“Using less, paying more”Making the case for long term investment in water efficiency

Cilla de LacyManager Liveable Communities

WSAAJune 2013

The Water Services Association of Australia is the industry body that supports the Australian

Urban Water Industry

Using water wisely – now and foreverMaintaining investment in water efficiency is as important as maintaining investment in your infrastructure – particularly in the face of uncertainty!

The decade that was• Millennium drought

(2001-2010)

• Record floods (2011- 2013)

GLOBAL FINANCIAL CRISIS 2008 – the worst since the Great Depression

Responses!• Big investment in

desalination, 0GL to 500GL from 2005 to 2012

• 130% increase in recycled water supplied from 2000 to 2009

• Big savings in water use – 350GL/yr!

The 350GL – where and how?City Annual water

savings (GL)

Sydney 120

Perth 100

Melbourne 60

Adelaide 55

Canberra 25

Impact on demand

0%

5%

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15%

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45%

50%

55%

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65%

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% F

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Melbourne's storage volume 2002-2011

Estimated Storage Volume without Water Conservation Recorded Storage Volume

The percentages shown are based on a storage capacity of 1810.5GL including Tarago Reservoir.

Impact on demand

The perfect storm

Quick increase in cost and prices

Eastern Australia has flooded

Water use is down due to floods and behaviour

change

Revenues are down but big fixed costs to

recover

Climate change is making many extreme events worse

Electricity prices are also high and economic growth is very low

The 2030 Vision

Stewardship of the urban water cycle

Influencing strategic land use planning

Compelling voice on National issues

Efficient, trusted and valued

‘Customer

driven,

enriching

life’

The strategy for water efficiency

Customer driven,

enriching life

Urban water

security

Regulation

Innovation

Water-energy

Strategic land use planning

‘Customer driven, enriching life’• A recent SAWM Newspoll found that 96% of

people surveyed saved water around the home

• About 70% of Melburnians and 55% of Sydneysiders support continuing investment in water efficiency despite recent price rises and capital investment

• Households now prefer low level restrictions (permanent water efficiency measures) to no restrictions - but are willing to pay more now to avoid severe restrictions

Urban water security

Managing future supply reliability with future demand

Water efficiency and the supply-demand balance

• Set a long term reduction target with the community

Target

• Develop, cost and assess a suite of water efficiency programs

Programs • Continuously invest in the right water efficiency measures

Investment

• Publically communicate demand-supply balance every year and act accordingly

Communicate

Save water, save energy!• Peak demand for energy in the residential sector driven by air

conditioning, water heating, pool pumps and filters

• Switching to water-saving showerheads in high water using households may reduce energy bills by up to 47 percent!

• Education programs designed to highlight link between energy and water use in a household and communities are important

Regulation - water restrictions

• Outdoor water restrictions helped save 575GL of water in Sydney between 2003-2009. In Melbourne per capita use fell from 195L/day to 143L/day

• Significant savings made inside the home but a loss of green spaces affected liveability

• Aggregate welfare cost of water restrictions to Australian households estimated to be $900m (PC 2008)

Temporary water restrictions are not a water efficiency measure as they result in a ‘loss of utility.’ WSAA supports the use of permanent water efficiency

measures with severe water restrictions reserved only for emergencies

Economic regulation

• Customers may expect water prices to fall when water use efficiency has increased.

• A decrease in water demand will reduce revenue but only have a marginal effect on short term variable costs such as pumping and treatment.

• As more than 60 per cent of revenue is typically associated with fixed capital costs, short term changes in water demand are unlikely to significantly affect the revenue requirement.

• This imbalance between revenue and costs may require a short term increase in prices, which should reduce over time as capital costs are avoided or deferred.

There may be merit in including water conservation costs in recoverable revenue only when conservation is the lowest cost solution for managing demand and supply; that is it must be

lower than the cost of augmenting water infrastructure or alternative sources of supply (ESC, 2012)

Pricing• Increasing water usage prices by 10% decreases

demand over a year by 1.1%

• Upgrading of appliances = halving of long term price elasticity

• Predicted increases in housing units, smaller block sizes and use of efficient appliances will reduce the ability of water usage prices to impact residential demand

Building and appliance regulation

New homes

BASIX (Building Sustainability Index) - Energy and water bill savings for an average four bed home in Western Sydney are between $158 and $228/yr(NSW Government, Planning 2012)

Appliances

The Water Efficiency Labelling and Standards Scheme has generated water savings at a cost of $0.08kL to $0.21kL. (ISF, 2008)

What’s missing?Minimum standards for commercial buildings

What should they target?The prevention and elimination of leaks as 94% of water consumed in an office block is through leakage and from heat rejection equipment particularly cooling towers

Strategic land use planningA strategic approach to urban water and land use planning keeps open the maximum number of options for servicing a community

Engaging with communities

upfront

Influencing public policy

debate concerning liveability

Valuing social and ecosystem

services

Innovation! Know your customers!

Always

Good sewage service and safe clean drinking water

- good taste and look

Fix and maintain infrastructure

Sometimes

Provide water usage info and comparisons

Sell water related products and recycled

water

Mostly

Set customer water use targets and provide water management

advice

Proactive leak detection and protection of

waterways

Don’t expect

Customer data to go to a third party

Utilities to diversify into new markets for profit

Customer segments16%

Efficient

usage

18% Price control

18% Uninvolved

22% Future focus

26% Basic supply and maintenance

Yarra Valley Water ‘Tap App’ Perth

H2omeSmart program

Summing up…….

It’s all about services NOT products

We are in the ‘forever’ business

Maintaining investment in water efficiency is as important as maintaining investment in your

infrastructure – particularly in the face of uncertainty!

It just takes a mindset change and a bit of imagination

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