Client NameGladstone Regional Council

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Client Name Gladstone Regional Council Project
Name 1770/Agnes Water Integrated Water
Contract Requirements Date 20 July 2008
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About the presenter

• Providing Infrastructure advice in

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Introduction

• Water and Wastewater Utilities Services Agreement
• Parties
• Gladstone Regional Council and
• United Utilities Australia.
• Purpose
• The Council proposes to implement the
  1770/Agnes Water Integrated Water Project to
  provide sufficient good quality water and
  wastewater services to the townships of 1770 and
  Agnes Water.
• Process
• Contract Procurement workshop
• Business Case
• QTC Financial Modeling
• Detailed Options Analysis
• Environmental approval
• Planning approval
• Expression of Interest
• Tender
• Award subject to limited Condition Precedent (CP)
• Modification, funding approval and release of CP

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Contract Principals

• Form of Contract Fixed Price - Design Build
  Operate
• Term 10 years post Commercial Acceptance
  with 5 year extension (20 years)
• References Contracts Wagga, Wodonga, Ballarat
  (2), Noosa (2), Central Highlands (3) etc
• Aim To engage with a best practice Operator
  leverage high standard of performance provide
  price and performance certainty all in an
  affordable package (contained water rate
  increases).
• Obligations
• Design UUA
• Construction UUA
• Operation UUA
• Land Council
• EPA Licence Council
• Payment Council
• Pre-existing Contamination Council

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Contract Term
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Contract Scope

• Operate maintain Councils existing water
  wastewater treatment assets
• Upgrade the existing Lagoon treatment system to
  ensure the effluent is in compliance with EPA
  standards
• Design Construct the following new assets
  (Modification)
• Wastewater treatment plant
• Desalination and bore water treatment plant
• 1770 Water supply pipes and reservoir
• 1770 Wastewater reticulation pipes
• Interconnecting pipework to and from water
  wastewater assets and
• Overall SCADA control system.
• Operations, maintenance and asset renewal for all
  water wastewater treatment assets for the
  Contract Term
• Invited Services in Water outside 1770/Agnew
  Water region.

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Contract Responsibilities

• Principal Council have employed Best Practice
  Operator to deliver assets and operate plants and
  in UUAs area of responsibility UUA will take the
  responsibility.
• UUA will at its own cost and risk
• Design
• Construct
• Operate and
• Repair maintain
• each Facility so that it can provide the
  Services to at least the Quality Standards.
• Without limitation UUA accepts the risk ..
  whether or not this agreement refers unless the
  Council expressly agrees to bear that risk
• UUA shall perform the obligations in accordance
  with the Minimum Standards and this agreement on
  the basis of their Submission.

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Contract Payment

• Design Construct Fixed Priced Milestone
  schedule
• Milestone Completion
• Design Certification
• Start-Up Operations - Toll
• Existing Lagoon Toll (Fixed monthly)
• Existing Water Toll (Fixed and Variable).
• Technical Completion
• Design Certification
• Compliance Testing
• Step performance increase
• Toll increases
• Operations - Toll
• Wastewater Toll (Fixed and Variable)
• Water Toll (Fixed and Variable)
• Asset Replacement (Fixed annual)
• Pre agreed escalation Formula.

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Security and Liquidated Damages

• Warranties attained
• Security Deposit
• Security reduces following Commercial Acceptance
  i.e.
• Commissioning
• Process Stabilisation
• Technical Completion
• 40 day on load wastewater compliance test with 24
  hour sampling and continuous conformity
• 30 day on load water compliance test with 24 hour
  sampling and continuous conformity
• Liquidated Damages
• Desalination Plant
• Wastewater Plant
• 1770 water wastewater pipelines

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Performance and Toll Abatement

• Technical Completion
• UUA warrants that Plant will meet new Quality
  Standards
• The New Toll applies
• Toll abatement applies
• 40 and 30 day performance test to achieve
  Commercial Acceptance
• Toll Abatement
• Pre-determined reduction in Toll
• Maximum is 20 of monthly Toll
• Abatement is to maximum for single event

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Performance Requirements - Wastewater
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Performance Existing Wastewater
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Performance Expectation Wastewater
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Performance Requirements - Water
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Performance Requirements - Water
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Performance - Existing Water
Dr. Julian Catmull and Dr. Michael
ten-Lohuis Enviro-Check Enterprises Pty
Ltd Friday, 18 April 2008 408 PM
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Water Supply - Trench
Although raw water that is not currently in use,
I think the result is significant because this
potential water source has levels of E.coli and
faecal coliforms similar to sewage.  Perhaps
there are dead animals somewhere in this body of
water?   I would certainly not recommend using
this water as a source for your potable water
plants.
Dr. Julian Catmull and Dr. Michael
ten-Lohuis Enviro-Check Enterprises Pty
Ltd Friday, 18 April 2008 408 PM
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Performance Expectation Water
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Capital Costs
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Sources of Capital Funding

• Water Headworks 1,367,720
• Sewer Headworks 1,239,660
• Reserves 882,000
• Borrowings 9,320,642
• Subsidy 26,944,424 (including
  developer contribution
  repayment).

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Operating Costs

• Fixed and variable components (Toll).
• Detailed financial model assessed by Queensland
  Treasury Corporation.
• Estimated operating cost of the IWS in 2008/09 is
  557K, stepping up to gt1M in 2009/10 as the
  system comes on-line and then costs level out.
• Scheme operates at deficit position until about
  Year 7 when it returns positive cash flow.
• Deficit funded by borrowing from Council
  reserves.

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Contract Activities Start Up
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Contract Summary

• Long term Design, Build Operate Contractor
• Contract is with the Operator (UUA) not designer
  or builder
• Contract style has been very successful in
  delivering exceptional outcomes for Councils
  (Noosa for example)
• Contract is essentially a fixed price contract
  with pre-agreed escalation clause
• Council has engaged Best Practice Operator for
  services at 1770/Agnes Water with ability to use
  these services outside this geographic area
• Design Construction payments are for pre-agreed
  and delivered milestones
• Contract is performance based with payment
  abatement for non-compliance
• Asset life is guaranteed throughout the Term of
  the Contract
• At the end of the Term the Contract provides for
  managed Handover
• High level of State Subsidy

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QueenslandLevel 13145 Eagle StreetBrisbane QLD
4000 Australiat 617 3228 0700f 617 3228
0799 VictoriaLevel 2164 Flinders
LaneMelbourne VIC 3000 Australiat 613 8626
9200f 613 9650 3160 www.perongroup.com.au
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Representations and Warranties

• UUA warrants the design, the construction and the
  operations
• Council does not warrant or represent the
  Submission, Design Documentation, Works or
  Facilities O M
• UUA acknowledges that Council has relied on its
  representations and warranties.

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Risk, Defects and Onus of Proof

• Sole assumption of Risk
• Design and Construction UUA
• Operation UUA
• Defects apply to Design as well as Construction
• To be rectified by UUA at any time
• May or may not be subject to Notification
• Onus of Proof
• Onus of proof is on UUA as Agreement assumes
  guilt until proven innocent

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Bore performance
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Contract Activities