The 28 January 2010 report in the SMH gave two estimates for the increase in Sydney Water's price. The Premier, Hon Kristina Keneally, was quoted as saying that an average water bill would rise by $2 per week or $154 per year; and the Opposition's Ms Katrina Hodgkinson said it would rise by $4.71 per week or $245 per year within two years.

Is there a source document, from either side of politics, for their price increase estimates?

Kellie, have you put the questions to the NSW Opposition?

Greg Cameron

Malcolm Turnball, is I understand very keen on privatising water.

SBS had a program on the liquid gold.

Whilst our politicans sell the story that privatisation, means improved effeciencies, and cheaper costs. The reality is that privatisation means greater costs.

Dear Kellie, why are we debating who or what the ownership of water should be? Surely the issue is supply and demand. If we had enough water, who cares who owns it?

Conservationists of many persuasions have killed off new storage facilities across the States for a generation. Limited storage means that even when we do get good rains we can’t collect it which means higher and higher prices.

This ownership issue is dealing with symptoms not the causes.

The mission and sole purpose of a privately-owned business is to maximise profit for shareholders. They are the reason the business exists. When water is a private good, the public interest is only relevant in the context of its impact on returns. When water is a public good, its use is managed to benefit people, not shareholders. The only privately-owned naturally occurring water in Australia is that which falls on a person's roof – rain. When rain is allowed to flow from a roof onto the ground, the rights to that water are vested in governments. The interesting thing about the use of rainwater tanks – when the rain is collected so that it does not fall on the ground - is that it competes with both big government and big business for consumer spending.

Greg Cameron

JamesH,

You claim that privatization means higher costs. This is true generally when the privatization process has been botched.

When councils out source equipment the compliance requirements they impose are gold plated, and far exceed anything they had ran with before. On top of this they seldom shed their internal administration for the product, and duplicate it in the supplier.

After all this they are surprised when the total cost is higher.

What is also true almost without exception is that services taken over from private companies by councils or governments run at much higher costs.

If the privatization is done properly with minimal duplication and interference, privatization is more often than not less expensive.

Congratulations, Kellie Tranter, on attempting to scrutinise, without the benefit of parliamentary privilege, the attempted privatisation of reticulated water supply in NSW.

Questions such as you have posed (and more) are what we should have been hearing from the Opposition in the NSW Parliament at least since 2006. Why haven't we been hearing them? It seems it has been left to the likes of the article author to do the job of a parliamentary opposition all on her own. Thankfully, someone with the necessary writing and legal skills is at last ventilating this fundamentally important issue. I wish her every success.



I am particularly intrigued as to the full implications of the quote the author has included in her article from the NSW Auditor-General’s Report to Parliament 2009 Volume Seven, speaking with respect to electricity supply for the Kurnell desalination plant, to wit:

“... the power need of the desalination plant
will be offset by renewable energy at a wind farm,
as opposed to it being operated by renewable energy.
The wind farm is located between Bungendore and Tarago
and Renewable Power Ventures (a subsidiary of Infigen Energy)
has built and will operate the wind farm. The wind farm,
known as the Capital Wind Farm, has a capacity of 140 megawatts ...”;

especially as they might relate to one of the questions posed by the author, to wit:

"What provisions are there to ensure supply
to customers if power outages occur? Are there
provisions guaranteeing Veolia’s revenue if there
is a power outage? Who pays for that? Sydney Water?"



I have a question of my own. Is the offsetting of the power needs of the desalination plant calculated in terms of Megawatt hours of electricity used, or is it measured in terms of the dollar cost of electricity used?

To amplify my question, given that wind-generated electricity is not necessarily available to match demand, might not the desalination plant frequently have to pay significantly higher spot prices for its electricity in order to maintain supply?

Hidden NSW government cost-shifting to Sydney Water consumers, by any chance?

Perhaps I should amplify what I mean by the use of the term 'hidden cost shifting by the NSW government' in the last sentence of my previous post.

The Capital Wind Farm has a 20-year contract for the sale of electricity to the Kurnell desalinator starting out at $50 per Mwh with provisions for increases indexed to inflation. So while ever the wind blows fair for the Capital Wind Farm, and/or while ever by way of the exercise of its right to trade in the National Electricity Market (NEM) it is able to on-sell the electricity of other producers, it will get $50 for every Mwh of electricity it supplies to the desalinator, presumably up to its maximum capacity demand of 140 Mw.

Absolutely capital! I wonder whether there is any contractual upper limit to CWF's right to (preferentially?) supply the desalinator at the $50 per Mwh rate, given the indications that desalinator capacity may be increased over coming years?

Consider also, that during off-peak hours, when the NSW government corporation Energy Australia normally has plenty of dirt-cheap electricity to sell at, say, $25 per Mwh, the desalinator may still be buying all its electricity from CWF at $50+ per Mwh. Even better (for the proprietors of the CWF)!

However, consider also what could happen when the CWF is unable, through lack of co-operative winds, to deliver any, or as much, electricity as the desalinator needs. Could it be that, for example, Energy Australia (a NSW government corporation) is contractually a preferred default supplier to the desalinator? If it was to be, would it not be charging significantly more than $50 per Mwh for the electricity it delivered when the CWF continued unable to supply? That would make for more revenue for the NSW government, but higher bills for Sydney Water consumers. Perhaps not so much hidden cost-shifting as hidden increased taxation.

Energy Australia at some other times, when the CWF is delivering, misses out on off-peak sales. All around, a loose-loose situation for NSW residents.

Who owns the CWF?

I suppose when quoting excerpts from an Auditor-General's report an author has to stop somewhere, but it is a pity Kellie Tranter did not include the final sentence of the paragraph quoted in her article, and already reproduced as the first quote in my first post to this thread on Friday, 4 June 2010 at 10:20:16 AM.

That final sentence read:

"It will also increase the supply of wind power in New South Wales
by over 700 per cent."


That's big!


I wonder whether the CWF contract with Sydney Water to supply electricity to the desalinator incorporates rights for CWF to expand its deliveries of power at or better than the contract price of $50 per Mwh, in step with any expansion, as is foreshadowed, of the capacity of the desalinator?

Which brings me to another question: does the right of CWF to trade in the NEM recognised in the contract effectively ensconce CWF as a 'middleman' with respect to all alternatively (to the CWF) sourced electricity supplied to the desalinator over the next 20 years?

If that be so, would that mean that CWF could buy off-peak electricity from, say, the NSW government corporation Energy Australia (or any other government corporation), at, say, $25 per Mwh, and routinely on-sell it to the desalinator at its contract price of $50 per Mwh? Off-peak hours are 10:00PM to 7:00AM, day in, day out. That's 37.5% of all round-the-clock operation of the desalinator, which will be happening at least for the first two years.

But should the desalinator not be needed to operate round-the-clock, and should its management choose to run it during off-peak hours, CWF could be making a gross profit of $11,497,500 pa. without turning a wind turbine blade! The CWF could in those circumstances sell all of its shoulder and peak time output opportunistically into the NEM, knowing it could not lose no matter what the state of the market!

Is this privatising of profits whilst socialising losses?

Kellie Tranter asks in her article, with respect to the Auditor-General's comments on the operational capacities of the Kurnell desalinator:

"Why the distinction between “water consumption”
and “drinking water”? Careless usage or carefully
crafted language?"

I'm not sure as to the significance of the distinction either, but I share the author's concern. Auditors-General must be fairly circumspect as to how they phrase their reports. Sometimes they must rely upon extremely nuanced use of language to publish deeply politically unpopular truths whilst maintaining their integrity, I suspect. I'd ponder that particular usage very deeply.

In doing so, I observe that the term 'drinking water' is also used on page 7 of the PDF of that part of the Auditor-General's report relating to Sydney Water Corporation, linked from this page, http://www.audit.nsw.gov.au/publications/reports/financial/2009/vol7/contents.htm , where he says:

"The Corporation is required under its Operating Licence
to reduce drinking water use by 80 per cent at the Malabar,
North Head and Bondi Sewerage Treatment Plants (STPs).
All other STPs and storm flow sewage treatment plants
must use at least 85 per cent recycled water for treatment.
The Corporation has met both targets.

Since 1995, the Corporation has increased the amount of
recycled water used in its sewage treatment plants from
17 to 43 megalitres per day, significantly reducing the
volume of drinking water used at the plants."

It is interesting to note on the same page of the PDF that recycled water as a percentage of total effluent discharged during 2009 is shown as being 5.3% . This doesn't seem to be consistent with the claim that 'drinking water' usage has been reduced by 80% at the Malabar, North Head and Bondi Sewerage Treatment Plants. Surely Sydney Water Corporation can't be excluding the inflowing effluent that it treats as not being originally almost entirely 'drinking water', can it?

What a joke if it is!

I don't know if any of this helps, Kellie, but generally any vessel (or corporation) dead in the water is an easy target for a torpedo.

On the subjects of carefully crafted language and extremely nuanced Auditor-General-speak, I have just noticed a little discrepancy between the Auditor-General's words as quoted by Kellie Tranter and those used in what I have taken to be the source document in the Volume 7 referred to in Kellie's text link in paragraph 9 of her article.

What I have taken to be the source of Kellie's quote is that part of Volume 7 headed 'Sydney Water Corporation', which is the second-last entry on the page of links to the components of Volume 7, which is obtainable here: http://www.audit.nsw.gov.au/publications/reports/financial/2009/vol7/contents.htm , where Kellie's text link delivers the viewer. What I have taken to be the source quote is the fourth paragraph on page 3 of the PDF document to which the text link 'Sydney Water Corporation' delivers one.



The problem is that the words ", as opposed to it being operated by renewable energy." included in Kellie's quote nowhere appear in this part of the Auditor-General's report.



Has Kellie Tranter sourced a substantially similar paragraph from somewhere else in Volume 7 of the A-G's report, or has she inserted the words ", as opposed to it being operated by renewable energy." as an amplificatory note, in the process thereby putting words in the mouth of the Auditor-General that he never used?

If there is another similar paragraph elsewhere in the report it is possible that it may not have contained the words 'It will also increase the supply of wind power in New South Wales by over 700 per cent', the seeming omission of which I mildly deplored in my post of Monday, 7 June 2010 at 8:42:43 AM. My apologies to Kellie Tranter if this has been the case.

Can the author, or anyone, set me straight on this little matter?

If there is another similar paragraph, as I suspect, then there exists an interesting trail of Auditor-General's nuances, doesn't there?

Or a trail of editing of the Report.

Well done Forrest Gumpp. What isn't in a report is often as important as what is. Kellie will be able to illuminate.
Greg Cameron

Dear Forrest

Thank you for your posts, information and more importantly, for your correction.

I omitted to pick up on the placement of the quotation marks during the editing process. The paragraph should in fact read as follows:

The Auditor-General’s Report to Parliament 2009 Volume Seven says “... the power need of the desalination plant will be offset by renewable energy at a wind farm...", as opposed to it being operated by renewable energy. "The wind farm is located between Bungendore and Tarago and Renewable Power Ventures (a subsidiary of Infigen Energy) has built and will operate the wind farm. The wind farm, known as the Capital Wind Farm, has a capacity of 140 megawatts ...”

Many thanks
Kellie

Thank you, Kellie Tranter, for the clarification as to the quote from the Auditor-General's Report. The words "as opposed to it being operated by renewable energy" made a most important distinction from "the power need of the desalination plant [being] offset by renewable energy at a wind farm". Its a pity in a way that that distinction was not, in the event, made by the Auditor-General.

I'm not sure that unmasking a bit of political spindoctoring as to the levels of recycled water usage at STPs achieved in replacement of 'drinking water' is a sufficient exploration of the implications of what may be the carefully crafted language of the term 'drinking water' as distinct from 'water consumption'. Any pointers to other possible ominous implications arising out of, or concealed by, this usage?

The byline to the article title on the index page says:

"All political parties should make it known where
they stand on the issue of water privatisation."

Could it be that many present and past prominent figures in all political parties may be compromised because they may stand to benefit from water privatisation and associated investment opportunities, such as the Capital Wind Farm may appear to be? Could that be behind the seeming reluctance of political parties to make known their stance on this issue?

Or is it the almost universal antipathy which politicians secretly have for the Constitution that lies at the root of it? It seems to me that Section 100 of the Constitution takes pains to emphasise not just the rights of States, but also and especially the inalienability of the rights of residents thereof as individuals to reasonable usage of the waters of rivers. It would seem that if the Commonwealth was to legislate with respect to any existent State legislation that appeared as if it in any way might abridge the rights of the residents therein to waters derived from any catchment, such Commonwealth legislation would be held to prevail.

I trust I have made myself sufficiently obscure in my little Constitutional foray. State sell-outs set at nought?

For a discussion of constitutional powers in relation to the environment see the Senate report http://www.aph.gov.au/senate/Committee/ecita_ctte/completed_inquiries/1999-02/enviropowers/report/c02.htm

For an excellent discussion of who owns water and who manages water in Australlia, see
South East Asia Geography Conference Panel: Water Governance in Context
Case Study of Australia Naomi Carrard
Australian Mekong Resource Centre
University of Sydney

http://www.mekong.es.usyd.edu.au/events/past/GeogConference2004/australia_casestudy.pdf

For what does it all mean, see the Commonwealth Water Amendment Act 2008

(Circulated by authority of the Minister for Climate Change and Water,
Senator the Honourable Penny Wong)
 
WATER AMENDMENT BILL 2008

GENERAL OUTLINE
1. The purpose of the Water Amendment Bill 2008 (the Bill) is to amend the Water Act 2007 (the Act), to give effect to the intergovernmental Agreement on Murray-Darling Basin Reform (Reform IGA) signed by the Prime Minister and First Ministers of each of New South Wales, Victoria, South Australia, Queensland and the Australian Capital Territory (the Basin States under the Act) at the 3 July 2008 meeting of the Council of Australian Governments (COAG).
2. The Reform IGA has also resulted in the negotiation of a revised Murray-Darling Basin Agreement (the revised Agreement) which will come into effect at the same time as this Bill commences.
3. The Bill will enable water resources in the Murray-Darling Basin to be managed in the national interest, optimising environmental, economic and social outcomes.
4. The Bill complements the Commonwealth Government’s $12.9 billion, Water for the Future plan announced by the Minster for Climate Change and Water on 29 April 2008.
5. The $12.9 billion of funding under Water for the Future is not specifically addressed in the Bill. However, this funding supports governance and water resource management reforms and includes:
• establishing the Murray-Darling Basin Authority;
• improving water information;
• sustainable rural water use and infrastructure programs; and
• purchasing water to improve the health of the rivers and wetlands in the Murray-Darling Basin.
....Greg Cameron

(continued)
6. This Bill relies on the Commonwealth’s constitutional powers and a referral of powers to the Commonwealth by New South Wales, Victoria, South Australia and Queensland (the referring States) to enact certain measures. These measures include:
• transfer of the current powers and functions of the Murray-Darling Basin Commission as set out in the former Murray-Darling Basin Agreement, to the new Murray-Darling Basin Authority;
• strengthening of the role of the Australian Competition and Consumer Commission (ACCC) by extending the application of the water market rules and water charge rules to cover, respectively, all bodies that charge regulated water charges and all irrigation infrastructure operators, and by providing for any State or Territory to 'opt in' such that the water market and water charge rules apply to water resources outside the Murray-Darling Basin; and
• enabling the Basin Plan to provide for critical human water needs.

7. The Bill has been informed by, and progresses, the Intergovernmental Agreement on a National Water Initiative between the Commonwealth of Australia and the Governments of New South Wales, Victoria, Queensland, South Australia, Western Australia, Tasmania, the Australian Capital Territory and the Northern Territory (National Water Initiative).
8. Schedule 1 of this Bill identifies those amendments that rely in part on the referrals of powers from referring State Parliaments. Schedule 2 of this Bill identifies other amendments to the Act, the Trade Practices Act 1974 and the Legislative Instruments Act 2003 arising from the Reform IGA, or of a minor technical nature. Schedule 3 deals with transitional matters relating to the reforms implemented by this Bill, which do not rely on a referral of powers.
9. The Bill repeals the Murray-Darling Basin Act 1993, and provides for the revised Agreement to be scheduled to the Act.
10. Substantive amendments to the Act are summarised below.