Tasmanias Urban Water and Sewerage Reform

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Tasmanias Urban Water and Sewerage Reform

• Water and Sewerage Project Team
• Regulatory Workshops
• Hobart 4th and 5th of October
• Launceston 9th of October
• Devonport 10th of October

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Purpose of the Workshops

• Aims are
• Analyse the strengths and weaknesses of the
  current regulatory roles and responsibilities in
  the sector
• Overview the elements of best practice regulation
  elsewhere
• Discuss what the high level regulatory
  objectives/principles for the sector going
  forward should be
• Discuss what the challenges in moving to best
  practice regulation might be

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Purpose of the Workshops

• Workshop discussion will feed into Taskforces
  issues paper on regulatory reforms moving
  forward.
• This is likely to be released in early November
  2007 and will precede another set of regulatory
  workshops, which will focus on pricing
  principles, service standards and asset management

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Session Overview

• Part 1 Taskforce Overview
• Part 2 Current Sewerage Regulation
• Part 3 Current Water Quality and Fluoridation
  Regulation
• Part 4 Workshop Session Strengths and
  weaknesses of current regulatory
  environment.
• Break
• Part 5 Best Practice Regulation
• Part 6 Workshop Session Regulatory
  implementation challenges

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Part 1 Taskforce Creation

• Creation of Ministerial Water and Sewerage
  Taskforce announced in 2006 State of the State
  speech
• investigating the structural and regulatory
  arrangements in the water and sewerage sector
• water is defined as urban and regional
  reticulated water for residential and commercial
  use, while sewerage includes wastewater
• Not about irrigation water or water for
  electricity generation

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Part 1 Taskforce Objectives

• Long-term sustainability of Tasmanias water
  resources
• Better quality of water and sewerage services to
  Tasmanian communities
• Better water and sewerage infrastructure and
  planning
• Greater efficiency and improved pricing signals
• Ensure the provision of water and sewerage is not
  a constraint on economic development

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Part 1 Taskforce Objectives

• Overall timeline

Business/es setup
Regulatory Framework developed
Legislation development
2008
2009
1/4
1/2
3/4
Implementation Plan completed
Phase in of new arrangements commence
Cabinet Decision on structural option Key
aspects of regulation
Skeleton of Regulatory Framework in public domain
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Part 1 Challenges Facing the Sector

• Asset Due diligence findings
• Sector replacement asset value 3.6 billion
  written down value 2 billion
• Half of the twenty-nine councils have not
  completed asset condition assessments
• Compliance
• Drinking water quality standard BWAs high
  compliance
• Councils 23 permanent boil water alerts, but in
  key tourism and business locations

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Part 1 Challenges Facing the Sector

• Asset Due diligence findings (cont)
• Poor environmental compliance from council
  operated major sewerage plants
• about 50 per cent of the 80 Level 2 WWTP do not
  comply with licence conditions or acceptable
  modern technology
• Indicative capital expenditure for water and
  sewerage over the next 10 years is 720 million
  to 845 million
• Ageing workforce creating skill shortages

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Part 1 Challenges Facing the Sector

• Both structural and regulatory reform will be
  required to address the issues
• Regulatory reform
• Not about changing current technical standards
• Ensure regulatory elements are interconnected
• Appropriate separation of roles and
  responsibilities
• The right checks and balances
• Aim to drive sustainable behaviours and provides
  for an acceptable level of service to all
• Appropriate customer protection

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Part 1 Current Water and Sewerage Value Chain
LAND USE PLANNING
Catchment management
Wastewater treatment
Treated wastewaters
Economic (price) regulation
Resource allocation regulation
Health safety regulation
Environmental regulation
Reticulation/ Retail
Bulk collection
Consumption
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Part 1 Water and Sewerage Value Chain (cont)

• Roles and responsibilities
• Sector made up of service providers, regulators,
  policy makers and oversight bodies/processes
• However, roles are performed to differing levels
  of sophistication
• Sometimes the separation of roles blur such that
  self regulation or self oversight occurs

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Part 1 Water and Sewerage Value Chain (cont)

• Roles and responsibilities (cont)
• Seemingly a disconnect between the technical
  (health, environment, resource allocation) and
  economic (pricing) elements of regulation
• The water and sewerage network also operates
  within the confines of land use planning
  objectives (to be dealt with separately from
  todays workshops)

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Part 2 Regulatory Roles Environmental
regulation and issues

• Coleen Cole
• Section Head (Waste Management)
• Environment Division
• Department of Tourism, Arts and Environment

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Part 3 Regulatory Roles Water quality
regulation and issues

• Stuart Heggie
• State Manager Environmental Health Services
• Department of Health and Human Services

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Part 4 Group Session 1

• Workshop Issues (20 mins)
• Provide Feedback (20 mins)

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Part 5 Considerations for Best Practice
Regulation

• Andrew Reeves
• Tasmanian Energy Regulator
• Government Prices Oversight Commissioner

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Part 6 Group Session 2

• Workshop issues (30 mins)
• Provide feedback (15 mins)

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Part 6 Regulatory Objectives

• Consumer protection prevent monopoly pricing,
  ensure minimum service standards
• Community health quality drinking water and
  monitoring catchment sources
• Environmental sustainability support
  sustainable environmental practices
• Financial sustainability service providers
  operate sustainably
• Competition by comparison, benchmarking to
  drive efficiency
• Independent oversight of pricing and customer
  serivce standards
• Provision of essential services in regional areas

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Part 6 Regulatory Principles

• Cost of regulation should not exceed the benefits
• Accountability mechanisms must be in place
• Independence must be upheld
• Affordability for all participants
• Services to be provided on a user pays basis to
  ensure full cost recovery

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Part 6 Regulatory Principles

• Transparency in pricing
• Efficiency mechanisms should be utilised
• Incentive and penalty mechanisms should drive
  behaviour
• Communication and consultation processes
• Consistency in application

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WORKSHOP SUMMARY
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THANK YOU