Water Corporation reduces water losses

Water Corporation of Western Australia has reduced its water losses from leaks and overflows by 11 per cent in the 2012-13 financial year and recorded the lowest operating costs of the major water utilities nationwide.

It has also cemented its position as the nation’s most profitable water utility, but recorded higher greenhouse gas emissions per household than utilities in all other capital cities.

The findings were part of a new national report, which provided performance results of water utilities across Australia.

The National Water Commission report found water quality and delivery efficiency had improved across Australia, but that water bills were continuing to rise.

Water Corporation chief financial officer Ross Hughes said the corporation had performed very well.

“I am very pleased to say that we have improved on our previous results in several categories, which is testimony to the hard work and dedication of our workforce,” he said.

The report found Water Corporation was the only major utility to reduce its annual volume of water supplied to homes last financial year.

Perth households have reduced water usage from 277 kilolitres per household in 2008-09 to 249kL in 2012-13, however this was still above the national average of 173kL per year.

The report found the national typical residential water bill, based on average water use, rose by 8 per cent in 2012-13.

In Perth, the typical residential water bill rose 4.5 per cent in 2012-13, to $1,205.

This is compared with Sydney Water, which held prices steady at $1,112 for a typical bill, and SA Water, which increased prices 16 per cent to $1,362.

The cheapest typical annual water bill from a major utility was $814 from City West Water in Victoria.

According to the report, overall operating costs have increased steadily during the past eight years.

Water Corporation’s combined operating costs of water and sewerage rose 6 per cent in 2012-13 to $574 per property serviced.

Despite this rise, Perth recorded the lowest operating costs of the major urban areas, after previous lowest Adelaide increased its operating costs 26 per cent in 2012–13.

In the Auditor General’s February report on Water Corporation said losing more than 10 billion litres a year above its benchmark, or 30 billion litres in total, was disappointing and recommended prioritising pipe replacement to reduce water loss.

In response the Water Corporation said it would replace pipes it deemed at risk of failure, rather than replacing them only when they fail or the more costly alternative of replacing pipes based purely on standard economic life.

Mr Hughes said the Water Corporation had worked hard to reduce water losses by reducing water mains breaks and decreasing the amount of water used for fire fighting, leaks and stolen water, referred to as non-revenue water.

“The decrease in non-revenue water can be attributed to a range of initiatives that have been implemented, such as leak detection, pressure management and maintenance and repair programs,” he said.

The report found Water Corporation was the most profitable of the major utilities, despite a 6 per cent reduction in net profit after tax in 2012-13 due to higher depreciation charges, interest charges and energy costs.

To better compare the profits of major water providers, which vary in size, revenue and expenditure, the report looked at the ratio of net profit after tax divided by income.

The report found Water Corporation had the highest NPAT ratio, 23 per cent, in 2012-13, compared with SA Water at 18 per cent and Sydney Water at 17 per cent.

Mr Hughes said Water Corporation had the highest NPAT of $506.6 million compared with the next highest, Sydney Water at $415.2 million, because of its use of historical cost depreciation, whereas Sydney Water used replacement costs for its depreciation.

“This means a lower profit for Sydney and hence lower dividend to the NSW state government,” he said.

Water Corporation’s greenhouse gas emissions increased 3 per cent from 2011-12, to 663 tonnes CO2 emitted per 1,000 properties.

This is compared with Melbourne, where three water utilities contributed a weighted average of 253t of CO2 per 1,000 properties, and Sydney ,which recorded 85t of CO2 per 1,000 properties.

Mr Hughes said Perth’s integrated water supply scheme required greater energy use than other states due to the large amounts of pumping required, and an increase in energy use due to the Southern Seawater desalination plant coming online.

However, he said the report’s greenhouse gas emissions calculation did not fully recognise the corporation’s purchase of renewable energy.

“Although the corporation buys energy generated from a renewable source for its large desalination plants, this measure is calculated by multiplying the actual energy used by the average greenhouse emission created per kilowatt hour across the network. Thus, there is no recognition in this measure of actual greenhouse emissions of energy purchased,” Mr Hughes said.

The report also found that, at 16 per cent, Western Australia is the only state where supplied water is not primarily sourced from surface water.

Groundwater makes up 48 per cent, desalination plants produce 33 per cent, and 0.03 per cent comes from recycled water.

Mr Hughes said the government had committed to replenishing groundwater, which would reduce reliance on surface water

“Due to the dramatic changes we have seen to our rainfall and runoff over the last decade, the Water Corporation has reduced reliance on surface water, moving toward more climate independent sources such as desalination,” he said.