ACCC 2013 Regulatory Conference Making water reform work Matthew - - PowerPoint PPT Presentation

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Nov 17, 2022 210 likes •462 views

ACCC 2013 Regulatory Conference Making water reform work Matthew Toulmin 26 July 2013 1 Transforming northern Victoria v Food Bowl / NVIRP / Connections Program v $2 billion investment in irrigation system modernisation v Aim to promote

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26 July 2013 1

Making water reform work Matthew Toulmin ACCC 2013 Regulatory Conference

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26 July 2013 2 Matthew Toulmin - RMCG ACCC Regulatory Conference

Transforming northern Victoria

v Food Bowl / NVIRP / Connections Program v $2 billion investment in irrigation system modernisation v Aim to promote productivity and create water savings v Explore theory and practice of implementing investment in supply system transformation

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Northern Victoria

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This Presentation

v Project objectives and drivers v Key program elements v Decision principles for investment v Customer input to process v Lessons learnt

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Objectives and drivers: synergies

v 3 program drivers/objectives

Productivity – the primary driver
Water supply for Melbourne
E-flows for the River Murray

v Synergies between drivers v Cost benefit analysis included all three v Regional benefits based on CGE

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The Goulburn-Murray Irrigation District (GMID)

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The Irrigation District

v 68,000 km2 in area v 9,600 customers – most very small non commercial v 6,300 km of channels – half small spur channels v 24,000 outlets – most simple and inefficient v 1,000’s of road crossings, regulators, culverts etc v 3,000 GL taken for irrigation

2,100GL used
900GL lost in distribution = 30%

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Driver 1: Infrastructure constrains productivity

v Dairy is the main sector – most exported

A price-taker in international markets

v Needs economies of scale from larger properties

Doubling size without doubling labour costs

v Requires automated water use on-farm. That means

Getting rid of complex small-scale systems
Automating distribution at higher levels of service

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Driver 1: Infrastructure constrains productivity

v Supply system designed for 70 cow dairy herd v Dairy herd now often 700 cows v Multiple supply channels, roadways and assets constrain productivity & economies of scale v Water trading out of the GMID v New developments and investment taking place down-stream or in NSW where large scale greenfield v Water charges going up v Lack of investment confidence

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Driver 2: Water for Melbourne

v Drought from 1997-2007 v Stage 3 water restrictions with risk of Stage 4 restrictions v Melbourne growing by 1,500 people a week v Desalination plant long-term solution but 5 year construction schedule from 2007 v Interim solution needed to fill the gap v NVIRP provides 75 GL = 18% of annual demand via 70 km pipeline

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Water for the River Murray

v River health under threat from level of diversion v Millennium drought exposes/exacerbates risks v Solutions

The Living Murray 2004: $500M for 500GL for

six icon sites

Water Act 2007 - the Basin Plan
Buy-back

v NVIRP generates water savings for environmental flows

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NVIRP

v The Food Bowl Alliance driven by local business concerned at declining commercial viability of region v NVIRP - $2 bn investment in system modernisation v Restore Food Bowl productivity v Generate 425GL of water savings:

75GL to Melbourne
75GL to irrigators
275GL to environment

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Program outline

v 2 main elements: $1bn each

Backbone automation
Connections program

v Backbone

Retract public system by 50% to major channels
Water super highway >20ML/day
Automation of control systems
Water savings from reduced outfalls

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Backbone profile > 20ML flow

BOORT PYRAMID HILL

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Connections Program

v 5,500 customers on spur channels v New connection from each farm to the backbone v Multiple outlets/meters rationalised v Connection assets privatised v 3,000km of spur channels retrenched v Water savings from:

Closing leaky spur channels
More accurate meter outlets

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Customer base: 9,600 properties

v 300 large commercial operators > 1,000ML/yr v 750 medium commercial irrigators ~ 500ML/yr v 3,000 small users < 100ML/yr v 5,500 rural residential & domestic and stock v Dairy - the major commercial force v Mixed - annual crops - opportunistic v Horticulture - niche in Central Goulburn

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Irrigation sectors

200 400 600 800 1000 1200 1400 1600 1800 2000

Central Goulburn Rochester Loddon Valley Murray Valley Torrumbarry

Property Types – 2008 Data

Dairy Mixed Horticulture Rural Residential

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Connections case-study

!

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Connections Options

v New individual connection to backbone – 80% v Joint large connections (syndicates) – few v Joint D&S piped supplies – 200 v Relocate farm to the Backbone – 6 to date v Create new supply to river / groundwater – few v Exit irrigation convert to dryland – 70 v Do nothing – face formal closure

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Decision framework

v Not just retrofit new assets to existing farms v Transformation not standard funding model v Fit for purpose / value for money / water savings v Type of property: large commercial vs. lifestyle v Size of realistic future demand v Distance from backbone and cost v Integration with other users

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Decision framework: size and distance

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Customer engagement – 3 decision levels

v District Plan – 6 districts for broad directions

Water Services Committees

v Strategic Connection Plans (SCPs)

168 SCPs @ ~ 100 properties
Realistic integrated decisions at local scale
Landowner Steering Committees

v Property scale

Landowner decision

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Individual landowner decisions

v Contribute to SCP discussions at local scale v Review their options – funds for independent advice v Indicate interest and preference v GMW makes formal offer v Agreement leads to formal contract v Appeal available through Independent Review Panel v Ultimately termination of supply and compensation

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Lessons

v Strategic change is challenging v Commercial imperative not operator interest v Strategic scale for decision / not marginal change v Recognise synergies and interactions v Build trust: engage regional partners & local champions v Robust process to ensure confidence

Balance discretion/innovation against equity
Both carrots and sticks are needed