Welcome

WELCOME A message from our Chair and Managing Director

// Greg Martin Chair // Darren Cleary Managing Director

Hunter Water is proud of the contribution that we make to the liveability and prosperity of our region by providing excellence in water, sewerage, recycled water and some stormwater services for our customers and community. In 2022, Hunter Water celebrates 130 years of service to the Greater Newcastle and Lower Hunter communities. Founded in 1892, the then Hunter District Water Supply and Sewerage Board was established to protect the public health of the City of Newcastle and broader Hunter Region, initially provided services to a population of just 17,000 people. Today we are proud to provide services to more than 600,000 customers across the Lower Hunter region, including thousands of local businesses. Our communities rely on our investments and services as key enablers to the continued growth and prosperity of our evolving region . Reflecting on our 130 year of history also requires us to pause and reflect on the custodianship of our lands and waters by First Nations people over the last sixty millennia. During the year, Hunter Water launched our Innovate Reconciliation Action Plan (RAP), following the conclusion of our first Recognise RAP. The Innovate RAP commits us to taking tangible steps towards reconciliation, to continue to learn from the wisdom of Aboriginal knowledge, and continue to build respect and connection with our First Nations communities. Water remains precious to Hunter Water and to our communities and customers. Our last Annual Report opened by outlining how Hunter Water had responded to the worst drought that the region had experienced in more than forty years. The last year has been quite different. The Lower Hunter has experienced consistent rainfall resulting from two consecutive La Nina weather cycles. At the time of reporting, our storages are at 100 per cent capacity, and we are currently holding more than 270 billion litres of water across four sites – the largest volume ever stored by Hunter Water. While our dams may be full, conservation has remained a focus of our customers and communities, and of Hunter Water. Our Love Water message has been widely embraced with community water reducing by 5.5 per cent over the year against expected consumption, a pleasing result given the above-average rainfall and belowaverage temperatures observed across the year. Hunter Water’s commitment to water conservation has continued, including a washing machine replacement trial with social housing tenants via Land

and Housing Corporation, and an expanded non-residential Find and Fix Leaks program. Significant wet weather, along with the continued COVID-19 pandemic and associated labour and supply chain disruptions, has provided a number of challenges for Hunter Water. During the year, our people and suppliers have continued to deliver essential services to our customers, with remarkable resilience and passion for their roles. Our response to COVID-19 has seen us adapt, innovate and improve our business practices. We continue to adapt our strategic priorities to the challenges and opportunities presented, and foster the resilience, innovation and adaptability shown by our workforce and partners in serving our community and supporting the productivity and prosperity of the region. Keeping our people and community safe remains our highest priority. Hunter Water has maintained a relentless focus on safety, with a concerted effort to drive an enhanced safety and wellbeing culture underpinned by visible, felt leadership, and centred around our values of Leading, Learning, Trust, Wellbeing and Inclusion. Being guided by what is valued by our community continues to build trust and confidence in Hunter Water, particularly in these times of uncertainty. We are evolving our services, particularly our digital services, to better meet customer expectations, to more effectively manage risk and to operate more efficiently. The values of our customers and community guide our long-term decision making and will continue to improve our service delivery to meet changing customer expectations. We are investing in long-term assets where appropriate while retaining the flexibility to adapt to a changing future. Our asset and service strategies utilise adaptive pathway planning and appropriate adoption of innovative technology to manage uncertainty, meet customer expectations and improve value. Our investment decision making supports intergenerational equity, with future generations not unfairly burdened with the consequences of decisions made by us in the short term. For the last three years, we have consulted with our communities and customers about their values and preferences for our water future, have looked at the data on our changing climate, and the expected growth of the region, and have analysed a range of demand and supply options to reduce the amount of drinking water we use and to supplement our water supplies. The culmination of this extensive body of work was the release of the Lower Hunter Water Security Plan (LHWSP) in April 2022. The Plan outlines the actions Hunter Water is now taking to ensure a sustainable and resilient water system, including continued water conservation programs, leakage reduction, increased recycling and source augmentation, including a permanent desalination plant at Belmont, and progress on a connection to the Upper Hunter water system. Sustainability continues to be a focus of Hunter Water. By the nature of our business, with many low-lying assets, it is incumbent on us to invest in both mitigating climate change and adapt to greater climate variability. Hunter Water is progressing with investments in our onsite solar program, which has already installed 1.74 megawatts of solar at sites across the Lower Hunter. In the last year, we generated 1,685 megawatt hours of renewable energy at our sites. During the year, we released our Sustainability Strategy, including ambitious climate targets to meet net zero emissions by 2035, with an interim target of an 80 per cent reduction in Scope 1 and 2 emissions by 2030. Operationally, our performance has remained strong with full compliance on all Operating Licence system performance standards, and significant continued improvements in leakage reduction, water conservation, water quality, environment, customer response and customer satisfaction. Alongside our operational, community and environmental sustainability objectives, the financial sustainability of the business remains an important objective. As this report confirms, total revenue for the year was $370 million, up from $351 million in Financial Year 2021 (FY21). Total expenses were $312 million, an increase from $293 million in FY21. Total capital expenditure of $161 million, has supported upgrades in our infrastructure across the region. End of year net profit after tax was $41 million (compared with $40.7 million in FY21), with a declared dividend of $27.2 million to our shareholders, the NSW Government. Looking towards the year ahead, Hunter Water will continue to work closely with our customers and communities in the development of our next pricing proposal to the Independent Pricing and Regulatory Tribunal. The Board maintains its commitment to harness operational efficiencies, deliver the great services that our customers expect, enable the region’s growth and quality of life, and maintain Hunter Water’s role as a valued partner in delivering the aspirations for our region.