Water Conservation Report

Transcription

1 Water Conservation Report

2 Table of contents Executive summary... 3 Introduction and regulatory context Approval of the ELWC Methodology Our five-year plan The value of water Overview Projects in the Water Conservation Plan Programs that have reached maturity Development of the Water Conservation Plan The ELWC Methodology Quantifying the ELWC Development of the Water Conservation Plan Stakeholder Consultation on the Water Conservation Plan Alignment with the 2017 Metropolitan Water Plan Water efficiency in Water Use Efficiency Programs Leak management Water Recycling Appendix 1 Our total water savings for Appendix 2 Reporting Requirements Appendix 3 Levelised costs, assumptions and water savings Appendix 4 Valuing and comparing cost and benefits Appendix 5 Correcting for Weather Appendix 6 Calculating the Economic Level of Leakage Appendix 7 Estimating Leakage Appendix 8 Glossary Appendix 9 List of acronyms and units Water Conservation Report Page 2

3 Executive summary Introduction Each year, we report on how we conserve water in accordance with Section 3 of our Operating Licence For the first time this is based on the Economic Level of Water Conservation (ELWC) methodology, approved by IPART in December This report outlines our Water Conservation Plan (WCP) for the next five years and how we prepared it using the new methodology. It also reports on the costs and water savings from our water conservation programs run in Development of the Water Conservation Plan The WCP describes Sydney Water's plans for water conservation over the next five years. Development of the WCP has been informed by the new ELWC methodology, as outlined below in Figure 0-1. It is important to note that not all the projects in the WCP are based purely on economic efficiency. Some of our water conservation activities are undertaken as commercial offerings, social programs, and to build and maintain capability. Water Conservation Report Page 3

4 Step 1 Quantify the volume of water that would be saved over the life of the water conservation project Step 2 Quantify and value costs over the life of the candidate project, including: Design and implementation costs Avoided and/or avoidable costs Any positive external (social and environmental) benefits Step 3 Calculate the levelised cost of the candidate project. Step 4 Compare the levelised cost against the value of water, and only carry forward a project if the levelised cost is less than the value of water. Step 5 Finalise the list of candidate projects and develop a draft Water Conservation Program. Figure 0-1 ELWC methodology key steps The current value of water The ELWC methodology was by approved by IPART in December For this report, the shortrun value of water was estimated based on dam levels at the start of January In future, we will align the value of water with our business planning and approval processes to ensure alignment of the program with budget and resources. At the start of January 2017, the values of water were: - Short-run value of water was $0.56 per kl - Long-run value of water was $2.04 per kl The period of time over which water savings are assumed to occur for a particular project determines the value of water against which the project will be evaluated. See Table Value from the first weekly verified storage report released in January Water Conservation Report Page 4

5 Table 0-1 Duration of water savings benefits vs the value of water Duration of water saving benefits Value of water 5 years or less Short-run 6-19 years Intermediate (interpolated between long and short run values) 20 years or more Long-run Figure 0-2 Replacing leaking taps is part of our Waterfix program Water Conservation Report Page 5

6 Our Five-Year Water Conservation Plan Table 0-2 lists the projects that comprise our Water Conservation Plan for the five-year period commencing 1 July In addition to our ongoing and new water conservation projects, the plan includes projects that may be implemented at a later date depending on future dam levels, as well as several research and capability building initiatives. Full details of the projects are described in Section 2.3. Table Our Water Conservation Plan Projects Project status Project type Project Ongoing To be implemented in Water efficiency Water efficiency Water efficiency Water efficiency Leakage Water efficiency Waterfix residential Waterfix strata PlumbAssist Supporting and research and development projects Active Leak Detection Program Rainwater Tank Repair More viable with an increase in the value of water Water efficiency Water efficiency Water efficiency Water efficiency Council partnerships D&BCS 3 Online Monitoring D&BCS 4 Efficiency Audits Love Your Garden Our proposed 5-year WCP is based on the value of water and the ELWC methodology. The levelised cost of each project has been assessed where we have reliable information to estimate the costs, water savings and benefits (where they can be quantified) of individual projects. This is detailed in Appendix 3. Where projects are considered economically efficient at the current value of water, we have included them in our five-year plan. Our ongoing water conservation projects are our Active Leak Detection Program, Waterfix Residential and Waterfix Strata. The ELWC also includes one program (Rainwater Tank Repair) which we will initiate in , subject to business case approval. 2 Subject to business case/funding approval 3 Developer and Business Customer Services 4 Developer and Business Customer Services Water Conservation Report Page 6

7 We may also run projects which conserve water for reasons other than water efficiency, such as commercial offerings, social programs for our customers in hardship, and research and development. These are detailed in Appendix 3. For example, we will continue our PlumbAssist program. It is not efficient at the current value of water, however we primarily undertake PlumbAssist as a regulated social program for our customers in hardship. Our Waterfix programs, on the other hand, are not only economically efficient, but a commercial offering for our customers. The projected water savings from projects which are economically efficient are added to calculate the ELWC in ML/day. Based on the current value of water, our ELWC for the next five years is 23.5 ML/day. Our total water savings are projected to be 23.7 ML/day. Year-by-year savings for each project are detailed in Table 0-2. Our actual level of investment in water conservation, and the amount of water savings that result, will change over time as circumstances evolve, including changes in the value of water. The ELWC is a forward-looking methodology, and we are not considering ongoing savings from projects implemented until now, including from our leakage program and our water recycling program. Figure 0-3 Irrigation with recycled water from Picton Water Recycling Plant Water Conservation Report Page 7

8 Table 0-3 Predicted water savings for our forward-looking 5-year WCP based on the current value of water Project type Project Potential water savings (ML) year Total Economically efficient projects Efficiency Efficiency Efficiency Leakage Waterfix residential 6 Waterfix strata 7 Rainwater Tank Repair 8 Active Leak Detection Program , ,572 5,656 7,861 10,145 12,452 39,688 Total predicted ELWC water savings (ML) ELWC (ML/day) 3,792 6,096 8,521 11,025 13,552 42,986 ML 23.5 ML/day Projects we complete for reasons other than water efficiency Social project PlumbAssist Total potential water savings (ML) Total potential water savings (ML/day) 3,814 6,139 8,584 11,110 13,658 43,304 ML 23.7 ML/day 5 Including water savings benefits expected to last for multiple years. 6 Projections based on average recent data 7 Projections based on average recent data 8 To be implemented in , subject to business case/funding approval 9 Projection of savings based on baseline, average leak rate of rise and subject to no change in internal policies. The savings are calculated in comparison to not implementing a leakage program. In previous years, reporting of the leakage program included savings from a baseline as of A new business case has been developed from Going forward we will be reporting against the baseline. Our total water savings from the program since 2002 will remain at approximately 20 billion litres per year. 10 Projections based on average recent data Water Conservation Report Page 8

9 Our WCP also includes a number of projects which we can implement if water becomes scarcer and the value of water rises. These are mature projects that have been completed or piloted during the millennium drought ( ), and we estimate that future investment in these projects will result in efficient water savings if dam levels drop. These projects are listed in Table 2-3, and full details are in Section Table 0-4 Programs we will implement if the value of water rises Program (subject to business case/funding approval) Levelised Cost Anticipated Annual Water savings (ML) Council partnerships $ D&BCS 11 Online Monitoring $ D&BCS 12 Efficiency Audits $ Love Your Garden $ The full list of our ongoing programs can be found in Section 2.3.1, and their levelised costs, assumptions and water savings are detailed in Appendix 3. This includes a range of activities that support the development of the WCP, 2017 Metropolitan Water Plan and water conservation projects, such as pilot trials of projects, demand analysis and research. These activities help us to target future effort and quantify potential water savings to inform levelised cost calculations. While there was an exhaustive assessment of projects during the millennium drought, new technologies and drivers may change the viability of projects we have previously assessed, or provide opportunities for new projects. These projects need to be piloted in order to determine the true costs and benefits prior to completing the ELWC calculations. Details of these projects can be found in Section Developer and Business Customer Services 12 Developer and Business Customer Services Water Conservation Report Page 9

10 Figure 0-4 A rain gauge can help you determine how much water your garden needs Our Water Conservation Plan is made up of three main elements: our water leakage, water efficiency, and recycled water programs. Our leakage program is the backbone of our five-year WCP. While this program is primarily completed for the purposes of water conservation, it also has significant reputational and asset maintenance benefits. We will adjust the scale of the leakage program annually in line with the value of water and the ELWC methodology. On the current value of water, the economically efficient level of water efficiency projects is limited. However, opportunities for these projects will increase as the value of water increases. We have not assessed our recycled water program using the ELWC methodology, nor included water savings from our current schemes in our projected water savings for the next five years. We consider these schemes to be past investments. While our recycled water program will continue to save approximately 13 billion litres of water a year, the ELWC is a forward-looking methodology and is not intended for considering current operational recycled water projects, nor water savings from past projects. Review of past recycling projects have generally shown that costs are greater than the value of water. We will continue to explore new technologies and methods of making recycled water more efficient. The 2017 Metropolitan Water Plan also acknowledged that there are currently policy, regulatory and pricing barriers that artificially constrain the use of recycled water when determined based on an integrated water cycle management approach. The Metropolitan Water Plan proposed an independent review of the barriers and enablers of recycled water and also proposed the three-year WaterSmart Cities program to explore opportunities for delivering drinking water, recycled water, wastewater and stormwater services to new communities in a more integrated, cost effective and sustainable way. Water Conservation Report Page 10

11 We are actively seeking opportunities to leverage the contribution that recycled water can make within an integrated water cycle approach (for servicing growth in areas such as Greater Parramatta to the Olympic Peninsula, and Western Sydney, for example) through better quantifying avoided cost and externalities, seeking opportunities to leverage existing infrastructure, and exploring new servicing approaches (such as decentralised and precinct based approaches). The ELWC Methodology The ELWC methodology is designed to promote economically efficient investment in water conservation, including water efficiency, leakage and recycling. It evaluates whether the cost to society of a water conservation project is less than the value of water that it saves. If so, it is considered economically efficient. Our ELWC methodology is based on a marginal value framework, where investment in water conservation could increase until the cost of saving an extra volume of water is just equal to the cost of supplying an extra volume of water. Quantifying the ELWC Once we have determined if our projects are economically efficient (i.e. the levelised cost is less than the value of water), we calculate the ELWC. This is an estimate of the amount of water that could be conserved each year by viable projects, based on our economic assessment of costs and benefits across individual water conservation projects. We calculate the ELWC by adding the total amount of water that could be saved during the five-year program across all the economically viable and available projects and converting to an average ML/day basis. The ELWC for our program based on the January 2017 value of water is 23.5 ML/day. However, we also plan to continue some projects, such as PlumbAssist, which conserve water for other reasons. The ELWC 5-year WCP and ELWC methodology only considers new and ongoing water conservation programs. It does not consider ongoing savings from previously completed programs, even though these may be significant Water Use and Water Conservation Program Total water use 13 for was 557,807 million litres compared to 529,939 million litres in This includes water used by the residential sector, businesses, industry, irrigation and leaks. This amount is similar to total water use in , when the population was around 20% lower than now and water restrictions were in place. On a per person basis water use continues to remain at a similar level to when Level 3 water restrictions were replaced with Water Wise Rules. Despite the warmer than average weather, average water use per person for was estimated to be 307 litres a day 14. When corrected for weather impacts, average per person water demand reduces to 302 litres a day (Appendix 5). 13 Total water use includes potable water and unfiltered water provided for industrial use in the Illawarra. Recycled water is not included. 14 Observed demand not corrected for weather impacts. Water Conservation Report Page 11

12 We estimate that we saved 11,091 ML in measurable water savings in Our efficiency program included PlumbAssist, Waterfix Residential and the new Waterfix Strata. Our leakage program saved 1, million litres, and our ongoing recycled water projects saved 9679 million litres of water in A summary of our total costs and water savings from can be found in Appendix 1. Figure 0-5 Active leak detection is a key part of maintaining low levels of leakage. 15 This is much lower than previous years as it is based on a baseline. In previous years, reporting of the leakage program included savings from a baseline as of A new business case has been developed from Going forward we will be reporting against the baseline. Our total water savings from the program since 2002 are 19,565 ML/year.. Water Conservation Report Page 12

13 Introduction and regulatory context Each year, we report on how we conserve water in accordance with Section 3 of our Operating Licence For the first time this is based on the Economic Level of Water Conservation (ELWC) methodology, approved by IPART in December In the past, obligations in Sydney Water s Operating Licence regarding water conservation have been fixed and prescriptive. From 1995 we were required to achieve a per capita reduction of water use to 329 litres per person per day (LPD) by From 2011, we were required to ensure that water use did not exceed this limit. This approach was not dynamic in that it did not vary with our dam levels, which may not have always incentivised the most efficient water conservation investment decisions. The new methodology promotes economically efficient decisions in water conservation which can consider social and environmental costs and benefits in addition to the cost of the program and the water saved. It is also adaptable, meaning that we are prepared for a range of dam levels, demand conditions, and climatic factors. This report outlines our plan for the next five years and describes how we prepared it using the new methodology. It also reports on the costs and water savings from our water conservation programs run in Appendix 2 outlines how this report meets specific requirements in the Operating Licence Reporting Manual. Water Conservation Report Page 13

14 1.1 Approval of the ELWC Methodology The ELWC was introduced in the Operating Licence , with the new requirements for water conservation, reproduced below: 3.2 Economic level of water conservation By 1 November 2015, Sydney Water must submit to IPART (for IPART s approval) a report outlining Sydney Water s approach to, and principles for, developing a methodology for determining its economic level of water conservation, including (at a minimum) each of the following elements of water conservation: a) water leakage b) water recycling; and c) water efficiency (including demand management) Once the approach and principles referred to in clause are approved by IPART, Sydney Water must develop a methodology in accordance with the approach and principles By 31 December 2016, Sydney Water must obtain IPART s approval for the Methodology. In 2015 the Independent Pricing and Regulatory Tribunal (IPART) approved the approach and principles that Sydney Water used to develop a methodology to determine its Economic Level of Water Conservation (ELWC). An industry reference group including Hunter Water, the Metropolitan Water Directorate and Water NSW met periodically to provide guidance to the project. In April 2016 Sydney Water released an issues paper to seek feedback from stakeholders on the various methodology options. These were incorporated into the final report, as well as comments from a public forum held in October 2016 to consult with interested parties. The ELWC methodology was approved by IPART in December Water Conservation Report Page 14

15 Our five-year plan This section outlines the projects included in the Water Conservation Plan. We undertake water conservation programs in three main areas: water efficiency, water leakage and water recycling. Water efficiency projects primarily aim to conserve water through efficient technologies, behaviour change, metering, voluntary use reduction and efficiency audits. Our leakage program is made up of operational projects completed by Sydney Water to reduce water leakage in our system. This may include proactive leak detection and repair, new technologies, and pressure reduction projects. Our water recycling program aims to reuse water, whether it be wastewater or stormwater. These projects can range from large scale wastewater recycling, to sewer mining to stormwater harvesting. These projects are considered to be water conservation projects when they reduce demand on our surface water supplies. When the levelised cost of a project is lower than the value of water, we will implement it, subject to business case for funding approval. We have included projects which are ongoing, as well as projects we can implement if water becomes scarcer. We have also included projects we need to pilot to be able to estimate costs and benefits. However, we also undertake some projects for reasons other than water conservation alone. These could be commercial offerings, social projects, or research projects. An explanation of these types of projects is in Appendix The value of water The ELWC methodology was approved by IPART in December For this report, the current short-run value of water was estimated based on dam levels as at the start of January Dam levels in early January 2017 were at 89.7%. The value of water is dependent on its scarcity, so a high dam level results in a low short run value of water. In future, we will align the value of water with our business planning and approval processes. The long run value of water, which is intended to reflect long term investment in infrastructure and supply, is not directly affected by dam storage levels. The long run value of water used for this report reflects the regulated retail price of water that will apply during the financial year. At the start of January 2017, the values of water were: - Short-run value of water was $0.56 per kl - Long-run value of water was $2.04 per kl 16 Value from the first weekly verified storage report released in January Water Conservation Report Page 15

16 Value of water ($ / kilolitre) The period of time over which water savings are assumed to occur for a particular project determines the value of water against which the project will be evaluated. See Table 2-1. Table 2-1 Duration of water savings benefits vs the value of water Length of water saving benefits Value of water 5 years or less Short-run 6-19 years Intermediate 20 years or more Long-run Projects which fall into the Intermediate category will be assessed against a linear interpolation of the short- and long-run values of water. This is shown in Figure 2-1. $2.50 Economic Level of Water Conservation Value of Water $2.00 $1.50 $1.00 $0.50 $0.56 $2.04 $1.94 $1.84 $1.74 $1.64 $1.55 $1.45 $1.35 $1.25 $1.15 $1.05 $0.95 $0.85 $0.75 $0.65 $ Duration of water savings (years) Figure Short-run to Long-run values of water Water Conservation Report Page 16

17 2.2 Overview of the Water Conservation Plan Table 2-1 lists the projects that comprise our Water Conservation Plan for the five year period commencing 1 July In addition to our ongoing water conservation projects, the plan includes projects that may be implemented at a later date depending on future dam levels, as well as several research and capability building initiatives. Table Water Conservation Plan Projects Project status Project type Project Ongoing To be implemented in Water efficiency Water efficiency Water efficiency Water efficiency Leakage Water efficiency Waterfix residential Waterfix strata PlumbAssist Supporting research and development projects Active Leak Detection Program Rainwater Tank Repair More viable with an increase in the value of water Water efficiency Water efficiency Water efficiency Water efficiency Council partnerships D&BCS 18 Online Monitoring D&BCS 19 Efficiency Audits Love Your Garden Our proposed 5-year WCP is based on the value of water and the ELWC methodology. The levelised cost of each project has been assessed where we have reliable information to estimate the costs, water savings and benefits (where they can be quantified) of individual projects. This is detailed in Appendix 3. Where projects are considered economically efficient at the current value of water, we have included them in our five-year plan. Our ongoing water conservation projects are our Active Leak Detection Program, Waterfix Residential and Waterfix Strata. The ELWC also includes one program (Rainwater Tank Repair) which we will initiate in , subject to business case approval. We may also run projects which conserve water for reasons other than water efficiency, such as commercial offerings, social programs for our customers in hardship, and research and 17 Subject to business case/funding approval 18 Developer and Business Customer Services 19 Developer and Business Customer Services Water Conservation Report Page 17

18 development. These are detailed in Appendix 3. For example, we will continue our PlumbAssist program. It is not efficient at the current value of water, however we primarily undertake PlumbAssist as a regulated social program for our customers in hardship. Our Waterfix programs, on the other hand, are not only economically efficient, but a commercial offering for our customers. The predicted water savings from projects which are economically efficient are added to calculate the ELWC in ML/day. Based on the current value of water, our ELWC for the next five years is 23.5 ML/day. Our total water saving are projected to be 23.7 ML/day. Year-by-year savings for each project are detailed in Table 2-3. Our actual level of investment in water conservation, and the amount of water savings, will adjust over time as circumstances evolve, including changes in the value of water. The ELWC 5-year plan only considers new and ongoing water conservation programs. It does not consider ongoing savings from previously completed programs, even though these may be significant. Figure 2-2 The Love Your Garden Program includes advice on how and when to water your garden Water Conservation Report Page 18

19 Table 2-3 Predicted water savings for our forward-looking 5-year WCP based on the current value of water Project type Project Potential water savings (ML) year Total Economically efficient projects Efficiency Efficiency Efficiency Leakage Waterfix residential 21 Waterfix strata 22 Rainwater Tank Repair 23 Active Leak Detection Program , ,572 5,656 7,861 10,145 12,452 39,688 Total potential ELWC water savings (ML) ELWC (ML/day) 3,792 6,096 8,521 11,025 13,552 42,986 ML 23.5 ML/day Projects we complete for reasons other than water efficiency Social Project PlumbAssist Total potential water savings (ML) Total potential water savings (ML/day) 3,814 6,139 8,584 11,110 13,658 43,304 ML 23.7 ML/day 20 Including water savings benefits expected to last for multiple years. 21 Projections based on average recent data 22 Projections based on average recent data 23 To be implemented in , subject to business case/funding approval 24 Projection of savings based on baseline, average leak rate of rise and subject to no change in internal policies. The savings are calculated in comparison to not implementing a leakage program. In previous years, reporting of the leakage program included savings from a baseline as of A new business case has been developed from Going forward we will be reporting against the baseline. Our total water savings from the program since 2002 will remain at approximately 20 billion litres per year. 25 Projections based on average recent data Water Conservation Report Page 19

20 Our WCP also includes a number of projects which we can implement if the value of water rises. These are mature projects that have been completed or piloted during the millennium drought, and we estimate that future investment in these projects will result in efficient water savings if dam levels drop. These projects are listed in Table 2-3 and Section Table 2-4 Programs we will implement if the value of water rises, subject to business case/funding approval Program Levelised Cost Anticipated Annual Water savings (ML) Council partnerships $ D&BCS 26 Online Monitoring $ D&BCS 27 Efficiency Audits $ Love Your Garden $ The full list of our ongoing programs can be found in Section 2.3.1, and their levelised costs, assumptions and water savings are detailed in Appendix 3. This includes a range of activities that support the development of the WCP, 2017 Metropolitan Water Plan and water conservation projects, such as pilot trials of projects, demand analysis and research. These activities help us to target future effort and quantify potential water savings to inform levelised cost calculations. While there was an exhaustive assessment of projects during the millennium drought, new technologies and drivers may change the viability of projects we have previously assessed, or provide opportunities for new projects. These projects need to be piloted in order to determine the true costs and benefits prior to completing the ELWC calculations. Details of these projects can be found in Section Developer and Business Customer Services 27 Developer and Business Customer Services Water Conservation Report Page 20

21 Our Water Conservation Plan is made up of three main elements: our water leakage, water efficiency, and water recycling programs. Our leakage program is the backbone of our five-year WCP. While this program is primarily completed for the purposes of water conservation, it also has significant reputational and asset maintenance benefits. We will adjust the scale of the leakage program annually in line with the value of water and the ELWC methodology. On the current value of water, the economically efficient level of water efficiency projects is limited. However, opportunities for these projects will increase as the value of water increases. We have not assessed our water recycling program using the ELWC methodology, nor included water savings from our current schemes in our projected water savings for the next five years. We consider these schemes to be past investments. While our recycled water program will continue to save approximately 13 billion litres of water a year, the ELWC is a forward-looking methodology and is not intended for considering current operational recycled water projects, nor water savings from past projects. Review of past recycling projects have generally shown that costs are greater than the value of water. We will continue to explore new technologies and methods of making recycled water more efficient. The 2017 Metropolitan Water Plan also acknowledged that there are currently policy, regulatory and pricing barriers that artificially constrain the use of recycled water when determined based on an integrated water cycle management approach. The Metropolitan Water Plan has proposed an independent review of the barriers and enablers of recycled water and also proposed the 3 year WaterSmart Cities program to explore opportunities for delivering drinking water, recycled water, wastewater and stormwater services to new communities in a more integrated, cost effective and sustainable way. We are actively seeking opportunities to leverage the contribution that recycled water can make within an integrated water cycle approach (for servicing growth in areas such as Greater Parramatta to the Olympic Peninsula, and Western Sydney, for example) through better quantifying avoided cost and externalities, seeking opportunities to leverage existing infrastructure, and exploring new servicing approaches (such as decentralised and precinct based approaches). Water Conservation Report Page 21

22 2.3 Projects in the Water Conservation Plan Ongoing program Our Water Conservation Plan includes a number of current projects that we plan to continue. This section details these projects and their role in the plan. WaterFix Residential The residential Waterfix program allows customers to choose the type of plumbing service they need to improve water efficiency in the home, providing customers with a choice of services to suit their individual needs. This service includes replacing showerheads, toilets and taps, and repairing leaks by a qualified plumber. The program has been very successful since its inception in Initially offered as a subsidised service, since 2011 we have offered the service to residential customers at cost recovery rates. Costs to the customer vary, depending on the type of service selected. In , the WaterFix service offered: all types of tap and toilet leak repairs installation of WELS (Water Efficiency Labelling Scheme) 3-star showerheads installation of WELS 4-star dual flush toilets installation of WELS 3-star flow regulating aerators or WELS 4-star in-body flow regulators. Initially the program was primarily designed to promote water efficient products in customers homes. However, a change in customers attitudes to water efficiency since the millennium drought means that the focus of the program has shifted to a leak identification and repair service. The size of the project every year is highly dependent on customer uptake. However, we service around customers per year, on average. Since 2011, we have serviced over 3200 customers, and we estimate that program has saved approximately 304 million litres of water. For the next five years, we predict that Waterfix residential will save an additional million litres of water every year. These water savings are estimated to last up to 17 years after the service 30. For this period of water savings benefits, the current value of water is $1.74. Because the program is currently run at commercial rates, the levelised cost for the residential WaterFix program is less than zero. This is below the value of water, and therefore economically efficient. Currently we only promote Waterfix through our website. However, because the levelised cost of the program is well below the current value of water, in we will investigate whether additional marketing sources will enable us to increase our water savings while ensuring that the program remains economically efficient. 28 Based on average number of customers for 2013/ /17 29 Based on weighted average water savings for 2011/12 to April Based on seven years of full water savings and a 10% annual decay in savings thereafter. Water Conservation Report Page 22

23 WaterFix Strata The WaterFix Strata program was introduced as a pilot in 2016 as an addition to the residential WaterFix program. We identify strata buildings with high water use using a unique benchmarking tool which provides a comparison of the water use of an apartment. Typical water use for an efficient apartment building is litres per bedroom per day. We have identified that more than 20 of Sydney s largest strata complexes have very high water use of greater than 600 litres per bedroom per day. However, with only a single meter serving the majority of Sydney s residential strata buildings, the incentive for individual apartment dwellers is limited. To incentivise this, the WaterFix strata program is based on a performance guarantee. Under this agreement, the strata body pays no upfront costs, instead repaying costs of services with the savings achieved by WaterFix. That is, the water bill of the account is held static until the costs of the service are recovered; typically around three years. The project was started as an 11-building pilot program. The first year of the pilot, , was successful, with significant water savings from the first building completed. We completed work in all 154 units. Like Waterfix Residential, these water savings are expected to last for up to 17 years after the work was completed. The ongoing pilot program aims to deliver the service to 10 Strata buildings in the financial year. This program is also run on a commercial basis, and the levelised cost is calculated to be less than $0.00. This is below the value of water at $1.74, and therefore economically efficient. If the second year of the pilot is also deemed successful, we anticipate that we will run this project for at least the next five years. Based on the pilot and additional buildings that have been assessed, we anticipate that this program will save an additional 193 million litres of water every year. Water Conservation Report Page 23

24 PlumbAssist PlumbAssist provides a proactive, tailored water efficiency service for high use customers experiencing financial hardship. PlumbAssist is offered through our BillAssist program; customers having difficulties paying their bills are referred to BillAssist by the Sydney Water Contact Centre or external community service agencies. Other customers identified with high and/or long-term debt are proactively offered assistance by our BillAssist team. BillAssist staff offer customers case management and a range of assistance options. As part of the assistance package, staff do an initial plumbing assessment which includes a check for high water use or a sudden increase in use. Eligible customers with high water use or who cannot afford to fix essential plumbing services are then referred to PlumbAssist. PlumbAssist aims to rectify problems customers may have with: high water use wastewater systems hot water systems. Plumbers may also: fix tap and toilet leaks replace taps find and repair concealed leaks replace inefficient toilets replace failed hot water systems. PlumbAssist reduces water waste and the cost of future water bills, and alleviates financial stress for vulnerable customer groups. Since starting in 2011, 1404 customers have had a plumbing issue resolved through the PlumbAssist service. The range of services offered is similar to WaterFix, but the standard of plumbing fixtures prior to our visits is typically very poor meaning the potential for greater savings and costs per fitting installed is higher. PlumbAssist is a carefully targeted service for the most vulnerable households so it is difficult to predict customer uptake. However, on average, 170 customers per year will have an issue resolved through PlumbAssist 31. Savings also vary significantly from house to house due to the variety of plumbing issues repaired through the program. We estimate that this program has saved over 501 million litres so far, and will continue for at least another five years, with anticipated annual water savings of 21.2 million litres per year. Like the Waterfix programs, water savings are estimated to last up to 17 years after the appointment. The PlumbAssist program has a levelised cost of $3.38. While this is above the value of water, which is $1.74 for a program with water-saving benefits of up to 17 years, this program is run primarily as a social program to help customers in hardship. Social benefits of the program include alleviating financial stress and ensuring that vulnerable customers have access to basic amenities. 31 Based on average numbers from 2013/14 to 2016/17 Water Conservation Report Page 24

25 These benefits are not easy to quantify; externalities have therefore not been reflected in the calculation of the levelised cost. However, our three residential water efficiency programs all offer similar services, and share program management resources. When considering the total costs and water savings of PlumbAssist and Waterfix Residential and Strata, the total levelised cost of the combined water efficiency program is approximately $0.06. As a total program, this is below the value of water at $1.74. Figure 2-3 We work with our partners to enable water sensitive cities of the future Water Conservation Report Page 25

26 Education Initiatives We invest in and support education programs that promote water efficiency with a broader focus on the urban water cycle. Initiatives are guided by the Sydney Water Education Plan This Plan will be updated in We run educational tours at seven operational sites, which include water filtration, water recycling and wastewater treatment plants and an advanced water recycling plant. We also have a specially designed Water Recycling Education Centre at St Marys. Our tours promote responsible water use and efficiency and we engage with people from secondary schools, TAFE colleges, universities, technical and international delegations, and other key stakeholders. Every year, approximately 4,000 people participate in a treatment plant tour and presentation. About 2,000 people per year also visit the Water Recycling Education Centre to learn about recycling, sustainable water management and water recycling treatment technology and innovation. Figure 2-4 Students on a tour of the water recycling plant and education facility at St Marys Water Conservation Report Page 26

27 Regulatory measures Two external regulatory measures, implemented during the millennium drought, remain in place: the Water Efficient Labelling and Standards (WELS) scheme and the Building Sustainability Index (BASIX). Both measures continue to improve the water efficiency of homes. BASIX is a state-wide planning policy that sets water use and greenhouse emission targets for residential dwellings. BASIX aims to reduce the volume of drinking water used and greenhouse gas emissions produced by new dwellings and existing dwellings with extensions and alternations. WELS is a national scheme that involves mandatory water efficiency rating and labelling for a range of appliances and fittings. It also sets minimum water efficiency standards for some appliances, such as washing machines. Sydney Water worked closely with regulatory bodies during the millennium drought ( ) to implement this legislation. Figure 2-5 Our network technicians assess reports of leaks and breaks and prioritise jobs to ensure we respond with the appropriate resources Water Conservation Report Page 27

28 Leakage management Sydney Water owns and maintains about 25,000 km of pipes that deliver water to customers. We also maintain the connections to customer properties. All pipe networks are vulnerable to leaks and breaks. Water mains leak or break for a number of reasons and age is usually not the determining factor. Many things can cause leaks, such as: deteriorating joints and fittings ground movement cracking pipes changes in water pressure changes in rainfall and temperature. Sydney Water implements a number of programs to reduce the likelihood of leaks and the amount of water lost when they happen. These programs include: Active leak detection and repair. Pressure management. Optimised response times to repair leaks and breaks. Improved flow metering. Leakage programs are justified and implemented based on the Economic Level of Leakage (ELL). The ELL aims to achieve a balance between keeping costs low for customers and reducing leakage levels. The ELL methodology is consistent with the ELWC methodology. However, while the ELL reflects the level of leakage from the system at the point where the cost of leak reduction activities equals the savings from reduced leakage, the ELWC methodology is used to determine the investment and volume of water savings (from a baseline level of leakage) that is economically efficient. We will update the forward-looking ELL on an annual basis in line with the value of water and the ELWC methodology. An explanation of the ELL methodology can be found in Appendix 6. The ELL for the period is estimated to be 108 ±16 32 ML/day. The leakage program is also supported by our ongoing Pipe Renewal Program as part of our asset maintenance program. By replacing pipes that have reached the end of their life, this program aims to minimise leaks and breaks. Research is also being done on whether leaks lead to pipe breaks. If there is evidence to support this hypothesis, this research will inform the leakage program s size and scope by allowing us to calculate the avoided costs of addressing leaks before they turn into breaks. Sydney Water has reduced breaks by 50% over the last 10 years. We monitor leakage on a quarterly basis and adjust our programs in response to these results. When we increase the amount of active leak detection in response to increased leakage there can be a delay of several months before there is a noticeable effect. Over the last four years we have aimed to manage to our target and provide value to customers. 32 In line with the uncertainty band. Water Conservation Report Page 28

29 The active leak detection and response is a short-term program of less than five years, as the water savings achieved by active leak control would continue for a period after the program was stopped, but the savings will decay over time as new leaks emerge (or re-emerge). Approval for a five-year business case for the active leak detection program is underway. Based on the ELWC methodology, and the corresponding short-run value of water at the time ($0.56 a kilolitre), the efficient level of investment in reducing leaks was around $1.7 million a year. This is equivalent to water savings of around 9.8 ML a day, and a levelised cost of around $0.30 a kilolitre. Figure 2-6 To inspect for hidden leaks Sydney Water uses acoustic devices that pick up the noise water makes as it leaks from a pipe Water Conservation Report Page 29

30 Water Recycling Our water recycling program aims to reuse water, whether it be wastewater or stormwater. These projects can range from large scale wastewater recycling, to sewer mining to stormwater harvesting. These projects are considered to be water conservation projects when they reduce demand on our surface water systems. Recycled water can be used to: water gardens, golf courses and parks flush toilets wash cars fight fires. It can also be used for some industrial purposes and to supplement river flow in the Hawkesbury- Nepean River. We currently operate 23 recycled water schemes, including 15 irrigation schemes. However, we also provide recycled water for use at our own wastewater treatment plants. Our recycled water schemes currently produce approximately 42 billion litres a year. We calculate our water savings based on whether potable water would have been used for the intended purpose. This is approximately 13 billion litres annually. Details on our recycled water savings in can be found in Section 4.4. The ELWC is a forward-looking methodology. In future, we will proactively evaluate recycled water opportunities as part of an integrated water cycle management approach when planning recycled water services on our own sites, as well as recycled water services for customers. This approach is consistent with the concept of one water where we holistically consider all sources and end uses for water, and the benefits and costs of managing water, energy, and nutrients. Such an approach will ensure that we use the right water, of the right quality for the right purpose. Recycled water will be provided when: - it is economically efficient to do so, - it is in the interests of customers - Sydney Water can recover its capital and operating costs. In line with the ELWC methodology, assessments of economic efficiency can include avoided costs in water security and supply, wastewater transfer and treatment, nutrient management and other externalities where they can be adequately quantified. We will explore how our water servicing solutions can provide wider economic benefit and how this may be harnessed. We know that when we are not in drought surface water is a lower cost and lower energy intensity source of water, so planning for recycled water schemes will account for the variation in the need for, and value of, recycled water as a substitute for potable water. However, other benefits of recycled water such as reduced nutrient and flow impacts may be sustained on an ongoing basis. Water Conservation Report Page 30

31 We will continue to explore new technologies and methods of making recycled water more efficient. Currently there are policy, regulatory and pricing barriers that artificially constrain the use of recycled water when determined based on an integrated water cycle management approach. The 2017 Metropolitan Water Plan proposed an independent review of the barriers and enablers of recycled water and also proposed the three-year WaterSmart Cities program to explore opportunities for delivering drinking water, recycled water, wastewater and stormwater services to new communities in a more integrated, cost effective and sustainable way. We are actively seeking opportunities to leverage the contribution that recycled water can make within an integrated water cycle approach (for servicing growth in areas such as Greater Parramatta to the Olympic Peninsula, and Western Sydney) through better quantifying avoided cost and externalities, seeking opportunities to leverage existing infrastructure, and exploring new servicing approaches (such as decentralised and precinct based approaches). Figure Saw tooth weir on the tertiary clarifier at the Rouse Hill Water Recycling Plant Water Conservation Report Page 31

32 Sewer mining Sewer mining, a specific form of recycling, is the process of tapping into a wastewater system, (either before or after the wastewater treatment plant), and extracting wastewater, which is then treated on-site and used as recycled water. There are currently eight sewer mining schemes operating in Sydney Water s area of operations. These schemes are owned and operated by organisations including councils, golf clubs and commercial building owners. We support the provision of recycling by sewer mining projects in accordance with our sewer mining policy. Our objectives are to: facilitate sewer mining by providing timely information, advice and responses to sewer mining enquiries and applications encourage improved water efficiency and sewage management outcomes ensure the operation of the sewerage system is not compromised ensure that the extraction and use of sewage for sewer mining only exposes Sydney Water to business or legal risks that can be managed. Private onsite reuse schemes There are currently eight private onsite reuse schemes currently in operation. Recycled water is produced by capturing, treating and re-using wastewater from a site s buildings or facilities. This includes Sydney Water s head office building at 1 Smith Street, Parramatta. Recycled water volumes from these schemes are not reported to Sydney Water. Stormwater Harvesting Stormwater harvesting involves collecting, storing and treating stormwater from urban areas, which can be used as recycled water. The stormwater is collected from stormwater drains or creeks, rather than roofs. Recycled water is treated so it s safe to use. Recycled water produced from stormwater harvesting can be used to provide water for public parks, gardens, sports fields, toilet blocks and golf courses. Typically, stormwater is under the domain of local councils. However, we may work with them to improve the health of our waterways, provide opportunities for stormwater re-use and/or protect people and properties from flooding. Water Conservation Report Page 32

33 Figure 2-8 Kiama Golf Club uses recycled water for irrigation Water Conservation Report Page 33

34 Current research and development activities We are currently undertaking a number of research projects which will feed directly into water efficiency projects or inform related strategy. Most of our research into water efficiency and water conservation build on our relationships with key universities and institutions. Leak detection trials We are always investigating and scanning the market for new technologies which will can improve the way we operate. Currently we are undertaking two leak detection technology trials: TaKaDu and Utilis. Takadu is a "software as a service" solution which continuously monitors flow, pressure and other available network data to identify deviations from normal pattern for the early detection of leaks and other system anomalies. We initiated a trial of TaKaDu in The trial has been extended for another 12 months, with a reduced scope. Verification of TaKaDu events against reported breaks and leaks will no longer continue, as this has been adequately tested. Results from TaKaDu will be compared against similar products Innoyvse (IWLive) and Aquis which are also being trialled by Sydney Water in 2017 (Jun-Dec). Utilis analyses satellite imagery to identify water below ground level that matches a certain chemical signature typical of drinking water. It identifies potential leaks taking images covering hundreds of square kilometres at once. This raw imagery is then overlaid on GIS systems including street locations. Based on suggested locations, only a few leaks were found, so there was insufficient evidence to prove there was a significant benefit with the detection method. Sydney Water experienced some issues that delayed the start of the trial, and as a result the trial was ceased at 50% completion. Water Conservation Report Page 34

35 End use study: Understanding how customers use water at home The end use study will develop Sydney-specific detailed estimates of how customers use water for specific purposes, such as showering, toilet flushing and clothes washing. The project was started in 2017 and will continue into This large-scale project involves installing special high resolution, high frequency meters on over 400 properties to collect water consumption data that will be broken down into various end use parameters. This metering project will be supported by a customer survey providing information on the types and efficiency of water using appliances present and other factors that influence their water use. Information collected from this project will help inform future water conservation projects and forecasting future water demand. Figure 2-9 Keep a jug of cold drinking water in the fridge Water Conservation Report Page 35

36 Water use analysis: piloting the usefulness of predefined customer segments In 2016, Sydney Water trialled the use of predefined customer segmentation data, considering general customer characteristics and preferences, into Sydney Water's analytics projects including demand forecasting. The trial considered which customer segments participated in past water efficiency programs and how average water use in each segment may differ. The trial demonstrated how this additional information could provide another piece of information to understand the potential uptake of water efficiency projects and how to best develop campaigns in times of drought. Using agent based models to understand the uptake of water conservation projects Sydney Water is currently piloting an agent based model in partnership with CSIRO as part of the Low Carbon Living Cooperative Research Council (CRC). Agent based modelling aims to predict the actions of individuals when interacting with each other and their environment. This model aims to understand the patterns of decisions made by different groups when they are offered water conservation projects. If successful, it will improve our understanding of the potential uptake of water conservation programs. This pilot will be completed in Forecasting Sydney s weather and climate Sydney Water is currently undertaking an innovative project with UNSW, exploring medium-term forecasts from 6 months to 5 years; a notoriously difficult time period for weather forecasting. The research is in two main areas: - analysis of what Sydney s water demand will look like under different climatic scenarios over the next five years - 3-year weather and climate forecasting. This research will help Sydney Water to prepare in advance for impending water scarcity and inform the Water Conservation Plan. It will provide an indicator of possible scale and timing of a period of water security or drought, and when we should be planning to roll out projects to avoid being unprepared. This work is fundamental to better incorporate longer term climate change impacts into longer demand forecasts and demand-supply planning. Water Conservation Report Page 36

37 2.3.2 New projects in Our Rainwater tank service and maintenance project will be implemented in 2017/18, subject to business case/funding approval. Rainwater tank service and maintenance This project offers an installation verification and maintenance service for rainwater tank systems. Residential rainwater tanks underpin a significant portion of the projected demand savings expected to be sustained in the greater Sydney region. However, research conducted in 2010 by Sydney Water for the Department of Planning found the majority of rainwater tanks in BASIX certified homes were performing below expectations in terms of energy efficiency and in their ability to reliably provide water for toilet flushing and clothes washing. It has also been observed that while there is a BASIX requirement for new developments to install a rainwater tank, many homes do not use their water tank. This occurs for a variety of different reasons ranging from equipment failures and cost of repair, to poor water quality. The project aims to optimise and/or significantly improve rainwater tank utilisation, reducing mains water use. It will also provide an educational service that allows the customer to gain an understanding of their rainwater tank system and motivate them to follow up with the service and/or ensure continued efficiency. Customers will pay an initial assessment fee of approximately $120 for the service. The program will target BASIX houses, and potentially be offered through direct mail, a bill insert, and/or a social media referral service. This program is estimated to save approximately 17 million litres per year 33, and water savings benefits for this project are expected to last for 10 years 34. The levelized cost of a five-year program is $0.13. This is below the value of water, which is currently $1.05 for a project with 10 years of water savings benefits. This project is therefore considered economically efficient, and we will be implementing this project in , subject to business case approval. 33 Based on BASIX rainwater tank potable water savings. 34 Based on the reasonable lifetime of wearable components of a system. Water Conservation Report Page 37

38 Figure 2-10 Rainwater tank in a suburban garden Water Conservation Report Page 38

39 2.3.3 Programs more viable with a future increase in the value of water These are programs which we are not currently running, but which have been piloted or implemented before. We have a good understanding of what is involved, and we will consider implementing them at a time when the value of water increases to exceed the levelised cost of the program and there is sufficient interest from stakeholders and customers. Concealed leak detection We have developed a highly sensitive algorithm to identify households with possible concealed leaks. We continuously monitor our customers meter reading data, and where a concealed leak is suspected, a letter can be sent to the owner, advising them that they may wish to investigate their high water use. If the customer calls us following this letter, they are run through a series of questions to determine what service is appropriate. They are then referred to a specialist leak detection service, or to the Waterfix Residential program, which includes minor leak repairs. This potential program may also be expanded to incorporate new technology. Smarter meters in new apartment buildings have the capability to alert Sydney Water, and we can subsequently alert our customers. The program was piloted in 2016 as part of the Waterfix program. However, water saving calculations are not yet possible, due to the need for a long record of water consumption for participating households after the leak detection appointment. If sufficient data is available, we will update the levelised cost for this potential project in the report. Love your Garden program The Love your Garden program offers tailored advice about a garden's specific watering needs. The offer is targeted at customers who use significant amounts of water on their garden. The service involves a qualified horticultural expert visiting a customer s home and evaluating the amount of water the garden needs. Tools such as tap timers, rain gauges and tap tags are provided along with a detailed report. An updated program will also include an assessment of residential irrigation systems, which have become more popular in the community since the end of the last program. The Love Your Garden program ran from 2007 to 2011, and in that time saved approximately 4.4 billion litres of water. The levelised cost of the historical program is $ , and each appointment will continue to save water for 10 years 36. This value of water that will make this project viable will only occur with very low dam levels. However, a new program would include a number of updates, including a nursery program, and potentially lower marketing costs and additional services. 35 Based on historical costs, adjusted for CPI 36 Based on previous program data Water Conservation Report Page 39

40 Figure 2-11 The Love Your Garden service involves a trained horticulturist assessing your garden and providing a tailored watering plan and recommendations on how to improve the garden Business Customer Services relationship management Businesses use about a quarter of the volume of water we supply to customers each day. Business owners who reduce water use often find they also save money in reduced wastewater, energy and chemical treatment costs. Our Business Customer Services help customers achieve best practice water and wastewater management for their business. Sydney Water s Business Customer Services team continues to provide a holistic service to business customers. By bringing together customer connection services, trade waste, backflow prevention, compliance and water efficiency assistance into one service area we can look at a business water use as a whole. Business Customer Services Relationship Management has saved 543 million litres of water since 2011 by: benchmarking water use conducting water use monitoring completing water audits identifying water saving opportunities rolling out water saving measures. Water Conservation Report Page 40

41 Our online monitoring and water efficiency audits for business customers wrapped up in June 2017 due to no uptake from businesses for the previous two years. If drought conditions return and businesses express an interest in undertaking these programs, we will consider implementing them again as short-term two-year programs. Our co-funded online monitoring has a levelised cost of $ and a benefits length extending to 2 years 38. This is above the value of water at $0.56. This means that dam levels of approximately 65-70% would be required before this program is efficient. Co-funded efficiency audits have a levelised cost of $ , and a water saving benefits length of 10 years 40, and dam levels would have to be very low before this program became efficient. However, it may be more efficient to deliver the projects as a program of works, particularly for our larger customers. This is why our business customer services offered the program as part of a holistic approach to relationship management. Council Partnerships The Council Partnerships Program ran from 2010 to Sydney Water worked with local councils to help small and medium water-using businesses achieve sustainable water savings. Sydney Water co-funded the employment of sustainability project officers who worked with 15 councils for different periods of time. The project officers engaged with small and medium businesses to conduct water audits, recommend how they can improve their water efficiency and help them implement water efficiency projects. At the end of the program, around 500 small to medium water using businesses had participated in the program, with total savings of 2.4 million litres. This program was considered to be beneficial to Sydney Water s relationships with councils. However, it is not possible to quantify this particular benefit in the ELWC calculation. The project has a levelised cost of $ and water savings benefit length extending to 2 years Based on a co-funded program and current online monitoring fees for large water users 38 Based on the Top100 Online Monitoring pilot, which ran from 2008 to Based on on a co-funded program and recent average fees for large water users 40 Based on the previous One-to-One Program which ran from 2002 to Based on historical costs, adjusted for CPI 42 Based on water savings reporting for the previous program Water Conservation Report Page 41

42 2.3.4 Projects to be piloted In order to determine whether a project is efficient, we need to gather data on the true costs and water saving benefits of a program. The following section details projects that we can pilot prior to completing the ELWC calculations. Pilot programs will probably deliver water savings efficiently, but we use pilots to evaluate the program design, and determine costs, benefits, and how best to implement the project at scale. Demand management through behaviour change trial project Sydney Water s demand management decision framework has identified the Nepean Water system in Western Sydney as a suitable area to conduct a behaviour change trial. The purpose of the project is to reduce average and peak water use in the Nepean Water system using relevant proven behaviour change and community based social marketing techniques in order to reduce or delay future capital expenditure. We intend to pilot this project, but there is currently no identified funding to complete this trial as originally envisaged. We re currently exploring options to complete a trial on a more limited basis. If we re unable to identify funding we will make provisions in the next pricing submission. Improved leak reporting and response In addition to our active leak detection programs, we rely on customers and staff to report leaks that reach the surface from buried pipes. By attending to leaks promptly, the average run time of leaks is reduced and hence the total amount of water lost per leak and Sydney Water is demonstrating to the community its commitment to water efficiency. We are currently investigating how optimising Sydney Water s response time to repair these leaks reduces water loss. We currently prioritise the response to reported leaks on safety and on the volume of water that could be lost. Anecdotally, we believe the reporting of small leaks has reduced since the drought. We are therefore also investigating ways to increase the community s awareness of leaks, and encourage them to report leaks. Water Conservation Report Page 42

43 2.4 Programs that have reached maturity Previous initiatives have been extremely successful in reducing water use. We expect savings from these initiatives to continue in the future, despite the completion of many of the programs. Water efficient fixtures and behaviours established under these programs should continue to reduce water use. Our pressure management program implemented about 179 pressure reduction schemes between 2005 and We estimate that the program still saves seven billion litres a year in reduced leaks from the network. On average, each customer that has their pressure reduced saves an extra 3,900 litres a year. In total, pressure management saves about 10 billion litres a year. A quarter of Sydney Water s network is now pressure managed, and additional investment in pressure management is unlikely to be efficient. We have always reviewed and adapted our water efficiency programs to ensure they are cost effective and targeting the largest users of water. Analysis showed that many of our efficiency programs in their current format have reached maturity. To achieve significant additional savings from these programs alternative implementation mechanisms are needed, such as regulatory measures. For example, the Smart Rinse Program, aimed at replacing low-efficiency spray rinse nozzles, and BizFix Program, which retro-fitted businesses with water efficient fittings, were part of a larger Business Customer Services water efficiency program. They have both been discontinued as they have been assessed as having reached their maximum effect. During the millennium drought, a combination of rebates and the WELS program were effective in driving a change in consumer demand for water efficient products such as washing machines and toilets. During this period, water efficient machines became more dominant in the market, and there was a phasing out of low-efficiency washing machines. While other avenues may be explored, a similar level of investment in these projects would not result in equivalent water savings in the future. Some programs, such as rebates for washing machines, are intentionally designed to be in place for a limited period of time. Rebates may provide enough financial incentive to encourage customers to take up initiatives they had avoided because of cost. The rebate is removed once it has achieved the desired effect. While we didn t include external projects such as rebates in the WCP, this will not prevent us from developing and contributing to these schemes in partnership with external agencies. Water Conservation Report Page 43

44 Development of the Water Conservation Plan The Water Conservation Plan (WCP) is our 5-year program of water saving-projects that are proposed to be implemented, based on current dam levels. These have the primary purpose of promoting water conservation where it is economically efficient to do so. This covers, but is not limited to, water efficiency, leak reduction and water recycling. The WCP aims to identify cost effective opportunities to reduce water use, to help maintain a sustainable supply/demand balance. We assess water saving opportunities by evaluating them with the new Economic Level of Water Conservation (ELWC) framework. This framework determines if the cost of the project is less than the value of the water saved. The WCP outlines projects which we are planning to do over the next five years, as well as a list of potential programs and projects which may be implemented if our dam levels drop and the value of water increases. This will be done in combination with monitoring trends in demand, research programs, evaluating long term recycling projects, and piloting promising efficiency and leakage projects to confirm that they will be effective. The Water Conservation Plan is therefore designed as a living plan, to be updated annually as the value of water changes and we improve our understanding of the effectiveness of water saving projects. This will allow us to integrate current and future research and pilot projects, start, stop or adjust the scale of efficiency projects, and evaluate future investments. Figure 3-1 The Love Your Garden service involves a trained horticulturist assessing your garden and providing a tailored watering plan and recommendations on how to improve the garden Water Conservation Report Page 44

45 3.1 The ELWC Methodology The ELWC is designed to promote economically efficient investment in water conservation, including water efficiency, leakage and recycling. It evaluates whether the cost to society of a project is less than the value of water that it saves. If so, it is considered economically efficient. Our ELWC methodology is based on a marginal value framework, where investment in water conservation could increase until the cost of saving an extra volume of water is just equal to the cost of supplying an extra volume of water. This can be explained with the assistance of Figure 3-2. The horizontal axis represents the volume of water saved through water conservation, while the vertical axis represents the cost per kilolitre. Figure 3-2 Determination of the ELWC based on marginal costs The horizontal straight line VW reflects the costs of supplying water, which we refer to as the value of water. The position of the curve may move up or down depending on factors like the outlook for water supplies, but is assumed to be constant at a given point in time. The marginal cost of water conservation curve (MCWC) shows how the unit cost of conserving water rises as we invest in additional water conservation projects. In other words, the cost to save one kilolitre of water rises as we try to save more and more water. For example, finding new participants for a program will eventually become increasingly difficult, and more costly strategies would be needed to reach new participants. At low levels of water conservation, the cost to save an extra kilolitre of water is lower than the value of water (ie, in Figure 3-2, the MCWC curve is below the VW curve). It therefore makes sense to invest to save water. For example, if it costs a household $2.00 a kilolitre to buy water but they can spend $1.50 a kilolitre installing an efficient showerhead to save water, the household would have a financial surplus of $0.50 for each kilolitre of water it conserves. It would therefore be rational to invest in the showerhead. In fact, the household can continue investing in water saving measures and still be better off so long as the water conservation activity (whether showerheads or Water Conservation Report Page 45

46 some other option) costs less than $2.00 a kilolitre. When the two values are the same, total costs are minimised and we have reached the ELWC. This point is demarcated by A in Figure 3-2. Reducing water use any further would increase total costs ie, the household spends more than it saves., the MCWC curve is below the VW curve). It therefore makes sense to invest to save water. 3.2 Quantifying the ELWC Once we have determined if our projects are economically efficient (i.e. the levelised cost is less than the value of water), we calculate the ELWC. This is an estimate of the amount of water that could be conserved each year by viable projects, based on our economic assessment of costs and benefits across individual water conservation projects. We calculate the ELWC by adding the total amount of water that could be saved during the five-year program across all the economically viable and available projects and converting to an average ML/day basis. The ELWC for our program based on the January 2017 value of water is 23.5 ML/day. However, we also plan to continue some projects, such as PlumbAssist, which conserve water for other reasons. The ELWC 5-year plan only considers new and ongoing water conservation programs. It does not consider ongoing savings from previously completed programs, even though these may be significant. This is detailed in Section 2.3 and Appendix 3. Water Conservation Report Page 46

47 3.3 Development of the Water Conservation Plan The Water Conservation Plan (WCP) describes Sydney Water's plans for water conservation over the next five years. Development of the WCP has been informed by the new ELWC methodology, as outlined below in Figure 3-3. It is important to note that not all the projects in the WCP are based purely on economic efficiency. Some of our economic activities are undertaken as commercial offerings, social programs, and to build and maintain capability. Step 1 Quantify the volume of water that would be saved over the life of the water conservation project Step 2 Quantify and value costs over the life of the candidate project, including: Design and implementation costs Avoided and/or avoidable costs Any positive external (social and environmental) benefits Step 3 Calculate the levelised cost of the candidate project. Step 4 Compare the levelised cost against the value of water, and only carry forward a project if the levelised cost is less than the value of water. Step 5 Finalise the list of candidate projects and develop a draft Water Conservation Program. Figure 3-3 ELWC methodology key steps In developing the Plan, we also looked at: - projects which are currently underway - projects which we have completed in the past and whether they would be viable to implement again - projects we can implement if the value of water rises - projects we can pilot to calculate a levelised cost for planning purposes - research areas to investigate future possible programs. Some existing projects, such as water recycling schemes, were not evaluated using the ELWC methodology, and water savings have not been included in our five-year plan. As the ELWC methodology is forward-looking, we are not considering the efficiency of water savings of projects Water Conservation Report Page 47

48 implemented prior to now. For example, many of our recycling schemes were implemented during the millennium drought or to meet BASIX requirements. However, we would consider opportunities for further expansion to these schemes that were economically efficient, and include them in future versions of our WCP. The ELWC methodology is forward-looking and is only applied where there is a real opportunity to vary the level of water savings. We have also not completed a levelised cost comparison for several other projects included in the plan. This was done because: - the project doesn t result in direct water savings, for example research projects - water savings are unable to be quantified, for example if the project is being completed primarily for another purpose - we don t have enough information about the potential project to develop a reliable estimate of the associated costs and benefits. This is detailed in Appendix 3. Projects for which we don t have a good estimate of the costs and benefits will require piloting and to assess their levelised costs and viability. Water Conservation Report Page 48

49 3.4 Stakeholder Consultation on the Water Conservation Plan The development of the ELWC methodology was informed by extensive stakeholder consultation, including internal staff, our Customer Council, and an Inter-agency Reference Group. We also received submissions from Institute of Sustainable Futures (ISF), Lendlease, the Australian Sustainable Business Group (ASBG), and the Rainwater Harvesting association. Due to limited time between the approval of the ELWC methodology by IPART (end of December 2016) and the requirement to produce a Water Conservation Plan (by 1 September 2017), and the high level of recent consultation in developing the methodology, stakeholder consultation on this iteration of the Plan was limited to Sydney Water staff and the Metropolitan Water Directorate. Future iterations of the Plan will include wider stakeholder consultation. Figure 3-4 Students on a tour of the water recycling plant and education facility at St Marys Water Conservation Report Page 49

50 3.5 Alignment with the 2017 Metropolitan Water Plan The 2017 Metropolitan Water Plan was released in March The Plan is the NSW Government s plan to ensure there is sufficient water to meet the current and future (10-15 years) needs of the people and environment of the Greater Sydney region. It was developed in collaboration with state agencies, key industry stakeholders, the community, and water utilities, including Sydney Water. The Metropolitan Water Plan recognises the critical value of water conservation in balancing supply and demand. It reinforces investment in economically efficient water conservation, which is the intent of the ELWC methodology. It also notes that investment will increase if demand rises rapidly. We are therefore monitoring demand (Section 4.1) to support our 5-year Water Conservation Plan and the 2017 Metropolitan Water Plan. Figure 3-5 Rosehill Recycled Water Scheme - Reverse osmosis units Fairfield Plant Water Conservation Report Page 50

51 Water efficiency in This section details the key statistics, costs and water savings of the programs that we undertook last year. Further details of these programs can be found in Section 2.3, which details all of our ongoing programs, including our research and development program. A summary of our total costs and water savings from can be found in Appendix Water Use Water use in Total water use 43 for was 557,807 million litres (557.8 GL/year) compared to 529,939 million litres in This includes water used by the residential sector, businesses, industry, irrigation and leaks. This amount is similar to total water use in , when the population was around 20% lower than now and water restrictions were in place (Figure 4-1). On a per person basis water use continues to remain at a similar level to when Level 3 water restrictions were replaced with Water Wise Rules (Figure 4-2). Average water use per person for was estimated to be 307 litres a day 44. When corrected for weather impacts, average per person water demand reduces to 302 litres a day (110.1 kl per person per year) (Appendix 5). The impact of weather and other factors on demand are discussed in section Currently, residential demand accounts for almost 75% of metered water use. Non residential use is about 25% and includes industrial, commercial and government properties. 43 Total water use includes potable water and unfiltered water provided for industrial use in the Illawarra. Recycled water is not included. 44 Observed demand not corrected for weather impacts. Water Conservation Report Page 51

52 Figure Total water use 45 (excluding recycled water) in Sydney was around 558 billion litres a year in This is about the same volume used in , despite a 20% increase in population 45 Total water use includes potable water and unfiltered water provided for industrial use in the Illawarra. Recycled water is not included. Water Conservation Report Page 52

53 Figure Total water use per person per day 46 (excluding recycled water), not corrected for weather impacts Key factors affecting water use Key high level drivers of water demand include the economy, environment, governance and demographics (Figure 4-3). These drivers can trigger responses that may increase or decrease water use. They rarely act independently so a change in one driver usually causes change in another. The response triggered by these drivers is reflected in: people s attitude to water.eg their water using behaviours, appliance purchase choices price of water development and adoption of new technology or practices.eg appliances, sourcesubstitution change in non-residential use of water in terms of changes in industry type, efficiencies and alternative water sources changes in leakage. 46 Observed demand not corrected for weather impacts. Water Conservation Report Page 53

54 Each of these responses may lead to an increase or decrease in demand depending on what the drivers for change are. For example, the response to reoccurring severe drought could be that people view water as a scarce resource and are willing to more pay for more for it. Figure High level drivers of water demand Weather also has significant impact on demand. Deviations from average weather conditions can increase or decrease annual water consumption by up to 5% compared to consumption under average weather conditions. Prolonged extreme weather events, such as heatwaves, can cause more variation, particularly on a short term basis Demand forecasting and monitoring Sydney Water forecasts short (5 year) and long term water demands (50 years). These forecasts are used for financial and demand-supply planning by Sydney Water, WaterNSW and the Metropolitan Water Plan. These forecasts consider potential changes in major water demand drivers and estimates what the impact of these changes may be. To enable adaptive planning and assist in making decisions for an uncertain future, Sydney Water has also developed a range of plausible futures with an associated combination of demand drivers and their impacts. Three of these futures and associated forecasts (higher use, lower use and 'base case') were adopted for use in Metropolitan Water Planning in These futures provide an indication into the potential longer term level demand under a set of assumed set of drivers and responses mentioned in The true future may not be explained solely by any of these individual futures, but they can be used to help consider futures that are different from our current experience. These forecasts should be used to understand the impact of demand drivers and to think about what levers may be used to avoid an undesired future. They should not be used to address short term fluctuations in demand. Water Conservation Report Page 54

55 These scenarios are currently being reviewed and will be updated to consider the future scenarios being developed as part of the interagency scenario working group under the NSW Government's Common Planning Assumptions Group. The latest update of the demand forecasts occurred in in response to the 2016 release of population projections from the Department of Planning and Environment (DPE) (Figure 4-4). The potential deviation in demand forecast due to normal weather variations are illustrated by the grey shading. The updated forecast also incorporated: new population and dwelling projections (DPE, September 2016 release) updated end use trends resulting from new population and dwelling projections, e.g. presence of more BASIX dwellings due to higher growth of development updated water price for residential customers - changed from $2.276/kL in to $2/kL from 1 July 2017 updated non-residential forecast including non-residential price elasticity updated projections for leakage based on latest estimates of actual leakage and the economic level of leakage. Figure Monitoring and forecasting the demand for drinking water Water Conservation Report Page 55

56 As illustrated in Figure 4-4, demand in was higher than forecast. Known reasons for this include: hotter and drier than average weather conditions for much of the summer (November to February), as illustrated in Figure 4-5 (known short term impact) temporary increase in unfiltered water consumption due to the inability to use recycled water by key customers (known short term impact) increased use by both the non-residential and residential sectors. Demand in , excluding the impact from additional unfiltered water use, remains within the bounds of the expected deviation resulting from typical variations in weather. It is not yet known if there is a true increase in demand or if it is temporary, like what was observed in Demand will continue to be monitored throughout to better understand how this result may impact longer term trends. Figure Deviations in average maximum temperature for each month in The average maximum temperatures were higher than the long term average for all months except September. Water Conservation Report Page 56

57 4.2 Efficiency Projects Waterfix Residential Sydney Water invested about $135,823 in delivering the WaterFix service. We estimate WaterFix saved about 24,000 litres for each property serviced in , representing a total saving of about 9.7 million litres this year. The service was provided to our customers at commercial rates. This meant the program made a small profit in The program has a levelised cost of less than $0.00. This means that it is considered economically efficient compared to the current value of water Waterfix Strata Our new Waterfix Strata program serviced one full apartment block at the end of We assessed 154 apartments, which will result in significant water savings. We will be expanding the pilot program to complete 10 buildings in Due to privacy reasons, we cannot report on our program costs for this financial year. However, the program is also provided to our customers at commercial rates, and has a levelised cost of less than $0.00. It is considered economically efficient Business Customer Services Business customer services revolve around one-on-one personalised relationship management with an allocated relationship manager. Services offered in include co-funded efficiency audits and co-funded online monitoring. No new customers opted to complete these programs in , and the program will be wrapped up in June 2017 due to low customer uptake. These offerings could be re-established if the value of water rises and there is sufficient customer interest. However, we also currently publish a range of information on our website to help business customers be water efficient, including: best practice guidelines to achieve water efficiency case studies water efficiency benchmarks for different types of businesses a do-it-yourself tool to save water in your business. Water Conservation Report Page 57

58 4.3 Other Projects PlumbAssist In , 166 customers had a plumbing issue resolved through the PlumbAssist service. Water savings from the program in were estimated to be 19.3 million litres annually. We estimate PlumbAssist saved about 100,000 litres for each property serviced. Sydney Water spent $495,270 in to deliver PlumbAssist. While this program is not economically efficient according to the current value of water, we primarily complete this program as a regulated social program for our customers in hardship Education Program We run educational tours at seven operational sites, which include water filtration, water recycling and wastewater treatment plants and an advanced water recycling plant. We also have a specially designed Water Recycling Education Centre at St Marys. Our tours promote responsible water use and efficiency and we engaged with people from secondary schools, TAFE colleges, universities, technical and international delegations, and other key stakeholders. In , 4,133 people participated in a treatment plant tour and presentation. About 2,637 people visited the Water Recycling Education Centre to learn about recycling, sustainable water management and water recycling treatment technology and innovation. We do not currently measure water savings from our education programs Research programs and trials In , we completed a number of research programs and trials, including trialing new leak detection technologies and research into how customers use water in the home. We don t measure water savings from these projects. Full details of our current research programs and trials can be found in section 2.3. Water Conservation Report Page 58

59 Figure 4-6 Students on a tour of the water recycling plant and education facility at St Marys 4.4 Leak management We inspected 8009 km of pipes in (covering all 429 pressure zones which are prioritised for active leak detection and targeted accordingly). It is estimated that we saved 1,387 million litres of water savings in This value is much lower than previous years as it is based on a baseline. We have recalculated our baseline to account for the long term change in performance due to our program. In previous years, reporting of the leakage program included savings from a baseline as of A new business case has been developed from Going forward we will be reporting against the baseline. Our total water savings from the program since 2002 are 19,565 ML/year. The savings are calculated in comparison to not implementing a leakage program. Sydney Water spent almost $0.8 million on active leak detection and repair in Key leak management statistics The Infrastructure Leakage Index (ILI) measures how effectively infrastructure management can reduce leaks. According to leakage experts, it is the best performance indicator for real loss management. Water Conservation Report Page 59

60 The ILI is a standard introduced by World Bank includes bands from A (reflecting best practice) to D, with recommendations for both developed and developing countries. Sydney Water s ILI of 1.3 is in the top band (Band A) and compares well against other developed countries. By world standards Sydney Water rates in the top 10% of water utilities for minimising leaks. Our Operating Licence Reporting Manual requires us to report the level of water leakage from Sydney Water s Drinking Water supply system against the economic level of leakage for the previous financial year. Our ELL for was 104 ±16 48 ML/day. Actual Average water leakage for was 114 million litres a day compared to 103 ML/day for the financial year. Our leakage level was within the range of our ELL. When we review our leak management, we look at: leak rate number of bursts, breaks and leaks average time to repair bursts, breaks and leaks length of mains inspected economic level of leaks. Table 4-1 details our key statistics for leak management in Table 4-1 Key leak management statistics Key statistics Leakage Number of bursts, breaks and leaks in (low priority) Average time to repair water main breaks (low priority) Number of bursts, breaks and leaks in (high priority) Average time to repair water main breaks (high priority) Length of mains inspected in Economic Level of Leakage (ELL) Value 114 ML/day 3, hours hours 8,008 km 104±16 49 ML/day Infrastructure Leakage Index Calculated at the beginning of In line with range previously approved by IPART. 49 Calculated at the beginning of , with range in line with that previously approved by IPART Water Conservation Report Page 60

61 Costs and savings from leak management programs in are included in Appendix 7. Table 4-2 lists the reported volume of water leakage between and Table Water leakage Year Water leakage (ML/day) Average Water Recycling Water recycling projects We operate 23 recycled water schemes. We also provide recycled water for use at our own wastewater treatment plants. See Table 4-3 for details of our recycled water schemes, including the recycled water volumes and how much drinking water this saves each year. Our Operating Licence Reporting Manual requires us to report the volume of water sourced from Recycled Water (in Megalitres) for the previous financial year. The volume of water sourced from Recycled Water in is 38,339 ML compared to 43,341 ML in financial year. This was primarily due to a temporary reduction in industrial demand Sewer mining There are currently eight sewer mining schemes operating in Sydney Water s area of operations. These schemes are owned and operated by organisations including councils, golf clubs and commercial building owners. In total, these schemes produced over 1.2 billion litres of recycled water in As external programs, these are not included in our total water savings. Water Conservation Report Page 61

62 Table 4-3 Summary of total recycled water supplied and volume of drinking water replaced by recycled water initiatives in Recycled water scheme Source of recycled water Volume of water recycled (ML/year) Water savings (ML/year) Type of use Kiama Golf Course Bombo Irrigation, golf course BlueScope Steel Wollongong 3, ,085.3 Industrial Port Kembla Coal Terminal Wollongong Industrial Wollongong Golf Club Wollongong Irrigation, golf course Wollongong City Council Wollongong Irrigation, parks, sports fields Warwick Farm Racecourse Liverpool Irrigation, race course Liverpool Golf Club Liverpool Irrigation, golf course Industrial Foundation 50 and Rosehill Racecourse Rosehill 1, ,922.9 Industrial, race course Hickeys Lane Penrith Irrigation, parks, sports fields Penrith Council parks Penrith Irrigation, parks, sports fields Stonecutters Ridge Golf Club Quakers Hill - - Irrigation, golf course Agricultural release Quakers Hill Agricultural release Rouse Hill residential Rouse Hill 2, ,319.5 Residential, commercial Castle Hill Golf Course Castle Hill Irrigation, golf course Dunheved Golf Course St Marys Irrigation, golf course Agricultural release St Marys 2, Agricultural release Hawkesbury-Nepean replacement flows 51 Elizabeth Macarthur Agricultural Institute Agricultural release St Marys WRP52 West Camden West Camden 8, Environmental flows Irrigation, farm 1, Agricultural release Richmond Golf Course Richmond Irrigation, golf course University of Western Sydney, Hawkesbury Richmond Irrigation, farms, parks, sports fields Picton Farm Picton Irrigation, farm Aorangi Farm Gerroa Irrigation, farm Sydney Water reuse at wastewater recycling and treatment plants 16, ,995.2 Industrial Total for recycled water projects 53 38,339 9, This refers to customers provided with recycled water from the Rosehill Recycled Water Scheme. 51 The St Marys Water Recycling Project (Replacement Flows) means that there is up to 18 billion litres more drinking water supply in Warragamba dam. However, the project does not reduce the demand for drinking water so the number is not included in the total for drinking water saved. 52 Water Recycling Plant (WRP) 53 Totals listed may not balance exactly with numbers in the table due to rounding. Water Conservation Report Page 62

63 Figure 4-7 Secondary treated wastewater entering the influent pipe to the deep media filters at the Rouse Hill water recycling plant Water Conservation Report Page 63

64 Appendix 1 Our total water savings for Table 1-1 Total measurable water savings for Program/service Water savings (ML/yr) Investment ($ 000, gross) Water savings (ML/yr) Investment ($ 000, gross) Water efficiency PlumbAssist N/A WaterFix Residential N/A Waterfix Strata N/A 58 N/A N/A 59 N/A 60 Business Customer Service Leak management Active Leak Detection 19, , Pressure management 10, N/A N/A 65 N/A Water recycling BlueScope Steel 6,758 Port Kembla Coal Terminal ,139 Wollongong Golf Club Wollongong City Council 4 4 Industrial Foundation 66 and Rosehill Racecourse 1,950 17,523 3,085 1,923 8,723 17,772 Rouse Hill residential 2,489 2,172 2,319 4,251 Other minor schemes 2, , Hoxton Park Recycled Water Scheme - Total 43, ,822 11,091 33, Not reported in Not reported in This cost was recovered as part of the program. See Section 2 for a more detailed explanation. 57 This cost was recovered as part of the program. See Section 2 for a more detailed explanation. 58 Project began in Not reported for privacy reasons 60 Not reported for privacy reasons 61 No Customer uptake for or The program was wrapped up in June See Section for details 62 From a 2002 baseline 63 This is much lower than previous years as it is based on a baseline. We have recalculated our baseline to account for the long term change in performance due to our program. 64 Pressure management provides an ongoing water saving. See Section 3 for a more detailed explanation. 65 No longer being reported 66 This refers to customers provided with recycled water from the Rosehill Recycled Water Scheme. Water Conservation Report Page 64

65 Appendix 2 Reporting Requirements Reporting guide for auditors Reporting Manual Requirement Clause Water Conservation Report Subject The elements of Sydney Water s water conservation program for the previous financial year The elements of Sydney Water s water conservation program for at least the next five financial years Sydney Water s strategies, programs and projects relating to water leakage, recycled water and water efficiency Sydney Water s water conservation objectives, targets and timetables, and extent to which these elements accord with the economic level of water conservation activity and the Methodology Describe and explain Sydney Water s progress against each of the elements of its water conservation program for the previous financial year, including any deviations from this program Describe and explain any changes to Sydney Water s water conservation program relative to the previous annual Water Conservation Report (where applicable) Outline how Sydney Water s water conservation program relates to the Metropolitan Water Plan and its progress against the Metropolitan Water Plan The level of water leakage from Sydney Water s Drinking Water supply system against the economic level of leakage for that financial year for the previous financial year, as well as earlier financial years (where applicable) of the Licence term The volume of water sourced from Recycled Water (in Megalitres) for that financial year for the previous financial year, as well as earlier financial years (where applicable) of the Licence term Quantity of Drinking Water drawn by Sydney Water from all sources, expressed in Gigalitres per year (aggregate), litres per person per day (weather corrected) and kilolitres per person per year (weather corrected). Location in report Section 4 Section 2 Section 1, Section 2 Section 2 N/A Section 1, Section 2, Section 3, Section 4 Section 3.5 Section 4.3, Appendix 6 Section 4.4, Appendix 1 Section 4.1, Appendix 5 Water Conservation Report Page 65

66 Appendix 3 Levelised costs, assumptions and water savings Ongoing projects Table 3-1 outlines the projects which we have evaluated under the ELWC methodology. We have calculated the levelised cost of these projects to determine whether they are economically efficient for the next five years. The project type classifies the project as a water efficiency, leakage or recycling project. The period of benefits outlines how long the water savings for the project are expected to continue. This relates to the current value of water, as it is calculated depending on whether the project will be evaluated against a short-run, intermediate or long-run value of water. Table 3-1 Levelised cost of ongoing projects Status Project Period of Benefits Levelised cost Current value of water Annual anticipated water savings (ML) Ongoing Waterfix residential 17 years <$0.00 $ Ongoing Waterfix strata 17 years <$0.00 $ Ongoing PlumbAssist 17 years $3.38 $ Viable Ongoing Rainwater Tank Repair Active leak detection program 10 years $0.13 $ years $0.31 $ Table 3-2 details committed projects currently underway for which we did not calculate the ELWC, but are still included in the Plan. The outcomes of these projects will still be reported on. Details of all the projects are included below. Water Conservation Report Page 66

67 However, some of these projects may be undertaken primarily for reasons other than water conservation. If so, we may choose to implement the project even if the levelised cost is above the value of water. Additional drivers of water conservation projects may include: Commercial offerings, offered to our customers on a commercial basis. These projects may include water efficiency audits, leakage monitoring or express repairs. External projects run by an external party. This may include rebates, building, plumbing and landscape regulation and BASIX. We won t be calculating a levelised cost for these projects, and we generally don t report on water savings for these projects unless there is a regulatory requirement to report on some aspects of the program. Research and support projects, designed to help us understand new areas which may be economically efficient in producing water savings, preparing for the future, understanding how new technologies work, and piloting new projects to understand the true costs and benefits in a project so that we can complete the ELWC calculation. Often these projects don t result in direct or measurable water savings, but we re doing them to assess their potential to increase water savings in the future. Educational programs, essential projects based on communicating water conservation messaging and projects to the community. This can range from school educational programs on the water cycle to promoting reporting of leaks to assist in our leakage program. Social programs, completed to assist our customers experiencing financial hardship to reduce their debt. Water Conservation Report Page 67

68 Table 3-2 Primary drivers of our other ongoing projects Project type Efficiency Leakage Project name Education plan - awareness of water cycle and processes Regulatory measures BASIX and WELS R&D Activities - Code for Australia Prototype of App to engage with community on water use. R&D Activities - End use project: understanding and potential approaches R&D Activities - Water use analysis (customer segmentation) R&D Activities - CRC LCL Low carbon living Leak detection trials - Takadu leak detection Leak detection trials - Utilis satellite imaging for leak detection Primary Driver Educational program water savings not quantifiable External program not run by Sydney Water Research project water savings not quantifiable Research project water savings not quantifiable Research project water savings not quantifiable Research project water savings not quantifiable Trial ongoing Trial ongoing Recycling Water recycling program Sunk cost; no operational decision required Sewer mining Private onsite reuse schemes Sunk cost; no operational decision required External program not run by Sydney Water Water Conservation Report Page 68

69 Projects more viable with an increase in the value of water These are programs which we are not currently running, but have been piloted or implemented before. We have a good understanding of what is involved, and we can consider implementing them at a time when the value of water exceeds the levelised cost of the program. Project type Project Period of Benefits Levelised cost Current value of water Anticipated annual water savings (ML) Efficiency Efficiency Efficiency Council partnerships D&BCS online monitoring D&BCS efficiency audits 2 years $1.48 $ years $1.29 $ years $3.50 $ Efficiency Love your garden 10 years $12.45 $ Water Conservation Report Page 69

70 Appendix 4 Valuing and comparing cost and benefits The ELWC methodology compares the levelised cost of a project against the value of water, as measured from the perspective of the whole community. The methodology therefore tries to include all costs and benefits, such as social and environmental benefits and costs, even if they do not directly affect Sydney Water or water users. These impacts are referred to as externalities, because they are an unintended consequence of an action or decision taken by other parties. These externalities are included in the societal levelised cost that we use to determine if the project is economically efficient or not. This section details the externalities used in the societal levelised costs of programs. For completeness we have also included the financial levelised cost of our projects, known as the utility levelised cost, which only considers the direct costs and water savings that Sydney Water can claim. The ELWC methodology is similar to a conventional social cost benefit analysis (CBA). In a CBA, we add up all the costs and benefits of a project, compared to a do nothing scenario, to determine if it provides a net benefit to the community. Under the ELWC methodology, however, we compare projects against a benchmark, known as the value of water. If the project can deliver water at a lower cost than the relevant benchmark, it provides a net benefit to the community and should proceed (subject to available funding and other priorities). The value of water reflects the costs of supplying water from existing sources and, depending on the situation, the cost of expanding the water supply system with new sources. Unlike CBA, this means that many of the benefits associated with water conservation programs are in fact included in the value of water. This means that we cannot include those benefits again to calculate the levelised cost for a project, because this would be double counting the same benefit. For example, the PlumbAssist program is run primarily as a hardship program, and is very effective at reducing water use for customers experiencing financial difficulties. However, we don't include the reduction in water supply costs in the levelised calculation for this program because this benefit is already measured in the value of water benchmark. Similarly, the ELWC methodology should only capture impacts that have a net impact, whether positive or negative, on the whole community. A change that simply re-allocates resources from one to group to another is known as a transfer payment, and should normally be excluded from the analysis. For example, a reduction in water sales revenue for Sydney Water would not be counted as a cost of a water conservation project, because this is exactly matched by an offsetting reduction in customer bills. However, if using less water provides a benefit over and above a reduction in their water bills, it is valid to count this benefit in the levelised cost calculations. Some water conservation projects involve charging participants a fee. However, these are not considered transfer payments, because payment of the fee results in the provision of a service. To the extent that costs of a program are at least recovered from the fees of participation, and customers can voluntarily participate in the program, providing the service will result in a net economic gain for society. Customer revenue can therefore be included in the societal levelised Water Conservation Report Page 70

71 cost calculations for voluntary water conservation projects (under the umbrella of externalities ), which would be deducted from Sydney Water s delivery costs. Table 4-1 details the externalities used in the calculation of levelised costs for projects, and the externality-exclusive levelised costs. Table 4-1 Levelised costs and externalities of projects Status Project Levelised cost Externalities Utility levelised cost (without externalities) Ongoing Waterfix residential <$0.00 Customer contributions Ongoing Waterfix strata <$0.00 Customer contributions $1.47 $0.63 Ongoing PlumbAssist $3.38 None $3.38 Viable Rainwater Tank Repair $0.13 Customer contributions $0.59 Not currently efficient Council partnerships $1.48 None $1.48 Not currently efficient D&BCS online monitoring $1.29 Customer contributions $2.58 Not currently efficient D&BCS efficiency audits $3.50 Customer contributions $7.74 Customer energy bill reduction 68 Not currently efficient Love your garden $12.45 Customer contributions 69 $ Based on previously audited program 69 Based on customer contributions from historical program Water Conservation Report Page 71

72 Appendix 5 Correcting for Weather Weather correction Climatic conditions have a strong influence on the levels of customer water use, mainly because they affect residential outdoor and cooling tower use. Water use by residential customers is seasonal, with higher use over summer months and lower use when it s colder. However, the difference in water use between summer and winter has lessened since drought restrictions were in place. Day-to-day and week-to-week changes in the weather can also cause short term fluctuations in water use, significantly above or below the seasonal trend. The purpose of weather correction (or climate correction) is to remove, as much as we can, the impact of climatic variations. This helps us determine how much water would have been used under 'average weather conditions'. This is important, as year-to-year total demand figures may show significant variation. Weather correction is necessary to monitor and identify underlying demand trends. The weather correction model we use does not remove seasonal variations in demand. However, corrections are made for weather conditions (temperature, rainfall and an evaporation index) that are significantly above or below average for that period of the year. We reviewed our weather correction model in As part of the review, we improved the predictive ability of the model. We also updated documentation of the model as part of this process. In , we re-calibrated the model to only use data post water restrictions - that is data from July 2010 to June 2015 with no restrictions, only Water Wise Rules. We continue to investigate drivers of demand including extreme weather events and continued non-average weather conditions. Measuring against an average year We use a model that reports average year demand as a 365 day rolling average of water use in litres per person a day. Results from the weather correction model showed that we used more water than we would have done under 'average' weather conditions. The 365 day moving average of demand at 30 June 2017 was 307 LPD with a weather correction of 5 LPD 70. This gives a weather corrected demand of 302 LPD for Numbers listed may not balance exactly due to rounding. Water Conservation Report Page 72

73 Figure 5-1 The weather in meant that we used more water per person than in an average year Water Conservation Report Page 73