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Sydney Water – Annual Report 2011

At a glance


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At a glance

Sydney Water’s roleWe are Australia’s largest water utility, providing essential services to over 4.6 million people in Sydney, the Illawarra and the Blue Mountains.

Sydney Water supplies about 500 billion litres of water a year to over 1.7 million homes and businesses – meeting stringent national water standards.

We also collect and treat over 500 billion litres of wastewater a year. In an Australian first, Sydney Water is producing hydroelectricity from wastewater to help power its wastewater treatment plants.

We recycle about 47,500 million litres of wastewater a year and beneficially use the biosolids we capture during treatment for agriculture, composting or land rehabilitation.

We also provide some stormwater services, mainly in southern Sydney, the inner west and Rouse Hill.

In providing these essential services to the community, we have three principal objectives we must meet:

• protect public health

• protect the environment

• be a successful business.

Our aim is to ensure that the customer is front of mind in everything we do, and that we are forward thinking and operate efficiently.

To help deliver our objectives and outcomes, we continue to build a safe, capable and committed workforce.

Sydney Water is a statutory state owned corporation, constituted under the State Owned Corporations Act 1989, and operates under the Sydney Water Act 1994.

About Sydney Water

Sydney Water supplies about 500 billion litres of water a year to over 1.7 million homes and businesses.

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A key focus for Sydney Water over the past few years has been planning for a sustainable future by securing Sydney’s water needs, investing in infrastructure to service growth and reducing our carbon footprint.

For the future, we need to look at more flexible solutions to providing water services that are energy efficient and have a positive effect on the environment. We must also ensure that we do this efficiently and effectively and that this does not translate into prices that customers are not willing to pay.

In recent years, Sydney Water has substantially reduced its operating costs and plans to continue doing so over the next five years. Savings have mainly come from better managing our operations and maintenance, and by adopting innovative solutions in recycling, energy management, asset management and information technology.

Through a joint effort with the community, Sydney Water more than met its Operating Licence target this year to reduce total demand for water. We achieved this through effective water efficiency measures and recycling schemes, and by investing in leakage prevention and pressure reduction programs.

This adaptive planning approach ensures that there is sufficient water available over time to meet population growth, protect river health and respond to future droughts.

Focusing on customers Sydney Water regularly seeks feedback to understand what’s important to customers, how we are performing and what improvements we need to make. In particular, we value the advice and feedback we continue to receive through our Customer Council.

In 2010, we developed new approaches with the council for working with customers in financial difficulty. We also benchmarked our hardship program against other water and energy utilities to build an industry best practice model.

To improve our service, we introduced a new customer management system so all customer interactions are transparent. We also introduced a number of field-based initiatives to improve productivity and reduce costs.

We still need to put more emphasis on understanding customer needs in our planning, decision-making and service delivery. This includes addressing growing customer expectations around value for money.

Investing in the futureOver the next 25 years, Sydney’s population is expected to increase by 1.5 million. Sydney Water will spend over $1 billion to service growth over the next five years. This will include upgrading some water and wastewater systems to service priority new housing sites.

In 2010–11, Sydney Water delivered a $636 million capital works program. Over the next five years, we will continue to deliver major projects in line with increasing demand for infrastructure and services.

Working in partnership with the public and private sectors is critical to our business and the timely delivery of our major capital works for the benefit of customers. Our partnerships involve using best practice and sharing knowledge, risks and returns.

This year saw the commissioning of Sydney’s largest water recycling project at St Marys. The plant will recycle about 18 billion litres a year, playing a significant part in ensuring that greater Sydney reaches its target of 70 billion litres a year by 2015.

Sydney Water worked with Deerubbin WaterFutures, a consortium of companies consisting of United Group Infrastructure, McConnell Dowell Constructors (Aust) and GE Water and Process Technologies to deliver this major water recycling project.

Sydney’s desalination plant has been in full production since June 2010 after coming online in January that year. In July 2010, it was formally handed over to Veolia Water Australia to operate.

In May 2011, the Minister for Finance and Services declared the Sydney Desalination Plant a monopoly supplier of non-rainfall dependent drinking water under the Water Industry Competition Act 2006. Following this, the Minister referred SDP to the Independent Pricing and Regulatory Tribunal of NSW, for a public review and determination of the prices it can charge its customers. This will ensure that Sydney Water continues to obtain drinking water from the plant at an appropriate and efficient price.

Chairman and Managing Director’s review

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At a glance

Reducing our carbon footprintWe are on track to meet our 2020 target of being carbon neutral for energy and electricity use. As part of our $60 million investment in renewable energy, Sydney Water is producing hydroelectricity from wastewater to help power wastewater treatment plants.

In June 2011, the Prospect Hydroelectric Plant began operation. The plant will generate about five per cent of Sydney Water’s total energy needs every year – enough electricity to power over 1,500 homes a year. Our 11 renewable energy projects will reduce our reliance on external electricity sources by 20% a year, saving about $6 million a year.

Supporting othersThis year, Sydney Water provided significant support following the devastating Queensland floods and the Christchurch earthquake. We are proud to have been able to provide this assistance to our water industry colleagues and the communities involved in their time of need.

We also gave over $1 million to more than 50 organisations as part of our Community Investment Program. This included donating $160,000 to programs assisting people in financial hardship and sponsoring the Powerhouse Museum’s new EcoLogic: creating a sustainable future exhibition.

Safe and committed workforceSydney Water cares about the health and wellbeing of its staff and contractors and wants to ensure a safe workplace where people go home injury-free. While injuries overall were down, we did have an increase in lost-time injuries for both staff and contractors. Manual handling, slips, trips and falls caused the majority of incidents. In particular, we need to focus more in high-risk areas. Although we made some improvements and introduced a number of safety innovations this year, we still have work to do to improve our safety record.

In March 2011, we received a report from the Independent Commission Against Corruption (ICAC) into the corrupt conduct of a number of staff and external contractors. This followed a public inquiry in September 2010 after Sydney Water had identified and raised the issues with ICAC. Sydney Water has already actioned most of the recommendations made. This included training staff in corruption and fraud prevention and establishing a Corruption Hotline.

Sydney Water continued to be recognised for its leadership by winning four major human resources awards. We were also pleased to be voted in the inaugural Dream Employers Survey as one of the top 10 organisations to work for in Australia and New Zealand.

In August 2011, the Managing Director, Kerry Schott, left Sydney Water after five years at the helm. Kerry led Sydney Water with great clarity, character and knowledge and leaves a lasting legacy for which the Board and organisation are very grateful. We also wish to acknowledge the efforts of the Board, the Executive team and all of our people who make Sydney Water such a great organisation.

Finally, we look forward to meeting the challenges ahead. Sydney Water will continue to work with stakeholders, partners and industry to achieve sustainable solutions in serving our community into the future.

Thomas G Parry Kevin Young Chairman Managing Director

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July 2010

2010 Civil Contractors Federation NSW Earth Award for the 18 km desalination pipeline, which takes water from the desalination plant at Kurnell to Erskineville. The award recognises excellence in environmental, project and construction management.

July 2010

NSW Government Green Globe Award for our $60 million investment in renewable energy projects. Projects will save Sydney Water $6 million a year in avoided electricity costs and further our carbon neutrality commitment.

September 2010

The desalination project won the National Australian Institute of Project Management Award for the best project in the Construction/Engineering category for projects over $100 million.

October 2010

Commissioned St Marys Water Recycling Plant, which provides about 18 billion litres of highly treated recycled water a year to help maintain the flow of the Hawkesbury-Nepean River.

November 2010

Voted as one of the top 10 organisations to work for in Australia and New Zealand in the Dream Employers Survey.

February 2011

Opened a state-of-the-art Water Recycling Education Centre for universities, technical and further education (TAFE) colleges and high schools, professional trade groups and community groups to explain the role of water recycling in securing Sydney’s water supply.

March 2011

Introduced a Customer Management System to provide a holistic view of customers. Staff can now capture information in the one place and therefore manage customer interactions better.

April 2011

The desalination plant was named desalination plant of the year at the Global Water Summit in Berlin. The plant was delivered on time and $89 million under budget.

June 2011

Continued to meet Australian Drinking Water Guidelines. Customers rated the quality of the drinking water that comes out of their taps as 8.2/10.

June 2011

Began operating the Prospect Hydroelectric Generator, one of 11 renewable energy projects helping us to reach our 2020 target of being carbon neutral.

Highlights

October 2010Won four human resources (HR) Leader Compass Awards:

• Best HR Strategic Plan

• Best Employer Branding Strategy

• Best Talent Management Strategy

• Employer of Choice (more than 1,000 staff).

Sydney Water also received highly commended for Innovation in Recruitment and Retention.

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At a glance

Network Technicians assess the situation and either do the repair or arrange for the right crews and equipment to do the job.

August 2010Had a major main break on Moore Park Road, Paddington, which saw millions of litres of water loss, and impacts on customers across the Centennial Park area.

August 2010

Received a penalty notice under the Protection of the Environment Operations Act 1997 for washing dirt into a stormwater drain outside a construction site at Narellan. We have made changes to stop this happening again.

March 2011

Received a report from the NSW Independent Commission Against Corruption (ICAC) into the conduct of a number of Sydney Water staff and external contractors following a public inquiry in September 2010. Sydney Water had identified and raised the issues with ICAC. The report made a number of findings and 18 recommendations. Sydney Water has implemented the majority of these, and the balance will be implemented by December 2011.

March 2011Received a penalty notice under the Protection of the Environment Operations Act 1997 for a delayed clean-up associated with a wastewater overflow to Toongabbie Creek, Baulkham Hills. The overflow occurred during a period of unusually high emergency water main breaks. Sydney Water investigated the incident and has put additional resources and processes in place to manage such situations in the future.

June 2011

Despite a long-term decreasing trend, our lost-time injury frequency rate (LTIFR) for staff increased for the second year in a row from 4.86 to 5.9. The LTIFR for contractors also increased to 3.28 from 1.92. This year we have made some improvements in the overall number of injuries and introduced a number of safety innovations. However, we still have work to do to improve our safety record.

Areas to improve

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Sydney Water Board

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John Brown Non-executive Director

John Fletcher Non-executive Director

Kerry Schott Managing Director

Bob Pentecost AM Non-executive Director

Thomas G Parry AM Chairman

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At a glance

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Ralph Kelly Non-executive Director

Brian Gilligan Non-executive Director

Greg Stewart Non-executive Director

Kate McKenzie Non-executive Director

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Dr Thomas G Parry AM (Chairman) – BEc (Hons), MEc, PhD

Term of appointment: 1 June 2010 to 30 September 2013. Appointed as Chairman on 1 June 2007.

• Chair of the Regulatory and Reform, People and Remuneration, and Desalination Plant committees.

• Member of the Finance, and Public Health and Research committees.

Tom was a consultant to Macquarie Capital Funds Group until August 2009. He was Foundation Executive Chairman of the Independent Pricing and Regulatory Tribunal of NSW (IPART) and its predecessor, the Government Pricing Tribunal of NSW from 1992 to 2004. He was an ex officio Commissioner of the Australian Competition and Consumer Commission (ACCC), a member of the NSW Council on the Cost and Quality of Government, and the Foundation NSW Natural Resources Commissioner. He was also a member of the Board of NSW Health’s Clinical Excellence Commission and South East Area Health.

Tom is currently Chairman of Australian Energy Market Operator, Chairman of First State Super, a director of the Sydney Opera House Trust, a director of the Australian Securities Exchange’s Compliance Company, a director of Powerco NZ, and a Member of the Advisory Council of the SMART Infrastructure Facility at the University of Wollongong.

Dr Kerry Schott (Managing Director) – BA (Hons), MA, D Phil

Term of appointment: 2 August 2006 to 1 August 2011. Appointed as Managing Director August 2006.

• Ex-officio member of all committees.

Kerry is a member of the Infrastructure Australia Board. She was previously Deputy Secretary, NSW Treasury. Kerry was a non-executive Director of the Sydney Water Board from 1997 to 2001.

She spent 15 years as an investment banker, including as Managing Director of Deutsche Bank and Executive Vice President of Bankers Trust Australia. She has worked as an economic policy adviser with the Reserve Bank of Australia and the Commonwealth Government, and as an academic at University College London and at Oxford University.

Kerry was Chairman of the NSW Environment Protection Authority and the NSW Film and Television Office, a director of the Film Finance Corporation Limited and director of Australian Airlines Limited. She has been a member of the Corporations and Securities Panel and a Trade Practices Commissioner.

John Brown (Non-executive Director) – BCom, FCA, MAICD

Term of appointment: 7 September 2010 to 30 September 2013. Appointed as Director on 7 September 2004.

• Chair of the Board’s Audit and Risk Committee.

• Member of the Regulatory and Reform, People and Remuneration, and Desalination Plant committees.

John was previously a partner with KPMG for over 26 years and since then has been appointed to be the chair or member of the audit committees of a number of NSW and Federal public sector entities. John is also a director and chair of the Audit Committee of Integrated Research Ltd and is a director of The Gift Of Life Foundation Ltd.

John Fletcher (Non-executive Director) – BSc, MBA, FAICD

Term of appointment: 7 April 2011 to 31 March 2014. Appointed as Director on 7 April 2008.

• Chair of the Finance Committee.

• Member of the Audit and Risk Committee.

John is a director of APA Group. He was previously a director with Integral Energy Australia, Foodlands Australia Limited, Alinta Energy Group (formerly Babcock & Brown Power Group) and Natural Gas Corporation Holdings Limited (New Zealand).

John has held a number of executive roles at the Australian Gas Light Company, including Chief Financial Officer and Group Manager Investments.

Brian Gilligan (Non-executive Director) – BA, DipEd, MA, FAICD

Term of appointment: 7 September 2010 to 31 May 2012. Appointed as Director on 12 May 2004.

• Chair of the Environment Committee.

• Member of the Regulatory and Reform Committee.

The Board

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At a glance

Brian is Assistant Commissioner with the NSW Natural Resources Commission, a director of the Hunter Valley Research Foundation, chair of the Board of the University of Newcastle’s Tom Farrell Institute for the Environment and an independent member of the Audit Committee for Parks Australia.

His former appointments include Director-General, NSW National Parks and Wildlife Service (1998–2003), Executive Director Operations, NSW Environment Protection Authority (1996–98), and director, Hunter Water Corporation (1989–92).

Ralph Kelly (Non-executive Director) – BCom, MBA, SF Fin, FAICD

Term of appointment: 7 September 2010 to 31 December 2011. Appointed as Director on 21 September 2001.

• Member of the Audit and Risk, Environment, Finance, and People and Remuneration committees.

Ralph had been in investment banking for over 30 years, with particular experience in corporate finance advice, infrastructure and listed capital raisings. He is now a financial consultant and principal of Pennant Advisory Services Pty Ltd.

He is currently a director of Essential Energy, FSS Trustee Corporation (the trustee of the First State Superannuation Scheme), Health Super Investments Pty Ltd (Chair), and Ausflag Limited, and he is an independent member of the Audit and Risk Committee of the Office of State Revenue, NSW.

Kate McKenzie (Non-executive Director) – BA, LLB

Term of appointment: 1 February 2011 to 31 December 2011. Appointed as Director on 1 February 2009.

• Member of the Audit and Risk Committee.

Kate is Group Managing Director, Telstra Innovation Products and Marketing at Telstra. Before joining Telstra, Kate was Director-General of the Department of Commerce in NSW and previously held a range of senior executive roles in government departments and offices.

Throughout her career, Kate has been involved in management of the commercial impacts of complex policy issues including competition, energy reform, corporatisation and privatisation.

Kate holds Bachelor of Arts and Bachelor of Law degrees from the University of Sydney.

Bob Pentecost AM (Non-executive Director) – BE (Civil), GDA, MAICD

Term of appointment: 8 October 2010 to 30 September 2013. Appointed as Director on 8 October 2007.

• Member of the Environment, Public Health and Research, People and Remuneration, and Desalination Plant committees.

Bob has worked in the private sector as a director on several boards, and also in government, giving advice at ministerial and cabinet level.

Recently, Bob was the Chief Executive Officer of Rail Infrastructure Corporation. He has filled similar roles at Network Design and Construction (telecoms), Merlin International Properties and the Darling Harbour Authority.

He is a director of Allconnex Water and was a director of Hamilton Island Pty Ltd.

Bob was awarded membership to the Order of Australia for services to the building and construction industry in 1991.

He is a member of the Industry Advisory Network University of Technology Sydney.

Dr Greg Stewart (Non-executive Director) – MBBS, MPH, FRACMA, FAFPHM

Term of appointment: 1 December 2008 to 30 November 2011. Appointed as Director on 1 December 2005.

• Chair of the Public Health and Research Committee.

Greg is the director of Population Health for the NSW Health Reform Transition Organisation (Western). He was previously Chief Health Officer of NSW; Chief Executive Officer of Wentworth Area Health Service; and director of the Public Health Unit of South Western Sydney Area Health Service. Greg is a member of the NSW Medical Council, the Board of the Australian Institute of Health and Welfare and the Council of the Australasian Faculty of Public Health Medicine.

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Office of the Managing Director

Company SecretaryGroup auditHealth and safetyStrategic planning

Our structure

Delivery of capital works program

Engineering services

Procurement and contracts

Program delivery water, sewer and growth

Project management

Workplace accommodation

Asset SolutionsIan Payne

Corporate insurance

Legal counsel

Information technology

Risk management

Shared services

Corporate ServicesDenise Dawson

Business customer services

Communications and marketing

Community relations

Contact centre

Customer service

Government relations

Media

Online services

Customer and Community RelationsAngela Tsoukatos

Corporate compliance

Financial control

Financial accounting and statutory reporting

Regulatory strategy and pricing

Finance and RegulatoryAlan Ramsey

Asset planning

Group property management

Investment program

Recycled water development

Stormwater

Strategic assest management

Urban growth

Asset ManagementPaul Freeman

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At a glance

Board ofDirectors

HR strategy and operations

Industrial relations

Organisation development

Planning and reporting

Recruitment and retention

Reward and recognition

Human ResourcesPeter Mills

Civil delivery

Construction

Engineering and contracts

Logistics and support

Mechanical and electrical delivery

MaintenanceEric De Rooy

Emergency management

Energy management

Hydraulic systems

Monitoring services

Network operations

Treatment operations

OperationsColin Nicholson

Managing DIrectorKerry Schott*

*as at 30 June 2011

Environmental planning and management

Science and technology

Strategic directions

Sustainablity and RegulationKaia Hodge/Judi Hansen

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Denise Dawson, General Manager Corporate Services – BBus, GradDip (Acctg)

Denise was appointed General Manager Corporate Services in April 2007. Denise is responsible for managing and delivering a range of business services across all Sydney Water divisions including:

• providing the key business and administration functions of payroll, accounts payable, transactional accounting and financial reporting

• driving Sydney Water wide Business Improvement Initiatives

• providing a secure and reliable computing environment to support the Sydney Water business

• developing, maintaining and improving the Risk, Business Continuity and Management Assurance frameworks for Sydney Water

• providing ethical and independent general legal counsel and legal support to Sydney Water.

Corporate Services’ major achievements during 2010–11 include:

• successfully delivering a significant IT capital investment program of $69 million, including major projects Maximo Consolidation and Customer Management System Phase 1

• implementing a new intranet site as part of the Sydney Water Information Management project with an update of 80% of content

• developing a system to track and record benefit realisation across the business

• implementing an improved control regime for assessing corruption and fraud

• achieving a large reduction in fleet numbers, resulting in significant savings to the organisation

• upgrading the payroll system to provide greater functionality and improved processes

• rolling out the new electronic delegations manual to provide easier access and greater visibility to those with financial delegations.

Eric De Rooy, General Manager Maintenance – BE (Civil), (Hons), MBA

Eric was appointed General Manager Maintenance in October 2008. Eric is responsible for the maintenance and renewal of all of Sydney Water’s service-related assets.

Maintenance’s major achievements during 2010–11 include:

• improving the overall availability and reliability of assets

• improving water and wastewater service delivery for customers

• successfully delivering the maintenance workplan and renewal program, resulting in a lower impact on customers from water main and sewer main faults, and compliance with the relevant Operating Licence standards

• meeting efficiency targets and budget

• implementing a significant change program to achieve better efficiencies in future years.

Paul Freeman, General Manager Asset Management – BE (Mech) (Hons)

Paul was appointed General Manager Asset Management in 2000. He is responsible for planning, managing investment in, and the strategic operation of, Sydney Water’s water, wastewater, recycled water and stormwater infrastructure. This includes new assets to service growth and optimising maintenance and replacement of existing assets.

Asset Management’s major achievements during 2010–2011 include:

• planning to service new growth, particularly in the north-west and south-west growth centres

• developing recycled water schemes

• managing Sydney Water’s real estate portfolio including contaminated land

• managing assets to lowest life cycle costs

• reviewing all aspects of the division, resulting in the initiation of five reforms designed to deliver efficiencies and greater value for customers.

Sydney Water Executive

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At a glance

Judi Hansen, General Manager Sustainability and Regulation – BSc (Biol), MSc, PhD

September 2003 to March 2011

Judi was appointed General Manager Sustainability and Regulation in September 2003. She was responsible for developing long-term strategic plans for water supply, demand management, recycling and integrated water services for new growth. She was also responsible for environmental planning and management and delivered the research and development program.

Sustainability’s major achievements during 2010–11 include:

• undertaking analysis to identify the effect of water prices on the demand for water

• developing a new econometrics-based tool for forecasting water demand

• achieving recertification of Sydney Water’s International Organization for Standardization (ISO) 14001 Environmental Management System

• delivering environmental assessments and securing planning approval for Sydney Water’s $600 million capital works program

• working with the NSW Government to implement and review the Metro Water Plan.

Kaia Hodge, Acting General Manager Sustainability and Regulation – BSc (Hons), MEnvStud, PGDipManagement

Kaia was appointed Acting General Manager Sustainability and Regulation in June 2011. Before this, Kaia was Stormwater Manager, Asset Management Division. Before Kaia’s appointment, senior staff rotated to act in the position of General Manager.

Peter Mills, General Manager Human Resources – BA (Psych)

Peter was appointed General Manager Human Resources in July 2007. Peter is responsible for providing advice on human resources, as well as strategies to create an equitable and rewarding work environment.

Human Resources’ major achievements during 2010–11 include:

• roll-out of the Leadership Framework, an initiative to develop leadership capability at Sydney Water; the Leadership Framework sets the context for managers to deliver consistent leadership using Sydney Water’s key behaviours

• continued recognition of Sydney Water’s industry leadership in human resources through winning four HR Leader Compass Awards

• continued commitment and development of Sydney Water’s employment brand received endorsement in the inaugural Dream Employers Survey in October, where Sydney Water was recognised as one of the top 10 organisations to work for in Australia and New Zealand.

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Colin Nicholson, General Manager Operations – BSc, BE (Civil) (Hons), MEngSc

Colin was appointed General Manager Operations in October 2008. Colin is responsible for integrating, monitoring and analysing products and systems, including treatment facilities and networks. He also manages corporate programs such as compliance reporting, energy management, emergency management and security.

Operations’ major achievements during 2010–11 include:

• full compliance with drinking water and recycled water requirements

• effective integration of the desalination plant into the water system

• provision of an additional 50 million litres a day of recycled water from the St Marys Water Recycling Plant

• continued good performance for Sydney Water’s wastewater networks and treatment plants

• nine cogeneration plants and three hydroelectric plants working to produce up to 20% of Sydney Water’s total electricity requirements from renewable energy

• improvement of efficiency and reliability of operational processes, systems and assets.

Ian Payne, General Manager Asset Solutions – BE (Civil), MEngSc, MBA

Ian was appointed General Manager Asset Solutions in April 2010. Ian is responsible for finding innovative and cost-effective ways to deliver infrastructure and procure goods and services for Sydney Water. In particular, he is responsible for the delivery of Sydney Water’s large capital program.

Asset Solutions’ major achievements in 2010–11 include:

• delivering 95% of project milestones on time

• reducing customer complaints by 30%

• achieving efficiencies of $20 million on a $458 million budget

• improving safety on construction sites with the lost-time injury frequency rate down to 1.7

• establishing a forum for contractors to find new ways to make sites safer

• overseeing a major review into the procurement of services contracts totalling $700 million a year.

Alan Ramsey, Chief Financial Officer and General Manager Finance and Regulatory – BEc

Alan was appointed General Manager Finance and Regulatory in July 2007. Alan is responsible for providing financial, economic and performance analysis and reporting throughout Sydney Water. He coordinates reporting to shareholders, regulatory oversight bodies and other external stakeholders.

Finance and Regulatory’s major achievements during 2010–11 include:

• completing the sale of Sydney Water’s subsidiary in Thailand, AWT International (Thailand) Limited to local Thai interests

• arranging the gazettal of Sydney Water’s subsidiary, Sydney Desalination Plant Pty Ltd (SDP) as a monopoly supplier under the Water Industry Competition Act 2006; this included the referral of SDP to the NSW Independent Pricing and Regulatory Tribunal (IPART) for determination of prices for desalinated water

• managing SDP’s submission to IPART and providing necessary information to assist IPART in making its determination

• managing Sydney Water’s credit rating review, which maintained the current credit rating

• negotiating a 10-year extension of Sydney Water’s long-term contract for water filtration services from the Macarthur Water Treatment Plant and beginning similar negotiations with the owners of the Prospect plant

• overseeing Sydney Water’s input to the Australian Productivity Commission’s review of the national urban water market.

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At a glance

Angela Tsoukatos, General Manager Customer and Community Relations – BSocWk, MM, GAICD

Angela was appointed General Manager Customer and Community Relations in April 2005. Angela is responsible for:

• driving a customer focus across Sydney Water

• managing Sydney Water’s relationship with customers from connections and customer accounts to helping those experiencing hardship

• communicating with customers and staff

• building relationships with stakeholders and communities affected by major projects.

Customer and Community Relations’ major achievements during 2010–11 include:

• achieving a customer service rating of 7.5/10

• resolving 95% of customer issues at the first point of contact

• establishing a specialist case management team to improve management of complaints and time-consuming customer issues

• introducing relationship managers for major business customers to provide a single point of contact for customers

• incorporating a modern, new Customer Management System to improve information management and customer interactions

• opening the Water Recycling Education Centre at St Marys Water Recycling Plant.

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Sydney Water’s stakeholders are those who are impacted by our operations, have influence over what we do or have an interest in what we do.

Table 1 – Stakeholder engagement

Stakeholder category Goal for effective stakeholder engagement

Evidence of stakeholder engagement in 2010–11

Customers Understand what’s important to customers and ways to improve our services.

Regular independent surveys provide feedback on performance and what customers value.

Quarterly meetings with the Customer Council and the Business Customer Forum enable us to listen to customers’ issues and needs.

Feedback from staff, especially relationship managers and other frontline staff including Contact Centre and Maintenance and Community Services personnel; speaker program analysis of issues raised by customers through social media; speaking engagements; feedback from the Ombudsman and discussions with other water utilities.

Government and regulators

Provide accurate and timely performance information and robust analysis of relative costs and benefits.

Regulatory reviews in 2010–11 included:

• Operating Licence Reporting Manual performance indicators

• Sydney Water Management Licence (for Manly Dam, Botany Wetland and to extract water from the Hawkesbury-Nepean River before treating it at Richmond Water Filtration Plant)

• Productivity Commission – Urban Water Study submission.

Business and delivery partners

Ensure tendering for major contracts drives efficiencies and innovation.

Achieved ‘best practice’ in procurement for strategy, tendering and governance in an independent survey of suppliers, which is done every two years.

Following a number of external reviews, Sydney Water was found to be a mature procurement organisation, with many advanced practices including industry engagement.

Won a number of national awards for excellence in government partnerships, environmental and project management, and the use of innovative technologies and techniques.

Media Provide accurate, relevant and timely information to the community via traditional and social media.

Available to the media 24 hours a day, seven days a week via a media hotline.

Held media conferences for major events including the opening of the St Marys Water Recycling Plant and Water Recycling Education Centre.

Issued media releases announcing upgrades to and development of the water and wastewater network.

Advocacy and representative groups

Liaise with peak advocacy groups to ensure that all customers have affordable access to essential water and wastewater services.

Benchmarked our hardship program against various water and energy utilities to build an industry best practice model.

Worked with the Customer Council to develop new approaches for working with customers in financial difficulty.

Stakeholders

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At a glance

Stakeholder category Goal for effective stakeholder engagement

Evidence of stakeholder engagement in 2010–11

Suppliers Ensure market competition through fair and efficient procurement.

Surveys are done every two years – the last in 2009–10 showed supplier satisfaction with the procurement process was 77%.

Other utilities Work with other utilities to share information and to collaborate on research.

Member of the Water Service Association of Australia, including the:

• Asset Management and Environment and Sustainability Committees

• Water Quality and Health Committee.

Actively contributed to Australian Water Association as Board member and NSW Branch President.

Worked with the Bureau of Meteorology and 260 water authorities around Australia to compile the country’s first national database of water information.

Research and education groups

Maintain access to national and international expertise to identify and respond to emerging issues.

Actively contributed to the US-based Water Research Foundation, as a Board member, and the Water Reuse Association, as Australian Division Vice Chair.

Contributed regularly to national and international conferences, forums and journals.

Subscribed to a number of major national and international water industry research collaborations including Water Research Foundation and Water and Environment Research Foundation. Sydney Water is one of 375 organisations from the US, Europe and Australia, which are members of the Water and Environment Research Foundation. A major focus for the Foundation is research on wastewater collection systems and treatment processes.

Invested over $790,000 in partnering nine key national and international research alliances.

Continued work on the Climate Change Adaptation Program, including infrastructure protection modelling and analysis with the Attorney General’s Department and regional climate modelling with the Office of Environment and Heritage.

Sponsorship and community investment

Support a broad range of organisations in our area of operations with a focus on the community, youth and the environment.

Gave over $1 million to over 50 organisations as part of our Community Investment Program.

Worked with the Powerhouse Museum to develop an interactive water exhibit as part of the EcoLogic: creating a sustainable future exhibition.

Donated $160,000 to programs assisting people in financial hardship.

Staff Develop a safe, capable and committed workforce.

Increased scores in engagement in the annual Your Say staff survey.

Developed leadership capability by rolling out a Leadership Framework.

Continued to implement competency programs across Sydney Water.

Donated over $247,000 to charities chosen by staff, as they met safety targets.

Voted as one of the top 10 organisations to work for in Australia and New Zealand in the Dream Employers Survey.

Recognised 52 staff for 40 years service and 62 staff for 30 years service.

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Sydney Water delivers essential and sustainable water services for the benefit of the community. We apply sustainability principles to business processes that guide planning and operations, project assessment, workforce development and management, and capital investment decision-making.

The following framework sets out Sydney Water’s commitment to and understanding of the principles of environmental excellence, social responsibility and economic sustainability, underpinned by good governance.

Sydney Water’s corporate goals integrate the social, economic and environmental aspects of our commitment to deliver sustainable water services.

The Sustainability scorecard, Sydney Water’s sustainability performance measurement and yearly reporting framework, adopts these goals and measures performance through our sustainability indicators.

Sydney Water maps its Annual Report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines and adopts the GRI principles for reporting. These include transparency, inclusiveness, auditability, completeness, relevance, sustainability context, accuracy, neutrality, comparability, clarity and timeliness. Independent auditors verify the Annual Report against these principles.

Further information about Sydney Water’s sustainability projects and initiatives is available on Sydney Water’s website, sydneywater.com.au

Sustainability framework

Sustainability principles

Environmental excellence

Sydney Water takes responsibility for its impact on the environment, with ongoing benefit to our customers, staff and communities.

To know more, visit the Wastewater treatment system discharges, Breaches of statutory instruments, Environmental performance monitoring, Trade waste agreements, Environmental Footprint, Energy Use, By-products, Waste Minimisation and Flora, fauna and heritage sections of this report.

Social responsibility

Customers drive our business. We aim to be an employer of choice.

To know more, visit the Stakeholders, Customer satisfaction, Social Assistance, Service quality and system performance, Water quality, Customer satisfaction with water, Safety, Capability, Key behaviours, Work-life balance and Staff Engagement sections of this report.

Economic sustainability

We balance our responsibility to protect public health and the environment with affordable services and shareholder returns.

To know more, visit the Reuse and Recycling, Water leakage, Water efficiency, Water drawn, Profitability, Debt Servicing, Return on assets and equity, Infrastructure management and Financials sections of this report.

Good governance

Our business is managed openly and with accountability, and all staff are required to work following our key behaviours.

To know more, visit the Corporate governance section of this report.

www.sydneywater.com.au

25

At a glance

(Legislated Local Government Areas)About 12,700 sq km

Sydney Water’s area

BrokenBay

Port Jackson

BotanyBay

LakeIllawarra

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Campbelltown

Katoomba

Colo Heights

Wisemans Ferry

Kurrajong Heights

Otford

Bargo

Oakdale

NattaiNationalPark

Hornsby

Sydney

PalmBeach

Lithgow

Manly

Gosford

Wollongong

Kiama

(Legislated Local Government Areas)About 12,700 sq km

Sydney Water’s area

Stormwater catchment system – about 300 sq kmSource/Graphics: Sydney Water, Asset Management

Wastewater catchment system – about 2,000 sq km

Water delivery system – about 3,200 sq km

Area of operations – about 12,700 sq km

BrokenBay

Port Jackson

BotanyBay

LakeIllawarra

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Campbelltown

Katoomba

Colo Heights

Wisemans Ferry

Kurrajong Heights

Otford

Bargo

Oakdale

NattaiNationalPark

Hornsby

Sydney

PalmBeach

Lithgow

Manly

Gosford

Wollongong

Kiama

Scale in kilometres

0 5 10 15 20

OperationsMap 1: Area of operations

26


Map 2: Water delivery system

Note: Click on the map below to find out more about our water delivery system.

Water delivery

CascadeIllawarraMacarthurNepeanNorth RichmondOrchard HillsPotts HillProspect EastProspect NorthProspect SouthProspect TransferRydeWarragambaWoronora

Water Filtration PlantDesalination PlantDelivery Systems

Nepean

Illawarra

Macarthur

Woronora

Warragamba

OrchardHills Prospect

Kurnell

NorthRichmond

Cascade

BrokenBay

Port Jackson

BotanyBay

LakeIllawarra

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Campbelltown

Katoomba

Wisemans Ferry

Kurrajong Heights

Otford

Bargo

Oakdale

NattaiNational

Park

Hornsby

Sydney

PalmBeach

Manly

Gosford

Wollongong

Kiama

Scale in kilometres

0 5 10 15 20

Water delivery


Nepean

Illawarra

Macarthur

Woronora

Warragamba

OrchardHills Prospect

Kurnell

NorthRichmond

Cascade

BrokenBay

Port Jackson

BotanyBay

LakeIllawarra

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Campbelltown

Katoomba

Wisemans Ferry

Kurrajong Heights

Otford

Bargo

Oakdale

NattaiNational

Park

Hornsby

Sydney

PalmBeach

Manly

Gosford

Wollongong

Kiama


Water filtration plantDesalination plant

27

At a glance

Map 3: Wastewater systems

Note: Click on the map below to find out more about our wastewater systems.

Wastewater systems

Gerringong/Gerroa

Bombo

Shellharbour

Port Kembla

Wollongong

Bellambi

Picton

West Camden

Wallacia

Glenfield*

Liverpool

Fairfield

Cronulla

Bondi

NorthHead

Warriewood

BrooklynNorthRichmond

Richmond

Riverstone

RouseHill Hornsby

Heights

WestHornsby HeightsCastle Hill

Quakers Hill

Winmalee

Penrith

St Marys

Malabar

BrokenBay

Port Jackson

BotanyBay

LakeIllawarra

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Campbelltown

Katoomba

Wisemans Ferry

Kurrajong Heights

Otford

Bargo

Oakdale

NattaiNational

Park

Hornsby

Sydney

PalmBeach

Manly

Gosford

Wollongong

Kiama

Scale in kilometres

0 5 10 15 20

Wastewater systems

*Gerringong/Gerroa

Bombo

Shellharbour

Port Kembla

Wollongong

Bellambi

Picton

West Camden

Wallacia

Glenfield*

Liverpool

Fairfield

Cronulla

Bondi

NorthHead

Warriewood

BrooklynNorthRichmond

Richmond

Riverstone

RouseHill Hornsby

Heights

WestHornsby HeightsCastle Hill

Quakers Hill

Winmalee

Penrith

St Marys

Malabar

BrokenBay

Port Jackson

BotanyBay

LakeIllawarra

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Campbelltown

Katoomba

Wisemans Ferry

Kurrajong Heights

Otford

Bargo

Oakdale

NattaiNational

Park

Hornsby

Sydney

PalmBeach

Manly

Gosford

Wollongong

Kiama

Wastewater treatment plantWater recycling plantWastewater systems

After Rose Hill on-line

Quakers Hill

Shellharbour

RichmondRiverstone

MalabarSt. Marys (2)

West Hornsby HeightsWinmalee

Warriewood

Wollongong

West Camden

Gerringong / GerroaLiverpool

BondiBrooklyn

Bombo

CronullaCastle Hill

Hornsby HeightsNorth RichmondNorth HeadPenrithPicton

Rouse Hill

Wallacia

28


Map 4: Stormwater catchment

Stormwater catchment

BrokenBay

Port Jackson

BotanyBay

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Otford

Hornsby

Sydney

PalmBeach

Manly

Stormwater catchment Scale in kilometres

0 5 10 15 20


BrokenBay

Port Jackson

BotanyBay

Sutherland

Windsor

Blacktown

Parramatta

Liverpool

Otford

Hornsby

Sydney

PalmBeach

Manly


29

At a glance

Table 2 – Principal statistics

Water services

4.6 million people Sydney Water supplies water, wastewater, recycled water and some stormwater services to over 4.6 million people in Sydney, the Illawarra and the Blue Mountains. Sydney Water is Australia’s largest water utility.

492,167 million litres a year Sydney Water supplies 492,167 million litres of water to over 1.7 million homes and businesses every year. Households used 72% of the water supplied, while businesses used 28%.

Privately owned filtration plants, operated under contract to Sydney Water, treat most of the water. Several other plants owned by Sydney Water treat the rest. The desalination plant supplied 16% of Sydney’s water supply, with 64% from Prospect water filtration plant and about 20% from the other water filtration plants.

Treated water is distributed to customers via a network of about 21,069 km of water pipes, 269 reservoirs and 177 pumping stations. The system is operated using centralised computer control systems.

Recycled water

47,521 million litres a year Sydney Water recycles about 47,521 million litres of wastewater a year. There are a number of water recycling schemes in place that reduce demand on water supplies and reduce discharges of wastewater. There are 501 km of recycled water mains, and the amount of recycled water is increasing. Recycled water is treated to standards suitable for its intended use.

Wastewater services

509,435 million litres a year Sydney Water collects and treats over 509,435 million litres of wastewater a year from about 4,476,600 customers. The wastewater network includes about 24,193 km of wastewater pipes and 675 wastewater pumping stations. There are 24 separate wastewater systems licensed by the Office of Environment and Heritage.

Sydney Water transports wastewater to 16 wastewater treatment plants and 14 water recycling plants. After treatment, wastewater is reused or discharged to rivers or the ocean under licence conditions related to the receiving environment. Inland plants discharging to the rivers treat waste to high levels. Three of the treatment plants are storm wastewater treatment plants (Fairfield, Bellambi and Port Kembla), which are used only during major storms.

Sydney Water beneficially uses 100% of captured biosolids in agriculture, composting or land rehabilitation, and more than 90% of captured grit and screenings.

Stormwater services

447 km of channels Most stormwater channels and drains are the direct responsibility of local councils. Sydney Water manages 447 km of stormwater channels and conduits mainly in south and south-west Sydney, as well as Sydney Water drainage areas at Rouse Hill.

30


Table 3 – Principal statistics at 30 June 2011

Indicators 2011 Unit

Estimated population serviced by drinking water 4,580,780 people

Estimated population serviced by wastewater 4,476,600 people

Estimated population serviced by recycled water# 67,970 people

Length of drinking water mains owned and operated by Sydney Water*

21,069 kilometres

Length of recycled water mains* 501 kilometres

Length of wastewater mains owned and operated by Sydney Water*

24,193 kilometres

Number of wastewater treatment plants 16 wastewater treatment plants (WWTP)

Number of water recycling plants 14 water recycling plants (WRP)

Number of reservoirs in service 269 reservoirs

Number of water pumping stations in service 177 water pumping stations

Number of wastewater pumping stations in service 675 wastewater pumping stations

Number of wastewater systems 24 wastewater systems

Quantity of recycled water supplied 47,521 million litres

Quantity of drinking water supplied 492,167 million litres

Amount of water sourced from desalination 77,102 million litres

Daily amount of water recycled 130 million litres/day

Wastewater collected (includes discharge and bypass) 509,435 million litres

Properties with stormwater drainage available 506,742 properties

Properties with water service available 1,792,837 properties

Properties with wastewater service available 1,744,843 properties

Stormwater channels under Sydney Water control 447 kilometres

Area of operations (approximate) 12,700 square kilometres

#The numbers presented last year for recycled water were projections based on the Australian Bureau of Statistics preliminary estimated resident population for June 2008.

*Results reflect most recent data at time of reporting.

Increase in length of stormwater channels from 440 km in 2010 to 447 km in 2011 is due to: 1: addition of missing open channel stormwater data in Hydra (1.10 km) 2: acquiring stormwater channel through sewer separation (5.73 km) 3: adopting stormwater channels from developers (0.17 km).

31

At a glance

Figure 1: Total income 2010–11 ($2.3 billion)

Sydney Water’s total income for 2010–11 was $2.3 billion, $119 million (5.4%) higher than in 2009–10. This was mostly from a combination of higher water sales and higher prices determined by the Independent Pricing and Regulatory Tribunal.

Figure 2: Total core operating expenditure 2010–11 ($1.1 billion)

Total core operating expenditure of $1.1 billion was $44 million (4.1%) higher than in 2009–10. This was driven by higher costs for contractors and electricity.

Figure 3: Total asset investment 2010–11 ($636 million)

Asset investment included replacement or rehabilitation of water and wastewater pipelines, renewals at water and wastewater treatment plants, programs to provide for growth in existing areas and the north-west and south-west of Sydney, and government programs, including completion of the Replacement Flows Project at St Marys (part of the Western Sydney Recycled Water Initiative).

Financial highlights

32


Profit after tax for 2010–11, of $274 million, was $172 million lower than in 2009–10, mostly due to higher borrowing costs and asset charges.

Capital expenditure in 2010–11 (excluding capitalised interest) included continued major investment in core water and wastewater assets for reliability and growth. Expenditure is lower than in previous years due to the completion of major projects, including the desalination plant.

Gearing (debt/debt plus equity) has stabilised with lower capital expenditure than in previous years with the completion of several major projects, including desalination and recycling.

33

At a glance

Table 4 – Summary profit and loss*

2010–11 $M

2009–10 $M

2008–09 $M

2007–08 $M

2006–07 $M

Total income 2,306 2,187 1,958 1,766 1,693Core operating expenses 1,120 1,076 1,027 975 969Earnings before interest, tax, depreciation and amortisation

1,186 1,111 931 791 724

Depreciation, amortisation, impairments and sales losses

273 182 238 193 184

Finance costs 473 291 235 210 180Profit before tax 440 638 458 388 360Taxation expense 166 192 207 109 103Profit after tax 274 446 251 279 257Dividend payable 230 232 205 190 140

*Excludes superannuation actuarial gains/losses.

Total core operating expenditure for 2010–11 was $1.12 billion, $44 million (4.1%) higher than in 2009–10. This was caused mostly by higher contractor and electricity costs, partially offset by lower bulk water costs and lower costs for all other operating expenses.

Earnings before interest, tax, depreciation and amortisation were $1.19 billion, $75 million (6.8%) higher than in 2009–10, mostly due to higher income.

Depreciation, amortisation, impairments and sales losses totalled $273 million, $91 million (50%) higher than in 2009–10. This was caused by higher depreciation, due to the completion of major capital works projects in previous years and a reversal of previous asset impairments in 2009–10, which lowered total asset charges in that year.

Finance costs totalled $473 million, $182 million (62.5%) higher than in 2009–10. This was related to higher borrowings used to fund asset investment. This was also due to the completion of major capital projects in previous years, where interest was capitalised to those projects while in progress.

Tax expense for the year was $166 million, $26 million (13%) lower than in 2009–10, due to the lower operating result and the impact of changes in asset values on tax calculations.

34


Table 5 – Summary balance sheet

2010–11 $M

2009–10 $M

2008–09 $M

2007–08 $M

2006–07 $M

Property, plant and equipment

14,488 13,475 12,316 12,355 11,909

Other assets 582 481 398 318 387Total assets 15,070 13,956 12,714 12,673 12,296Total debt 7,114 6,505 5,558 4,218 3,276Other liabilities 2,043 1,884 1,774 1,714 1,780Total liabilities 9,157 8,389 7,332 5,932 5,056Net assets/equity 5,913 5,567 5,381 6,741 7,240*Capital expenditure 636 1,072 1,731 1,311 618

*Excluding capitalised interest.

Total assets were valued at $15.07 billion, $1.11 billion higher than last year. During the year, Sydney Water spent $636 million on capital expenditure.

Total liabilities were $9.16 billion, $768 million higher than last year, due mostly to higher borrowings. During the year, Sydney Water’s net borrowings increased by $609 million to fund the capital expenditure program. Total debt outstanding at the end of the year was $7.11 billion.

Shareholder equity increased by $346 million during the year to $5.91 billion.

Table 6 – Summary cash flow

2010–11 $M

2009–10 $M

2008–09 $M

2007–08 $M

2006–07 $M

SourcesReceipts from operations 2,152 2,093 1,891 1,618 1,534Grants, interest, CSO and other operational receipts

151 155 138 119 106

Borrowings 720 957 1,336 1,100 420Other receipts 62 63 21 270 121Total sources 3,085 3,268 3,386 3,107 2,180

UsesOperational expense 1,232 1,251 1,244 1,172 1,052Capital expenditure 650 1,196 1,567 1,234 591Dividends 232 205 190 140 193Income tax 131 88 71 105 63Interest 493 410 285 258 218Other payments 343 79 51 191 59Total uses 3,081 3,227 3,408 3,101 2,176

Increase (decrease) in cash 4 41 -22 6 5

Note: Interest paid includes the Government Guarantee Fee, and capital expenditure payments include payments for intangibles.

Cash receipts from operations in 2010–11 were $2.15 billion, an increase of three per cent over the previous year. Sydney Water borrowed an additional $720 million (excludes repayments and other financing items).

Cash used for operational purposes in 2010–11 was $1.23 billion, a decrease of one per cent over the previous year. A total of $650 million was paid for the asset investment program. Interest paid increased by $83 million (20%), due to the increase in debt in recent years to fund increased capital expenditure and an increase in the Government Guarantee Fee.

The dividend payable to the NSW Government of $230 million was in line with the amount agreed in the Statement of Corporate Intent.

35

At a glance

Sydney Water follows international best practice by mapping the Annual Report against the Global Reporting Initiative (GRI) Sustainability Reporting Guidelines 3.1, an initiative of the United Nations Environment Program.

Sydney Water has adopted the GRI principles for reporting – transparency, inclusiveness, completeness, relevance, sustainability context, accuracy, neutrality, comparability, clarity, reliability and timeliness. In line with these principles, Net Balance Management Group Pty Ltd independently verified Sydney Water’s Operating Licence Environmental Indicators and Sustainability Indicators for the Annual Report 2010–11.

Ref Indicator description Location

1. Strategy and analysis

1.1 Statement from chief executive officer and chair

At a glance>Chairman and MD’s review

1.2 Description of key risks and opportunities

Corporate Governance> Insurance and risk management

Performance

2. Organisational profile

2.1 Name of the reporting organisation

Front covers of full and summary reports

Homepage of online report

2.2 Major brands, products or services, including volume

At a glance > About Sydney Water

2.3 Organisational structure At a glance>About Sydney Water> Our structure

2.4 Location of organisation's headquarters

Back cover of full Annual Report and summary report

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report

Australia

2.6 Nature of ownership and legal form

At a glance>About Sydney Water> Sydney Water’s role

2.7 Markets served At a glance>About Sydney Water

At a glance> About Sydney Water> Operations

2.8 Scale of the reporting organisation

At a glance>About Sydney Water>Sydney Water’s role

At a glance>About Sydney Water>Principal statistics

2.9 Significant changes during the reporting period regarding size, structure or ownership

None

2.10 Awards received in reporting period

At a glance>Highlights

3. Report parameters

3.1 Reporting period About this report

3.2 Date of most recent previous report

Not reported

3.3 Reporting cycle About this report

3.4 Contact point for questions regarding the report

Back cover of full Annual Report and summary report

About this report

3.5 Process for defining report content

Not reported

3.6 Boundary of the report About this report

At a glance> Financial highlights

3.7 State any specific limitations on the scope of the report

Not reported

3.8 Basis for reporting on joint ventures, partially owned subsidiaries, leased facilities, outsourced operations and other situations that affect comparability from last report

Financials>Financial statements

At a glance> Chairman & MD’s review

Performance

Global Reporting Initiative

www.sydneywater.com.au/AnnualReport

36


3.9 Data measurement techniques and the bases of calculations, including assumptions

Performance

Sustainability

3.10 Explanations of the nature and effect of any re-statements of information provided in earlier reports

Throughout

3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report

No significant changes

3.12 GRI Content Index – table identifying the location of standard disclosures in the report

Sustainability> Global Reporting Initiative

3.13 Policy and current practice with regard to seeking external assurance for the report

Independent verification statement

4. Governance, commitments and engagement

4.1 Governance structure of the organisation

Corporate governance> Sydney Water Board operations and governance

At a glance> About Sydney Water> Our structure

4.2 Indicate if the chair of the highest governance body is also an executive officer



4.3 For organisations that have a unitary board structure, state the numbers of members of the highest governance body that are independent and/or non-executive members



4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body

Not reported

4.5 Linkage between compensation and the organisations performance for members of the highest governance body

N/A

4.6 Process of the highest governance body to ensure conflicts of interest are avoided

Not reported

4.7 Process for determining required qualifications and expertise of the members of the highest governance body


4.8 Internally developed mission codes of conduct and value statements

At a glance> About Sydney Water>Sydney Water’s role

Corporate governance> Sydney Water Board operations and governance> Board structure and duties

37

At a glance

4.9 Process of the highest governing body for overseeing the organisation's identification and management of economic, environmental and social performance

Corporate governance

4.10 Process for evaluating the performance of the highest governance body

Corporate governance

4.11 Explanation of whether and how the precautionary approach or principle is addressed by the organisation

Corporate governance> Insurance and risk management

4.12 Externally developed, economic, environmental and social charter, principles or initiatives to which the organisation subscribes and/or endorses

Sustainability scorecard

4.13 Significant memberships in associations

Not reported

4.14 List of stakeholder groups engaged by the organisation

About Sydney Water>Stakeholders

4.15 Basis for identification and selection of stakeholders to engage


4.16 Approaches to stakeholder engagement, including frequency of engagement


4.17 Key issues and concerns that have been raised through stakeholder engagement and how the organisation has responded to these


Performance> Working with customers

Performance> Being an efficient organisation

EnvironmentalRef Indicator description Location

Materials

EN 1 Materials used by weight or volume

Not reported

EN 2 Percentage of materials used that are recycled input materials

Appendixes> Waste Reduction and Purchasing Policy (WRAPP) Statement

Sustainability> Sustainability scorecard

Energy

EN 3 Direct energy consumption by primary energy source

Appendixes> Energy efficiency opportunities (EEO) reporting obligations

Appendixes> Special objectives

EN 4 Indirect energy consumption by primary source


EN 5 Energy saved due to conservation and efficiency improvements

Performance> Climate change



EN 6 Initiatives to provide energy efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives



EN 7 Initiatives to reduce indirect energy consumption and reductions achieved



38


Water

EN 8 Total water withdrawal by source



EN 9 Water sources significantly affected by withdrawal of water

Not reported

EN 10 Percentage and total volume of water recycled and reused



Biodiversity

EN 11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas

Not reported

EN 12 Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas



EN 13 Habitats protected or restored


Appendixes> Threatened Species Conservation Act 1995

Operating Licence Environment Report

EN 14 Strategies, current actions and future plans for managing impacts on biodiversity




EN 15 Number of International Union for Conservation of Nature (IUCN) Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk

Not reported

Emissions, effluents and waste

EN 16 Total direct and indirect greenhouse gas emissions by weight



EN 17 Other relevant indirect greenhouse gas emissions by weight



EN 18 Initiatives to reduce greenhouse gas emissions and reductions achieved



EN 19 Emissions of ozone-depleting substances by weight


EN 20 Nitrogen oxides and sulphur oxides, and other significant air emissions by type and weight

Not reported

EN 21 Total water discharge by quality and destination



EN 22 Total weight of waste by type and disposal method


Appendixes> Waste Reduction and Purchasing Policy (WRAPP) Statement

EN 23 Total number and volume of significant spills



EN 24 Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally

N/A

www.sydneywater.com.au/Sustainability/environmentalmanagement.cfm






39

At a glance

EN 25 Identity, size, protected status and biodiversity value of water bodies and related habitats significantly affected by the reporting organisation's discharges of water and runoff

Not reported

Products and services

EN 26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation



EN 27 Percentage of products sold and their packaging materials that are reclaimed by category

N/A

Compliance

EN 28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations



Transport

EN 29 Significant environmental impacts of transporting products and other goods and materials used for the organisation's operations, and transporting members of the workforce



Overall

EN 30 Total environmental protection expenditures and investments by type

Not reported

Human rightsRef Indicator description Location

Investment and procurement practices

HR 1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

Not reported

HR 2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken

Not reported

HR 3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

Not reported

Non-discrimination

HR 4 Total number of incidents of discrimination and actions taken

Corporate Governance> Legal changes

Freedom of association and collective bargaining

HR 5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk and actions taken to support these rights

N/A

Child labour

HR 6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour

N/A



40


Forced and compulsory labour

HR 7 Operations identified as having significant risk for incidents of forced or compulsory labour and measures to contribute to the elimination of forced or compulsory labour

N/A

Security practices

HR 8 Percentage of security personnel trained in the organisation’s policies or procedures concerning aspects of human rights that are relevant to operations

N/A

Indigenous rights

HR 9 Total number of incidents of violations involving rights of indigenous people and actions taken

N/A

Assessment

HR 10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments

N/A

Remediation

HR 11 Number of grievances related to human rights filed, addressed and resolved through formal grievance mechanisms

N/A

Labour practices and decent work Ref Indicator description Location

Employment

LA 1 Total workforce by employment type, employment contract and region

Appendixes> Equal employment opportunity

LA 2 Total number and rate of employee turnover by age group, gender and region

Not reported

LA 3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations

Appendixes> Equal employment opportunity

LA 15 Return to work and retention rates after parental leave, by gender

Not reported

Labour / management relations

LA 4 Percentage of employees covered by collective bargaining agreements

Not reported

LA 5 Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective agreements

Not reported

LA 6 Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs

Not reported

LA 7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region


Performance> A safe workforce

41

At a glance

LA 8 Education, training, counselling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases

Not reported

LA 9 Health and safety topics covered in formal agreements with trade unions

Not reported

Training and education

LA 10 Average hours of training per year per employee by employee category

Not reported

LA 11 Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings

Performance> A capable workforce


LA 12 Percentage of employees receiving regular performance and career development reviews

Not reported

Diversity and equal opportunity

LA 13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity

Appendixes>Equal Employment Opportunity

Equal remuneration for women and men

LA 14 Ratio of basic salary of men to women by employee category

Appendixes>Equal Employment Opportunity

SocietyRef Indicator description Location

Local Community

SO 1 Percentage of operations with implemented local community engagement, impact assessments and development programs

N/A

SO 9 Operations with significant potential or actual negative impacts on local communities


SO 10 Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on the local communities


Corruption

SO 2 Percentage and total number of business units analysed for risks related to corruption

Not reported

SO 3 Percentage of employees trained in organisation's anti-corruption policies and procedures


SO 4 Actions taken in response to incidents of corruption

About Sydney Water> Chairman and MD’s review

About Sydney Water> Areas to improve

Corporate Governance> Legal changes

Public policy

SO 5 Public policy positions and participation in public policy development and lobbying

N/A

SO 6 Total value of financial and in-kind contributions to political parties, politicians, and related institutions by country

N/A

42


Anti-competitive behaviour

SO 7 Total number of legal actions for anti-competitive behaviour, anti-trust, and monopoly practices and their outcomes

N/A

Compliance

SO 8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

Corporate governance> Legal changes

Product responsibilityRef Indicator description Location

Customer health and safety

PR 1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures


PR 2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcomes


Products and service labelling

PR 3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

N/A

PR 4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcomes

N/A

PR 5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

Performance> Working with customers


Marketing communications

PR 6 Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship

Not reported

PR 7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes

Not reported

Customer privacy

PR 8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

Appendixes > Compliance with NSW Privacy and Personal Information Protection Act 1998

Compliance

PR 9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

N/A

43

At a glance

EconomicRef Indicator description Location

Economic performance

EC 1 Economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments

At a glance>Financial highlights

Performance> Being an efficient organisation

Financials>Financial performance


Appendixes> Community investment

EC 2 Financial implications and other risks and opportunities for the organisation's activities due to climate change

At a glance> Chairman and Managing Director’s review

Corporate Governance> Insurance and risk management


EC 3 Coverage of the organisation's defined benefit plan obligations


EC 4 Significant financial assistance received from government


Market presence

EC 5 Range of ratios of standard entry-level wage compared to local minimum wage at significant locations of operation

Not reported

EC 6 Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation

Not reported

EC 7 Procedures for local hiring and proportion of senior management hired from the local community at significant locations of operation

Not reported

Indirect economic impacts

EC 8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement

Not reported

EC 9 Understanding and describing significant indirect economic impacts, including the extent of impacts

At a glance> Chairman and Managing Director’s review

44


Goal 2010–11 performance summaryProgress rating

2010–11 2009–10 2008–09

Customer service

Serving customers

Customer satisfaction: Customers have a positive view of the overall quality of services we provide. Complaint numbers were the lowest in five years.Social assistance: Sydney Water continued to support customers experiencing difficulties by providing flexible payment arrangements.

Service quality and system performance: Maintained high levels of water and wastewater system performance and met required licence targets.

Water efficiency

Maintaining a water efficient city

Reuse and recycling: Sydney Water saved 10.6 billion litres of drinking water through recycling schemes to help secure water supply for greater Sydney and the environment.

Water leakage: Sydney Water has the largest leak prevention and repair program in Australia. Our performance compares well with other developed countries including England, Wales, the United States of America and Canada.

Water efficiency: Residential, commercial and industrial customers helped increase water savings by almost four per cent to 121 billion litres compared to 2009–10.Water drawn: Customers have maintained water saving behaviours during Water Wise Rules and helped reduce total water use from Sydney’s supply system.

Water quality compliance

Providing clean, safe drinking water

Water quality: Sydney Water continued to show a high level of compliance with NSW Health and the Australian Drinking Water Guidelines 2004 requirements.Customer satisfaction with water: Customer feedback shows continued high satisfaction with water quality.

Licence compliance

Contributing to clean beaches, oceans, rivers and harbours

Wastewater treatment system discharges: Continued to meet treated wastewater load discharge licence requirements to help protect the local environment and public health.

Breaches of statutory instruments: Three tier 3 penalty notices were issued under the Protection of the Environment Operations Act 1997 to Sydney Water or its contractors. Minimal environmental harm occurred from the incidents and controls have been implemented.

Environmental performance monitoring: Long-term results show water quality and ecosystem health in inland waterways and at Sydney beaches continue to be maintained.

Trade waste agreements: Managed trade waste consents to meet total discharge limits and to ensure the continued production of biosolids and recycled water for reuse.

Sustainability scorecardThis scorecard provides an overview of Sydney Water’s sustainability performance in 2010–11.

The scorecard is based on Sydney Water’s goals, which integrate the social, economic and environmental aspects of our performance. It includes summary statements and progress ratings based on management evaluation of Sydney Water’s performance against its sustainability indicators.

45

Sustainability Indicators

Goal 2010–11 performance summaryProgress rating

2010–11 2009–10 2008–09

Eco-efficiency

Optimising resource use

Environmental footprint: In 2009–10, Sydney Water reduced its full supply chain carbon footprint by about 21% and its ecological footprint by about 20% compared to the previous year.

– –

Energy use: Achieved a 47.5% reduction in carbon emissions as at June 2011. We are on track to meet the target of a 60% reduction by 2012.

By-products: Continued to meet our target of 100% beneficial use of biosolids.

Waste minimisation: Maintained a recycling rate of 72% in 2010–11 compared to 74% the previous year.

Flora, fauna and heritage: Restoration and rehabilitation works achieved a net gain of native vegetation. Heritage management targets were met.

Workforce, safety and capability

Developing a safe, capable, committed workforce

Safety: Sydney Water’s goal is to achieve zero injuries to staff, contractors and visitors. The lost-time injury frequency rate increased for staff and contractors. We are focusing on behavioural change, key risks and the most common causes of injuries.

Capability: Investment in staff training and the entry level program continues to help staff work more effectively, better serve customers and contribute to Sydney Water’s long-term viability as a successful business.

Key behaviours: Survey results showed that we met our target for the key behaviours of honesty, teamwork, achievement driven and personal responsibility. These behaviours guide the way staff deliver essential and sustainable water services for the community.

–

Work-life balance: Sydney Water helps staff balance the demands of work and personal life. Survey results showed that staff are able to achieve balance and that managers are supportive.

–

Staff engagement: Survey results indicate that staff effort and retention drivers continued to improve. –

Business efficiency

Being an economically efficient business

Profitability: Despite reduced revenue, profit before tax exceeded target due to lower than expected operating and interest costs.

Return on assets and equity: Return on assets and equity decreased due to reduced revenue together with increases in assets and equity. Return on assets and equity is low by commercial standards.

Debt servicing: Increased debt to fund a comprehensive capital expenditure program.

Infrastructure management: Ensured reliability and availability of services through ongoing investment in renewal, rehabilitation and maintenance of infrastructure.

LegendExpectations met or exceeded Indicators show a positive long-term trend towards the goal.

Areas to improve Mixed results, positive trends for some indicators and negative trends for others towards the goal.

Action required Indicators show a negative long-term trend towards the goal.

– Not applicable Performance area not reported.

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