Water Journal June 1988

Page 1

EXEC UTIVE DIRECTOR P. Hu ghes P.O. Box A232 Sydney South 2000 (02) 269 6814

FEDERAL PRESIDENT M. Dureau , P.O. Box 152, North Ryde 2113 (02) 887 2555.

FEDERAL SEC RETAR Y G. Cawston Box A232 P.O. Sydney St h., 2000. (02) 522 1148



ISSN 0310- 0367


Vol. 15, No. 2, June 1988

J . D. Mol loy, Cl¡ M.M.B.W. G.P.O. Box 4342, Mel bou rn e 3001, (03) 615 599 1

BRANCH SECRETAR IES Canberra, A.C.T. M. Sharpin, Willing & Part., P.O. Box 170, Curt in, A.C.T. 2605. (062) 815 811

CONTENTS Viewpoint .. . .. ..... . .. .. .... . . .. .. ... .


Association and Industry - News, Views and Comment . .. .............................. .... .


New So uth Wales Mrs S. Ton ki n-Hi ll , Si nc lair Knight & Pa rt. 1 Chandos St. , St. Leonards , 2065 , (02) 436 7166

Vi cto ria

IA WPRC News ..... .. . ...... . ... . ......... . .. .. . .


Summer School '88 - Overview and Reports -E. A. Swinton ........ .. .. .... . ........ . .... ... .... . ... .


Water Industry in the UK New Directions -J. Jeffry ... .. ........ ...... . ..... . . . . ..... . .. ... .


The Use of Water Industry Assets - Management Issues -P. W. Hughes ........ .. .. . ... ...... . .......... .. ...... .


Key Issues in the Water Industry The South Australian Experience -P.A. Norman .. ... . ... . .. . . ......... .... .. .. ..... ... .. .


J . Park, Water Train ing Centre, P.O. Box 409, Werribee, 3030. (03) 741 5844

Qu eensla nd D. Mackay, P.O. Box 412, We st End 4102. (07) 844 3766)

South Aust rali a A. Town send, State Wat er Laborat ories , E. & W.S. Private Mail Bag , Sal isbury, 5108. (08) 259 0244

We ste rn Au st ralia Mr K. Cadee, Wat er Auth . o f W.A. , P.O. Box 356, West Perth 6005 (09) 420 2457

Tasmania A. B. Denne P.O. Box 78A , Hobart 7007

North ern Territory P. Abbey, P.O. Box 37283 Winnel li e, N.T. 5789 . (089) 89 7290

EDITORIAL & SUBSCRIPTION CORRESPONDENCE G. A. Goffin , 7 Mossman Dr., Eaglemont 3084 03 459 4346


Demand Management and Financial Reporting -D. J. Dole . ..... .... . . .................... ... ..... ... . . .


Biological Phosphorus Removal CS/RO Newsletter -W. G. Raper . ...... ......... . .. . . .. ...... . .. .. ... . .... . .


Conferences ... . . ... ...... ... . .. .... ..... ... ... .. .. ... . ... .. .


Calendar .. ... ... .. .. ... .... .. .. . . . .. .. . ...... ............ .. .


ADVERTISING Ann Sykes Appit a 191 Roya l Parade, Parkvi lle 3052 03 347 2377

COVER PICTURE The operations room of a water supply reservoir and its technical services centre functioning with an integrated telemetry network system, which was completely designed, installed and commissioned in-house, by Melbourne 's Board of Works. The integrated telemetry system collects and records data, monitors system capacity and performance, issues the necessary alarms and instructions, and importantly, carries out the requisite ana lysis for optimised operation . Wherever necessary, remote operation and control are provided. In addition, the integrated system is pro grammed to issue reports for day to day functioning and for management information systems. The Board's telemetry experience, dating back to 19 72, therefore covers a wide range of expertise with different computerised hardware, soft ware, electromechanical and electronic instrumentation, as well as state-ofthe-art telecommunication systems. Organisations interested in a relation ship with Melbourne's Board of Works, aimed at sharing this expertise with the industry, both in Australia and overseas are invited to contact its Marketing Manager, Mr Pereira on Tel. (03) 615 5926. See page 32 this issue. Front cover donated by Melbourne & Metropoli tan Board of Works.

The statements made or opinions expressed in ' Wat e r' do not ne ceSSf:! rify reflect the views of the Australia n Water and Wastewater Association, its Council or committees.

WATER June, /988


1988 OPTIMISING THE USE OF ASSETS General Commentary and Reports by E. A. (Bob) Swinton OVERVIEW

The 1988 Summer School, held in Tasmania in February, was organized by the Association with the primary objective of expanding the knowledge and attitudes of the middle managers of the industry, those who will have more and more responsibility in the future for the operation and maintenance of the millions of dollars worth of assets invested in the water and wastewater industry. In the present and in the future climate, the community will demand better service and better quality both of supply and environmental management, and yet the funds available to accomplish these targets will shrink . The need, therefore, is to drive the systems harder, to increase productivity of the workforce , both professional and technical, and at the same time, to devise politically acceptable ways to raise the necessary finance, both for new construction, and more significantly, for the uprating and rehabilitation of pipelines, sewers and plant , some of these assets being already nearly a hundred years old . The administration of the school was organised and run most completely by a small committee of the Tasmanian Branch under the capable leadership of Tony Denne. Over 70 'students' attended, from all over the continent, and they were very well catered for. All seemed to go smoothly, even when the University 'double booked' the main venue resulting in some of the lectures being given in the Union Bar. The syllabus for the School, and the provision of the lecturers, was the responsibility of the Victorian Branch. A subcommittee under the leadership of Dr. Wayne Drew provided a wide span of subjects, ranging from the 'high tech' of Integrated Telemetry Network to the nitty gritty of Industrial Relations. Thirty lecturers were assembled, some staying just for the day, but most joining in whole-heartedly, particularly in the workshop sessions. The key-note speaker was Mr. Jack Jeffry, Director of the North Surrey Water Company, which provides water supply for a sizeable proportion of the population of Outer London, he was recruited by Mike Dureau, our Federal President. It was an excellent choice, for not only was Jack able to intr9duce us to the 14

WATER Jun e, 1988

ways in which England and Wales are tackling similar problems, but he also contributed to the sessions on water quality with his experience of the EEC regulations. He finally summed up the school from the point of view of an 'outsider', although he had by then established the closest of contacts with the Australian contingent. Jack was brought up in County Durham Uust north of Yorkshire) and he took one day off to drive to Launceston, to watch Tasmania play Queensland in the Sheffield Shield. He was thoroughly sunburnt but enjoyed the day immensely. He still disapproves of the Aussie cricket hat, despite his sunburn. Had Tony Denne been able to buy him one, it is doubtful that he would ever have worn it, in lieu Tony presented him instead with a videotape of Alan McGilvray's 'The Game is not the Same'. The majority of the 'students' relaxed in a rather less healthy manner, certainly more costly for some of them. The writer can speak from bitter experience . . . it is a long walk from Wrest Point to the heights of the University Colleges at 2 a.m., with empty pockets and not even a CabCard to help out. The contents of the lectures were of considerable value, so much so that this issue of Water is devoted largely to the task of bringing the main themes to the notice of all members of A WW A . Some of the papers on finance and administration are published almost in full being somewhat different from the usual coverage in this Journal.

The core of the Tasmanian organising team - Tony Denne, Annette Nichols and Peter Spratt

The lectures outlining the opportunities for the application of technology to the problems provided excellent reviews of the 'state of the art' in all fields. It is not possible to publish them in full, but they are briefly summarised in this report. Readers are strongly recommended to purchase complete copies of the lectures. These are available from the Tasmanian Branch at the very reasonable price of $50. The area of computer applications is also novel for this Journal and the writer has reviewed the five lectures presented on this subject more fully than the more familiar areas of process technology and water quality. This review follows under the title 'Computers Drive Capital Further and Faster With More Reliability'. The areas of reticulation and collection technology, i.e. the pipelines and sewers which represent the greater bulk of the assets of the industry were covered by Trevor Richards (Vic. RWC) and Roger Vass (MMBW). Trevor spoke on the proper selection of water pipes and mains and the necessity to develop consistent Australian standards . Roger Vass gave an excellent survey of the strategies and costs of sewer rehabilitation, culminating with an exhaustive review of the technologies currently available. This area is sufficiently important to justify an issue of the Journal to itself. This will appear later in the year with Trevor Richards of the Victorian RWC as Associate Editor.






Computers Drive Capital Further and Faster With More Reliability The lectures ranged over a wide field of application of computers - including the listing of assets both geographical and textual, assistance with the planning of maintenance, the development of software to analyse and optimise maintenance schedules and finally to the application of computers in controlling the operations of water supply and sewerage systems. Speakers were: Wayne Harris and Syd Farrell (ACT Water), Tom Coster (Scott, Furphy, NSW), Nick Apostilides (GHD), Geoff Cosgriff and Mike Prior (MMBW), Mike Dureau (Kent Instruments).

HISTORICAL AND DEVELOPMENT Early History Wayne Harris and Syd Farrell summarised the history of the application of computers . At first they were the ponderous mechanical machines developed to assist accountants in the business world to process huge amounts of relatively simple data. Even when replaced by the early electronic machines, they were still so expensive as to demand virtually 24 hours per day operation to justify their cost. Computers had to become more sophisticated before they could be considered for the more complex operations of management of physical assets where, they had to deal, not just with the simple figures of invoices and ledgers, but with the myriad details of plant and equipment. The range and variety of information is wide and the processing is diverse and interactive. Each run on the computer is short and rarely repetitive, so that the machine itself is not so fully utilised . Only when the competitive developments in the computer industry led to the availability of relatively cheap, albeit sophisticated, hardware could computers be considered for engineering purposes . In Australia, the power generation and mining industries were the pioneers in application of computers, while overseas, the petrochemical and process industries predominated. The water industry and other utilities lagged behind the manufacturing industries, mainly because the bulk of the information on their physical assets could be maintained manually on maps and plans, and was mainly 'static' data. In Australia in the 1970s, three factors combined to cause a review of these traditional approaches: • the deterioration of original paper records • conversion to metric units • development of computer-aided drafting . As an illustration, the Melbourne Board estimated that it would be at least three million dollars cheaper to use computers to preserve and update their reticulation plans rather than to re-trace them. Intergraph workstations and software were extended to drawing maps and plans with information stored in 60 separate layers, which could be selected as required. Systems which combine storage and manipulation of both spatial and textual data with a graphics package capable of presenting detailed maps were then developed. In the process industries, the first software systems for maintenance were developed 'in-house', replacing the manual systems already in use, so that each company had their own. However, about 10 years ago, such software was being sold commercially. In 1984, the number of maintenance packages available in Australia alone rose from six to over 30; this proliferation has now been followed by consolidation and improvement. Within the utilities area there is a tendency to produce a package of tools which can be used to configure the information, and procedures to suit individual requirements. This is probably due to the fact that there are only a few utility authorities compared to the large numbers of companies in the process industries, there are considerable differences between them based on local and historical factors, and also because there is as yet only a short history of development of computer applications.

Setting up a system The Authors then gave detailed advice on how to set up such systems, summarising: a comprehensive review of existing management system must be made which usually brings to light areas which can be better organised. Then, the specification for the computer must be defined, including cost limits. The system options can then be considered. In situations where the existing manual systems are well understood, packaged software solutions are more cost-effective than custom solutions. Where the existing systems are not well-defined, it is better to apply generalised software tools to assist in clarifying the situation. It must always be realised that although the purchase price of the computer may seem significant, the cost of collecting and entering the data and preparing the schedules can be 10 times greater. This phase should only be implemented by sound project management to prevent expensive cost over-runs. The installation of a computer-based system for planning maintenance is not a matter to be undertaken lightly. Problems can arise where operating practices are not in harmony with the computer system, and staff attitudes can either enhance or frustrate the effectiveness of the system. Managing the 'culture change' is critical to success. Unfortunately, this aspect is often overlooked. None-the-less, it is the way of the future, not only for the large Authorities, but also for the small.

Dis-aggregation The sad part, according to Harris and Farrell, is that this historical development has led to separation between the accounting systems and each of the engineering data-processing systems, yet much of the data used is common to all whilst being raised and recorded in entirely different systems. The way ahead is to re-integrate all the disciplines, using the immense power of the modern computer. However, progress will be slow, because the task is enormous, and because there is already so much investment, both in hardware and labour, in the present systems. These improvements will only be achieved when organisations develop sufficient maturity in themselves to recognise, and develop, the symbiotic relationships between the various functional service and financial units in any one corporation .

PLANNED MAINTENANCE The lecture given by Tom Coster spelt out the requirements for planned maintenance, as applied to reticulation systems and pointed out the opportunities for reduction of costs by the application of computers. Maintenance and depreciation costs must be optimised. There is a least cost between inadequate and excessive maintenance, but in a service industry, the risk and cost of failure of supply must also be quantified. Pro-active maintenance involves disciplined management, and effective planning based on information, not guesswork. A maintenance job can be triggered in three ways: • ad hoc ... in response to a breakdown, an event, or even an opportunity. • scheduled .. . e.g. regular inspections, flushing, overhauls. • condition assessment ... this has a major role in an industry where many of the assets are 'out of sight, out of mind'. Computer-based maintenance programs for water and sewerage systems differ from the programs used in the process and transport industries, for the following reasons: • the main assets are widely distributed geographically • they are mostly buried • their public profile is low ... 'out of sight ... ' • they are not normally subject to technical obsolescence but demand or load may overtake capacity. WATER June, 1988








Structurally defective sewers If the sewers in question still possess sufficient capacity for their immediate duty, an authority has three options: • do nothing until there is a collapse, then repair. • replace a whole catchment on the basis of its age . • assess condition, and the community cost of failure. Clearly the third option is the most cost-effective. As with analysis of I/I, action should be based on information, not guesswork. The extra information required over that already captured for the I/I survey, relates to the community risk and dislocation factors. There is as yet no satisfactory theoretical model which can predict the structural condition of sewers, although the Melbourne Board is currently investigating alternative models for assessing the condition of its 1300 km of concrete pipes, as part of its research program into aging assets. Los Angeles, with similar problems , and 1200 km of decaying concrete pipes, mostly 70 years old, decided to adopt the more comprehensive procedure of field inspection, using a variety of techniq.ues including: • physical inspection • measurement of H2S levels • CCTV • infrared thermography and ground penetration radar. The objectives were to assess susceptibility to corrosion (termed Life Factor 1) and the presence of existing voids (termed Life Factor 2). Figure 1 illustrates the point-scoring system developed to assess 'remaining service life' (Parent, 1987) . Community risk was also rated on a point score, e.g. from large diameter sewers in busy streets, to small sewers in outlying districts. Combining the two scores allowed the city to develop a priority listing for repairs. A design matrix system was used to select the range of rehabilitation techniques which could be suitable in the particular circumstances, and a further program calculated the relative costeffectiveness of the alternatives, leading to the final choice. Since the rehabilitation of sewers is a long-term program, the effectiveness of the repairs needs to be monitored over a long term . The computerised decision program must be flexible enough to incorporate the experience gained, and also to take advantage of new or more competitive technologies .


AGE 50- 60 YE AR S

Further applications of computer technology, not just for monitoring, or scheduling of optimal maintenance, but for managing the whole reticulation system to better effect, were outlined by Geoff Cosgriff and Mike Prior of the Melbourne Board . These represent the ultimate in the application of 'Smart Capital to Dumb Assets' ... Mike Prior's own words . Although automatic computer-based control of process engineering, as in petrochemical and mineral processing plants, is well-established, its application to city-wide reticulation presents a challenge, to which the Melbourne Board is applying its talents.

The Integrated Telemetry Nelwork (ITN) consists of a network of DEC VAX processors located throughout the metropolitan area, connected to 400 remote telemetry stations. At present, approximately 4000 digital and 1000 analogue points are monitored. The data are available to operators not only in the central control room, but also on on-line terminals at the depots, and on portable terminals which can access the information through the public telephone system. Key staff have on-line terminals at home. The data is maintained on a corporate data base at Head Office, and is available to maintenance engineers, designers, p,lanners and asset managers. The first computer-based system was installed in 1976, primarily for fault monitoring e.g. flood warnings, reservoir overflows, and for control of the recently installed chlorination and fluoridation facilities from a central control room. It gave direct assistance to the maintenance staff through the provision of alarms and remote measurement. Gradually the other areas, such as operations, investigations, planning and design have reaped major value from the information provided by the system. For example, instead of the old system of telephone conversations with operators, followed by manual adjustment pf valves or pumps, the direct linkage of sensors and actuators to the control rooms enables the existing hydraulic network to be driven harder. In 1977, a peak water consumption of 2000 ML/d was difficult to control. With only a little augmenta~ion of pipework, peak days of 3000 ML/d can now be controlled, and 2500 ML/d is considered normal. The benefits now far exceed those originally perceived. In conjunction with computer modelling tools, ITN has allowed major savings in the capital works programs, and an increase in system productivity of about 200Jo, together with enhanced quality of service ... all for a relatively minor investment in computer hardware and links. The areas of major benefit are as follows:

7~ 90- 100

l .00


















0. 50

Maintenance This is still the major user of the system. Fault monitoring immediately displays alarms in the operations room, which are directed to the appropriate maintenance personnel. Staff can monitor the status of the stations at any time, instead of relying on spot checks or even upon calls from the public to report loss of service. The degree of urgency can be assessed, in order to limit out of hours call-outs to the minimum . The data is recorded to assist in analysis of the primary cause of any fault. As outlined in preceeding lectures, scheduling of maintenance can be based on integrated operating time rather than on a calendar basis, and an economic analysis of 'repair or replace' decisions can be more rational. The system incorporates 'vibration signatures' to identify impending bearing failure in rotating machinery.


!To t.e l scou • [

,: :


w:ort I


Figure 1. Life Factors.

Operations As indicated above, the hydraulic network is being driven harder and yet reliability has increased, because the sensors give advanced notice of impending overloads or failures. In crises such as major bursts, or planned shutdowns, the operators can consider the total system instead of the isolated event. Alternative network options can be simulated on the computer, using past experience of consumption patterns, before being implemented. WATER June, 1988





Automatic controls have been installed in addition to the monitors so that the operators can enter required parameters such as set-points, control bands, etc., and the control system operates to this specification, giving alarms only if the criteria cannot be met, thus freeing the operators for more productive work. The simulation mode enables operators to be trained to manage both normal operation and simulated emergencies or critical levels.

Design and Planning Designers can now get reliable feedback on the performance of their designs. Instead of rule of thumb estimates, design criteria can be based on past history and modelling of future conditions, which enables the designer to work to closer . .. and cheaper ... tolerances . This facility extends to models which predict more accurately the lead time for major works.

Energy Management Reduction in energy costs has been obtained by operating equipment to schedules, such as off-peak pumping into a balancing reservoir at a rate calculated by the controller to just fill it overnight. As the level is drawn down during the day, the controller only brings in pumps if the level starts to fall below a preset band, and then only sufficient to bring it to the upper limit of the band, rather than back to the old criterion of 'full'. One investment of $2000 in such a controller typically saved 40% of the power costs, or $30 000 to $40 000 a year. There are many other ways in which energy costs are being saved by such techniques, such as minimising excursions by sewage pumping stations into the higher billing bands.



assess an alarm situation in terms of relative urgency. For example, a power failure to a submersible pump station can be assessed in terms of the normal duty of the pump at that particular time of day and season, and the duration of the power failure. If the mini-computer decides that the sewer can afford to back up until the power comes on again, no call-out will be signalled, until such time as the situation becomes more serious. The computer will also signal what type of fault and even quote the contact number for the appropriate maintenance personnel. The overall objective is to 'send the right person at the right time' taking into account station configuration, time of day, season, weather, demand or loading and the availability of appropriate personnel. The programming of such mini-computers is frustrating to the designer because every achievement in understanding the requireq)ogic makes it seem simple, so that it is no longer 'artificial intelligence'. A collaborative project betwen the MMBW and the CSIRO Division of Construction and Engineering is in progress to develop 'Expert Systems' (see Tucker and Woodhead, this issue, Ed.) A prototype is in operaton covering about 100 automatic kerb-side sewerage pumping stations, and also part of a water supply network with six pumping stations. The knowledge and experience of both the operators and the engineers over the years is being captured for the use of future generations. Alarms are signalled to the duty operators, accompanied by a logical matrix of advice to decide the appropriate actions. These systems reduce training costs, increase responsiveness and give controlled logical advice which reduces errors. Subject to the evaluation of the performance of the prototype, the 'expert system' (or better termed ... 'knowledge-based system') will be extended and incorporated into the ITN to become a regular part of the monitoring and control system.

Summary of ITN Asset Management Monitoring of performance data and the instant call-back of the computer data base has allowed taking the calculated risks of eliminating stand-by equipment. Major dams and conduits are fitted with instruments which monitor safety indicators such as displacement or seepage. This long-term data can be more readily Geoff Goscriff monitored via the data base access. A Facilities Information System (FIS) is at present being brought on-line. This is a digital mapping and information system based on Intergraph. The ITN system will be tied in, and the MMBW corporate data base will then tie together property, consumption, rating data, financial and costing data, together with the engineering history and performance of the physical assets. Mike Prior A common information system is thus drawing together the designers, operators and maintenance staff along with the accountants. Performance data can be compared and evaluated. Data collected from seemingly unrelated sources is being used for other purposes . For example, customer metering data can be combined with zone consumption to provide assessment of leakage. Performance indicators, e.g. pumping energy per kilolitre delivered, treatment costs per kilolitre, are derived and used for setting targets and controlling activities. Communication between senior and middle management has improved by the use of the common information base, and the ease with which the computer can generate graphic displays of the behaviour of the hydraulic system.

Throughout the whole of the ITN exercise, each application has been based on a benefit-cost exercise conducted on the DIRECT objective alone. However, it has be;n found that the information collected is being recalled and used for other purposes which were not even thought of at the time, and the economic benefits have multiplied enormously. Overall, the Melbourne Board has spent around $10 million over the past 10 years, each separate decision based on a one to five year payback . The result has been an increase of about 20% in the productivity of a reticulation system worth about $2000 million, without major expenditure on more pipelines . This is very definitely a case of achieving MORE with only MINOR expense. The ratio of capital investment in computer technology to achieve an increase in productivity worth 20 to 40 times that amount in terms of physical assets probably holds as much for a small authority as it is doing for the major authorities.

INSTRUMENTATION The final lecture in this group was given by Mike Dureau, who summarised the developments in instrumentation, the measuring devices without which even the most 'expert' computers would be useless as a blind, deaf operator with no fingers, and severe cold in the nose. Dureau covered the latest developments in measurement of flow, level, pressure, density, turbidity, and the physico-chemical parameters of pH, redox potential, conductivity. The concentrations of more than 30 ions can now be measured continuously by commercial ion-selective electrodes . The mini-laboratories of the auto-analysers can cover a dozen or more compounds. To this list should be added the automatic flocculation controllers for both water treatment and sludge conditioning.

Communication Artificial Intelligence The application of 'smart transmitters' at the monitoring station is being developed. These are programmed to 'think' and 18

WATER June, 1988

The initial signals from sensors must be converted into forms suitable for transmission to the control room. For use within a treatment plant a recent development is the 'Field Bus' which eliminates the individual wiring of instruments. A single co-axial




or fibre-optic cable meanders round the plant, and each transmitter is tapped into it. The present trend is to install 'smart transmitters' with each sensor, or group of sensors, so that the initial signals are calibrated, possibly fed back to the appropriate controller on-site, then converted to engineering units and transmitted to the control room, where they can be polled by the computer. However, the market could swing to systems of raw data transmission, which are then processed in the central computer. For water and sewerage reticulation systems, the Field Bus is hardly appropriate. Transmission of information from remote sites to central control, or telemetry, is the fastest growing sector of the industrial electronics field . It is far cheaper than sending out operators to read the instruments. Telemetry is not new, what is new is that the drop in cost of computers means that most new systems will involve a central computer to Mike Dureau manipulate the data and implement control. Communication is usually maintained by one or a combination of three systems: • dedicated lines for short distances, usually within the area of a treatment plant • switched networks using Telecom lines, for less frequent access • radio links, using the UHF band, and line-of-sight repeater stations over longer distances. This latter is often the most economical solution. Modern systems operate by the master station 'addressing' each outstation in turn, usually one each second, waiting for the reply before polling the next. The same radio frequency is used for all, but only one station can transmit at a time. For small systems, a PC can be used, but there are definite advantages in installing a multi-tasking, dedicated industrial computer, despite the initial expense of the hardware .

Computer Control Dureau then discussed computer-based systems for the control of treatment plants . These date from the 1970s, one of the first to adopt direct digital control being the sewage treatment plant at Norwich, UK in 1971. Nowadays, a design engineer has the option of an 'integrated' or a 'distributed' control system. In the former, a central com-



puter carries out all the control and computations, using very rapid time-sharing to control many loops virtually simultaneously . The operator's interface is a VDU, usually in colour, and commands are issued through either a keyboard, touch screen , tracker ball or joystick. Equipment nowadays is reliable, but for safety, dual redundant processors may be provided. A more costeffective back-up may be the retention of single loop controllers for critical loops, which take over a crude control in case of breakdown . Distributed control was developed for larger plants , the work load being carried by several smaller computers located in the subplant which th~ control, and carrying only ·he data necessary for that function. They are linked to the central management computer, which displays information and alarms from the satellites, and from which over-riding commands can be issued. The large South Eastern Purification Plant in Melbourne was originally installed with ICS, but has now been successfully converted to DCS . Smaller plants, such as Morgan Water Treatment Plant and Elenora Sewage Treatment plant, are more compact, and ICS is perfectly suitable. The Lower Molonglo WQCC has adopted a different system. The five existing control rooms have been equipped with 'hands-on' PCs under the command of the operators, and a fibre-optics system links. them all together. Future developments in automatic control will incorporate 'expert systems', 'fuzzy logic' , optimisation and economic monitoring, as well as developments in hardware. The capacity of staff to accept and absorb such changes is finite, and operator training must be built in from the start. In Lower Molonglo, the operators' PCs were handed over to the men some weeks before the system was installed, together with a parcel of computer games. The men were encouraged to play the games during breaks , lunchtime, or even after shift. Within a few weeks the operators were familiar with the PCs, had begun to lose interest in the games, and were keen to apply their new-found expertise to the real world.

SUMMARY Application of modern instrumentation and computer technology costs very little compart d to the huge value of the physical assets of the water and wastewater authorities, but it has already demonstrated the potential to optimise the utilisation of those assets, both in terms of maintenance, control and design. Consequently, there is no reason why the major authorities should be the only ones to be involved in this rapidly developing field .

Process Technology Lectures in this field were given by: Frank Bishop (CSF Vic), Jonathon Crockett (GHD Vic), Ian Pittaway (CSF Vic) , Roger Locke (CSFTas), Chris Davis (Aquatech), Keith Cadee (WAWA). Frank Bishop covered the field of water treatment , first with a succinct review of the principles underlying coagulation, filtration and disinfection. He then gave hard-headed advice on the ways to improve the performance of an existing plant from the view-point that improvement in performance may be necessary for increased throughput, improved quality of product, because of decreasing quality of the raw water supply or as result of urbanisation. The starting point is a thorough audit of the existing plant, commencing with ascertaining from the operators how the plant is actually operated, rather than how it should be. Experience has shown that retraining of operators, updating the manuals and repair of existing monitoring equipment can be very cost-effective in itself but minor defects in plant and instruments must be corrected first, otherwise the operators remain demoralised. The next stage is to capitalise on unused capacity of existing units, usually by first making minor changes in pipework, then by application of 'new' technology such as polyelectrolytes, tube settlers, or anthracite in the filters . After these modifications, a bottleneck with

one unit will usually remain but duplication of this unit alone is much cheaper than building a complete treatment train . The application of DAF may solve seasonal algal contamination in raw water quality, and direct filtration may be used more economically during periods of low turbidity . Balancing storages should be optimised to suit customer demand, because a treatment plant should be operated as smoothly as possible. Jonathon Crockett dealt with the most economical way of extending sewage treatment plant capacity and improving performance. Much of his lecture was also applicable to the most economic design for new plants. He stressed we can no longer afford the luxury of sizing a plant for its estimated load 20 years hence. Unlike sewers, treatment plants can be expanded in stages, and the aim should be for a five to ten years lead . (An excellent example of such staging is the Cranbourne plant Vic .). When undertaking uprating, the first task is to control infiltration and inflow by rehabilitation of the sewers, and to reduce organic load if possible by in-house roughing treatment of industrial loads. Further ideas introduced included in-main treatment with oxygen, and the use of the new microscreening technology to remove a significant proportion of the organics as particulate WATER June, 1988





matter which can then be screw-pressed for burial. These screens are usually used for ocean outfalls, but could have value in relieving overloaded secondary treatment systems. Jonathon discussed the resurgence of interest in biological filters, particularly the concept of various combinations with aeration tanks. He suggested that lagoon treatments still have significant scope in Australia and described techniques for reducing the problem of algae in the effluents. His talk covered oxidation ditches, wetlands and infiltration as well as high technology and included, in brief, the subject of nitrogen and phosphorus removal which was covered fully by Chris Davies in discussing both physico-chemical and biological methods . The latter technology is still not thoroughly understood, but considerable progress is being made in research and development all over the world. (The Newsletter on Biological Phosphorus Removal in this issue of the journal summarises the Australian scene). . The disposal of sludge has become one of the most significant costs of sewage treatment, a subject covered thoroughly by Ian Pittaway in describing current practices in sludge thickening and dewatering, digestion, both anaerobic and aerobic, and the newer developments in sludge composting. Sludge utilisation as an alternative to storage is increasing, even in Australia. Control of pathogens can be achieved by stockpiling digested air-dried sludge for at least two years composting to develop higher temperatures in the heap (in USA there a re mechanical systems to turn the heap) or heat treatment in a rotary drier. Roger Locke reviewed the options for sewage treatment available to small communities; from septic tanks (defining the various State standards), through aeration systems such as rotating biological filters, to package aeration plants and composting toilets. The latter, however, do not deal with 'grey water' but at least, the bulk of the organic and pathogen load is reduced to a safe compost, provided the system is properly maintained. An investigation some years ago in Victoria, found that a composting toilet owned by a keen gardener was well maintained. Otherwise, it was doubtful if it would receive the necessary attention.


Frank Bishop

Jonathon Crockett


Ian Pittaway

Although the odour problem, strictly speaking, arises in the sewers, Keith Cadee's lecture on odour control was another example of the application of technology, both within the sewers and in Keith Cadee the treatment plant. Control of septicity by chlorine, oxygen or hydrogen peroxide were discussed, emphasising that most systems are reliable and cheap to install , but high in operating costs but usually with the side benefit that the wastewater is easier to treat. The higher capital cost method of sealing the sewers has been found not as difficult as was imagined, and the techniques used in Perth were outlined . This experience has been extended to recommendations for the design of sewers. The methods adopted in treatment plants both in design and operation were also covered. The policy of the Perth Authority regarding buffer zones is to purchase adequate land, but to aim at leasing for compatible purposes to recover some of the cost, while retaining control. Keith concluded by stating that the pressure on Sewerage Authorities to eliminate odours is bound to intensify, and both design and technology must cope. .,


Water Quality

Alan Wade

Carl Nicholson

Peter Nadebaum

The provision of safe palatable water is the duty of the Authorities, but the definitions of 'safe' and 'palatable' are by no means easy to quantify. It is a truism to say that better water quality costs money, and the lecturers in this area certainly agreed with the philosophy 'The best with the least' . The lecturers covering this field were: Jack Jeffry (North Surrey Water), Alan Wade (NHMRC), Carl Nicholson (Sydney WB), Peter Nadebaum (CSF Vic). Jack Jeffry, the keynote speaker from UK, by training a chemist before he entered the ranks of management , was well qualified to introduce the School to the standards to which the UK industry aims. Although until recently there was no legal requirement, most authorities aimed at either the WHO or USA standards. In 1985 however, the whole of the EEC had to comply with the Drinking Water Directive of 1980. Derogations and 20

WATER Jun e, 1988

delays were permitted to give time to modify plants or systems, but time is now running out. The financial cost to the UK of complying with the nitrate standard is estimated to be of the order of 5 million dollars. The specification of strict standards for each of scores of compounds, despite grave doubts about the real effects health, is very worrying. The possibility of legal action and certainly of attack by environmental groups is mounting. The impact of agriculture on both ground and surface raw water quality is serious, and there seems to be no communication between the Government departments advocating increased use of fertilisers and chemicals, and the departments setting the standards for water quality. In the highly urbanised society of UK, the greatest threat to raw water arises from storage, transport and disposal of hazardous chemicals. The River Thames, which provides the water supply to Jack Jeffry's company, has in recent years been contaminated by accidental discharges of plating wastes, and timber preservatives. Other rivers have similarly been grossly polluted. A report (WWA 1984) recommended a number of actions to be taken to cope with such emergencies, and these were summarised in an appendix to the lecture. The use of bank-side storage reservoirs which can be isolated from the river until the pollution peak has passed, is a typical example. With regard to THMs, the policy in UK is that effective disinfection by chlorine is vital, and the data on carcingenesis does not justify its replacement. (In Australia, superchlorination of unclarified water may present a threat.) In conclusion, Jack restated the theme of his key-note speech, that the water industry needs to be much more positive in its rela-




tionships to its customers and the media, to overcome ignorance and consequent hysteria. Alan Wade of the NHMRC provided a refreshing contrast to the complicated lists of MACs which control the situation in Europe and USA. His subtitle was 'Minimising the Costs'. The Australian Guidelines for Drinking Water Quality are based on a pragmatic approach to risk, and assessment of impact. They are 'criteria', not 'standards'. He discussed the value of purifying all water supplies to potable standards, when only a small proportion is used in the kitchen. This theme was taken up in the subsequent workshops with the comment that the European practice of purchasing drinking water in bottles may well be seen in Australia if the financial pressure on water treatment intensifies. However, this is not yet the case (although a fair proportion of 'water' is drunk from cans or bottles, albeit highly contaminated with



deleterious chemicals which would not be tolerated if they came from the tap.) Authorities must control, not only 'toxic' pollutants, but also taste and odour, to satisfy their customers. Carl Nicholson of the Richmond Water treatment plant reviewed the situation there, where at various times of the year, the Nepean River becomes poluted by algae, due to both point and diffuse sources of nutrients. This subject has been covered in previous papers in this Journal, but Carl's review was timely and exhaustive. Peter Nadebaum spoke on the other aspect of water quality . .. 'Dirty Water Problems', which can cause significant concern to both consumers and Authorities. His pa er was an also exhaustive cover of the causes, the chemistry and the range of solutions available to combat this problem.

Future Needs and Directions This aspect of water supply, wastewater, treatment and disposal with related topics such as health and environment, training and skills, was covered by four lecturers: Brian Botto (CSIRO); Paul Greenfield (Qld University); Lance Bowen (Sydney W.B.); Wayne Drew (Vic. R.W .C.). Brian Bolto's lecture focussed on the philosophy and politics of the research, into both treatment and equipment, which will be needed to implement the huge expenditures forecast for the future . The priorities listed in 'Water 2000' were quoted, along with the further targets identified by the A WRC Water Technology Committee. The present balance of water research does not adequately cover these needs. The Water Technology Committee, the Urban Water Research Association and the A WW A Specialist Panel must coordinate their activities. The A WRAC Partnership Research Program should assist with the development phase, but more radical and imaginative solutions will require a commitment to long-term research. Paul Greenfield gave his views on the future of research into wastewater treatment. He saw little prospect of completely new processes, but plenty of scope for improving both traditional processes and some of the more recently developed. The key is likely to be better control by microprocessors and 'expert systems'. There is also scope for optimising the use of existing plant by equalising the diurnal load. He suggested 'off-peak' tariffs to encourage industry to discharge during the low periods. Accurate data on the real costs of reducing specific components would help to develop more appropriate charging formulae. Removal of nitrogen and phosphorus is not yet reliable, and there is a definite need for small robust systems for this purpose. Lance Bowen spoke on the public health aspects of water quality, comparing our situation with that of Europe and USA . The USA EPA has been instructed by Congress to define maximum contaminant levels for 83 compounds, and to add a further 25 compounds to the list every three years. These levels will be defined by law. Within Australia, the recent draft guidelines are a compromise between perceived risk and cost. However, if the political environment results in demands for strict standards, as in USA, the cost of water treatment and the necessary analyses will increase enormously. It is the role of the water scientist to overview the risks responsibly, and prepare the industry for greater scrutiny by pressure groups and informed consumers. Education and training is a vital issue in Australia, and this area was addressed by Wayne Drew . The water industry must take positive action to achieve the desired educational profile of its workforce. The managerial shifts outlined in previous lectures require new skills at all levels . Wayne Drew chaired a survey on behalf of A WRC in 1985, but this report has yet to be published. None the less, initiatives are already being taken , for example, the Operator Training Centres of NSW and Victoria, and the courses organised by A WWA at the Administrative Staff College. Wayne summarised the needs as • Strategic planning for managers • Industrial relations negotiations for managers

• Multi-skilling of major sectors of the workforce • Multi-disciplinary education for managers and professionals. The A WW A Summer School itself was a product of this philosophy. As well as the lectures on management and technology reviewed above, two further lectures provided a useful introduction to most of the engineers present. Professor Ivan Woods of Melbourne University Graduate School of Management telescoped a two year course into one hour and succeeded in explaining the functions of Balance Sheets and the ratios defining profitability, liquidity and gearing, pointing out the differences between a government-backed authority, and a commercial venture. Since we seem to be heading along in the latter direction, this was a very revealing lecture. Ralph Medina, of the MMBW, spoke on•Industrial Relations, giving hard-headed advice on negotiations, and extending it to a view of the future. He foresees that multi-skilling of the work force will be accepted by the Unions, and that constraints on finance will gradually lead to a demise of the privileged position which the trades have built for themselves in the public service industries, mainly due to past defaults of management. He made a strong plea for the involvement of the first-line superv isor in all negotiations. In summarising the School, Jack Jeffry concluded by suggesting a change of the title from 'Optimising Water Assets' to 'Change, and its Acceptance'. Acceptance is required, not just from the trade unionist , but also from professionals and, even more crucially, from management. An excellent School, and t'o reiterate, the lectures, in full , are well worth the $50 for purchase and perusal by those unable to attend.

The rest of the organising team, Jeff Lawrence and Bill McEwan - relaxing at last! WATER June, /988



SUMMARY This paper looks at the way in which water supply organisations have developed in England and Wales, and the growth in understanding of the relationship between water quality and health. In 1973, the Water Act created the 10 Regional Water Authorities, which coordinated with the 28 Statutory Water Companies . The present Government's proposals to privatise the industry, and remove existing financial controls are outlined . Reactions to these proposals are discussed. Some of the problems ahead are also considered, including metering, financing and organisation of research, customer reactions and training of operators and staff.

INTRODUCTION From 79AD to 1973AD The UK Water Industry has been developing for at least 2000 years. First, we had the highly sophisticated systems introduced by the Romans, with stone aqueducts and lead pipes. In the Middle Ages, the monasteries built water works using conduits of wood, earthenware and lead, and these systems were taken over by the townspeople when the monasteries were dissolved. Water was gravitated from springs to public fountains where water carriers filled their vessels and sold water in the streets. In 1619, Sir Hugh Myddleton founded the first water company, the New River Company, which drove a canal 40 miles from Hertfordshire to a reservoir in the City of London. (New River Head is now the site of the main laboratories of Thames Water Authority). This period was followed by the application of steam power to pump water to the urbanised populations of the nineteenth century. It was then that an increasing understanding of the relationship between water and public health began to develop. Chadwick's report on the sanitary conditions of the labouring population of Great Britain was presented to the House of Lords in 1842, and eventually lead to the 1848 Public Health Act which was the first acceptance by a British Government of a responsibility for safeguarding public health. Then in the 1850s,

Jack Jeffry is a Fellow of the Institute of Water Engineering and Science, and M.Sc. in Chemistry and Bacteriology. He is Director and General Manager of the North Surrey Water Company and Director of the Sutton Water Company, and is also Deputy Director of the Water Research Council. 24

WATER June, 1988

Dr John Snow did his famous work on cholera. Many other developments followed, leading after the Croydon typhoid outbreak of 1937 to the adoption by all major water undertakings of routine disinfection of water supplies . At the end of the second world war, we had the Water Act 1945, which set out many of the principles which still apply in the water supply industry, and this was followed by several pieces of legislation aimed at control of pollution, and of water resources. One of these Acts , the Water Resources Act 1963, set up a system of river authorities and was the first real attempt by Parliament to establish a comprehensive system of river basin management. By 1973, the water cycle in England and Wales was administered through 29 river authorities set up under the 1963 Water Resources Act, with responsibility for control of water resources, navigation, river and grbund water quality, etc., plus about 200 water supply undertakings, and hundreds of local authorities looking after sewage disposal. Most of the water supply undertakings were based on local authorities, but 28 were statutory companies, together responsible for about a quarter of the water supply to England and Wales.



In 1974 all of these different organisations, except the 28 statutory water companies, were brought together, under the Water Act 1973, into 10 Regional Water Authorities - and the phrase 'integrated river basin management' was heard for the first time . The Act also established a National Water Council with statutory responsibilities in such fields as national negotiations on pay and conditions, training and pensions, and with a role in coordinating the regional water authorities . (This council was replaced in 1983 by a non-statutory body, the Water Authorities Association, based on the Water Companies Association which had represented the Statutory Companies since 1885) . Under the Act, each Regional Water Authority was given responsibility for the whole water cycle including river and ground water management, sewage treatment and disposal, and water supply - but the Act recognised that Regional Water Authorities would discharge this latter responsibility through the existing 28 statutory water companies, within their statutory areas . In other words, there was dual responsibility . Figure 1 shows the areas of the 10 RWAs, the largest being Thames Water. The RW As operate within strict financial controls set each year by Government. These controls include limits on the money which can be borrowed from the Government (an external financing limit, or EFL). in at least one case that external financing limit is now a negative figure, in other words, that authority has become a net contributor to the Treasury . Another form of financial control imposed by the Government on the authorities is a required rate of return on the current cost valuation of their

assets. In recent years, both of these factors have tended to increase regional water authority charges. There are 28 statutory water companies - mostly in the SE, but also in Bristol, in the Midlands and in the NE. The statutory water companies operate quite differently from the RWAs. Like other companies, they are run by Boards of Directors elected by shareholders ; they raise their capital through the financial markets, and are subject to corporation tax. However, they are subject to Government controls on dividends, on transfers to reserves, and on the amount carried forward on revenue account. This method of control of private monopolies results in lower charges, rather than in higher dividends (as in Mutual Societies). Because, for many years, the maximum allowable dividend has been paid, water company stock always finds buyers among institutions and others looking for a fixed interest balance in their portfolios and has changed hands at prices which reflected the yield, as in gilt-edged. (What is interesting is that in the last year, voting stock in statutory water companies has begun to attract the interest of speculators who ¡ see possible opportunities, if the government goes through with its privatisation proposals. This interest has pushed up the price of such stock by a factor of 4 or 5 - and buyers are appearing, for example, from France and Australia.)

NEW PROPOSALS In April 1985 a discussion paper on privatisation of the water industry was published by the Government, and in February 1986 this was followed by a White Paper, which would normally have been expected to lead quite quickly to the production of a parliamentary bill. The White Paper proposed to transfer to the private sector the existing 10 regional water authorities as 10 Water Services Public Limited Companies (WSPLC), with essentially their present functions. The White paper also proposed to give statutory water companies the opportunity to convert to PLC status, by removal of their statutory financial controls. However, the Government recognised the need to control private monopolies and proposed that the whole water industry, after privatisation, would be subject to price control, rather than by using the method of control of profits. Although these proposals were generally welcomed by regional water authorities, this was not the reaction outside the authorities. The fact that the proposals meant giving legal control and regulatory functions to PLCs created opposition from almost everyone - from the Trade Unions and the Labour Party, through the Confederation of British Industry, to the National Farmers Union and the Country Land Owners Association. It was quite an achievement to produce a consensus within such a diverse group! The Water Companies Association supported the principle of privatisation, as it was bound to do, although expressing doubts about the suitability of the PLC form of privatisation in the water industry, and joining in the opposition to the idea of transfer of regulatory powers from the Regional Water Authorities to Water Services PLCs. In addition, the Association was concerned that the proposal to remove statutory financial controls from companies would completely change their philosophy and expose them to takeover for reasons other than the public interest.

As a result, in July 1987 the Government published proposals for 'A public regulatory body in a priva"lised water industry'. What was proposed, essentially, was to transfer the regulatory functions of the regional water authorities to a public body, the National Rivers Authority, leaving the other functions of the authorities to be privatised, with responsibility only for the operational functions of water supply and sewage disposal. Some confusion exists at the moment, because, not long before announcing that it intended to create the National Rivers Authority, the Government had set up a new control body, Her Majesty's Inspector of Pollution , which, among others, embraces the field of water pollution. Its relationship to the NRA is still uncertain. Figure 2 is a diagram of the proposed reorganisation. The boundaries of responsibility will have to be accurately defined. This new proposal by the Government has now received general support except within some of the RWAs. They have put a lot of emphasis on their perception of the virtues of integrated river basin management and this becomes difficult to defend once a RAW in the public sector becomes a PLC. In other words, it really is a matter of which is more important - the desire for the flexibility of operation as a PLC, or the desire to retain control over the whole water cycle. I believe that if we are to have a PLC water industry , it is essential that we leave the regulatory and environmental functions out of the privatisation, and I think that given the intention of the Government to privatise as PLCs, a strong National Rivers Authority on the lines proposed by the Government is essential. The Government plans that the National Rivers Authority will operate through regional offices, nationally co-ordinated. In a sense, this will be a return to the river basin management principles of the 1963 Water Resources Act- with the national aspect of the National Rivers Authority effectively answering one of the main criticisms of the 1963 Act, which was that there was no overall co-ordination of the individual river authorities. The removal of the financial controls applied by the Government to the regional water authorities - the controls on borrowing which are embodied in the external financing limits has been seen by the authorities as one of the big attractions of privatisation. But, will the controls which the government will have to apply to a profit-oriented monopoly - essential to public health really be that much easier? I think not. Certainly, there will be no public or political acceptance of PLC privatisation of the water industry unless it is seen to be accompanied by strict financial as t well as environmental control. The Government is considering a form of financial control which will link increases in prices of services to the monthly retail price index (reduced by a percentage efficiency stimulus, the RPX formula, as it has become known). The Director General Water will have the job of setting controls on price increases which will, in theory , promote greater efficiency, while taking account of the rate of inflation, and of the capital expenditure requirements of the company to enable the company to meet defined levels of service. The theory is that pressure from shareholders will produce higher levels of efficiency within the company, allowing higher dividends to be paid, while guaranteeing levels of service at ever lower real prices. (It sounds to me as though someone has discovered 'the secret of perpetual motion'). As we all know, the water industry is highly capital intensive. We spend a lot of money on treatment works, on sewers and on

WATER June, 1988


water mains - we invest long-term, and changes in levels of service are generally gradual. The Director General Water and his staff will not only have to agree to the capital projects and the capital expenditure needed ro meet the required levels of service, but will also have to ensure that that capital is actually spent on those projects, because the easy way, in the short to medium term, for a price-controlled PLC to make higher profits is obviously to cut back on capital expenditure. In that connection, I quote without comment from the first two annual reports of the recently privatised British Gas PLC. These show that in year two, turnover was lower than in year 1, profits were higher, and capital expenditure was lower by 360Jo. It seems to me that the present proposals will required two large, powerful regulatory bodies if they are to work at all. Both the National Rivers Authority and the Director General Water will need substantial resources if they are to ensure that pressure for profits does not lead to inadequate provision of new and replacement assets, and therefore to gradually falling levels of service. This seems a pity when there has been in operation for well over 100 years a privatised model which has worked well, without any serious criticism from anyone. The combination of clear objectives, commercial freedom and professional skill, coupled with control of profits, which is seen in the statutory water companies, works without the need for the complex and expensive superstructure which the PLC model requires in the water industry. And if this superstructure fails, and levels of service do fall over the next 10 or 15 years, because of inadequate capital spending, the final irony then could be calls for nationalisation of the water industry. The only criticism of the statutory water company model made by government is that it contains too little incentive to efficiency, but that could simply be provided through the existing Monopolies and Mergers Commission - and anyway, industry has made it clear, through the Confederation of British Industry, that security of supply comes before efficiency. There is a third way in which the private sector could be brought into the Water Industry, that is through the method of franchising - which is a kind of extension of contracting out. It is used in France, where companies such as Compagnie Generale des Eaux and Societe Lyonnaise compete to run the operation of water services on behalf of public authorities on contracts of from 12 to 25 years, depending on whether or not they provide the capital. The public authority specifies the service required, which removes the risk of under-investment if the whole responsibility were handed to a PLC. It also removes the need for an overall economic regulatory body and introduces some genuine competition into a monopoly industry. This competition could be extended in UK if the statutory companies were retained, and the regional water authorities stayed as they are now , except for being required to put out their operational functions to contract. Such an arrangement would allow comparative competition between the two systems. It could be argued that this would offer the best solution both in terms of effectiveness and efficiency. But it does suffer from one major disadvantage that seems to rule it out - there would be no sale of assets, and therefore, no money for the Treasury!

OTHER ISSUES In the UK water industry, apart from the privatisation debate, there are many other issues to be faced. Among these are: • methods of charging for domestic water • future of research • customer attitudes and expectations • changing requirements of skills, training

proved, leading to possible development of variable tariffs to reduce peak loading, but the overall prospa:t is not appealing, in view of the public outcry over other large scale capital expenditures .

Research Applied research for the UK water industry is mainly carried out by Water Research centre, although more fundamental research is carried out in many other organisations, such as the Freshwater Biological Association, and in the universities. For example, scientists at the Freshwater Biological Association laboratory, at Windermere in the English Lake District, have done a great deal of work on algology which has been successfully applied by the water industry in the management of large storage reservoirs subject to stratification. The Water Research Centre is the direct research arm of the water industry . It has three laboratories - Engineering at Swindon, Process Engineering at Stevenage, and Environment at Medmenham. It is a company limited by guarantee - that is, it is non-profit making, and is owned by its members. All water undertakings in the UK are members along with consultants and equipment supplies etc. We all pay a subscription which, for water utilities is linked to our operating costs, and there is broad consultation each year about the content of the research program. In addition, the Department of the Environment has, for many years, placed contracts with WRC for research into matters such as water quality and health . Among the many interesting projects in the WRC research program are sewer and water main renovation, and digitised records (at Swindon), treatment of waterworks and sewage sludges (at Stevenage), and work on bacterial mutagenicity, as well as on sea outfall dispersion (at Medmenham). A few years ago, WRC set up a wholly owned subsidiary company, WRC Contracts Limited, initially to help implement WRC research in individual undertakings, on a contract basis. For example, my own Company went to WRCC for advice on leakage control, the contract providing for the application of WRC research to the specific situation in North Surrey Water Company. WRCC has proved highly successful, and is now active in many parts of the world, including the Far East and the United States, sometimes acting alone, but often in partnership with local consultants. As a result of the increasingly ,commercial attitude of the regional water authorities in the last three or four years, and with the prospect of privatisation ahead, WRC has decided that in future it is unlikely to be able to rely on subscription funding to the same extent as in the past. It is therefore deliberately reducing its subscription income this year to 850Jo of last year, and is relying on persuading members to enter into group or individual research contracts on particular projects for the remaining l 50Jo. Further reductions in subscription funding are planned, perhaps to as low ~s 20 or 250Jo of last year, but perhaps more ~ikely to something hke 500Jo. But what will be the position if PLC privatisation comes? It is thought likely that the National Rivers Authority will accept responsibility for the part of the research program concerned with environmental regulations and standards, but will the water service PLCs be prepared to fund any joint research for the water industry through subscriptions? We shall have to wait and see, but a report in NEW SCIENTIST is not encouraging . It quotes a survey by the National Science Foundation in the United States, which found an overall slowdown in R&D. It quotes as the reason 'low growth in sales and profits, and to mergers, etc. Of 18 firms involved in takeover battles, more than half had cut back on R&D spending.

Customer attitudes Metering At present in UK, although most industrial and commercial supplies are metered, there are very few domestic meters, and charges are based usually on rateable values. The government intends to abolish the rating system by 1990, substituting a 'poll tax', to counteract the perceived unfairness of the rating system. After 2000, water undertakings will have to charge either by a flat rate licence per property or by metering. If metering has to be adopted, the capital cost of the installation of the meters would be of the order of one billion pounds! Remote monitoring in an electronic system combined with the other utilities h<:1s already been 26

WATER Jun e, 1988

Water quality is rapidly becoming a matter of general public interest. The water industry is having to learn to cope with pressures which have built up quite recently from three quite different sources - all three suggesting that all is not well with drinking water quality. Advertising from manufactures of point-of-use filters and from the sellers of bottled water suggests this slightly obliquely, while environmental pressure groups openly challenge the safety of public water supplies . We put immense effort into producing a good product, including using modern and expensive laboratory equipment.

Customers who might have happily accepted professional reassurance 25 years ago now expect much more detailed responses to their questions, and I think that the water industry is going to have to learn to be much more open than has sometimes been the case in the past. We do a first class job - we produce a good product at about 0.1 OJo of the cost of bottled water - and the quality of the bottled water is often not as good as the tap water - while point of use filters can easily be a culture medium for bacterial growth. We're going to have to get out, and be prepared to support the argument publicly, and positively, rather than leaving it to the critics to make the running.

that this is the direction in which we have to move. I also believe that women will play a much greater part in the water industry in future . In my company, women already occupy several key positions, including responsibility for water quality and treatment, personnel, and wages and salaries. Yet in one regional water authority, out of 857 women employees, only 30'/o are in higher grades, compared with an overall average figure of 260'/o. There is a large untapped reservoir of ability there, which represents a valuable underused asset - and that can't be sensible management.

CONCLUSION Skill requirements These are changing so quickly. Twenty years or so ago, we still had margins in most of our activities. We had spare clerical and technical staff; our treatment plant was operated at conservative rates with scope for up-rating, and the industry was generally low technology. Now that has all changed quite dramatically. Numbers employed in the UK water industry have fallen (by about 400'/o in my own company), plant has been up-rated, and the level of technology has risen everywhere, in laboratories, in drawing offices, in administration, and in control systems. All this has implications for skill requirements throughout the industry. For example, our shift attendants running pumping and treatment systems have traditionally been unqualified people who have learned their job by 'sitting next to Nellie'. In future there will be fewer of them but they will need a much higher basic education and much better training if they are to cope. Another example - traditionally, we have recruited our supervisors from intelligent operatives. Nowadays, it is ever more likely that those intelligent young people whom we might have recruited as operatives two generations ago will now go on to polytechnic or university. The need for a comprehensive training strategy for the UK water supply industry was recognised in 1964, when the industry set up the Water Supply Industry Training Board. This organisation obtained its funding through a training levy imposed on payroll throughout the industry . It established its own residential training centres for management training, for technical and administrative skills and for operative training, and the industry competed for 'free' courses at these centres, as well as claiming grants for the cost of sending employees to external education and training . After the Water Act 1973, which set up the RWAs and the National Water Council, the Water Supply Industry Training Board became a division of the National Water Council, but its operation continued much as before, including the levy-grant system, until the National Water Council was abolished in 1983. Training then became the responsibility of a new company, Water Industry Training Association. Like WRC, it is a company limited by guarantee, and its staff were initially the same as those employed by the National Water Council Training Division. The new Company retained most of the existing training centres, but abolished the levy grant system, so that the industry paid for the courses it actually wanted. It has recently changed its name to Water Training, so in just over 20 years, the same basic organisation has had four different names. But the emphasis has changed a lot in that time, even if the basics are the same. The organisation is now much more responsive to customer needs, so there are many more courses for specialist groups, and much more in-house training for individual undertakings. For instance , my Company has used Water Training very successfully in providing management training for a group of about 15 third tier managers. We are going to have to do far more in future to develop and train our technicians, our supervisors and our managers in the new skills they will need. I'm not sure that we've fully recognised the manpower planning problems building up. By that, I mean finding the right people, training them properly , and finding the right system of pay and differentials to allow us properly to reward them when we've got them. In that context, you may be interested in the fact that my Company has recently transferred most of our manual employees to non-manual terms and conditions, and we hope to complete the transfer of the rest later this year. As far as I know, no one else has done this in the UK water industry, but I believe that having everyone on the same system will remove one of the fundamental causes of conflict in British industry, as well as giving us greater flexibility, and for those reasons, I believe strongly

When all the political debate is over, the public will still depend for its water service on the dedication and skill of all those who work in the industry, from the engineers and.scientists, through to the craftsmen maintaining the pumps, and the men in the muddy trench repairing a burst main. Maybe the politicians will remember that.

REFERENCES CHADWICK, EDWIN (1965). Report on the Sanitary Condition of the Labouring Population of Great Britain. Edinburgh University Press (Edinburgh). DEPARTMENT OF THE ENVIRONMENT, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD, THE WELSH OFFICE (1987). The National Rivers Authority - The Government' s Proposals for a Public Regulatory Body in a Privatised Water Industry. DoE, London. GOUGH, J. W. (1964). 'Sir Hugh Myddleton'. Clarendon Press, Oxford. HMSO (1986). Privatisation of the Water Authorities in England and Wales White Paper. HMSO, London. HMSO (1987) . Public Utility Transfers and Water Charges Bill. HMSO , London. HANSARD (1987). Orders of the Day - Public Utility Transfers and Water Charges Bill - Order for the Second Reading read. Hansard, London. WATTS, R. (1987) . Prospects for Water Supply PLCs, in The Privatisation of the Water Industry - The Economist, London .


WATER June, 1988


The Use of Water Industry Assets Management Issues P. W. Hughes SUMMARY This paper presents a general overview of some of the main issues facing the managers in the government sector of the Water Industry . The changing and uncertain environment within which they must work and the training of the future leaders are seen as key elements in strategic planning.

INTRODUCTION The successful managers of the large urban water authorities have to be acutely aware of the environment within which they operate. This environment is constantly changing and in recent times the rate of change has been dramatic. If these managers are to manage successfully the resources under their control - human, physical and financial - they must be outward looking, aware of the changing environment and then, have a vision of the future and the courage and skill to pursue that vision. These managers control monopolistic organisations and the pressures on them are quite different from those engaged in normal commercial operations and subject to the cut and thrust of the market place. They have, until fairly recently worked, in a sellers market where there was a shortage of the services which they provided. They were not generally sales or market oriented but rather product oriented - very proud of their physical achievements and the quality of the system which they were building. There was talk of 'monumental life' rather than 'economic life'. The Government Sector of the Australian Water Industry appears to have had much in common with New Zealand Government enterprises of which Ross Gittins, writing in the Sydney Morning Herald on 4th November, 1987 said: '(they) were still being run as Government Departments, without proper profit and loss accounts, with Ministers making the key decisions and with social policy objectives mixed up with commercial ones. Not surprisingly, none of the enterprises was 30

WATER June, /988

making a profit and several were running at a loss.'

During this period , governments tried to keep the organisations in touch with its market by, in the case of the Sydney Water Board and others, giving them a strong local government orientation at Board level. In the 1960s and '70s, the emphasis was on technical achievement and innovation and the political message was 'get the job done' sometimes with the implied message 'at any cost'.

THE CUTBACK ECONOMY In a recent publication the A WRC(l) had this to say: 'In the past decade or so the Australian water industry has moved from an era of resource development into what is regarded as a mature phase where the emphasis is on efficient resource management. Moreover, as the Australian economy is being increasingly exposed to the often harsh realities of internatio na l competitiveness, water aut horities are having to adapt to a new order of eco nomic str ingency. Large government deficits and the upward pressure on interest rates have required governments to cut-back on public sector borrowing. These macro-economic problems have substantia l implications for the water industry a nd its consumers. It is estimated that over 40% of the current income of the major water authorities is now required for debt servicing. Compounding this is an estimated annua l short-fall in asset replacement in excess of $400 million. Governments are responding to such pressures by demanding greater accountability and efficiency in public trading enterprises. 'For the water industry in particular, this means tough and sometimes unpopular decisions will need to be made on issues such as workforce planning, pricing policies and acceptable levels of risk . It will be crucial that both government and the community fully understand the background of these decisions . The industry must also improve its capacity to forecast and plan to at least a 10 to 15 year horizon . Improving vision in this way will provide the ind ustry with greater manoeuvrability and even the potential to shape its future.'

THE INDUSTRY RESTRUCTURES As the water industry enters a more mature phase with the basic infrastructure generally in place and in the face of a severely deteriorating economic environ-

Peter Hughes is Executive Director of the Australian Water and Wastewater Association. Until his retirement in 1985, Peter was acting Deputy General Manager of the Sydney Water Board. ment, there are signs that organisations like the Sydney Water Board are moving to a stronger market approach i.e., one where the organisation is more attuned to the customers' /consumers' wants and the integration of the organisations activities to satisfy those wants. They can hardly be said to be in a buyers' market, but they have lost the 'political clout' they once had when large numbers of the public were clamouring for basic services. In changing its structure from centralised to decentralised, the Sydney Water Board is trying to increase the surface area of the organisation exposed to the customers. This is a desirable - some would say an essential move, but it does have a downside risk. There is a danger that managers' attention will be diverted from the long term needs of the system to the short-term wants of the customers. It was not by chance that, when it started to reorganise, the Board introduced its Asset Management Program.

THE FINANCIAL PROBLEM A fixation with the short term can be particularly damaging to the water industry where assets are in the most part buried and have long economic life spans and accordingly can be out of sight and out of mind. It is quite obvious that neglect could go undetected for decades and then, when it becomes obvious to all, the industry could face a financial disaster hard to manage.

Replacement Costs To quote A WRC(l) again: 'While 60 to 70% of the urban hydraulic infrastructure is less than 25 years old, 25 to 30% was built before 1930. Due to decay or inadequate design specifications for current uses, most of these older structures will need rehabilitation or renewal over the next 30 years . The current estimated total cost is $12 000M, equ ivalent to a total average annual expenditure of $400M for that 30

year period. The available evidence suggests that the industry is, in fact, providing less than $100M annually.' In general the Australian situation seems to be that there is no short term financial or physical crisis caused by dereliction of the system. There is, however, a shortage of data and of the information systems needed to handle that data to monitor the system and give timely warning of the maintenance needs of the system. If there is an infrastructure crisis at this stage it is lack of information. However, the industry is not recouping the true cost of the services provided and this has implications for future generations. The water authorities are stewards charged with the care of capital resources which it has taken 100 years or so to accumulate. A recent A WRC report estimated the cost of replacing these assets at between 40 and 50 billion dollars.

Rate of Return The A WRC report went on to say that it: 'estimates that the water industry is currently earning a real rate of return on assets of + 0.5% and that its target RRR should be about 2% in order to maintain existing production capacity and meet financial costs . This target return compares with the 5% target adopted for the water industry in the UK and the 4% target adopted in some States for all statutory authorities. In order to determine the increase in performance required to meet the target RRR of 2%, the report estimates that the industry would need to have increased productivity (or income) by 22% in 1985/ 86. The variations in the required productivity gains between authorities were extremely large (0-200%) reflecting the diverse nature of the industry and the huge burden that parts of the industry place on the States income base.'

Need for Increased Productivity Inflation is a National problem and if it is to be beaten and the economy turned around, every sector of the economy must play its part. This includes the water industry. Responsible management seeking to play its part in the fight against inflation must keep increases in government charges below the inflation rate, not just equal to it. Faced with an equation which says: income should be reduced in real terms, the rate of return on investments is too low, and increasing the debt burden is out of the question, then the managers of the large water authorities must attack costs and increase productivity. In this process cross subsidies will be highlighted and hopefully user-pay principles will be applied to social policy objectives as well as in other areas. It is often said that politicians work in a short time frame and emphasise the quick and sometimes dirty fix rather than reward the long and hard slog. It is however, possible to get long term strategies into place, but it needs patience and an understanding of the political imperitives of the day and very good communication between the proponents of the

strategy and the decision makers. This is a skill not to be underestimated and has not always been in the armoury of the engineer manager.

THE DESIRABLE POLITICAL SCENARIO The political resolve to tack le some of the hard issues seems to be emerging through A WRC which sees the following desirable scenario(!): 'The user communities and governments would clearly prefer that: • charges should not rise substantially in real terms (except where there is clear and inequitable undercharging of particular groups) • charges should be such as to recover the true cost of services with an adequate agreed rate of return on the written down replacement value of assets. Users and governments thus seek performance from the water authorities and the systems they operate, that meet their needs both as customers and shareholders. These two preferences or objectives are in conflict in the short term . It will be possible to move towards the achievement of both only if the water authorities are alert to the opportunities to address the issues. In particular, opportunities are available to minimise rises in the real cost of services while at the same time moving towards more adequate returns on assets and provisions for depreciation. These opportunities lie particularly in • the use of modern technology in operations • efficient water use • improved financial management • better risk management.'

THE MANAGEMENT OF RISK The economists who deal with the management of scarce resources are saying to us 'resources are scarce and you cannot do all you want to do and you may not be able to do all the things that you think you need to do'. We are all conscious of the need for maximum efficiency and effectiveness, but increasingly we are going to have to manage with less - much less. A major consideration will be to minimise inputs. The manager will thus have to balance the 'three Es', Economy, Efficiency and Effectiveness(3). The Sydney Water Board recently circulated a paper entitled 'Future Directions for the Water Board'(2) which included the following: 'We are in an era where risk will have to be managed not totally avoided. In the past, urban water authorities have tended to be risk averse. They can no longer afford to be.' The easiest, although not always the wisest way, to save money is not to do anything, particularly on the research and maintenance side. This, however, can have )ts problems. The history of engineering is full of great and tragic failures. The Granville Bridge of recent memory being only one such case. A calculated risk is still a risk and a very watchful and experienced eye must be kept by the managers on safety and the consequences of failure. In this environment the technical advice must be of the highest

quality and given ~ith an understanding of the broader issues facing general management.

INTERNATIONAL COMPETITIVENESS The Commonwealth's view of Industry Policy Objectives and Strategy in the current economic climate is given in a recent information paper(4) from which the following quote is taken: 'The decline in world demand for Australia's traditional agricultural and mineral export commodities now seems likely to be medium to long term in duration. Whilst Australia will continue to be heavily reliant on such exports for the forseeable future, there is a clear need for stronger performance in our manufacturing and traded services industries, if the balance of payments is not to be a continuing constraint on economic growth, job creation and rising living standards. 'Australia can no longer afford the primarily domestic focus of industry and technology policies of the past. World economic and technological developments require that Australian industry becomes more effectively integrated into the international environment. It is world markets which offer the greatest opportunities for Australian growth and economic renewal. A continuation of the traditional inward orientation of Australian policy would risk stagnation and further reductions in living standards. A central thrust of Government policy is therefore to improve Australia's economic and technological linkages with the world economy. 'Efforts are being made to ensure that public utilities and ,statutory bodies operate to best meet the needs of the industry. In systematically harnessing all these areas of Government activity, the Government's objective is to foster a coherent pattern of inc!entives and appropriate attitudes to enable a substantial improvement in Australia's industrial competitiveness in the years ahead.' It is very important that managers of public agencies bear the above policy in view particularly when considering procurement policy, standards etc.

TRAINING MANAGERS The management of the water industry is a complex business requiring the input of a variety of skills drawn from various disciplines. No one person can expect to have all the skills and knowledge to properly manage the large water authorities. It is therefore vital that a lot of thought and effort should go into building a management team which is capable of doing the job. An issue of very great importance to the water industry is the selection and training of those who will manage the industry in the future. There is a desperate need for well rounded managers. Ideally, they should be technically literate, familiar with the economic and political issues of the day, have a good grasp of financial matters and understand how people and organisations work. They must have good communication skills and have a vision of the future. They will need dedication and determination if they are to realise their vision. It takes a lot of continuing education throughout the managers' career to WATER June, 1988


produce such a person and much of it must come from self teaching . It is not enough to want to be a manager, one has to learn to be one and study it as with any other discipline. So how is the water industry going about training these well rounded managers? Not very well! Most organisations tend to promote managers to a job and then expect them to learn how to do it by doing. This may be alright except that the tiro can make mistakes and this can be costly. To guard against this, some organisations filter decisions through a hierarchy - defence in depth. The final decisions tend to be safe but the process is rather slow and conservative, and may tend to lose touch with the consumers' needs. In our endeavours to break away from the large bureaucratic situations, the levels of management are being reduced and guthority is being delegated deeper into organisations. This makes it more necessary to train the managers before they move into a new role rather than afterwards. Perhaps we need to review the whole system of management training. We may need to review the entire process right back to and including the tertiary level. I believe Australia has demonstrated that it can produce good engineers and scientists but on the other hand we have a poor record of managing the riches of

material and human resources with which we are endowed. I believe that we are very short of managers who can handle today's technology and that the effects of this shortage are being increasingly felt. To quote again from the Commonwealth Information Paper(4): 'Traditional competitive strategies for manufacturing have placed great store on cost reduction and achieving maximum technical efficiency. Contemporary thinking overseas is giving at least equal emphasis to human capital formation , workforce attitudes and investments in "soft technologies", particularly improved management techniques. The Government is therefore encouraging Australian industry to act on these changing perceptions of competitive strategy including the need for community attitudes and institutions to change towards a more " productive culture" in Australia.'

There is possibly no issue more important than the strategy to be followed to produce the technically literate managers needed to steer Australia into the future. There is a lot of work to be done and perhaps the water industry can show the way.

order of the day , Managers will need reliable data on the performance of the assets under their control if they are to avoid stumbling into a financial crisis. They will need to be able to market their cause if they are to receive a fair share of the financial cake. They will need to cooperate with each other within sectors and across sectors of the water industry to a far greater degree then they do now. In the long run, whether they are successful or not will depend on the skills and training they have accumulated and their capacity to make crucial decisions in difficult times. Their selection and training is vital to the future success of the industry.




CONCLUSION Managers of the water industry will, in the future, have to work in an uncertain, turbulent environment where resources are short. Cutbacks are likely to be the


AUSTRALIAN WATER RESOURCES COUNC IL. Water Management Series No. 9 New Directions for Water Resource Management: Policy Issues. Australian Government Publicity Services Canberra 1987 . SY DNEY WATER BOARD. Future Directions of the Water Board. Internal Document June 1987. ALEXANDER, D. J. The Role and Management of an Australian Water Authority, Engineering & Water Supply Dept. of South Australia Jul y 1987. DEPARTMENT OF INDUSTRY, TECHNOLOGY AND COMMERCE. Policy Development Unit March 1987. Industr y and Technology Policy - An Information Paper.

Melbourne Board of Works - Invitation to the Industry A MESSAGE TO BENEFIT YOU NOW! SHARE WITH US - TECHNOLOGY: EXPERTISE: SERVICES In keeping with the objectives of active co-operation between members of the water sector and its industries, the Melbourne and Metropolitan Board of Works will be sharing its in-house developed technology, expertise and services with Counterpart utilities and other organisations in Australia, in a series of exciting programs soon to be developed. Expertise and technology associated with telemetry systems, and computerised packages for water piping network analysis, water storage supply simulation studies, asset management, mapping systems etc. which can be of significant benefit to the industry, are expected to be made available as the Board's contribution to intra-industry co-operation. This will offer the opportunity, for your organisation and others, to fast track into the latest technology without the hardships associated with the evolutionary build up of systems and its extended learning curves. Originating as it will, from a reputable and practising water utility, with a good appreciation of the industry's common needs, the proposed packages will enable even small organisations to obtain the benefits from the application of modern technology with its high productivity gains - working smarter not harder, as it's popularly known. Through the proposed arrangements the risks associated with the adoption of such productivity improvers, will be far reduced, because intending users will have the opportunity of inspecting the systems on offer in their real life environment. Their performances, in some situations could even be demonstrated in the premises of the intending user, i.e. by using host computers, temporary communication networks etc. The organisations first to participate in the proposed programs may also be offered the opportunity to become partners, as it were, in extensions of the proposed services into overseas marketing pro32

WATER June, 1988

grams etc. In so doing, the product-services offered will become closely associated with the Australian water industry as a whole. Benefits at the national and organisational level, both financial and non-financial must follow . Without raising expectations too high, invitations to participate in these programs can be expected in the near future . The proposed form in which ensuing discussions could take place are yet to be developed. They will, however, be flexible enough for most organisations to participate, be they as suppliers or users of the proposed packages. In the spirit of the industry's co-operation, these services are expected to be made available at prices reflecting the cross flow of information and assistance currently existing. With the overseas marketing programs however, the strategy will be for the Australian product-service to match the international competition in terms of price, promotion, performance, support services etc. Even before the formal invitations are received, your ideas and suggestions on the manner or form in which the proposed services should be made available, would be most welcome, and will be duly acknowledged. Your assessment and indication to us of industry's typical needs would also be valuable. We also wish to identify whether these needs relate to concept testing and development, feasibility studies, functional specification production, supply of hardware and software packages, training, hand over and commissioning etc. Inputs of this nature are of vital importance if this Australian based initiative is to succeed.

It is asked that initiai enquiries be directed to Mr Eddie Pereira, Marketing Manager, Melbourne and Metropolitan Board of Works, 625 Little Collins Street, Melbourne, or phone (03) 615 5926 or fax (03) 615 5004.

KEY ISSUES INTHE WATER INDUSTRY The South Australian Experience P.A. Norman



The paper reviews the progress achieved in South Australia in addressing the key issues identified in the Australian Water Resources Council Paper No. 9 (1987) . 'New directions for water resource management: Policy Issues' . It also discusses some of the potential problems still to be resolved.


INTRODUCTION The developed countries of the world have invested in their water industries to the extent that major backlogs are now the exception rather than the rule. Their water industries have reached a phase requiring the creation of a second generation of assets , or at least significant asset rehabilitation. Unlike the creation of first generation assets, this requires substantial investment without expansion of the revenue base of customers to finance it. The Australian water industry is characterised by this description . Over the last decade the earlier trend for continuing major capital development has slowed significantly, and attention is now directed to an increasingly hard-nosed business approach to assessment of standards of service and even to whether the less economic services should be perpetuated. At the same time there has been a concerted drive in all agencies towards achieving improved cost efficiency in the operation and maintenance of the assets. The scenario which has emerged has been addressed in a number of forums in recent years. The Australian Water and Wastewater Association has fostered discussion at two Summer Schools (Canberra, 1984 and Hobart, 1988) and a National Water Management Seminar, convened jointly with the Institution of Engineers, Australia (Adelaide, 1984). The matter has also received attention at the last two Federal Conventions (Melbourne, 1985 and Adelaide, 1987). Concern for the protection and improvement of limited water resources has also been raised, with recognition being given to the variety of competing uses often vying for the same precious and finite resource. In 1987, the Australian Water Resources Council (AWRAC) released a submission from its Standing Committee as Paper No. 9 'New directions for water resource management: policy issues' . These are summarised in Table 1 and amplified later in this paper. In South Australia there is significant progress in the development and implementation of some of the new policy directions in a boldly exciting manner at a rate unprecedented in this industry. At the same time however, difficult problems are seriously handicapping efforts to achieve the objectives of service and efficiency expected by the community.

Policy Directions

Potential Problems

Cost effectiveness

Determination of infrastructure

True costs

Financial management of infrastructure Financial management - other aspects

Resource management

New technology for data processing New technology in w'ater operations

Management and administration

Management and staffing


Water use

- From AWRAC Water Management Series No. 9 1987.

PROGRESSIVE DEVELOPMENTS IN THE INDUSTRY Cost Effectiveness of Operations 'There is wide appreciation throughout the water sector of the expectations of communities and governments that the costs to users of water services should be as low as possible . All authorities are making successful efforts to contain and reduce the real costs of operation and maintenance, and to do more within the limited funds available. Some have been on this path for over a decade.'

The South Australian Engineering and Water Supply Department is an example of such an authority, and its success is evident from the changes in some of its key performance statistics over the decade ending in 1986/ 87 depicted in Table 2. The trend in achieving more with less which has been established will continue for some years. As productivity improvements are implemented attention is beginning to focus also on appropriate standards of service.

True Costs of Services 'There is a more recent appreciation of the need for customers to

Peter A. Norman, B.E.(Adelaide), M.Eng.Sc.(NSW), is Manager, Water Resources in the Engineering and Water Supply Department, South Australia. Previously, he managed the development of concept designs for major water filtration plants and the operation of the metropolitan Adelaide water supply system. WATER June, 1988






Total number of properties serviced with water supply and sewerage Total number of employees

409 500 7 110

525 400 4 519

+28% - 36%

Number of employees per 1000 properties serviced Total annual expenditure per property serviced , expressed in 1986/87 values Total annual revenue per property



- 50%

$500 $396

$442 $441

- 12% + 11%

pay the true cost of services, and for pricing structures to be rational in terms of equity and economic efficiency. There have been moves in this direction, albeit partial and tentative. There is still considerable opposition in many water using sectors, notably some parts of agriculture, to such moves. Commitments of governments and water agencies to these ideals is limited partly by the fear that moves to implement them would be in conflict with the objective of containing charges to users .' In the Engineering and Water Supply Department, accrual ac. counting practice has been adopted since 1985/86 with respect of provisions for superannuation and long service leave and since 1986/87 with respect to provision for full depreciation allowance based on historical costs, and the likely impact of these costs on available cost recovery mechanisms is currently being investigated. Two major components of this true cost identification exercise are: • the move towards a depreciation allowance based on the current replacement cost of assets; • the necessary financial allowance to pay a community dividend on capital invested Departmental assets. This 'real rate of return' on the written-down replacement cost of assets is an issue currently being examined by all major water authorities in Australia. The impact of these two items on true cost recovery in South Australia will be significant. With an estimated current replacement value of $8 900 million, current cost depreciation and a real rate of return of 3% (say) would require allowance of $110 million per annum and $120 million per annum respecfr-,.ely, that is, a total additional requirement of $230 million per annum. This would double the revenue needed to finance the Department's business operations. The extent of the challenges posed by these considerations is clearly enormous.

Resource Management 'The institutional capabilities of States to manage water resources have improved . There is an increasing appreciation of the interaction of land use and water quality and quantity, and some projects are under way which will demonstrate the effectiveness of integrated water and land management.' The South Australian Water Resources Act was proclaimed in 1976. It has provided a solid foundation for effective planning and management of the water resources of the State with a high degree of opportunity for multi-disciplinary input and community participation. The recent passage of legislation through the four Parliaments of New South Wales, Victoria, South Australia and the Com•monwealth to establish the Murray-Darling Basin Council of Ministers and the associated Commission both with representation of water, land and environment portfolios is the most significant recent example of this philosophy.

by 15% from $120/year/property sc,rviced in 1976/77 to $102/year/property serviced in 1986/87, both expressed in 1986/87 values.

Research 'The level of effort and capacity in water research is being upgraded, the relevance of research to the needs of the water sector and the coordination of research priorities is being improved.' The establishment of the Australian Water Research Advisory Council (AWRAC) in 1985 and the Urban Water Authorities Research Association of Australia in 1986 are both excellent examples of institutional arrangements to steer the research effort along the path of maximum return for investment of the research dollar. Twelve centres of concentration of research have been identified around Australia by A WRAC. Two of these are located in South Australia . These are the Australian Centre for Water Treatment and Water Quality Research based on the E&WS Department's State Water Laboratory and the Centre for Research in Groundwater Processes based on groups in the CSIRO Division of Water Resources and the Flinders University .

POTENTIAL PROBLEMS 'There are a number of potential problems facing the industry, which, if not addressed urgently and effectively, will bring serious difficulties to the communities served. There are in addition, a number of opportunities for action, which, if not taken, will limit the ability of the sector to achieve the reasonable expectations of the community. They include the following issues .'

Deterioration of Infrastructure 'The older assets of the water sector have deteriorated to the extent that some irrigation infrastructure is becoming unserviceable, significantly limiting the ability of customers to use water efficiently, and contributing to high water tables and salinity. In the urban sector, some infrastructure of large urban authorities is deteriorating to a condition that in IO to 15 years will require an unprecedented increase in capital expenditure by the water authorities, unless an early start is made on replacing or upgrading some systems and adequate technology is developed to rehabilijate rather than replace.' This issue is confronting agencies with the prospect of having to finance massive programs of expenditure from the existing revenue base . The Engineering and Water Supply Department services communities and rural development across the State using assets with a current replacement value of the order of $8 900 million. This infrastructure is used to cater for a population of about 1.4 million and includes over 23 000 km of water mains and 6000 km of sewers. Following investigations into this issue by the Department, the Parliamentary Public Accounts Committee of South Australia reviewed the matter and concluded that the average annual rate of consumption of assets is about 1 .4%/year in this industry or about $110 million/year. Furthermore, the Committee found that the current rate of asset replacement has been about $14 million/year in recent years, which compares with projected levels of required investment which increase to rates of about 10 times that amount early after the year 2000. More importantly, this peak rate of expenditure is two to three times the present rate of total capital expenditure on all programs by the Department.

Financial Management of Infrastructure Management and Administration 'Most agencies have undergone profound changes in organisation and have upgraded the quality of management. Administrative structures are being reviewed to more appropriately reflect the need to reduce overheads and devolve responsibility to the appropriate level.' The Engineering and Water Supply Department underwent a major reorganisation in 1979 and 1980. Further changes have followed, all of which have been reducing and reshaping the structure to reflect the wind-down of capital development, the shift towards more efficient operation and reduced management overheads . As an example of the effect of these changes in the Department the management expenses for the organisation have been reduced 36

WATER June, 1988

'Historically, charging levels have not reflected the true cost of services. Returns on assets are inadequate. In particular the depreciation of assets has been under-provided by a large margin and virtually all communities are "Jiving off the assets" of their water authorities.' The first step in addressing this issue is to identify the true or full cost of services as discussed earlier under item 2.2. This highlights a significant shortfall in revenue collected and leads to the politically unsavoury need to increase the price of services. In a climate of community attitudes strongly critical of public sector service charges which are increased at a rate in excess of the Consumer Price Index, it is common for the shortfall to be reduced initially by productivity gains. However, this approach on its own is rarely sufficient to close the gap . Almost inevitably it will

be necessary at least to review the standards of service and as a last resort, to consider increasing the real price of services.

Other Aspects of Financial Management 'Major opportunities exist in most agencies for greater efficiencies and returns in revenue collection and the management of debt .'

The Engineering and Water Supply Department is seeking to become more financially independent of the State Treasury in order to manage its business activities in a more efficient and flexible manner . This would be achieved by optimizing cash management through more timely revenue collection and debt payment.

New Technology for Data Acquisition and Processing 'Modern technology has enormous potential to improve the effectiveness and efficiency of acquisition and processing of data for water resources assessment, studies of water quality, design rainfall / streamflow data, storm studies, streamflow and flood forecasting, etc. A reasonable investment would bring handsome returns in both the short and long term.'

Whilst significant benefits can accrue from such technology the cost of establishment is often large and sometimes underestimated which leads to uneconomic investment of funds . Careful financial analysis is essential before embarking on such schemes.

Management and Staffing 'Significant further cost reductions will require: - an approach to industrial relations that is open and involving at all levels, and at the same time intolerant of inefficient work and management practices; - multi-skilling and the abandonment of over-restrictive award classifications; - retraining and redeployment.'

A number of restrictive work practices have been built into the industry over many years of development. Little by little these have accumulated to militate against cost-efficient operation. Our customers see us as inefficient and to a large degree they are quite correct. The accumulation of restrictive work practices is the single factor which is most responsible for this malaise in the industry . Unlocking of these arrangements is not ~asy, and can only be achieved by extremely sensitive consultation between management and the workforce. The strategy of retraining and redeployment of employees is logical and successful in some areas, but has only limited application in a practical sense. A good example of relevant training is the initiative taken by the A WWA in introducing a Water Management Development Course conducted by the Australian Administrative Staff College at Mount Eliza in Victoria. Training must also extend to the lower echelons of staff in the industry as they move into the ranks of management.

Water Use 'The technology of water use has been almost completely neglected by the public sector. The upgrading of water use efficiency will provide opportunities for improved productivity and economy by users, while, for water agencies, minimising the capital required for expansion of headworks, water treatment and distribution systems, and waste disposal.'

The principal stimulus influencing water use is price. Pricing structures should be such that they not only recover costs but also contain an incentive to minimise water use by incorporation of a pay-for-use component. Other means of minimising water demand include the promotion of water saving appliances, increasing community awareness of the need for water conservation a,id, of course, restrictions as the last resort.


Little Para Water Filtration Plant

New Technology in Water Operations 'This provides perhaps the greatest future opportunity for the achievement of community expectations in cost efficiency and service effectiveness, but appears to receive inadequate and uneven attention and investment having regard to the rate of cost reduction that would seem to be required .'

A South Australian example of such a shift in approach is the changed mode of operational attendance at major water filtration plants serving metropolitan Adelaide. One of these plants was commissioned in 1984 with 24 hours per day operational production but only one shift attendance, seven days per week, instead of the conventional three shifts per day. This has been achieved with surveillance during unattended hours by conventional instrumentation and automatic dial out of alarms to activate beeper units carried by relevant personnel who are 'on call'. This operational arrangement is being extended progressively to the other three plants serving metropolitan Adelaide. There remains enormous scope for lateral thinking to identify new ways of dealing with technological problems. There is a reluctance in the industry to adopt unconventional solutions, but this is dissipating in the present climate of financial constraint. The Water Technology Committee of the Australian Water Resources Council is an effective way for dissemination of new developments.

The issues which have been identified by the Australian Water Resources Council are collectively life threatening to the industry or at least the more vulnerable member authorities within it. The key characteristic which will ensure survival and continued service to our customers is flexibility - to enable change to occur in an anticipatory way to head off emergent difficulties. This requires visionary leadership coupled with adaptive management working in consultation with the workforce. Whilst there is a long way to go, there has begun a shift in the motivation of agencies in the industry - away from being self centred and patriarchal towards becoming customer oriented and responsive to the communities served.

RECOMMENDED READING ALEXANDER, D. J. 1987. The role and management of an Australian Water Authority into the 1990s, New directions. Engineering and Water Supply Department, South Australia. AUSTRALIAN WATER RESOURCES COUNCIL STANDING COMMITTEE (1987). Water management series: No. 9. New Directions for water resource management: policy issues. Australian Government Publishing Service, Canberra . CRAWFORD , P. J. (1987). Investing in water futures. Proc. 12th Federal Convention Australian Water and Wastewater Association, Adelaide. LEWIS, K. W . (1985). Dominant issues facing the water industry in Australia. Proc. l 1th Federal Convention Australian Water and Wastewater Association, Melbourne. SOUTH AUSTRALIAN PARLIAMENTARY PUBLIC ACCOUNTS COMMITTEE (1987) . Water supply and sewerage disposal asset replacement. 51st Report. S.A. Parliament.

Continued on page 41 WATER June, 1988


Demand Management and Financial Reporting

D. J. Dole

SUMMARY Recent initiatives of the Australian Water Resources Council (A WRC) have resulted in a coherent statement of contemporary water management issues affecting Australia. This should form the basis for joint consideration by water industry bodies over the next few years. A WRC Committees are progressively addressing these issues; summaries are provided of some work undertaken by Planning Committee (A WRC) on demand management and on financial reporting and performance indicators. INTRODUCTION The Australian Water Resources Council (A WRC) provides a national focus for consideration of the wide range of current water resource management issues across Australia. A WRC has encouraged its Standing Committee and the supporting advisory committees to review current and emerging issues faced by the water sector with a view to establishing priorities for attention. In July 1987 AWRC summarised the current position in a statement entitled - New Directions for Water Resources Management: Policy Issues. (A WRC Water Management Series No . 9). This paper outlines the four major themes identified . It refers specifically to some current work being undertaken by Planning Committee (one of the A WRC advisory committees) in regard to two elements of the major themes viz: • demand management • financial reporting and performance indicators POLICY THEMES The overnll context is recognised as one charactertised by a shift from resource development toward more efficient and effective resource management.

Summary In summary the themes can be presented as follows: Resource Management Policies • resource assessment • demand management • integrated resource management • community involvement • legal and institutional issues Economic and Financial Management Policies • water industry financing 38

WATER June, 1988

• asset maintenance and replacement • accounting procedures and accountability • economic efficiency

Water Technology Policies • need for improved technology • application of technology

Management and Training • education and training • industrial relations

Addressing the Themes Work programs of all A WRC committees are now being examined against these policy themes. An initial observation is that whilst the committees are addressing most of the traditional water industry issues, there is a need to refocus effort towards a number of key issues . In particular these include: • financial and economic policies • technology transfer • public participation in decision making • appropriate technology for smaller communities • water re-use Planning Committee has over the past few years attempted to develop its work program in response to perceived industry needs . It has paid particular attention to issues that fit within the above mentioned two broad themes: • resource management policies and • economic and financial management policies It is within this context that the two items identified under identification above have been pursued. This work is described in a little more detail below.

DEMAND MANAGEMENT In May 1986, the Western Australian Water Resources Council David J. Dole, Batchelor of Agricultural Engineering, Melbourne is Technical Services Director with the Victorian Rural Water Commission, he is a Deputy Commissioner of the MurrayDarling Basin-Commission and Victorian Water Authority Member on the Snowy Mountains Council. Since 1983 he has been Chairman of the Planning Committee of the A WRC.

in conjunction with CSIRO, Major Urban Water Supply & Sewerage Authorities of Australia and A WRC sponsored a national workshop on urban water demand management. Whilst the focus of this workshop was specifically urban oriented, the principles and guidelines have general application and therefore serve as a useful framework for considering this topic. The proceedings of this national workshop have been published by A WRC as Conference Series No. 14.

Definition of Demand Management It was generally agreed that the following definition should be adopted: Demand Management is the program which is adopted to achieve effective management of the use of water resources in order to meet the general objectives of: - economic efficiency; - environmental conservation; and - community and consumer satisfaction

Nature of the Problem The views of the workshop were summarised as follows: (A WRC-1986) 'The water industry has tended to view itself as a water supply management body with very little regard given to managing demand. Water has been treated as a 'public good' and therefore funded from rates which are a taxation type of revenue. Most water consumers have not had to pay the financial and environmental cost of their consumption and where costs are high have been cross-subsidized from other classes of consumers, low cost· geographic areas or State treasuries. 'The water industry is now facing rapidly escalating costs and placing greater demands on community resources as: • new sources of supply are more expensive than those which have already been developed; • environmental factors are requiring both additional work and higher standards for planning and construction; • there is an increasing requi(ement to replace existing assets; and • consumers expect a uniform high standard of service, even in difficult and expensive areas. 'These costs are escalating at a time when financial restraint is required and with both the supplier and community unaware of what the consumer is prepared to pay for a water supply. This lack of knowledge of the relationship between quantity, quality and what the consumer is prepared to pay results from the traditional rates-based charging system being unrelated to the real factors which determine water supply cost. These are quantity, quality and standard of service.'

• programs to improve the efficiency of tlfl: water supply system including leak detection, source inter-connection, conjunctive use of surface and groundwaters and other water management practices which can be implemented by water authorities; • promotion of water recycling -by consumers and from waste water treatment-plants; • Monitoring and study of: - the components of water use; - changes in design and consumer penetration of water using applicances; and - consumer attitudes to water use and demand management strategies; • dual supply/ alternative sources of lower quality water for a component of consumption (e.g. gardens, toilets) or large individual consumers; and • research into all sections of the water cycle. Of these, the critical elements are pricing and metering. There seems to be general acceptance that tariffs should be in two parts, a fixed charge component and a pay-for-use component. Whilst there is continuing debate on whether or not the fixed charge should relate to a 'free' allowance it is evident that there is now a widespread recognition that free allowances, which in essence place a zero value on the resource, are not consistent with sound demand management policy. It is also evident that there is a greater acceptance that the 'pay-for-use' component should reflect the marginal cost of production.

Evaluation An essential component of effective demand management is a commitment to clear and open evaluation of the impact of individual strategies. This is not a straightforward matter. Available techniques for isolating the effect of specific strategies are not well developed; this identifies a major area for research. Improved demand forecasting techniques are required in order to relate actual results against objectives. Additionally refinement of these techniques is needed in order to assist forward planning. Performance, both technical and financial, needs to be reported with an eye to national consistency. It is not accepted that results cannot be validly extrapolated. Thus a national forum for co-ordination of research and evaluation of survey results is identified as important. In this reg~rd initiatives undertaken by AWRC, Australian Water Research Advisory Council and the Major Urban Water & Sewerage Authorities of Australia are important.

Research Needs Demand Management Elements There are many elements to be considered in developing a demand management orientation. These involve both the water authority and its consumers; the mix will vary depending on local circumstances. However two important principles should be common to all such programs. First, there must be effective means for interaction with the community served. Second, the authority must be able to demonstrate that it has a strong commitment to efficiency and effectiveness in its operations. The following specific elements of a comprehensive demand management strategy were identified: • pricing policies based on a two part tariff structure to give all consumers the correct signal of the real cost of water. This includes installation of comprehensive metering; • information and education programs for consumers, water managers, and workers in the water industry; • publicity campaigns to increase community awareness and change water using habits; • regulation and restriction, for example time or street number controls on the use of sprinklers; • town planning, for example encouragement of redevelopment and more flexible utilization of urban lots such as dual occupancy, town houses etc. which reduce garden area relative to population; • improved design of water-using appliances such as toilet cisterns, washing machines, garden sprinklers and shower roses; • improved watering practices for gardens, parks and sports grounds; • provision of advisory and consultant services t0 industry;

It is difficult to identify specific programs of research needs directly related to each element of a demand management strategy. However it is possible to formulate research proposals under a number of general headings that will encourage multidisciplinary approach to the topics and which will meet the overall needs for effective demand management. The workshop summarised these views in a tabular presentation (Table 1), identifying significant gaps in current knowledge.

Conclusions Demand management approaches require a clear orientation toward consumer needs and responsibilities. This in turn results in enhancing public involvement in decisions and their consequences. It is envisaged that the pursuit of demand management strategies as outlined will provide benefits in the form of: • deferral of capital expenditure • reduction in operating costs • more effective use of water resources • reduced environmental stresses

Recommendations The recommendations ansmg from the May 1986 Perth workshop have been reviewed by A WRC. As a result of this review, A WRC issued its recommendations and these have now been nationally circulated. They are as follows: (1) All water authorities should introduce consideration of deWATER June, 1988 39

TABLE 1. SUMMARY OF RESEARCH NEEDS Economics/ Statistics ·

Technical Assessment

Communications Studies

Psych / Behav Organisational Studies Studies

for national reporti.ng standards relating to both financial and technical aspects of water use and is arranging for its technical committees to initiate action in this regard.

Water Use Studies

Components of use Forecasting Economic Studies

Benefit/ cost analysis Financial analysis Tariff structure Country towns' experience Billing Social Equity effects Water Delivery Systems

Performance monitoring Design standards Leak detection Pressure control Dual supplies Use of wastewater Water use restrictions Appliance and Industrial Conservation

Marketing Design Industrial Conservation

FINANCIAL REPORTING AND PERFORMANCE Outlays on water and water related services throughout Australia have been estimated at 10 to 150Jo of total State and local government expenditures. With increasing attention being given to effectiveness of performance and the introduction of more rational cost recovery policies, it was obviously necessary to examine financial reporting and performance measures. With such a widely dispersed industry both geographically and functionally, such examination is no simple matter. Nevertheless some attempts have been made over the past few years and this report outlines some of the work undertaken by A WRC Planning Committee in this area.

Urban Garden Irrigation

Financial and Cost Recovery Policies

Garden design Sprinklers Water harvesting


In 1985/ 86 a survey was undertaken of major water servicing authorities across Australia. The survey covered all States and Territories and sought to idenCommunications Studies tify all sources of income and all classes of Public participation costs. Consumer research Despite its relatively broad brush apCampaign evaluation Billing information proach, it was possil;lle to conclude from Metering the survey that, as a whole, the water inDecision to water dustry is not adequately providing for Restrictions depreciation of assets and therefore not meeting the ,true cost of providing serSource: AWRC - Conference Series No. 14 (1987) . • a significant research requirement is identified. vices . mand management in their water planning with the programs The current replacement cost of all water assets was estimated developed being appropriate to regional circumstances and objecas being in the order of $40 billion (1985 prices). On the assumption that the annual cost of depreciation would be at least 1OJo of tives. (2) Water planning in general and demand management decisions this value, it was estimated that not less than $400 m should be in particular should be based on marginal cost considerations, provided each year for the replacement of existing assets. The amongst other criteria. survey indicated that the amounts actually being provided fell far (3) All water authorities should consider adopting a two part short of this figure. The clear conclusion was that costs incurred tariff with consumption being charged on a unit price basis. by the present generation were being transferred to later genera(4) Demand management programs should include multiple tions . elements selected on the basis of realistic benefit/ cost consideraThe discussion that followed this survey concluded that: tions and other appropriate analytical tools . • Authorities should be encouraged to report publicly on a regular (5) All water authorities promoting demand management should basis: review their internal water supply operations to seek efficiency - the current cost of replacement of assets gains and maximise their credibility with consumers. - amounts provided for asset replacement (6) In planning and implementing demand management, all water - strategies for addressing growing debt (including policies on authorities should develop an interactive relationship with the demand management, operational requirements and effects on community by providing appropriate information and responding level of service). to feedback. Consideration of standards of service should be in• a standard set of definitions for financing be prepared covering cluded in this interactive relationship. the following costs (7) All water authorities should institute demand forecasting - operations and maintenance techniques, at the very least by components of water use and - administration preferably incorporating socio-economic factors . - capital (8) Consideration should be given by the Australian Water - finance Resources Council and research funding agencies to research proThe aim was to provide some coherent basis for authorities to grams on demand management as an input to policy making in report on practices and performance in a way that might allow rathis area. The research program needs to encompass organisational judgements to be made . It was recognised that the data tional / management requirements, demand studies, needed to be collected in such a way as to distinguish between technical/behavioural studies of water use efficiency and comvarious categories of water services. In essence these are: - metropolitan water and sewerage services munication studies. (9) The Australian Water Resources Council's Water Technology - non metropolitan water and sewerage services Committee, in consultation with the appropriate technical com- irrigation, rural supplies and drainage services mittee of the Major Urban Water and Sewerage Authorities of Australia, should investigate and promote improvements in the Real Rate of Return design of water-using appliances. (10) The Australian Water Resources Council supports the need After examining a number of financial reporting mechanisms 40

WATER June, 1988

and conventions, it was concluded that traditional accounts did not provide an accurate picture of the financia l performance of the industry and that varying standar.d s made comparisons mea.ningless . It was recognised that the UK water industry had adopted real rate of return (RRR) to ensure that community resources were used efficiently. Some Australian States had also identified RRR as a usefu l macro-economic performance indicator for statutory authorities. RRR simply measures net income (revenue less cost less current replacement cost depreciation) against the current value of assets. It not only shows whether or not the investment of community resources produces a return sufficient to cover costs, it also indicates whether or not the return is less than the return that wou ld have been achieved if funds were invested elsewhere. A zero rate of return means that income covers operating costs and the cost of assets. This wou ld be a breakeven situation if the cost of capital was zero. Thus it is possible to identify a target rate of return to reflect the desired return on capital. By relating the net income to the written down replacement value of assets a measure of the return on equity is gained. It is important to note that the RRR calculation does not include real interest costs because of the bias this wou ld create against ¡o rganisations with a high debt to equity ratio. Thus an organisation may have a positive RRR and therefore be operationally viab le; it may still not be financially viab le since its return may not be sufficient to earn a return on capital and pay its real interest costs.

Conclusions A WRC in 1987 considered the outcome of the surveys outlined above and agreed to undertake a joint effort to develop broad performance indicators for the three main elements of the water sector. It also endorsed the Real Rate of Return framework as the conceptual basis for an integrated array of indicators. Working Groups have been established to develop concepts and definitions that will permit standardisation of performance measures . The aim is to have a set of agreed indicators against which agencies can report in 1988. This is an important initiative and one that reflects the advantages of having a Ministerial Council as the lead forum for the Australian water industry . Ministers have given their support for a start toward national reporting against common scales. The major aim is to provide an opportunity for relevant comparative performance analysis . All water agencies will derive benefit from this approach.

REFERENCES AUSTRALIAN WATER RESOURCES COUNC IL (1987). Conferen ce Series No. 14. Proceedings of the National Workshop on Urban Water Demand Management. AUSTRALIAN WATER RESOURCES COUNC IL (1987). Water Management Series No . 9. New Directions for Water Resource Management : Policy Issues. PLANNING COMMITTEE, AUSTRALIAN WATER RESOURCES CO UNC IL . Repo ns on Financial and Cost Recovery Policies 1986, 1987 (unpublished).

Overall Results Based on the 1985/ 86 survey, the following industry totals were derived:

Million 2138.9 1180.0 794.2 1974 .2 164.7 39825.0 0.40Jo 673.5 l.70Jo

P.A. NORMAN Continued from page 37


Operating revenue Cost of service Current Cost Depreciation Total cost Net Income Written down Replacement cost RRR Current financial cost (net interest) Target rate of return to break even

It is estimated that the survey results encompassed at least 950Jo of the Australian water industry. From the information provided it again indicated that the actual provision for depreciation was deficient by at least $400 m . The examination was, of course, limited to the position in 1985/ 86 and arrived at rates of return for industry components for that year. It did not indicated the accumulated effect of not providing sufficient amounts in previous years for asset replacement. The RRR range calculated was from - 3.00Jo to + 3.1 % with an industry average around 0.40Jo. It was also noted that when financial costs are included most authorities are in a negative position. In order to determine the effect of achieving the target (break even) rate of return an estimate was made of the productivity increase required. This measure simply shows how much costs would have to decrease or income increase to break even in 1985/ 86. For the industry this indicated a n in crease of 220Jo with a range for individual components of up to 2000Jo. It is clearly demonstrated that most rural water supply authorities would require very high productivity gains to reach positive rates of return. This reflects the fact that generally such authorities have set charges to cover, at best, operations and maintenance. Interest on capital is funded by Government and there is virtually no provision for current cost depreciation.

Other Performance Indicators The overall RRR provides a context within which other consistent performance indicators can be developed. These include: - cost per service with the unit supplied as the base measure - output measures of performance such as quality and reliability, water supply indicators and effluent disposal standard indicators

SOUTH AUSTRALIAN PARLIAMENTARY PUBLIC ACCOUNTS COMMITTEE (1987). Summary report on asset replacement. 53rd Report. S.A. Parliament. VARIOUS AUTHORS (1988). Selected papers present ed at th e Summer School convened by Australian Water and Wastewater Association . Tasmanian Branch. VARIOUS AUTHORS (1984) . Selected papers presented at the Summer Schoo l convened by Australian Water and Wastewater Association. A.C.T. Branch, Canberra. 1 VARIOUS AUTHORS (1984) . National Water Man agement Seminar. Australian Water and Wastewater Association and the Institution of Engineers, Australia. WATER 2000 (1983). A perspective on Australia' s water resources to the year 2000. Austra lian Government Publishing Service, Canberra . I

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WATER June, 1988


Biological Phosphorus Removal CSIRO Newsletter W. G. Raper The Australian Water Research Advisory Council and the A WRC attach high priority to work on biological phosphorus removal by several different groups with a wide geographical spread. To assist information transfer between the groups and the industry, which previously has occurred mainly at A WWA Conferences, the Water Technology Committee of A WRC requested CSIRO to prepose and circulate a newsletter. The first issue (Contact Officer, W. G . Raper) is summarised in these comments, it provides a selective description of papers presented at the IA WPRC Specialist Group Conference held in Rome last September and a summary of Australian activities.

IA WPRC SPECIALIST CONFERENCE Several Australians attended the IA WPRC Specialist Conference on Biological Phosphorus Removal in Rome during September 1987 . Some 35 papers and eight posters were presented from 11 countries, indicating a continuing high level of activity on this topic . A poster paper was presented by the CSIRO/ Monash group. The proceedings have been published by Pergamon Press as 'Biological Phosphate Removal from Wastewaters' R. Ramadori, Ed. Two papers on new and simpler processes were presented, a French process (Bourdon, Florentz and Sibony) which overcomes the need for mixed liquor recycle, and a German process (Schonberger and Hegemann) which is claimed to be operable in a conventional activated sludge plant fitted with a primary settler. Both give enhanced phosphorus removal. The popular mechanism involving anaerobic sequestration of acetate for operation of biological P -removal plants received further support in several papers, most of which described systems operating on synthetic or acetateenhanced feedstock. On the other hand two papers on full scale plant operation (Daigger , Nicholls) and one on a laboratory investigation (Tsu z uki) described effects which are inconsistent with the above theory. Two other papers (Cloete, Stephenson) concluded that the role of Acinetobacter was overestimated or required clarification . These reservations add significance to previous inconsistencies reported by Brodish in 1982, Fukase in 1985 and Raper in 1987. Copies of any of the papers presented at the Rome Conference may be obtained from the CSIRO Division of Chemicals and Polymers , Private Bag 10, Clayton

W. G. C. (Bill) Raper is Manager of the Wastewater Treatment Program at the CSJRO Division of Chemicals and Polymers, Clayton, Vic. 44

WATER Jun e, 1988

3168, via the interlibrary loans system at the normal cost of $6 per paper.

AUSTRALIAN RESEARCH Australian efforts can be categorised under two general headings - 'sites' where plants are in operation and 'research groups'. These obviously overlap to a large degree . The source of information is from published papers (A WW A Conference 1987) or from the name(s) at the end of the relevant paragraph.

has been found to remove phosphorus, and occasional effluent values below 1 mg/ L phosphorus have been measured. However, P removal patterns appear to be cyclic with values higher than 1 mg/L encountered at times. Redox potential was also measured and found to be in the order usually associated with biological P removal. A contin ing investigation into this phenomenon is underway. Laboratory work at CSIRO has not yet been able to duplicate the effect. (H . Awad, W. Raper)

BENDIGO Sites: BALLARAT A pilot plant operating with nominal constant flow has been operated by the Ballarat Water Board in co llaboration with CSIRO. It achieved excellent results in summer (about 0.2 mg/ L PO.-P) but in winter figures increase to around 2 mg/ L. The pilot plant has also been operated under diurnal flow conditions with similar results in summer but inferior results in winter. Although the flowscheme was designed to minimise nitrification in the activated sludge system, which contains no discrete anoxic stage, it has been found in summer that as much as 80 to 90% N removal can occur. In winter little N removal is seen. A full scale plant of up to 100 000 e.p . is under construction and is likely to start up March/ April 1988. (B. E. Price, W. Raper)

BATHURST The intermittent extended aeration process designed by Public Works Dept., NSW (commonly known as Bathurst Box)

A continuous bench scale pilot plant using the University of Cape Town (UCT) process has given effluent P levels below those predicted using kinetic models together with the predicted N removal of around 80%. Results in winter deteriorate for a short period after storm events but recover well. Significant periods of very low effluent phosphorus (less than 0.1 mg/ L PO.-P) have been experienced and causes are under investigation. The work is being done by the Board in close collaboration with the Bendigo CAE, Sinclair Knight & Partners and the University of Cape Town, prior to the construction of a 120 000 e.p. purposedesigned nutrient removal plant in 1988 . (M. Peters)

CANNING VALE A large pilot plant operated by the Water Authority of West Australia has given results with some promise, but results range more widely than the above two examples, perhaps between 1-4 mg/L P, with about 70% N removal. The plant is shut down at present. (K. Cadee)

Ballarat Biological Removal Project. With a vidoe camera mounted on the microscope, Carol Williams monitors sludge characteristics and records pictures on tape for reference.


controlled conditio ~, currently using the UCT flowsheet. Their objectives include kinetic mod e l evaluation, waste characterization , biological nutrient removal design evaluation, detailed microbiological monitoring and advanced operator training. Their early results were reported at the 1987 A WW A Convention (paper and poster). (M. P eters)

The University of NSW School of Civil Engineering (funded by the Sydney Water Board) operated a three stage Bardenpho pilot plant with poor results for almost a year until the feed was supplemented with fermented primary sludge. Following this a limited number of excellent results were obtained . Data were given at the 1987 A WWA Convention .

Centre for Wastewater Treatment, University 'of New South Wales

LOWER PLENTY CSIRO (partially fund ed by a consortium of large water boards) has operated both five stage and , more recently, three stage Bardenpho pilot plants with excellent results. Efflu ent co mpo site samples (unfiltered) contain < 0.5 mg/ L Total P , < I mg/ L NHJ and < 5 mg/ L NO 3 • Consistent with results at Lilydale and Castle Hill, prefermentation of influent is essential to achieve the above results, which were maintained during winter. Performance deteriorated severely on two occasions for periods of 1-2 weeks. Reasons are yet to be established. (W . Raper)

NEWCASTLE The Hunter District Water Board is commencing a study at their Marmong Point plant, using a three stage Bardenpho system incorporating a prefermentation unit. The pilot plant is basically similar to the first unit installed at Lilydale some years ago, with the addition of a simplified prefermentation unit which CSIRO has suggested to overcome the shortage of suitable substrate (VFA or RACOD) in influent sewage. Promising results were obtained, but as effluent nitrate increased, removal of P declined. (P . Cooksey)


Ballarat Biological Removal Project: Mal Peters with some of his team. The configuration of the reactors can readily be altered.

wastewater and the readily degradable COD is high in relation to phosphorus. Modelling suggests that a single anaerobic tank ahead of the oxidation ditch aeration tank will provide adequate P removal (an effluent of 2 mg/ LP is required). Nevertheless, in view of the uncertainty abo ut future loads on the plant, an array of anaerobic and anoxic tanks is being provided to allow for vario us flo w schemes. T he design was referred to several researchers in Australia and overseas for comment. (J. Crockett) To summarise, considerable activity is occurring fo llowing the disappointing results first presented at the A WW A Convention in 1983. Varying success is apparent, with the best results clearly associated with on-site R&D (Ballarat, Bendigo and Lower P lenty) .


Biological phosphorus removal was incorporated into a 25 000 e.p. stage at Penrith after awarding a contract for a carousel plant in 198 I. The concept was a single anaerobic tank with provision for a variety of flow patterns including the UCT system on the suggestion of Prof. Marais. Back-up ferrous chloride was provided. The plant (commissioned in 1984) removes over 90% N but only 2 mg/ L P. However, this is in line with the U.C.T. model as the raw sewage is very low in readily degradable COD and high in phosphorus. The next stage, now designed, incorporates a prefermentation tank to correct this problem as well as an array of anaerobic and anoxic tanks. The design has drawn on research both within Australia and from overseas. (J . Crockett)

T his group consists of a Principal Research Scientist and a Technical Officer fun ded by CSIRO, two Technical Assistants funded by a consortium of large Water Boards, two Senior Lecturers funded by Monash University Dept. of Microbiology, a Post Doctoral Fellow fund ed by A WRAC, a Technical Officer fund ed by the Australia n C hemical Specialities Producers Association and an Honours student. The group is strong in process design, laboratory and pilot plant operation and basic microbiology. The members have already published a total of five publications on biological P removal. Pilot plants at Ballarat and Lower Plenty have been designed, built and operated successfully.


Bendigo Water Board/CAE

The Wodonga plant is being constructed in stages and stage 3 which incorporates biological phosphorus removal will be in operation in early 1989. Its capacity is 45 000 e. p. Unlike Penrith, Wodonga's sewage contains food industry

Here there are approximately five chemists, engineers, microbiologists and operators funded by t he Victorian Government, the Bendigo Water Board and probably UWRA. They operate a ve ry flexible bench scale pilot plant under

The Project is supervised by three engineers and one proj ect officer and has been assigned to ~ project funded by UWRA ($52 000) over 15 months to design a prefermenter suitable for the conditioning of Sydney sewage for biological phosphorus removal. A 4 m 3 pilot plant sedimentation tank has been installed at Castle Hill STP to research the conditions required for volatile fatty acid (VF A) production. The results show that, in a simple sedimentation tank , VF A remained in the sludge and not the supernatant. Conversion of the tank to an activated primary tank to enable recycling the sludge and elution of the VFA is in progress. (T . Schulz, P. Bliss, D. Barnes, P . Evans)

University of Technology, Sydney (Previously The New South Wales Institute of Technology) The School of Civil Engineering carried out bench-scale and full- scale investigations at the Penrith plant for almost one year during 1986. This study showed that the plant receives very low influent concentration s of RACOD, substantial phosphorus r;lease was measured in the aeration tank , and results from the benchscale tests using mixed liquor from the aeration tank were similar to the full-scale results . Poor phosphorus release and uptake were measured , even when the sewage was dosed with 200 mg/L of acetate. These, and other results, suggested that biology-enhanced phosphorus removal was only occurring to a very limited extent. (J . Nielsen)

General In addition to the foregoing, significant work has been done and/or is being done within the Sydney, West Australian and Hunter District Water Boards. The West Australian work was also reported at the 1987 AWWA Convention .

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WATER June, 1988