Innovation at Western Water Les McLean, General Manger Strategy & Performance

11 July 2013

Overview

• Strategic context

• Innovation Pipeline process

• Case Study: Class A for Clothes Washing Machines

• Case Study: Intelligent Metering Trial

• Case Study: Environmental Offsets Framework

• Risk Appetite

Strategic context • Innovation Statement (Board endorsement)

• BAU thinking won’t address some new complex challenges

• Innovation is about taking risks

• New ideas come from all levels

• Need leadership, time and money

• Need ideas management process and tool

• Strategic Plan 2013, Innovation one of 3 key themes:

• “Build the capacity for, and encourage innovation, particularly to improve

liveability and to deliver efficient solutions.”

• Innovation Strategy developed

Innovation Pipeline – Ideas Management Process

Case Study: Class A Recycled Water in Clothes Washing

Machine Investigations

Where did the idea come from? • Clothes washing machines use an

average of 45L of drinking water per

person per day (DSE, 2008)

• Class A recycled water use in clothes

washing machines is approved by

regulators

• Western Water has a goal of fit-for-

purpose potable substitution

• Financial benefits

• Potential water quality risks Typical Breakdown of Indoor

Water Use (DSE, 2008)

Stage Assessment Key Findings

1. Literature review Identified work completed to date and potential limitations.

2. Water quality desktop analysis Concerning levels of colour and TDS when compared against ADWG, which has the potential to cause discoloration of fabric

3. Laboratory material testing All materials complied with laundry standards with the exception of those washed with eco-friendly detergent

4. In-house Ecofriendly detergent trial

All materials (both potable and Class A RW) washed with eco-friendly detergents failed to comply with all laundry standard

5. Eynesbury pilot trial Participant feedback was positive despite high levels of colour and TDS

6. Class A Customer perception survey

There is strong interest from Eynesbury community in implementing this new use. Results highlighted need for further community education.

What was the process?

Barriers to implementation • Colour

• Customer perceptions

• Detergent type

• Risk appetite

Benefits of implementation • Customer choice and value

• Reduced operational costs

• Consistent with strategic direction

• Consistent with government policy

Case Study: Intelligent Meter Trial

Intelligent Meter Trial

• Detect leaks in the supply system, defer augmentation

• Customer segmentation, water usage, customer leakage • Individualise customers via value added services • Operational efficiencies, meter replacements, automate manual processes

Staff Trial • Proceed on the basis of replacing meters with “digital” meter • No Community engagement yet… recognise political climate! • 20 sites installed – 25% (5) of these experienced internal leaks…!

Case Study: Environmental Offsets Framework for the Victorian Water Industry

• VicWater released a position paper

‘Recycled Water Returned to Stream for

Environmental Flows’ -2007

• Reuse to Waterways discussion paper -

2008

• Environmental Offsets Discussion Paper

• Draft Environmental Offsets Framework -

2011

• Environmental Offsets Framework identified

as a strategic project

Where did the idea come from?

Degraded environment

What is an example of an environmental offset?

Weed removal and revegetation

Improved water quality, habitat and community amenity

What is the process?

• No approved process

• Risk of regulatory and stakeholder acceptance

Barriers to implementation

Benefits of implementation • Deferred capital investment

• Cost effective environmental compliance

• Lower cost to customer

• Tangible environmental benefits

• Potential to improved Social value

• Holistic perspective, paradigm shift to

regulations

Risk Appetite

These case studies all took a different approach to Innovation:

• Class A recycled water for clothes washing was focussed around the pursuit

of new markets

• Intelligent Metering Trial links into both transforming the customer

experience as well as fostering new capabilities

• Environmental Offsets Framework is about re-defining the solutions and

value proposition

Risk Appetite Strategic level

• Innovation as an opportunity

• Innovation as a mitigation measure for strategic risks

• Strategic Risk Register as a source of ‘challenges’ for our people to focus ideas on

• Risk management in idea delivery

Ask yourself “What is the risk of doing nothing/not having an innovation

program?”