WBM CUSTOMER CONSULTATIVE COMMITTEE. SPECIAL MEETING NO. 79 Meeting held at 1.30pm, Wednesday 23 November 2011 Italian Sports Club

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1 WBM CUSTOMER CONSULTATIVE COMMITTEE SPECIAL MEETING NO. 79 Meeting held at 1.30pm, Wednesday 23 November Italian Sports Club PRESENT: Tom Elevato Chair (WID) Nick Dellios - Deputy Chair (WID) Ken Goodwin (BMID) Alec Berias, (WID) Con Ballan (WID) Mick Fragapane (WID/River) Odino Boratto (BMID) John Faranda (WID) SRW Representatives Clinton Rodda, Managing Director Ed Smith, Manager Water Supply - West Stuart Wrigglesworth, Chief Finance Officer Bart Keogh, Operations Supervisor, Joe Matthews, Manager Headworks Assets Abdul Rehman, Engineer Vivian Reitano, Acting Secretary IN ATTENDANCE: Owen Phillis, Melbourne Water Brad McLean, Melbourne Water APOLOGY: Noula Antonopoulos- Secretary of WBMCCC Nick Dellios (BMID) Andrew Closter (BMID)

2 1. REVIEW OF MINUTES OF LAST MEETING (19 Oct ) Alec Berias asked why a Sicitor couldn t be present at CCC meetings? Ed Smith responded it s ok to get advice and bring advice back to CCC meetings but does not think a Sicitor should sit in on CCC meetings. John Faranda advised that it doesn t fit into the Customer Committee Guidelines. 2. CCC FEEDBACK ON RENEWALS VS RAB FUNDING Stuart Wrigglesworth Stuart Wrigglesworth reviewed presentation given at last meeting. The flowing Asset Funding topics were covered: Context Objectives of this discussion What actually happens What happens at SRW? What are renewals at SRW? What is the RAB alternate? Historic Assets Status of renewals at SRW So what s the problem What does RAB mean for SRW Alternate models In defence of renewals What s next During the presentation the Committee Members made the flowing comments: Tom Elevato asked whether irrigators can provide direct feedback to ESC. Stuart Wrigglesworth said that the ESC is there to look after customer interests and therefore would consider customer inputs directly. Mick Fragapane asked whether work regarding the siltation of the reservoirs is included in SRW s capital program. Ed Smith replied that hydrographic surveys are undertaken from time to time to determine the vume of the storages and in addition we undertake a catchment management program which aims to reduce the amount of erosion within the catchment but ultimately de-silting works is cost prohibitive Alec Berias asked if the infrastructure had been maintained sufficiently in the past or are the assets just replaced when life expired Ed Smith responded that as the assets have such long lives he doesn t know if relevant amount of maintenance has been carried out over the full life of each asset. Maintenance is often carried to maintain service levels. Stuart Wrigglesworth commented that the aim of the RAB approach is that we only raise funds to finance capital works when it is needed.

3 Con Ballan asked whether the proposed works to modernise the district was to save water? Ed Smith advised that the updates where primarily to extend the life of the assets but would result in significant savings which is an added benefit. Con Ballan asked - will saving water reduce customer s costs? Ed Smith responded that savings may result in additional entitlement which would result in costs being spread over a greater vume and also may contribute to the cost of capital if auctioned. This topic is on today s agenda. Asset Funding: Nick Dellios asked Do we get funds from customers now and spend when necessary or do we wait for assets to be replaced? Stuart responded that that is essentially the current renewals model where funds are continuously raised from customers and held until needed as assets need replacing. This smoothes out price impacts of major capital works. Ken Goodwin commented that the model SRW are running currently is not adequate-we have been paying for over 40 years but assets have not been renewed. Stuart Wrigglesworth advised that there was no money put aside for the district modernization project Con Ballan asked - what is interest rate on the money clected? Stuart Wrigglesworth - our current internal rate return is 7.6% Nick Dellios asked -when does SRW predict assets will be updated? Stuart Wrigglesworth said that SRW has an asset inspection regime that inspects all assets every five years and rates the condition of the assets on a scale of 1-6. This is used to determine when an asset needs to be replaced. Nick Dellios said that farmers may stop farming and leave the district, he suggested most farmers would not commit to paying for the upgrades. He went on to comment that Werribee customers are already heavily rated. Con Ballan asked at what point does the decision have to be made to upgrade channels and who makes the decision that they need upgrading? Stuart Wrigglesworth advised SRW proposes their capital works programme over the five year water plan period and its impact on prices. The ESC then determines what the appropriate level of prices are over that water plan. Con Ballan commented that at some point these works would have to be done for this district to remain viable. Nick Dellios suggested that SRW -should send out monthly bills so that customers could pay their accounts in smaller instalments. Stuart Wrigglesworth advised that he will take that into consideration. Ken Goodwin was concerned that in the last 9 nines years prices have gone up due to the major capital works at the headworks site and that if SRW changed to the renewal model, costs will

4 continue to go up and at a faster rate. We understand that SRW need to do the work to keep business viable but prices are too high. Tom Elevato commented that the Minister advised that no funds would be set aside for the modernisation of the WID. Clinton Rodda stated that SRW had been in discussions with the Minister and had submitted a strategic assessment asking Government for 50% funding and 50% from customer funding. We are now developing the business case. Clinton Rodda suggested that he would continue to keep the Ministers office updated. Stuart Wrigglesworth confirmed with the CCC that the general view is that RAB suits however, Odino Boratto suggested that the existing renewals model is the better option. 3. WIF UPDATE & CCC FEEDBACK ON OPTIONS FOR SAVINGS Clinton Rodda, Pat Caruso Clinton Rodda led discussions regarding over 30 years investment cycle o o o Submitted Strategic Assessment to DSI on 7 th July What are options for modernising WID Looked at spray on liners(behave like concrete) Presentation of Channel lining pricing scenarios Scenarios for case studies Pricing Assumptions Clinton advised that he would also be making a similar presentation to the SRW Board.He also suggested that he would come back to the CCC when he had any further information 4. MELBOURNE WATER - RECYCLED WATER UPDATE Owen Phillis Brad McLean MW led discussions on Quantative Risk Assessment In summary: o Recapped discussions from previous meeting regarding herbicides o Effect of Irrigation Vume o Irrigation Vumes-Conclusions o Effect of degradation in soil o Degradation-conclusions o Safety Factor is the next area of uncertainty o Further Analysis Conclusions Next steps o Timeline o How does this affect the new contract process Alec Berias was concerned whether large quantities of herbicide were being dumped in to the sewerage catchment.

5 Ed Smith and Brad McLean advised that MW could not detect the point source of the contamination but that the work we are undertaking is to ensure that the Canadian guidelines and US Ecotox data are converted to an applicable interim guideline for the WID. This along with the increased degree of monitoring should ensure that water with concentrations of contaminant that above the guideline is detected and stopped from being supplied. John Faranda asked how often testing would be done once we start delivering Recycled Water to the district. Brad responded that tests are done once a week. This means that MW can monitor levels throughout the plant which would give MW and SRW enough time to alert customers should issues arise. Brad said that MW was convening a panel of experts in the field to review the Canadian guidelines and the US Ecotox data with the aim of coming up with an applicable guideline for the WID. This meeting is to be held on the 29 th November. Brad advised that should MW get a conclusive result they would then be able to timetable a return to supply for the WID. Tom Elevato commented that the WID would have been shut down if this had happened 12 months ago. Tom Elevato asked MW Can you determine what amount went into system? Brad McLean advised approx kg 5. MELTON DAM UPGRADE Joe Matthews Abdul Rehman Joseph Matthews led discussions on remedial works proposed at Melton Reservoir: o Widening of existing apron with sloping side wall o Raising and extending right abutment end wall o All flows up to 1 in 100,000 Annual Exceeding Probability flood (460,000 Ml/day) contained within apron. About 4 times the flood of record o Reduces right abutment risk by 1000% o Dam falls outside the ANCOLD Limit of terability (2003) o Action needed to enable the dam to fall below the limit of terability o Currently at tender stage o Works start in February 2012 o Completion by end of June 2012 Impact to Customers o No interruption to irrigation supply storage operates as normal o Strict environmental contrs o Works funded by SRW customers o Price impact ~ 6% Tom Elevato requested that the CCC visit works in April 2012 ACTION: CCC to be invited to visit Melton Reservoir once works have begun in NEXT MEETING Wednesday 14 December, Italian Sports Club

6 The next meeting No. 79 of the Werribee Bacchus Marsh Customer Consultative Committee is scheduled for 12.00pm (Xmas Lunch) on Wednesday 14 December, at Italian Sports Club John Faranda-Apogy for CCC meeting on 14 December, 7. CLOSE There being no further business, the meeting closed at 5.00.pm

7 WBMCCC MEETING ATTENDANCE Alec Berias Con Ballan Nichas Dellios (WID) Mick Fragapan e Nick Dellios (BMID) Andrew Closter Ken Goodwin John Faranda Odino Boratto Tom Elevato 17 Aug 13 Sept (Special meeting) 19 Oct 29 Nov 16 Mar 12 Apr 15 Jun 16 Aug 19 Oct 28 July (special Meeting) Ap Ap 23 Nov (Special meeting) A po l Ap Ap Ap - Ap Ap Ap Ap Ap Ap A po l Ap Ap Ap Ap Ap Ap Ap - Attended Meeting Ap - Notification of apogy Blank - Did not attend 14 Dec