Corporate Plan 2018-19 - Southern Rural Water · Corporate Plan – the first under the 2018-2023...

Corporate Plan

2018-19

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Foreword

I am pleased to submit Southern Rural Water’s 2018-19 Corporate Plan – the first under the 2018-2023 Pricing Determination.

As we prepare this plan, we are in dry conditions. In our unregulated systems, we have extensive restrictions on rivers and streams, while groundwater systems are more resilient in the short term.

Our regulated irrigation systems in the Macalister, Werribee and Bacchus Marsh Districts had good water availability at the beginning of the season, but we will enter the 2018-19 season with much lower storage levels in our dams.

While dairy prices currently remain relatively low, the longer term outlook for dairy remains positive. Changes in supply availability and demand will continue to drive significant variations in vegetable prices.

We expect there will be some carry-over water available for the Werribee and Bacchus Marsh Irrigation Districts and we have a strong contracted volume of recycled water for Werribee, however we will be reliant on rainfall and inflows to generate full allocations. As is usual for the Macalister Irrigation District, we rely on winter and spring inflows.

The outlook for power generation and urban water customers is mixed. There are low levels in the storages that supply Western Water, while storage shares remain good in the Latrobe system for Gippsland Water and the power generators.

We are making excellent progress in modernising our business to deliver great service at affordable prices. In this way, we can position the business to help make our customers successful, in turn, promoting strong regional economies and employment opportunities.

Our strategy continues its focus on transforming irrigation services, getting more water into production, and giving customers more control and flexibility in how they manage their water and how they do business with us.

As part of the modernisation of the business, we are delivering record levels of capital expenditure. This winter, we are pipelining 22 kilometres of channels as part of the MID2030 Phase 1B project. This project is fully funded by irrigators, state and federal governments.

We also have more than 10 kilometres of pipeline being installed in Werribee and Bacchus Marsh this winter. We have secured 66% of funding from our customers and the Victorian Government for these projects. We were unsuccessful in our bid for federal funding for the final third of funding, so we will continue to work with the Victorian Government to explore further funding opportunities. We remain totally committed to delivering these modernisation projects.

These projects will transform service and improve water security for our customers, along with providing further water for environmental flows.

During the year, we progressed work on the Victorian Government’s “Water for Victoria” Plan. Government priorities have helped shape our strategy and our focus for the coming years on:

leadership in climate change mitigation and adaptation

improving environmental outcomes continued modernisation and improvement in

our irrigation, metering and dam assets completing further Local Management Plans for

groundwater and surface water areas, driving improved agricultural productivity

through improved service and more water for production

maintaining our strong financial position working to improve water security for our

Werribee and Bacchus Marsh customers engaging with Traditional Owners delivering better recreational outcomes for our

communities.

The board has reviewed the corporate strategy, which has strengthened our focus on driving growth and productivity while ensuring effective resource stewardship and commitment to leadership and culture. This will ensure that we continue to support our agricultural sector and other regional customers, while demonstrating strong leadership in climate change, environmental improvement, a culture of excellence, and a diverse and inclusive workplace.

We will also continue to monitor the external environment to identify, understand and respond to new and emerging issues.

I look forward to working in partnership with our customers, stakeholders, and government to bring this Plan to fruition.

Diane James AM Chairman

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Contents COVER PAGE 1

Corporate Overview 4

Statement of corporate intent 5 1.1 Business plan 10 1.2 Government priorities 13 1.3 Capital expenditure 20 1.4 Changes from 2017-18 plan 22 1.5 Risk 23 1.6

Macalister Irrigation District 26

Overview 27 2.1 Service measures 28 2.2 Strategic focus 29 2.3 Pricing 30 2.4 Capital works program 32 2.5 Financial outcomes 34 2.6

Werribee Irrigation District 36


Bacchus Marsh Irrigation District 46


Groundwater & Rivers 54


Latrobe Bulk Entitlements 64

Overview 65 6.1 Service measures 66 6.2 Charges 66 6.3 Capital works program 67 6.4

Werribee and Maribyrnong Bulk Entitlements 68

Overview 69 7.1 Service measures 69 7.2 Charges 70 7.3 Capital works program 70 7.4

Financial Statements 71

Preface 72 8.1 Operating statement 77 8.2 Balance sheet 78 8.3 Statement of cash flow 79 8.4 Financial performance indicators 79 8.5 Quarterly financial statements 80 8.6

Appendices 83

Corporate Overview

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Statement of corporate intent 1.1

Our services

Irrigation

We manage the release and delivery of water to the Werribee, Bacchus Marsh, and Macalister Irrigation Districts.

This includes operating and maintaining regulated channel and pipeline networks, and maintaining drainage systems.

Managing dams

We operate and maintain seven dams to harvest water on behalf of irrigators and other Bulk Entitlement holders.

We also work with Catchment Management Authorities, Melbourne Water and the Victorian Environmental Water Holder to manage the release of environmental flows.

The following table lists the storages we manage and the customers they service.

Storage River Customers

Blue Rock Latrobe Gippsland Water, power generators, licensed diverters, Victorian Environmental Water Holder, Department of Treasury and Finance

Lake Narracan Latrobe Power generators, Department of Treasury and Finance

Lake Glenmaggie Macalister / Thomson

Macalister irrigators, licensed diverters, Victorian Environmental Water Holder

Rosslynne Reservoir Maribyrnong Western Water, Melbourne Water, licensed diverters

Melton Reservoir Werribee Werribee irrigators, Bacchus Marsh irrigators, licensed diverters

Merrimu Reservoir Werribee

Western Water, Werribee irrigators, Bacchus Marsh irrigators, Department of Environment, Land, Water and Planning (DELWP) (unallocated share), licensed diverters, Victorian Environmental Water Holder

Pykes Creek Reservoir Werribee Werribee irrigators, Bacchus Marsh irrigators, Western Water, licensed diverters

Groundwater and rivers

We have been delegated under the Water Act 1989 to manage licensed water use from southern Victoria’s unregulated rivers and groundwater aquifers. Our role includes:

assessing applications to take and use water assessing applications to construct new farm dams and bores metering water use and ensuring compliance with legal requirements

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monitoring rivers and aquifers, and applying rosters and restrictions where necessary to protect environmental outcomes.

Other functions

We also undertake a range of ancillary functions, including:

managing recreational facilities at our major water storages (Glenmaggie, Cowwarr, Blue Rock, Melton, Merrimu and Pykes Creek)

operating (by appointment) as Resource Manager for some surface water catchments (mostly in Gippsland)

operating and maintaining groundwater pumps in and around the Macalister Irrigation District to manage salinity

providing administrative support to the Victorian Drillers’ Licensing Board.

Our structure

Our customer-facing activities are consolidated as a single Customer Services division, comprising four operating businesses.

Water Supply East Water Supply West Groundwater and Rivers Business Services

Operating the Macalister Irrigation District, and major dams in the Latrobe and Macalister basins.

Operating the Werribee and Bacchus Marsh Irrigation Districts, and major dams in the Werribee and Maribyrnong basins.

Licensing diversions from surface and groundwater, and the construction of bores and dams.

Providing customer service and administrative support.

These operating businesses are supported by a range of corporate and technical functions, structured into six groups:

Technical and Environmental

Providing technical support to our operating businesses in engineering, environmental management, and water resource management, as well as developing and delivering irrigation modernisation projects.

People and Culture Providing employee services, performance management, and employee health and safety.

Strategy and Performance

Coordinating strategic planning, and providing performance monitoring and strategy reporting.

Communications and Engagement

Delivering communications and engagement activities.

Information & Communications Technology

Supporting our IT systems and networks, and investment in technology to support our strategic objectives.

Finance Supporting and delivering financial management, risk management, corporate governance, and regulatory compliance.

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Performance measures and targets

Our service measures have been developed in consultation with our customers, to focus on measuring the elements of service that are important to them.

Measures and targets relevant to each customer group are detailed in subsequent sections of this plan.

Targets for financial indicators, as required under Appendix 2A of the Victorian Water Industry Performance Reporting Framework, are included in section 8.5 of this plan.

The measures below are specified under Appendices 2C, 2D and 2E of the Victorian Water Industry Performance Reporting Framework.

Measure Target

Orders delivered at time agreed [C1.4] 95%

Applications (water share transfers) completed within agreed timeframes [C1.5] 99%

Groundwater supply (number of transfers processed within target period) [WSR3] 90%

Billing complaints (per 1000 customers) [CRR2] <1

Total net CO2 emissions (E2) 1,514 tonnes

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Strategic priorities

Our vision

Excellence in rural water management, driving growth and customer productivity in southern Victoria.

Our focus

For customers

adaptive, efficient and sustainable irrigation districts

affordable prices communication,

convenience, and customer control

growth and increased productivity

For us

safe, healthy, and caring workplace

culture of excellence, high performance and individual accountability

diverse and inclusive leadership at all levels agile and future-ready

people financially sustainable

For all

climate resilience sustainable water

resources environmentally

responsible strong and respectful

relationships safe dams

Our trademark behaviours

United

Customer First

Ambitious

Results Driven

Innovative

Respectful

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Governance

Southern Rural Water (SRW) is governed by a board of nine directors; comprising eight non-executive directors (including the chairman) appointed by the Minister for Water, and a Managing Director appointed by the board.

The board will continue to seek improvement in its governance planning and practices.

It will do this by:

conducting an annual review of the board’s performance, and subsequently developing and implementing an improvement plan.

establishing and supporting board committees to meet governance requirements and to support the board’s effectiveness. The committees are:

o Audit, Risk and Governance Committee o Remuneration Committee o Asset Governance Committee.

working closely with our customer consultative committees. These committees comprise a

diverse range of customers and provide critical guidance and insight into customer thinking. These are:

o Macalister Customer Consultative Committee o Southern Groundwater and Rivers Forum o Werribee Bacchus Marsh Customer Consultative Committee.

locating board meetings throughout our region to engage with customers and stakeholder groups through field tours, stakeholder receptions, and face-to-face meetings.

reporting on board meetings via our website to our wider customer and community base.

supporting completion of the Company Directors Course (Australian Institute of Company Directors) by all directors, encouraging director attendance at relevant industry forums, and encouraging directors’ continuing professional development.

resourcing the board’s secretariat with appropriately qualified personnel and providing access to relevant professional guidance and assistance.

monitoring government policy and ensuring corporation alignment to policy.

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Business plan 1.2

Corporate Strategy

We have an important role in supporting Victoria’s economy, which relies on secure and reliable water supplies. We also have an opportunity to drive growth and productivity, particularly in regional areas, by:

making more water available

giving water users more flexibility and control in the way that they access water

providing sustainable access to water in ways that are more efficient and convenient for our customers.

We are in the process of refreshing our strategy. On page 8 you will note a new vision and focus and refined trademark behaviours for the corporation. Our existing strategy was developed in 2014, and while we will retain much of our strategic focus, in particular our modernisation projects, our new strategy will place greater emphasis on resource stewardship in the context of climate change, and on building a culture of excellence throughout the business. Over the coming months we will further refine our objectives and initiatives to support this strategy.

This corporate plan was developed under our existing strategy, which is described below. The focus on these elements will continue with the new strategy.

Service improvement

Modernised Service

We have made excellent progress in modernising our irrigation districts, with major projects completed, funded and underway in the Macalister, Werribee and Bacchus Marsh Irrigation Districts, along with our groundwater and rivers business. These are delivering real benefits to customers and local communities.

These funded projects will address extensive parts of our irrigation delivery networks, which remain largely unchanged since they were constructed 60-100 years ago. Although still functional, these networks have high water losses, and cannot provide the level of service required for modern on-farm irrigation practices. Also, manual operation imposes risks for our staff, and costs for our customers. Upgrading our supply systems makes more water available, allowing irrigators to be more productive, which drives regional growth and increases jobs.

Our long-term goals are to:

complete modernisation in each irrigation district to support good on-farm irrigation practice by 2025

reduce water losses so that we can regularly operate our irrigation systems at better than 85% efficiency for open channels, and 95% efficiency for pipeline systems by 2025

establish automated meter reading and real-time customer usage information on more than 90% of our unregulated surface water and groundwater meters by 2022

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modernise our service offerings to customers so that they have access to information they require and to transactions they need to undertake with us, in ways convenient to them

achieve these objectives while maintaining a real price rise of no more than 0.5% per annum over the next 20 years.

The $60m SRW, state and federal government-funded MID2030 Phase 1B modernisation project in the Macalister Irrigation District commenced in May 2017.

The modernisation works in Werribee and Bacchus Marsh, funded by the state government and SRW customers, also commenced in 2017. We have been unsuccessful in our bid to secure the final one-third funding from the federal government’s National Water Infrastructure Development Fund. We will now continue discussions with the Victorian Government on options to complete modernisation.

Cost / debt reduction

New revenue

New sources of revenue can be used to fund service improvements without taking on debt and subsequently increasing prices. New revenue allows us to spread fixed costs further, therefore reduce prices, and provide new job opportunities. Our revenue strategy includes a mix of asset sales, project funding, and new business opportunities.

We have set some aspirational goals for increasing revenue to challenge and stimulate innovation in our business. They are:

$20m of one-off revenue 20% of recurrent revenue coming from new sources by 2023 at least 50% external investor funding for our major irrigation modernisation projects.

We have made some progress toward these goals and within our financial plans we have assumed, across the five years to 30 June 2023:

$2.5m from MID water sales $0.5m from BMID water sales $0.9m from WID water sales $3.6m from land sales.

Reduced costs

As part of the 2018-23 Price Submission to the Essential Services Commission (ESC), we set targets for reducing our costs to keep prices affordable. This includes:

5% productivity saving over the five-year period to June 2023 on all operating costs across the business

an additional 10% operating cost saving set for Werribee and Bacchus Marsh irrigation districts following the completion of irrigation modernisation works

continuing to limit capital expenditure for routine renewal and remediation of our asset base to 75% of historic spend.

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Our capital expenditure budget continues to be formulated to deal with all identified replacement and renewal requirements, meaning we will achieve cost reductions without lowering our standards of asset maintenance.

Reducing our cost base provides capacity to direct more funds to modernisation and other service improvements, and also to manage our debt levels and prices.

Enabling our strategy

Our objectives are achievable only through our people, systems and process. Underpinning our strategy is a focus on:

creating a high-performance culture in which our people put customers first, show respect, and are united, ambitious, results driven and innovative

leveraging smarter and innovative technology, including better integration of information systems, making information more accessible, streamlining tasks and allowing more customer transactions to be completed online

improving our asset management, using the right information and analysis to decide the best mix of actions for all our assets so that we can meet our obligations and agreed customer service levels, keeping our long-term asset costs as low as possible.

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Government priorities 1.3

Climate change

SRW is committed to a Zero 2025 strategy to reduce our carbon emissions by 100% from a baseline 1,559 tCO2e by the year 2025. Our Zero 2025 strategy is based on an aspiration to exceed the Victorian Government’s targets and to be the first water corporation to be carbon neutral by 2025.

By implementing our Zero 2025 strategy, SRW expects to reduce carbon emissions by a minimum 45 tCO2e and a maximum 283 tCO2e in 2018-19. The reductions will come from multiple initiatives, including:

reducing emissions from energy use by investigating renewable energy opportunities, including the Intelligent Water Networks Large-Scale Renewables Project, and purchasing Green Power

reducing vehicle emissions from our vehicle fleet reducing waste to landfill.

We will reduce emissions progressively to 2025 by pursuing initiatives in waste reduction, vehicle fleet efficiency and electrification, renewable energy solutions at SRW sites - including solar panels on SRW buildings – and purchasing Green Power where on-site solutions are not available.

We are also participating in the Intelligent Water Networks Large-Scale Renewable Energy Project, which is expected to be commissioned in mid-2020. This will provide renewable energy for operational pumps, which account for a significant proportion of our energy-related emissions.

We will continue to investigate and establish carbon offset initiatives that will allow us to offset any remaining emissions by the end of the pledge period and, therefore, achieve net zero emissions. This will also involve engaging with staff, customers, and contractors on climate change mitigation.

Importantly, Zero 2025 will place minimal, if any, financial burden on our customers. It will aim to embed sustainable practice throughout the business, and will encourage initiatives that avoid, minimise or offset emissions.

Climate Adaptation

SRW is responsible for managing a large part of the surface and groundwater resources for rural supply in Southern Victoria and is committed to responsible stewardship of water resources.

Agricultural customers, power generators, and urban water customers use water as a critical business input and are therefore highly aware of local seasonal conditions and water supply outlook.

In irrigation districts, we review our allocation (available water) fortnightly and communicate allocation changes to our customers.

We publish regular water supply outlooks on our website, which we also communicate through regular district updates. We encourage water trading between customers in surplus to those who

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need more water, and also we also make water savings available for allocation auctions each season.

Drought contingency plans are maintained to assist with managing low allocations in any given season, helping customers to plan and manage dry periods. This has included recycled water for the Werribee Irrigation District and trading water from the Macalister Irrigation District to provide water security for both Werribee and Bacchus Marsh.

Our irrigation modernisation projects continue to save significant amounts of water. The projects also enable our customers to make long-awaited changes to their operations, installing best-practice irrigation to utilise their allocation. The savings are providing additional water for irrigators and the environment to build resilience to climate change.

We will continue to source alternative water supplies, particularly in the Werribee Basin, to assist customers with water security during dry periods. We will lead and participate in projects across the state to achieve this security.

Power generators and urban water corporations have access to our water allocation model, which provides them with real-time information on their water in our storages.

Groundwater systems are generally resilient to short-term dry periods, but, where required, we impose controls enabled under licence conditions.

Unregulated surface water systems have Local Management Plans, which outline the systems of rosters and restrictions applied during dry periods – in many cases, most summers. Rosters and restrictions are communicated directly to irrigators by local field staff as required.

We will continue to review and enhance these systems in the light of climate change and increased variability.

Customer and community outcomes

At Southern Rural Water, we pride ourselves on our strong relationships with customers, recognising the products and services we supply are critical inputs for their business.

We maintain customer interfaces through:

offices in each of our main districts field staff a multi-site customer services call centre team regular meetings and interaction with our customer committees.

Our ongoing engagement with customers and communities includes:

customer Consultative Committees (CCCs) in the irrigation districts and a Southern Groundwater and Rivers Customer Forum

strong connection between our field staff and customers a dedicated ‘Customer First’ internal team, reviewing the ways we provide service and

conducting regular site visits to a range of customers regular board engagement with stakeholders and customers, including tours to their

businesses to hear about their priorities and challenges focused communications and engagement plans for all major projects detailed customer surveys every two years

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short, transactional customer surveys and feedback for specific issues media releases and interviews to keep the wider community aware of the work we are

doing with, and for, our customers sponsorship of community groups’ initiatives and activities education tours regular newsletters, website content and social media updates.

All of this engagement helps us to shape our strategic direction and planning.

We are committed to the following customer outcomes, as outlined in our recent Price Submission:

SRW provides great customer service. SRW's water supply system enables good practice irrigation. SRW manages water resources well; maintaining a good balance between our

customers’ needs as water users and the sustainability of the resource. SRW works with each user to manage their water needs and entitlements. SRW keeps prices as low as possible.

Each outcome is supported by measures and targets, which are a combination of objective business performance data and subjective customer sentiment, as defined in survey questions. Many performance measures have been carried over from Water Plan 3 with renewed performance targets. Others have been refined or are new.

Measures and targets relevant to each customer group are detailed in subsequent sections of this Plan.

Our engagement plans

Our communications and engagement initiatives for 2018-19 include support for all our major projects, decision processes and community awareness.

We have communications and engagement plans for the major modernisation projects in the Macalister, Bacchus Marsh, and Werribee Irrigation Districts. These involve a combination of individual and group engagement, website and social media updates and media releases, including radio and TV, and newsletters to ensure customers and the wider community are kept updated with progress and decisions.

A communications and engagement plan will support the Barwon Downs Borefield Licence Renewal Review throughout 2018-19, including formation of a stakeholder and community review group, which will help identify key issues of concern to stakeholders, customers and community members, and inform the technical panel throughout the application process.

We have planned several communications activities around the new Pricing Plan.

We also anticipate further engagement with stakeholders and customers regarding decisions on Mornington Peninsula groundwater throughout 2018-19.

One of our strategic objectives is to make it easier for customers to have control over their interactions with us; such as improvements in ordering water, paying bills, trading water, applying for licence changes. We are planning for stakeholder and further engagement on a customer portal and related ICT enhancements to improve how customers can engage with us in future.

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We anticipate working further with VicWater and Traditional Owner groups to develop Participation and Engagement guidelines for all water corporations; based on the guidelines developed for Catchment Management Authority use with Traditional Owners.

Water for Aboriginal cultural, spiritual and economic values

Covering 37% of southern Victoria, our region intersects with many Traditional Owner groups.

We have a partnership agreement in place with the Gunaikurnai Land and Waters Aboriginal Corporation (GLaWAC), the Registered Aboriginal Party for the Gunaikurnai people, who hold native title over most of Gippsland. This agreement is structured around the Gunaikurnai Whole of Country Plan and was developed jointly with other water corporations and natural resource management organisations in Gippsland.

This progressive initiative may be used as a model for similar multi-partner agreements, which respects that Traditional Owner groups may prefer a collaborative approach, instead of developing individual agreements with every stakeholder organisation in their Registered Aboriginal Party (RAP) area.

We propose to use a similar approach, in conjunction with DELWP, VicWater and other water businesses to develop partnership agreements with other Traditional Owner groups across southern Victoria.

During 2018-19 we will:

support research to understand the barriers for Aboriginal enterprises to supply goods/services

explore opportunities for Aboriginal enterprises to manage native vegetation and/or carbon offset sites that we develop

launch a traineeship program targeting trainees from diverse backgrounds including Aboriginal and Torres Strait Islander

target 70% of our staff having undertaken cultural awareness training refer significant surface and groundwater applications to Traditional Owner groups advise Traditional Owner groups of opportunities to access water savings work with the relevant Registered Aboriginal Parties to build capacity on water-related

matters.

Resilient and liveable cities and towns

While SRW does not provide drinking water for cities or towns, we are involved with the 11 Integrated Water Management groups that operate across our region.

We sit on several of the project control groups, and support working groups with relevant surface and groundwater information strategies and projects where they intersect with our areas of responsibility. This can include groundwater supply or diversions from dams or unregulated rivers.

Our irrigation modernisation projects deliver investment and benefits to the local communities; both in the construction period and, more significantly, through improved service and water savings by increasing production, regional economic activity, and environmental benefits.

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Recognising recreational values

SRW manages dams of behalf of customers who own the water entitlements in these dams. The storages and weirs that we manage also provide recreational value for the local communities and tourism, ranging from passive recreation such as picnicking through to boating, kayaking, fishing, swimming, and water skiing on several of our storages. Lake Glenmaggie is a popular holiday boating and fishing spot. Blue Rock Lake has become a focus for competitive bass fishing and community recreational use. Pykes Creek Reservoir is particularly popular for water recreational use at weekends because of its proximity to Melbourne.

We provide information on our website about recreational opportunities at each of our sites, and we have an active social media presence for our more significant storages. We regularly partner with local communities, user groups, and Landcare groups to explore and implement opportunities to support them to meet their objectives.

To better understand our community and visitor expectations for recreational use, we lead or participate in consultation with local communities; for example the Pykes Creek Advisory Committee (led by SRW) and the Melton Reservoir Development Advisory Group (led by Melton Shire Council).

Land and recreation management plans

SRW is preparing land and recreation management plans for all major water storages, consistent with the requirements of Water for Victoria. We already have plans for Blue Rock Lake, Merrimu Reservoir and Pykes Creek Reservoir, and during 2018-19 we will develop a plan for Lake Glenmaggie.

We prepare these plans in consultation with the local communities and other stakeholders including urban water corporations, catchment management authorities, DELWP, Landcare groups and recreational user groups (e.g. boating and fishing clubs). The plans focus on recreational usage and the protection of environmental values. They consider short-, medium- and long-term needs and define agreed actions, responsibilities, and funding arrangements. In doing so, the plans will assist SRW to maintain infrastructure and facilities to support recreational objectives at our water storages under existing arrangements.

Recreational Users Information Needs Assessment (RUINA)

We have worked with the team from DELWP in developing the Recreational Users Information Needs Assessment (RUINA), which has identified some gaps in how we manage our storages for recreational use. During 2018-19, we will continue working with the RUINA team to identify projects to close these gaps.

Other opportunities

We have made several submissions in 2017-18 for funding to improve the recreational value of water at our storages including:

playground and picnic facilities upgrades jetty installations disabled access to swimming and boating facilities.

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We have a major submission with the Boating Safety and Facilities Program managed by Transport for Victoria to install a boat ramp jetty with disabled access at Blue Rock Lake. These projects will depend on the success of our funding bids.

Leadership and culture

SRW has developed a Diversity and Inclusion Strategy and Action Plan for 2018-2020.

The action plan initiatives, identified under five priority areas, are spread over three years and include a focus on:

Leadership – to promote cultural change through developing and supporting our leaders across the organisation to support their staff to achieve their best.

Education and communication programs – to build a diverse and inclusive workplace inclusive of women and men, people with disabilities, LGBTQ+, Aboriginal and Torres Strait Islander Peoples, culturally and ethnically diverse candidates, so SRW best represents and engages with communities in which we live and work.

Human resources policy and practice - to ensure we meet our diversity targets and our people are representative of the Victorian community, including boosting the number of females working in all positions and targets for Aboriginal people to be employed, supported and remain employed.

Governance – our Diversity and Inclusion Committee is diverse, organised, influential and highly effective, and is able to advocate for our action plans.

Measurement and reporting - we will track the progress and outcomes of our actions against targets that show we have a diverse and inclusive workforce.

We want SRW employees to understand the importance and benefits of diversity and be committed to the creation of an inclusive workplace. This will be done through:

educating our workforce about diversity and inclusion practices, including providing all staff with cultural competency training

mandating diversity and inclusion overlay for new SRW buildings ensuring that diversity and inclusion symbols are visible and present at all facilities and

sites, and that our leadership group champions these initiatives continuing the SRW Champions of Change program developing SRW specific diversity and inclusion measures and transparent reporting of

progress and targets building a diverse and inclusive workplace and strongly encouraging applications from

women and men, people with disabilities, LGBTIQ+, Aboriginal and Torres Strait Islander Peoples, culturally and ethnically diverse candidates to best represent and engage with communities in which we live and work

developing a diversity and inclusion placement program promoting our Aurora Women’s Network annual event to all staff refreshing and broadening our contact officer training to include LGBTIQ+ support and

family violence.

Measurement and reporting ensures that a comprehensive approach is taken to tracking the progress and outcomes of our actions, along with our overall targets in creating a diverse and inclusive workforce. This includes:

diversity and inclusion reporting for the board and management of SRW

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meeting industry-wide and government diversity and inclusion reporting requirements participating in the Australian Workplace Equality Index Survey introducing an annual diversity and inclusion census to understand how our employees

reflect the communities we serve, and to ensure our focus and activities are best serving the needs of our diverse employees.

HR policy and practice is where we seek to have equitable and inclusive policies and practices to attract and retain people from unique backgrounds, perspectives, and experiences. Initiatives include:

work experience programs, traineeships, internships and vacation placements to provide additional pathways for people from diverse backgrounds to enter our business

ongoing review of policies and procedures to support the diversity of our workforce - for example, flexible work practices and gender-balanced shortlists.

Governance is about our Diversity and Inclusion Committee being diverse, organised, influential, and effective, through:

championing diversity and inclusion and overseeing implementation of initiatives establishing and maintaining a diversity and inclusion budget providing SRW representation on relevant public sector networks reviewing the strategy and initiatives for ongoing relevance and alignment to the broader

organisational direction and industry requirements.

The above initiatives are scheduled for the first year of the three-year plan. Some will be completed within 12 months and others will be ongoing, eventually becoming business as usual. Further initiatives will be rolled out in the coming years.

Financial sustainability

Price paths for each customer group are detailed in subsequent sections of this Plan. These pricing examples are consistent with our 2018 Price Submission, which is due to be approved by the ESC in June 2018.

Our price paths reflect our focus over the last four years on finding cost savings and new revenue, which allow us to deliver service improvements through modernisation of our business, while keeping prices affordable for customers and ensuring our own financial sustainability.

Other financial information, as required under the Corporate Planning and Reporting Guidelines, is provided in section 8 of this Plan.

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Capital expenditure 1.4

Overview

Our capital expenditure program is summarised below, and assumes:

existing ANCOLD dam design standards existing safety design and construction safety standards no natural disasters or other major unplanned incidents.

The program now includes major modernisation projects in the Macalister, Werribee and Bacchus Marsh Irrigation Districts. The MID 2030 Phase 1B project is fully funded with one-third each from SRW (on behalf of irrigators), the Victorian Government, and the federal government. At the time of writing, we have two thirds of our Werribee and Bacchus Marsh projects funded by SRW (on behalf of irrigators) and state government, after the federal government did not approve the final third of funding. We will now work with the state government on options to complete the project. The final third is not costed in this corporate plan.

The program includes our forecast at 30 April 2018 of capital expenditure for 2017-18. Project detail can be found in following sections of this Plan.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 Total

Forecast Budget Budget Budget Budget Budget Budget

$'000 $'000 $'000 $'000 $'000 $'000 $'000

Macalister Irrigation 24,403 24,883 14,388 7,870 1,895 2,145 51,181

Werribee Irrigation 5,523 9,843 3,309 69 106 90 13,417

Bacchus Marsh Irrigation 3,028 3,320 1,490 216 197 178 5,401

Groundwater & Rivers 597 593 750 738 406 482 2,969

Maribyrnong & Werribee Bulk Entitlement 1,668 1,413 1,301 1,860 1,073 1,386 7,033

Latrobe Bulk Entitlements 1,275 836 652 530 827 1,128 3,973

Corporate and shared 1,941 4,644 3,689 2,052 1,958 2,006 14,349

38,435 45,532 25,579 13,335 6,462 7,415 98,323

Project

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Corporate and shared projects

Our corporate and shared capital budgets include IT systems and equipment, vehicles and plant, facilities and other shared costs, and leased land and buildings, as detailed below.

Werribee office site redevelopment

The SRW board has approved plans to redevelop the Werribee office and depot site at 1 Tower Road, Werribee.

The office is currently on a large under-utilised site and consists of a heritage-listed water tower and front office, with some portable extensions which were added in the 1990s. The portable extensions are now in poor condition and require replacing.

The depot is also in poor condition and council has a preference for SRW to move the depot out of the Werribee central business district.

A large proportion of the land at the site is unused and, under government policy, SRW has a responsibility to maximise the use of land it owns.

The anticipated redevelopment presents an opportunity to subdivide the land, create a new fit-for-purpose office, relocate the depot, and use the proceeds of the sale of surplus land to fund the new office, with any surplus funds going into funding modernisation works.

The new office will be built during 2018-19, and the sale of surplus land is included in our financial forecast for 2019-20.

Customer experience program

We want to provide our customers with access to our services in ways that are convenient and that put them in control. Our customers expect more information and services to be available online. A customer portal will be a secure extension to our existing website, allowing customers to access their own rural water entitlement or allocation data and financial information. The portal will be a window to all of our online services - presented to customers via a single sign-in.

Project 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 TotalForecast Budget Budget Budget Budget Budget Budget

$'000 $'000 $'000 $'000 $'000 $'000 $'000

Werribee office redevelopment 0 1,810 0 0 0 0 1,810

Asset management system upgrade 0 0 1,136 106 0 0 1,242

Customer experience program 85 570 305 52 0 0 927

Systems integration 25 225 51 0 0 0 276

IT systems and equipment 287 316 571 319 327 419 1,952

Vehicles & plant 1,488 1,630 1,500 1,500 1,500 1,500 7,630

Facilities & other shared costs 114 140 73 21 76 22 332

Leased land and buildings 42 42 53 54 55 65 269

2,041 4,733 3,689 2,052 1,958 2,006 14,438

22

Changes from 2017-18 plan 1.5

2018 Price Submission

In September 2017, we lodged our 2018 Price Submission with the ESC. This submission covers the five-year period from 1 July 2018 to 30 June 2023. Through the Price Submission, we have established new service standards and targets for our customer groups, and indicative price paths.

As part of our 2018 Price Submission, we identified some opportunities to make our tariff schedule shorter, simpler and more transparent for customers, staff and regulators, as well as reducing some costs for customers. These changes are incorporated within this corporate plan, and include:

removing renewal fees for surface and groundwater licences reducing the cost of simple licence transfers reducing or eliminating intensive management fees revising the tiered structure for groundwater application fees across all surface and

groundwater applications combining tariffs into single transactions where they are always incurred together aligning similar tariffs to simplify the tariff schedule renaming tariffs to improve clarity removing redundant tariffs and notes.

With these changes, we have reduced our tariff schedule from 5 pages down to 2 pages.

Financial position

Current irrigation modernisation projects for the Macalister, Werribee and Bacchus Marsh Irrigation Districts introduced $104m of capital expenditure into the business. These modernisation plans are unchanged from the 2017-18 Corporate Plan and continue to account for the significant increase in debt described by the forecast Balance Sheet.

Our end of year debt levels across the five years to June 2023 are higher than projected by the 2017-18 Corporate Plan ($3m to $5m more). This change reflects the capital expenditure plan determined as part of our Price Submission. The repayment of this higher level of debt is fully supported by the draft price determination issued by the Essential Services Commission.

23

Risk 1.6

Our risk management approach

Our work on risk management continues to be consistent with the International Standard ISO31000:2009 and requirements under the Statement of Obligations.

Appropriate controls and treatments have been established to manage each risk. We review these on an ongoing basis.

Consequence assessment continues to centre around seven themes: Reputation, third party losses, customers, environment, prices, people, and losses.

Risks are regularly reviewed at risk owner level. Potential new risks and occurrences are considered at both the Executive Risk Committee and within each business unit; any changes are subject to Executive Risk Committee, Audit, Risk and Governance Committee, and board approval. Risks are recorded in a comprehensive risk register. An annual risk review is conducted by management and presented to the board in June of each year. Corporate risks are individually reviewed at board committee level throughout the year, allowing for a comprehensive presentation by risk owners, and a thorough examination of the topic by the board committee.

An attestation by the Managing Director to each board meeting includes risk occurrence for the month, changes to individual risk ratings, changes to risk mitigation strategies, and any emerging risks which may have been identified.

24

Corporate risks and controls

The following table identifies our corporate risks and controls:

Risk Primary Controls

Align and meet shareholder expectations

Engagement with Ministers and departmental staff

Engagement in policy development processes

Southern Rural Water policies and Corporate Instructions

Impact of climate change

Ongoing monitoring of groundwater systems to detect over-use or salinity intrusion

Modernising irrigation districts to reduce water losses

Irrigation districts being resilient by having multiple water sources

Environmental damage due to over extraction from an aquifer

Monitoring of aquifer levels (and quality if required) by technical staff and hydrogeologists

Use of groundwater model in high-risk aquifers

Employee safety

Hazard identification and notification

OHS policies, procedures and work instructions

Subordinate emergency plans – bushfire, flood

Minimum vehicle standards

Failure to manage outrage

Regular engagement with key stakeholders, opinion leaders and customers

Public consultation process for significant or controversial applications

Financial mismanagement

Water Plan and Corporate Plan submission and review

Board oversight of budget assumptions and process

Reconciliation processes

Internal audit

Headworks supply failure

Undertake operation, maintenance, safety and security inspections using Visual Inspection Regimes

Undertake annual emergency and security training exercises

Five-yearly external comprehensive inspections

Loss of scale

Strong government/stakeholder relations

Alternative water supplies

New Revenue Strategy

Exit fees are payable on termination of delivery shares to offset future revenue losses

Public safety

Restricted access to operational areas at dams

Security structure around main channel regulators

Enforcement of Marine Act 2010 & Marine Regulations 2012

Public Health and Safety Strategy

Education programs

Terrorism

National terrorist alert system or other government advice

On-site surveillance and restricted site access

Dams are highly resilient

Unrealised economic output / long-term customer viability

Irrigation Modernisation Strategy will improve service and provide more water for production

More Water for Production Strategy will provide additional resources to expand production

25

Operational risks and controls

The following table identifies our operational risks and controls:

Risk Primary Controls

Allocation system failure

Stream monitoring network

Water allocation models and procedure

Regular review of restriction rules and trigger points

Failure to manage water quality issues

Some closed storages and fencing of marginal areas

Storage Sustainability (Safe Drinking Water Risk Management) Plans

Chemical control training and procedure

Fraud

Delegations (including embedded controls within finance system)

IT security

Financial procedures and controls

Internal audit

Industrial action

Enterprise Agreement, policies and procedures

Effective engagement with staff

Safety system and resolution procedures

Irrigation supply failure

Asset Inspection Program

Corporate Incident Management Plan

Dam Safety Program

Legal process failure

Board Delegation Policy

Compliance Guidelines and Procedure Manual

Documented processes and procedures (release and compliance strategies for each storage)

Compliance Register

Loss of critical IT systems

Uninterruptable power supply

Offsite backup and disaster recovery contract

Internal audit

Loss of major office Business Continuity Plan

Office security

Third party property damage

Asset Inspection Program

Water level alarm on automated regulators

Dam safety surveillance and flood routing training for reservoir operators

Macalister

Irrigation District

27

Overview 2.1

The Macalister Irrigation District (MID) is the largest irrigation district in southern Victoria. The district is situated around Maffra in central Gippsland and sources water from the Macalister River via Lake Glenmaggie, and from the Thomson River via Cowwarr Weir.

The district has secure water supplies, supplemented by good rainfall. The average annual inflow to the district over the last 10 years has been around 185,000ML.

The region has productive soils, a strong dairy sector, and developing vegetable and cropping industries. Approximately 33,500 hectares are currently used for irrigation, and of this, 90% is under pasture. Estimates put annual economic contribution in excess of $500m per annum.

The irrigation season runs from 15 August to 15 May. On average, we process up to 20,000 irrigation orders each irrigation season in the MID.

Total area of the district 54,753ha

Total length of channels 592km

Total length of pipes 39km

Total length of drains 411km

No. of delivery outlets 2,159

No. of customers (irrigation and stock and domestic) 1,140

Total high reliability water shares 149,395.9ML

Total low reliability water shares 71,158ML

Total delivery shares 1,419ML/day

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Service measures 2.2

The table below details our service measures for the Macalister Irrigation District:

Measure 2018-19

Performance Target

Channel performance (pool height consistency) 78%

Delivery reliability 99%

Delivery efficiency 80%

Customers with access to Demand Management System 40%

Release of water savings 800ML

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Strategic focus 2.3

The table below summarises our major initiatives and outcomes for the Macalister Irrigation District.

Initiative Outcomes

MID2030 Phase 1B – Southern Tinamba upgrade

In 2007 we finalised our MID2030 strategy – a blueprint for investment in infrastructure to transform the efficiency, service levels and environmental footprint of the Macalister Irrigation District.

We have secured $60m funding for the Southern Tinamba upgrade project. This project will replace leaky channels with pipes, and in the lower part of the system automates channels.

The project is jointly funded by customers, state and federal governments.

MID2030 Phase 2

Phase 2 includes the Newry, West, Boisdale, Nuntin and Stratford supply systems. The estimated construction cost is $30m-$50m. The project is expected to yield water savings in excess of 5GL.

Upgrade or replace 85km of channel.

Reduce losses by 9,700ML.

Use the savings to create water shares for customers.

Increase service levels by reducing order times and providing higher and more reliable flows.

Funding modernisation

Finalise the feasibility studies and business case for MID2030 Phase 2. We can then move to working with potential investors regarding funding the project.

Finalise business case and seek funding to complete MID modernisation.

Water sales and distribution

Sell and /or distribute water savings from our modernisation program to our customers to increase production or provide water security.

$500k per annum for proceeds from the sale of new entitlements.

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Pricing 2.4

Overview

Our prices for 2018-19 are consistent with the indicative price paths from our 2018 Price Submission. We set prices annually to reflect our operating and capital budgets, within the constraints of our total revenue requirement.

Our water share prices will decrease slightly, reflecting the increased quantity of water shares following the distribution of water savings during 2017-18. Our infrastructure fee for delivery shares will increase by CPI only (1.9%).

Specific prices

The table below lists the major prices for the Macalister Irrigation District. Our full tariff schedule is detailed in the Appendices.

Tariff 2017-18 2018-19 High reliability water share (per ML) $13.20 $12.90

Low reliability water share (per ML) $6.60 $6.45

Delivery share (per ML/day) $5,160.00 $5,255.00

Standard usage (per ML) $9.95 $9.95

Service point – metered outlet (each) $205.00 $208.50

Service point – metered pump (each) $107.50 $109.50

Salinity mitigation $0.55 $0.55

We also collect application fees on behalf of the Victorian Water Register for transactions relating to water shares and allocations.

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Bill impacts

The table below provides indicative bill impacts for small, medium and large customers in the district. Note that, following a distribution of water savings during 2017-18, most customers will have a greater volume of water shares in 2018-19.

2017-18 2018-19 Bill change

% Qty Charge Qty Charge

Small customer (channel supply)

High reliability water share (ML) 5.0 $66.00 5.2 $67.51

Low reliability water share (ML) 2.5 $16.50 2.6 $16.87

Delivery share (ML/day) 0.0575 $296.70 0.0575 $302.16

Service point – metered outlet (each) 1 $205.00 1 $208.50

Usage (ML) 5.0 $49.75 5.0 $49.75

Salinity mitigation (ML) 5.0 $2.75 5.0 $2.75

Total bill $636.70 $647.55 1.7%

Medium customer (channel supply)



Delivery share (ML/day) 0.575 $2,967.00 0.575 $3,021.63

Service point – metered outlet (each) 1 $205.00 1 $208.50

Usage (ML) 50.0 $497.50 50.0 $497.50


Total bill $4,522.00 $4,598.97 1.7%

Large customer (channel supply)

High reliability water share (ML) 250.0 $3,300.00 261.7 $3,375.50


Delivery share (ML/day) 2.875 $14,835.00 2.875 $15,108.13

Service point - metered outlet (each) 3 $615.00 3 $625.50

Usage (ML) 250.0 $2,487.50 250.0 $2,487.50


Total bill $22,200.00 $22,577.83 1.7%

Medium customer (river supply)



Service point – metered pump (each) 1 $107.50 1 $109.50

Usage (ML) 50.0 $497.50 50.0 $497.50


Total bill $1,457.50 $1,440.75 -1.1%

32

Capital works program 2.5

Overview

Our budgeted capital expenditure for the MID totals $51.1m across the five years of this Corporate Plan.

Significant projects

MID2030 Phase 1B

This $60m project is underway as the next phase of modernisation for the MID, and has been jointly funded by SRW customers and the state and federal governments. This project covers the Southern Tinamba supply zone, which includes some of the poorest channels and highest water losses in the district.

We are modernising approximately 80km of channels in the Tinamba, Mewburn Park and Riverslea areas with a combination of piping and channel automation.

The project is planned to be completed over the next three years. The project will increase the system efficiency and the level of service to customers in this area. The estimated water savings from the project are approximately 9,700ML per year, and will be made available to the district to increase production.

Stage 1 was completed on time and under budget during winter 2017. The final pipeline design is mostly complete and has significantly realigned the route. Stage 2 pipeline construction works started in May 2018, and will be followed by stage 4 pipeline construction works in winter 2019 and Stage 3 channel automation works in 2020.


$'000 $'000 $'000 $'000 $'000 $'000 $'000MID2030 1A 1,020 0 0 0 0 0 0

MID2030 1B 21,481 21,339 10,262 5,543 24 0 37,168

MID2030 2 0 300 207 52 0 0 559

Glenmaggie northern inlet rehabilitate 181 613 0 0 0 0 613

Maffra weir operating gear 209 450 1,554 609 0 0 2,613

Other district works 699 1,064 1,306 1,017 1,019 959 5,365

Other storage works 813 1,117 1,059 649 852 1,186 4,863

24,403 24,883 14,388 7,870 1,895 2,145 51,181

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Glenmaggie northern inlet refurbishment

The project involves securing the fixed bulkheads and improving our access arrangements. The project will be completed in the next few months.

Maffra Weir operating gear refurbishment/replacement

A review of the operating gear for the spillway gates at Maffra Weir found that they were in very poor condition and do not meet modern design standards. There were also a number of electrical and safety issues identified.

The board approved a business case to replace the operating gear and associated operating deck. The project cost is estimated to be $2.8m, with the bulk of the construction work scheduled in 2019-20.

34

Financial outcomes 2.6

Operating result

The operating cost base for the Macalister Irrigation District increases across the five-year period to June 2023. This reflects the progressive completion of irrigation modernisation works and represents the customer contribution towards these projects. As revenue is limited to CPI over the period, the increasing cost base results in a break-even result for 2020-21 to 2022-23.

Surplus results in 2017-18 to 2019-20 will accumulate into our modernisation fund – providing a contribution towards future modernisation projects, such as MID2030 Phase 2.

Compared to 2017-18, district capital costs decline in 2018-19 following full discontinuation of the asset renewal annuity.

Revenue from usage charges is calculated on our 10-year average usage of 147GL per annum.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Revenue

Fixed annual charges 10,775 10,969 11,255 11,548 11,847 12,154

Usage charges 1,467 1,467 1,467 1,467 1,467 1,467

Other revenue 81 83 85 87 89 91

12,323 12,519 12,807 13,102 13,403 13,712

Expenses

Operating costs - District 7,126 7,477 7,576 7,675 7,776 7,878

- Storage 1,175 1,141 1,156 1,171 1,186 1,201

Capital costs - District 1,875 1,230 1,732 2,308 2,491 2,465

- Storage 1,322 1,397 1,592 1,912 2,003 2,047

11,498 11,245 12,056 13,066 13,456 13,591

Operating result 825 1,274 751 36 (53) 121

Resilience fund

In our 2013-18 Water Plan we proposed to strengthen price certainty and stability for customers by introducing a business resilience fund. This fund is built by pricing for a small annual surplus during the 2013-18 regulatory period. The fund enables us to absorb unforeseen cost or revenue changes without amending our indicative price path. Our Corporate Plan forecasts that we will maintain the MID resilience fund at $800k by the end of the five-year period.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 800 800 800 800 800 749Annual operating result 771 1,273 752 37 (53) 121Transfer to modernisation (782) (1,303) (775) (41) 0 (74)Interest 11 30 23 4 2 4Closing balance 800 800 800 800 749 800

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Modernisation fund

In 2015 we established a modernisation fund to accumulate surplus funds generated from operating results, water entitlement and other asset sales. These funds are used to offset price increases from modernisation projects.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 6,414 1,179 1,328 578 543 37

Water sales 549 500 500 500 500 500

Transfer from operating surplus 782 1,303 775 41 0 74

Share of asset sales 233 0 (232) 488 24 0

Funds applied to modernisation projects (6,963) (1,679) (1,828) (1,078) (1,044) (538)

Interest 164 25 35 15 14 1

Closing balance 1,179 1,328 578 543 37 74

Renewal fund

Prior to the 2013-18 regulatory period, we included a provision in our pricing for the future replacement and refurbishment of irrigation district assets, and we had accumulated over $20m of renewal funds for the MID.

From 2013-14, we began to transition away from this pricing approach by reducing the annual provision and offsetting the accumulated renewal funds against modernisation projects. The fund will be fully expended by the end of 2017-18.

Werribee

Irrigation District

37

Overview 3.1

The Werribee Irrigation District (WID) is one of Victoria’s prime horticulture regions, located on Melbourne’s doorstep at Werribee South.

Water supply to the WID consists of river water, groundwater and Class A recycled water sourced from Melbourne Water’s Western Treatment Plant.

River water for the WID is harvested in dams on tributaries to the Werribee River and on the Werribee River itself. These dams also hold entitlements for the Bacchus Marsh Irrigation District and for Western Water.

The WID specialises in the production of green leafy vegetables - most notably broccoli, lettuce and cauliflowers - with a farm gate value in excess of $187m per year. The WID employs approximately 660 people.

The costs of managing the dams are shared in accordance with Bulk Entitlements, and for the WID the shares are:

70.4% of Pykes Creek 71.3% of Melton 14.3% of Merrimu 7.13% of Lerderderg diversion.

More information on our storage operation function for the Werribee and Maribyrnong systems is included in Section 7 of this Plan.


The table below details our service measures and targets for the Werribee Irrigation District.

Measure 2018-19

Performance Target

Delivery volume accuracy 98%



Recycled water salinity <1800EC




Total length of drains 63km

No of delivery outlets 267

No of customers 244

Total high reliability water shares 11,006ML

Total delivery shares 156ML/day

Total recycled water customer contracted volume 7,864ML

38

Strategic focus 3.3The table below summarises our major initiatives and outcomes for the Werribee Irrigation District.

Initiative Outcomes

Werribee modernisation

We have started the major upgrade of the remaining channels in the Werribee Irrigation District. The project replaces the old leaky channels with pipes. Co-funding from the Victorian Government and customers will allow us to complete two-thirds of the project. We are actively seeing funding for the last third.

The project will save 5,000ML, with two-thirds going back to customers to use for production and to improve the resilience of the district in dry times. The other third of the water savings will go to improve the health of the Werribee River.

3,330ML of water savings from replacing channels with pipes


Funding to complete the modernisation of the Werribee system will cost $31.3m. We secured a one-third contribution from the Victorian Government in the 2016-17 budget. We were unsuccessful in our bid to secure the final one-third funding from the federal government’s National Water Infrastructure Development fund. We will now continue discussions with the state government on options to complete modernisation.

Commitment of 66% external funding for Werribee modernisation – 33% secured from the Victorian Government.

Reducing salinity

Recycled water salinity varies between 1600EC and 2000EC and is well above the optimum level for vegetable production of <1300EC. We will work with stakeholders to reduce salinity levels to help growers reduce on-farm costs and improve crop yields and returns and support the long-term health of Werribee South soils.

We provide a product of suitable quality for all our customers.

39

Pricing 3.4

Overview

Our prices for 2018-19 are consistent with the indicative price paths in our 2018 Price Submission. We set prices annually to reflect our operating and capital budgets, within the constraints of our total revenue requirement.

Our prices for 2018-19 will increase by CPI only.

Specific prices

The table below lists the major prices for the Werribee Irrigation District. Our full tariff schedule is detailed in the Appendices.

Tariff 2017-18 2018-19 High reliability water share (per ML) $125.00 $127.00

Low reliability water share (per ML) $62.50 $63.50

Delivery share (per ML/day) $14,900.00 $15,180.00



Recycled water contracted volume (ML) $343.00 $349.00


40

Bill impacts

The table below provides indicative bill impacts for small, medium and large customers in the Werribee Irrigation District, as well as a large recycled water customer.

Qty

2017-18 Charge

2018-19 Charge

Bill change %

Small customer

High reliability water share (ML) 5.0 $625.00 $635.00

Low reliability water share (ML) 2.5 $156.25 $158.75

Delivery share (ML/day) 0.0775 $1,154.75 $1,176.45

Service point – metered outlet (each) 1 $230.00 $234.00

Total bill $2,166.00 $2,204.20 1.8%

Medium customer

High reliability water share (ML) 50.0 $6,250.00 $6,350.00

Low reliability water share (ML) 25.0 $1,562.50 $1,587.50



Total bill $19,590.00 $19,936.00 1.8%

Large customer





Total bill $39,180.00 $39,872.00 1.8%

Large recycled water customer

High reliability water share (ML) 100.0 12,500.00 12,700.00

Low reliability water share (ML) 50.0 3,125.00 3,175.00

Delivery share (ML/day) 1.55 23,095.00 23,529.00

Service point – metered outlet (each) 2 460.00 468.00

Recycled water contracted volume (ML) 100.0 34,300.00 34,900.00

Total bill 73,480.00 74,772.00 1.8%

41


Overview

Our budgeted capital expenditure for the WID totals $13.4m across the next five years.


Werribee Irrigation District modernisation

We have started the major upgrade of the Werribee Irrigation District. The project replaces the old leaky channels with pipes. Co-funding from the state government and customers will allow us to complete two-thirds of the project. We are actively seeing funding for the last third.

The project will save 5,000ML with two-thirds going back to customers to use for production and to improve the resilience of the district to dry times. The other third of the water savings will go to improve the health of the Werribee River.


$'000 $'000 $'000 $'000 $'000 $'000 $'000WID modernisation 5,493 9,719 3,010 0 0 0 12,729

Other district works 30 49 67 69 106 90 381

5,523 9,918 3,541 69 106 90 13,724

42

43


Operating result

The operating cost base for the Werribee Irrigation District benefits from the discontinuation of the renewal annuity in 2018-19. In addition, the progressive implementation of irrigation modernisation works enables further operating cost reductions across the period. Together, these lower costs offset the increase in capital charges that results from the customer contribution towards irrigation modernisation.

Other revenue represents an interest return on termination fee proceeds received in 2014-15. These proceeds are contributed towards modernisation works in 2018-19, and thereafter no further revenue is received by the district.

Surplus results across the period accumulate into our modernisation fund – providing a potential contribution to complete WID modernisation.

No delivery of metro water is planned for 2018-19.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Revenue

Fixed annual charges 3,963 4,033 4,126 4,221 4,318 4,417

Other revenue 122 133 0 0 0 0

4,085 4,166 4,126 4,221 4,318 4,417

Expenses

Operating costs - District 2,100 2,053 1,942 1,929 1,915 1,901

- Storage 619 601 609 617 625 633

Capital costs - District 313 239 384 408 372 331

- Storage 970 1,016 1,122 1,110 1,095 1,136

4,002 3,909 4,057 4,064 4,007 4,001

Operating result 83 257 69 157 311 416

Recycled water supply

Contracted volume to the Werribee recycled water scheme is approximately 7.5GL per annum. Our pricing model assumes usage of 65% for a break-even result.

Prices increase by CPI annually and include an ongoing contribution to repay the long-term recycled water debt. This debt arose on the establishment of the scheme and on current rates of repayment will be fully paid by 2032.

44

Resilience fund

In our 2013-18 Water Plan we proposed to strengthen price certainty and stability for customers by introducing a business resilience fund. This fund is built by pricing for a small annual surplus during the 2013-18 regulatory period. The fund enables us to absorb unforeseen cost or revenue changes without amending our indicative price path. Our Corporate Plan forecasts that we will maintain the WID resilience fund at $300k throughout the five-year period.

Modernisation fund

In 2015 we established a modernisation fund to accumulate surplus funds generated from operating results and other asset sales. These funds are used by us to offset the price increases from modernisation projects.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 3,438 929 294 1 173 340

Transfer from operating surplus 31 274 87 177 336 444

Share of asset sales 150 0 (94) (4) 0 0

Funds applied to modernisation projects (2,846) (928) (684) (196) (369) (511)

Interest 156 20 8 0 5 9

Closing balance 929 294 1 173 340 453

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23$'000 $'000 $'000 $'000 $'000 $'000

RevenueFixed entitlement charges (50%) 1,277 1,301 1,331 1,362 1,393 1,425Usage charges 383 390 399 408 418 427Other revenue 61 63 64 65 67 68

1,721 1,754 1,794 1,835 1,878 1,920ExpensesOperating costs - District 224 222 225 228 231 234 - Melbourne Water 1,337 1,362 1,393 1,426 1,458 1,492Capital costs - District 9 5 22 47 44 43Long term district debt repayment 126 129 129 133 133 136

1,696 1,718 1,769 1,834 1,866 1,905Operating result 25 36 25 1 12 15

45

Renewal fund

Prior to the 2013-18 regulatory period, we included a provision in our pricing for the future replacement and refurbishment of irrigation district assets, and we had accumulated over $5m of renewal funds for the WID.

From 2013-14, we began to transition away from this pricing approach by reducing the annual provision and offsetting the accumulated renewal funds against modernisation projects. The fund will be fully expended by the end of 2018-19.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 499 14 0 0 0 0

Annual annuity provision 166 0 0 0 0 0

Funds applied to capital projects (13) 0 0 0 0 0

Funds applied to modernisation projects (652) (14) 0 0 0 0

Interest 14 0 0 0 0 0

Closing balance 14 0 0 0 0 0

Bacchus Marsh Irrigation District

47

Overview 4.1

The Bacchus Marsh Irrigation District (BMID) is located north-west of Melbourne, on a fertile flood plain of the Werribee and Lerderderg Rivers.

The district is dominated by several large-scale enterprises that produce a significant proportion of the total output. Vegetable growing and orchards are the primary businesses.

We also provide water for sand-washing to several major quarries supplying the construction industry.

Current estimates indicate that around $50m of economic activity is generated per year. The BMID supports approximately 430 full time jobs.

There is a small volume of licensed groundwater, and river water is supplied from Pykes Creek Reservoir; therefore an important priority is to secure a viable alternative water supply.

The first stage of modernisation works has changed the way water is supplied to customers. Approximately two-thirds of the district is now supplied via a pump station on the Werribee River at the Maddingley Weir. This has improved the responsiveness of the supply system to changes in customer demand, raising overall service levels.

Storage operator costs

In addition to the operating and capital costs of running the irrigation district, BMID prices must also contribute to costs of operating storages to harvest and release water.

The costs are shared in accordance with bulk entitlements, and for the BMID the shares are:

28.3% of Pykes Creek 28.7% of Melton 5.7% of Merrimu 2.9% of Lerderderg diversion.

More information on our storage operation function for the Werribee and Maribyrnong systems is included in Section 7 of this Plan.




No of delivery outlets 165

No of customers 130

Total high reliability water shares 4,310ML

Total delivery shares 71ML/day

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The table below details our service measures and targets for the Bacchus Marsh Irrigation District.

Measure 2018-19

Performance Target

Delivery volume accuracy 98%



Strategic focus 4.3

The table below summarises our major initiatives and outcomes for the Bacchus Marsh Irrigation District.

Initiative Outcomes

BMID modernisation

We have started the upgrade of the Bacchus Marsh Irrigation District. We have completed a new pump station and rising main at Maddingley Weir.

Works underway and planned involve:

upgrade of 2/2 pipeline

new pipeline from Spur 5 across the Lerderderg River to supply district north of the Western Freeway

piping of the ‘12’ Channel

new gravity pipeline from Bacchus Marsh Diversion to service customers along Werribee Vale Road.

Higher service levels and 1,100ML of water savings


Funding modernisation for the Bacchus Marsh Irrigation District system will cost $12.4m. We secured a one-third contribution from the Victorian Government in the 2016-17 budget to match the SRW contribution (on irrigators’ behalf). We were unsuccessful in our bid to secure the final one-third funding from the federal government National Water Infrastructure Development fund. We will now continue discussions with the state government on options to complete modernisation.

Commitment of 66% external funding for Bacchus Marsh modernisation – 33% secured from the Victorian Government.

Water Security

We have sought to provide water security by issuing an additional 600ML of groundwater licence and 1,200ML of Thomson water to be supplied as needed through the Metropolitan grid infrastructure.

Secure an alternative supply of 2,000ML for dry years on top of the 600ML of new groundwater allocation already licensed.

49

Pricing 4.4

Overview


Our water share prices will increase by CPI only (1.9%), while the infrastructure fee for delivery shares will increase by 4.8% (including CPI). This increase provides a customer contribution to modernisation of the irrigation district, and follows price reductions during our previous Water Plan.

Specific prices

The table below lists the major prices for the Bacchus Marsh Irrigation District. Our full tariff schedule is detailed in the Appendices.

Tariff 2017-18 2018-19 High Reliability Water Share (per ML) $125.00 $127.00

Low Reliability Water Share (per ML) $62.50 $63.50

Delivery Share – Infrastructure Fee (per ML/day) $10,370.00 $10,870.00




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Bill impacts

The table below provides indicative bill impacts for small, medium and large customers in the Bacchus Marsh Irrigation District:

Qty

2017-18 Charge

2018-19 Charge

Bill change %

Small customer

High reliability water share (ML) 5.0 $625.00 $635.00


Delivery share (ML/day) 0.0925 $959.23 $1,005.48


Total bill $1,935.48 $2,003.23 3.5%

Medium customer





Total bill $8,897.38 $9,200.13 3.4%

Large customer





Total bill $35,199.50 $36,392.50 3.4%

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Overview

Our capital expenditure for the BMID totals $5.4m across the next five years.


BMID Modernisation

We have started the upgrade of the Bacchus Marsh Irrigation District. We have completed a new pump station on the Werribee River and our new tank at Maddingley Basin is close to completion. Further planned works involve:

Stage 2: Upgrade of 2/2 pipeline Stage 3: A new pipeline from the Bacchus Marsh Diversion to service customers along

Werribee Vale Road Stage 4: A new pipeline to supply district north of the Western Freeway and piping of the

‘12’ Channel Stage 5: Decommissioning of the Main Channel.


$'000 $'000 $'000 $'000 $'000 $'000 $'000BMID modernisation 3,028 3,243 1,348 2 0 0 4,593

District works 0 77 142 214 197 178 808

3,028 3,320 1,490 216 197 178 5,401

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Operating result

Revenue from Bacchus Marsh customers increases at CPI plus 1.7% for the 2018-23 period. This indicative price path was included in our Price Submission, and represents the customer contribution towards irrigation modernisation. As Bacchus Marsh customers received an equivalent price decrease in the 2013-18 period, this price path returns prices for the 10-year period to CPI only.

The progressive implementation of irrigation modernisation works at Bacchus Marsh enables operating cost reductions across the period. These lower costs further offset the increase in capital charges that results from the customer contribution towards irrigation modernisation.

Surplus results across the period accumulate into our modernisation fund – providing a potential contribution to complete BMID modernisation.

Resilience fund

In our 2013-18 Water Plan we proposed to strengthen price certainty and stability for customers by introducing a business resilience fund. This fund is built by pricing for a small annual surplus during the 2013-18 regulatory period. The fund enables us to absorb unforeseen cost or revenue changes without amending our indicative price path. Our Corporate Plan forecasts that we will maintain the BMID resilience fund at $200k throughout the five-year period.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23$'000 $'000 $'000 $'000 $'000 $'000

RevenueFixed annual charges 1,462 1,564 1,600 1,637 1,675 1,713

ExpensesOperating costs - District 748 744 696 698 700 702 - Storage 249 242 245 248 252 255Capital costs - District 78 108 186 223 217 214 - Storage 378 399 447 450 457 484

1,453 1,493 1,574 1,619 1,626 1,655Operating result 9 71 26 18 49 58

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Modernisation fund

In 2015 we established a modernisation fund to accumulate surplus funds generated from the operating result and other asset sales. These funds are used by us to offset the price increases from modernisation projects.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 1,618 1,790 74 5 29 60

Transfer from operating surplus 19 36 37 28 61 71

Share of asset sales 65 0 (34) 2 0 0

Funds applied to modernisation projects (549) (1,790) (435) (66) (91) (101)

Interest 73 38 2 0 1 2

Closing balance 1,790 74 5 29 60 72

Renewal fund

Prior to the 2013-18 regulatory period, we included a provision in our pricing for the future replacement and refurbishment of irrigation district assets, and we had accumulated over $2.5m of renewal funds for the BMID.

From 2013-14, we removed the annual provision, which allowed a price reduction, and we have been using the remaining funds against our annual capital works.

As shown below, the fund will be fully expended in 2018-19 through our investment in modernisation of the irrigation system.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 1,103 31 (0) (0) (0) (0)Funds applied to modernisation projects (1,103) (32) 0 0 0 0Interest 31 1 0 0 0 0Closing balance 31 (0) (0) (0) (0) (0)

Groundwater

andRivers

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Overview 5.1

Our Groundwater and Rivers business licenses and monitors the use of water from unregulated rivers and groundwater aquifers in southern Victoria.

It is also responsible for licensing the construction of bores and farm dams, managing around 1,800 bore construction licences issued online each year.

Licence holders on the Latrobe and Maribyrnong systems contribute to costs of operating storages to harvest and release water – Blue Rock Lake on the Latrobe River, and Rosslynne Reservoir on the Maribyrnong River.

The costs are shared in accordance with bulk entitlements, and in the case of Blue Rock Lake, also includes a pro-rata apportionment of the drought reserve.

The shares are:

2.59% of Blue Rock for the Latrobe system

4.5% of Rosslynne for the Maribyrnong system.

More information on our storage operation functions for the Latrobe system is included in Section 6, and in Section 7 for the Maribyrnong system.

Number of surface water take and use licences 4,233

Volume of surface water take and use entitlements 163,064ML

Number of groundwater take and use licences 4,310

Volume of groundwater take and use entitlements 393,356ML

Number of surfacewater registration (dam) licences 3,141

Volume of surfacewater registration (dam) licences 82,189ML

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The table below details our service measures and targets for processing applications and for promoting trade unregulated systems:

Measure 2017-18

Performance Target

Applications processed within target timeframes 90%

Customer contacts to promote water trade 1,000

The following targets are applied to the various application types:

Application type Target (days)

Allocation trade 3

Bore construction licence 3

Divide a water share 3

Information statement 3

Licence transfer 7

Water share transfer 7

Subdivision 10

Farm dam licence 30

Take and use licence 30

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Strategic focus 5.3

The table below summarises our major initiatives and outcomes for Groundwater and Rivers.

Initiative Outcomes

Sale of unallocated water

There is an opportunity to make up to 60,000ML of water available for productive use in our region. We have developed a policy and process for the sale of unallocated water. We have completed auctions in a number of areas and there will be further sales progressively where demand is identified and water is available.

Complete sale of unallocated water in 2018-19 for areas including the Dilwyn, Moorabbin and Moe groundwater areas.

Trading

Of the water allocated to licence holders, less than 50% is put to productive use in most years. We will focus on encouraging licence holders who typically use little or no water to trade their allocation – either permanently or temporarily.

Increased customer contact and education, focused on water trading leading to more water in production.

Automated rostering

We will develop an automated system that gathers flow information and sets rosters according to the local rules. The information will be available online and also be pushed out to customers.

System developed and piloted for the 2018-19 irrigation season.

Automated meter reading – Stage 2

Automated Meter Reading (AMR) technology will reduce the labour and vehicle costs associated with manual meter reading and provide more frequent usage data to SRW and customers to assist in decision making. AMR will be progressively implemented across our region where it is cost effective to do so.

In 2018-19 automated meter reading will be progressively rolled across groundwater and surfacewater systems in our region extending to 60% of meters.

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Pricing 5.4

Overview


Our prices reflect a small reduction, after CPI.

In March 2017, Hazelwood Power Station ceased operating. The owner, Engie, holds a groundwater licence for dewatering the mine. We have assumed the continuation of dewatering and payment of associated licence fees over the period of this Corporate Plan.

Specific prices

The table below lists the major prices for our Groundwater and Rivers customers. Our full tariff schedule is detailed in the Appendices.

Tariff 2017-18 2018-19

Licence charge (per licence) $370.00 $368.00

Licensed volume charge – surface water (per ML) $11.90 $11.80

Licensed volume charge – groundwater (per ML) $4.10 $4.05

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Bill impacts

The table below provides indicative bill impacts for small, medium and large licence holders.

Qty

2017-18 Charge

2018-19 Charge

Bill change %

Small customer – surface water

Licence charge (each) 1.0 $370.00 $368.00

Volumetric charge (ML) 5.0 $59.50 $59.00

Total bill $429.50 $427.00 -0.6%

Small customer – groundwater



Total bill $390.50 $388.25 -0.6%

Medium customer – surface water



Total bill $965.00 $958.00 -0.7%

Medium customer – groundwater



Total bill $985.00 $975.50 -1.0%

Large customer – surface water


Volumetric charge (ML) 200.0 $2,380.00 $2,360.00

Total bill $2,750.00 $2,728.00 -0.8%

Large customer – groundwater


Volumetric charge (ML) 300.0 $1,230.00 $1,215.00

Total bill $1,600.00 $1,583.00 -1.1%

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Application fees

We charge application fees for a range of different transactions in relation to water licences and works licences (bores and dams). As part of 2018 Price Submission, we restructured our tariffs, which included:

removing licence renewal fees reducing the cost of simple repeat licence transfers revising the tiered structure for groundwater and surface water application fees combining tariffs into single transactions where they are always incurred together aligning similar tariffs to simplify our tariff schedule.

Overall, our application fees will not increase more than CPI.

The table below lists the most common fees that we receive. Our full tariff schedule is detailed in the Appendices.

Tariff 2017-18 2018-19 Construct, alter or decommission class A or B bore $440.00 $448.00

Transfer of licence (repeat temporary transfer or sale of property) $235.00 $122.00

Information statement $110.00 $112.00

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Overview

Our capital expenditure for Groundwater and Rivers totals $2.9m across the next five years.


Automated meter reading

Groundwater and Rivers has commenced the introduction of new technology to read our meters. The new system comprises a low cost, low power transmitting device that is attached to existing water meters and allows hourly data to be sent digitally via radio technology to high-sensitivity receivers. The data is then available to be viewed online and quickly and easily imported directly into our metering system.

This will remove the need for field staff to physically read meters, which will substantially reduce operating costs and safety risks to staff, and also improve field operations productivity. The ability to access daily and hourly usage data will assist customers with on-farm management and allow important decisions regarding resource management to be made quickly and easily.

Meter replacement

Groundwater and Rivers continues to undertake meter replacement projects to upgrade or replace any meters that are non-conforming or past their useful life.

This ensures we meet our obligations under the National Framework for Non-Urban Meters and associated State Implementation Plan, as far as reasonably practicable. The assumption for the period is that there will be no external funding or requirement from government to upgrade to more expensive metering technology.

We have a current fleet of over 5,000 meters. Maintenance and replacement is an ongoing requirement to make sure the fleet is kept up to relevant standards.

By upgrading or replacing these meters, customers will be able to rely on the accurate usage information to better manage their business and SRW is able to rely on the information to assist and make decisions around resource management.


$'000 $'000 $'000 $'000 $'000 $'000 $'000

Automated meter reading 247 417 506 571 235 241 1,970

Meter replacement & other 350 176 244 167 171 241 999

597 593 750 738 406 482 2,969

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Operating result

Our corporate-wide strategies to reduce operating and capital expenditure delivered operating surpluses across the 2013-18 Water Plan period.

This improved financial performance has enabled us to provide a price freeze for customers across the full 2018-23 regulatory period. As shown by the operating result table below, the 2017-18 surplus is offset by deficits in 2018-19 to 2020-21 before returning to surplus by the end of the 2018-23 regulatory period.

Applications for new groundwater and surfacewater licences are subject to ongoing volatility (influenced by factors such as seasonal conditions and government policy). For 2018-19 we have projected to maintain the same core workload as 2017-18.

Resilience fund

In our 2013-18 Water Plan we proposed to strengthen price certainty and stability for customers by introducing a business resilience fund. This fund is built by pricing for a small annual surplus during the 2013-18 regulatory period. The fund enables us to absorb unforeseen cost or revenue changes without amending our indicative price path. Our Corporate Plan forecasts that we will maintain the Groundwater and Rivers resilience fund at $500k by the end of the five-year planning period.

Groundwater & Rivers Field2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000


ExpensesOperating costs - District 5,655 6,002 6,080 6,159 6,239 6,320 - Storage 69 66 66 67 68 69Capital costs - District 487 456 477 516 517 506 - Storage 15 18 19 22 22 22

6,226 6,542 6,642 6,764 6,846 6,917Operating result 477 (151) (104) (76) (4) 82

Groundwater & Rivers Applications2017-18 2018-19 2019-20 2020-21 2021-22 2022-23

$'000 $'000 $'000 $'000 $'000 $'000

RevenueFees 1,157 1,181 1,198 1,215 1,232 1,249

ExpensesOperating costs 1,154 1,177 1,189 1,207 1,222 1,236

Operating result 3 4 9 8 10 13

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Modernisation fund

In 2015 we established a modernisation fund to accumulate surplus funds generated from the operating result and other asset sales. These funds are used by us to offset price increases from modernisation projects.

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 2,164 2,533 1,906 1,369 1,234 1,156Transfer from operating surplus 316 0 0 12 66 112Share of asset sales 0 0 (15) 23 37 72Funds applied to modernisation projects 0 (720) (607) (235) (241) 0Interest 53 93 85 66 59 61Closing balance 2,533 1,906 1,369 1,234 1,156 1,401

Latrobe Bulk

Entitlements

65

Overview 6.1

SRW is the appointed storage manager for the Latrobe River basin. Our role is to harvest, store and release water on behalf of entitlement holders. This involves managing large and complex infrastructure including dam walls, embankments, spillways, and associated mechanical and electrical equipment.

We manage Blue Rock Lake, Lake Narracan and Yallourn Weir on behalf of Gippsland Water and the Latrobe Valley power companies. A small share of entitlement from Blue Rock Lake is held by SRW for downstream licence holders, and the Department of Treasury and Finance (DTF) is custodian for water entitlements issued to the former State Electricity Commission of Victoria (SECV). Blue Rock Lake also holds an environmental entitlement and a drought reserve.

The Hazelwood power station does not hold entitlements in the Latrobe System, and so the closure of the power station in March 2017 has not impacted this part of our business.

The table below shows the entitlement shares on the Latrobe system:

Entitlements Blue Rock Narracan and Yallourn

Gippsland Water 16.27%

AGL, Loy Yang A power station 16.40% 32.80%

Energy Australia, Yallourn power station 14.97% 29.94%

Alinta, Loy Yang B power station 8.20% 16.4%

Licence holders 2.00%

DTF (Former SECV) 10.43% 20.86%

Environmental entitlement 9.00%

Drought reserve 22.73%

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Maximising the accuracy of water release helps us to minimise water losses. We measure performance as the percentage of time that the released flow is within defined limits of the ordered flow. Our target is:

95% of ordered releases are within 10% of the ordered flow.

Charges 6.3

The table below details our charges for the Latrobe storage operation. These charges are based on the pricing principle of cost recovery, and act to fully reimburse our cash outgoings to manage these systems.

2017-18 2018-19 $'000 $'000 Gippsland Water 620 648

Energy Australia 387 427

AGL 424 468

GDF Suez 212 234

Victorian Government (SECV) 241 264

Victorian Environmental Water Holder 117 138

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Our capital expenditure on Latrobe system storages totals $3.9m across the next five years.


Blue Rock hydraulically activated bulkhead for low-level inlet

This project will allow the bulkhead for the low-level inlet to be put in place without having to use divers or a barge. The existing bulkhead has never been used as it is impractical and unsafe to install. Without a bulkhead, the low-level inlet and the pipe upstream of the tower can’t be easily inspected, as we need either a specifically designed bulkhead to be in place or two lines of isolation. This installation will reduce risk of undetected defects.

Blue Rock equipment lift

This project aims to install a small equipment lift in the tower so that staff can move safely up and down the ladders without having to carry equipment. This will result in a significant safety improvement.

Blue Rock Pump Station Road

The road to the pump station is deteriorating and has some high risk sections for drivers - especially considering it is used frequently at night. The project aims to repair the failed or deteriorating sections and re-seal the entire road. It is also likely that some short sections of guard rail will be installed.

Blue Rock low level refilling valve

The low level refilling valve is used to refill the conduit after it has been dewatered for maintenance. It is currently in poor condition and needs to be replaced to ensure its reliability.


$'000 $'000 $'000 $'000 $'000 $'000 $'000Other storage works 1,275 836 652 530 827 1,128 3,973

1,275 836 652 530 827 1,128 3,973

Werribee and Maribyrnong

Bulk Entitlements

69

Overview 7.1

SRW is the appointed storage manager for dams on the Werribee and Maribyrnong river systems. Our role is to harvest, store and release water on behalf of entitlement holders. This involves managing large and sophisticated infrastructure including dam walls, embankments, spillways, and associated mechanical and electrical equipment.

We manage the Pykes Creek, Melton and Merrimu reservoirs on the Werribee system, which also includes diversion weirs and tunnels to divert water from the Werribee River into Pykes Creek Reservoir and from the Lerderderg River into Merrimu Reservoir via Goodmans Creek. This system provides water for Western Water and for our Werribee and Bacchus Marsh Irrigation Districts. There is also an environmental entitlement to the flows into Merrimu Reservoir, and a portion of the storage capacity and inflows are unallocated.

On the Maribyrnong River, we manage Rosslynne Reservoir, which holds entitlements for Western Water, Melbourne Water and for SRW on behalf of downstream licence holders.

The table below shows the entitlement shares on the Werribee and Maribyrnong systems:

Entitlements Pykes Creek Melton

Merrimu Rosslynne

Capacity Inflows

Western Water 1.24% 60% 70% 86%

Melbourne Water 9.5%

SRW 98.76% 100% 20% 10% 4.5%

Environmental entitlement 10%

Unallocated 20% 10%


To maximise seasonal allocations for customers, it is important that water harvest is maximised in our off-stream storages at Pykes Creek and Merrimu Reservoirs (other major storages are on-stream so harvest performance does not apply). Our target is:

Water is harvested at the maximum possible rate >95% of time available (when dam capacity is available).

For all storages, maximising the accuracy of water release helps us to minimise water losses. We measure performance as the percentage of time that the released flow is within defined limits of the ordered flow. Our targets are:

Werribee system: 95% of time within 10% or 5ML. Maribyrnong system: 95% of time within 10% or 1ML

The different levels of precision in the definition for each system reflect the different equipment for measuring and making releases at the different storages, as well as the differing customers and volumes.

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Charges 7.3

The table below details our charges for the Werribee and Maribyrnong storage operations. These charges are based on the pricing principle of cost recovery, and act to fully reimburse our cash outgoings to manage these systems.

2017-18 2018-19 $'000 $'000 Western Water 1682 1785

Melbourne Water 53 53

DELWP (Unallocated share) 273 274


Our capital expenditure on storages in the Werribee and Maribyrnong river systems totals $7m across the next five years.


Merrimu cone valve upgrade

The cone valve at Merrimu Reservoir is critical as it is used for flood releases and also to pass environmental flow requirements. It is currently in poor condition and operating unreliably. The project involves replacing the hydraulic controls and removing the valve to remove corrosion, repaint and reinstall.


$'000 $'000 $'000 $'000 $'000 $'000 $'000Melton cone valve upgrade 109 251 0 0 0 0 251

Other storage works 1,559 1,162 1,301 1,860 1,073 1,386 6,782

1,668 1,413 1,301 1,860 1,073 1,386 7,033

Financial Statements

72

Preface 8.1

Overview

Our forecast financial statements comprise:

Operating Statement Balance Sheet Statement of Cash Flow Financial Performance Indicators Quarterly Operating Statement Quarterly Balance Sheet Quarterly Financial Performance Indicators.

Our Operating Statement shows significant losses after interest and depreciation charges – between $6m and $8m per annum across the planning period. This must be interpreted within the context of our designation as a ‘not for profit’ entity subject to state government sanctioned price regulation, and the implications of this for our asset values and depreciation charges.

We have infrastructure assets valued at over $1.2 billion which are not included in our regulatory asset base for pricing. This generates around $11m-12m per annum of depreciation charges, which are not recoverable through our regulated pricing framework.

Financial assumptions

Quantities

The quantities on which our revenue is forecast are generally stable across the planning period, with only moderate adjustments to reflect our proposed sale of properties and water entitlements.

This stability reflects the entitlement-based nature of our services, including:

Eastern Irrigation – delivery volumes consistent with our Water Plan of 147GL per annum, being approximately the same as the last 10-year average.

Groundwater and Rivers Application Fees – applications for new groundwater and surfacewater licences are subject to ongoing volatility (influenced by factors such as seasonal conditions and government policy). For 2018-19 we have projected a similar workload as 2017-18.

Werribee Irrigation – delivery of river and recycled water entitlements consistent with business as usual. No delivery of metro water is planned for 2018-19.

Bacchus Marsh Irrigation – delivery of river water entitlements consistent with business as usual. No delivery of metro water or other emergency supply water is planned for 2018-19.

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Staffing

Our staffing levels are expected to remain consistent with 2017-18.

Inflation

Our financial plans have been prepared in nominal dollars of the day, which are calculated with 2018-19 inflation at 1.9% and 2.3% inflation applied thereafter.

Cost of debt

Our Balance Sheet records an ongoing debt position for the corporation. As has been our approach in the past, we plan our interest costs as the weighted average of existing fixed interest obligations and the spot interest rate applicable at the time of completing the Corporate Plan. Accordingly, we have assumed an interest charge of 4.3% for 2018-19 – increasing to 5.3% across the balance of the planning period. The increase to 5.3% takes a prudent view that interest rates may increase in future periods.

Rate of return

A 4.13% real rate of return has been incorporated within our calculation of revenue requirement. This rate is consistent with that used by the Essential Services Commission for the draft 2018-23 Price Determination.

Construction costs

Our future capital budgets assume that infrastructure construction costs will increase at CPI.

Labour rates

We have assumed a minor increase in labour rates above CPI as a result of the in-principle enterprise agreement. The enterprise agreement is due for staff vote in June 2018.

Electricity costs

As most of our water supply is gravity-fed, our electricity costs are mostly for office use and accordingly represent a minor expense for the corporation. We expect to manage electricity price movements within our general basket of external costs.

Fuel prices

While we have an extensive fleet of 130 vehicles, we have not adjusted budgets for any real change to fuel prices. As with other speculative price changes, we expect to manage any cost change within our general basket of external costs.

74

Sensitivity analysis

Overview

This section summarises the financial impacts of alternative water supply and demand scenarios.

At the outset we note that, as a rural water corporation, we do not operate in a conventional utility regime – where the utility supplies water to meet the demand of its customers. Rather, our customers own their entitlements and our role is to deliver the water available to them under those entitlements when they order it, or in the case of Groundwater and Rivers customers, to ensure that the entitlements are exercised in accordance with conditions imposed to protect the environment and other users.

Consequently, most of our revenue is derived from charges for water entitlements, and is not dependent on how much water is available to, or used by, the holders of those entitlements.

Macalister Irrigation District

In the MID, water usage is charged at $9.95 per megalitre, and accounts for approximately 12% of our revenue. This Plan assumes ‘average’ water allocations and water deliveries based on recent years, that is, 147,500ML of water deliveries. A repeat of 2006-07, the worst year on record, would see usage limited to 50% of high reliability water entitlement – around 72,000ML.

This would decrease our revenue by $720k, which we would need to recover through future tariff increases.

Werribee Irrigation District

Our pricing for the Werribee Irrigation District does not include a variable usage charge for river water supplied against water shares. This recognises the highly variable nature of the Werribee catchment.

Long-term recycled water contracts have been established for Werribee customers and these contracts include a 50% ‘take or pay’ obligation. However, on average, we expect to deliver to customers 65% of contracted volume, and water pricing has been established on this basis. Should conditions be wetter than average, it is likely that our revenue will be limited to the 50% take or pay obligation, and pricing will fail to recover our costs by approximately $200k. In a dry year, we will recoup this deficit as deliveries will exceed 65%.

This Plan is based on 65% recycled water usage, which generates a break-even result.

Bacchus Marsh Irrigation District

As with Werribee, our pricing for the Bacchus Marsh Irrigation District does not include a variable usage charge for river water supplied against water shares.

This recognises the highly variable nature of the Werribee catchment. As with Werribee, we recently consulted with the customer committee on the possibility of reintroducing a usage charge, and this option was rejected.

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Groundwater and Rivers: Applications

We have returned to pre-drought levels of applications and there is some risk that application rates could decline further. We believe the level of revenue at risk from the budgeted $1.2m is $250k.

Despite the decline to this business activity in recent years, we are committed to maintaining our capability to deal effectively and professionally with all applications and enquiries.

Groundwater and Rivers: Field Compliance

Our annual tariffs for groundwater and surfacewater licences comprise a fixed charge per licence and an entitlement component (per ML). This does not expose us to any revenue risk from seasonal conditions.

Latrobe, Werribee and Maribyrnong Bulk Entitlements

Our Headworks business operates storages on behalf of bulk entitlement holders. Our charges are based on the actual costs of operating and maintaining those storages – and so do not expose us to any revenue risk from seasonal conditions.

Specific issues

Modernisation works

Our financial projections are based on significant modernisation works occurring in the Macalister, Werribee and Bacchus Marsh irrigation districts. A total program of just over $100m has been supported by the Victorian Government, the federal government and our irrigation customers. Macalister works are fully funded, and two-thirds of Werribee and Bacchus Marsh funding has been secured.

As the final third contribution towards Werribee and Bacchus Marsh ($15m) has not been secured, we have not included this part of the modernisation works within the Corporate Plan.

While we are currently developing the business case for the final Macalister Irrigation District modernisation works (phase 2), we will not budget for this until we secure funding.

Asset valuations

Our Operating Statement and Balance Sheet are prepared in accordance with accounting standards and financial reporting directions, under which our infrastructure assets are carried at their depreciated replacement value.

In accordance with state government requirements, our infrastructure and land assets are subject to revaluation every five years, and were last restated at 30 June 2016.

Our prices have been determined in accordance with the pricing principles established in the Water Industry Regulatory Order 2003 (WIRO), and revenue has been subject to determination by the Essential Services Commission. This determination has reflected the White Paper position with regard to past investments, and established our regulatory asset value to be zero as at 1 July 2004. Under the WIRO pricing principles we are therefore unable to generate any return on assets constructed or acquired prior to 1 July 2004.

76

Arguably, our reported operating result is an anomaly specific to our designation as a ‘not for profit’ entity. As a commercial entity, our asset values would be revalued to reflect their future cash flows – zero for our pre-2004 infrastructure – and our depreciation charge would also be significantly reduced.

Repaying deficits and building resilience

In order to avoid cross-subsidisation between our customer groups, we maintain an ongoing record of annual results, which is represented by the various fund balances held for each customer group.

In the past, our irrigation businesses tended to operate in deficit as a result of revenue volatility in times of drought.

We also incurred significant upfront costs in establishing the recycled water scheme, and we have set recycled water prices to recover these costs over 20 years.

The introduction of unbundling, and the decision to cease usage charges in Werribee and Bacchus Marsh has reduced our revenue risk. Coupled with favourable seasonal results, and the implementation of our operating cost reduction strategy, all irrigation deficits have now been repaid. Our approved prices are now building some resilience in our businesses to absorb unforeseen cost and revenue changes, as well as generate operating surpluses to contribute towards the cost of modernisation.

77

Operating statement 8.2

2017-18 2018-19 2019-20 2020-21 2021-22 2022-23Forecast Budget Budget Budget Budget Budget

$'000 $'000 $'000 $'000 $'000 $'000


Usage charges 2,436 1857 1866 1875 1885 1894Application fees 1,119 1,294 1,313 1,333 1,353 1,373

Recoverable works charges 638 225 260 318 613 791Other revenue 1,373 382 390 399 409 413Sale of assets 1,393 1,250 5,644 1,505 1,505 1,460

35,295 33,671 38,914 35,564 36,543 37,412

ExpensesEmployee related expenditure 15,619 15,121 15,270 15,419 15,570 15,721

Other operating costs 7,651 7,873 7,817 7,915 8,010 8,109Other project costs 1,374 804 516 365 365 364

Recycled water supply 1,508 1,362 1,393 1,426 1,458 1,492Environmental contribution 423 561 574 587 600 614

Recoverable works 638 225 260 318 613 791WDV of assets sold 1,070 750 2,294 750 750 750

28,284 26,696 28,124 26,780 27,366 27,841

Earnings before interest, taxes and depreciation

7,011 6,975 10,790 8,784 9,177 9,571

Depreciation on regulated asset value 3,554 3,910 4,203 4,657 4,640 4,706Financing charges 1,163 2,045 3,136 3,253 3,228 3,131

Profit before taxes and statutory depreciation

2,294 1,020 3,451 874 1,309 1,734

Additonal statutory depreciation 11,431 11,785 11,956 11,976 11,998 12,012Income tax credit (2,759) (3,230) (2,552) (3,331) (3,207) (3,083)

Net loss (6,378) (7,535) (5,953) (7,771) (7,482) (7,195)

78

Balance sheet 8.3

Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23Forecast Budget Budget Budget Budget Budget

$'000 $'000 $'000 $'000 $'000 $'000

AssetsCurrent assets

Cash assets 2,330 1,184 1,444 1,341 1,457 1,200

Receivables 4,748 4,765 4,795 4,843 4,941 5,051Other 447 447 447 447 447 447

Total current assets 7,525 6,396 6,686 6,631 6,845 6,698

Non-current assetsProperty, plant & equipment 1,261,170 1,289,015 1,294,655 1,289,056 1,276,289 1,264,220

Total non-current assets 1,261,170 1,289,015 1,294,655 1,289,056 1,276,289 1,264,220

Total assets 1,268,695 1,295,411 1,301,341 1,295,687 1,283,134 1,270,918

LiabilitiesCurrent liabilities

Debt payable within one year 4,000 3,900 4,300 4,200 4,300 4,300

Payables 7,539 3,222 2,817 2,039 2,443 2,767

Provision for employee benefits 5,855 6,339 6,551 6,770 6,996 7,228

Total current liabilities 17,394 13,461 13,668 13,009 13,739 14,295

Non-current liabilitiesLong term debt 24,500 45,100 49,200 55,300 52,700 50,200

Provision for employee benefits 165 179 185 191 197 204Deferred tax liabilities 216,251 213,021 210,469 207,139 203,932 200,848

Total non-current liabilities 240,916 258,300 259,854 262,630 256,829 251,252

Total liabilities 258,310 271,761 273,522 275,639 270,568 265,547

Net assets 1,010,385 1,023,650 1,027,819 1,020,048 1,012,566 1,005,371

EquityContributed capital 432,858 453,658 463,780 463,780 463,780 463,780

Asset revaluation reserve 557,698 557,698 557,698 557,698 557,698 557,698Retained profits 19,829 12,294 6,341 (1,430) (8,912) (16,107)

Total equity 1,010,385 1,023,650 1,027,819 1,020,048 1,012,566 1,005,371

79

Statement of cash flow 8.4

Financial performance indicators 8.5


$'000 $'000 $'000 $'000 $'000 $'000

Cash flow from operating activitiesReceipts from customers 33,026 32,404 33,241 34,012 34,940 35,843

Payments to suppliers & employees (25,843) (24,886) (24,703) (24,008) (24,764) (25,383)Interest & bill discount received / (paid) (974) (2,045) (3,135) (3,251) (3,225) (3,129)

Net cash provided by operating activities 6,567 5,473 5,403 6,753 6,951 7,331

Cash flows from investing activitiesPayments for property, plant & equipment (36,351) (49,169) (25,410) (14,361) (5,840) (6,548)

Proceeds from sale of property, plant & equipment 1,931 1,250 5,644 1,505 1,505 1,460

Net cash used in investing activities (34,420) (47,919) (19,766) (12,856) (4,335) (5,088)

Cash flow from financing activitiesProceeds from contributed capital 16,120 20,800 10,123 - - -

Repayment of debt (1,530) (4,000) (3,900) (4,300) (4,200) (4,300)

New debt facilities 8,130 24,500 8,400 10,300 1,700 1,800Net cash provided by financing activities 22,720 41,300 14,623 6,000 (2,500) (2,500)

Net increase/ decrease cash held (5,133) (1,146) 260 (103) 116 (257)

Cash at beginning of the year 7,463 2,330 1,184 1,444 1,341 1,457

Cash held at the end of the year 2,330 1,184 1,444 1,341 1,457 1,200


Internal financing ratio 18.1% 11.1% 21.3% 47.0% 119.0% 112.0%

Gearing ratio 2.2% 3.8% 4.1% 4.6% 4.4% 4.3%

Interest cover - cash (times) 7.7 3.7 2.7 3.1 3.2 3.3

Current ratio 43.3% 47.5% 48.9% 51.0% 49.8% 46.9%

Return on assets -0.3% -0.4% -0.1% -0.2% -0.2% -0.2%

Return on equity -0.6% -0.7% -0.6% -0.8% -0.7% -0.7%

EBITDA margin 19.9% 20.7% 27.7% 24.7% 25.1% 25.6%

Return on regulatory assets* 5.1% 2.0% 5.7% 1.3% 1.9% 2.5%

80

Quarterly financial statements 8.6

Quarterly operating statement

Sep-18 Dec-18 Mar-19 Jun-19$'000 $'000 $'000 $'000

RevenueFixed annual charges 7,124 7,178 7,134 7,227

Usage charges 125 496 782 454Application fees 323 324 324 323

Recoverable works charges 98 44 88 (5)Other revenue 95 95 95 97Sale of assets 311 313 313 313

8,076 8,450 8,736 8,409

ExpensesEmployee related expenditure 4,054 3,507 4,053 3,507

Other operating costs 1,922 1,971 2,009 1,971Other project costs 196 201 206 201

Recycled water supply 63 433 433 433Environmental contribution - 280 - 281

Recoverable works 98 44 88 (5)WDV of assets sold 187 187 188 188

6,520 6,623 6,977 6,5760

Earnings before interest, taxes and depreciation 1,556 1,827 1,759 1,833

Depreciation on regulated asset value 958 968 978 1,006Financing charges 479 607 506 453

0Profit before taxes and statutory depreciation 119 252 275 374

Additonal statutory depreciation 3,196 3,245 3,298 2,046Income tax credit (808) (806) (808) (808)

Net loss (2,269) (2,187) (2,215) (864)

81

Quarterly balance sheet

Sep-18 Dec-18 Mar-19 Jun-19$'000 $'000 $'000 $'000

AssetsCurrent assets

Cash assets 1,063 1,159 1,064 1,184

Receivables 8,650 9,661 2,589 4,765Other 447 447 447 447

Total current assets 10,160 11,267 4,100 6,396

Non-current assetsProperty, plant & equipment 1,273,724 1,279,284 1,279,977 1,289,015

Total non-current assets 1,273,724 1,279,284 1,279,977 1,289,015

Total assets 1,283,884 1,290,551 1,284,077 1,295,411

LiabilitiesCurrent liabilities

Overdraft 27,500 35,500 13,000 3,900

Payables 2,174 3,718 1,837 3,222

Provision for employee benefits 5,980 6,095 6,222 6,339

Total current liabilities 35,654 45,313 21,059 13,461

Non-current liabilitiesLong term debt 24,500 24,500 24,500 45,100

Provision for employee benefits 169 172 175 179Deferred tax liabilities 215,443 214,636 213,828 213,021

Total non-current liabilities 240,112 239,308 238,503 258,300

Total liabilities 275,766 284,621 259,562 271,761

Net assets 1,008,118 1,005,930 1,024,515 1,023,650

EquityContributed capital 432,858 432,858 453,658 453,658

Asset revaluation reserve 557,698 557,698 557,698 557,698Retained profits 17,562 15,374 13,159 12,294

Total equity 1,008,118 1,005,930 1,024,515 1,023,650

82

Quarterly statement of cash flow

Quarterly financial performance indicators

Sep-18 Dec-18 Mar-19 Jun-19$'000 $'000 $'000 $'000

Cash flow from operating activitiesReceipts from customers 3,863 7,126 15,496 5,919

Payments to suppliers & employees (6,246) (5,842) (6,569) (6,229)Interest & bill discount received / (paid) (478) (607) (507) (453)

Net cash provided by operating activities (2,861) 677 8,420 (763)

Cash flows from investing activitiesPayments for property, plant & equipment (22,218) (8,894) (7,128) (10,929)

Proceeds from sale of property, plant & equipment 312 313 313 313

Net cash used in investing activities (21,906) (8,581) (6,815) (10,616)

Cash flow from financing activitiesProceeds from contributed capital - - 20,800 -

Repayment of debt - (500) - (3,500)

New debt facilities 23,500 8,500 (22,500) 15,000Net cash provided by financing activities 23,500 8,000 (1,700) 11,500

Net increase/ decrease cash held (1,267) 96 (95) 121

Cash at beginning of the period 2,330 1,063 1,159 1,064

Cash held at the end of the period 1,063 1,159 1,064 1,185

Sep-18 Dec-18 Mar-19 Jun-19Budget Budget Budget Budget

Internal financing ratio -12.9% 7.6% 118.1% -7.0%

Gearing ratio 4.1% 4.6% 2.9% 3.8%

Interest cover - cash (times) -5.0 2.1 17.6 -0.7

Current ratio 28.5% 24.9% 19.5% 47.5%

Return on assets -0.1% -0.1% -0.1% 0.0%

Return on equity -0.2% -0.2% -0.2% -0.1%

EBITDA margin 19.3% 21.6% 20.1% 21.8%

Appendices

84

Detailed tariff schedule

17-18 18-19 19-20 20-21 21-22 22-23

ANNUAL CHARGESIrrigation / Regulated Systems

Macalister Irrigation / Macalister and Thomson Regulated SystemsMacalister/Thomson Water Share - High Reliability 13.20 12.90 13.20 13.50 13.80 14.20 Macalister/Thomson Water Share - Low Reliability 6.60 6.45 6.60 6.75 6.90 7.10 MID Delivery Share 5,160.00 5,255.00 5,375.00 5,500.00 5,625.00 5,755.00 MID Service Point - Metered Outlet 1 205.00 208.50 213.50 218.50 223.50 228.50 Macalister/Thomson/MID Service Point - Metered Pump 1 107.50 109.50 112.00 114.50 117.00 119.50 Macalister/Thomson/MID Service Point - Unmetered 1 48.00 48.75 50.00 51.00 52.25 53.50 Macalister/Thomson/MID Usage 9.95 9.95 9.95 9.95 9.95 9.95 MID Casual Use 52.90 53.90 55.10 56.40 57.70 59.00 MID Drainage Diversion Entitlement & Sales 2 19.00 19.35 19.80 20.25 20.70 21.20 Salinity mitigation 3 0.55 0.55 0.55 0.55 0.60 0.60

Werribee and Bacchus Marsh Irrigation / Werribee Regulated SystemWerribee System Water Share - High Reliability 125.00 127.00 130.00 133.00 136.00 139.50 Werribee System Water Share - Low Reliability 62.50 63.50 65.00 66.50 68.00 69.75 WID Delivery Share 14,900.00 15,180.00 15,530.00 15,880.00 16,250.00 16,620.00 BMID Delivery Share 10,370.00 10,870.00 11,440.00 12,040.00 12,680.00 13,350.00 WID Service Point - Metered Outlet 1 230.00 234.00 239.00 245.00 250.00 256.00 Werribee System/WID Service Point - Metered Pump 1 115.00 117.00 119.75 122.50 125.25 128.25 Werribee System/WID Service Point - Unmetered 1 57.50 58.50 59.75 61.25 62.50 64.00 BMID Service Point - Metered Outlet 1 195.00 204.00 215.00 226.00 238.00 251.00 BMID Service Point - Metered Pump 1 97.50 102.00 107.50 113.25 119.25 125.50 BMID Service Point - Unmetered 1 50.00 52.25 55.00 58.00 61.00 64.25 WID Casual Use 235.00 239.00 244.00 250.00 256.00 262.00 BMID Casual Use 245.00 256.00 270.00 284.00 299.00 315.00 WID Drainage Diversion Entitlement & Sales 2 110.00 112.00 114.50 117.00 120.00 122.50 WID recycled water contracted volume 343.00 349.00 357.00 365.00 374.00 382.00 WID recycled water sales 2 274.00 279.00 285.00 292.00 298.00 305.00 WID recycled water uncontracted use 635.00 645.00 660.00 675.00 690.00 705.00

Unregulated surface and groundwaterLicence Charges

Take and Use Licence 370.00 368.00 368.00 367.50 367.50 367.50 Operating Licence - Decontamination Bore & Hazardous Dam 240.00 238.50 238.50 238.50 238.50 238.00

Licensed Volume ChargesSurface Water Licensed Volume & Sales - Standard 2 11.90 11.80 11.80 11.80 11.80 11.80 Surface Water Licensed Volume - Offstream Winterfill 8.33 8.26 8.26 8.26 8.26 8.26 Aquaculture Diversion Rate 78.75 78.25 78.25 78.25 78.25 78.00 Groundwater Licensed Volume 4.10 4.05 4.05 4.05 4.05 4.05

System Management ChargesSurface Water - Thorpdale 4, 5 9.55 9.50 9.50 9.45 9.45 9.45 Surface Water - Latrobe System 4, 6 11.50 11.40 11.40 11.40 11.40 11.40 Surface Water - Maribyrnong 4,7 51.40 51.00 51.00 51.00 51.00 51.00 Groundwater - Deutgam 4 27.30 27.10 27.10 27.10 27.10 27.10 Salinity mitigation 4, 8 0.55 0.55 0.55 0.55 0.60 0.60 Groundwater control pump usage 25.00 25.25 26.00 26.50 27.25 27.75

Indicative prices ($)*NotesTariff and Price Component Price ($)

85

17-18 18-19 19-20 20-21 21-22 22-23

APPLICATION FEESIrrigation District

Application to amend district boundary 1,155.00 1,175.00 1,200.00 1,230.00 1,260.00 1,285.00 Applications relating to Delivery Shares, Water Use Licences and Registrations, and Drainage Diversion Agreements

Various** 237.50 242.50 250.00 255.00 260.00

Issue of Take and Use or Underground Disposal LicenceFixed component - Domestic & Stock Various** 752.50 770.00 787.50 805.00 825.00 Fixed component - volume up to 20ML Various** 1,645.00 1,680.00 1,720.00 1,760.00 1,800.00 Fixed component - medium impact Various** 2,070.00 2,120.00 2,170.00 2,220.00 2,270.00 Fixed component - high impact Various** 3,335.00 3,410.00 3,490.00 3,570.00 3,655.00 Volumetric component Various** 20.30 20.80 21.30 21.80 22.30 Water availability assessment 110.00 112.00 114.50 117.25 120.00 122.75

Amendment/Amalgamation of LicenceLicence amendment - significant 545.00 555.00 567.50 580.00 592.50 607.50 Licence amendment - minor 545.00 122.00 125.00 127.50 130.50 133.50

Transfer of LicenceSimple transfer (repeat temporary transfer or sale of property) 235.00 122.00 125.00 127.50 130.50 133.50 Low impact transfer (up to 20ML or amalgamation) Various** 375.00 385.00 392.50 402.50 412.50 Medium impact transfer Various** 805.00 820.00 840.00 860.00 880.00 High impact transfer Various** 2,065.00 2,115.00 2,160.00 2,210.00 2,265.00

Construction Licences - NewContruct Farm Dam - not potentially hazardous and no engineering Various** 965.00 990.00 1,010.00 1,035.00 1,060.00 Construct Farm Dam - potentially hazardous and no peer review Various** 2,630.00 2,690.00 2,755.00 2,820.00 2,880.00 Construct Farm Dam - potentially hazardous, peer review or on-stream dam requiring a s.51 licence

Various** 5,445.00 5,570.00 5,695.00 5,830.00 5,965.00

Construct, alter or decommission class A or B bore 440.00 448.00 458.50 469.00 480.00 491.00 Construct, alter or decommission class C bore Various** 1,280.00 1,310.00 1,340.00 1,370.00 1,405.00 Construct, alter or decommission class D bore Various** 1,690.00 1,730.00 1,770.00 1,810.00 1,850.00 Construct additional investigation bore 100.00 101.50 104.00 106.50 109.00 111.50

Construction Licences - ExistingHazardous dam - Operating licence 1,300.00 1,320.00 1,355.00 1,385.00 1,415.00 1,450.00 Farm Dam - alter or decommission 735.00 745.00 765.00 780.00 800.00 820.00 Amend, renew or transfer works licence 300.00 122.00 125.00 127.50 130.50 133.50 Bore construction licence renewal 325.00 122.00 125.00 127.50 130.50 133.50

Private WorksPrivate works - domestic & stock pipe permit 315.00 320.00 327.50 335.00 342.50 350.00 Private works - other 610.00 620.00 635.00 650.00 665.00 680.00 Transfer licence to use works 325.00 237.50 242.50 250.00 255.00 260.00

GeneralApplications - additional assessment 130.00 132.00 135.50 138.50 141.50 145.00 Information Statement 110.00 112.00 114.50 117.00 120.00 122.50 Information report - mail out or standard 390.00 395.00 405.00 415.00 425.00 435.00 Information report - short 110.00 112.00 114.50 117.00 120.00 122.50 Information report - complex 1,210.00 1,230.00 1,260.00 1,290.00 1,320.00 1,350.00 Special meter reading 110.00 112.00 114.50 117.00 120.00 122.50 Diversion works on Crown lands 325.00 330.00 337.50 345.00 352.50 362.50

Notes to the above table are detailed on the next page.

Tariff and Price Component Notes Price ($) Indicative prices ($)

86

Notes to tariff schedule

NOTES

* These charges are subject to a revenue cap. The proposed annual price path is only indicative and actual annual price changes will be subject to constraints specified in the annual price adjustment formula.

** A number of application fees have been restructured, and so more than one fee may have previously been applicable for these transactions.

1 Shared service points charged at 80% of the full rate.

2 "Sales" charges apply to usage in excess of annual entitlement volume.

3 Salinity mitigation charged on usage recorded for the prior season.

4 Charge per ML of entitlement, in addition to standard or winterfill licenced volume charge.

5 Applies to licences on the Narracan, Ten Mile and Wilderness Creeks and their tributaries.

6 Applies to licences downstream of Blue Rock Lake.

7 Applies to licences downstream of Rosslynne Reservoir.

8 Applies to extraction from rivers, streams and deep bores in the following parishes: Bundalaguah, Coongulla, Dension, Glenmaggie, Maffra, Nuntin, Sale, Tinamba, Wa De Lock, Toongabbie North, Toongabbie South, Winnindoo, Wooundellah, Wurruk Wurruk.

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