Seed CDC CWTS Feasibility Report 20170913 Name Seed_CDC_CWTS_Feasibility_Report_20170913.docx...

www.seedcs.com.au

Feasibility Study Coorong Water Transportation Scheme

Prepared for Coorong District Council

13 September 2017

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Seed Consulting Services, 106 Gilles Street, Adelaide, South Australia 5000 P: +61 8 8232 4823 W: www.seedcs.com.au E: [email protected]

1. Tracey Strugnell 2 Tracey Strugnell 3

Feasibility Study Coorong Water Transportation Scheme Coorong District Council Final Report 13 September 2017 Prepared by: Seed Consulting Services 106 Gilles Street, Adelaide, South Australia 5000 P: +61 8 8232 4823 W: www.seedcs.com.au In collaboration with:

and regional landholders Front cover photo credits 1-3, https://www.coorong.sa.gov.au/cwts 2017

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Document Control Document Information

Information

Document ID 617 CDC

Document Owner Coorong District Council

Issue Date 13 September 2017

Last Saved Date 13 September 2017

File Name Seed_CDC_CWTS_Feasibility_Report_20170913.docx

Document History

Version Issue Date Changes Final 13 September 2017

Document Approvals

Role Name Signature Date

Project Director Andy Chambers

13/09/17

Writers Andy Chambers

13/09/17

Checked Andrew Osborne 13/09/17

Disclaimer The information contained in this Seed Consulting Services (Seed) report is given in good faith and has been derived from sources believed to be reliable and accurate. Seed accepts no legal liability for the accuracy of field data, analytical results or mapping data provided as part of this report or for any associated loss in productivity, business or such like through third part use of this data. Seed accepts no legal liability for failure of third parties to obtain any necessary government or other agency permits or approvals with respect to any issue raised in this report where approvals may be required. The material and opinions in this report may include the views or recommendations of third parties, which may not necessarily reflect the views of Seed, or indicate Seed’s recommendation regarding a particular course of action. Seed does not provide advice of an investment or commercial valuation nature. Seed does not accept any liability for investment decisions made on the basis of environmental or other information provided in this report.

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Contents Executive Preview ..................................................................................................... 5 1. Introduction ......................................................................................................... 6 2. Background ......................................................................................................... 8 3. Methodology ...................................................................................................... 11 3.1 Other Agreed Tasks ................................................................................................................. 13 3.2 Change in Focus ...................................................................................................................... 14 3.3 Stakeholder Review .................................................................................................................. 14 4 Expression of Interest ...................................................................................... 15 4.1 Context ..................................................................................................................................... 15 4.2 EOI results ................................................................................................................................ 16 4.3 EOI Discussion ......................................................................................................................... 16 5 SA Water Response .......................................................................................... 20 5.1 Context ..................................................................................................................................... 20 5.2 Response Findings ................................................................................................................... 20 6 Discussion ......................................................................................................... 22 7 Conclusions & Recommendations .................................................................. 25 Attachments

List of Tables Table 1: Summary of EOI results .......................................................................................... 16Table 2: Summary of Alternative water users, sources and costs. ....................................... 17Table 3: Regional investment potential of alternative water sources, as reported by EOI respondees. ........................................................................................................................... 18

List of Figures Figure 1: Map of the Coorong region indicating the location of SA Water mains (blue lines)................................................................................................................................................ 10Figure 2: Spatial representation of the location and scale (ML total consumption) of landholders who participated in the Registration of Interest (ROI) process. ......................... 19

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Executive Preview The Coorong region is a vibrant, productive area, known for production of premium red meat, a clean, diverse environment and innovative landholders.

During 2016/17, the region sought to negotiate with SA Water for a regional Coorong Water Transportation Scheme. This would enable third party access to SA Water’s infrastructure and secure cheaper reticulated water for landholders within the region serviced by the Tailem Bend to Keith pipeline network.

Through funding provided by the Minister for Regions, Coorong District Council (CDC), Regional Development Australia (RDA) and regional landholders, the region was able to undertake extensive consultation and run an expression of interest (EOI) process with regional landholders to gauge their interest in participating in a transportation scheme.

Whilst positively received by landholders, these negotiations were unable to achieve the outcome sought and SA Water would not commit to a transportation scheme. SA Water considered that its criteria for such could not be met a demonstration of growth.

Excellent regional information was gathered through the EOI process which highlighted that a range of landholders had already invested strongly in their own water infrastructure, and were using over 500 ML from alternative sources for under 80 cents per kilolitre and were no longer using mains water at $3.24/kL. The value of the water secured by these alternative water users is over $1.6million per annum and represents on farm water infrastructure investment of over $7million.

Further collaboration in the region has the potential to bring forward future investment in water security and realise this regional growth potential.

Whilst the feasibility of a water transportation scheme was found to be not currently possible, this report has provided a range of recommendations that can facilitate the next phases of deeper regional collaboration and help to coordinate the investment necessary to assist regional landholders to create greater water security on their farms.

This study has highlighted an issue that is statewide in nature, familiar to graziers and landholders in most regions of South Australia where reticulated, potable mains water is used for stock water.

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1. Introduction During 2016, the Coorong District Council (CDC) commenced preliminary discussions with SA Water regarding the viability of a Coorong Water Transportation Scheme (CWTS). The scheme would utilize capacity in the Tailem Bend to Keith water pipeline and facilitate a mechanism for transportation of River Murray water allocations owned by landholder in the region, and result in mains water price relief for commercial water users in the region.

Following grant money being made available through the Minister for Regions (Regions SA), cash and time contributions from CDC and cash contributions from a number of larger landholder businesses in the region, Seed Consulting Services (Seed) was engaged by CDC to prepare a feasibility study to consider the viability of a CWTS.

Seed’s tasks were to assess the feasibility of a regional water transportation scheme and (subject to regional and SA Water infrastructure requirements) to enable a structure of management for a scheme, similar to the Clare Valley Water Transportation Scheme (See Box 1).

A Coorong Water Transportation Scheme Project Group consisting of CDC, RDA and Regions SA representatives, and regional water users was formed to provide guidance to Seed and act as a regional intermediary with SA Water. A sub-committee was also formed to attend meetings with SA Water in the later stages of the project.

Because little was known of the types of water users and consumption patterns in the region Seed collaborated with CDC to undertake an Expression of Interest (EOI) process in the region and gain a greater understanding of regional water use including use types, volumes, SA Water account numbers and drivers for growth. This would assist the region and SA Water to obtain a better understanding where there was interest and capacity for additional use.

Advice from the region also indicated that a number of users had disconnected from the SA Water mains due to price pressures and invested in their own infrastructure, including private pipelines, micro desalination, and sheeted catchments. This had enabled those landholders to have greater control of on-farm water security and provide greater resilience to managing water pricing shocks. Seed and CDC also collected data from these “alternative water users” to assist in greater understanding of the price sensitive nature of farm water supplies, the drivers for better water security at the farm level, and the cost of installing this infrastructure.

The large nature of the region and extensive SA Water infrastructure (over 600 kilometres of network mains) results in a range of water uses including stock water for beef and sheep production, feedlot use in beef, chicken and pork production, recreational and town water supplies, as well as the key role of potable water supply for homes and townships throughout the region.

Whilst this feasibility study set out to create a viable CWTS over the duration of the project, it became apparent that one of SA Water’s key criteria for a scheme, demonstrated growth across the region, could not be met. Therefore, the emphasis of the project shifted toward identifying the alternative opportunities that exist for regional water users to secure long term suitable and cost affordable water supplies. Given that the cost of SA Water has risen so dramatically over a 10-year period, it is not currently considered a viable source for commercially focused landholders.

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This report outlines the background on the initial agreed methodology of the study. It details the regional Expression of Interest (EOI) in a future CWTS, and provides details of alternative water use options on Coorong farms. Importantly, this report presents the current directions and thoughts of the region regarding ways to create better on farm water security to assist landholders to move away from expensive potable water supplies to secure, “fit for purpose” farm water supplies.

The Coorong region is a vibrant, productive area, known for production of premium red meat, a clean, diverse environment and progressive landholders who have already invested strongly in water infrastructure. Further collaboration in the region has the potential to bring forward future investment in water security and realise this regional growth potential.

Finally, the feasibility study is presented as a summary of the completed process, as a guide for the region to focus on next steps to creating greater regional water security, business growth and resilience and provides the platform for a future funding agreement deliverable between CDC and the Minister for Regions.

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Box 1. Clare Valley Water Transportation Scheme – Case Study In the early 2000’s SA Water extended a potable water pipeline from Auburn in the Clare Valley through to Clare township. This pipeline created greater flexibility for SA Water to deliver potable water to South Australian regional areas (Yorke and Eyre Peninsula’s and West Coast) and also presented an opportunity for irrigators in the Clare Valley to contribute to infrastructure and gain water security for the Clare Valley wine industry, particularly grapegrowers requiring supplementary irrigation. Whilst the Clare Valley growers contributed $1500 per ML to committed volumes, they continued to pay the Statewide SA Water retail price, at that stage (2004) 42c/kL (0-125 kL) and $1.00/kL (>125kL). By 2011 the price (Tier 3) had risen to $2.75 (non-residential) and by 2015, $3.32/kL. This was unviable for viticulture. In 2010 the Clare Valley Grapegrowers Association approached the Minster for Water to address the high price of water. In 2014, following extensive negotiations with SA Water an agreement was reached for a summer off-peak water transportation product that delivered water to Clare Valley grapegrowers. Agreement was reached with growers who; (registered interested, and signed contracts with SA Water. The contract conditions for the delivery of water was;

- between the hours of 8pm and 6am - for $2.14/kL under take or pay arrangements - over a three year trial.

Whilst still expensive, this enabled grapegrowers to plan with confidence and to some extent, control water costs. A requirement of this arrangement was that each grower needed to own or lease a River Murray water allocation and SA Water “transports” this allocation over-night under the agreed conditions. A statutory third party access regime was instituted 1 July 2016. https://www.sawater.com.au/business/products-and-services/third-party-access-to-sa-water-infrastructure

2. Background SA Water’s Tailem Bend to Keith water pipeline delivers potable water to a region of over 750,000 hectares through a 130 km transfer main and over 600km of branch mains. The pipeline has a capacity of approximately 8 GL and currently delivers approximately 4 GL per annum1.

It is estimated2 that approximately 2 GL per annum is used by domestic water users (including farms), with another 2 GL for industrial and livestock purposes.

SA Water charges have steadily increased over a ten-year period (2006 – 2016) reaching $3.59/kL in 2015, resulting in some Coorong landholders receiving annual stock water bills in excess of $100,000. In the 2016/17 financial year water was charged at $3.24/kL.

1 SA Water pers com 2 Based on analysis of information provided by regional landholders, industry knowledge and discussions with SA Water.

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The consensus of the Coorong region was that this level of water pricing was unsustainable, particularly as a source for stock water (beef and sheep grazing) and other important rural industries such as chicken and pig production.

Regionally it was considered that there was sufficient interest in a different pricing structure, and that a water transportation product such as that which exists in the Clare Valley could be valuable for the region, particularly given the significant growth and interest in premium beef production, access to nearby meat processing in Murray Bridge and export potential for beef products from the region.

In 2016 CDC successfully received funds from Regions SA to undertake a Coorong Water Transportation Feasibility Study with further funding support from CDC, RDA (Regional Development Australia Murrayland and Riverland Inc), and a group of Coorong based livestock producers.

Seed Consulting, who had assisted the Clare Valley region with SA Water negotiations and worked extensively with the regions landholders was selected as the group to deliver this project. A CWTS Project Group was established and the first meeting was held at Coorong District Council in November 2016.

A sub-committee of the Project Group was also formed to engage with the project manager and SA Water on an as needs basis.

CDC and SA Water signed a Memorandum of Understanding (MOU) for the duration of the project in order to share relevant information, and to commit to the progress of the project as far as practical. This MOU came to its conclusion following correspondence between CDC and SA Water in August 2017.

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Figure 1: Map of the Coorong region indicating the location of SA Water mains (blue lines). Source: SA Water 2017.

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3. Methodology Seed submitted a fee for service proposal prior to being engaged as the preferred project manager, including a detailed methodology to complete the project.

A number of “Hold Points” were included in the project methodology to ensure that the Project Group, CDC and key stakeholders could vary the approach as needed.

It should be noted that this methodology altered substantially after the first “Hold Point” as a consequence of SA Water advising it could not achieve commercial terms for a Scheme. (See Section 3.2 and Section 5).

The key aspects of the methodology are outlined below.

1. Draw up a Business Case for a ‘Coorong Water Transportation Scheme’. Negotiate with SA Water, DEWNR, and potential Water Holders Establish a relationship with an interested Water Holder 1.1 Prepare a communications plan and undertake preliminary market analysis.

1.2 Compile a ‘Business Case’ for a Water Holder to enter the market as part of a ‘Coorong Water Transportation Scheme’ (CWTS).

1.3 Explore with the following bodies their interest in being a ‘water holder’ in the project area; Regional Development Australia, Livestock SA, Waterfind, Rural Co Water, Blue Sky Water, etc.

1.4 Negotiate with the following parties to obtain the best possible outcome for the project area and the regions landholders/water users;

a) With SA Water to obtain a ‘Water Transportation Agreement’ and price band that will deliver the best possible outcomes for end water users.

b) With the ‘water broker/water holder’ in regard to the conveyancing and administrative cost per water trade, per landholder. c) With DEWNR to negotiate a reasonable fee for water transfer(s), per landholder. d) With DEWNR to negotiate a waiving of the ‘site use application fee per parcel of land’. This should not apply as the water will not be used for irrigation.

2. Non-binding Expression of Interest(EOI) process with end water users.

Plan, implement, and collate the Expressions of Interest. Report back to project group and stakeholders.

2.1 Obtain;

- Water use figures for the project area. - Contact details of mains water users in the project area.

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2.2 Conduct community consultation activities as required to assist landholders/water users to engage in the ‘Non-binding Expression of Interest Process’. The scope of this task will vary subject to the interest of end water users.

Hold Point

2.3 Plan the required Registration of Interest Forms, Promotion, and data collection process. Information for end water users would need to include; - approval sought for SA Water to release individual account details, - concept background, - the role of the water holder, - an estimated price band and trial time period (approved by SA Water), - the take or pay arrangements, - potential water storage and infrastructure requirements, - a description of a SA Water smart meter.

2.4 Negotiate with potential third party meter suppliers (subject to SA Water’s approval and requirements).

2.5 Conduct the Registration of Interest Process. The scope of this task will vary subject to the final number of end water users.

2.6 A targeted promotional campaign would ensure that mains water users are aware that the Registration of Interest period is open.

2.7 A targeted consultation with rural merchandisers, agribusiness, and banks to ensure that they are aware of the Water Transportation concept and Registration of Interest process.

2.8 Liaise with local industry water infrastructure experts in regard to provision of information to local landholders.

2.9 As required assist water users to work through their own water use and infrastructure requirements prior to completing a ‘Non-binding Registration of Interest’. The scope of this task will vary subject to the interest of end water users.

2.10 Collate Registration of Interest data. Hold Point

3. Collate all information covering;

3.1 Finalise mains water users Registration of Interest data and the Water Transportation Scheme Business Case.

3.2 Describe alternate operational models.

3.3 Report back to the Project Group, potential Water Holder(s), and SA Water, providing analysis of 3.1 and 3.2 above.

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3.4 At this point the Project Group, potential Water Holder(s), and SA Water will have sufficient information to decide whether to proceed with a ‘Coorong Water Transportation Scheme’ that would be driven by the Water Holder.

Hold Point 4. End of project deliverables;

4.1 Negotiations completed to a point where Agreement is reached between all parties (includes; SA Water, Water Holding Body, Water Broker, DEWNR, end water users as shown in attachment).

4.2 Hand all of the information produced on to Coorong District Council and the Water Holder(s) required to implement a Coorong Water Transportation Scheme.

4.3 Support and facilitate the Water Holder to create a Coorong Water Transportation Scheme.

Seed’s view was that the project could result in a commercially viable water transportation scheme, subject to:

• sufficient water users agreeing to conditions of operation;

• sufficient price reduction per kL to create a sustainable business value for water users;

• the development of a commercially viable business case such that a ‘Water Holder’ NGO, association or similar could operate the administrative arrangements within agreed cost structures; and

• SA Water subsequently providing confirmation it could support a scheme that is acceptable to water users.

This outcome would include acceptable agreements for all the necessary operational requirements such as DEWNR permitting and/or licensing, temporary water trades, brokerage and conveyancing fees, meter supply, installation and reading costs and scheme administration.

3.1 Other Agreed Tasks Following engagement, Seed also prepared a detailed Communications Plan, a Risk Plan and a Project Work Plan. These documents are referenced in Attachments A, B & C respectively.

An “Options Evaluation” paper was also prepared as part of the project development. The paper was designed to consider the benefits of a broader scheme and to evaluate the range of potential water supply options available to the region given that some landholders had already invested in on-farm supply arrangements as a result of the high cost of supply from SA Water. It was acknowledged early in the project that SA Water were seeking a larger interest to underpin the broader scheme and would not be able to offer a regional CWTS if significant volume of demand for the scheme was not forthcoming. This paper is included in Attachment D.

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3.2 Change in Focus Following from the project risk plan developed by Seed a series of project “Hold Points” were implemented in the study methodology to enable changes to the approach to reflect new information. One of these hold points occurred after Step 2.2 in the agreed methodology. Following the regional Expression of Interest (EOI) process data on the volume of water being consumed by landholders was compiled, summarised and shared with the Project Group and SA Water.

SA Water analyzed this data and provided advice that it did not believe there was sufficient evidence of projected growth in water use in the region to progress with a CWTS. This fundamentally shifted the direction of the project from that point forward, as the Project Group did not feel it was warranted in progressing with a more detailed Registration of Interest (ROI) process, if a scheme was not to eventuate. This process and the steps then taken in the project are discussed in more detail in Sections 5 & 6 of this report.

3.3 Stakeholder Review Following preparation of a draft feasibility report, Seed circulated the draft document for stakeholder review. A range of comments were received and incorporated in to a final document that is representative of the broader view.

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4 Expression of Interest 4.1 Context During the week of 19 December 2016 Coorong District Council (CDC) and Seed collaborated to distribute an initial Expression of Interest (EOI) within the region. This consisted of:

• Development of an on-line Survey Monkey questionnaire • Creation of online (web based), email and hard copy response options • Hard copy mail out and email by CDC to all regional landholders (Coorong and

Tatiara DC’s) reliant on SA Water mains • Process description on CDC and TDC (Tatiara District Council’s websites

The mail out went to 1111 landholders. Dedicated email and phone numbers were created to assist with answering queries and managing responses. The close date for EOI’s was set as Friday 17th February, 5pm. A copy of an EOI form is contained in Attachment E.

The EOI process was an important opportunity to understand the following:

1. The size (ML) and pattern of usage across the region e.g. where water is being used and how much?

2. The extent of use compared to various SA Water sub-mains. 3. Locations of proposed additional water use. 4. Usage location and size in relation to any known delivery issues (such as low

pressure).

Box 2: The value of an EOI Water consumption patterns within the Coorong region were not well understood at the time of developing the project. Data confidentiality meant SA Water could not provide a detailed analysis of their customer database. So the project through the assistance of CDC and CTLAP conducted a mail out to regional landholders to request information on consumption totals (SA Water), meter and account numbers (SA Water), interest in participating on a CWTS, to what extent additional water would be taken if a cheaper pricing mechanism was available, and sought information on other water supplies and conservation strategies implemented on farm.

For the first time this enabled a snapshot of regional water use for the grazing and livestock industry and provided excellent information on how some landholders have adapted to higher water pricing by implementing on farm alternative water supplies and water conservation strategies.

Whilst the EOI provided a sub-set of information on the spread of regional water use it was able to provide a good picture of where demand and interest was throughout the region (See Figure 2). Regionally this provides better insight into where future alternative water supplies can be targeted in relation to further opportunities for economic development and potential clustering of needs.

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4.2 EOI results Table 1 summarises information collected in the EOI process and have been compiled to provide a regional summary and protect individual landholder confidentiality and Intellectual Property (IP). Table 1: Summary of EOI results

Project Area The region supplied by the Tailem Bend to Keith SA Water pipeline including the Narrung Peninsula, and extending into the Tatiara District Council.

751,919 hectares

Number of landholders responding to EOI All were interested in a Water Transportation Scheme

148

Number of water meters Total number reported by respondees

584

2015/2016 SA Water Mains Consumption as provided by landholders (EOI’s)

730.04 ML

Additional water that would be consumed in a WTS

161.48 ML

Landholders who have already installed leak detection units

113

Leak detection unit installation represents an investment of:

$169,500 - $339,000

4.3 EOI Discussion A key feature of the EOI process was the 730 ML consumption attributable to the 148 respondees (many of whom have multiple SA water accounts and meters). Whilst this still left a considerable volume of water unaccounted for, of the 4000 ML (4 GL) regional consumption, it was significant enough to understand the pressure of water pricing across the region.

During the EOI period Seed, Coorong Tatiara Local Action Plan (CTLAP) and CDC spent further time contacting and reviewing water use information from landholders who indicated they had moved to alternative sources of water and had effectively switched off their use of

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SA Water mains. Table 2 summarises this information, which interestingly identified 500 ML of non-mains water consumption, an estimated $1.6million in lost revenue to SA Water.

The main alternative water use infrastructure was; private pipelines (from Lake Albert), good quality groundwater sources, micro-desalination of groundwater, and sheeted catchments (lining a catchment with plastic to capture run-off into a lined farm dam).

These alternative water uses were demonstrated to be delivering water to the landholders for less than 80 cents/kL.

In summary, alternative water users have:

• Suppplied their own water for <80 cents per kL • Used over 500 ML / annum of non-mains water • Secured water with an estimated value of over $1.6 million • Serviced a land area of 76,429 hectares

Table 2: Summary of Alternative water users, sources and costs.

Landholders who have installed lined catchments 2

Cost of installing lined catchments $130,000 - $250,000

Landholders who have installed desalination 3

Average Cost of installing desalination $130,000

Landholders who have installed private pipeline projects from Lake Albert

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Cost of installing private pipeline projects from Lake Albert

$162,000 - $544,500

Landholders who have installed private pipeline projects from Groundwater

5

Cost of installing private pipeline projects from Groundwater

$80,000 - $150,000

Landholders who have already installed leak detection units 113

Represents an investment of

$169,500 - $339,000

TOTAL Investment in on-farm water infrastructure by alternative water users

>$7million

Additional information was sought from landholders during the EOI process to determine to what extent they would invest in alternative water sources and leak detection equipment.

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This information is summarised in Table 3. It further highlights the interest of landholders in accessing cheaper water through alternative means to mains water and the value they attach to potential loss of expensive water through system leakage. Table 3: Regional investment potential of alternative water sources, as reported by EOI respondees.

Note: (does not consider others who may be interested regionally but did not respond to the EOI)

Landholders interested in installing lined catchments

30

Potential investment in lined catchments

$3.9m- $7.5m

Landholders interested in installing desalination

29

Potential investment in desalination

$3.7m

Landholders interested in private pipeline projects

30

Potential investment in private pipeline projects

$2.4m - $16.3m

Landholders interested in leak detection units

70

Potential investment in leak detection units

$105,000 - $210,000

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Figure 2: Spatial representation of the location and scale (ML total consumption) of landholders who participated in the Registration of Interest (ROI) process.

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5 SA Water Response 5.1 Context Following compilation of data from the EOI process, Seed summarised the EOI and alternative water user data in to a format similar to Tables 1 and 2 and asked SA Water to review this data in the context of developing a CWMS. SA Water were specifically asked to evaluate and respond to the significance of loss of revenue due to alternative water users disconnecting from the SA Water mains system.

5.2 Response Findings EOI

SA Water presented their finding to the Project Group in May 2017.

SA Water provided the follow advice regarding the EOI summary data:

• Location of customers was plotted on a map which indicated a spread across the entire region.

• An extensive trial was undertaken to quantify the capability of the Water Treatment Plant (WTP).

• The WTP is able to treat 24ML/day if operating 24 hours. • Hydraulic capacity constraints on peak days – existing low pressure issues. • Technical evaluation – unable to proceed without regional growth profile.

Figure 3: Flow chart of SA Water pumping infrastructure for the Tailem Bend Keith pipeline (as provided by SA Water 1/5/17).

Further information provided by SA Water related to the requirements for SA Water to proceed with a CWTS. Requirements to proceed: Water Transportation Scheme Criteria

SA Water Criteria

• Subject to spare system capacity

• Commercially Viable:

– Scheme can’t be subsidised by SA Water’s other regulated customers (ESCOSA requirement)

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Box 3. Clare Valley Water Transportation Scheme – Terms & Conditions

• Participants to provide SA Water with demand profile • Clare Region Wine Grape Growers Association presented a proposal to SA

Water for its consideration. • Subject to spare system capacity

ü Spare capacity was confirmed once the increase in volume was determined

• Commercially Viable ü Clare customers demonstrated an increase in demand

• Revenue certainty required through ‘take or pay’ ü ‘Take or pay’ arrangement was implemented with smart meters installed

to monitor demand. • Only available to non-residential customers

ü Clare irrigators who originally invested in the irrigation infrastructure were considered for the scheme

• 3 year trial - Peak summer (Nov →March) water transportation within the window

of 8pm to 6am. • A ‘take or pay’ water transportation arrangement underpinned by increased

water consumption (scheme is not subsidised by SA Water’s other water customers).

• Irrigators can ‘carry over’ up to 25% of contracted quantity. • The Clare Region Winegrape Growers Association tasked with securing water

licences as a collective on behalf of the irrigators. Source: SA Water presentation 1/5/17

– Growth required over and above current demand (scheme to support industry growth)

• Revenue certainty required through ‘take or pay’

• Only available to non-residential customers

• Participants to provide SA Water with demand profile and nominated ‘take or pay’ volume to consider as part of a proposal to SA Water.

Alternative Water Users

SA Water advised that they had undertaken an assessment based on data provided (Table 2) to them relating to the alternative water users. The volume of reduced consumption (500 ML) and the accompanying reduced revenue (forecast to be $1.6 million), is expected to grow as other landholders disconnect the mains and move to alternative water sources.

Scenario modelling was undertaken by SA Water on projected revenue loss (including projected revenue growth).

As a result of the modelling undertaken by SA Water, they advised that the projected revenue loss was insignificant in the context of the total State revenue base (pers com SA Water presentation).

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6 Discussion This study enabled the region to enter into business negotiations for development of a CWTS with SA Water in mutual good faith that a CWTS could be achieved and create price relief to regional landholders, in a similar fashion to the Clare Valley region.

It is noted that these negotiations commenced before third party access legislation3 was passed and enacted by ESCOSA.

Whilst the region, smaller groups or individuals could seek to enter third party access arrangements under the legislation, discussions with SA Water indicate that given the high cost of producing water in the Tailem Bend Keith pipeline (suggested to be greater than $8/kL), the only avoidable costs would be the cost of licensing and allocation (e.g. owning a River Murray water licence) and as such would still result in water above $3/kL. This would be unlikely to be considered viable by proponents.

This is important in the context of viable alternatives for the region, given that alternative water users in the region are already supplying water through their own schemes for sub $1/kL.

Regional water use data was not provided by SA Water and furthermore, SA Water maintains commercial in confidence pricing agreements with larger regional water users which has the potential to bias the outcomes of this review by nature of their scale and the impact of price differences between these parties and the attempt to achieve a lower across the board price reduction for the region.

The EOI process gathered some very important regional water use data, including where demand is centered, what alternative water sources landholders are interested in, gaps in information relating regional sectorial (meat and livestock) value and growth potential, and absence of a Regional Agricultural Industry Group able to promote and manage the interests of the industry in the region.

As highlighted in Section 3.2, in February 2017, following meetings between SA and the Project Group sub-committee it became apparent that EOI’s, growth projections and volumes used by alternate water users, were insufficient to convince SA Water that a scheme could be viably implemented.

These aspects relate strongly to the data gaps identified above and the lack of a regional group or association able further drive opportunity to focus attention on these aspects and where necessary work regionally with active groups like CTLAP, Livestock SA, RDA, Regions SA and industry to gather the necessary information to underpin regional economic development and in particular, understand any barriers to improving the export potential of the region.

There may be value in developing a Business Case providing a current snap shot of the extent of the Coorong Livestock Industry, its potential for domestic and export growth, and a clear identification of any barriers to this growth which may include factors such as feed availability and access to livestock quality water at a reasonable price.

By May 2017 it was evident to the Project Group that SA Water would not proceed with a CWTS, however the information gathered in the process has been vital in enabling the Coorong region (and other State regions) to better understand that water security may in fact

3 http://www.escosa.sa.gov.au/industry/water/third-party-access

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be achievable through multiple approaches. This was highlighted by the options paper (Attachment D).

Two aspects are pivotal;

1. Additional information in the form of a Business Case regarding export market potential, barriers to regional red meat industry growth and the farm impacts of water and energy cost are required. Greater understanding of future regional water policy, in particular on unregulated surface and groundwater is also needed. These latter issues will be particularly important in a future subject to climate change.

2. Greater regional collaboration is required. The success of the Clare Valley WTS was partially due to it being managed through an Association (The Clare Valley Grapegrowers Association) with a clear voice, ability to gather good local economic and water use data and engage with all members across the regional sector. Creation of an appropriate association or co-op could assist governance arrangements and strengthen the collective voice of the region.

These aspects are useful for taking the next steps forward on water security.

At the May 2017 Project Group meeting, following the SA Water presentation, the members voted for focus on opportunities to create their own on farm water security solutions. They considered that access to low interest loans or incentives were one way to enable landholders to fund and create their own security of water supply. This was considered further when CDC met with Federal government representatives in Canberra and continues to be explored by RDA Murraylands and Riverland.

Options Paper

As more data emerged from the EOI process and additional data from alternative water users was developed, Seed was able to consider other regional options for water supply (Attachment D). The large scale nature of the region and the existence of other water assets such as the lower lakes, saline shallow water table, Tintinara/Coonalpyn, Roby, and Tatiara Prescribed Groundwater Areas present opportunities at varying scales throughout the region. In summary, these are:

• Access the Tintinara/Coonalpyn, Roby, or Tatiara Prescribed Groundwater Areas for stock water through a sub-regional, non-potable water supply pipeline

• Access the lower lakes through organised private pipeline/s • Undertake localized micro-desalination of groundwater (water table) • Construct sheeted catchments, and • Undertake Aquifer Storage and Recovery (ASR) using either off-peak SA Water

mains or private pipeline diversions • Use any of the above options to shandy mains water

These are all viable options and have varying scalability and affordability depending on the size, location and funding assistance available. They also have water policy implications and must be considered at a State level to enable consideration of sustainable use of fit for purpose water.

24


Next Steps

During the later stage of preparation of this report, the region, through discussions between CDC, RDA, Regions SA and the Project Group commenced research and development of the following:

• Funding pathways – investigating low cost loan or incentive options for landholders to invest in their own water security options;

• Formation of a Coorong Water Security Advisory Group made up of livestock producers;

• Working with State government representative groups such as Livestock SA to raise the profile of water security for livestock at the State level;

• Seeking funding from the Farming Together fund to create greater local collaboration, investigate creation of a co-op and gather additional sector specific economic data to strengthen the business case for investment in water security, and

• Investigation of the potential of smaller third party access schemes.

25


7 Conclusions & Recommendations

The Coorong Water Transportation Scheme feasibility project set out to create a viable CWTS. Whilst it approached this with the best of intentions it became apparent during the project that a CWTS was not viable under the commercial terms of SA Water’s requirements.

Nevertheless, important information was gathered highlighting where the region can invest in water security projects. This should enable action on securing water access for the future from fit for purpose sources, at costs acceptable to landholders and rural based industries.

The following recommendations have been developed from the process to date, to assist the region in achieving greater security of water supplies and control of water costs, noting that over the past 10 years these supply costs have increased to unacceptable levels for sustainable rural enterprise development.

It is considered that the water security, water pricing and broader water policy issues faced by a number of landholders (particularly graziers) in the Coorong region are similar to those faced in many of the rural areas of South Australia. As such it is believed that this feasibility study should logically form part of a much broader review and action on water access and statewide rural water policy and pricing.

Accordingly, it is recommended that:

1. Coorong District Council continues to collaborate with RDA and Regions SA to investigate and secure best options for low cost loans or incentives to support landholders in developing their own water infrastructure solutions;

2. The region, through access to the Commonwealth “Farming Together” Program, consider formation of an entity (association) that can continue to investigate, develop and promote water security projects for the mutual benefit of economic development in the region.

3. A Business Case be prepared, ensuring that all relevant information regarding the regional economic performance of the livestock industry is collected and compared with current export data and strategies for improved export potential from the region. This will highlight regional growth potential;

4. The Coorong Water Security Advisory Group collaborate with Livestock SA and other relevant organisations to promote the Coorong region as a case study for action on State wide water access and pricing based initially on the livestock industry but subsequently expanding the scope to include other enterprises in the region. This should include working with DEWNR, SA Murray Darling Basin NRM, and South East NRM to ensure that water policies facilitate security around activities such as sheeted catchments and micro-desalination;

5. CTLAP continue to support the benefits of landholders installing leak detection equipment to reduce unnecessary wastage of expensive mains water, and the range of water security projects being developed across the region; and finally

6. That the dialogue with SA Water continue as part of this process to pursue a secure and more affordable water supply in the region of interest.


Attachment A Communications Plan

Coorong Water Transportation Scheme Communications Plan 1 February 2017 (Final)

Seed Consulting Services 106 Gilles Street, Adelaide, South Australia 5000 T: +61 8 8232 48 23 - E: [email protected] - W: www.seedcs.com.au

1 Seed Consulting Services, 106 Gilles Street, Adelaide, South Australia 5000 P:+61 8 8232 4823 W: www.seedcs.com.au E: [email protected]

Table of Contents

1. Introduction .............................................................................................................. 2

2. Project Steps: What, How, and Who? ................................................................... 3

STAGE 1 ........................................................................................................................... 4 CDC and SA Water MOU ....................................................................................................... 4 Establishment of a Project Group .......................................................................................... 4 Preliminary Market Analysis .................................................................................................... 5 Compile a Preliminary ‘Business Case’ for a Water Holder ................................................ 6 Explore interest in being a ‘Water Holder’ ............................................................................ 7 Project Administration Negotiations ...................................................................................... 7

STAGE 2 ......................................................................................................................... 11

3 Expression of Interest(EOI) Process ...................................................................... 11 Obtain Data ........................................................................................................................... 11 Conduct community consultation – Expression of interest (EOI) ..................................... 12 Plan the required Non-Binding Registration of Interest (ROI) process ............................. 13 Water metering (subject to SA Water’s approval and requirements). ........................... 14

4. Non-Binding Registration of Interest (ROI) Process ............................................ 15 Conduct the Registration of Interest (ROI) process. .......................................................... 15 A targeted promotional campaign .................................................................................... 15 A targeted consultation with rural merchandisers, agribusiness, and banks. ................ 16 Liaise with local industry water infrastructure experts. ...................................................... 17 Assist water users .................................................................................................................... 17 Collate Registration of Interest data. .................................................................................. 18

STAGE 3 ......................................................................................................................... 19

5 Finalising the operational model ......................................................................... 19 Finalise Water Transportation Scheme Business Case. ...................................................... 19 Describe alternate operational models. ............................................................................ 19 Report to the Project Group ................................................................................................ 20

STAGE 4 ......................................................................................................................... 21

6. Project Conclusion ................................................................................................ 21 Recommendations to Proceed ........................................................................................... 21 Documentation handover ................................................................................................... 21 Support systems ..................................................................................................................... 22 Contingency plan ................................................................................................................. 23


1. Introduction In response to high mains water prices for users in the Coorong region, Seed Consulting Services (Seed) has been engaged by the Coorong District Council (CDC) to initiate an investigation into the feasibility of establishing a Coorong Water Transportation Scheme (CWTS). The intended output of this project is to:

• Assessment of the best options for an administrative ‘Water Holder’ structure; • Enable commercial negotiations with SA Water on water pricing for a Transportation

product within the region; and • Negotiate with, and support, potential ‘Water Holders’ to Coorong Water Transportation

Scheme commencement stage. • Deliver ongoing value to water users in the region.

The purpose of this communication plan is to clearly outline:

• Issues to be communicated to landholders, agencies and the Project Group and other stakeholders;

• How and when this will be communicated; and • Who has responsibility for communicating each specific task.

Seed has been designated as the project consultant. Andy Chambers (Director) is the project manager. General Communications Seed has created a dedicated contact phone number and email for all enquiries relating to the Coorong Water Transportation Scheme. The contact number is 04XX XXX XXX Seed has also created a dedicated email address for ALL correspondence. The email address is [email protected] Project Group members, Councilors and local government employees should all be advised to direct any enquiries to the dedicated telephone number and email. Seed will attend to all enquiries within 2 business days.


2. Project Steps: What, How, and Who? Project tasks are expected to be delivered in the following timeframes. This will require dedicated periods of communication with stakeholders and reporting to the Project Group. Stage 1 – Business case development and preliminary communications 15th November 2016 – 16th January 2017 Stage 2 – Expression of Interest and Non-Binding Registration of Interest (ROI) process 16th January 2017 – 12th May 2017 Stage 3 – Collate all Information and report 15th May 2017 – 15th June 2017 Stage 4 – End of project deliverables Project completion 30th June 2017.


STAGE 1 CDC and SA Water MOU To ensure both organisations seek to implement their best collaborative endeavours to create a CWTS, a MOU is proposed to be signed between CDC and SA Water. Seed will assist in facilitating this outcome.

Establishment of a Project Group To ensure lines of communication remain open between Project Group members, a series of meetings will be organised throughout the lifetime of the project. In total, five meetings will be held over the period (subject to change if/when necessary) and Seed will organize suitable times for all members and email calendar invites. Role of the Project Group:

• The role of the Project Group will be to provide guidance and advice to the project manager for the duration of the project (December 2016 to July 2017);

• Assist the project manager and SA Water to review agreement documents and negotiate a prepared outcome for the region;

• Assist CDC and the project manager with regional contacts; • Provide assistance with any conflict or contractual resolution, should this be required; • Provide a conduit to SA Government as required; • Assist with document and reporting review; and • Any other tasks as agreed.

Parties involved • CDC; • SA Water; and • Seed (assistance role).

Tasks

• Seed to organise meeting with CDC and SA Water for signing of MoU. (November 2016)


Preliminary Market Analysis To assist in building the business case and ‘Water Holder’ model, Seed will undertake a preliminary market analysis. This will involve meeting in person the top 10 SA Water supplied landholders and a subset of around 15 other users by phone to discuss potential delivery models and their SA Water supply needs, and on farm infrastructure requirements / challenges. Identification of on farm infrastructure requirements / challenges may highlight the potential to negotiate bulk area discounts for on farm water infrastructure connected to this scheme e.g. pumps and tanks. Discussion of current ATO ‘water facility’ depreciation arrangements may also have some bearing on the decision making of landholders. The above task may require some resource input from SA Water and CDC to provide appropriate landholder data and to make initial contact. If necessary Seed will contact both parties to arrange data access discussions. The output of this stage will be a written synthesis with will be provided to the Project Group for discussion at the February steering meeting.

Parties involved • All Project group members

Group to include Reps from CDC, RDA, Regions SA and key landholders.

Tasks • Seed to liaise with CDC to form a Project Group consisting of

project stakeholders and interested landholders. • Determine a suitable time for the first meetings then email

calendar invites. (proposed first week of December 2016). • Seed to provide a suggested meeting calendar, December

2016 – June 2017 (Attachment A). • Seed to draft a meeting Agenda for the first Project Group

meeting. (Circulated by Seed two weeks prior to meeting).


Compile a Preliminary ‘Business Case’ for a Water Holder Seed will prepare a preliminary business case for a ‘Water Holder’ to enter the market as part of a CWTS. This business case will be developed using information collected during the Preliminary market analysis step and will form an initial guide to the best structure for administration moving forward. A significant component of the final business case will be a thorough investigation of the potential market. This will occur through a later, more formal Expression of Interest (EOI) process. The initial ‘business case’ will consider the following aspects:

• potential size of the market (ML) • a base volume for negotiations with SA Water • possible price range for a transportation product • initial models for a ‘water holder’ entity • likely administration costs for managing a ‘water holder’ entity

From the above investigation, Seed will provide a discussion paper and present the initial business case to the Project Group for discussion. This will also assist a “Water Holder” to further consider their options. The target date for presentation is the March 2016 Project Group meeting.

Parties involved • Seed, SA Water and CDC

Tasks

• Seed will work with CDC and SA Water and compile a database of water users, approximate water account size (usage 2014/15) and landholder contact details.

• Seed team members will undertake site visits to top 10 water users in the region and call (telephone) 15 others across the region to discuss their views on a CWTS and their specific SA Water delivery needs); and

• Seed to prepare written synthesis of investigation and disseminate to Project Group for February 2017 meeting.


Explore interest in being a ‘Water Holder’ Seed will discuss with a range of bodies including (but not limited to) Regional Development Australia, Livestock SA, a range of water brokers and other business entities, their potential interest in becoming a ‘Water Holder’ on behalf of a future transportation scheme. A range of barriers and benefits will be considered. A report will be presented to the Project Group for discussion at the March 2017 meeting.

Project Administration Negotiations Seed will provide a written report to the Project Group outlining negotiations, discussions and agreed outcomes with the following entities (a-d).

a) With SA Water to obtain a ‘Water Transportation Agreement Framework’ and initial price band estimate that will deliver the best possible outcomes for end water users. Seed will assist discussions between SA Water and the Project Group in firstly formalising the MoU between CDC and SA Water to commence the next stages of negotiations regarding a water transportation product. These discussions may include a ‘Water Holder’ entity depending on progress of the preferred model. A Draft Water Transportation Agreement Framework will be circulated to the Project Group for discussion. This document is likely to be a work on progress over the project duration.

Parties involved • Seed

Tasks

• Seed to prepare a preliminary business case discussion paper and present the initial business case to the Project Group at the March 2017 Project Group meeting.

Parties involved • Seed

Tasks

• Seed to discuss with relevant organisations to assess interest in becoming a Water Holder for the scheme: and

• Present findings to Project Group for review and further discussion at the March 2017 meeting.


b) With the ‘water broker/water holder’ regarding the conveyancing and administrative cost per water trade, per landholder. Seed will discuss with a range of water brokers the best water allocation trade process and possible pricing and brokerage for annual volumes. A temporary arrangement may be required if a subsequent transportation agreement with SA Water is for a temporary period (e.g. 3 yrs). Ultimately this would be an agreement between the ‘Water Holder’ and the broker under this model (if agreed) or between broker and water user (if other models are agreed).

Options, including a written offer (quote) for potential fees, charges etc. would be presented by Seed to the Project Group for review. The most favourable offer would then be selected and Seed would then work with this broker and a ‘Water Holder’ to formalise agreements for a contractual period (once a Transportation Scheme is considered commercially viable).

Parties involved • Seed; • CDC; and • SA Water

Tasks

• Seed to assist and organise a meeting between CDC and SA Water to formalise MoU between CDC and SA Water,

• Seed to assist SA Water as necessary to develop an initial Water Transportation Agreement framework, including proposed price band of supplied water, and

• Seed to develop with SA Water any other conditional requirements such as delivery times, hours, metering etc. to be included in the Draft Water Transportation Agreement.

• Seed to circulate Draft Water Transportation Agreement documents to the Project Group as they are developed. (Likely February to May 2017).


c) With DEWNR to negotiate a reasonable fee for water transfer(s), per landholder. Seed will discuss with DEWNR, options for managing annual temporary water allocation transfers, a structure and costs. The intent will be to secure the best possible financial and administratively “lean” process over a mutually beneficial time period. Agreed administrative process, including fees and charges will form an important part of the business case for a Water Transportation Scheme.

Parties involved • Seed; • Water broker; • Water holder; • SA Water; and • Project Group

Tasks

• Seed to facilitate discussion with a range of water brokers to determine best offer for water trade services;

• Seed to provide a review report to the Project Group to approve a preferred broker or broking process; and

• Seed to formalise agreements between water broker and water holder (this may not occur until later in the project when the final EOI and business case are fully understood).

• Seed to engage with this work December 2016 through January 2017. Reporting to the Project Group at the February 2017 meeting.


d) With DEWNR to negotiate a waiving of the ‘site use application fee per parcel of land’. This should not apply as the water will not be used for irrigation. During negotiations on transfer fees (1.6 c), Seed will also negotiate the potential of waiving of the site use application fee, given that water is not intended for irrigation purposes and will in most cases be for stock or industrial use and therefore “per parcel of land’ is not applicable. Where irrigation is proposed, we will negotiate the best possible outcome for each individual circumstance.

Parties involved • Seed; and • DEWNR;

Tasks

• Seed to organise and facilitate discussion with DEWNR to determine best process for managing annual temporary water allocation transfers and negotiate waiving the ‘site use application fee per parcel of land’

• Seed to present a report to the Project Group summarising agreed DEWNR administrative requirements at the February 2017 meeting.

Parties involved • Seed; • DEWNR • Project Group

Tasks

• Seed to facilitate discussion with DEWNR regarding temporary water allocation transfer and licensing requirements, fees and charges.

• Seed to present a report to the Project Group summarizing agreed DEWNR administrative requirements at the February 2017 meeting.


STAGE 2

3 Expression of Interest(EOI) Process Obtain Data Seed will work with SA Water, CDC and landholders to determine water use data and landholder ID for potential water users in the CDC and Tatiara District Council regions, taking in to consideration privacy and confidentiality. We anticipate that this may require CDC to contact its rate base to secure written authority to disclose aspects of landholder SA Water account details to Seed. This may include details such as property location (CT, allotment, Section, Hundred etc.) SA Water account number, meter size and water use (last three years) kL (to be provided by SA Water).

Seed will prepare all necessary letters, correspondence etc. and work with CDC to ensure the minimum work load for CDC in accessing and distributing this information, however, recognising that the initial formal correspondence to landholders may need to come from CDC.

Parties involved • Seed; • SA Water; and • CDC

Tasks

• CDC to distribute written authority letter seeking disclosure of SA Water account details of landholders to Seed, potential end ‘Water Holder’, Water Broker, and other stakeholders who require access to land ownership information.

• SA Water to provide customer account numbers, meter size and water use for last three years; and from above identification

• Seed to prepare correspondence material and assist CDC in distributing information about the scheme to users identified in the region.

• Seed to store all information in a secure, confidential data base.

• Tasks above will occur between December 2016 and February 2017 and are likely to be ongoing over the duration of the project.


Conduct community consultation – Expression of interest (EOI) Once landholder approvals for contact have been received, Seed will contact landholders via letter and/or email to outline the proposed EOI process. A draft letter will be presented to the Project Group and SA Water for agreement prior to sending to landholders. Seed (in collaboration with CDC) will manage a contacts database to enable a record of interested parties. We suggest an initial 30-day period for advisory indicating a formal ROI process is to occur, seeking feedback and approval for direct future contact by the project manager.

At this stage, we will review the numbers of contacts with the Project Group as an initial indication of scheme interest and for project budget management purposes.

Parties involved • Seed; • Project Group; • SA Water; • CDC

Tasks • Seed to draft landholder contact letter advising the proposed

EOI process and send to landholders in the region after review by Project Group and SA Water (December 2016)

• Seed and CDC to manage contact database and record numbers of interested parties (Dec 2016 – June 2017)

• Seed and Project Group will review numbers of interested parties as an indication of initial scheme interest (January 2017) Seed to provide updates to Project Group via email January 2017 with summary report, Project Group February meeting.


Plan the required Non-Binding Registration of Interest (ROI) process Once the initial EOI advisories are received, Seed will design a form for the formal, non-binding ROI process. We will also plan a process for promoting, mailing, receiving, prompting and collating responses. Landholders will be informed of all relevant information (as outlined in 2.9 above). We expect this will include written (post) and email correspondence and three information sessions within the region (Tintinara, Coomandook and Meningie). We will coordinate with CDC the best method for primary contact and receipt of ROI’s.

Our initial expectation is for 200-360 responses, however, given the large customer base of 900, double the number (720) of responses could be possible and will require flexibility in managing all aspects of this part of the project. We intend a series of review points during this stage to gauge the likely number of responses and manage work load accordingly.

Should the numbers go higher that 720 we will raise this with the Project Group as soon as possible to consider how the necessary resources will be applied. This may require Seed to add an additional resource for a number of weeks or for CDC to include some project officer time. The best approach to resources and budget will be agreed, should these circumstances eventuate.

Parties involved • Seed; • CDC • Project Group;

Tasks

• Seed to design form for the formal, non-binding ROI process. • Seed in consultation with CDC will plan a process for

promoting, mailing, receiving, prompting and collating responses including post and email correspondence and organising three information sessions (February 2017).

• If ROI numbers exceed 720 responses, Seed to organize meeting with Project Group to determine best method of allocating resources (February/March 2017).

• Seed to arrange three community meetings (Tintinara, Coomandook and Meningie) in mid-February 2017.


Water metering (subject to SA Water’s approval and requirements). Once ROI numbers are more fully understood, we will discuss with SA Water smart water metering requirements. Subject to acceptance and agreement (by SA Water) we will negotiate with potential third party providers to tender for supply, with the intention that the outcome is a financially better position than meters being supplied and installed by SA Water.

We will consider all opportunities for remote access and management of meters and data to assist with ongoing efficiency management of meter data. This will need to consider SA Water billing requirements.

Tender, supply and install may need to be run as a separate (but related) activity to this project and could be managed by the future ‘Water Holder’. We will discuss this further with CDC, the Project Group and SA Water.

It should be noted an option for metering maybe a price per kL included into the cost of water by SA Water. We will raise this with water users in the ROI process.

It may also be possible to use existing water meters. This will be determined early in discussions with SA Water.

Parties involved • Seed; • SA Water; • Water Holder (potentially); • CDC; • Project group;

Tasks

• Seed to raise discuss meter options with SA Water in November 2016;

• Seed to negotiate for third party providers of smart water meters with SA Water. (If this is an option);

• Seed to organize for third party providers to tender for supply (if viable)

• Seed to discuss with CDC and Project Group the potential of Water Holder Managing supply and installation of Smart Meters (if required)

• Seed to raise option of metering costs to be included in water supply charges (if supplied by SA Water)


4. Non-Binding Registration of Interest (ROI) Process

Conduct the Registration of Interest (ROI) process. Seed will manage the formal (non-binding) ROI process, working collaboratively with CDC and the Project Group to distribute ROI forms and set a suitable response time. We suggest an ROI period of 60 days.

We will meet with the Project Group and SA Water during this period to advise on progress. This will likely assist in understanding more fully the final business case and assist SA Water with its own business case analysis, which in turn will determine the type of product to be offered, terms of delivery and price.

We will also continue to review total numbers and budget during this period.

A targeted promotional campaign Prior to and during the nominated ROI period Seed will distribute information regarding the intent and expectations of the ROI process to ensure that all mains water users are aware of the potential benefit to them of being involved in the ROI process. This will include a letter drop (CDC to assist with rate base contact details matched with SA Water account holder Database).

Email, public notices (local papers, Post Office notices and community group notice boards and sporting and community clubs) will be used as appropriate to ensure maximum distribution and potential for advice regarding the ROI process.

Parties involved • Seed; • CDC; • Project group;

Tasks

• Seed and CDC to distribute ROI forms and set a suitable response time

• Seed to arrange progress meeting with Project Group and SA Water including assisting SA Water with business case analysis (February and March 2017)


A targeted consultation with rural merchandisers, agribusiness, and banks. The communications plan will identify key rural merchandisers, agribusinesses and banks for distribution of advice regarding the ROI process. They will be key distribution channels for communication regarding the intent of the ROI and the formal ROI process.

Parties involved • Seed; • CDC;

Tasks

• Seed to distribute information about the proposed scheme including the benefits to landholders with assistance from CDC to target engagement to most suitable stakeholders. Distribution methods will include: - Letter drop - Email - Distribution of public notices in community hotspots - Coorong and Tatiara District Council facebook pages - Coorong and Tatiara District Council web pages (Ongoing tasks – majority occurring Feb/March 2017)

• Discuss with the Project Group setting up social media sites to assist the campaign (December 2016).


Tasks

• Seed to identify and contact rural merchandisers, agribusinesses and banks in the region and prepare public notices for display in premises (January & February 2017)


Liaise with local industry water infrastructure experts. The communications plan will also identify key local industry water infrastructure experts whom we will communicate and liaise with to ensure an open, additional communications channel to landholders. The plan for communications is likely to include email, printed flyers and phone calls to provide advice and direction regarding the ROI process.

Assist water users All communication advisories regarding the EOI process will contain dedicated contact details for Seed. We will ensure calls are answered or returned on the same day wherever possible to assist water users with making prompt decisions.


Tasks

• Seed to continue to distribute information about the proposed scheme including the benefits to landholders with assistance from CDC to target engagement to most suitable stakeholders. Distribution methods will include: - Telephone - Letter drop - Email - Distribution of public notices in community hotspots - Social media (if appropriate) - Will occur March to May 2017


Tasks

• Seed to identify and contact local industry water infrastructure experts in the region and prepare public notices for display in premises (January & February 2017)


We will discuss any need for additional support from CDC or key members of the Project Group however we suggest a dedicated point of communication (Seed) would help to ensure a consistent message.

Because numbers may be variable we will constantly monitor the volume of responses. If enquiries reach a level above the resourced capacity, we may need to add resources which we have included in the budget up to an indicative level (total 720). As indicated earlier we will remain in contact with CDC and the Project Group and if numbers go beyond 720, we will discuss any need for appropriate budget or resource variations.

Collate Registration of Interest data. We will collate all data from the ROI process into a single Excel spreadsheet and prepare a summary advisory report to be presented to the Project Group at an update meeting immediately following closure of the formal ROI period. We will also provide updated data to SA Water at this time to enable them to continue to formalise their own offer regarding the terms and price structure of a proposed scheme.

Parties involved • Seed; and if necessary • CDC and members of Project Group

Tasks

• Seed to answer any queries from water users interested in the scheme from the dedicated phone and email address

• Seed to monitor total interested responses and contact CDC and Project Group if numbers go over 720 to negotiate appropriate management options moving forward. (April/May 2017)

Parties involved • Seed; • Project Group; • SA Water

Tasks • Seed to arrange meeting with Project Group and SA Water to

present data collected from the ROI process (May 2017).


STAGE 3

5 Finalising the operational model

Finalise Water Transportation Scheme Business Case. Once the formal ROI period is closed and all relevant information is collated, we will run the data through the preferred business model (adapted from initial business case assessment, Stage 1). We expect that this stage will also include discussions with SA Water to confirm a base price for transportation options and consider additional aspects such as metering, billing and delivery hours and time periods.

Describe alternate operational models. We will run data from the ROI process through any alternate models identified in the initial business case assessment to ensure that the best model for management of a transportation scheme is presented for consideration by all relevant Stakeholders.

Parties involved • Seed; • SA Water

Tasks • Seed to run data through the preferred business model already

identified and from this analysis, liaise with SA Water to confirm transportation options and a base price (May 2017)

• Seed to liaise with SA Water for issue of a preliminary water transportation agreement contract document (May 2017) for review by stakeholders.

• Seed and SA Water will distribute a draft transportation agreement contract to landholders who participated in the EOI (May 2017).


Report to the Project Group We will present our findings to the Project Group in a workshop. This will include analysis of the ROI process, business case modelling and alternative options assessment. It may also be useful to present the preferred model to a reference group of water users to test acceptance of the model. We will discuss this option further with the Project Group.

We will peer review our model with our external water industry professional to ensure all relevant data, financial metrics and potential economic variables have been considered.

Parties involved • Seed;

Tasks

• Seed to compare alternative business models with the preferred model to ensure most optimal decision is being made and present findings in meeting with the Project Group (May 2017)

Parties involved • Seed; • Project Group; • CDC; • SA Water; • Water industry professional; • Selected group of water users • Financial Contributors

Tasks

• Seed to organise peer review of preferred model with water industry professional (April/May 2017)

• Seed to organise a workshop to present ROI findings to the Project Group, CDC and SA Water (May 2017)

• Seed to discuss with Project Group the suitability of including a selected group of water users as attendees to the workshop (early May 2017)


STAGE 4

6. Project Conclusion

Recommendations to Proceed All non-confidential data, business case assessments and other relevant materials will be compiled into a final document, including a recommendation and provided to the key stakeholders for consideration with view to presentation of a commercially viable transportation scheme to be operated by the agreed ‘Water Holder’.

It is our view that at this stage the ‘Water Holder’ should have been selected and will have all information necessary to develop a functioning CWTS for water users in the region.

Documentation handover

All information produced by Seed in the project will be provided to CDC, apart from any commercial in confidence or private information specifically requested by individuals (water users) or SA Water to be kept confidential. For instance, information such as private financial information, private contact details disclosed for the purposes of assisting water users to determine their best business position or individual SA Water account information that has been provided by water users under terms of privacy will not be disclosed or forwarded.

Parties involved • Seed; • Project Group; • SA Water • CDC • RDA • Regions SA • Financial Contributors • All other key stakeholders

Tasks

• Seed will complete the final recommendations document and disseminate to all key stakeholders involved in the final decision including Project Group members, SA Water and CDC. (June 2017)


Support systems Seed will use our best endeavours to support and facilitate a positive outcome - a commercially viable Coorong Water Transportation Scheme. This will include assisting a ‘Water Holder’ to facilitate the scheme up to a point where the ‘Water Holder’ can confidently operate the scheme independently beyond the completion of this project.

If for some reason, a ‘Water Holder’ is not be created until sometime after this project, then we suggest a minor budget component be held over to enable Seed to spend some time (nominally a day or two) with the ‘Water Holder’ to assist with their uptake of the scheme.

We consider however that it would be to the best advantage of a scheme that a suitable ‘Water Holder’ be developed during the project and be ready to commence operating immediately following completion of the project. It is our intent to ensure this is the preferred and actual outcome.

Parties involved • Seed • CDC, and • Project Group

Tasks

• Seed to provide CDC all non-confidential information collected and produced throughout the project (June 2017)

Parties involved • Seed; • Water Holder;

Tasks

• If a water holder is not nominated throughout the project lifetime, Seed at the discretion of the Project Group and CDC, will assist the water holder in the initial transition of running the scheme. Should this occur, Seed expects this will require one or two days on site to provide necessary training. (June/July 2017 or TBA)


Contingency plan Should at any stage it appears that a business case for a water transportation scheme is not viable, or functionally a system to deliver the required outcomes is poor, we will inform the Project Group and call a meeting, including all relevant stakeholders, to review the project direction and subsequently implement actions necessary to achieve a beneficial outcome. If at any stage a resolution appears unlikely, conflict guidance or third party facilitation could be required to achieve the required result. This is a risk management approach to manage any potential threat to the desired outcome, a fully functional Coorong Water Transport Scheme.


Attachment B Project Risk Plan

Seed Consulting Services 106 Gilles Street ADELAIDE, South Australia 5000

Project Risk Management Plan Coorong Water Transportation Scheme (CWTS)

Author: Andy Chambers Date: 1st February 2017 Version: Final

Coorong Water Transportation Scheme - Risk Management Plan

Risk Management Plan CWTS Final Page 1

Document Control Document location

Location

/Shared/SEED/Clients/222 Open Projects/617 CDC/02 Working/Risk Management Plan/Risk_Management_Plan_CoorongWTS_Final_010217 .docx

Author

Position Name Contact no

Director Andy Chambers 0419 817 205

Stakeholders and other contributors

Position Name

Consultant Andrew Osborne

Consultant Stewart Duncan

Revision history

Version Issue date Author/editor Description/Summary of changes

Final Draft

1/2/17 Andy Chambers Final Draft

Reviewed by

Version Issue date Name Position Review date

Approvals

Version Issue date Name Position Approval date

Related documents

Document Location

Seed CWTS – Work Plan (A1) Seed CWTS – Project Group members (A2) Seed CWTS – Communications Plan (A3) Seed CWTS – Project Group meeting schedule (A4)


Table of Contents 1. PROJECT SUMMARY ............................................................................................................................... 3

1.1. Opportunity Statement ....................................................................................................................... 31.2. Objectives and Critical Success Factors ........................................................................................... 41.3. Scope ................................................................................................................................................ 4

1.3.1. In scope 41.3.2. Out of scope 41.3.3. Assumptions 51.3.4. Constraints 5

1.4. Risk Management Framework ........................................................................................................... 51.5. Project Tasks and Schedule .............................................................................................................. 5

2. PROJECT RISK ASSESSMENT ............................................................................................................... 62.1. Risk Rating Methodology ................................................................................................................... 62.2. Consequence Legend ....................................................................................................................... 62.3. Risk Identification .............................................................................................................................. 7

2.3.1. Operational Risks 72.3.2. Legal and Compliance Risks 82.3.3. Market and Financial Risks 92.3.4. Miscellaneous Risks 11

3. RISK MANAGEMENT PROCESSES ...................................................................................................... 123.1. Organisation .................................................................................................................................... 123.2. Risk Management Process and Reporting ...................................................................................... 123.3. Risk Management Key Tasks and Schedule ................................................................................... 13


1. Project Summary This Risk Management Plan applies specifically to the project management of an evaluation by Seed Consulting Services (Seed) in to the viability of a Coorong Water Transportation Scheme (CWTS) proposed by SA Water. The Coorong District Council (CDC), in collaboration with Regions SA (PIRSA), RDA Murraylands and regional landholders are seeking to evaluate the potential for a (CWTS). If implemented, the scheme would provide for access to the SA Water Tailem Bend to Keith potable water pipeline network in order to provide landholders with a transportation product to use water for commercial/industrial purposes at a price better than the current SA Water Tier 2 State-wide price. The project will require engagement with landholders and businesses in the region seeking to use water for commercial and industrial purposes. The scheme will require engineering and operational feasibility assessment by SA Water to determine the capacity and capability of such a transportation scheme and engagement with the Department of Environment, Water and Natural Resources (DEWNR) to enable landholders to secure and manage River Murray water entitlements. Risks borne by third parties such as SA Water and DEWNR are not included in this plan. Furthermore creation of some form of regional entity or water holder, or arrangements with a similar existing organisation, may be required to facilitate ongoing water entitlements transfer, continued liaison with SA Water and other stakeholders and maintain viable arrangements for the benefit of the region and water users. A regional evaluation study (the Project) to determine the viability of a CWTS is proposed. Funds to assist the study have been provided by the Minister for Regions, Coorong District Council (CDC) and several regional stakeholder businesses. Seed Consulting Services Pty Ltd (Seed) has been engaged to project manage the process. A work plan document is attached. (Attachment 1). A Project Group consisting of key stakeholders will oversee the project and assist Seed as necessary to facilitate a successful project. A list of the Project Group members is provided in Attachment 2. The decision to implement a scheme will be underpinned by the Project Group’s assessment that the business case for a CWTS will benefit the region and support ongoing water and economic security for the intended market. A sub-committee of the Project Group, in collaboration with Seed will provide interface with SA Water and assist with the review and approval of proposed SA Water pricing and contract terms. It is intended that the CWTS be fully functional by summer 2017.

1.1. Opportunity Statement SA Water potable water is currently used by a range of commercial/industrial stakeholders (landholders) connected to the SA Water Tailem Bend to Keith pipeline network. This includes account holders connected throughout the Narrung Peninsula, Jervois, Coomandook, Coonalpyn, Tailem Bend, Coorong (Field, Meningie, Woods Well, & Salt Creek) and Keith areas who currently use potable water for commercial, industrial and recreational purposes and pay the full state wide price for this water. In 2014 SA Water successfully negotiated a business agreement with the Clare Valley Winegrape Growers Association to operate a three-year trial of a transportation scheme in the Clare Valley region. Terms of this transportation scheme arrangements currently allow delivery of water for around $2.15/kL. Scheme participants also may water allocation lease and licence entitlement fees to enable this water to be transported to them. Should a similar scheme be negotiated for the Coorong region, then subject to SA Water system and operational requirements, Coorong regional users could expect to lower the current cost of water. Such an outcome may be to the business benefit of numerous regional water users, however assessment on a user case by case basis will be required to ascertain the long term benefit of any such arrangement to their business.


1.2. Objectives and Critical Success Factors For most water users (stakeholders), success of a CWTS would need to ensure that the full cost of water was considerably less per kL than what is paid now (or future price increases can be reasonably projected) to ensure viability of investing potentially additional business time and resources to secure a cheaper product. Therefore a key objective of the project is for regional businesses to secure water at a price that represents value. A number of critical success factors exist for both regional stakeholders and SA Water. These include: • An assumption that SA Water can develop, support and distribute a water transportation scheme

with a price, terms and conditions attractive to regional water users; • A requirement that business negotiations are politically attractive to the South Australian State

Government and can be shown not to represent a subsidised water product; • That the processes is not politicised creating a block to business negotiations; • That the outcome represents a growth model that the SA Water Board can be confident satisfies

SA Water business requirements; • A need for the Essential Services Commission of South Australia (ESCOSA) to be satisfied that

the outcome is not adversely affecting water pricing or other water consumers; • A product that is operationally and cost viable for water users; • Providing water users with contract terms that provide confidence in medium term investment e.g.

do not require investment by landholders where future price increases wipe out any initial gains (better than 5 year ROI)

• Demonstration of a collaborative model for regional economic growth and social benefit; and • The ability for regional stakeholders to create a model for proactive collaboration across a range

of beneficial regional sustainable development activities.

1.3. Scope The full scope of the project is described in more detail in the project work plan (Attachment 1) and communications plan (Attachment 3). In summary the project scope involves four stages:

• Stage 1 – Business case development and preliminary communications 15th November 2016 – 16th January 2017

• Stage 2 – Expression of Interest and Non-Binding Registration of Interest (ROI) process

16th January 2017 – 12th May 2017

• Stage 3 – Collate all Information and report 15th May 2017 – 15th June 2017

• Stage 4 – End of project deliverables

Project completion 30th June 2017. 1.3.1. In scope

In scope activities include all those listed above for which detail is provided in the work plan and communications plan documents (Attachments 1 & 3). 1.3.2. Out of scope

Residential or domestic water supplies will not be a part of this evaluation.


Costs to set up and run a future “water holder” entity, should the project decide that this is a necessary outcome, are not included. 1.3.3. Assumptions

• SA Water is under no obligation to proceed with an offer of a CWTS to the region and will only do so providing that critical success factors (outlined in Section 1.2) can be satisfied.

• Further, that SA Water will assist the process of the investigation according to the terms of the Memorandum of Understanding (MoU) between SA Water and Coorong District Council (CDC), agreed in December 2016.

• Regional landholders will accept that the Project Group is assessing the water transportation scheme viability on their behalf and negotiating the best possible business outcomes for all.

• Not all landholders will agree to be involved and that the best outcome for everyone (or business) will be assessed by each accordingly. Seed will assist landholders in making this assessment where requested and where sufficient information is provided during the terms of the project.

• At a certain stage of the project (where price and terms and conditions of a viable scheme are agreed) SA Water will take over the regional communications and marketing and approach each and every SA Water account holder to advise them of the nature and potential of the scheme).

1.3.4. Constraints

Seed is constrained to the agreed terms and conditions of the engagement and project scope as outlined in the signed project agreement between Seed and CDC. SA Water is constrained to the requirements of the State Government, ESCOSA and its Board with respect to operation, pricing and management of the water supply network and can not operate outside of these requirements.

1.4. Risk Management Framework A risk management plan has been developed to assist with the ongoing management of the project. The framework has been developed from a range of risks and has been based on a level of risk tolerance as defined in the risk rating, with controls developed to mitigate the identified project risks. The management of the controls would be undertaken by Seed Consulting through the Project Group who would sanction and or confer on the mitigation ahead of actioning.

The risk management plan is summarised in Section 2 - Project Risk Assessment.

The risk management plan has been provided to the Project Group.

It is recommended that the CWTS Project Group review these risks and the proposed solutions and accept this risk management plan as the method to manage project risks for the duration of the project. 1.5. Project Tasks and Schedule A range of risk assessment and management tasks have been incorporated into the accompanying work plan document (Attachment 1) and schedule. These tasks are highlighted in red text in each case to highlight that the task is a project risk related activity and requires additional project management attention and review by the Seed project team.


2. Project Risk Assessment To ensure that the project is successfully completed and conducted within a clearly defined and documented set of tasks and timelines, this project risk assessment has been prepared and circulated to all key stakeholders. The process has involved using the established risk management matrix approach of consequence and likelihood to rate each risk: low, medium, high or extreme as outlined in the tables in Section 2.1 and 2.2.

2.1. Risk Rating Methodology The following matrix (Section 2.1 and 2.2) were used to assess the risks identified for key aspects of the project.

Consequence Rating Insignificant Minor Moderate Major Catastrophic

Almost certain - controls unsatisfactory to mitigate the risk

High High Extreme Extreme Extreme

Likely - Controls inadequate to mitigate the risk and require improvement

Medium High High Extreme Extreme

Possible - Controls reasonable / adequate to mitigate the risk but may still require improvement

Low Medium High Extreme Extreme

Unlikely - Controls robust and adequate to mitigate the risk

Low Medium Medium High Extreme

Rare - Controls strong to mitigate the risk

Low Low Medium High High

2.2. Consequence Legend

Rating Description Insignificant Impact can be easily absorbed without requiring management effort

Minor Impact can be readily absorbed but some management effort is required

Moderate Impact cannot be managed under normal operating conditions; requiring moderate level of resource and management input

Major Impact requires a high level of management attention / effort and resources to rectify

Catastrophic Disaster with potential to lead to business collapse and requiring almost total management attention / effort to rectify


2.3. Risk Identification The following sections break down key stages and steps with the CWTS project and consider: • The risk summary • A description of the risk • The preliminary risk rating

• A risk mitigation description, and • The residual risk rating (following action to reduce risk). Following this assessment, Section 3.0 describes the risk management process, designed to ensure that resources, strategy, action and schedule are designed accordingly to mitigate known and potential risks.

2.3.1. Operational Risks

Risk Summary Description Preliminary

Risk Rating Risk Mitigation Description Residual

Risk Rating

Poor work flow (Seed) Seed does not complete tasks in the agreed and required timeframe, due possibly to increased numbers of interested users.

Medium Seed will review the number of potential participants, all work flow time schedules and report monthly on progress to the Project group. If work flow get behind the required schedule Seed will allocate additional project resources. If this is as a consequence of increased landholder interest (e.g. >600) Seed will negotiate with CDC for additional funding and commit further resources.

Low

Poor work flow (SA Water) SA Water does not complete tasks in the projected timeframe, due possibly to increased numbers of interested users, complex engineering or operational requirements or poor growth potential of the scheme

Medium Seed will meet regularly with SA Water to gauge these aspects. This may be largely out of Seeds control and may need additional Project group intervention, negotiation or SA Water resources to address the required outcomes.

Medium


2.3.2. Legal and Compliance Risks

Risk Summary Description Preliminary

Risk Rating Risk Mitigation Description Residual

Risk Rating

No legal structural capability

Currently the region does not have a (legal) representative body to act on behalf of water users as a “water holder entity”. If the scheme is deemed viable but an entity is unable to manage water entitlement on behalf of users, this could result in lack of landholder participation.

Extreme To successful implement a scheme, a water holder entity should be formed. Seed is prioritising action on this aspect as part of the project and will report at each Project Group on progress and seek regular input by the Project Group on direction and action.

Medium

ESCOSA requirements In some circumstances, depending on the scheme or conditions negotiated, ESCOSA may refuse to approve the scheme as it may conflict with the best interests of the State or SA Water customers

Low Seed will maintain a high level of communication with ESCOSA and inform them of each proposed critical step and ensure project review as negotiations proceed with SA Water, such that there is ESCOSA confidence on the scheme

Low

SA Water business Development of a water entity and terms and conditions of supply are unable to be agreed or fit within SA Water’s business management requirements

Low High levels of project communication and negotiation will ensure the project proceeds within agreed and necessary boundaries, subject to business viability for both parties

Low

Inaccurate communications Seed, CDC and/or Project Group provide false, misleading or inaccurate information, advice or assistance to water users that results in political, management (SA Water, CDC and/or Project Group) intervention such that the project is stalled or unable to proceed

High All communications, work flow and management will be within the proposed work plan, risk management plan and communications plan to ensure that risks are controlled and any matters arising attended to promptly.

Medium

Propose operations outside of agency requirements

Water administration and allocation processes can not be achieved in a low cost, low administration manner, resulting in poor business case

Medium Negotiations with DEWNR will occur early in he project to ensure a simple process of allocation transfers with minimum fees and timely processing.

Low


Risk Summary Description Preliminary Risk Rating

Risk Mitigation Description Residual Risk Rating

ESCOSA requirements In some circumstances, depending on the scheme or conditions negotiated, ESCOSA may refuse to approve the scheme as it may conflict with the best interests of the State or SA Water customers

Low Seed will maintain a high level of communication with ESCOSA and inform them of each proposed critical step and ensure project review as negotiations proceed with SA Water, such that there is ESCOSA confidence on the scheme

Low

SA Water requirements The Project Group propose a framework that can not fit within SA Water’s business operational requirements

Medium High levels of project communication and negotiation will ensure the project proceeds within agreed and necessary boundaries, subject to business viability for both parties

Medium

2.3.3. Commercial Risks



Water price SA Water is unable to offer a pricing structure acceptable to water users

High Attention to high levels of stakeholder engagement (Seed) to enable the maximum possible involvement and acceptance by water users, including growth potential

Medium

SA Water Operational SA Water is unable to offer supply conditions or contract terms acceptable to water users

Extreme Attention to high levels of stakeholder engagement (Seed and SA Water) to enable the maximum possible involvement and acceptance by water users, including growth potential

Medium

Demand (volume) Demand for a transportation product is high but with no growth potential

Extreme This remains a real risk. High levels of communication with stakeholders on this issue will be required. A converse agreement may be needed relating to the potential for a “Stranded” SA Water asset, where landholders develop other mechanisms for water supply and abandon commercial use of mains water.

High




New Org required If a new organisation (water holder entity) is developed and requires money for operational needs, it may not be financed from credit providers (banks, finance company etc.)

Medium Costs to operate a new entity could be funded in the medium to longer term by fees generated through administrative charges to participants. Grant funding would be sought to assist start up and/or the entity could be incorporated into an existing company or organisation. These options will be explored as part of the study and the best business case determined.

Low

No previous trading As above Medium As above Low

Future water pricing Future increases in water pricing may mitigate the gains made through development of a transportation scheme.

Medium Negotiations with SA Water will seek to achieve a reasonable contract period (e.g. 5 yrs.) of CPI only water price increase to assist landholders in covering any additional costs of investment to achieve reasonable ROI’s for the project.

Low

SA Water terms and conditions

Conditions of the scheme “such as take or pay” or timing of take (e.g. overnight) may be considered too risky to cash flow by prospective users

High Some terms and conditions (such as take or pay) are anticipated to be unfavourable to some landholders, potentially excluding their involvement. This will be discussed with SA Water, but unlikely to be changed as a forms a mandatory part of a scheme offer.

Medium

Negative business case The business case for participation by water users is deemed to be negative or does not “stack-up” compared to other water supply options.

Medium The business case assessment will review a range of options to the region. It is known that some landholders have already invested in alternative water supplies and others may see this as a favourable option depending on their circumstances. The business case assessment will consider how a scheme will presents (favourably) in comparison to other options. It is currently unknown if a scheme will be the best option for most users.

Medium


2.3.4. Miscellaneous Risks



Project schedule overshoot Due to delays in assessment from both Seed and SA Water the project overshoots its projected timeframe and cannot present opportunity for a scheme to be operational by Summer 2017.

Low Project management and communications plans will mitigate known risks other than SA Water operational assessment needs and will keep the project on-track

Low

State election If delays (above) are significant the State Government may go into caretaker mode and prevent ultimate sign-off for a scheme.

Low As above, project management protocols are work with SA Water should keep the project on track for a delivery scheme prior to summer 2017.

Low

Other (more attractive) business cases

An alternative supply scheme (e.g. private pipelines (combo of River Murray and regional groundwater) are deemed more attractive

Medium An options assessment paper will be prepared that considers the practicality and achievably of these other options.

Medium


3. Risk Management Processes

A range of strategies and actions are incorporated within the project work plan to manage risk and address the mitigation activities outlined in Section 2.0.

3.1. Organisation

As project managers, Seed has incorporated a range of strategies to attend to potential project risks and address the mitigation activities outlined in Section 2.0. This includes a range of roles and responsibilities. Key roles and responsibilities are as follows: Project Management, Andy Chambers, Director, Seed Consulting Services. Andy is the appointed project manager and responsible for the overall implementation, risk and communications plans. Project Risk and Strategy, Andrew Osborne (Director Osborne Management) sub-consultant to Seed. Andrew will provide independent strategic and risk management support to the Seed team. Project Risk and project stakeholder interface, Stewart Duncan, sub-consultant to Seed. Stewart will provide on-ground and landholder interface support to Seed. Project Sponsor, Vincent Cammell, CEO, Coorong District Council. Vincent will provide strategic direction and input from the Council and contract guidance to Seed. Project Management Assistance, Tracey Strugnell and Graham Gates, Coorong District Council Tracey and Graham will provide project assistance and support with access to landholder information and assistance with distribution of information within the region. Project oversight and steering, Project Group (see Attachment B) The Project Group will provide strategic direction and support to Seed and assist in regional decision making. SA Water committee, Sub-Committee of the Project Group The sub-committee will provide a direct meeting and communications link to SA Water for review and feedback on scheme pricing and terms and conditions. SA Water Project Managers, Joe Lazzaro & Libby Vojin. Libby and Joe are the key mangers of the project from SA Water and interface for operational, management, customer and Board approvals processes.

3.2. Risk Management Process and Reporting

Risk mitigation will be included on the agenda of each scheduled Project Group meeting (See meeting schedule, Attachment 4. The process of risk management will be managed by Andy Chambers (Seed). Andy is the appointed project manager. Oversight and review of the risk register and risk assessment will be provide by Andrew Osborne, conducted internally with Seed and reported under agenda item at the scheduled project group meetings. Should a risk item arise and be assed to have urgent response requirements, then Seed will take action where appropriate or following internal assessment seek the guidance (initially by email) of the Project Group and if considered serious enough by way of calling an unscheduled interim meeting.


3.3. Risk Management Key Tasks and Schedule

All project tasks are outlined in the project work plan (Attachment 1). Specific risk related tasks are highlighted in red text in each case to highlight that the task is a project risk related activity and requires additional project management attention and review by the Seed project team.


Attachment C Project Work Plan

Coorong Water Transportation Schemecomplete in progress outstanding

Work Plan V3

Task Responsibility Deliverable 2016 2017December January February March April May June July

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4A) SignMoU-CDCandSAWater Seed/CDC/SAWater SignedMoU X1 PrepareProjectCommunicationsPlan Seed emailedplan X2 PrepareAgendaforFirstProjectGroupMeeting Seed emailedagenda X3 AttendMeeting1,ProjectGroup Seed Meeting X4 Circulatemeetingminutesandactionsarising Seed Documents X5 Circulateforwardmeetingcalendar Seed6 PrepareProjectRiskManagementPlan Seed X7 PrepareProjectWorkPlan Seed X8 Circulateplansforreview Seed X9 PreparedraftEOIquestionnare/survey Seed/CDC X10 OpenEOIquestionnare/surveytoPublic Seed/CDC X11 Answerenquiriesfromlandholdersincludingsocialmedia Seed/CDC X X X X X X X X X X X X X X X X X X X X X X X X X12 Compilewaterusersdatabase Seed X X X X X X X X13 Contacttop10waterusers Seed X X X X13a Contact12alterntivewatersourcesusers Seed X X X14 ProvideProjectGroupwithwrittensynthesisofinvestigations Seed X X X15 ExploreinterestinbeingaWaterHolder Seed X X X X X X X X X X X X X X X X16 PresentfindingstoProjectGroup Seed X17 Reviewpreliminarypriceandoperationalconditions(SAWater) Seed/ProjectGroup X X18 CirculatedraftSAWater,watertransportationagreement Seed X19 faciliatediscussionswithwaterbrokers Seed X X X X20 ProvideareporttoProjectgrouponrecommendedbroker Seed X X21 Formaliseagreementsbetweenwaterbrokerandwaterholder Seed/ProjectGroup X X X X22 NegotiatewithDEWNRonwateradminstativeprocess&fees Seed X X X X23 ProvidereporttoProjectGroup Seed X X23a Circulatemeetingminutesandactionsarising Seed X X24 Plan&designRegistrationofInterest(ROI) Seed/CDC X X X X25 Planthreecommunityinformationmeetings Seed/CDC X X26 ManageROIprocessincludingmailoutincollaborationwithCDC Seed X X X X X X X27 Runthreecommunitymeetings Seed/CDC X X28 ReviewWatermeteringrequirementswithSAWater Seed/SAWater X X X X X29 Considerthirdpartyprovisionofsmartwatermetersifapproriate Seed/SAWater X X30 Determinemostcostefectivemethodofmetering Seed X X X X31 CoordinateROIformsreturnandcollatedatabase Seed X X X

32Prpeareaninvenstigation(businesscase)reportofbestoptionsbasedonrevisedcostsfromSAWater Seed

X X

33Coordinatesub-committee(ProjectGroup)andSAWatermeetingtoreviewprice,termsandconditions Seed/ProjectGroup

X X

34 ProvideongoingROIQ&Asupporttocommunity Seed X X X X X X X X X X35 Identifyandcontactlocalbusinessestoassistininformationdisemination Seed X X X X X X36 CollatealldatainformationandcloseROIprocess Seed X X37 Modelalldatatodeterminebestbusinesscase(includingcomparisonofothermodels) Seed X X38 PresentbestbusinesscasetoProjectGroup Seed X39 Distribute(incollaorationwithSAWater)finalwatertransportationagreement Seed/SAWater X X40 Peerreviewmodelsandpreparefinaldocumentedbuisnesscase Seed X X41 PresentfinalcasetoProjectGroupandallstakeholders Seed X42 Presentbestcaseoptiontocommunityasappropriate Seed X X43 Provideallnon-confidentialdocumentationtoCDC Seed/CDC X44 Assistwithinformationhandovertoawaterholder(ifnominated) Seed X X45 TransitiontoCWTSasneeded Seed X X X X


Attachment D Options Evaluation Paper

Seed Consulting Services 106 Gilles Street ADELAIDE South Australia 5000 T: +61 (08) 8232 4823 E: [email protected] W: www.seedcs.com.au

1

Coorong Water Transportation Scheme Options Evaluation – February 2017 Group 0 – Business as Usual (BAU) Criteria Option 0.1 Notes

Maintaining current supply conditions to customers at $3.24/kL

Provides a platform for investment and regional economic development

• current cost of supply limits investment

provides for job creation and future jobs growth

• Future jobs growth dependent on scale of operations and market returns.

• Water costs are understood to represent a significant proportion of operating costs therefore limiting jobs growth.

Ensures security of supply in the context of a drying climate • Drought restrictions will likely apply

Provides for appropriate allocation of capital that is both economic and efficient.

• The level of service provided through SA Waters investments exceeds the requirements for stock water supply.

Is commercially attractive and affordable to scheme customers.

• Existing supply costs value the resources higher than what is required for non-potable commercial or industrial use

meetscriterioninfull

meetscriterioninpart

doesnotmeetthecriterion


2

Is environmentally responsible and represents regional benefits

• Existing supply infrastructure has limited environmental impact.

• Other supply arrangements such as small scale desalination have not been regulated and therefore present questionable environmental impacts.

Meets community expectations for the utilisation of the resource

• Meets non-potable water quality expectations but not price expectations at $3.24/kL


3

Group 1 - Maintain existing supply arrangements combined with private diverter schemes Criteria Option 1.1 Notes Maintain supply to existing customers

under existing arrangements combined with private diverter schemes with supply from surface waters or groundwater systems


• Provides multiple options for those customers with access to a private scheme.

• No change for the majority of customers that remain connected to existing infrastructure.


• Cheaper water through private schemes will provide opportunity for economic growth and presumably jobs.

Ensures security of supply in the context of a drying climate • Private/GW schemes more likely to provide increased security of water supply.

• Restrictions will likely apply to remaining customers.


• The private diverter schemes would arguably be developed to achieve an enduring low cost supply.

• There is no change for customers that remain connected outside of the BAU case.


4

Is commercially attractive and affordable to scheme customers.

• Private diverter schemes would normally be developed based on being more attractive and affordable, other strategic considerations aside.


• Private diverter schemes would normally comply with the regulatory requirements for the entire cycle.

• Scope exists for licensing to prevent environmental breaches, where environmental monitoring is not executed in accordance with licensing.


• Private diverter schemes would normally be excluded from community consideration, apart from initial works and licensing approvals.

• Supply arrangements for the majority of existing customers that remain connected to the SA Water supply infrastructure would remain unchanged. i.e. project case


5

Group 2 – Coorong Water Transportation Scheme Criteria Option 2.1 Option 2.2 Option 2.3 Option 2.4 Notes As per option 0.1 with

supply under revised commercial terms yet to be agreed with SA Water.

As per option 2.1 combined with groundwater supply the TC, Tatiara, USE, LSE PWRA's to customers able to be viably supplied.

As per 2.2 but with MAR scheme.

As per 2.2 but with surface water storage scheme.


• More attractive commercial terms should ideally lead to greater returns and provide the confidence for future investment at a farm/enterprise level.

• As per option 2.1 but with increased flexibility as a consequence of the increased potential for further investment.




• Increased returns would presumably provide the opportunity for growth and additional job growth.

• As a consequence of the increased flexibility of supply arrangements, increased opportunity for additional jobs growth presents.




6

Ensures security of supply in the context of a drying climate

• It is expected that there would be no change to the without project case 0.1.

• Restrictions would be likely to continue in a drought

• The risk associated with restrictions is in part mitigated with the availability of a further source of water for those customers connected to the groundwater resource.

• The risk associated with restrictions is in part mitigated with the availability of a further source of water for those customers connected to the groundwater resource.

• The security of this intervention is higher than option 2.2.

• The risk associated with restrictions is in part mitigated with the availability of a further source of water for those customers connected to the surfacewater resource.

• The extent of the security improvement would be contingent on the investment in size of storage.


• A lower price (during off-peak times) reflects the opportunity to supply when the energy costs are lower maximising use of the investment.

• For those customers connected to the groundwater scheme the additional investment would occur on the basis that the net costs to customers would be lower.



Is commercially attractive and

• Responses from customers so far

• The cost to those customers




7

affordable to scheme customers.

favour a lower price when considered in the context as a function of enterprise running costs.

connected to the groundwater scheme should be lower than in option 2.1; other economic considerations considered.




• A lower tariff will detract from otherwise adhoc development of unregulated supplies. Viz a small-scale desalination plant with unsustainable groundwater interception and unregulated disposal of brine.

• The development of alternative sources in conjunction with the CWTS should only occur in the context of demonstrated environmental benefits.




• A lower cost of supply would meet the expectations of non-potable supply.

• The expectations of the broader community in this way would be unlikely to be

• A lower cost of supply would meet the expectations of non-potable supply. The expectations of the broader community in this way would be

• of supply would meet the expectations of non-potable supply. The expectations of the broader community in this way would be unlikely to be

• of supply would meet the expectations of non-potable supply. The expectations of the broader community in this way would be unlikely to be


8

satisfied without adequate regulation or controls including the position of the economic regulator.

• Potentially better water pricing and flexibility of supply should there be escalating water pricing and single option supplies.

unlikely to be satisfied without adequate regulation or controls including the position of the economic regulator.







Attachment E Example EOI questionnaire

Must be completed by Friday 17th February 2017.

The Coorong region is working to secure cheaper SA Water mains water for commercial andindustrial enterprises supplied through the Tailem Bend to Keith SA Water mains pipeline.

The current supply price of SA Water mains is $3.24 per kL. If a scheme could secure analternative cheaper pricing structure, subject to sufficient demand volume and SA Water systemcapacity and transportation requirements, would you be interested in being involved? If so, youmust complete this Expression of Interest so that we can remain in contact with you during thisproject.

This project WILL NOT, be able to provide cheaper domestic water for residential properties.

The proposed scheme, if successful, will involve securing River Murray licensed waterentitlements and transporting this water under certain conditions to commercial and industrialusers such as farms, industrial premises, Council's and any other commercial water users.

This survey is intended to register initial interest from landholders and SA Water account holdersin the Coorong and Tatiara District Council regions who use (or would like to use) SA Watermains water commercially.

Seed Consulting Services have been appointed to manage this engagement process.

If you would like to discuss this survey or would like further information about the proposedscheme, please contact:

Seed Consulting Services on telephone 0475 416 624 or email [email protected]

All responses are non-binding. If sufficient interest in the scheme is expressed, a more formalRegistration of Interest process will be undertaken. All private details will be storedconfidentially and only used for the purposes of communicating with you regarding theproposed scheme. We respect your privacy.

Andy ChambersDirectorSeed Consulting Services Pty Ltd106 Gilles Street ADELAIDE SA 5000

Please complete this on-line form by Friday 17th February 2016.

Coorong Water Transportation Scheme - Non-Binding Expression of Interest

Coorong Water Transportation Scheme

1

Name

Company

Address

Postal Address

City/Town

State/Province

ZIP/Postal Code

Email Address

Phone Number

1. Address

Hundred

Section

Allotment/s

CT (volume and folio)

2. Please provide your property location details so we can better understand how your water use willinfluence the proposed scheme. These can be found on your Council rates notice or SA Water bill. Ifyou don't have those details handy, please leave blank.

3. Can we contact you by email or telephone regarding the next steps of this project?

Yes

No

4. Can you please provide your SA Water account number to our team?

Yes

No

If yes, please provide SA Water Account Number

Number of meters

5. How many SA Water meters do you have?

2

6. Do you know approximately how many kilolitres (kL) you used in total for last financial year?

Yes

No

If you answered Yes above, what was your 2015/16 consumption (kL)?

7. The current price of SA Water mains is $3.24 per kL. If a scheme could secure an alternative waterpricing structure, would you be interested in a contractual agreement to secure a lower price per kL?

Yes

No

8. If the water was cheaper per kL, would you use more?

Yes

No

9. If you answered Yes in Q.8, How much more water (kL) might you take annually?

10. Have you considered installing a lined dam and water catchment?

Yes

No

If Yes, have you installed one?

11. Have you considered installing a desalination unit?

Yes

No

If Yes, have you installed one?

12. Have considered installing a large scale piping project?

Yes

No

if Yes, have you constructed it?

3

13. Have you considered installing leak detection equipment?

Yes

No

if Yes, have you installed it?

14. Any other comments?

4

Seed CDC CWTS Feasibility Report 20170913 Name Seed_CDC_CWTS_Feasibility_Report_20170913.docx...

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