

3

4

4

5

5

6

7

8

9

10

11

12

14

16

19

24

27

29

letter to ministers

about hunter water

chairman’s message

managing director’s message

financial overview

board of directors

objectives & regulatory requirements

regulatory instruments

operating licence performance

pricing structure

corporate structure

water supply & wastewater network

our customers

our community

our employees

our operations

our futurerisk management

waste reduction

energy efficiency

demand and supply management

environmental management

hunter water australia

regional land management corporation

CONTENTSchichester trunk main

outdoor tap timer

low-flow showerhead

standard water meter

20mm standpipe

HUNTER WATER CORPORATION ANNUAL REPORT 2002-03 3

LETTER TO MINISTERS

OCTOBER 2003

The Hon Michael Egan MLCTreasurerLevel 33 Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

The Hon John Della Bosca MLCSpecial Minister of State and Assistant TreasurerLevel 33 Governor Macquarie Tower1 Farrer PlaceSYDNEY NSW 2000

Dear Treasurer and Minister

REPORT OF PERFORMANCE FOR YEAR ENDED 30 JUNE 2003

We are pleased to submit the Annual Report of Hunter WaterCorporation covering the year ended 30 June 2003 forpresentation to Parliament.

The Annual Report was prepared in accordance with Section 24Aof the State Owned Corporations Act 1989 and the Annual Reports(Statutory Bodies) Act 1984.

The Financial Statements for 2002-03, which form part of theAnnual Report, have been submitted to and certified by theAuditor-General of New South Wales.

Yours sincerely

Ron RobsonChairman of the Board

David EvansManaging Director

Hunter Water is a State Owned Corporation and the water andwastewater service provider for close to 500,000 people in theLower Hunter Region, with 208,000 properties connected to thewater network and 195,000 to the wastewater network.

Our area of operation covers 5,366km2 in the local Governmentareas of Cessnock, Lake Macquarie, Maitland, Newcastle and PortStephens. In addition, bulk water is supplied to the majority ofDungog Shire and to small areas in Singleton and the Great Lakes.

We also provide provide some stormwater services to the peopleof the Lower Hunter, with close to 100km of stormwater channelsin the Newcastle, Lake Macquarie and Cessnock areas.

Hunter Water delivers more than 200 million litres of water a dayusing assets worth about $2 billion. Our raw water sources are:Grahamstown Dam 152,000 ML; Chichester Dam 21,500 ML;Tomago Sandbeds 60,000 ML; and Anna Bay Sandbeds 16,000 ML.

We collect, treat and then deliver drinking water to our customersand then safely transport, treat and dispose of the region’swastewater. The water supplied to customers meets the mostrecent guidelines for drinking water set by the National Healthand Medical Research Council.

The community’s wastewater is treated and clear effluent isdischarged to waterways or reused where it is economically andenvironmentally beneficial.

OUR AIMContinuous improvement in being commercially successful and indelivering value-for-money water, wastewater and associatedservices in an environmentally responsible way.

OUR VALUES• Culture of continuous improvement• High levels of customer satisfaction• Sustainable environmental performance• Responsible management in delivering regulatory compliance• A valued, skilled and competitive workforce• A commercially successful, efficient and growing business

OUR REGULATORSHunter Water operates within a framework regulated by:

• IPART (Independent Pricing and Regulatory Tribunal), whichaudits and administers the Corporation’s Operating Licence.IPART sets customer service standards, including drinking waterquality. IPART also sets the prices we charge for our services.

• EPA (Environment Protection Authority), which licenses theoperations of our wastewater facilities and monitors andinvestigates all associated environmental issues.

• DIPNR (Department of Infrastructure, Planning and NaturalResources), which provides a Water Management Licence toextract water from surface and groundwater sources.

• DoH (Department of Health), which through a Memorandumof Understanding, establishes procedures for communicatingresults of our water quality monitoring programs.

ABOUT HUNTER WATER

ANNUAL REPORT 2002-03 HUNTER WATER CORPORATION4

CHAIRMAN’S MESSAGE

On behalf of Hunter Water Corporation’s Board of Directors, I ampleased to present the 2002-03 Annual Report.

Hunter Water has continued to maintain a strong commercialperformance while providing high quality water and sewerageservices to the people of the Lower Hunter.

The total operating profit for the year was $34 million and was achieved on core tariff income sales of $124 million. Thiscompared to a total operating profit of $26.3 million and core tariff income of $117.3 million in 2001-02.

The operating result has been reduced by an unfavourableexpense of $8.4 million due to the underperformance of HunterWater’s Defined Benefit Superannuation Funds. This represents asignificant accounting adjustment against the reported results forthe year, broadly consistent with the outcome of a range ofsuperannuation funds in the past 12 months.

Looking back over the past decade, Hunter Water has received netpositive super adjustments of more than $7.5 million.

Hunter Water has a strong underlying financial position with lowlevels of indebtedness.

Based on this year’s outcome and Hunter Water’s ongoing strongfinancial base, the Board of Directors is pleased to recommend adividend of $38 million.

As Chairman of the Board, I am proud to lead an organisationwhich has an established reputation in water industry reform,both at a national and international level.

Our focus for the coming year will be to manage a significantcapital works program which will provide for the renewal of assetsto meet higher standards and future growth in the region.

We will also continue to maintain high levels of customer service,operate in an environmentally responsible manner and furtherdevelop our highly skilled workforce.

As always, I would like to take this opportunity to thank myfellow Directors for their continued support and congratulatemanagement and staff on another successful year.

RON ROBSONChairman

Hunter Water’s fundamental tasks are to:

• Provide water and wastewater services to people in the LowerHunter to a level that meets the community’s expectation, and

• Improve the quality and efficiency of the services we provide.

There are three key areas where the community expects us tobe successful, these being the level of service we provide, ourinteraction with the environment and our operational efficiency.The effectiveness of Hunter Water’s services to the community ismonitored through a comprehensive regulatory framework whichincludes independent auditing of our operations each year.

Some of the major highlights this year included:

• The quality of drinking water and other services provided tocustomers continued to be very high.

• We launched an Integrated Water Resource Plan (IWRP) toprovide a sustainable basis for the region’s long term watersupply. The IWRP builds further on the region’s strong waterconservation record and identifies a range of demandmanagement initiatives, as well as low environmental impactoptions for augmenting supply in the longer term should thatprove necessary.

• The Board endorsed a significant increase in expenditure forour capital program over the next four years. An average $65million will be spent each year to upgrade our capital assetsand improve system performance.

• A new Customer Contract was developed by IPART following anextensive public consultation process. The Customer Contractprovides the terms and conditions under which Hunter Waterprovides water, sewerage, drainage and trade waste services toits customers. It also sets out rights and obligations includingcustomers’ rights in any dispute with Hunter Water.

• The focus of our annual Environment Report changed to aCommunity and Environment Report to reflect our commitmentto sustainability, including the social, economic andenvironmental aspects of our operations.

It has been a very demanding year and once again it waspleasing to see the workforce accept the challenges offered andproduce excellent results. The training and development programthat we have embarked on is proving to be extremely successfuland evident in the strong performance of Hunter Water at alllevels. The results of this performance will be of continuingbenefit to the people of the Hunter.

DAVID EVANSManaging Director

MANAGING DIRECTOR’S MESSAGE


FINANCIAL OVERVIEW

BOARD OF DIRECTORS

ECONOMIC ENTITY 2002-03 2001-02$M $M

Total Revenue 139.90 126.20 Operational Costs 56.80 53.30 Total Operating Profit 34.00 26.30

Dividend 38.00 31.10

Community Service Obligations 8.70 8.60

Total Fixed Assets 2093.00 1997.70

Financial Assets 58.00 71.70

Financial Liabilities 131.70 131.80

Net Debt/(Investment) 73.70 60.10

Capital Expenditure 48.20 53.20

Working Capital Ratio (Times) 0.75 1.52

Real Rate of Return 1.96 1.84

Real Cost Reductions/(Increases) per customer as % -0.80 1.90

before Dividend &Tax but after Contributions for Capital Works

Mr RON ROBSON Mr DAVID EVANS Mr PETER BARRACK Mr ROSS KNIGHTS

Prof JENNY GRAHAM Mr DAVID BOYD Mr DAVID BARNES Mr WARREN ELLIOTT

Two key instruments provide theframework for our business operations:

• The Statement of Corporate Intent setsout our corporate charter, objectivesand business performance targets.

• The Regulatory Framework protects theconsumer and the environment througha set of licences and tools determinedby Government (see diagram below).

STATEMENT OF CORPORATE INTENT

OUR CHARTER

Continuous improvement in beingcommercially successful and in deliveringvalue for money water, wastewater andassociated services in an environmentallyresponsible manner.

OUR OBJECTIVES

Customers and the Environment:

• Maintain a high level of customersatisfaction with service quality andstandards and value for money.

• Ensure Hunter Water takes a proactiverole in disseminating information andraises awareness in the community ofHunter Water’s ongoing strategies androle in society.

• Be responsive to customer/communityexpectations about service standardsand environmental performance.

• Ensure that services are delivered tocustomers in environmentally responsibleways by taking account of the principlesof ecologically sustainable development.

Shareholders and Regulators:

• Achieve the business outcomecommitted to shareholders in HunterWater’s annual Statement of CorporateIntent, including ongoing reductionsin operational costs per property.

• Ensure shareholders and regulatorsare aware of the implications of anynon-commercial objectives establishedby the Government.

• Achieve compliance with Hunter Water’sregulatory instruments, including theOperating Licence, EPA wastewatersystem licences, the Water ManagementLicence and agreements with otheragencies such as the DoH.

• Strengthen our relationship withregulators and work with them toensure that regulation is in the bestinterest of the community.

• Maintain and operate, at minimum totallifetime cost, a system of assets whichprovides the operating capabilityrequired to deliver water, wastewaterand stormwater services of specifiedquantity, quality and reliability.

• Acquire, at minimum total lifetimecost, new assets required to provideessential improvement or expansionof Hunter Water’s operating capability.

The Organisation and its Growth:

• Create a work environment where skillsand attitudes are readily transferableinside and outside Hunter Water.

• Growth capability to sell servicesexternally to:

- achieve further productivity gainswithout risk of eroding Hunter Water’score skill base;

- maintain a strong core of expertisewithin Hunter Water so that it canpurchase operating and capital inputswith a high degree of technicalexpertise and ensure that services areprovided with the latest cost-effectivetechnologies and processes; and

- grow a skilled, experiencedcompetitive workforce.

• Be a leading Australian provider ofspecialist operations and consultancyin water and wastewater management.

RELATIONSHIP WITH GOVERNMENT

Hunter Water is a statutory State OwnedCorporation (SOC). As such, Hunter Wateroperates as a commercial business withthe responsible Government Ministerhaving powers to direct Hunter Waterin certain matters of public interest.

Hunter Water is regulated by the StateGovernment through an OperatingLicence and by IPART, DIPNR and EPA.

A Memorandum of Understanding withNSW DoH is in place covering theadministration of drinking water quality.

Like all enterprises operating in AustraliaHunter Water must also abide by stateand national legislation relevant to itsprocesses and operations.

OBJECTIVES AND REGULATORY REQUIREMENTS


OUR REGULATORY FRAMEWORK

ACCESS TO WATER

Hunter Water’s role is to provide thewater needs of its community whileensuring the maximum protection forthe catchment and its environment onthe community’s behalf.

Hunter Water extracts water from theWilliams River and groundwater sourcesunder extensive conditions set out in alicence issued by DIPNR under theWater Act 1912.

DIPNR can direct Hunter Water tocarry out remedial work should waterextraction activities cause any adverseenvironmental impacts. Penalties of upto $500,000 can be imposed for failingto comply with remedial directions orlicence conditions.

WASTEWATER DISCHARGE

The EPA issues licences under theProtection of the Environment OperationsAct (1997) for each of Hunter Water’s17 wastewater treatment systemscomprising the wastewater transport(pipe) network and treatment plants.

The licences stipulate both quality andquantity conditions for discharge fromeach wastewater treatment works and are reviewed every three years under the legislation.

OPERATING LICENCE

Hunter Water delivers services under anOperating Licence granted by the NSWGovernment. The Operating Licenceprotects consumers by prescribing overallstandards of service that Hunter Watermust meet in relation to the following:

Drinking water qualitysupply of safe drinking water

Water continuityreliable supply of water

Water pressureprovided at a minimum of 20 metreshead at point of connection toHunter Water’s watermain

Wastewater treatmenteffective treatment of wastewater withenvironmentally acceptable dischargeof effluent

Wastewater transportreliable transport of sewage

The Operating Licence also sets outconditions relating to:

• Customer and consumer rights

• Community consultation

• Customer complaint & dispute handling

• Managing water demand and supply

• Environmental managementstrategies/plan

• Publication of environmental indicators

• Annual independent auditing ofoperational performance

IPART has the role of regulator to theurban water sector in NSW as well asresponsibility for setting of prices.

IPART reviewed Hunter Water’s OperatingLicence in the second half of 2001 andearly 2002. IPART’s proposals for a newLicence were reviewed by the Governmentand a new Licence came into effect from1 July 2002. A full copy of this newlicence can be found on our websiteat www.hunterwater.com.au

OPERATING LICENCE PERFORMANCE

Each year an independent audit of HunterWater’s operations is conducted to assessour compliance with the Operating Licence.

IPART is responsible for the annualoperational audit, periodic reviews of ouroperating licence and pricing. In August2003 IPART commissioned ParsonsBrinckerhoff to conduct the operationalaudit for Hunter Water for the period 1 July2002 to 30 June 2003. The audit assessesHunter Water’s performance against servicestandards and other requirements of theOperating Licence listed.

The audit is expected to be completedin December 2003. IPART will make theresults of our Operating Licence auditavailable to the community. Hunter Waterwill make the results available throughits community Consultative Forum andpublic sessions of our Board meetings.

At the time of preparing this report, it isanticipated that the results of the auditwill be made public at the Decembermeeting of the Consultative Forum.

REGULATORY INSTRUMENTS


A 5,000 litre backyard rainwater tank

Belmont Wastewater Treatment Works

OPERATING LICENCE PERFORMANCE


TARGET

• Supply of safe drinking water based onNational Health and Medical ResearchCouncil guidelines.

• >95% of samples free of total coliforms.

• >98% of samples free of faecal coliforms.

• No more than 14,000 properties served willincur discontinuity of water services for morethan five hours duration annually.

• No more than 4,800 customers per annumwill experience a verified low-pressureincident of <20m head as measured atthe point of connection to HunterWater’s watermain.

• Discharges from the wastewater treatmentworks shall meet the discharge standards setby the EPA.

• No more than 6,500 sewage overflow eventsper annum in our area of operations.

• Prepare a Catchment Management Report.

• Develop new Environmental Management Plan(EMP) and Environmental and EcologicallySustainable Development (ESD) Indicators.

• Participate in the Energy Smart BusinessProgram (ESBP) with Sustainable EnergyDevelopment Authority (SEDA).

• Effective customer service in the provisionof good quality drinking water andwastewater services.

PARAMETER

Drinking Water Quality

Drinking Water Continuity

Water Pressure

Wastewater treatment

Wastewater Transport

Environment

Customer Management

PERFORMANCE 2002-03

• The licence requirements have been complied withduring the year for Hunter Water’s area of operations.

• 99.3% of samples were free of total coliforms.

• 99.9% of samples were free of faecal coliforms.

• The licence requirement was met, with 13,966 propertiesnot experiencing interruption of more than five hours.

• The licence requirement was met, with only 2,625properties experiencing a verified low-pressure event.

• Hunter Water operated 17 wastewater works during theyear. Fourteen of these works complied with EPAlicences. Minor exceedances at Burwood Beach andKaruah had no significant impact. Algae growthimpacted on effluent quality at Cessnock.

• The licence requirement was met, with only 2,969sewage overflow events occurring.

• The Catchment Management Report was prepared and isavailable on our website at www.hunterwater.com.au

• The EMP and ESD Indicators were prepared withcommunity input. Progress against the plan andindicators can be found in our Community andEnvironment Report 2002-03 and the ESD IndicatorsReport 2002-03; both are available on our website.

• Hunter Water continued to carry out initiatives as partof the ESBP.

• Hunter Water achieved compliance with the requirementsof the Operating Licence. The 2003 Customer PerceptionSurvey continues previous trends that indicate customersrate Hunter Water’s overall performance very highly, withmore than 90% of domestic and commercial customerssurveyed giving a positive rating.

Footnote: the Operational Audit for 2002-03 is expected to be completed by December 2003.

Hunter Water has been an acknowledgedleader in water price reform in Australiasince the early 1980s. Hunter Water hasmatched substantial real price reductionsfor customers with improved servicestandards and customer satisfaction.

This has been achieved throughsignificant cost reductions, productivityimprovements and a focus on deliveringspecified service levels. Since 1992 ouraverage operating costs per service havefallen by over 40% in real terms.

Over the last eleven years Hunter Waterhas significantly reduced average chargesin real terms. In 2003 a typical residentialcustomer’s water and wastewater bill isthe same as it was in 1992. Other recentpricing outcomes include:

• A reduction of water and sewer pricesfor residential customers in real termsby around 30% since 1991-1992.

• Hunter Water’s prices, under IPART’sprice determination for the three yearsto mid 2003, have been adjusted onaverage by 1.5% less than the rateof inflation each year.

• Pay-for-use water pricing to maintain astrong water conservation signal.

• Continuation of Australia’s firstlocation-based water pricing systemfor major customers.

PRICES - WHO DECIDES?

The prices that Hunter Water charges forits water, sewer and drainage services areset by IPART. One of IPART’s mainresponsibilities is to conduct regularreviews of the costs of Governmentmonopoly services, including watersupply and wastewater services.It must ensure that prices charged forthese services are fair to all customers,ie households, businesses and industry.

IPART takes account of a range offactors, so that prices charged also allowfor the recovery of capital and operatingcosts incurred by Hunter Water inefficiently delivering the standard ofservice required by the community.

PRICE CHANGES IN 2002-03

Price changes in 2002-03 are in line withthe price determination issued by IPARTin 2000 for each of the three years to30 June 2003. The changes in 2002-03are summarised in the table at right.

PRICE CHANGES IN 2003-2004

IPART issued a new price determinationfor Hunter Water on 23 May 2003. Thedetermination sets charges for the LowerHunter for the next two years andprovides an overall price adjustmentmarginally above the Consumer PriceIndex (CPI) for each of those years.

Although there is a small increase inwater usage prices, there is a reductionin the annual water service charge. Theincrease in the usage charge furtherstrengthens the water conservation signalthat has been a feature of Hunter Water’spricing structure since 1982. It alsocomplements the demand managementmeasures in our new Integrated WaterResources Plan, available online atwww.hunterwater.com.au

For sewer charges, the usage componentremains at about the same level. However,there will be a small increase in the sewerservice charge.

IPART has also provided for an increase inthe minimum sewerage charge for homeunits and flats. Until 2000, many flatsand units paid substantially less for sewerservices than houses. IPART’s objective inincreasing this charge for flats and unitsis to bring it closer to (but still less than)that paid by residents living in houses.

IPART estimates that the increase for atypical residential customer in the Hunterwill be less than 50 cents per week. Anaverage household using 210kL per yearwill pay around $555 for its combinedwater and sewer bill in 2003-2004.

With these new prices, a typical customer’sbill is the same today as it was 11 yearsago in 1992. If the 1992 bill increasedwith inflation it would now be around$732 per year, or $177 more than the billtoday. In 1992, the typical annual HunterWater bill was 5% more than the averageweekly wage - now it is around 25% lessthan the average weekly wage.

PRICING STRUCTURE


PRICE CHANGES IN 2002-03Typical household bill: • Down 1% after adjusting for inflation of 2.9%Change in Real Terms: • Equal to a saving of just under $5Water Service Charge: • Increased in line with inflation by 75c to $26.55Water Use Charge: • Increased by 0.9c to 93.9c/kL Sewer Service Charge: • Increased in line with inflationSewer Use Charge: • Up by less than 0.5c per kilolitreStormwater Drainage: • Residential charge rose $3.83 - only affects 20% of customers.

Property-value based charges applying to non-residential customers were reduced by about 7% as part of a program ofreducing reliance on this type of charge.

PRICE CHANGES IN 2003-04Typical household bill: • Up 0.7% after adjusting for inflation of 3.1%Change in Real Terms: • Equal to an increase of less than $4 after inflationWater Service Charge: • Reduced 50c to $26.05, a 5% reduction allowing for inflationWater Use Charge: • Up from 93.9 to 98.0c/kL, a 1% rise allowing for inflationSewer Service Charge: • Rise by about 1% more than the rate of inflationSewer Use Charge: • Rise by 0.8 to 42c/kl, a 1% fall allowing for inflationStormwater Drainage: • Service charges increased by $3.72 per year in areas where

stormwater charges apply. Valuation charges applying tonon-residential customers are reduced by 2% or 5% whenthe effect of inflation is considered.

REAL OPERATING COSTS INDEX COMPARISONSources: Hunter Water Corporation and the Water Services Association of Australia

Note: National figures for 01-02 and 02-03 had not been published by the Water ServicesAssociation (WSA) at the time of production of this report. From 2001 WSA’s comparativestatistics WSAAfacts is published every 2 years rather than annually as in previous years.

The aims and objectives of Hunter Waterare achieved through the core andoperations groups.

CORE GROUP

The functions of the core group are to:

• Manage Hunter Water’s relationshipswith Government, including compliancewith the conditions of the OperatingLicence and other licences grantedby the NSW EPA and DIPNR and theMemorandum of Understanding withNSW DoH.

• Manage Hunter Water’s infrastructurebase consisting of dams, pipe andpumping infrastructure and water andwastewater facilities. This includesmonitoring the condition of assetsand running the water, wastewaterand drainage services competitively bypurchase of services from within HunterWater and from the private sector.

• Ensure effective and efficientmanagement of the water storageand treatment system and wastewatertreatment and discharge facilities.

• Provide financial and employee services.

• Manage the interaction with customersthrough five customer centresthroughout the region and a 24-hourCall Centre, providing a high level ofcustomer focus consistent with theexpectations of customers.

OPERATIONS GROUP

The operations group supplies the coregroup with many of its day-to-day needsat market competitive rates. It performsthe following functions:

• Maintenance of the water supply, sewerand drainage infrastructure includingmaintenance of electrical andmechanical assets.

• Wastewater treatment operations.

SUBSIDIARY COMPANIES

Hunter Water Australia Hunter Water Australia (HWA) providesa range of specialist technical andoperational services to water agencies,councils, industry and urban developers.HWA works in the fields of water,wastewater, stormwater, catchment andenvironmental management. The companycarries out these activities under thefollowing groups:

• Water & wastewater treatment plantprocesses and operations

• Laboratory services

• Water engineering

• Strategic services

• Corrosion engineering

• Geospatial services

Regional Land Management CorporationThe Regional Land ManagementCorporation (RLMC) was created by theNSW Government in March 2003 tomanage the day-to-day activities offormer BHP lands and other crown landin the Lower Hunter region. The RLMC isan interim arrangement to enable theGovernment to consider how to bestmanage this land in the longer term.

The activities of the RLMC are fundeddirectly by the NSW Government inaccordance with the formal provisionsspecified in the SOC Act 1989. Thesubsidiary arrangement ensures that thecost of this activity is transparent andfinancially separate from Hunter Water’swater, wastewater and stormwater business.

One of the major objectives of theRLMC is to assist in the developmentof a specialist entity to develop specificparcels of land in the longer term. Animportant element of this process is toensure that the right balance betweenenvironmental use of the lands andfuture employment opportunities inthe Hunter is created.

CORPORATE STRUCTURE


OPERATIONS

• elec. mech. maintenance• operations & maintenance• wastewater treatment• stores purchasing fleet• admin & support

FINANCE &CORPORATE SERVICES

• finance• employee services• legal & insurance• corporate services• information services• company secretary

COMMUNITYRELATIONS

• corporate communications• customer & contact centres• public affairs• business services• admin & support

PLANNING &DEVELOPMENT

• planning• contracts• assets planning• strategic operations• info technology

CORP PLANNING &GOVT REGULATION

• corporate regulation• compliance & review

BUSINESS & URBANDEVELOPMENT

• business development• urban development• trade waste

MANAGING DIRECTORDAVID EVANSB Ec Hons FAICD

HUNTER WATER CORPORATION ORGANISAT IONAL STRUCTURE 2002-03

HWC SUBSIDIARY COMPANYHunter Water Australia

MANAGING DIRECTOR JIM KEARYB Eng MBA CP Eng FIE Aust FAICD

HWC SUBSIDIARY COMPANYRegional Land Management Corporation

CHIEF EXECUTIVE OFFICER DAVID EVANSB Ec Hons FAICD

KEVIN YOUNGB Eng MBA FIE AustCPENG GAICD

JOHN O’HEARNB Comm FCPA

RUSSELL PASCOEB Eng Dip Com Sci

HELEN VORLICEKB Bus GAICD

SHARON SMITHB Comm ACAASIA GAICD

RAY HINCHEYB Eng M Eng Sc

WATER SUPPLY NETWORK


WATER SUPPLIEDGrahamstown Dam 31,142 MLChichester Dam 27,532 MLTomago Sandbeds 14,845 MLAnna Bay Sandbeds 3,224 MLLemon Tree Passage 888 ML

WATER NETWORK Treatment Works 6Water Connections 205,000Water Mains System 4,400 kmWater Reservoirs 73Pumping Stations 77

MAJOR WWTWs POP. SERVEDBurwood Beach 170,000Belmont 85,000Edgeworth 43,000Boulder Bay 40,000Morpeth 35,000Toronto 25,000Farley 20,000Shortland 20,000Cessnock 20,000Raymond Terrace 20,000Kurri 17,000

WASTEWATER NETWORK Treatment Works 17Sewer Connections 192,225Sewer Mains System 4,870kmPump Stations 366

WASTEWATER NETWORK

SERVING OUR CUSTOMERSACHIEVEMENTS IN 2002-03

• Implemented the new OperatingLicence, which included a range ofenhanced customer service provisions.

• Participated in the IPART review of ourCustomer Contract. The reviewculminated in the NSW Governmentissuing a new Customer Contract inSeptember 2003. The Contract specifiesthe rights and obligations of customersand Hunter Water.

• Expanded options for customers whomay be dissatisfied with aspects of ourservices by joining the Energy & WaterOmbudsman of NSW (EWON).

• Introduced a Code of Debt andDisconnection which clearly outlines tocustomers their rights and obligationsin regard to account payments.

• Developed the framework for a PaymentAssistance Scheme for customers infinancial hardship.

A NEW OPERATING LICENCE

We commenced the 2002-03 year witha new Operating Licence that is now inplace until mid 2007. The OperatingLicence protects our customers byprescribing standards of service that wemust meet, particularly in relation to thewater and sewerage systems. A full copyof the Operating Licence is availableonline at www.hunterwater.com.au

In addition to the water supply andsewerage system performance standards,the new Licence has enhanced theprotection provided to customers withthe inclusion of a range of provisionsrelating to our customer interactions. This includes specific provisions relatingto debt and disconnection, complaintand dispute handling, as well as arange of public reporting requirements.

As with the previous Operating Licence,our performance against all provisionsof the Licence will continue to beindependently audited each year.

The operational audit of our 2002-03performance against Operating Licencerequirements was underway at the timeof compiling this report.

CUSTOMER CONTRACT REVIEW

The key aspects of how we will interactwith customers in the provision of water,sewerage and drainage services areoutlined in the Customer Contract.

The Contract, which is a schedule to theOperating Licence, is a deemed contractthat applies to all customers withproperty connected to a watermain ora sewermain owned by us. It sets outcustomers’ rights and obligations, andwhat they can expect from us in thedelivery of services.

In 2002-03 IPART reviewed the CustomerContract. Their review included therelease of an Issues Paper, and a publicconsultation phase during whichinterested stakeholders were invited toprovide comment. We made a submissionto the review outlining key strategicmatters considered important indeveloping a new contract. IPARTcompleted the review and formallysubmitted the Customer Contract to theState Government for approval. Thecontract was approved by the Governorof NSW and became effective from1 September 2003.

Overall, the new Customer Contractformat is simple for our customers andstaff to understand and use. It clearlyoutlines customers’ rights and obligations,and sets out the minimum standards ofservice that they can expect. Matterscovered by the Customer Contract includethe services we will provide, billing andpayments, debt and restriction of services,redress and account rebates, maintenanceresponsibilities and complaints handling.Visit www.hunterwater.com.au to obtain afull copy of our Customer Contract.

ENERGY & WATER OMBUDSMAN

Hunter Water joined the Energy & WaterOmbudsman of NSW (EWON) on 1 July2002. It is always our preference to dealwith our customers directly, particularlywhen there are issues that are causingdissatisfaction. However, we recognisethat there may be some instances wherewe are unable to reach agreement withcustomers or where customers may wishto seek external assistance. Access toEWON’s services provides these customerswith an independent, external review ofthe reasonableness or otherwise of ouractions or decisions - the service is freeof charge to customers.

In 2002-03 EWON investigated a total of58 complaints from our customers andresponded to 32 enquiries. The latter areusually relatively straightforward mattersinvolving provision of information by EWON,or referral back to us or another agency.Complaints related to a range of issuesand are summarised in the graph below.

The most common category was billing,responsible for 45% of EWON contacts.It is worth noting that billing is generallythe highest category for complaint bycustomers of the other utilities that aremembers of EWON. Billing is a relativelygeneric term covering a range of issuesto do with customer accounts, includingdisputed high consumptions, arrears andrestriction/disconnection of supply.

EWON investigation and review processesare highlighting areas where our servicescan be improved. These include ongoingstaff training to facilitate more effectivecommunications with customers at thefirst point of contact, taking ownershipof customer issues and timeliness ofresolving matters.

EWON’s independent review of customerenquiries also assists us to evaluate theeffectiveness of how we communicateour policies, procedures and decisionsto customers.

OUR CUSTOMERS


FINALISED EWON CONTACTS 2002-03(by Operating Licence Category - excluding enquiries)

EWON also provides feedback afterreviewing information received fromcustomers and Hunter Water. This offersanother perspective and can help us toensure our systems and processes arecomparable to best practice.

It is a requirement of our OperatingLicence that we must report to IPARTeach year on the operation of EWON asit relates to our customers. See ourwebsite at www.hunterwater.com.au fora copy of the report for 2002-03.

COMPLAINTS MANAGEMENT

Customer complaints to either HunterWater or EWON assist us in identifyingareas on which to focus to improveservice delivery. A new ComplaintsManagement System (CMS) and wasbrought on-line in May 2002 hasenhanced our capabilities to managecustomer complaints, particularly interms of monitoring and tracking thestatus of matters.

Staff training was conducted acrossHunter Water when the new system wasintroduced, and there have been furtherreminders and updates to staff during2002-03. In the interests of continuousimprovement in complaint management,particular emphasis has been given toensure staff are aware of the importanceof providing timely responses, takingownership of issues, record keeping,appropriate internal escalation andfeedback to customers.

Additional training for Contact Centrestaff was conducted in June 2003 tofurther develop their skills in problemsolving and negotiation. The ContactCentre is the primary interface with ourcustomers, and ongoing coaching incomplaint management is assisting inproviding these staff with new challengesand feedback on their skill development.

This work is also being linked to thefindings from the customer satisfactionsurveys so that staff can see directly thebenefits in terms of improved servicedelivery. For example, we know from ourcustomer satisfaction surveys that keyareas of importance to customers includethe willingness and ability of operatorsto assist and resolve problems, follow upon commitments, empathise and respondin a timely fashion.

In 2002-03 a total of 2983 complaintswere lodged by customers regardingvarious aspects of Hunter Water’sservices. The most common complaintcategory is billing, which accounts foraround 30% of total complaints. Mostbilling complaints relate to matters suchas high consumption, information on theaccount and disputed meter readings.Other complaints include operationalmatters such as water quality, continuityand pressure, restoration of property andnotification of supply interruptions.

CODE OF PRACTICE ON DEBT ANDDISCONNECTION

In 2002-03 we developed a Code ofPractice on Debt and Disconnection.The aim of the Code is to assist thosecustomers in financial difficulty to managetheir ongoing payments commitments sothey can maintain access to water andsewerage services. It also outlines ourapproach to outstanding accounts andprovides information on options that maybe available to customers who are havingtrouble paying their bills. It also explainsthe situation as it applies to tenants. Wesent the Code to all customers with theiraccounts in 2002-03 and it is availableon our website at www.hunterwater.com.au

PAYMENT ASSISTANCE SCHEME

During 2002-03 we developed theframework for a Payment AssistanceScheme, through which nominatedwelfare agencies provide assistance tocustomers who may be experiencingfinancial hardship. The scheme, whichwas introduced on 1 July 2003, operatesalong similar lines to those in place forcustomers of electricity and gascompanies. Customers seeking financialassistance will be assessed by thenominated agencies for eligibility.

The scheme supplements other assistancethat we already provide to customers asoutlined in our Code of practice on Debtand Disconnection. For a brochure visitour website at www.hunterwater.com.au

CUSTOMER RESEARCH

During 2002-03 we canvassed customerand community views on the following:

Customer Satisfaction:We have an ongoing programme ofrandomly selecting customers who havehad contact with us through either ourtelephone service or our field operators.The aim is to gain their views on theirservice experience, so we can identifyareas where we can improve our servicedelivery. We use the results of thesesurveys each quarter to communicate tofrontline staff issues that are importantto customers in their dealings with us.Staff value this, particularly when theycan identify positive trends that resultfrom their initiatives.

Community Perceptions:Since 1988 we have conducted a majorsurvey of residential and non-residentialcustomers selected at random to find outtheir views on a range of aspects relatingto our operations. These include overallperformance, pricing, environmentalperformance, and water and seweragesystem performance. These surveys arenow conducted biennially. The 2003survey involved 500 face-to-faceinterviews (with 350 residential and150 non-residential customers).

Preliminary results indicate overallperformance levels remain strong, withmore than 90% of customers ratingHunter Water favourably.

Focus Groups:In April 2003 we engaged a researchcompany to conduct focus group researchin three local government areas (Maitland,Newcastle and Lake Macquarie) to gainan insight into community views andawareness levels of demand managementissues. We are using the information toassist in developing community awarenessstrategies and marketing plans for ourIntegrated Water Resource Plan (IWRP).

Omnibus Survey:In March 2003 we participated in theHunter Valley Research Foundation’sregional Omnibus Survey to gaugecommunity awareness of the waterconservation campaign conducted overthe summer of 2002-03. Of key interestwas recollection of messages and themedia source that people heard or sawthe campaign through. Findings indicatedthat two in five people could recall theThink Twice campaign messages, andthat the majority saw it on television.

OUR CUSTOMERS


Customer feedback at a community event

WORKING WITH THE COMMUNITYACHIEVEMENTS IN 2002-03

• We conducted a water conservationcampaign during summer to remindthe community that water is a valuableresource and they need to use it wisely.

• We researched customer and communityattitudes on a range of matters relatingto Hunter Water’s activities.

• We consulted with the community onimportant projects.

WATER CONSERVATION CAMPAIGN

While the Lower Hunter region did notexperience drought conditions to thesame extent as much of NSW, we didrecognise the increasing effect of thedrought and sought to raise communityawareness of the need to conserve waterand to use water wisely.

We launched a community awarenesscampaign in early December 2002 toencourage people to be careful abouttheir use of water. The campaign utilisednewspapers, radio and television, andwas launched to coincide with the startof summer when people were morefocussed on water usage. The campaignhad a dual theme of Think Twice thisSummer (before using water) becauseEvery Drop Counts, and demonstratedeveryday activities where the communitycould save water.

The media campaign was supported bya range of promotional giveaways andcompetitions at community events, aswell as regular storage level updates tolocal media outlets. Analysis at the endof the summer period indicated that peakdaily water consumption for the regionwas 15% less than the previous summer.

CONSULTATIVE FORUM

A Consultative Forum Charter was formallyadopted at the June 2002 meeting. TheCharter was published and is available onHunter Water’s website and at CustomerCentres. The Charter outlines a range ofrequirements on the Forum’s operation:

• The Forum’s general role• Selection criteria for members• How vacancies are filled• Term of membership• Operating procedures/meeting conduct• Types of matters the Forum can consider• How issues are tracked and followed-up• Funding and resourcing

The Consultative Forum met four timesduring the year – in October andDecember 2002, and April and June2003. We provided formal agendas andreport papers for all meetings on keyoperating, environmental and communitymatters. Key matters considered by theForum in 2002-03 included:

• The Lake Macquarie and NewcastleSewer System Upgrade Strategies: amajor 10-year upgrade program in thesetwo key catchments which will enhanceservice levels to customers by improvingthe performance of the sewerage systemin heavy rainfall.

• Chichester Dam Remedial Works: a $2.5million project to conform to currentdam safety requirements.

• Annual reports on key performanceareas including:

- bathing beach quality

- trade waste

- effluent and biosolids recycling

- Operating Licence water andwastewater system performance

- environmental performance asoutlined in our Community andEnvironment Report

- odour management (treatmentand transport systems)

- catchment management

• Integrated Water Resource Plan(IWRP):a stakeholder workshop to gaincommunity input into the draft IWRPwas conducted immediately followingthe October 2002 Forum meeting.

• Water Storage and ConservationCampaigns: the status of the Hunter’swater storages, and the impacts of thebushfires experienced in early summer,the good December rainfall that wasreceived, and the water conservationcampaign run over summer months.

• Two-year price path: the outcome ofIPART’s pricing determination for2003-04 and 2004-05.

• Customer Contract review by IPART:Forum members were kept informed ofprogress of the review during 2002-03.

• Environmental Management Plan (EMP):the outcome of the public consultationprocess of Hunter Water’s EMP.

OPEN BOARD

We continued our practice of conductingpublic sessions of the Board of Directors’meeting each month. Meeting agendas areadvertised in the major local newspaper,and the meetings are open to the mediaand the community. The business papersfrom each session are also made available.

SPONSORSHIP

We continued to sponsor a broad rangeof organisations, events and communityprojects that contribute to sustainabilityand environmental awareness.

Organisations sponsored in 2002-03included Landcare, Waterwatch, HunterValley Research Foundation, Hunter SurfLifesaving and The Wetlands Centre. Afull list of our sponsorships for 2002-03is provided in the appendices.

OUR COMMUNITY


Members of the Consultative Forum

Our summer water saving campaign

COMMUNITY CONSULTATION

We consulted with local communities ona range of projects during 2002-03:

Chichester Dam UpgradeIn October 2002 we announced a $2.5million remedial project at ChichesterDam to ensure that the dam conforms tocurrent best practice in dam safety. Thework, to be finished by November 2003,required closing the popular recreationaldestination because construction activityposed a potential risk for visitors.

In recognition of the important role thatthis facility plays in the Dungog area, weconsulted extensively with the Dungogcommunity both in the lead-up to andduring the project. Information sessionswere held with Dungog Councillors andstaff and the Visitor Information Centreand a brochure was provided to explainthe work to interested members of thecommunity. Regular progress reports weregiven to key stakeholders in the area,particularly those in the tourism industry.

Newcastle Wastewater Transport Upgrade This important project is primarily aimedat reducing the amount of stormwaterentering the sewerage system in wetweather. New pipes and pumps will beinstalled to enable the sewerage systemto cope better with the larger flows thatoccur in heavy rainfall. This projectentered the detail design phase duringthe year and information brochures weredelivered to all households along pipelineroutes and in the vicinity of new pumpstations. Consultation will continue duringthis project with customers being advisedof key milestones as they approach.

Fern Bay Sewerage SchemeAfter announcing that the township ofFern Bay would receive sewerage servicesunder the Priority Sewer Program, wedistributed information to the community

outlining details of the scheme includingthe expected completion time. Proposedlocations of pipes and pumps will beprovided to local residents on completionof the detailed design work.

COMMUNITY EVENTS

We are actively involved in organisingand participating in major annual eventssuch as Catchment Day to celebrateNational Water Week each October.We also participated in launching eventssuch as the inaugural Festival of Whalesin Port Stephens. We use local events topromote community ownership andeducate the public about responsibleuse of water resources, for instance,by publicising the Think Twice message.

Events we attended in 2002-03 included:

• Catchment Day• National Maritime Festival• Newcastle Show• Dungog Autumn Festival• Surfest• Tocal Field Days• Festival of Whales

HUNTER WATER PUBLICATIONS

This year we increased the number ofpublications aimed at promoting waterconservation by producing:

• Think Twice posters and bookmarks,distributed to Lower Hunter libraries.

• A brochure about saving water insidehomes and out in the garden. Thesewere distributed at community events.

• A card on how to read water metersand detect leaks was also distributed atcommunity events.

Our regular publications include:

• A quarterly community newsletterSplash, which is distributed to areadership base of 400, through ourcustomer centres and to Lower HunterCouncil’s and local libraries.

• An Annual Report, which is distributedto IPART, Lower Hunter Council’s andother major water authorities.

• A Community and Environment Reportwhich is distributed to IPART, LowerHunter Council’s, other major waterauthorities, Water Services Associationof Australia (WSAA) and universities.

Most publications are accessible on ourwebsite at www.hunterwater.com.au

INFORMATION PRIVACY & PROTECTION

The new Customer Contract informscustomers that we will treat theirpersonal information according to theprovisions of the NSW Privacy andPersonal Information Act 1998.

ETHNIC AFFAIRS

We recognise the cultural and linguisticdiversity of the people we employ, thecustomers we serve and the broadercommunity in which we operate, as vitalin achieving our business objectives.

Within this context we are committed totreating all employees equitably, and todelivering quality services to all membersof the community, including those froman ethnic background.

We consider it crucial to create strongcommunication links between HunterWater and ethnic communities, as wellas the broader community. Essentially, weobserve the principles of multiculturalismin the conduct of our business affairs.

KEY STRATEGIES IN 2002-03

• Reappointment of the CommunityDevelopment Officer for the MigrantResource Centre as a member of theHunter Water Consultative Forum.

• Provision of a free interpreter andtranslator service to customers.

• Maintenance of a list of staff whospeak additional languages to English.

• Provision of access for all customers toEWON for dispute resolution.

• Development of the framework for aPayment Assistance Scheme, to beadministered by local welfare agencies(including the Migrant Resource Centre)for hardship situations.

KEY STRATEGIES PLANNED FOR 2003-04

• Explore avenues for providing greaterinformation and services to the ethniccommunities of the Lower Hunter, eg ethnic newspapers and radio.

• Promote the availability of staff whoact as Language Aids.

• Communicate our existing Non-EnglishSpeaking Background (NESB) servicesto ethnic community groups.

OUR COMMUNITY


We proudly support community events

HIGHLIGHTS IN 2002-03

• Ongoing skills enhancement & training.

• Career growth opportunities internallyand in the external market.

• Exposure to broader external networks,workforces and business structures. Thispromotes innovation and develops amarketable, competitive skills base.

• A new rewards and recognition program.

• Continued safety training.

• Management development program.

Hunter Water’s workforce operates in acomplex service environment - involvingcommercial performance, contractualobligations and regulatory functions -and is employed in a diverse range ofassociated activities.

Hunter Water aims to provide employeeswith a challenging and rewarding workenvironment, including the flexibility torecognise individual performance andalso provide personal developmentopportunities for staff.

To complement employee managementby line managers, an annual corporateassessment and review process isconducted to assess training anddevelopment requirements, recruitmentneeds and succession planning issuesfor each business group.

Our ongoing challenge is to have in placean organisational structure that ensuresnew technologies are implemented, workpractices are improved and skills to keepour business moving forward aremaintained. Strategies are thendeveloped to encompass the evolvingneeds of our workforce.

RECRUITMENT AND TRAINING

Hunter Water’s recruitment and employeedevelopment strategy:

• Provides development opportunitiesfor employees who participate in ourexternal growth agenda through themarketing arm of Hunter Water’ssubsidiary, Hunter Water Australia.

• Continues to focus on engineeringexpertise to service Hunter Water’smajor capital works program.

• Targeted recruitment particularly inhigh skill areas.

• Employment of trainees and graduatesacross a diverse range of professions.

To achieve this we provide training inthe areas of information technology,operations, safety and environmentalawareness. The main focus in the pastyear has been training in OccupationalHealth & Safety, Customer Service Skillsand Management Development. We alsoprovide programs to assist employeeswith training and development, including:

- Internal and external courses - Study assistance - On the job training- Job rotation and relief- Annual performance reviews- Scholarships - Secondments and exchanges- Mentoring program- Skills development program- Induction and orientation

Hunter Water’s key Business Plan themeof continuous improvement is a criticalfactor that allows us to maintain ourcompetitive edge. Our focus is on thedevelopment of our employees acrossvarious areas of Hunter Water. To enablethis Hunter Water has a number ofprograms in place, including:

Management Development ProgramThe Management Development Program isa three year commitment to increase andfurther develop management/leadershipskills. The program includes modules indeveloping skills in:

• Performance management• Strategic management• Time management • Leadership development • Project management • Financial management

To date over 60 managers/supervisorsand selected staff have completed thePerformance Management, ProjectManagement, Time Management andPeople Skills modules of the program. Financial Management and Leadershipmodules will be conducted in 2003-04.

Team BuildingIn addition to our ManagementDevelopment Program, a Team BuildingProgram was conducted during the year.This included cross-functional teamdevelopment to build on specific skillsto enhance performance outcomes forHunter Water and individuals. Individualgroups have also started specific teambuilding programs.

Skill Development ProgramThis program is an extension of manyof the training and development optionsavailable to employees. It assistsemployees to focus on their individualskill development through a customisedone-on-one training/skills needs analysis.The program involves various assessmenttools, including one-on-one interviewswith an independent organisationalconsultant to identify a suitable careerpath, training and development needsand future opportunities for participants.

External Growth OpportunitiesConsistent with our objective to createa work environment where skills arereadily transferable both inside andoutside Hunter Water, a number of staffhave worked on external projects in NSW,interstate and overseas through oursubsidiary Hunter Water Australia. In2003-04 it is intended to place an evengreater commitment to growing externalsales through developing the skills of ouremployees. This will present even moreopportunities for staff to work as a HunterWater employee and consultant, and allowindividuals to apply their skills in acompetitive market place.


OUR EMPLOYEES

Operations staff repair broken pipeline

Staff can join our Mentoring Program


OUR EMPLOYEES

These opportunities facilitate exposureof employees to new challenges andissues and therefore expand ouremployees skills and knowledge base.

The involvement of our staff in externalwork will also facilitate the process ofgenerating new ideas from the marketplace.

RECOGNISING OUR EMPLOYEES’ NEEDS

While our ongoing employee managementprogram addresses training and businessgrowth issues, we are mindful of theneed to acknowledge other working lifedimensions for employees.

As a result, we have endeavoured toprovide a whole of life balance, where weoffer various forms of employee assistancesuch as health awareness, health checksand counselling. This coupled with arange of family friendly options relatingto flexible leave arrangements andinitiatives such as job share, part timework, purchase of additional leave andtelecommuting (facilitated throughtechnology improvements) have beendesigned to assist employees balancework and family commitments.

In relation to employee recognition ourCommunity Relations group introduced arewards and recognition program calledOggie’s Choice Awards. The awards areavailable to either individuals or teamsfor special workplace achievements.

The objective of the awards is torecognise a ‘job well done’ and provide areward. Nominations are made by peersand assessed by a panel which hasmanagement and staff representation.

Hunter Water also has a PerformanceManagement Program with some 100employees participating. The programfocuses on both outputs and the skillsand abilities required to ensure jobsuccess. Annual reviews with all salariedstaff provide opportunities for feedback,two-way communication and recognition.

EQUAL EMPLOYMENT OPPORTUNITY

Hunter Water is committed to EqualEmployment Opportunity (EEO) andAffirmative Action. Our EEO policy aimsto provide a workplace free of harassmentand discrimination of any kind. We alsostrive to promote equal employmentopportunity for all our employees,including members of minority anddisadvantaged groups.

Our EEO Management Plan provides anoverview of the strategies that will beundertaken or pursued during the next12 months. It also outlines the timetabledactions that will be necessary to ensuresuccess of our strategies. Achievementsin 2002-03 include the awarding ofscholarships to an Indigenous studentand a student with a disability.

Continuation of Hunter Water’s MentoringProgram has also developed successfulworkplace partnerships where employeeshave the opportunity to share theirprofessional and personal skills andexperiences and to grow and developin the process.

Both these initiatives will continue in2003-04. EEO statistical tables displayingtrends in representation and distributionof EEO groups are contained in theAppendices of this report.

ENTERPRISE BARGAINING OUTCOMES

Enterprise Bargaining negotiationswere concluded with agreement reachedproviding pay outcomes for employeesfor a one year period to 31 May 2004.

The new Enterprise Agreement covering themajority of our employees contains furtherclarifications of Essential Services. Thiswill ensure that we achieve the customer,health and environmental protectionrequirements that we are obliged to fulfilunder the Operating Licence and otherlegislation. Hunter Water has also agreedto form joint working parties on a numberof issues arising from these negotiations,including discussion of further flexibleleave arrangements.

OCCUPATIONAL HEALTH AND SAFETY

Hunter Water values safe work practicesin the interest of employees, the publicand the efficiency of Hunter Water.

We have implemented an OccupationalHealth and Safety Management System(OHSMS) which provides for a structuredsystematic approach to managingoccupational health and safety in theworkplace. Part of the OHSMS includestraining of our employees to ensure theyare aware of safety issues and risks.

Programs conducted in 2002-03• Risk identification/assessment/control• Back and posture care• First aid and CPR• Driver awareness• Confined space• Accident prevention• Heat awareness• Sewer safety• Cranes and slings• Safe operation of grinders• Safe operation of quickcut saws

This year a review of Hunter Water’scurrent OH&S management approach wasconducted, which identified a number ofways in which our current approach tooccupational health and safety could befurther improved. As a result, activitiesand initiatives in the areas of enhancedawareness, compliance and rehabilitationare planned for 2003-04.

We also commenced a safety awardscheme for our higher risk fieldoperatives in late 2002, which will runover a two year trial period. The awardscheme is an incentive for employees toperform good safety practices.

Phone operators in the Contact Centre

Customer Relations staff training session

SAFETY PERFORMANCE

Hunter Water is a member of the NationalSafety Council of Australia (NSCA) andhas joined their 5-Star Health and SafetySystem. A star-grading audit wasconducted by the NSCA during 2002-03.Consistent with previous years HunterWater received a 4-Star rating. The OH&Saudit found good commitment by bothemployer and employees on workplacesafety committees and a genuine desire toeffectively manage risk in the workplace.

A number of improvements were madeto Hunter Water’s safety managementsystems during 2002-03, many of thesebeing based on the recommendationsraised in the NSCA’s grading audit.

The audit led to the development of aContinuous Improvement Action Plan.Hunter Water’s Safety Advisory Committeeprogressively monitored the progress ofits implementation, including:

• Site risk assessment• Pollution control• Gravitational hazards• Occurrence reporting• Inspections• Chemical management • A new emergency first aid course

In addition to the NSCA audit, an auditby Workcover accredited auditors of ourOH&S and injury management systemsconfirmed our eligibility for the thirdyear running of a rebate under theGovernment’s Premium Discount Scheme. A table displaying three year trends inSafety Performance is contained in theAppendices of this report.

NEW INITIATIVES

Initiatives implemented in 2002-03 toachieve better safety performance:

• Trial of a safety award scheme for ourfield employees targeting a reduction inlost time due to workplace injury.

• External review of our constructionand maintenance contractor interfacefocusing in particular on documentationand compliance controls.

• Review of our safety strategy to ensurethat it encompasses all activities withinHunter Water and that its importance isrecognised across all areas.

• Review of protective clothing suchas sun protection requirements,flammability and visibility.

OUR EMPLOYEES


Environmental incident training session

Hunter Water’s objective is to achievecontinuous improvement in beingcommercially successful while deliveringvalue-for-money water, wastewater andassociated services in an environmentallyresponsible way.

We are mindful of the principles ofEcologically Sustainable Development(ESD) in all aspects of our operations.

Ecologically Sustainable Development isdefined as a means of conserving andenhancing the community’s resources sothat ecological processes on which lifedepends are maintained and the totalquality of life now, and in the future,can be increased (Council of AustralianGovernments 1992).

ESD involves integrating ecological,economic and social objectives into ourmanagement of resource. In the past,economic development, social programsand environmental protection werelargely undertaken in isolation from each other.

However, there is a growing understandingthat the systems are interlinked and thatsocial, economic and ecological systemsare dependent on each other.

In our custodianship of the community’swater we use other resources such asenergy, materials, money, time andpeople. We must carefully assess ouractivities to ensure we achieve a balancethat uses resources efficiently and for thebroader benefit of the community.

INTERFACING WITH DEVELOPERS

This year has seen significant develop-ment activity in the Lower Hunter withan increase in development applicationsto Hunter Water of about 30%.

This increase has impacted across allsectors of the market including:

• Residential: predominately in Thornton,Aberglasslyn, East Maitland and theNorth Lakes areas.

• Industrial/commercial: especially SteelRiver, Cameron Park and Rutherford.

• Multi residential/apartments: especiallyinner city Newcastle & Lake Macquarie.

• Tourism/resort: notably at Pokolbin.

Hunter Water and developers have madesignificant investments in recent years toprovide infrastructure to extend servicesto these growth areas. Hunter Watercontinues to work with the developmentcommunity in planning for future growth.

This year’s highlights have included:

• Annual Developer Forum (June 2003)to discuss and give feedback on issuesrelevant to the development community.

• Processing of about 1,750 applicationscompared to 1,350 in the previous year.

• Around $20 million of new water and sewerassets were constructed by developers andhanded over to Hunter Water to manage($16 million previous year).

• Receipt of $11.7 million in developercharges for purchase of capacity in thewater and sewer asset network toservice new developments ($8 millionprevious year).

• IPART approved a new fee structure forservices associated with processing andadvising on developments and relatedactivities, beginning 1 July 2003.

• Development of key initiatives toenhance customer service delivery tothe development community, such asthe electronic work flow managementsystem introduced from 1 July 2003.

• Outsource preparation of drawings from1 July 2003 for minor works required aspart of new developments.

WATER SUPPLY UPDATE

Our customers rely on us to supply high quality drinking water at adequatepressure and on a continuous basis. In 2002-03 Hunter Water continued to comply with all service standardrequirements of its Operating Licence in regard to water supply.

WATER SUPPLY BY SOURCE 2002-03

Hunter Water’s Operating Licencerequirements relate to three key areas:

• Water quality• Continuity of water supply• Maintenance of adequate pressure

To ensure we can continue to supplydrinking water and protect catchmentsfrom which it comes, a range of projectwork was conducted in 2002-03.

MAJOR PROJECTS 2002-03

Grahamstown Dam Sequential UpgradeWe are in the process of increasing thestorage capacity of Grahamstown Dam.

Work includes construction of a newspillway, two bridges on the PacificHighway and rock protection work on the main embankment. The bridge workwas completed to coincide with theupgrading of the Pacific Highway by the Roads and Traffic Authority, withsubstantial economic and environmentalbenefits gained from carrying out theworks simultaneously.

Other work completed to date alsoincludes the discharge channel underthe new highway bridges and an energydissipater to ensure flows do not causedownstream damage.

OUR OPERATIONS


Chichester Dam spillway overflowing

In 2002-03 design work for the newspillway was essentially completed.Construction of the new spillway isexpected to commence in mid 2004.

When completed, Grahamstown Dam willhold approximately 50% more than itscurrent capacity. This will allow morewater to be transferred from the WilliamsRiver in wet periods when flows arehigher. The increased storage capacitywill provide improved security of supplyduring drought events.

Tomago to Tomaree PipelineDuring 2000-01, in order to provide forthe increasing needs of the TomareePeninsula and to meet the requirementsof the Water Management Licence, weplanned the next augmentation for watersupply to the Tomaree Peninsula.

The project involved the construction of37 kilometres of pipeline from TomagoWater Treatment plant to the TomareePeninsula with two booster stations,at Williamtown and Bob’s Farm.

Work on the pipeline and pump stationswas completed in December 2002. Thecost of the project was $9 million.

Drought PlanningDuring the past 2 years we have beenrefining our computer modelling tools forChichester Dam, Grahamstown Dam andTomago Sandbeds. These help us to makethe best use of the three major sources,to evaluate the risk of water shortage,and develop plans to expand capacity.

This work was taken into account in thepreparation of the new Integrated WaterResource Plan. An independent review ofthe modelling was also conducted, whichconfirmed that the model was sufficientfor our drought planning needs.

We have continued to promote demandmanagement activities including waterrecycling, water efficient householdconsumption practices and researchinto alternative technologies.

Integrated Water Resource PlanThe Integrated Water Resource Plan(IWRP) was finalised in March 2003.The plan seeks to achieve an appropriatelevel of drought security for ourcustomers while balancing availableresources in a sustainable manner.

The plan adopts a combination ofdemand management initiatives (egwater efficient devices, water recycling,leakage control) and an appropriate levelof storage capacity.

Increasing the Capacity of theWater Distribution SystemWe need to ensure that our watermainnetwork keeps pace with growth, so thatcustomers can receive adequate pressure.Accordingly, we have completed work toincrease the capacity of the networks inMedowie, Williamtown, Swansea Heads,Bolwarra, East Branxton, Nelson Bay andLemon Tree Passage. Planning work wasalso undertaken on the augmentation ofwater distribution systems at Pokolbinand East Maitland, planned for 2003-04.

Water Quality MonitoringHunter Water routinely analyses its rawwater in surface storages (ie Chichesterand Grahamstown Dams) for levels ofblue-green algae. The raw water resultsfor blue-green algae indicate whetheradditional treatment processes need tobe activated. Other routine analysisincludes the taste and odour compoundsMIB and Geosmin, and other aestheticparameters such as manganese.

Routine monitoring of water quality atChichester Dam showed increases in algallevels in spring and summer. However,the type of algae detected was a small-celled, non-toxin producing species. Thetaste and odour compound Geosmin wasdetected at elevated levels in the sourceduring winter and summer, causing amoderate increase in customercomplaints. Slightly elevated levels ofManganese (which were still well belowaesthetic guideline limits) in this sourcecaused increased dirty water problemswithin the system in late summer.

In response to both of these problems,the flow from the Chichester Dam sourcewas reduced to minimise the impact.

Routine monitoring of water quality atGrahamstown Dam showed increases inalgal levels in autumn, and winter.However, the type of algae detected was asmall-celled, non-toxin producing species.The taste and odour compound MIB wasdetected in the Grahamstown source inearly autumn. In response, water from thetomago source was used to meet demandin place of Grahamstown water.

Routine monitoring of raw water qualityis carried out to ensure that appropriatesource substitution and/or additionaltreatment is carried out in the eventof variations in raw water quality.

OUR OPERATIONS


Taking a sample to test water quality

WASTEWATER TREATMENT UPDATE

During the 1990s Hunter Water upgradedits major coastal wastewater treatmentfacilities and, as a joint venture with theState Government, spent $310 millionthrough the Hunter Sewerage Project(HSP) to provide service to 20,000unsewered properties in outlying areas.

The removal of septic overflows andtreated effluent from Lake Macquarie andPort Stephens and the upgrade of majorocean disposal facilities has improved thequality of the region’s beaches and thehealth of both these major waterways.

The overall upgrading program has nowbroadened with additional focus on thewastewater transport system andupgrading inland wastewater treatmentfacilities that discharge treated effluent tomore sensitive waterways. About $72 million has been spent to date on the$90 million program to upgrade a range ofinland wastewater treatment facilities.

NEW GENERATION OF TREATMENT WORKS

Hunter Water aims for sustainability inthe treatment of the region’s wastewaterby: using natural treatment processes;recycling where environmentally andeconomically feasible; and by returninghigh quality treated effluent to the watercycle in compliance with EPA standards.All these measures help to minimiseimpacts on the environment.

In 2002-03 Hunter Water achieved a highlevel of compliance (over 98%) with ourEPA wastewater treatment licencerequirements. A small number of minorlicence exceedances had no significantenvironmental impacts. Generally whereeffluent quality limits were not achievedthe exceedance was caused by biologicalactivity in the maturation ponds used fordisinfection (eg algal blooms), not withproblems in the main treatment process.

This year has seen the construction of anew WWTW at Kurri Kurri to replace theexisting plant built in 1942. The $14.5million upgrade has enabled the facilityto cater for growth and has resulted inimprovements to the quality of effluentdischarged to local waterways.

In addition we completed constructionof transfer systems at Bolwarra andMinmi at a cost of about $9 million.As a result, these two plants have beendecommissioned and the wastewaterredirected to Farley and ShortlandWWTWs respectively.

Mid 2002 saw completion of the StocktonTransfer System which resulted in thesmall Stockton WWTW and outfall beingdecommissioned. This removed the lastremaining shoreline outfall in the LowerHunter. The project cost was $11 million.

Wastewater from Stockton has beentransferred to the Shortland WWTW.The system has capacity for populationgrowth at Fern Bay/Stockton andindustrial developments on KooragangIsland and at Steel River. The cost ofthe scheme was about $10 million.

WASTEWATER TRANSPORT

Sewer surcharges or overflows aregenerally related to weather conditions.In heavy rain, parts of the systembecome overloaded by stormwaterseeping into cracked pipes, illegalconnections of stormwater into thesewerage system, or poorly locatedcustomer fittings such as sewer shaftsor yard sinks.

The vast majority of our customers areunaffected by wet weather overflows,with problems occurring generally only inlow-lying areas or where the water tableis high. In 2002-03, 63 overflows wereattributed to heavy rain compared with516 in the previous year. As the flow isheavily diluted, there is generallyminimal environmental impact.

In 2002-03 we improved the performanceof the wastewater transport system inwet weather by:

• Completing the $2.7 million upgradeof sewer rising mains and associatedpumping stations in the Swansea area.This upgrade incorporated significantpipe relining to stop groundwaterentering the sewers. This providesmore pipe capacity and also reducesthe energy required for pumping.

• Commencement of pipe relining tosections of the Merewether and WarnersBay wastewater transport system toreduce the amount of stormwater whichenters the wastewater systems in wetweather. The expected cost of thelining work is $1.23 million.

• Construction commenced for Stage 1and the design work substantiallycompleted for Stages 2 and 3 of theEast Lakes (Warners Bay/Belmont)wastewater transport upgrade at anexpected cost of about $21 million.This also involved consultation withaffected property owners and LakeMacquarie City Council.

• Completion of substantial inflowreduction program. Through theassistance of council supplied floodinformation we have identifiedmanholes (access points formaintenance) in the wastewatertransport network at risk of lettingsurface water enter during times offlooding. Many hundreds of thesemanholes have been sealed withspecial lids to minimise the risk offloodwaters overloading the system.

• Completion of the upgrade of theBooragul wastewater pump stationand rising main at a total cost ofabout $850,000.

• Commencement of design work forthe Newcastle wet weather wastewatersystem upgrade at an expected costof about $24 million. This involvesconsultation with affected propertyowners and Newcastle City Council.

• The township of Fern Bay is to beprovided with a reticulated wastewatertransport system as part of the NSWGovernment’s Priority Sewer Programto replace existing on-site systems.

OUR OPERATIONS


Irrigating fodder crops with recycled water

HUNTER SEWERAGE PROJECT

The Hunter Sewerage Project (HSP) wascompleted in December 2002. The projectwas a joint initiative with the NSW StateGovernment in response to the problemsassociated with unsewered areas near thelocal waterways of Lake Macquarie andPort Stephens.

Problems with inefficient septic tanksand illegal disposal of septic effluentraised public health and environmentalconcerns by local communities. Over thepast decade the HSP has been connectingthese unsewered areas to the HunterWater’s sewerage system.

The scheme provides benefits for boththe community and the environmentby treating sewage in a more efficientmanner. The project cost $310 millionwith 20,000 properties supplied withsewerage services since 1987.

During 2002-03 work involving theinstallation of ultra violet disinfectionfacilities at Tanilba Bay WWTW wasundertaken. The assessment of threedecommissioned wastewater treatmentworks sites to establish if remediationwas needed to remove any residualcontamination was also conducted.

OUR OPERATIONS


Ultra-violet disinfection unit at Kurri

COST

$20 MILLION

$11 MILLION

$5 MILLION

$14.5 MILLION

$16.5 MILLION

WASTEWATER WORKS

NEW MORPETH WWTW

UPGRADE RAYMOND TERRACE WWTW

UPGRADE SHORTLAND WWTW

NEW KURRI KURRI WWTW

NEW CESSNOCK WWTW

COMMISSIONING

DECEMBER 2000

JUNE 2001

MAY 2002

JUNE 2003

LATE 2007

BENEFITS

• caters for population growth

• provides a higher level of treatment

• first to employ biological nutrient removal

• extra nutrient removal & improved disinfection

• protects water quality downstream of plant

• caters for population growth in Raymond Terraceand Medowie

• caters for population growth and transfer ofwastewater flows from Stockton

• transfer of Stockton flows in July 2002 alloweddecommissioning of the last shoreline outfall

• planning approval obtained in 2000-01


• protects sensitive inland waterways

• caters for population growth

• the Environmental Impact Statement (EIS) wascompleted & publicly exhibited in early 2002

• comments about EIS have been assessed and faunastudies being completed prior to a report to theMinister seeking approval to proceed


• caters for population growth and for newdevelopments in the Cessnock area

ODOUR CONTROL

Sewage can generate odours whensystem detention times exceed four orfive hours. Odours can be present in thetransportation system or at treatmentfacilities. We have been proactivelyaddressing the issue of odour control inthe total system rather than ‘masking’odours at the point of emission.

Preventing odour generation byappropriate design and/or chemicalcontrol removes a community nuisanceand also protects system assets whichcan be corroded by sewer gases.

This proactive approach has seen theannual expenditure on odour controlrise from $100,000 in the early 1990s toabout $1 million in 2002-03. There alsohas been significant capital expenditureduring that time to improve facilities.

RECYCLING INITIATIVES

A key objective in Hunter Water’sEnvironmental Management Plan isproductive reuse of recycled water andbiosolids where it is economically andenvironmentally feasible.

In 2002-03 about 4,053 megalitres ofeffluent (7.8% of dry weather effluentflows or equivalent to 20% of ChichesterDam) was recycled. On current systemgrowth 4,053 megalitres represents 6.5years growth in demand for potablewater. Without this recycling we wouldhave needed to increase water storagesin the early 1990s rather than 2004.

In 2002-03 the industry and agriculturesectors were the two main users. Duringthis period the equivalent of 4,823 drytonnes of biosolids were dewatered anda total of 3,990 tonnes of biosolids werereused. The percentage of reused biosolidsby ‘end use’ is shown in the BiosolidsRecycling graph.

No biosolids were disposed to landfill;the unused component being stockpiledon wastewater treatment sites until abeneficial reuse opportunity is identified.

WATER RECYCLING 2002-2003

BIOSOLIDS RECYCLING 2002-2003

OUR OPERATIONS


ODOUR COMPLAINTS WASTEWATER TRANSPORT & WASTEWATER TREATMENT 1996-2003

RISK MANAGEMENT

Hunter Water is strongly committed toa risk management ethos. We have astructured risk management approachwhich is actively engaged for strategicas well as day to day operational andbusiness administration activities.

This approach enhances both theeffectiveness and efficiency of ouroperations, encouraging proactivemanagement, providing a framework forstrategic planning and ensuring that thequality and continuity of the supply ofwater and wastewater services to thecommunity is maintained and deliveredin a financially viable way.

Importantly, our commitment to riskmanagement helps us to safeguard ourstakeholders - our local community,employees, shareholders, regulatorsand the environment.

Detailed risk analysis is undertaken anda corporate risk matrix is maintained,both of which provides a high levelcontext for management and the Boardof Directors. The manner in which theidentified risks are managed is closelymonitored and regularly reported toour Board of Directors. The Audit andCompliance Committee, a sub-committeeof the Board of Directors, also overseesan annual internal audit program whichtargets high risk areas.

The effective provision of water andwastewater services depends mostimportantly on how well we create,maintain and operate our substantialinfrastructure base - our reservoirs,pumping stations, treatment plantsand pipe networks.

Detailed planning for the expansion,maintenance and replacement of aboveand below ground assets is based on aformal quantitative risk analysis, tominimise risk while still achieving anacceptable level of service at a viablecost. As a result, our asset maintenanceplans reflect a balance of preventativeand reactive maintenance.

Complementing this approach we have arange of risk management controls inplace including:

• Active promotion of demand managementinitiatives in the local community.

• Contingency plans for disastercircumstances.

• Insurance programs for compensation.

• Regular review of our insurance programin response to changes in our riskprofile, policy cover and premiums.

• Effective risk management is anintegral part of our business at HunterWater and will remain a key focus as westrive for continual improvement in thedelivery of services to the community.

WASTE REDUCTION

Hunter Water continues its commitmentto waste avoidance and resource recoverythrough the development andimplementation of its Waste Reductionand Purchasing Policy (WRAPP).

The focus of our WRAPP is on:

• Reducing waste from daily activities.

• Management systems, services andproducts that avoid generating wastesdisposed to landfill.

• Purchasing recycled or low wasteproducts and services that are priceand performance competitive.

• Involving management, staff, clientsand customers where they cancontribute to reducing waste.

Four main areas of waste generationhave been identified in the WRAPP.These include vegetation wastes,construction and demolition materials,office consumables and paper products.

Our main priority at Hunter Water isto reduce construction and demolitionwaste. Steps have been taken to betterunderstand the type and amount ofwastes generated in this area to targetwaste reduction and recycling strategies.Within our offices, paper and officeconsumables is a priority area.

A waste audit in 2002-03 revealed:

• Recyclables in general waste (garbage)has decreased by 60% compared to theprevious audit in 2001.

• Office material that is currently recycledincludes paper, cardboard, cans, bottlesand printer toner cartridges.

• Contractors recycle significant amountsof soils, pipes and concrete and oftenreuse pumps. Importantly, there is aneed to improve the way contractorsreport recycling and reuse initiatives,this is planned to occur in 2003-04.

• Over 80% of office waste paper iscurrently recycled.

• There was a 28% reduction comparedwith 2001-02 in the amount of paperpurchased by Hunter Water.

• All office packaging is recycled.

Waste Reduction Initiatives 2003-04

• Staff awareness resulted in a 50%decrease in the number of phone booksdistributed to staff. The internet isbecoming widely used for phone andother enquiries, and will continue tobe encouraged.

• WRAPP principles will be incorporatedinto the new Purchasing and Tenderingpolicy. Staff awareness in recycling,purchasing recycled products and wastereduction will be a major educationfocus for the coming year.

• An Electronic Document ManagementSystem has recently been implementedin our Business and Urban DevelopmentSection. This system is being trialled asa paperless office concept with a viewto broader use throughout Hunter Water.

OUR FUTURE


Waste audits are conducted annually

ENERGY EFFICIENCY

Hunter Water is a medium level consumerof electrical energy, currently using about70,000 MWh per annum, or 0.1% of theState’s total consumption. This usage isequivalent to 16,400 average householdsand the greenhouse gas produced interms of carbon dioxide generated is60,000 tonnes.

Improved environmental performancehas caused a significant increase in ourelectricity consumption over the pasteight years. This increased energy hasprimarily been associated with thecommissioning of modern wastewatertreatment works and the additionalpumping of treated effluent followingthe connection of additional homesunder the Hunter Sewerage Project.

However, this increased energyconsumption needs to be balancedagainst economic, environmental andsocial benefits, such as:

• Increased recycling of more highlytreated effluent.

• Discharge to the environment of amore highly treated effluent.

• Reduced costs to householders whopreviously paid for pumping-out ofseptic tanks.

• Reduced risk of overflows from septicsystems, as householders switch fromon-site disposal to the sewerage system.

• Health benefits associated with replacingseptic systems with sewerage services.

In 1998 Hunter Water was the first waterutility to join the Sustainable EnergyDevelopment Authority (SEDA) of NSWin Energy Smart Business Programming.

During 2002-03 we implemented thefollowing energy saving initiatives:

• Installing high efficiency water pumpsat our largest treated water pumpingstation at Tomago.

• Installing variable speed drives andbooster pumps in the Tomago sandbeds.

• Mechanical stirring of Chichester Damto replace the less energy efficientcompressed air system.

• Installing a new hydrogeneration unitat Dungog.

Energy reduction initiatives planned for2003-04 include:

• Backwash recovery at Grahamstown WTW.

• Energy optimisation of aeration atEdgeworth WWTW.

• Use of mini hydro-generators as areplacement for pressure reducingvalves in the water reticulation system.

• Application of low friction coatings tothe interior of pump casings to repaireroded pump casings.

• Upgrade of Cessnock WWTW to includemicro gas turbine which will generateabout 30-40 kW of electricity (300 MWhper annum) equivalent to a reduction of300 tonnes per annum of CO2.

DEMAND AND SUPPLY MANAGEMENT

The development of an Integrated WaterResource Plan (IWRP) to set direction inwater demand and supply for the nextdecade was a major development forHunter Water during 2002-03.

As required by our Operating Licence,an IWRP was prepared with economic,social and environmental factors beingconsidered when seeking the lowest costfor providing customers with water in thefuture. The aim of the IWRP is an annualsaving of about 1,000 megalitres ofwater, ie the equivalent of 18 monthsgrowth in demand.

A community forum was held in October2002 to gain input from the public andfrom various interested organisationsabout a range of proposals in the draftdocument. Comments from the publicconsultation period were assessed beforea final version of the IWRP was endorsedby the Board in February 2003.

A Marketing and Development Manager(IWRP) was appointed and a MarketingPlan focussing on the core areas of demandmanagement, recycled water and leakagereduction was approved in mid 2003.

The IWRP is viewed as an importanttool to balance the community’s futureuse of available water, optimising theeffectiveness of existing storages. Thisis reflected in a $16 million project toincrease capacity of water supply by 5.5gigalitres (and meet 10 years growth indemand) from Grahamstown Dam.

A new low-level spillway to moreeffectively manage storm run-off duringfloods and provide additional storage isplanned for completion by 2006.

Major initiatives in the IWRP include:

• Community awareness strategy• Residential retrofit programs• Reducing consumption in high use areas• Cleaner Production (industry/business)• Indoor/outdoor consumption monitoring• Water conservation labelling scheme• Water sensitive urban design • Promoting use of recycled water• Watermain replacement program• Pilot projects in leakage detection

The IWRP is available on our website atwww.hunterwater.com.au

OUR FUTURE


Energy efficient stirrer at Chichester Dam

ENVIRONMENTAL MANAGEMENT

Water ResourcesHunter Water’s role is to provide the waterneeds of the Lower Hunter communitywhile ensuring the maximum protectionof the catchment and environment. Wedraw water from surface and groundwatersources including an on-river storage atChichester Dam, an off-river storage atGrahamstown Dam and the Tomago andAnna Bay sandbeds.

For the region’s water supply system toremain sustainable it is crucial that thecatchments where water is extracted areprotected. We work with organisationssuch as the Department of Infrastructure,Planning & Natural Resources (DIPNR),the Environment Protection Authority(EPA), Hunter Catchment ManagementTrust (HCMT) and Landcare, to protectour current and future water supplies.

Managing Demand For WaterA key challenge for Hunter Water and theLower Hunter community is to ensure anadequate supply of water for a growingpopulation by planning and implementingmeasures to conserve water.

Another major challenge is for HunterWater to conserve water so that it doesnot significantly increase the amount ofenergy used to achieve these savingsor increase costs significantly.

With help from the community, HunterWater has prepared an Integrated WaterResource Plan (IWRP). This ten year planis critical to ensure that adequate watersupply services can be provided to agrowing population while optimisingexisting water storage facilities.

The development and launch of this longterm water resources plan coincided witha severe drought in NSW in 2002-03.

While the Hunter was fortunate that thisdrought did not severely deplete HunterWater’s storages, it was a timely reminderthat water is a valuable resource whichmust not be wasted and the availabilityof water is subject to widely variablerainfall conditions.

During the 2002 summer we launched awater conservation campaign to stressthe importance of water and involve thecommunity in saving it.

This campaign successfully heightenedcommunity awareness. Data showed thatpeak daily water consumption decreasedby 50 million litres or 15% compared tothe previous year’s summer.

Wastewater TransportTo provide a sustainable wastewatertransport system Hunter Water aims tominimise sewage overflows which mayadversely impact on customers and theenvironment. A major outcome of ourefforts is our current work on a $120million ten year project in LakeMacquarie and Newcastle.

The main issues being addressed by theupgrade program are to reduce overflowsby minimising the amount of rainwaterand groundwater getting into thewastewater system and to cater forpopulation growth.

Wastewater TreatmentIn 2003-04 Hunter Water will:

• Complete the design for the upgrade ofthe Cessnock wastewater treatmentworks including the use of low energytechnology.

• Commission disinfection units at theTanilba Bay WWTW.

• Commence biodiversity projectinvolving tree planting and weedcontrol at Morpeth wastewatertreatment works with Maitland CityCouncil and the HCMT.

StormwaterStormwater management is a sharedresponsibility between local councils,the community and Hunter Water.

In the late 1990s, councils preparedstormwater management plans for eachlocal Government area and as part ofthis process Hunter Water developed aStormwater Environmental ImprovementProgram for the Cessnock, Lake Macquarieand Newcastle catchments.

In 2002-03 our initiatives included:

• The Kotara Roof to Creek projectinvolves using rainwater tanks andlandscaping to minimise the amountand velocity of stormwater generatedwithin the catchment. This is a jointproject between Newcastle City Council,Hunter Water and Kotara residents. Todate, five rainwater tanks have beeninstalled in the Kotara catchment aspart of this project.

• Installing pollution control devices inthe Throsby Creek stormwater system.

• A streets to Creek project in theLambton sub-catchment involvedinstalling stormwater pollution trapsin the local stormwater system,community information days and the official renaming of the stormwatercreek running through Lambton Park (now known as Ker-rai Creek).

• Raising community awareness ofstormwater issues through educationprograms with Cessnock, Lake Macquarieand Newcastle City Councils, in additionto initiatives in the Newcastle area.

OUR FUTURE


Tap aerators reduce water consumption

Prototype odour control unit on trial

Hunter Water Australia (HWA) is asubsidiary of Hunter Water Corporationthat provides a range of specialisttechnical and operational services towater agencies, councils and industrymainly in eastern Australia.

The HWA Board is chaired by Mr RonRobson who is also chairman of theHunter Water. Other directors are Mr RossKnights (Deputy Chairman, Hunter Water)and Mr David Evans (Managing Director,Hunter Water). Mr Jim Keary is HWA’sCompany Secretary.

HWA operates in the fields of water,wastewater, stormwater, catchment andenvironmental issues, specialising in:

• Asset management• Pricing and institutional• Community and environment• Dams, structures and project management• Environmental testing• Mapping and monitoring• Operations support• Strategies, plans and reviews• Water and wastewater investigations• Materials engineering

HWA commenced trading independentlyin March 1998, although many of ourtrading activities were sold externallyfor a decade or more prior to this time.Hunter Water is the company’s majorclient. HWA has contracts with HunterWater to operate its water andwastewater treatment plants, providelaboratory testing services and processelectronic mapping information.

In 2002-03, about 40% of HWA’s incomecame from these contracts. The remaindercame from services sold to other clients.The company continues to work closelywith clients to develop specialist servicesand support their operational needs.

HWA MAJOR PROJECTS IN 2002-03

Asset Management

• Prepared infrastructure inventory andreview of asset management practicesof Victoria’s 24 water businesses.

• Asset management direction andsupport for Seattle Public Utilities.

• Winning of major asset managementcontract with Brown and Caldwell forSacramento County Regional SanitationDistrict in California.

• Asset management workshops forColiban Water.

Pricing and Institutional

• Workshop facilitation on options forimproved service delivery for Tamworthand Parry Councils.

• Review of water pricing options forCradle Water and Hastings Council.

• Conducted Australian study tour forPhillipines and Sri Lankan delegation.

Community and Environment

• Managed the Kotara stormwater projectincluding the installation of rainwatertanks for Newcastle Council.

• Review of potential environmentalimpacts relating to water/wastewaterprojects for Hunter Water, HastingsCouncil, Sanitarium Food Company and Lake Macquarie Council.

Dams, Structures and Project Management

• Design of access systems for WellingtonCouncils’ reservoirs.

• Rehabilitation of Winding Creek.

• Post design advice for Mudgee WaterTreatment Works.

• Design replacement CTGM Tarro-Sandgate.

• Rehabilitation works at North Lambtonlandslide.

• Design and construction managementof Chichester Dam remedial works.

• Advice on mine subsidence for BHP.

• Monitoring of 15 dams for BaulkhamHills Council.

• Design of Warners Bay/Valentine WWWcollection system.

• North Midlands project managementof new WTW and distribution system.

• Manage capital works programming forHastings and Muswellbrook Councils.

• Upgrade of South West Rocks WWPS.

• Flood study for new subdivisions atCessnock and Medowie.

• Hydrologic and hydraulic advice on newMayfield rail bridge.

• Independent review of large diametersteel mains in Townsville for AustralianMagnesium.

Environmental Testing

• Monitoring of Lake Macquarie andsurrounding creeks.

• Analysis of nutrient and microbiologicalparameters of Dora Creek catchment.

• Preparation of solutions and equipmentthat are used in the field to assistStreamwatch to establish communitybased programs.

• Microbiological testing of Warabrookwetlands for Warabrook Bushcare Group.

• Monitoring to assess Myall Quayssubdivision development’s effects onthe environment.

HUNTER WATER AUSTRALIA PTY LIMITED


Installing aerators at a treatment works

Repairing a major water supply pipeline

Mapping and Monitoring

• Asset mapping for Gloucester Council.

• Map compilation for NSW Department ofCommerce at Windale WWTW.

• Photogrammetric/geodetic monitoringof Chichester Dam for Hunter Water.

• Precise monitoring of cooling water andash dams for Macquarie Generation.

• Seabed monitoring of dredgingactivities in Lake Macquarie.

• Seabed and sewerage outfall mappingat Belmont.

• Aerial photography, cadastral mappingand sewermain design at Fern Bay.

• Watermain route survey and designat Abermain.

• Mapping of Hunter Water owned landand easements.

Operations Support

• Operations support for water andwastewater treatment plants of Dubbo,Tamworth, Dorset, Meander Valley,Maryborough and Singleton Councils.

• Integrated systems for implementationLongford WTP, Northern Midlands Council.

• Development of operational systems atDubbo and Bundaberg.

Strategies, Plans and Reviews

• Augmentation requirements for Cowrasouthern section water supply system.

• Redbank II power station EffluentReuse Feasibility Study.

• Cessnock Water Supply Servicing Strategy.

• Review of Servicing Strategy Reportfor Kooragang Island.

• Analysis of Boorowa water supplydistribution system.

• Upgrade strategy for Boulder Baywastewater treatment works.

• Update of projected connections reportfor Tomaree water supply system.

• Scottsdale water supply hydraulicmodelling study.

• Review sewerage services for a proposeddevelopment at One Mile Beach.

• Update projected connections report forSouth Wallsend water supply system.

• Sewer servicing strategy for a proposeddevelopment at Wyee Point.

• Preparation of projected loadings reportfor the Cessnock wastewater servicing.

Wastewater Investigations

• Design of sewer collection and pumpingsystem, Sanitarium Food Company.

• Design upgrade Newcastle WWPS.

• Value management review at Ballina.

• Review of Boonah STP.

• Load based licensing review at Bourke.

• Business case for primary sedimentationupgrade, Brown & Caldwell, Sacramento.

• Plant monitoring review and maintenanceworkshop for Bundaberg Council.

• Wastewater operations support forDubbo Council.

• Process modelling of Tully/MissionBeach STP.

• Port Macquarie Non-Potable WaterSupply Scheme.

• Hexham Bowling Club WWT tender.

• Investigation into water recyclingopportunities for Hunter Water WWTW.

• Boulder Bay Catchment project loadingsreport, capacity review in upgradestrategy, HWC.

• West Kempsey STP concept.

• South West Rocks inlet works design.

• South West Rocks Golf Course EffluentReuse Investigation.

• South West Rocks STW design ofchemical storage bund.

• Hydrogen sulfide control inMaryborough sewage system.

• Mount St John concept report for CityWater Townsville.

• Carrick odour investigation forMeander Valley Council.

• Wastewater treatment operationssupport for Meander Valley Council.

• Phosphorus removal facility forNambucca Heads Sewage Plant.

• West Tweed STP future options review.

Water Supply Investigations

• Design of Toowoomba WTP upgrade.

• Design of Hunter Valley Country Clubsewerage system.

• Detail design of Fern Bay sewage.

• Detail design of Bray Park WTP.

• Branyan WTP plant investigation.

• Woolgoola Dam treatment investigation.

• Process/operational review of Forth WTP.

• Whitehills WTP filter upgrade.

• Water treatment process upgrade forGoulburn Council.

• Denman WTP project planning.

• Borefield augmentation operatingstrategy for Nambucca Council.

• Beechworth WTP specification for NorthEast Region Water Authority.

• Manage instrumentation upgrade forRedland Shire Council.

• Capalaba WTP stabilisation optionsreview for Redland Water.

• Calala Lane WTP full scale trial forTamworth Council.

• Queenstown water supply scoping study.

Materials Engineering

• Major pipeline condition assessmenttrial for Hunter Water.

• Ongoing research work into galvanisedsteel for OneSteel.

• Project management of reservoirrefurbishment for Nambucca Council.

• Copper corrosion project work for WaterServices Association Australia.

HUNTER WATER AUSTRALIA PTY LIMITED


The Regional Land Management Corporation(RLMC) is a subsidiary of Hunter WaterCorporation and was created by the NSWGovernment in March 2003 to manage theday-to-day activities of former BHP andother crown land in the Lower Hunter.

The company will remain a subsidiary ofthe controlling entity HWC, for a periodof up to 18 months while long termarrangements for the lands are developed.

In the longer term, the NSW Governmenthas proposed to create a specialistorganisation to develop this land. TheGovernment has also agreed to fund theactivities of the RLMC in accordance withthe formal provisions specified in theState Owned Corporation Act 1989 NSW.

One of the major objectives of the RLMCwill be to assist in the development of anentity which will develop specified landin the longer term. The land that RLMCis managing includes five parcels:

• Former main BHP steelworks site (150 hectares).

• Former BHP waste site on KooragangIsland (239 hectares).

• Former BHP land at West Wallsend(1545 hectares).

• Land adjacent to the Hunter River atTomago (545 hectares).

• Crown land on Kooragang Island(860 hectares).

A Board has been appointed by HWCstwo voting shareholders, the Treasurerand Special Minister of State, and isChaired by Mr Ron Robson, who is alsoChairman of Hunter Water.

Other Board members are former ChiefExecutive of the Newcastle and HunterBusiness Chamber, David Simmons, theLord Mayor of Newcastle, John Tate andthe former General Manager of PortWaratah Coal Services, Ross Knights.

The Board is responsible for consideringland development issues and managing day-to-day activities such as leasearrangements, expressions of interest, EIS processes, remediation options andassociated matters.

RLMC TASKS IN 2002-03

Property ManagementThe RLMC liaised with BHP Billiton withrespect to demolition activities on theformer main steelmaking site. During thisperiod, three parcels on the site wereformally surrendered by BHP followingcompletion of demolition works. Theremaining areas are scheduled to beprogressively completed within the next12 months.

Strategies for remediating the site arebeing further developed, eg a computergroundwater simulation model in order toassess integrated groundwatermanagement options.

Property management functions coveringadministration of leases and licenceswere undertaken by the Department ofCommerce under an interim arrangement.Open tenders have been called for theongoing implementation of occupancymanagement on behalf of RLMC.

Property maintenance was undertaken asnecessary and safety plan and bushfirehazard reduction plans were developed.RLMC was represented on the MayfieldIndustrial Estate Assoc. Committee whichadministers common user infrastructureon the former main steelmaking site.

RLMC was formally transferred the EPAlicence responsibilities for the KooragangIsland waste emplacement site, includingmonitoring and reporting responsibilities. No wastes were received on the site duringthe past year. Financial managementsystems were developed and implemented,including operating procedures, corporatepolicies, internal controls and corporategovernance framework.

Major Development IssuesThere was significant interfacing withthe Newcastle Port Corporation (NPC)regarding the Expressions of Interestprocess for the proposed Multi-PurposeTerminal (MPT) on the former mainsteelmaking site.

RLMC is reviewing master planning forthe site, including provision of commonuser infrastructure and site services.

RLMC interfaced with NPC about futuredredging strategies for progressivedevelopment of the port in the southarm of the Hunter River. Geotechnicalinvestigations were commenced onKooragang Island in order to facilitatethe assessment of site preparationrequirements to suit future industrialdevelopment proposals.

RLMC managed environmental studiesfor a potential future materials handlingcorridor across Kooragang Island to linkland at Tomago with the south arm ofthe Hunter River.

REGIONAL LAND MANAGEMENT CORPORATION PTY LTD


BHP Mayfield Administrative Building BHP Mayfield site looking South-West

BHP Mayfield site looking North-East

PHOTOGRAPH COURTESY OF BHP BILLITON

PHOTOGRAPH COURTESY OF BHP BILLITON

Concept PlanningRLMC provided input into the ConceptProposal for Newcastle Port Environs,which is being managed by DIPNR.

This process is consistent withfacilitating structured industrialdevelopment which is complimentaryto broader environmental objectives.

Marketing and community consultationwas held with parties who approachedRLMC with an interest in leasing anddeveloping vacant sites.

Marketing strategies are being developedfor vacant Kooragang Island industriallands. This will progress with activemarketing of the lands including invitingExpressions of Interest, addressingdevelopment forums, web-basedpromotion and media campaigns.

Market demand analysis has commenced,including site inspections at othercomparable industrial development sites.

Community consultation was alsoundertaken to address environmental andindustry forums and meet with variouscommunity groups and representatives.

In accordance with the developmentconsent conditions for the demolitionand remediation of the former mainsteelmaking site at Mayfield, a meetingof the Community Consultative Committeewas facilitated on 1 June 2003. Thesemeetings are scheduled to be held atquarterly intervals.

REGIONAL LAND MANAGEMENT CORPORATION PTY LTD


Demolition of former BHP steelworks

GENERAL ENQUIRIES

EMERGENCY & FAULTS

EMAIL CONTACT

INTERNET SITE

MAILING ADDRESS

1300 657 657

1300 657 000

[email protected]

www.hunterwater.com.au

PO BOX 5171 HRMC NSW 2310

AUTHOR

DESIGNER

IMAGES

KIM GILL

BROCK HARRISON

INTERVISION PHOTOGRAPHY

BROCK HARRISON

DEBRA SANTOSA

BOOLAROO

CESSNOCK

MAITLAND

NEWCASTLE

RAYMOND TERRACE

143 MAIN ROAD

16 VINCENT STREET

285 HIGH STREET

595 HUNTER STREET

118 PACIFIC HIGHWAY

CONTACTS

CONTENTS

DESIGN

PRINTED ON RECYCLED PAPER - PUBLISHED 25 OCTOBER 2003

annual report - parliament of nsw · hunter water is a statutory state owned corporation (soc). as...

Documents