Water Conservation Report · Water Conservation Report | 2016-2017 Page | 4 Figure 0-1 ELWC...

Water Conservation Report

2016-2017

Water Conservation Report | 2016-2017 Page | 2

Table of contents

Executive summary ...................................................................................................................... 3

Introduction and regulatory context .................................................................................... 13

1.1 Approval of the ELWC Methodology ............................................................................................... 14

Our five-year plan .................................................................................................................. 15

2.1 The value of water ............................................................................................................................. 15

2.2 Overview ............................................................................................................................................. 17

2.3 Projects in the Water Conservation Plan ........................................................................................ 22

2.4 Programs that have reached maturity ............................................................................................. 43

Development of the Water Conservation Plan .................................................................... 44

3.1 The ELWC Methodology ................................................................................................................... 45

3.2 Quantifying the ELWC ....................................................................................................................... 46

3.3 Development of the Water Conservation Plan................................................................................ 47

3.4 Stakeholder Consultation on the Water Conservation Plan ......................................................... 49

3.5 Alignment with the 2017 Metropolitan Water Plan ......................................................................... 50

Water efficiency in 2016-2017 ............................................................................................... 51

4.1 Water Use ........................................................................................................................................... 51

4.2 Efficiency Programs .......................................................................................................................... 57

4.3 Leak management ............................................................................................................................. 59

4.4 Water Recycling ................................................................................................................................. 61

Appendix 1 Our total water savings for 2016-17 .................................................................. 64

Appendix 2 Reporting Requirements.................................................................................... 65

Appendix 3 Levelised costs, assumptions and water savings ........................................... 66

Appendix 4 Valuing and comparing cost and benefits ........................................................ 70

Appendix 5 Correcting for Weather ...................................................................................... 72

Appendix 6 Calculating the Economic Level of Leakage .................................................... 74

Appendix 7 Estimating Leakage ............................................................................................ 75

Appendix 8 Glossary .............................................................................................................. 77

Appendix 9 List of acronyms and units ................................................................................ 78


Executive summary

Introduction

Each year, we report on how we conserve water in accordance with Section 3 of our Operating

Licence 2015–2020. For the first time this is based on the Economic Level of Water Conservation

(ELWC) methodology, approved by IPART in December 2016.

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 2016-17.

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.


Figure 0-1 ELWC methodology key steps

The current value of water

The ELWC methodology was by approved by IPART in December 2016. For this report, the short-

run value of water was estimated based on dam levels at the start of January 20171. 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 0-1.

1 Value from the first weekly verified storage report released in January 2017.

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.

http://www.waternsw.com.au/__data/assets/pdf_file/0013/124051/05-01-2017-WaterNSW.pdf


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


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 2017. 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 0-2 - Our Water Conservation Plan Projects

Project status Project type Project

Ongoing

Water efficiency Waterfix residential

Water efficiency Waterfix strata

Water efficiency PlumbAssist

Water efficiency Supporting and research and development projects

Leakage Active Leak Detection Program

To be implemented in

2017-182

Water efficiency Rainwater Tank Repair

More viable with an

increase in the value of

water

Water efficiency Council partnerships

Water efficiency D&BCS3 Online Monitoring

Water efficiency D&BCS4 Efficiency Audits

Water efficiency 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 2017-18, subject to business case

approval.

2 Subject to business case/funding approval 3 Developer and Business Customer Services 4 Developer and Business Customer Services


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


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)5

2017-

18

2018-

19

2019-

20

2020-

21

2021-

22

5-year Total

Economically efficient projects

Efficiency Waterfix

residential6 10 20 30 39 49 148

Efficiency Waterfix

strata7 193 386 579 772 965 2,896

Efficiency Rainwater

Tank Repair8 17 34 51 69 86 257

Leakage Active Leak

Detection

Program9

3,572 5,656 7,861 10,145 12,452 39,688

Total predicted ELWC water

savings (ML) 3,792 6,096 8,521 11,025 13,552 42,986 ML

ELWC (ML/day) 23.5 ML/day

Projects we complete for reasons other than water efficiency

Social

project PlumbAssist10 21.2 42.4 63.6 84.8 106.0 318

Total potential water

savings (ML) 3,814 6,139 8,584 11,110 13,658 43,304 ML


savings (ML/day) 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 2017-18, subject to business case/funding approval 9 Projection of savings based on 2016-17 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 2002. A new business case has been developed from 2016-17. Going forward we will be reporting against the 2016-17 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


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 (2003-2009), 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 2.3.3.

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 $0.72 210.4

D&BCS 11Online Monitoring $1.29 22.8

D&BCS12 Efficiency Audits $3.50 136.9

Love Your Garden $12.45 42.2

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 2.3.4.

11 Developer and Business Customer Services 12 Developer and Business Customer Services


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.


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.

2016-17 Water Use and Water Conservation Program

Total water use13 for 2016–17 was 557,807 million litres compared to 529,939 million litres in

2015–16. This includes water used by the residential sector, businesses, industry, irrigation and

leaks. This amount is similar to total water use in 2003–04, 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 2016–17 was

estimated to be 307 litres a day14. 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.


We estimate that we saved 11,091 ML in measurable water savings in 2016-17. Our efficiency

program included PlumbAssist, Waterfix Residential and the new Waterfix Strata. Our leakage

program saved 1,38715 million litres, and our ongoing recycled water projects saved 9679 million

litres of water in 2016-17. A summary of our total costs and water savings from 2016-17 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 2016-17 baseline. In previous years, reporting of the leakage program

included savings from a baseline as of 2002. A new business case has been developed from 2016-17. Going forward we will be reporting against the 2016-17 baseline. Our total water savings from the program since 2002 are 19,565 ML/year..


Introduction and regulatory context

Each year, we report on how we conserve water in accordance with Section 3 of our Operating

Licence 2015–2020. For the first time this is based on the Economic Level of Water Conservation

(ELWC) methodology, approved by IPART in December 2016.

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 2011. 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 2016-17.

Appendix 2 outlines how this report meets specific requirements in the Operating Licence

Reporting Manual.


1.1 Approval of the ELWC Methodology

The ELWC was introduced in the Operating Licence 2015–2020, with the new requirements for

water conservation, reproduced below:

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 2016.

3.2 Economic level of water conservation

3.2.1 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)

3.2.2 Once the approach and principles referred to in clause 3.2.1

are approved by IPART, Sydney Water must develop a

methodology in accordance with the approach and principles.

3.2.3 By 31 December 2016, Sydney Water must obtain IPART’s

approval for the Methodology.


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 3.

2.1 The value of water

The ELWC methodology was approved by IPART in December 2016. For this report, the current

short-run value of water was estimated based on dam levels as at the start of January 201716.

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 2017-18 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 2017.

http://www.waternsw.com.au/__data/assets/pdf_file/0013/124051/05-01-2017-WaterNSW.pdf


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.

Figure 2-1 - Short-run to Long-run values of water

$0.56 $0.65

$0.75

$0.85

$0.95

$1.05

$1.15

$1.25

$1.35

$1.45

$1.55

$1.64

$1.74

$1.84

$1.94

$2.04

$-

$0.50

$1.00

$1.50

$2.00

$2.50

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

Valu

e o

f w

ate

r ($

/ k

ilolit

re)

Duration of water savings (years)

Economic Level of Water Conservation 2017 - Value of Water


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 2017. 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 2-2 - Water Conservation Plan Projects

Project status Project type Project

Ongoing

Water efficiency Waterfix residential

Water efficiency Waterfix strata

Water efficiency PlumbAssist

Water efficiency Supporting research and development projects

Leakage Active Leak Detection Program

To be implemented in

2017-1817

Water efficiency Rainwater Tank Repair

More viable with an

increase in the value of

water

Water efficiency Council partnerships

Water efficiency D&BCS18 Online Monitoring

Water efficiency D&BCS19 Efficiency Audits

Water efficiency 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 2017-18, 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


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


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)20

2017-

18

2018-

19

2019-

20

2020-

21

2021-

22

5-year Total

Economically efficient projects

Efficiency Waterfix

residential21 10 20 30 39 49 148

Efficiency Waterfix

strata22 193 386 579 772 965 2,896

Efficiency Rainwater

Tank Repair23 17 34 51 69 86 257

Leakage Active Leak

Detection

Program24

3,572 5,656 7,861 10,145 12,452 39,688

Total potential ELWC water

savings (ML) 3,792 6,096 8,521 11,025 13,552 42,986 ML

ELWC (ML/day) 23.5 ML/day

Projects we complete for reasons other than water efficiency

Social

Project PlumbAssist25 21.2 42.4 63.6 84.8 106.0 318


savings (ML) 3,814 6,139 8,584 11,110 13,658 43,304 ML


savings (ML/day) 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 2017-18, subject to business case/funding approval 24 Projection of savings based on 2016-17 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 2002. A new business case has been developed from 2016-17. Going forward we will be reporting against the 2016-17 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


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 2.3.3.

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 $0.72 210.4

D&BCS26 Online Monitoring $1.29 22.8

D&BCS27 Efficiency Audits $3.50 136.9

Love Your Garden $12.45 42.2

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 2.3.4.

26 Developer and Business Customer Services 27 Developer and Business Customer Services


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.



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).


2.3 Projects in the Water Conservation Plan

2.3.1 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 1999. 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 2016–17, 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 40028 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 9.729 million litres of

water every year.

These water savings are estimated to last up to 17 years after the service30. 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 2017-18 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 2013/14-2016/17 29 Based on weighted average water savings for 2011/12 to April 2016 30 Based on seven years of full water savings and a 10% annual decay in savings thereafter.


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 200-300 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, 2016-17, 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 2017-18 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.


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 PlumbAssist31. 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


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


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 2012–16.

This Plan will be updated in 2017-18.

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


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 (2003-2009) 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


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 2017-18 period is estimated to be 108 ±1632 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.


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 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

2016-17 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.


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.



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 2-7 - Saw tooth weir on the tertiary clarifier at the Rouse Hill Water Recycling Plant


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.


Figure 2-8 Kiama Golf Club uses recycled water for irrigation


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 2015. 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.


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 2018.

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 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 2018.

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.


2.3.2 New projects in 2017-18

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 year33, and water savings

benefits for this project are expected to last for 10 years34. 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 2017-18, 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.


Figure 2-10 Rainwater tank in a suburban garden


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 2018-19 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 $12.4535, and each appointment will continue to save

water for 10 years36. 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


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.


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 $1.2937 and a benefits length extending to

2 years38. 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 $3.5039, and a water saving benefits length of 10 years40, 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 2015. 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 $1.4841 and water savings benefit length extending to 2 years42.

37 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 2011 39Based 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 2011. 41 Based on historical costs, adjusted for CPI 42 Based on water savings reporting for the previous program


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.


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 2013. 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.


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


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


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.


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.

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

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.


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.


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.



3.5 Alignment with the 2017 Metropolitan Water Plan

The 2017 Metropolitan Water Plan was released in March 2017. 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 efficiency in 2016-2017

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 2016-17 can be found in Appendix 1.

4.1 Water Use

4.1.1 Water use in 2016-17

Total water use43 for 2016–17 was 557,807 million litres (557.8 GL/year) compared to 529,939

million litres in 2015–16. This includes water used by the residential sector, businesses, industry,

irrigation and leaks. This amount is similar to total water use in 2003–04, 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 2016–17 was

estimated to be 307 litres a day44. 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 4.1.3.

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.


Figure 4-1 - Total water use45 (excluding recycled water) in Sydney was around 558 billion litres a

year in 2016–17. This is about the same volume used in 2003-04, 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.


Figure 4-2 - Total water use per person per day 46 (excluding recycled water), not corrected for

weather impacts

4.1.2 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, source-

substitution

• 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.


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 4-3 - 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.

4.1.3 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 2015.

These futures provide an indication into the potential longer term level demand under a set of

assumed set of drivers and responses mentioned in 4.1.2. 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.


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 2016–17 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 2015-16 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 4-4 - Monitoring and forecasting the demand for drinking water


As illustrated in Figure 4-4, demand in 2016-17 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 2016-17, 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 2011-12.

Demand will continue to be monitored throughout 2017-18 to better understand how this result

may impact longer term trends.

Figure 4-5 - Deviations in average maximum temperature for each month in 2016-17. The average

maximum temperatures were higher than the long term average for all months except September.


4.2 Efficiency Projects

4.2.1 Waterfix Residential

Sydney Water invested about $135,823 in 2016–17 delivering the WaterFix service. We estimate

WaterFix saved about 24,000 litres for each property serviced in 2016-17, 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 2016–17. 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

4.2.2 Waterfix Strata

Our new Waterfix Strata program serviced one full apartment block at the end of 2016-17. We

assessed 154 apartments, which will result in significant water savings. We will be expanding the

pilot program to complete 10 buildings in 2018-19.

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.

4.2.3 Business Customer Services

Business customer services revolve around one-on-one personalised relationship management

with an allocated relationship manager. Services offered in 2016-17 include co-funded efficiency

audits and co-funded online monitoring. No new customers opted to complete these programs in

2016-17, 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.


4.3 Other Projects

4.3.1 PlumbAssist

In 2016–17, 166 customers had a plumbing issue resolved through the PlumbAssist service. Water

savings from the program in 2016-17 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 2016–17 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.

4.3.2 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 2016–17, 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.

4.3.3 Research programs and trials

In 2016-17, 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.



4.4 Leak management

We inspected 8009 km of pipes in 2016–17 (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 2016-17. This value is much lower than previous years as it is based on a

2016-17 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 2002. A new business case has been developed from 2016-17.

Going forward we will be reporting against the 2016-17 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 2016–17.

4.4.1 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.


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 2016-1747 was 104 ±1648 ML/day. Actual Average water

leakage for 2016–17 was 114 million litres a day compared to 103 ML/day for the 2015-16 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 2016-17.

Table 4-1 Key leak management statistics 2016-17

Key statistics Value

Leakage 114 ML/day

Number of bursts, breaks and leaks in

2016-17 (low priority) 3,013

Average time to repair water main breaks

(low priority)

192 hours

Number of bursts, breaks and leaks in

2016-17 (high priority) 9289

Average time to repair water main breaks

(high priority)

44 hours

Length of mains inspected in 2016-17 8,008 km

Economic Level of Leakage (ELL) 104±1649 ML/day

Infrastructure Leakage Index 1.45

47 Calculated at the beginning of 2016-17. 48 In line with range previously approved by IPART. 49 Calculated at the beginning of 2016-17, with range in line with that previously approved by IPART


Costs and savings from leak management programs in 2016–17 are included in Appendix 7.

Table 4-2 lists the reported volume of water leakage between 2010-11 and 2016-17.

Table 4-2 - Water leakage 2010-2017

Year Water leakage (ML/day)

2011–12 115

2012–13 120

2013-14 107

2014-15 99

2015-16 103

2016-17 114

Average 109

4.5 Water Recycling

4.5.1 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 2016-17 is 38,339 ML compared to 43,341 ML in 2015-16 financial year. This

was primarily due to a temporary reduction in industrial demand.

4.5.2 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 2016-17. As external

programs, these are not included in our total water savings.


Table 4-3 Summary of total recycled water supplied and volume of drinking water replaced by

recycled water initiatives in 2016–17

Recycled water scheme Source of

recycled

water

Volume of

water recycled

(ML/year)

Water savings

(ML/year)

Type of use

Kiama Golf Course Bombo 71.8 - Irrigation, golf course

BlueScope Steel Wollongong 3,085.3 3,085.3 Industrial

Port Kembla Coal Terminal Wollongong 239.0 239.0 Industrial

Wollongong Golf Club Wollongong 40.4 40.4 Irrigation, golf course

Wollongong City Council Wollongong 4.0 4.0 Irrigation, parks, sports fields

Warwick Farm Racecourse Liverpool 67.6 - Irrigation, race course

Liverpool Golf Club Liverpool 61.4 46.0 Irrigation, golf course

Industrial Foundation50 and

Rosehill Racecourse Rosehill 1,922.9 1,922.9 Industrial, race course

Hickeys Lane Penrith 3.0 - Irrigation, parks, sports fields

Penrith Council parks Penrith 21.5 21.5 Irrigation, parks, sports fields

Stonecutters Ridge Golf Club Quakers

Hill - - Irrigation, golf course

Agricultural release Quakers

Hill 365.0 - Agricultural release

Rouse Hill residential Rouse Hill 2,319.5 2,319.5 Residential,

commercial

Castle Hill Golf Course Castle Hill 103.0 - Irrigation, golf course

Dunheved Golf Course St Marys 95.5 4.8 Irrigation, golf course

Agricultural release St Marys 2,428.0 - Agricultural release

Hawkesbury-Nepean

replacement flows51

St Marys

WRP52 8,017.5 - Environmental flows

Elizabeth Macarthur

Agricultural Institute

West

Camden 58.7 - Irrigation, farm

Agricultural release West

Camden 1,830.0 - Agricultural release

Richmond Golf Course Richmond 64.7 - Irrigation, golf course

University of Western

Sydney, Hawkesbury Richmond 394.7 -

Irrigation, farms, parks, sports

fields

Picton Farm Picton 81.4 - Irrigation, farm

Aorangi Farm Gerroa 94.5 - Irrigation, farm

Sydney Water reuse at wastewater

recycling and treatment plants 16,969.7 1,995.2 Industrial

Total for recycled water projects53 38,339 9,679

50 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.


Figure 4-7 Secondary treated wastewater entering the influent pipe to the deep media filters at the

Rouse Hill water recycling plant


Appendix 1 Our total water savings for 2016-17

Table 1-1 Total measurable water savings for 2016-17

51 Not reported in 2015-16

51 Not reported in 2015-16

56 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 2016-17 59 Not reported for privacy reasons 60 Not reported for privacy reasons 61 No Customer uptake for 2015-16 or 2016-17. The program was wrapped up in June 2017. See Section 4.2.4 for details 62 From a 2002 baseline 63 This is much lower than previous years as it is based on a 2016-17 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.

Program/service 2015-16 2016–17

Water savings

(ML/yr)

Investment

($’000, gross) Water savings

(ML/yr)

Investment

($’000, gross)

Water efficiency

PlumbAssist N/A54 927 16.5 495.3

WaterFix Residential N/A55 29656 9.7 135.857

Waterfix Strata N/A58 N/A N/A59 N/A60

Business Customer Service61 0 0 0 0

Leak management

Active Leak Detection 19,45562 954 1,38763 883

Pressure management 10,00064 N/A N/A65 N/A

Water recycling

BlueScope Steel 6,758

3,139

3,085

8,723 Port Kembla Coal Terminal 346 239

Wollongong Golf Club 35 40

Wollongong City Council 4 4

Industrial Foundation66 and

Rosehill Racecourse 1,950

17,523

1,923

17,772

Rouse Hill residential 2,489 2,172 2,319 4,251

Other minor schemes 2,024 710 2,068 609

Hoxton Park Recycled Water

Scheme -

101

-

450

Total 43,06067 25,822 11,091 33,319


Appendix 2 Reporting Requirements

Reporting guide for auditors

Reporting

Manual

Requirement

Subject Location in

report

Clause 3.2.1

Water

Conservation

Report

The elements of Sydney Water’s water conservation program for

the previous financial year

Section 4

The elements of Sydney Water’s water conservation program for at

least the next five financial years

Section 2

Sydney Water’s strategies, programs and projects relating to water

leakage, recycled water and water efficiency

Section 1,

Section 2

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

Section 2

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

N/A

Describe and explain any changes to Sydney Water’s water

conservation program relative to the previous annual Water

Conservation Report (where applicable)

Section 1,

Section 2,

Section 3,

Section 4

Outline how Sydney Water’s water conservation program relates to

the Metropolitan Water Plan and its progress against the

Metropolitan Water Plan

Section 3.5

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

Section 4.3,

Appendix 6

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

Section 4.4,

Appendix 1

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).

Section 4.1,

Appendix 5


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 $1.74 9.9

Ongoing Waterfix strata 17 years <$0.00 $1.74 193.1

Ongoing PlumbAssist 17 years $3.38 $1.74 24.8

Viable Rainwater

Tank Repair 10 years $0.13 $1.05 17.1

Ongoing

Active leak

detection

program

5 years $0.31 $0.56 2133

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.


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.


Table 3-2 Primary drivers of our other ongoing projects

Project

type

Project name Primary Driver

Efficiency Education plan - awareness of water cycle

and processes

Educational program – water savings

not quantifiable

Regulatory measures – BASIX and WELS External program not run by Sydney

Water

R&D Activities - Code for Australia –

Prototype of App to engage with

community on water use.

Research project – water savings not

quantifiable

R&D Activities - End use project:

understanding and potential approaches


quantifiable

R&D Activities - Water use analysis

(customer segmentation)


quantifiable

R&D Activities - CRC LCL Low carbon

living


quantifiable

Leakage Leak detection trials - Takadu leak

detection

Trial ongoing

Leak detection trials - Utilis satellite

imaging for leak detection

Trial ongoing

Recycling

Water recycling program Sunk cost; no operational decision

required

Sewer mining Sunk cost; no operational decision

required

Private onsite reuse schemes External program not run by Sydney

Water


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 Council

partnerships 2 years $1.48 $0.56 210.4

Efficiency D&BCS online

monitoring 2 years $1.29 $0.56 22.8

Efficiency D&BCS efficiency

audits 10 years $3.50 $1.05 136.9

Efficiency Love your garden 10 years $12.45 $1.05 42.2


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


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

$1.47

Ongoing Waterfix strata <$0.00 Customer

contributions

$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

Customer energy bill

reduction68

$7.74

Not currently

efficient

Love your garden $12.45 Customer

contributions69

$13.36

68 Based on previously audited program 69 Based on customer contributions from historical program


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 2009–10. 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 2014-15, 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 LPD70. This gives a weather corrected demand

of 302 LPD for 2016–17.

70 Numbers listed may not balance exactly due to rounding.


Figure 5-1 The weather in 2016-17 meant that we used more water per person than in an ‘average’

year


Appendix 6 Calculating the Economic Level of Leakage

The economic level of leakage (ELL) is the point where the cost of reducing leaks equals the value

of the water saved. It is based on a least-cost model to determine the best rate of expenditure to

manage leaks.

Initially, Sydney Water determined the economic level of leakage based on the Best Practice

Principles in the Economic Level of Leakage Calculation. This report was published by the Office

of Water Services, the United Kingdom water industry regulator, in 2002. The methods in the

report are limited to evaluating leak management programs such as active leak detection and

repair.

Over time, we have improved how we determine the economic level of leakage to include the

effects of pressure management. This is based on International Water Association best practice,

customised for Australian National Performance Reporting.

The chart below is a simplified presentation of an economic level of leakage analysis. Higher rates

of expenditure result in lower levels of leakage and lower rates of expenditure result in higher

levels of leakage. Sydney Water will implement a mix of leak management programs to achieve

ELL and provide best value for customers.

Figure 6-1 - The economic level of leakage (ELL)

$/k

L

Leakage

Cost to reduce leakage

Value of saved water

Economic Level of Leakage

decreasing


Appendix 7 Estimating Leakage

Sydney Water uses the water balance method to estimate average losses (leakage) from our water supply systems. The water balance is a reconciliation of the volume of we produce with all known and estimated end uses subtracted. The remaining volume is estimated to be leakage.

Sydney Water follows the methods, definitions and terminology recommended by the International Water Association (IWA). The Water Services Association of Australia (WSAA) also supports this approach. Our ELL includes an uncertainty range of ±16 ML/day in our leakage estimate, in line with the range previously approved by IPART.

Water Balance Results for year ending in quarter 2016/17 Q4 (Figures in ML)

Billed authorised consumption

Revenue water Billed metered consumption

498,983 498,983 495,323

Authorised consumption

Billed unmetered consumption

502,589 3,660

Water Supplied

Unbilled authorised

consumption

Unbilled metered consumption

554,92371 3,607 412

Unbilled unmetered

consumption

3,195

Apparent losses

Non revenue water

Unauthorised consumption

10,664 55,940 555

Water losses

Customer meter under-registration

52,333 10,109

Real losses

Real losses from distribution

system

41,670 41,670 - 7.9%*

(114 ML/D)

* Percentage in relation to base year of 2005/06 water supplied

71 This number is different to total water use stated earlier in the report. The difference is due to different timeframes. Total water use is measured from water supplied between 1 July 2016 to 30 June 2017. The water balance is calculated between May 2016 and May 2017.


Appendix 8 Glossary

Building and Sustainability Index (BASIX)

State-wide planning policy that ensures new residential dwellings are designed to use less drinking water and produce fewer greenhouse gas emissions by setting energy and water reduction targets. BASIX also applies to extensions and alterations of existing residential properties.

Economic level of leakage

Represents the total level of leakage from the system at the point where the cost of leak reduction activities equals the savings from reduced water demand.

Levelised cost The present value of net project costs divided by the present value of water saved, measured over the life of the project

Recycled water

Recycled water is water that has been used before and is then cleaned to remove impurities. Recycled water (sometimes called reclaimed water) comes from wastewater, which includes greywater and stormwater. Sydney Water treats recycled water to Australian Recycled Water Guidelines and NSW Health standards so that it is suitable and safe for its intended use.

Sewer mining The extraction of wastewater upstream and/or downstream of a wastewater treatment plant for treatment and reuse as recycled water.

Stormwater harvesting

The collection, treatment, storage and use of stormwater runoff.

Water Efficiency Labelling Scheme (WELS)

National scheme that involves mandatory water efficiency rating and labelling for a range of appliances and fittings.

Water Wise Rules

Long-term water saving rules introduced by the NSW Government in June 2009. The rules focus on simple, common-sense behaviours, such as watering in the cool parts of the day, no hosing of hard surfaces and fitting hand-held hoses with trigger nozzles.

Weather Correction

The removal of year-to-year variation in water use relating to changes in weather conditions.


Appendix 9 List of acronyms and units

BASIX Building Sustainability Index

ELWC Economic level of water conservation

IPART Independent Pricing and Regulatory Tribunal

LPD Litres per person a day

NSW New South Wales

WCP Water Conservation Plan

WELS Water Efficiency Labelling and Standards

WSAA Water Services Association of Australia

m metres

L litres

kL kilolitres

km kilometres

ML megalitres

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