YVW Sustainability Report 2008 2009 - Yarra Valley Water

Creating Balancein a New EraSustainability Report2008/09environmentlifestyle

MilestonesNorthern Sewerage ProjectThe Northern Sewerage Project(NSP) is an essential investment ininfrastructure that will increase thecapacity of the sewerage system forMelbourne’s growing northern suburbs.The project involves the constructionof 12.5km of new sewer from CoburgNorth to Reservoir and is a $650 millioninvestment in Melbourne’s future.As the 2008/09 fi nancial year drew toa close, Yarra Valley Water was two daysoff completing the 2.1km long tunnelbetween the Newlands Road shaft inCoburg and Jukes Road shaft in Fawkner.This critical connection, which is threemetres in diameter, required theexcavation of more than 300,000 tonnesof rock with minimal interruption to thecommunities and residents living above.Recycled WaterIn a fi rst for Yarra Valley Water, this yearwe launched Class A recycled water toresidential developments in Melbourne’snorth via the Aurora Sewage and RecycledWater Treatment Plant. Availability of this19alternative water source should reducewater consumption in these householdsby 30 per cent. We are working now onthe long term strategy to incorporateClass A recycled water into sustainabledevelopments in Melbourne’s northand east and to supply at least 30,000homes with this resource for use indomestic gardens and toilets.In addition, we continued to developnew approaches to provide water andsewerage services in the most sustainableway, particularly through integratedwater management to utilise recycledwater and storm water.30Water ConservationWe continued to work closely withour residential and business customersto decrease water consumption.Yarra Valley Water worked closelywith the State Government andmetropolitan water utilities in designingthe Target 155 campaign as an effectivealternative to harsh Stage 4 waterrestrictions. The campaign has been atremendous success and has resonatedwith the community. Per capita consumptionsince the campaign commenced inDecember 2008, was below the targetat 154 litres per person by June 2009despite high consumption during theextreme temperatures in February.The T155 campaign has saved morethan 11 billion litres of water so far.Our free showerhead exchange programsaw customers exchange almost 50,000showerheads for a more effi cient model.Each showerhead exchanged is estimatedto save an average of 12,000 litres of waterper year, saving water, energy and money.We continued to minimise unnecessarywater loss within our own systemsthrough our pressure reduction strategy,water renewals program, leak detectionprogram and rapid response to burstsand leaks. We also continued to get greatfeedback from our customers due toour new, improved customer contactprocesses for emergency water works.See details in:Customer (page 16)Environment (page 32)34Effi ciency (page 51)

Environmental LeadershipWe pursued better methods to deliversustainable solutions to service growthin an environmentally responsible way.This year, our innovative work inenvironmental sustainability earned usthe Premier’s Sustainability Award inthe large organisations category.The award recognises our capacityto integrate sustainability into everylevel of Yarra Valley Water’s operations,from corporate strategy to day-to-dayactivities and the delivery of sustainablewater and sewerage services inestablished and new regions of ourservice area. Thanks to a vibrantenvironmental learning program,our employees are fully engagedon sustainability issues.Water PlanWe undertook substantial work to developour Water Plan for the 2009/10-2012/13regulatory period. This involved makinga price submission to the EssentialServices Commission (ESC) to ensurethat we can continue to create a strongerfuture through fi nancing much neededaugmentations to Melbourne’s watersupply and critical sewerageinfrastructure for a growing Melbourne.Our approach to communicating thisto customers centred on the biggerpicture of water supply and sustainablewater management, as well ascommunicating that water wise homescan minimise the impact of priceincreases across Melbourne.The ESC’s favourable decision on ourWater Plan means that we will havethe fi nancial capacity to maintainservices, improve environmentaloutcomes and provide customerswith solutions that will graduallysee an easing of water restrictions.Contents2 About Yarra Valley Water4 Our stakeholders and key partners6 The Yarra Valley Water Board7 Our Executive Team8 Chairman’s Report9 Managing Director’s Report10 Financial summary12 Sustainability reporting13 Customer25 Environment37 Culture47 Efficiency55 Appendix 1 – Environmental Cost Statement summary notes56 Appendix 2 – Large water users58 Appendix 3 – Bulk water entitlements61 Meeting our reporting responsibilitiesAppendix Efficiency Culture EnvironmentCustomer Overview

Yarra Valley Water’s strategic intent is to lead the global water industry in servingthe customer and the environment, supported by our high-performing businessculture and continuously improving efficiency.Who we areYarra Valley Water is the largest of Melbourne’sthree metropolitan water retailers, providing waterand sewerage services to more than 1.6 millionpeople and over 50,000 businesses in the northernand eastern suburbs. Owned by the VictorianGovernment, our activities are overseen by anindependent board of directors.As a retailer, we buy our water from MelbourneWater. The water we purchase for our customersis mostly harvested from protected mountaincatchments. We are also responsible for takingaway sewage for treatment. Our nine sewagetreatment plants fulfi l an essential role by treatingwastewater that can be released without impactto the environment. In addition they play a valuedrole in the tertiary treatment of wastewater toprovide fi t-for-purpose recycled water for useby industry, residential customers in designatedareas and for the irrigation of public open spaces.Three of our treatment plants produced recycledwater this year, with two treating the resourceto Class A standard.At your serviceYarra Valley Water exists to provide waterand sewerage services that contribute to thehealth and well-being of our customers andthe environment. We own and manage assetsvalued at more than $2.1 billion and maintainand operate over 9,000 kilometres of watermains and nearly 9,000 kilometres of sewermains. Our licence area covers around 4,000square kilometres – from as far north as Wallanand extending to Warburton in the east.We strive to provide customers with the highestqualitywater. Our commitment to customershas been internationally recognised and we arededicated to delivering all of our services withinthe carrying capacity of nature.What guides usYarra Valley Water’s strategic intent is to lead theglobal water industry in serving the customerand the environment, supported by our highperforming business culture and continuouslyimproving effi ciency.Our strategy has been built on the four elementsof customer, environment, culture and effi ciency.This provides clear priorities and a roadmap toachieving our strategic intent, with a strong linkbetween the work we all do today and how thatfi ts with our desired future.The strategy also takes into account the effectsof the continuing drought and includes specifi cinitiatives targeted at addressing its immediate,mid and long-term impacts, such as a strengthenedcommitment to water conservation and securingadditional water supplies.Our service areaYarra Valley WaterCity WestWaterYarra RiverMELBOURNEPort Phillip BaySouth East WaterWesternPort2 Yarra Valley Water Sustainability Report 2008/09

OverviewYarra Valley Water at a glanceCustomers1.6 million people served619,102 residential customers50,259 business customers9,098 new customers in 2008/09People395 full-time equivalent employeesAssets2.1 billion dollars of infrastructure and other assets9,114 kilometres of water supply mains75 water pumping stations50 water supply tanks109 water pressure reducing stations8,792 kilometres of sewer mains93 sewage pumping stations9 sewage treatment plantsOverview 3

Our stakeholdersand key partnersYarra Valley Water maintains strong relationships with keypartners who are specialists in what they do, and we workwith a range of government and industry stakeholders to fostera high level of innovation with mutually beneficial outcomes.This ensures that we manage a community resource with an understandingngof community expectations, engage with key stakeholders to help shape waterpolicy, and remain at the forefront of environonmentalmananagement as we addressthe issuesthahat confnfrorontcururrerent andfuture generatitionons.We valalueandbenenefiit frorom these productive, transparent relationships. Thehey helpus to not onlydririveeffifficiencncieies,butto build betttteri nfrastructure and devevelolopand provide sustainable solutitionons withminimalenvnvirironmental impact whilelo okining afteter the well-b eingof the communities we sererveve.Our solesharehoholder:Victorian Statate GovevernmentOur governancefrarameworkand parties thatworork with us forfinanciaial,environmental, humanhealalthth, sociala nd customemerperformance outcomomeses:Board of Dirirecectors,Yarra ValllleyWataterMinisterforWaterDepartmementof Sustainabilityand EnviviroronmnmenentDepapartrtment of Human ServicesDepapartmementof Treaeasuryand FinanancnceEnvironmenent ProtecectitionAuthority VictoriaEnergy andWataterOmbudsmsmanof VictoriaEssential ServicicesCommim ssionGrowthAreasAututhorityPlumbing Indndustry CommmmissisionSustaiainabilityVicictoriaState Government TreasurerState ServrvicicesAuthorirityTreasury Corpoporatitionof VictctororiaOrgaganinisatitions withwhichwe shaharetheresesponsibilityfor deliveringhigh-h qualitydrinking water, waterconservatitionandseweweragesererviviceces:CityWest WaterMelbouourne Water CorporatationSouth East Watatersavevewater!4 Yarra Valley Water Sustainability Report 2008/09

OverviewKey suppliliers:ABnote AustralasiaAECOM Auststralia Pty LtdAHA Consnstructions Pty LtdANZ BankAqua Environmental Pty LtdAustralia PostAustralian Construction andMaintenance Engineers Pty LtdAustralianCommemercial CateringPty LtdAurerecon Australia Pty LtdAzzona Drainage ContractctorsBaycorp Collection ServicesPty LtdBerry Pipelines Pty LtdBilfinger Berger Services(Australia) Pty LtdBMHS PtyLtdBrocockmanEngineeringPtyLtdCalifam Constructions Pty LtdCapiotechCiscsco Syststemems,Inc.Civil and Landndscscape DesignCorrrrCon Pty LtdCuststomFleleetet PtyLtdDeloitittete Tououchche TohmatatsuDiCarlo DrainagePtyLtdDKM Utilitity ServrvicicesPtyLtdEcoWise Pty LtdEricssssonAustralia PtyLtdFleeeet Partrtners (Austst) Pty LtdFujitsu Australia LtdGeomatatic Technologies Pty LtdGHD Pty LtdGMT CorpGrounds and Gardens Pty LtdHaulton Construction ServicesPty LtdInteractive Pty LtdIntergrgraraphCorporation Pty LtdInterfllow Pty LtdIBMJohnHollandPtyLtdMFJ Construcuctitions Pty LtdMoore StephensMWH Australilia Pty LtdNSC Enterpririse SololutionsPtyLtdOptusOracleCorporationPipeCorr Pty LtdProgograram FacicililitiesManagementPtyLtdRed RockConsultltiningSchultz Plumumbing PtyLtdSinclalairKnight MerzPtyLtdSkilltech ConsultingSerervicesPty LtdSun MicrosystemsAusustrtralaliaTelslstraTenix AllianancePtyLtdVeolia EnvnvirironmentalSererviviceces(Australia) Pty LtdConstituents who helpusdeliveran essentialservice to the community:Australian Water AssociationOur community andenvironmental groupsand representativesOur Customer ConsultativeCommitteeOur Environmental StrategicAdvisory CommitteeOur EmployeesInstitute forSustainable FuturesKildonanUnitingCareStafaff assoso ciationsVictctororiaian WateterIndustry AssociationWateter QualalityResearch AustraliaWater ResearchFoundationWater Services Associationonof AustraliaWelfare agencies andfinancnciaial coununsellorsOur customers:ResidentiaialBusinessBuilildedersLocal governrnmementandcoununcicils(Seeourserviceareaon page2)PlumbersPropertyandlanand developersOverview 5

Peter WilsonTony KellyJohn TilleardCaryle DemarteElizabeth ParkinHenry PinskierLiz RoadleyThe Yarra ValleyWater BoardPeter Wilson AM, BCom (Hons), MA, FCPA, FAICD, FAHRI – ChairmanTony Kelly CPEng, SFCDA, MAICD – Managing DirectorJohn Tilleard PhD, MS, BE (Civil), MAICD – Deputy ChairmanCaryle Demarte PSM, BBus, FAICDElizabeth Parkin CA, FFin, MAICD, BBusHenry Pinskier MBBSLiz Roadley B AppSc, M EnvS, M Ed and Pub6 Yarra Valley Water Sustainability Report 2008/09

OverviewOur Executive TeamPat McCaffertyPat McCafferty BBus (Acc), EMBA, FWCLPGeneral Manager, Strategy and CommunicationsTerry Swingler Dip Bus (Acc), FCPA, FCIS, FAICD, CFTPGeneral Manager, Finance and Company SecretarySam Austin BE (Civil)General Manager, Sustainable DevelopmentSteve Lennox BBus (Acc), CPA, ACISActing General Manager, Billing and Contact ServicesAnne Farquhar Cert Bus MgtGeneral Manager, Human ResourcesDavid Snadden BE (Civil)General Manager, Infrastructure ServicesHelen Robertson BBus (IT), PMPCOMPASS Program DirectorMax Kennedy BE (Civil), EMBAChief Information OfficerTerry SwinglerSam AustinSteve Lennox Anne FarquharDavid SnaddenHelen Robertson Max KennedyOverview7

“Our ongoing commitment tosustainability and reducing ourenvironmental footprint wasrecognised at the highest levelwith the company winning thePremier’s Sustainability Award.”Chairman’s ReportI am proud to present the Yarra Valley WaterSustainability Report 2008/09 and to highlightthe outcomes Yarra Valley Water has achievedover the past year.We are well regarded in the industry and haveestablished a reputation at the highest level forour strong commitment to sustainability in allthat we do. This year we won the Premier’sSustainability Award and were also a fi nalistin the 2009 National Banksia EnvironmentalAwards, generally regarded as the mostprestigious environmental awards in Australia.The launch of the Aurora Sewage and RecycledWater Treatment Plant has pioneered the useof recycled water to new urban developmentin Melbourne’s north. This will lead to thosehouseholds using 30% less drinking water whilebeing able to maintain lush green gardens andopen space throughout the dry summer months.The Northern Sewerage Project, scheduled forcompletion in 2012, is progressing very well andis our major infrastructure project. The total valueof the project is $650 million. It is using the verylatest underground engineering techniques tobore a three metre diameter tunnel 4.5 kilometresfrom Coburg North to Reservoir. The tunnel variesin depth from 30 metres to 39 metres and willservice the rapidly expanding northern suburbs.This year, we continued to actively promote waterconservation. Melbournians are well on track toachieve the 155 litres per person per day annualtarget (T155) and have saved over 11 billion litresof water since the inception of the program inDecember 2008. These essential savings, combinedwith Stage 3a water restrictions, will help to secureour dwindling water supplies until the north southpipeline and the desalination plant come on line.Yarra Valley Water has made a significantcontribution to the success of the T155 waterconservation campaign. We have been thepublic voice representing the metropolitan waterindustry and our free showerhead exchangeprogram has seen our customers exchangealmost 50,000 showerheads for more effi cientmodels this year. We have also made furtherprogress on reducing water loss in our systemand have continued to implement our pressurereduction program to reduce water main burstsand leaks.We worked closely with our business customers,both big and small to help them save water. Thetotal reduction of residential, business and watersystem leakage resulted in overall consumptiondropping from 247 litres per person per day in2007/08 to 234 litres per person per day this year.Yarra Valley Water provided much needed supportto communities affected by the devastatingbushfi res in February 2009. We established atemporary offi ce in Kinglake to coordinate ourefforts in providing bottled water, road sideemergency water tanks and fi lling of householdrainwater tanks.We were pleased to have delivered to ourshareholder, the Victorian Government, areasonable dividend.We were also pleased with the Essential ServicesCommission fi nal decision on water prices andthe certainty that this will bring over the next fouryears in terms of revenue and our planned strategicoutcomes. At the same time we acknowledge thatthe signifi cant price rises will adversely affectsome segments of the community and havemade provision for additional support programsfor those customers.I thank the Board of Directors and staff for theirefforts and achievements over the past yearand look forward to continuing success in thecoming year.Peter Wilson AMChairman8 Yarra Valley Water Sustainability Report 2008/09

“We are passionate about thepossibilities that lie ahead andwill work hard to ensure that Victoriamaintains its lead in the managementof water and sewerage services.”OverviewManaging Director’s ReportThe Australian water industry is a dynamic,vital industry sector, prominent in the public eyeand on the leading edge in dealing with climatechange. Yarra Valley Water, a major player inthe industry, is recognised as one of the world’sleading water utilities that provides essentialwater and sewerage services while balancingprofi t, service and environmental performancein a way that exemplifi es the principles of thetriple bottom line.Yarra Valley Water has a strong supportive workculture that nurtures talent and provides staffwith the opportunity to be involved in innovative,industry leading programs. We aim to berecognised by our customers as “their bestservice provider”, to operate our services “withinthe carrying capacity of nature” and to “consistentlymeet our shareholders’ expectations”.Over the next 12 months we will achieve somemajor milestones:• A complete revamp of our customer serviceprocesses and systems, culminating in a fullseparation of property and customer data,combined with the most modern informationtechnology architecture available, deliveringnew, unmatched capabilities in customerservice, data integrity and analysis.• Rapid expansion of our recycled waterservice to new homes and businessesin Melbourne’s growing northern suburbs.• The attainment of greenhouse gasneutrality in the delivery of our services.• Progress innovative servicing of a majornew development through integratingstorm water, recycled water and potablewater supplies, in conjunction with ourpartners at Melbourne Water, the Cityof Hume and industrial developer MAB.• Commencement of work with the EPAon turning the concept of nutrient offsetsand nutrient trading into a reality.• Expansion of our leading edge waterconservation programs.• Integration of new sources of water supplyinto our systems that will ease waterrestrictions and improve drinking water quality.• The review and upgrade of our assetmanagement systems which, when completeand integrated with our new customer andproperty systems, will give us unparalleledcapabilities in customer service andenvironmental performance.• Providing new services to our customersto meet their water related needs.• Achieving a more secure financial footing,following several years of low revenues withnew prices set by the Essential ServicesCommission in June 2009.In addition to all of the above, we are energisedby further industry reform and ambitious aboutthe potential it has to place the Victorian waterindustry in the forefront of customer service,environmental performance and effi ciency.We have a vision for the industry that includesthe introduction of more competition to lowercosts, accelerate innovation in service andimprove environmental performance. We seethe allocation of autonomous Bulk WaterEntitlements, the creation of a third partyaccess regime, the establishment of the StateWater Grid and the appointment of a GridManager as essential pre-requisites.I would like to add my thanks to our staffand business partners for the outcomes wehave achieved in the past year. I would alsoacknowledge their energy, enthusiasm andcommitment to Yarra Valley Water and thewater industry more generally. We are passionateabout the possibilities that lie ahead and willwork hard to ensure that Victoria maintainsits lead in the management of water andsewerage services.Tony KellyManaging DirectorOverview 9

Financial summaryYarra Valley Water recorded a profi t after taxof $19.8 million in 2008/09. This result wasinfl uenced by:• Increased revenue following a price increaseof 19.7% from 1 July 2008.• The introduction of the Target 155 campaignfrom November 2008 together with permanentwater saving behaviours exhibited by ourcustomers’ reduced water consumption andour revenue.• Greater than anticipated development in thenorthern suburbs.• Reduced interest rates as a result of theGlobal Financial Crisis.• Capital expenditure of $180.3 million torenew, augment and upgrade water and sewerinfrastructure and for the creation of newproperty and customer information systems.The Company paid an interim dividend of$5.7 million on 30 April 2009. The amount ofthe fi nal dividend for the year ended 30 June2009 will be determined after consultationbetween the Board, the Minister for Waterand the Treasurer of Victoria.Interest cover (times)Interest cover improved compared to the prioryear as a result of higher profi t in 2008/09.3.22.62.21.61.2Return on average assets (%)Return on average assets improved comparedto the prior year as a result of an increased profi tin 2008/09.1.403/04 04/05 05/06 06/07 07/08 08/09Capital expenditure ($m)Capital expenditure increased compared to theprior year due to expenditure to protect theenvironment, service new urban growth andimprove reliability by replacing ageing infrastructure.87.9117.5180.3162.7149.8 153.303/04 04/05 05/06 06/07 07/08 08/09Gearing ratio (%)Gearing ratio increased compared to the prioryear due to increased borrowings required asa result of higher capital expenditure.86.76.04.84.538.440.843.346.148.350.83.903/04 04/05 05/06 06/07 07/08 08/0903/04 04/05 05/06 06/07 07/08 08/0910 Yarra Valley Water Sustainability Report 2008/09

OverviewNet profit after tax ($m)Net profi t after tax improved compared to theprior year, mainly due to reduced borrowingcosts, greater than anticipated urban growthand increased revenue following the priceincrease from 1 July 2008.Where our revenuecomes fromWhat we spendour money on 52.54236.122.19.119.803/04 04/05 05/06 06/07 07/08 08/09Return on equity (%)Return on equity improved compared tothe prior year as a result of increased profi tin 2008/09.Volumetric water usage charges 28%Fixed sewerage service charges 25%Volumetric sewage disposal charges 21%Fixed water service charges 11%Other revenue 6%New urban growth 6%Trade waste charges 3%Capital expenditure mainly on the construction ofinfrastructure assets 29%Wholesaler water charges from Melbourne Water 29%Operating expenses, including employee salaries andcontract payments 26%Finance charges on borrowings 11%Environmental contribution paid to Departmentof Sustainability and Environment 3%Dividend to the Victorian Government 2%8.27.36.03.63.01.403/04 04/05 05/06 06/07 07/08 08/09Overview 11

Sustainability reportingEnvironmental costinghelps the business becomemore sustainableEnvironmental sustainability is a core strategicoutcome of the company. This is our third yearpreparing an Environmental Cost Statementwhich helps us identify what we need to becomemore environmentally sustainable.Why do we prepare anEnvironmental Cost Statement?An Environmental Cost Statement shows what weare spending each year on environmental objectives,and makes transparent what we will need tospend in coming years to become environmentallysustainable. While we are incurring such costs,we are reducing our environmental impact.Such a statement goes beyond compliance.We have chosen to prepare an EnvironmentalCost Statement to help improve business valuefor environmental spend. It prompts a relativeassessment of environmental improvementfor each incremental spend. It allows proactiveoptions to be compared against remedial action,and encourages options that have multiple benefi ts.It allows us to see the costs associated withenvironmental sustainability and not just monitorthe costs to meet environmental compliance.We believe we were the fi rst Australian companyto prepare an Environmental Cost Statement.What have we achieved so far?We have structured our Environmental CostStatement around our strategic objectives tobecome environmentally sustainable. These focusus on the following fi ve areas: extraction of waterfrom and discharge to waterways, septic tankmanagement, water conservation, greenhousegas emissions and sustainability leadership.Analysing our Environmental Cost Statementfor 2008/09 highlights the following key points:• We spent a total of $31.0 million to deliverenvironmental benefits.• To become environmentally sustainable weestimate we will need to spend an additional$7.8 million per year in coming years.• Our largest spend was in protectingwaterways through the Northern SewerageProject and the Sewer Renewals Program, whichalso improves service to our customers.• We offset our greenhouse gas emissionswith our showerhead exchange program.What have we learnt?Preparing this year’s statement has alsodelivered the following additional benefi ts:• An awareness that the long term objectiveis to find ways to reduce expenditure, andat the same time continue to reduce ourenvironmental footprint.• Recognition that it is theoretically possible.• The Environmental Cost Statement makestransparent the money spent on eachenvironmental objective.• Translating all environmental objectives intocosts not only allows comparison of differentenvironmental impacts but also highlightsthe economic business case to reduceenvironmental impacts. This drives us to findnew ways of doing things better. Firstly,for example, by delivering urban waterinfrastructure services to a new greenfield site,and in servicing backlog areas, both in amore sustainable way. These projects are atKalkallo and Kinglake respectively.• During 2008/09 a comprehensive review of allthe 2013 strategic objectives was undertakento assess whether the existing objectives werestill valid and to determine the extent that theobjectives contribute to their respective highlevel outcomes. The review of the objective toreuse biosolids highlighted that although thisobjective does contribute to Yarra Valley Water’sdesired environmental outcome by closingthe nutrient cycle through reuse and byensuring no net accumulation of well,the extent to which it contributes to thisoutcome is very minor relative to thecontribution from greenhouse gas impacts,nutrient impacts to waterways and waterconsumption impacts. As a result of thisfinding, the biosolids reuse objective wasremoved from our strategy.2008/09 EnvironmentalCost Statement ($’000)Protect waterwaysSeptic tanks/backlog Water conservation Greenhouse gasSustainability leadershipemissions2007/08 Internalised Costs2008/09 Internalised Costs2007/08 Cost Gap2008/09 Cost Gap12 Yarra Valley Water Sustainability Report 2008/09

CustomerOur goal is that our customersrecognise us as their best serviceprovider and are engaged inwhat we advocate

Our focus is on maintaining the highestlevel of service to the homes, businessesand communities we serveIn thecurrer nt drougughtthis meanans takingmeaningfuful and proactive stepeps to helelp our customers save water, while managingng thevast waterand seweragenetetworkwe are respsponsisiblble for to deliver reliablble service.Weseeour cusustomersa nd thecommunititiesto which they belong as keystatakehoholders in watatermanagememenent and work to ensure that watetercan continue to play a role in adding value to community life,even in timimesof shorort supppplyly. Weconsult and comommunicate with customerson maintenananceandnewconstruructctioion progograramsto ensusurea pososititivive outcome for bothcustomersandthe communinityty.This year we worked with developers to deliver thefi rstsupply of ClalassA recycled water to residentialdevevelelopments in Melbourne’s north.The infrastructure we haveconstructedto deliver thiswilill be further utilised and expanded to makerececycled wateter available to morehouseholds and busininesses inthis rapipidly growing areaof Melbourne. In addition, wecontinue to developnewapproacachehes in proroviding waterand sewerage services in themost suststainablble way,partiticularly throrough integratedwater management incorpororatating recyclcledwater andstorm water.Wehave pursued the maintenance programsthat mattermost to ourcustomers, resulting in ongoing improvementto our respononsetimime toserervivicefaults and ememergrgenencies, a fall in water qualalitity complaints, and increaeasesed satitisfaction among customers in theieir contact withYararrara Valleley Water.Achievevememenents• We hadourlowest evernumbeber of waterqualitity compmplalainintsts.• Wefurther improved our service tocustomerers repoportrtining a water main burstor leak through proactive custstomomercontacact prococesses designedto ‘keepcustomers in the loop’.• We reneneweded 57.7.3km of reteticicululationwater mainins to impmprovethereleliaiabibililityofthewatatersupply netwtwork.• We replaceced 1,91912 housuse sewerageconnectitionons to rededucuce the numberof sewer blockages affectingcustomomers’proroperties.• We relinededa tototalof 60.2.2kmof sewermains to improve the releliaiabibility of ourseweweraragenetwork.• We improroveved a numbmberof customerservice prococesesseses in ourCustomemer ContacactCentreto makeit easierandmoreefficienent for customomerers to deal with us.Areaeas for imprprovovememenentThisyeaear our CuststomerSatisfaction Monitor recocordrdeda fall in cusustotomemer percrcepeptionons assosociciatatedwith value and wateter supppplyly. We believetheprimarary caususe of thihis decline was contntinued wateter restrictctioionscombined withprice incncreases. Look ing aheaead,theprice increaseses arefunundidingnew wateter suppliesthahat willll, in turn, allllowfortheeasasing of harshwataterresestrictions.

CustomerCustomer – Key performance indicators08/09target08/09actualAchievedCustomer satisfaction– rating of “very good”or ”excellent”First contact resolution forwater and sewerage faultsand billing contactsWater quality complaints(complaints per 1,000customers)Customers experiencingmore than three sewerblockages per year60% 50.8% ✗97.5% 97.5% ✓4.0 3.8 ✓30 10 ✓Water supply interruptionsrestored within five hours98.5% 98.6% ✓Correspondence turnaround- letters in 4 days- emails in 24 hours96%85%96%92%✓✓Telephone response – callsanswered within 30 seconds86% 87% ✓15

Helping our customersduring droughtMelbourne experienced an unusually hot summerand one of the driest years on record in 2008/09.In order to conserve water in dams until new watersources become available, Target 155 (T155)was introduced on 1 December 2008. The T155campaign urges customers to use no more than155 litres of water per person per day, while stillabiding by compulsory Stage 3a water restrictions.T155, in conjunction with Stage 3a, achieveswater savings similar to what would be achievedunder Stage 4. However it does so without thesevere economic and community impacts of atotal ban on outdoor water use.In order to help our customers meet Stage 3awater restrictions and Target 155, we:• launched an online water use calculator sothat each customer can assess how muchwater is used in the household, plus identifyways to meet the target;• amended our ‘Smart Account’ to include asimple table that immediately shows customersif they have or haven’t met T155;• created and distributed more than 35,000 freewater savings kits for residential customers.Our innovative Water Conservation Kiosks poppedup in 15 major shopping centres across Yarra ValleyWater’s service area to engage the communityon water conservation and act as a convenientplace for customers to exchange ineffi cientshowerheads for a brand new effi cient model.This highly successful approach contributed tothe exchange of almost 50,000 showerheadsduring the year and 132,071 since the exchangeprogram commenced in mid 2006.This was a major contribution to a metropolitanwideachievement, with the water industrycelebrating its 300,000th showerhead exchangein Melbourne over the same period.Keeping water inthe communityYarra Valley Water undertakes a number of initiativesto provide our customers with opportunities tomeet water experts face-to-face and obtaininformation and advice around water restrictions,T155 and sustainable water use.We reached out to the community at:• The Sustainable Living Festival, 20-22 February2009 at Federation Square. This is the largestevent of its kind in Australia, attracting morethan 122,000 visitors.• The Darebin Community Festival, 1 March2009 with more than 40,000 visitors.• The Glenferrie Road Festival, 5 April 2009with more than 42,000 visitors.Our portable drink fountain, the Hydration Station,was also available at these events.As part of our ongoing effort to build and cementrelationships within the communities that weservice, we participated in the 12th MullumMullum Festival, held at the Yarran Dheran Reservein March 2009. Experts from Yarra Valley Waterwere on hand on the opening day to provideinformation to residential customers on holisticwater management issues including:• State Government programs and planningaspects of water and sewerage supply;• residential water consumption and T155;• business water consumption and T155;• maintaining waterway health via our seweragebacklog program.We know that water plays a key role in communitylife, and we’ve worked on solutions to helpcommunity parks and sports grounds survive thedrought. We continued our Community Water Tankerprogram throughout 2008/09 which captures anddistributes water lost from our system throughunavoidable bursts in water mains. We alsoarranged 530 deliveries of donated recycledwater totalling more than 12.7 million litres.We worked closely with councils and the EasternFootball League to drought proof a number ofsports grounds in our area, and this will save asignifi cant amount of water in the future throughreduced irrigation.Below: Working together to drought proof sports groundsWe also partnered with Tennis Victoria and itsmembers to continue to support clubs withen-tout-cas tennis courts by giving them analternative to the ‘one in two’ watering arrangementsunder Stage 3a water restrictions. The Courtreatprogram has been in place for two summers andinvolves a chemical treatment that helps retainmoisture. More than 60% of clubs with en-tout-cascourts are participating in the program, and theseclubs have reduced their water consumption bymore than 50%.Our Brushy Creek Sewage Treatment Plantproduced an additional 64 million litres of recycledwater available to councils in the eastern andnorth eastern suburbs to collect free of charge,which is predominantly used to irrigate andmaintain public spaces. This initiative is part ofour long-term strategy to re-use water, minimisewater wastage and reduce the social andcommunity impacts of drought.16 Yarra Valley Water Sustainability Report 2008/09

Customer$65 million project to connect Mernda-Doreen regionto metropolitan sewer system completedIn December 2008 Yarra Valley Water completed a three year$65 million project to allow the Mernda-Doreen region toconnect to the metropolitan reticulated sewerage system.In excess of 16,000 house lots, or 40,000 people, will usethis system.The project was jointly funded by Yarra Valley Water anddevelopers. We were able to deliver our portion of thislong-anticipated project on time and under budget.The Mernda-Doreen region has been identifi ed as one of Victoria’smajor growth corridors and sewerage infrastructure is essentialfor development to occur. This signifi cant infrastructure also allowsthe decommissioning of septic tanks in the area and will help toprotect the health of the community and environment, includingthe Yarra River and its tributaries such as the Plenty River.The sewerage services to the existing Mernda Township forma critical part of the $580 million State Government initiative tohelp improve the health of the Yarra River.Customer 17

Helping businesses bigand small to save waterWe continued to host quarterly corporatebreakfast seminars and other learningopportunities. These forums allow businessesto network, receive up-to-date water industryinformation, share in water conservationlearnings and practices, and consider issuessuch as corporate responsibility, alternativewater supplies, fi re sprinkler systems andcooling towers.We have also been working to help promotebusiness’ achievements in water conservationby developing case studies and profi lingwater conservation outcomes in newslettersand on our website. Nine case studies weredeveloped showcasing a range of innovative anddemonstration projects achieving outstandingresults in water conservation. These are examplesof actions that businesses in Yarra Valley Water’sservice area have taken to reduce their wateruse. In 2008/09 businesses reduced theirwater use by over 860 megalitres.Yarra Valley Water has also been active inencouraging small businesses to join the‘Support 155’ Business Program, by providingresources to help assess their water use,develop actions and implement solutionsto further cut water use by using it moreeffi ciently in the workplace.Practical advice forsustainable gardensOur involvement in the Our Water Our FutureWater Saver Garden Centres program continuesto initiate and encourage water saving behaviourin the garden. The centres provide practicalsolutions and techniques for customers to sustaintheir gardens throughout water restrictions anddrought and on a permanent basis.There are currently 58 retail garden centresacross Victoria accredited under the programto deliver advice on best-practice, water-effi cientgardening and long term gardening goals.We also worked with the State Government tolaunch a new website in June 2009 to helpour customers calculate the watering needs oftheir garden and develop a sensible wateringschedule. Further information is availableat www.smartgardenwatering.org.auWorking withdevelopers toservice new growthWe supply water and sewerage services toone of Melbourne’s most signifi cant growthcorridors to the north of the city and are buildingthe backbone water and sewerage infrastructureto service this new development. New growthforecasts for the Hume Corridor incorporateresidential estates spanning between Craigieburnand Kalkallo.To service this area we plan to spend in excessof $300 million on new water and sewerageinfrastructure over the next 20 years. In 2008/09we continued to work with developers and keygovernment stakeholders to communicate ourinfrastructure plans. We have also worked toaddress the requirement for Class A recycledwater to reduce demand on drinking water.The Aurora Sewage and Recycled WaterTreatment Plant is already providing recycledwater to the VicUrban Aurora estate, and supplyis being extended to other developments withinNorth Epping.The pipeline that will bring Class A recycled waterfrom Aurora to Craigieburn in 2010 is currentlyunder construction. The Highlands developmentat Craigieburn currently has approximately600 lots ready to receive this resource to usefor fl ushing toilets and watering gardens. Thisdevelopment is expected to increase by a further600 properties per year.18 Yarra Valley Water Sustainability Report 2008/09

The Kalkallo development is expected to be amajor employment hub incorporating industrialand commercial businesses. In addition torecycled water from our sewage treatmentplant, we are investigating opportunities torecycle storm water.With the proposed extension of the urbangrowth boundary, Yarra Valley Water hasproduced draft strategies to provide optimumservices to the additional 50,000 propertiesthat may be developed if the boundary isextended. We are also investigating whetherthis would justify the establishment of a largeregional recycling plant that would providerecycled water to all of these new lots.Keeping customersin the pictureOur infrastructure and maintenance programsrequire ongoing dialogue with stakeholdergroups, customers and the wider community.Our goal is to deliver least community costsolutions while placing a high priority onprotecting community amenity and reducingthe impact of our activities on the environment.Two of our larger projects with signifi cantcommunity and environmental impactsundertaken this year again centred on theSewerage Backlog Program and the NorthernSewerage Project.Developing modern sewerage networksMore than 17,000 properties across Yarra ValleyWater’s service area in Melbourne’s northernand eastern suburbs are not connected tothe mains sewerage system. Each one is apotential risk to the environment, public healthand our waterways. We are investing $320million over the next 20 years to bring modernsewerage services to these properties, workingin consultation with relevant councils and theEnvironment Protection Authority Victoria.Information sessions regarding upcomingprojects were held in Cockatoo, Park Orchardsand Montrose. Projects were completed inWoori Yallock, Donvale, Montrose and MerndaTownship, and we continued to work withcustomers to ensure they connect as soon aspossible. The introduction of pressure sewersystems in the Donvale and Montrose areashad a take up rate of close to 100 per cent.Communication with households to extendMelbourne’s sewerage capacityBuilding sewerage networks undergroundrequires a great deal of work above ground toassure customers that disruption to establishedhouseholds is minimised. Careful planning andearly notifi cation has kept the community inCoburg well informed of works to progressthe Northern Sewerage Project (NSP). The NSPwebsite was redesigned in 2008/09 to givelocal residents, businesses and communitygroups easy access to current informationabout the project. Unexpected geology inthe shaft at L.E. Cotchin Reserve in Reservoirnecessitated the use of explosives close tohomes. By developing creative noise reductionmeasures, project engineers were able tocontinue blasting with no reported impacton local households.Maintaining thefocus on high qualitydrinking waterYarra Valley Water undertakes routinemonitoring in accordance with the SafeDrinking Water Regulations 2005 and theAustralian Drinking Water Guidelines 2004to ensure delivery of safe and high-qualitydrinking water to our customers.Much of Melbourne’s water is sourced fromprotected catchments, meaning it is naturallypure but does contain natural occurring sediments.Our close proximity to these unfi ltered sourcesmeans these harmless sediments accumulate inYarra Valley Water’s system. While this water isperfectly safe and meets Department of HumanServices Drinking Water Quality Standards, theappearance of sediment causes a relativelyhigh level of water quality complaints.We have historically implemented a proactivewater mains cleaning program to reducesediment, however this program has stoppedto avoid water waste. Nevertheless, we willcontinue to explore alternative solutions toimprove the aesthetic quality of our water.In 2008/09, Yarra Valley Water received anaverage of 3.8 complaints for every 1,000customers, which is lower than our target offour complaints for every 1,000 customers, andis the lowest level of water quality complaintsever achieved by Yarra Valley Water.We recognise that drinking water quality isand always will be a key driver of customersatisfaction and we have a major commitmentto continuous improvement in this aspect ofour service.Planning is already taking place to ensurewe capitalise on the new sources of waterto improve water quality.CustomerCustomer19

Engaging community stakeholders and experts on key issuesThe insights of community stakeholders and experts werecritical this year as storage levels dropped, new metropolitanwideprograms to conserve water came into action, andmomentum built with the State Government’s plan to buildinfrastructure that will provide Melbourne with a secure watersupply. While providing essential dialogue, such engagementactivity adds to our ability to continue offering relevant andeffective solutions to customers.For many years our Customer Consultative Committee hasplayed an important role in providing us with representativeviews from a variety of customer groups.Throughout the year the committee was strongly engaged indiscussions relating to price increases and the impact on allcustomers, including those facing fi nancial diffi culty, tenants,business and new migrants. The committee also informed asubstantial culturally and linguistically diverse (CALD) programwhich will take effect in 2009/10; made recommendations ondeveloping programs that will see youth in secondary educationsectors take a leadership role in water management issues;and contributed information that kept us abreast of issueswithin the residential rental market and commercial sectors.The Committee members are: Netta Griffi n (Chairperson);Glenda Salter, Domestic Customers; Anne Hingston,Environment Victoria; Gavin Dufty, St Vincent de Paul;Susan Fraser, Kildonan UnitingCare; Mark O’Brien, TenantsUnion; Robert Lorenzon, Australian Industry Group; RobertBarron, Council on the Ageing; Kate Wilde, Youth Issues; andJudy McDougall, Migrant Information Centre (Eastern Melbourne).Yarra Valley Water also led a round-table discussion withMelbourne’s opinion leaders and experts in gardening sothat our contribution to Melbourne’s strategy for keepingwater consumption at a level of 155 litres per person perday could be informed by realistic and practical viewpoints.Round-table participants included commercial gardeners,media commentators on gardening, academics andrepresentatives from Melbourne’s public gardens. Thebenefi t of their insights will continue to reach customersas Melbourne prepares for spring and summer.20 Yarra Valley Water Sustainability Report 2008/09

Left: Netta Griffi n, Chairperson of CustomerConsultative CommitteeWater supply improvementsin Wandin North, Sevilleand Seville EastUpgrades being undertaken in partnership withMelbourne Water will result in our customers inWandin North, Seville and Seville East receivingan improved water supply by mid-2009.The work involves constructing a new pipelineat Silvan Reservoir to connect these areas toMelbourne’s fl uoridated and chlorinated watersupply. The treatment plant that had beensupplying this area has reached the end ofits operational life.CustomerWorking with MelbourneWater to integrate newsupplies into the existingwater systemWe are working closely with Melbourne Waterto prepare for the integration of new sourcesof water supply, in particular water to bedelivered to Melbourne via the North SouthPipeline, due to be commissioned in early2010. This water will reach more than twothirds of our customers through changes inthe water supply network.Managing ourassets to ensurereliable serviceOur service area includes a high percentage ofleafy suburbs. Tree roots in these suburbs oftenenter the sewerage system in search of water,which causes sewer blockages and subsequentsewer spills. The record dry conditions overpast years have magnifi ed this tree rootinfi ltration and increased the incidence ofsewer blockages and spills. We take actionto ensure continued responsiveness to sewerblockages, while also conducting proactivemaintenance to reduce the risk of future spills.This year we continued our scheduled programof closed circuit television sewer inspections,focussing on high-risk sewers to avoidfurther failures.Faults managementand improving serviceinterruptionsThe close proximity of our water infrastructure toMelbourne’s catchments also causes very highpressure, which results in a high number ofwater main bursts and leaks. Clay-based soilsare prevalent in our service area and result ina high incidence of leaks in the pipes as soilsexpand and contract with changes in moisturecontent. The drought has caused greater groundmovement than has been experienced in thepast and exacerbated the incidence of pipebursts and leaks.We continue to invest in proactive leak detection,pressure reduction and water mains renewalsto improve the reliability of our network.In 2008/09 we renewed 57.3 kilometresof reticulation water mains in areas wherecustomers historically experience repeatservice interruptions. We also relined a totalof 60.2 kilometres of sewer mains.We have invested more in responding tosewer service failures. The strategy to reducethe number of customers with repeat sewerblockages included the rehabilitation ofproblematic House Connection Branches(HCBs). The annual target of 1,800 HCBswas exceeded during 2008/09, with1,912 completed.This year we also refi ned our ‘trenchlesstechnology’, to make our pipe replacementprojects less disruptive to customers.Responding tocommunities in needImproved services equip usto manage the unprecedentedheat wave of February 2009With much experience in managing through thedrought we were well positioned to respond toone of the hottest summers on record in 2008/09.An investment of $1 million to improve ourresponse to water services during 2007/08 wasbacked by more enhancements in 2008/09.This included expanding our control room fora second time, securing additional fi eldassessors to prioritise the urgency of worksand rotating staff resources to meet demand.We continued to call our customers to keep theminformed and up-to-date regarding the statusof repairs. We also implemented Mobile FieldComputing in November 2008 to enable ourfi eld staff to access real time information,allowing rapid identifi cation of the location ofpipes and valves when supply interruptions occur.Customer 21

Black Saturday,Saturday 7 February 2009Our response team was on hand to supportour customers and the communities affectedby bushfi res on 7 February 2009.The initial challenge in facing the bushfi reswas maintaining water supply to customers andfi re fi ghting authorities for property protection.When the fi res broke out, we immediatelyestablished an incident team to respond toall issues and requests and to coordinateplans with other authorities.We maintained a high level of alert and supportedemergency agencies throughout the followingweeks to respond to the threat facing areas suchas Healesville and Warburton.We ensured that our pump stations and treatmentplants were kept on line, and considered actionsto deal with any water quality issues that mightarise from fi res in the catchments.In regards to water supply and quality, we prepareda series of escalation plans (should they berequired) to ensure the continuity and quality ofwater supplied to our customers.In the aftermath we stopped all billing activity forcustomers in the affected areas, including meterreading, bill delivery and debt follow up. Theentire summer quarter account was waived foraffected properties. For properties in other areaswhere people used water as a precaution for fi reprotection we rebated the cost of the water used.Better understandingcustomer needsThis year we took steps to further ourunderstanding of our customers and to ensurethat our programs and service provision remainrelevant. Alongside our ongoing customersatisfaction and customer contact researchwe undertook:• Research to understand the needs ofcouncils, taking into account their needsas organisations that have a shared interestwith us in ensuring that water and seweragesystems are well managed and a valuecreatingpart of community life.• Research to understand the impacts of waterrestrictions on different customer segmentsand to identify how we can help customersthrough the drought.• A review of Yarra Valley Water’s websiteincluding usability assessments andbenchmarking against best practice websitesto ensure we keep pace with our customers’information expectations in a rapidly evolvingonline arena.• Work with the Office of Disability Victoriato ensure that all programs and servicesmeet the needs of customers with physical,mental and psychological disabilities.• Continued engagement with customer groupsthrough the Customer Consultative Committee.Measuring customersatisfaction with our approachto water managementOur customers have a strong expectation thatYarra Valley Water will manage its water andsewerage service needs effi ciently and withdue respect for the environment. To monitorour progress in meeting these expectations acustomer satisfaction monitor runs throughoutthe year to randomly contact customers in ourservice area and understand their satisfactionwith all aspects of water management.The customer satisfaction monitor measuresour customers’ perceptions rather than trueexperience and provides valued insights intothe way that we need to engage with customersto involve them in a meaningful way with ourbusiness. We have seen that our customers’overall perception that we provide good toexcellent service has fallen from 100% to 91%in 2008/09, highlighting achievable actions totake in order to restore the perceptions andexpectations of customers in the coming year.We have used research data to design programsthat will help customers through change suchas higher pricing and water restrictions. Resultswill be monitored as price increases take effectafter 1 July 2009.22 Yarra Valley Water Sustainability Report 2008/09

CustomerHelping Kinglake recoverYarra Valley Water worked closely with the communitiesaffected by bushfi res to provide resources such as bottledwater, water tankers and equipment.We established a temporary offi ce onsite at Kinglake, staffedby an incident team equipped to respond to communityrequests regarding all supply issues, requests for aid andcommunications associated with the bush fi res.Two community water tanks were installed in Kinglake andKinglake West to enable the local communities to gain accessto clean water. Four water tankers operated by Yarra ValleyWater, City West Water and two contractors commencedcarting drinking water to the Kinglake region on Wednesday11 February to replenish customers’ water supply.During this time, Yarra Valley Water managed around 1,200requests for water from people affected by the fires whichresulted in almost 800 water deliveries. In addition, weserviced a number of businesses or support agencies duringthis period such as relief centres, schools, police stations, localbusinesses, the Country Fire Authority, the army and churches.Yarra Valley Water staff raised $37,230 to be donated to theRed Cross Bushfi re Appeal. The company donated a further$2 for every $1 donated by staff.Customer 23

Customer Contact Monitor providesinsights into customer experiencewith Yarra Valley WaterWe have approximately 618,000 contacts withour customers via our call centre and responseto faults and emergencies each year. We monitorcustomer satisfaction with our performance andhave set benchmarks to help us to meet theaspiration of ensuring that the customers’experiences improve their perception of YarraValley Water’s service.Within our account enquiry and faults andemergency contact we achieved:• 74% customer satisfaction with ease of contact;• 79% customer satisfaction with customertelephone manner;• 74% satisfaction with the ability of Yarra ValleyWater to resolve the enquiry; and• 76% satisfaction with the response fromYarra Valley Water.These results keep us at the same performancelevel as last year, and position us well to help ourcustomers through further challenges next yearas we enter a new era for water management.Resolving customer problems at fi rst contactWe have a fi rst contact resolution strategy thataims to resolve a customer’s problem or querythe fi rst time that they contact us. In 2008/09,we achieved our target of a fi rst contact resolutionrate of 97.5 per cent.Customer response rateOur commitment to high-quality customer serviceincludes responding to our customers within anacceptable timeframe.In relation to billing enquiries, we connected86% of our customers to an operator within30 seconds, which was our target for the year.In relation to emergency and fault calls, weconnected 93% of our customers to an operatorwithin 30 seconds, exceeding our target of 86%.24 Yarra Valley Water Sustainability Report 2008/09

EnvironmentCustomerWe provide our serviceswithin the carrying capacityof nature and inspire othersto do the sameCustomer 25

We understand that the way we provideour service impacts the environmentOur main environmental impacts are from thewater extracted from rivers for supply to ourcustomers, the nutrients we discharge backin to the environment from sewage treatmentplants and from sewage overfl ows, and thegreenhouse gas generated from the provisionof our services. In dealing with these issueswe aim to provide leadership to the waterindustry and encourage action by others.The four key goals to achieving ourstrategy are:• implementing programs that supportreduction in water consumption by ourcustomers and reducing water lostwithin our own systems;• delivering modern sustainable sewerageservices to properties currently servicedwith septic tanks;• managing the sewerage system tominimise nutrient discharges; and• continuing to reduce our net greenhousegas generated as a result of our operations.Achievements• Metered water usage reduced from247 to 234litres per person per daycomparedto the previousfinancial year.• Residential customers reduced theieirwater consumptptioion from164lititres perday to 158litres per day compararedtothe prevevioiousfinancialyear. We exchchanged49,759oldshohowewerheadsfornewew, watetereffificient showerheads.• Our business cusustotomers dececrereasasedtheheirwateter consumumptptioion from1,507lititreresper custstomomerperdayto 1,453 litresper custstomomerperdaycomompaparered to theprevious financial year. All businessesusing more than 10 million litres of waterper year lodged water conservationplans or waterMAPs with Yarra ValleyWater by 31 December2008.• Our pressure reduction strategy,wataterrenewals program, leak detectitionprogram and respspononse to burstsandleakaks led toan 11 percent reduductionin sysystem water losscomompaparered to thepreviousfinancialyear.• We achchieieved net zero grereenenhouse gasemissisionons throrougugh the use of offffsesetsgenenerarateted by thelowow-f-flolow showowererheheadexchchangeprogram.• We launched supply of Class A recycledwater for domestic use in the northernsuburbs in March 2009 via theAurora Sewage and Recycled WaterTreatment Plant.• We won the top environmental honourat the Premier’s Sustainability Awards inApriril 2009, winning the largrge businesscatetegogoryforinnovatioion in sustainababililitity.Areas for improvement• To rededuce the impact of poororperfoformining septptictanks on the environmenent,we striveto imprprovove the backcklolog connnnectionrate so thatgreater than 50 per centof custstomomerers connnnecect within oneyeaear of theserervivicebeing availabablele. As parart ofourbacacklklogprorogrgram211propertiescononnenectedto the sewewerarageserviceprorovided tothehem in 200008/8/0909, agaiainst our targetof 311 propertieses. Unfortrtunately,take-up ratetes were lowin Cockckatoooo. We areconontitinunuining with prorograms toencncouraragean imprproved connection rateat Cockatatoobyworking with the local commumunity.• The number of emerergency flow strtructutureres to be deliverered in 2008/09wasdelayeddueto ongoining discscussionwitith coununcicil regardinginfrastructure alignmentnt.26 Yarra Valley Water Sustainability Report 2008/09

Environment – Key performance indicators08/09target08/09actualAchievedWater consumptionper person per day244L 234L ✓Water recycled fromYarra Valley Watertreatment plants23% 25.2% ✓Sewage treatment planttests compliant withEPA requirementsCustomers with septictanks who connected tosewerage infrastructureCustomer complianceto trade wasteagreements/audits100% 100% ✓311 211 ✗93% 96.5% ✓Emergency overflowstructures on our sewerpipelines compliant withState EnvironmentProtection PolicyGreenhouse gas emissions 0.0tonnesCo 2 -e71% 68% ✗0.0tonnesCo 2 -e✓EnvironmentEnvironment 27

Right: Julian Dunwill,Operations Manager,Amcor Flexibles PrestonBelow: Giaan Rooney at 300,000th showerhead exchangeWater conservationResidential, business andnon-revenue water use –helping our customersto significantly reducewater usageOur customers continued to meet the challengeto conserve water while living under Stage 3awater restrictions and enduring one of the hottestsummers on record.The combined residential, business and nonrevenuewater use fell from 247 to 234 litresper person per day compared to the previousfi nancial year.We expect that a large part of the reduction indemand over the past few years will be permanent.This is due to the effective education of ourcustomers and the adoption of water effi cientappliances, technologies and practices over theextended period of drought and water restrictions.Target 155During winter, infl ows into Melbourne’s catchmentswere 40 per cent lower than the long-term averageand the September rainfall was the lowest onrecord. Storage levels were at 33.8 per cent on1 November 2008, compared to 39.8 per centat the same time the previous year.The Hon. John Brumby, Premier of Victoria, andthe Hon. Tim Holding, Minister for Water, launchedthe Target 155 (T155) campaign on 1 December2008, asking Melbournians to reach for a targetof 155 litres of water use per person per day.The program is a voluntary call to actionimplemented in conjunction with Stage 3a waterrestrictions and supported by an Our Water OurFuture marketing and communications program.Yarra Valley Water’s Tony Kelly acted as themetropolitan water industry spokesperson on boththe T155 campaign and Stage 3a water restrictions.Total water use has decreasedby 42% since 1997/98Total usage (Bulk Water) –average litres per capita per dayYarra Valley Water Residential Moving Annual per Capita Water Use170Target 155 Inception165100.0090.080.0Litres per capita per day16015570.060.050.040.030.0Average Weekly Max Temperature (Celsius)15020.010.01450.097/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/091/07/0815/07/0829/07/0812/08/0826/08/089/09/0823/09/087/10/0821/10/084/11/0818/11/082/12/0816/12/0830/12/0813/01/0927/01/0910/02/0924/02/0910/03/0924/03/097/04/0921/04/095/05/0919/05/092/05/0916/06/0930/06/09DatePer capita water useTemperatureRainfall (mm)28 Yarra Valley Water Sustainability Report 2008/09

EnvironmentAmcor gives water to the communityAmcor has in place infrastructure and partnershipsdesigned to deliver 600,000 litres of water per annum to localcommunities, including 100,000 to the community of Preston.Amcor recognises its important role in relation to theenvironment and the local community. The Amcor WaterGiving Project aims to conserve water by harvesting rainwater and distributing it to address local community needs.The company achieves this by using an existing resource,its roof, for the benefi t of the community.The project involves working in partnership with the City of Darebinto ensure that the donated water is used effectively to addresslocal community water needs. Yarra Valley Water has also madea signifi cant contribution to the Water Giving Project by offeringwater conservation solutions for all Amcor employees at Preston,including showerheads, shower timers and toilet leak detectors.The project has been implemented at fi ve locations acrossVictoria that will provide approximately six million litres of waterper annum to local communities. This is equivalent to over sixOlympic-sized swimming pools per year.Amcor will continue to phase in the project across Australiaover the next two years, identifying suitable sites and engagingwith local community partners and employees.Environment 29

Home water use has droppedby 33% since 1997/98Residential – average litres per person per day97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09Continuing conservationachievements withresidential customersOur residential customers reduced their averagewater use to just 158 litres per person per daythis fi nancial year.Yarra Valley Water and Melbourne’s othermetropolitan water authorities reached animportant milestone this year of swappingmore than 300,000 old showerheads underthe State Government’s Showerhead ExchangeProgram since the program inception in 2006.This is expected to save 3.6 billion litres ofwater and 60 million kilograms of greenhousegas emissions each year, and will assistMelbournians in their individual efforts toachieve a lower ecological footprint.Yarra Valley Water’s free showerhead exchangeprogram saw customers exchange 49,759 oldshowerheads for new, water-effi cient ones.Each showerhead exchanged is estimated tosave an average of 12,000 litres of water peryear and provides an additional benefi t ofreduced greenhouse gas emissions as lesshot water is being used in the home.During 2008/09, our customers were able toregister for the showerhead exchange programonline or at any of the Yarra Valley Water kiosksthat ran at community events and major shoppingcentres within our service area. We also continuedto promote the program through our successfulpartnership with Australia Post, and commenceda new relationship with Bunnings to provideshowerhead exchanges at their retail stores.Our customers were also able to register for afree water saver kit to help them with their watersaving efforts. The kit included a water effi cientgarden hose connector, two adjustable gardendrip spikes, a sink plug, a calendar, and a rebatebrochure and application form.We sent kits to more than 7,000 customers whoregistered within the four week summer campaign.Billed water consumption forbusiness customers has reducedby 47% since 1997/98Business – average litres per customer per day97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09Putting business watermanagement plans into actionBusiness water consumption has reduced by47 per cent since 1997/98.We have continued to work with our business andindustrial customers to provide guidance andtools to achieve reductions in water usage.We have worked closely with customers using10 million litres of water or more in a year, toensure that they participate in water conservationprograms and complete an annual waterMAP toassess their operations and develop actions formore effi cient water usage. In 2008/09, 100 percent of these customers complied with therequirement to lodge a waterMAP.30 Yarra Valley Water Sustainability Report 2008/09

Additionally, the water industry introducedSupport 155, a program to further encouragewater savings by businesses, including thoseusing less than 10 million litres of water per year.The Support 155 program is a call to action toassess water use around their business andimplement savings. Yarra Valley Water hasimplemented a web registration process andan online water calculator to help customersto achieve these savings.Registration to the Support 155 program allowedbusinesses to immediately access best practiceguidelines in relation to kitchens, amenities,cooling towers, cleaning, laundries and recycling.This year, we further helped restaurants tocut water usage by using new water effi cientpre-rinse spray valves to replace the oldvalves that use two to three times more water.The program includes the offer of a free wateraudit to advise restaurants of further watersavingopportunities.We also commenced a business laundryprogram in partnership with the Departmentof Sustainability and Environment (DSE). TheDSE provided $1 million of funding for thedevelopment and implementation of a programto engage non residential laundry operators(and their associations) across Victoriaincluding a report outlining all availablesustainable solutions for achieving watereffi ciency in this important sector.Schools encouraged to signup for water conservationIn 2008/09, a total of 376 government and31 private schools within our service area tookpart in the Schools Water Effi ciency Program(SWEP). A mandatory program for all VictorianGovernment schools, SWEP involves anindoor water audit of the school site and thedevelopment of a water effi ciency report toimprove water effi ciency.Our Water – Learn it, Live it! (Water LILI)program continued to grow, with 78 primaryand secondary schools in Yarra Valley Water’sservice area actively involved.The Water LILI program is free and gives teachersthe resources to develop fun and interestingways to integrate water conservation into theircurriculum. It was developed by Yarra ValleyWater and Melbourne’s other water utilitiesto teach students from years prep to ten aboutwater conservation, and forms part of the StateGovernment’s Our Water, Our Future policy.To support the program, Yarra Valley Water offersa number of activities designed to create a futuregeneration of water savers. These includepresentations on the water cycle and watersaving tips, a tour of the Upper Yarra SewageTreatment Plant and a performance by CloudiaRaindrop and Friends. The story of water cameto life for students with the launch of our BigBook about Water, a popular method ofpromoting the conservation story to primaryaged school children.We used Education Week, 17-23 May 2009, toencourage more local primary and secondaryschools to sign up to this important waterconservation program. Schools in our areawere also engaged in National Water Weekin October through a short fi lm competition.EnvironmentEnvironment 31

Right: Premier, John Brumby andYarra Valley Water Managing Director, Tony KellyTotal system water loss averaged5,400 litres per kilometre of watermain per day during 2008/09,marginally down from 6,100 litresper kilometre in the previous yearReducing leakage in thepipe networkOur total system loss was estimated at 5,400litres per kilometre of water main per day, downfrom 6,100 litres per kilometre of water mainper day in 2007/08.Due to the topography in our area, our supplynetwork is subject to some of the highestpressures in the world. These high pressures,combined with expansive clay based soils, resultin increased leakage rates and burst water mains.Part of our capital expenditure is a fi ve-yearpressure management program designed toreduce water loss in our system. The programbenefi ts include reducing background leakage,extending the life of pipe assets and reducingwater consumption.In 2008/09 we:• reduced excessive water pressures in afurther five pressure zones;• replaced 57.3km of ageing water mains toreduce water losses from bursts and minimiseservice interruptions to customers; and• surveyed 60.2km of pipe, using the bestavailableelectronic and acoustic equipment,to detect leaks and further reduce potentialwater loss.We continued to cap water losses from burstsand leaks by implementing a new process toimmediately switch off water during all burstsand signifi cant leaks. This balances customerrequirements for ongoing supply with the needto conserve water and meet communityexpectations under Stage 3a water restrictions.Protecting andenhancing ourwaterwaysRecycled water provides anew, sustainable water sourcefor sustainable developmentsThe delivery of Class A recycled water is partof the State Government’s Our Water Our Futureaction plan to substitute drinking water supplieswith recycled water for designated purposes suchas toilet fl ushing, watering gardens, car washingand irrigation of public space.Class A recycled water is a sustainable alternativewater supply that is produced from sewage andhighly treated with ultraviolet radiation, ultrafi ltrationand chlorination.97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09Total non-revenue waterReal losses32 Yarra Valley Water Sustainability Report 2008/09

EnvironmentYarra Valley Water wins top environmental honourat Premier’s Sustainability AwardsTony Kelly was very proud and delighted to accept the Premier’sSustainability Award (in the Large Business category) from thePremier, the Honourable John Brumby on 16 April 2009 at aceremony hosted by television personality Rove McManusat the Crown Palladium. The theme of the awards this yearwas ‘Innovation – a new thinking’ and the award recognisedongoing innovative work we’ve undertaken in the area ofenvironmental sustainability and our provision of world-leadingsustainable water and sewerage solutions.Examples included the Kalkallo Integrated Water Managementproject, work in the Hume corridor and our industry-leadingwork on water conservation.“Our sustainability programs and approach are at the forefrontof the domestic and international water industry, designed toinspire our customers, the community and our staff, and todeliver our services within the carrying capacity of nature,”said Tony Kelly, Managing Director.The award also recognised the integration of sustainability rightacross our business, from marketing programs, communityengagement and an internal green offi ce strategy, to engineeringdesigns for new water and sewerage infrastructure and upgrades.Premier John Brumby said the Premier’s Sustainability Awardsrecognised the hard work and innovation by the business andcommunity sectors to reduce their carbon footprint and use ofresources. “The Victorian Government is committed to supportingbusinesses, groups and individuals that are prepared to take onthe challenge of cutting their resource use and being innovativewith less,” he said.Environmentnmentnt33

We launched the supply of Class A recycled waterfor domestic use in the northern suburbs in March,with residents in the VicUrban development ofAurora becoming the fi rst to receive reticulatedsupply via a separate specially installed purplepipe system. This supply, which should reducewater consumption in those households by30 per cent, is perfect for non-drinking waterpurposes: it is plumbed for fl ushing toilets andoutside uses such as watering plants andwashing cars.The Aurora Sewage and Recycled Water TreatmentPlant will supply approximately 13,000 lots in theAurora development and Epping North East. Plansare in place to deliver Class A recycled water toa further 600 households in Craigieburn in thesummer of 2009 as part of the long term strategyto supply around 30,000 new homes in Melbourne’snorthern fringe with recycled water over the next25 years.Capital investment achievessustainable outcomesWe are planning to spend an average of$228 million per year over the next four yearson capital investment projects. Our capitalexpenditure has been prioritised to:• expand water supply and sewerage networksin the rapidly growing northern suburbs ofMelbourne, including provision of recycledwater for new homes;• reduce the spillage of untreated sewage byconstructing the Northern Sewerage Project,and ensure all emergency relief structures whichoutfall to drains and streams during heavyrainfall events achieve the requirementsof the State Environment Protection Policy(Waters of Victoria) – Schedule F7 Watersof the Yarra catchment by 2018;• continue our program to provide reticulatedsewerage to properties currently serviced withseptic tanks with a target completion date of2025; and• maintain service levels through continuedrenewal of existing infrastructure.Projects we have completed this year include:• Rosanna Relieving Sewer, $3.75M;• 57.3km of water main renewals, $14.7M;• 60.2km of sewer main renewals, $15M;• Commissioning of Aurora Sewage andRecycled Water Treatment Plant, $4M;• Commissioning of five Pressure ManagementAreas, $3.5M;• Commissioning of three Flow Control Facilitiesin Mernda/Doreen, $22M;• Malcolm Creek Branch Sewer, $5.2M; and• Provision of reticulated sewerage to 157households that rely on septic tanks, $3.6M.Sustainable seweragesolutions to improve themanagement of septic tanksWe continue to make a substantial contributionin the transition to more sustainable sewerageservices throughout Melbourne, providing theinfrastructure that will allow for the replacementof more than 17,000 septic tanks within ourservice area by 2025. The project includes a callto action for customers to invest in connecting tothe new service once available so our programhas focussed on providing customers with theenvironmental justifi cation and fi nancialincentives to do so.This year 157 customers with septic tanks wereprovided with sewerage infrastructure.This included a 60 lot pressure sewer area inDonvale, just above the exit of the Mullum MullumEastlink tunnel.The process of sewer design, construction andcustomer consultation takes well over 12 monthsin every area, so we have taken steps to lay theright foundations that will expedite customerconnection upon availability of the service. Thisyear we are working on:• completion of service to 258 properties atCockatoo and Park Orchards by June 2010;• completion of preliminary design and communityconsultation for the Wonga Park SewerageBacklog Project by December 2009 – thisproject will provide a service to 620 propertiesand will be completed by 30 June 2012;• completion of servicing to about 520 propertiesat Templestowe by 30 June 2011.34 Yarra Valley Water Sustainability Report 2008/09

Reducing impacts ofsewage treatmentplants and trade wasteThe majority of our sewage is treated atMelbourne Water’s Western and EasternTreatment Plants, however six of our smallsewage treatment plants discharge highlytreated water into the Yarra River or itstributaries. The other three plants recycle100 per cent of treated water for agriculturalor recreational purposes.Our treatment plants that discharge to waterwaysare required to comply with EnvironmentProtection Authority (EPA) Victoria dischargelicence conditions. We report to EPA Victoria onsewage treatment plant licence performance,water recycling schemes, biosolids recyclingschemes, trade waste received at sewagetreatment plants, sewer spills and progresswith agreed programs.A total of 8,251 litres of sewage was treated atour sewage treatment plants during 2008/09and we achieved 100 per cent compliancewith our agreed effl uent sampling programwith the EPA.We increased the volume of treated waterrecycled at our sewage treatment plants from23.1 per cent in 2007/08 to 25.2 per cent in2008/09, resulting in 2,272 million litres ofwater being reused.Trade waste is wastewater produced fromoperations of industry and commercial businessesand usually requires more treatment than normaldomestic sewage. Good management oftrade waste involving continual monitoringof discharges, education and assistanceto customers is important. This year ourmanagement practices were recognised withus achieving accreditation of our sewer qualitymanagement in accordance with InternationalStandard Organisation standard 22000.Greenhousegas emissionsAchieving net zerogreenhouse gas emissionsWe achieved our target of achieving a positionof net zero greenhouse gas emissions byJune 2009.The outcome was achieved through the continueduse of our showerhead exchange programwhere old and ineffi cient showerheads havebeen exchanged for new, water effi cient ones.This program provides a double benefi t for theenvironment in that it reduces the amount ofwater used in the shower and also the amountof energy used to heat that hot water. The netimpact is that this program generates moreCO 2offsets than we emit through our variousoperational activities.An independent climate change consultant,NetBalance Management Group Ltd, hasverified the methodology used to calculatethe quantity of greenhouse gas abatement perunit of showerheads. We are currently pursuingcertifi cation of the program for greenhouse gasabatements under a number of appropriateschemes, such as the Victorian EnergyEffi ciency Target.We are driving to maintain net zero greenhousegas emissions in the future. This involvesconsidering and monitoring the impact ofexpected escalation of electricity and abatementcosts in the future, the end of the showerheadprogram, and increased pumping andtreatment activities that will be required toservice new development.tonnes Co2-eAnnual Net GHG emissions andcumulative showerheads exchanged30,00025,00020,00015,00010,0005,0000Jun 04 Jun 5 Jun 06 Jun 07 Jun 08 Jun 09Net GHG emissions2009/09 ShowerheadTarget 142,500Year ending34,70582,312Showerheads exchanged cumulativeLeading the way with theMitcham Green Office StrategyOur Mitcham Green Offi ce Strategy (MGOS)continues to demonstrate the strong commitmentour staff have to environmental sustainability.The strategy has been an outstanding successin increasing our recycling to reduce waste tolandfi ll. Over the past fi ve years the MGOS hasreduced our offi ce footprint by reducing:• potable water consumption by 69 per cent;• paper usage by 48 per cent;• waste to landfill by 75 per cent; and• electricity consumption by 13 per cent.NILNIL125,000125,000100,00075,00050,00025,0000Showerheads Exchanged (cumulative no.)EnvironmentEnvironment 35

EnvironmentalleadershipSupporting new developmentWe are constantly looking to use better waysto deliver service, and pursue sustainablesolutions to service growth in an environmentallyresponsible way.We select the most appropriate and innovativetechnology by using Life Cycle Assessmentprocesses. These processes encompass theidentifi cation and quantifi cation of energy andmaterial usage, as well as environmental releasesacross all stages of the life cycle, the assessmentof the impact of these energy and material usesand releases to the environment; and theevaluation and implementation of opportunitiesto effect environmental improvement.During 2008/09 we worked with Hume City Counciland Melbourne Water at Kalkallo to provide anintegrated water management solution for aproposed 1200ha industrial development.Guiding objectives were to strive to mimic thenatural conditions of the local stream and deliverthe solution at the lowest community cost. Thisinvolved working across the whole urban watercycle to fi nd the most sustainable solution forstorm water, reticulated water and sewerage.Using advice provided by Royal MelbourneInstitute of Technology (RMIT) and Australia’sCommonwealth Scientifi c and Industrial ResearchOrganisation (CSIRO) we also commenced aproject to showcase a more sustainable wayto service the properties that are remotefrom conventional sewerage services. Thisdemonstration project at Kinglake West willinclude greywater systems and urine separatingtoilets. Despite the devastating fi res that ravagedthe Kinglake area over the summer, with thesupport of the Kinglake West residents thisproject will move into the implementation phaseduring 2009/10.Work commenced to deliver a more sustainableurban water solution to the 58ha PrincipalActivity Centre of Doncaster Hill. Yarra ValleyWater has signed a memorandum of understandingwith Manningham Council and Melbourne Waterto work together on the project to identifysustainable options for storm water, potablewater and sewage.We also commenced work on the Mandalaydevelopment in Beveridge, which is a 2,500lot residential development to the west of theBeveridge Township. This development will beunique within Yarra Valley Water in that it will beserviced by a vacuum sewer system as well asbeing supplied with Class A recycled water viaa separate pipe system. A number of key assetswill be constructed in order to service thedevelopment.IWA Sustainability Specialistprize for Research ExcellenceIn September 2008, we won an InternationalWater Association prize for research excellencerelating to sustainable water management. Theproject was a cooperative effort between YarraValley Water, RMIT University and the CSIRO onwater and servicing for new developments. Theresearch compared alternative servicing optionssuch as recycled water, rainwater tanks andgreywater recycling, with traditional centralisedservicing. It found alternative servicing optionscan produce better environmental outcomes,such as reductions in greenhouse emissions,nutrients and storm water run-off, and lowercommunity costs than traditional options.36 Yarra Valley Water Sustainability Report 2008/09

CultureWe aim to have a vibrantworkplace that enables us toachieve exceptional businessoutcomes, successful partnershipsand personal satisfaction

We aim to achieve high levels of personalsatisfaction as we work together to deliverexceptional outcomes for our customers,the environment and our shareholderOur focus on developing our people has contributed to high levels of staff satisfaction. We also have a strong record of internal promotion androtation, and we continue to provide structured programs for all levels of the organisation to develop competencies and embed constructivebehaviours. This year we continued to focus on learning and development opportunities for staff to further develop their potential. We alsocompleted a strategy designed to take our safety program from a systems driven approach to one that will promote an entrenched cultureof safety in our staff, contractors and our partners.Achievements:In 2008/09 Yarra Valley Water:• Implemented an online Career Centre, aFlexible Working Options Framework anddeveloped an Employee Value Proposition.• Supported eight secondments and11 further study arrangements.• Delivered 440 specialist learning anddevelopment sessions, with an emphasison developing leadership and technicalskills of staff and improving cultural andefficiency competencies.• Hosted 10 vacation students.• Raised more than $125,000 forcharities including:- $3,660 raised by staff for variouscharities with a dollar for dollar matchingdonation from Yarra Valley Water.- $6,695 raised for Wateraid by staff.- $37,230 donated by staff to the RedCross Bushfire Appeal; with a $2donation from Yarra Valley Water forevery $1 raised.Areas for improvement:Yarra Valley Water strives to achieve zero lost time injuries in the workplace. In 2008/09 we had three lost time injuries.In 2009 we re-ran our cultural surveys. Although our results remain in the top end of companies in Australia, and 10 of the 12 Outcomesderived from the results are above world average, we were disappointed that two of thefour Constructive Styles were below the resultsof our previous survey. Following feedback sessions with teams across the business, improvement plans have been developed and will beimplemented over the next 12 months.

CultureCulture – Key performance indicators08/09target08/09actualAchievedMaintain healthystaff turnover

Right: Lisa Anelli, Allison Flintoffand Hwan San LimNew Initiativesand StrategiesUpdating our strategy leads toproductive workplace planningYarra Valley Water’s Strategic Intent is built on thefour key pillars of customer, environment, cultureand effi ciency and provides a foundation for allactivities undertaken by our company.A review of the strategy was undertaken in August2008 as part of our dedication to develop a longterm vision for water in Victoria and to put arobust test around the strategy in light of theretail water industry review undertaken by theVictorian Competition and Effi ciency Commissionin 2007/08.The review found that the outcomes and objectivesof our strategy were fundamentally sound; howeversome refi nement to the strategy was appropriateto take us to the next level. Following Boardfeedback in November 2008, our core strategychanged as follows:• the wording of the four outcome statementsremain unchanged, however each outcomenow has a measure, target and specificinitiatives by which Yarra Valley Water willassess its achievement of the strategy;• a total of 15 high level objectives wereconfirmed as being relevant to theachievement of those strategic outcomes.Procedures are now in place that empower allline managers to explain the company’s strategyto their staff using a new performance effectivenessplan (PEP) process. These ‘PEP talks’ are designedto provide context for staff on how their rolesupports the company’s strategy and bring thestrategy to life. Expected outcomes includeenhanced employee satisfaction and clarityfor staff on the signifi cance of their role to theachievement of our strategic intent.All Yarra Valley Water staff have a PerformanceEffectiveness Plan for the 2009/10 year.Assessment of cultureprovides the way forwardIn 2008/09 we conducted extensive research tocollect data from our staff to inform the ongoingdevelopment of our culture in the future. As partof this process, we conducted focus groups andculture surveys across the company.Following feedback to staff on the results of theculture surveys, key actions were agreed and willbe implemented over the next 12 months. Theseplans will progress our intention to build a culturethat demonstrates behaviours that are affi liative,self actualising, achievement orientated andhumanistic/encouraging.Creating a NewEnterprise AgreementNegotiations were conducted during 2009 todevelop a new Enterprise Agreement (EA) forour staff. Signatories to the EA are the AustralianServices Union and The Association of ProfessionalEngineers, Scientists and Managers, Australiaalong with Yarra Valley Water management.Meetings were conducted in April 2009 toenable staff to voice their views about currentconditions under the EA. Staff members were alsoencouraged to attend the EA committee meetingsto observe proceedings.40 Yarra Valley Water Sustainability Report 2008/09

Flexible options bring balance to work and lifeOur fl exible working options framework stood up to the testin November 2008 when two valued Yarra Valley Wateremployees in the Finance and Corporate Services Groupwanted to balance their work objectives and still have timeto care for young children.The solution was to restructure a full-time fi nancial accountingposition into two separate part-time functions. Lisa Anelli returnedfrom maternity leave in November 2008 and resumed her previousfull time role of Manager, Financial Accounting in a three dayper week capacity. Alison Flintoff, who had been caretaking theManager, Financial Accounting role while Lisa was on maternityleave, assumed a newly created position of Manager, TaxationServices (incorporating the new responsibility of Payroll) in afour day per week capacity. Lisa works full time for six weeksduring the company’s peak period of July-August each year.“It is important to me to spend time with my daughter, butalso to maintain my career and to keep myself motivated andchallenged,” says Lisa.Splitting the function into two separate roles supported increasedfl exible work options for Lisa and Alison and ensured thatbusiness needs were still met.“I am appreciative of being given the opportunity to work in achallenging role, part time, and I make the extra effort to ensurethat I’m fl exible in turn to meet varying business requirements,by swapping my day off or working from home when thecompany requires me to,” says Alison.Terry Swingler, General Manager, Finance and CompanySecretary, is also positive about the fl exible arrangement.“I have no doubt that our fl exible work policy continues toassist us in attracting and retaining high calibre staff,” he says.“This is refl ected in excellent work outputs, and is invaluablein ensuring that we are on track to have a vibrant workplaceto achieve exceptional business outcomes, successfulpartnerships and personal satisfaction.”Not all fl exible work conditions involve working part time.Hwan San Lim, Manager, Demand Forecasting, Strategy andCommunications, works a full time role but commences earlytwo days per week to accommodate school pickups at 3.30 pmand after-school activities. The other three days per week,Hwan San works later hours to facilitate school drop offs.“Yarra Valley Water’s fl exible work policy has allowed me to stayin a full-time, challenging role, continue my MBA and care formy growing family. I have achieved my work goals, attained jobsatisfaction, scored really well on my last couple of exams, andstill stayed in touch with family life. I left my last workplace lookingfor work/life balance and found it here,” says Hwan San.CultureCulture 41

Right: John Langmore,President, United NationsAssociation of AustraliaWorkforce Planning providesa future focusWe will be reviewing our Workforce PlanningStrategy during 2009/10 to refl ect the currentexternal employment environment as well as thecurrent and future issues facing our workforce.This review will continue to address key componentssuch as succession planning, employmentconditions and our Employee Value Proposition.Work was completed throughout 2008/09on our Attraction and Retention Strategy andincluded the review and enhancement of ourcurrent staff attraction and selection programand processes, which are designed to attracthigh calibre candidates with the best skills,knowledge and attributes for both the roleand our organisational culture.We also completed our Employee Value Propositionand a Flexible Working Options Framework.Employee Value Proposition –“Our people. Your lifestyle.How refreshing.”Our employment brand showcases our company’spersonality and values and increases ourcapability to attract and employ quality,competent and skilled employees to meet ourbusiness requirements.We engaged our own staff in the process ofhelping to defi ne the unique value propositionfor Yarra Valley Water. This process involvedconducting three separate focus groupswith engineers, mixed professionals and newemployees. We also conducted an employmentbrand survey.The key messages from our research showedthat our employees most value:• The PEOPLE they work with;• Being able to balance their work andprivate LIFE; and• Having an ENVIRONMENTAL focus,and implementing new approaches tosustainability that will ultimately makea difference.Results analysis and key fi ndings have resultedin the development of an employment brandthat is consistent with the existing Yarra ValleyWater brand.A dedicated online careers centre and onlineadvertisement template embodies the valuesbehind this brand, ensuring that prospective staffgain an intimate understanding of life at YarraValley Water as part of the job search process.Flexible hours frameworkMany of our employees are already accessingfl exible work options which ultimately assistto improve the motivation, performance andsatisfaction of our staff and provide increasedco-operation and commitment to our company.Yarra Valley Water is committed to being anemployer of choice and strives to meet changesto workforce, society and technology. We alsorecognise the value of our staff and seek to retaincompetent and committed staff by offering themfurther options to balance their career with life’sother demands.Flexible work options feature on our careerscentre which was implemented in June 2009.Developing exceptional leadersOur Learning and Development strategy providesthe framework to ensure attainment of key skills,embed productive behaviours and developleadership competencies. It is underpinned by acomprehensive range of programs and initiativesthat provide development opportunities for all staff.42 Yarra Valley Water Sustainability Report 2008/09

World Day of Social Justice at Yarra Valley WaterA breakfast was hosted by Yarra Valley Water and KildonanUnitingCare on 20 February 2009 to recognise the inauguralWorld Day of Social Justice. The event raised awareness of theprograms developed by both organisations to achieve socialjustice and observe the efforts of the international communityin poverty eradication, promotion of full employment anddecent work, gender equity and access to social well-beingand justice for all.“The event provided an opportunity to recognise the greatwork of our and Kildonan’s staff in assisting our customersto manage their fi nancial commitments in times of hardship,”says Anne Farquhar, General Manager, Human Resources. “Thetiming of the event, as the realities of global economic conditionsbegan to develop and within two weeks of Victoria’s worstbushfi res, provided sobering context. The event was importantto us in terms of living out our strategy. People within ourorganisation are focussed on customer service and the workwe do with social justice groups such as Kildonan providestrong customer support programs and make a differencein people’s lives.”John Langmore, President of the United Nations Associationof Australia, spoke to guests and emphasised the importanceof actions taken by the corporate sector. He congratulated bothYarra Valley Water and Kildonan on their long-term strategiesin the area of social justice, specifi cally Yarra Valley Water’sHardship Program, stating that the overall success of theten-year program demonstrates that social justice can begood for communities and the bottom line.Other guest speakers were Peter Wilson, Chairman of Yarra ValleyWater and Kildonan’s Chair, Dr Kay Stevens. Key messages wereabout how commitment to social justice can help break down thebarriers facing today’s community, especially the most vulnerablein our society, so that people can then actively participate andcontribute to creating a thriving and inclusive community.Social justice is what faces you in the morning. It is awakeningin a house with adequate water supply, cooking facilities andsanitation. It is the ability to nourish your children and sendthem to school where their education not only equips them foremployment but reinforces their knowledge and understandingof their cultural inheritance. It is the prospect of genuineemployment and good health: a life of choices and opportunity,free from discrimination.Mick Dodson, Social Justice Commissioner, 1993.CultureCulture ure43

Learning and DevelopmentOpportunitiesIn 2008/09, we provided 440 instructor-ledtraining sessions for staff, with 275 of thesedelivered in our on-site training centre. In addition,11 staff received further study support throughour Study Assistance Program.A strong emphasis was placed on OH&S trainingand risk management as we continued to focuson improving the safety culture of not only ouremployees, but also our contractors and partnersthat deliver services on our behalf. We aim to havea commitment to safety and well-being entrenchedin our culture across all levels of the company.We offered a wide range of developmentopportunities, including:• leadership programs focussing onmanaging performance, managing changeand team leadership;• cultural programs focussing on communication,Equal Employment Opportunity, induction, selfawareness, safety and well-being;• efficiency programs such as systems trainingand information management, problem solving,risk management, and project management;• technical courses relating to pump systems,water and wastewater treatment, hydraulics,mechanical and electrical modelling, waterquality, and Hazard Analysis and CriticalControl Point training.Yarra Professionals Group visit Visy to view their water saving initiativesCreating career pathsthrough secondmentsYarra Valley Water encourages professionaldevelopment of our staff through secondmentsto short term assignments or projects of up to sixmonths. Secondments also take place to externalorganisations, such as design consultants forengineers to gain valued design experience thatwe are unable to offer internally.People seconded from Yarra Valley Water in2008/09 included:• Brant Mitchell, MWH, February 08 – February 09• Shem MacDonald, GHD, July 08 – February 09• Ian Filby, DSE, January 08 – January 09• Natalie Trotter, John Holland, January 09for 18-24 months• Elvira Caden, GHD, April 09 for 6-9 months• David White, MWH, April 09 for 6-9 months• Kein Gan, East Bay MUD (USA), October 2008• Peter Roberts, Melbourne Water, September2008 for 9 monthsPeople seconded to Yarra Valley Water:• Charity Moysienyane, MWH, February 08– February 09• Brad Rudsits, GHD, July 08 – February 09• Steven Theodorlis, MWH, early April• Chris Pepperell, GHD, March 09 for6-9 months• Hillary Anderson, East Bay MUD (USA),October 2008Yarra Professionals GroupThe Yarra Professionals Group aims to provideour staff with a forum to explore their professionaland personal aspirations, and provides access tothe wider water, engineering and other relatedindustries. Historically it has been a key source ofcareer support to our new graduates and vacationstudents. The group also subsidises attendancefor its members at key industry functions.Activities this year included a visit to Melbourne’s60L Green Building at 60 Leicester Street,Carlton and an internal presentation to overviewSingapore Waters’ recycling scheme.44 Yarra Valley Water Sustainability Report 2008/09

Maintaining local andinternational connections forprofessional developmentWe have been independently assessed as oneof the most effi cient water utilities in Australiaand are committed to sharing best practice.In 2008/09 companies that visited YarraValley Water included Hunter Water, SeattlePublic Utilities, Parsons Brinkerhoef andLaTrobe University.We also continued to share our vision and keylearnings to further benefi t industry, communityand individuals. We presented at numerouslocal and international conferences throughoutthe year, including:• Creating Water Sensitive Cities in Australia(Perth, Brisbane, Sydney, Melbourneand Adelaide);• Sixth Australian Conference in Life CycleAssessment (Melbourne);• Fourth International Conference onSustainable Water Environment: InnovativeTechnologies and Energy Efficient Solutions(Singapore);• IWA World Water Congress (Vienna);• 13th Annual National Water Conference(Melbourne);• Seventh Australian Water Summit(Brisbane); and• OzWater (Melbourne).Supporting water and sanitationin third world countriesWaterAid Australia is the Australian waterindustry’s own international charity. It works withsome of the world’s poorest communities inEast Asia and the Pacifi c region, providing accessto safe water, sanitation and hygiene education.Yarra Valley Water is a founding member ofWaterAid Australia and staff set up a fundraisingcommittee that has raised much-needed fundsfor projects.Our Walk for Water and chocolate fundraisingevents raised $6,695 for WaterAid.Visit www.wateraid.org to learn more aboutthis charity.Events andcommunicationsRecognising exceptionalpersonal achievementsEach month, we recognise special achievementsby employees and teams that have made anoutstanding contribution to the business atan informal Reward and Recognition session.The employee of the year and team of the yearare selected from these nominations.In 2008/09, our employee of the year wasDavid Walkley and our team of the year wasthe Bushfi re Community Aid Team.Work hard, play hardYarra Valley Water provides our staff with manyopportunities to get together for social eventsand gatherings. We also sponsor a numberof team events that raise money for charity.This year employees again took part in theRide to Work Day on 15 October 2008, with39 staff participating and reducing ourenvironmental footprint by cycling to work.Kick off provides focus forthe year aheadThe Yarra Valley Water Kick Off event is anopportunity to celebrate the achievementsof the past 12 months and look forward to thechallenges of the year ahead. All staff areinvited to attend this event, which includes theannouncement of employee and team of theyear along with a mixture of fun, informativeand motivational presentations from thechairman, the managing director, staff andkeynote speakers.Health and SafetyWe are committed to providing the safestpossible working environment and expect allemployees to understand their occupationalhealth and safety responsibilities to maintaina safe workplace. We aim for our staff, ourcontractors and our partners to have anentrenched culture of safety and acommitment to well-being.In 2008/09 we had three lost time injuries andseven medical treatment injuries. Our contractorsreported three lost time injuries and 21 medicaltreatment injuries.This year, our continued focus on Health andSafety included the following initiatives:• implementation of a Safety Alert programto notify internal and external partners ofcurrent safety issues;• an independent audit by SAI Global Pty Ltd toverify the ongoing maintenance and continualimprovement of our management systems;• implementation of Incident Cause AnalysisMethodology training to ensure that wehave a standard technique in place toinvestigate significant incidents andnear misses;• commencement of work with civilconstruction contractors to reviewprograms aimed at improving safetyperformance and awareness.Once again, we organised a very successfulSafety Week in October 2008 to put thespotlight on workplace health, safety andwell-being. Topics included nutrition, tai chi,fi rst aid and ergonomics.CultureCulture 45

David Walkley – Team Leader,Billing Management, Billing and Contact Services GroupFront: Melissa Greenwood, Michelle Doran, Jim Fontana Second: Jenny Manassa, Mel Stott, Deb Marson, Vince HalloranThird: Maarten de Beurs, Leah Prosser, Gary Gunn, Andrew Tofari Back: Phil Wright, Peter Murphy, Rhett Chapman, Daniel FitzpatrickEmployee of the YearYarra Valley Water congratulates David Walkley,Team Leader, Billing Management Team,for being the 2008/09 employee of the year.David has been employed by Yarra Valley Watersince our inception in 1995, and has more than32 years experience in the water industry. Themain focus of his current role is to ensure thatour billing accounts are out on time and are asaccurate as possible, while also managingchanges to the billing process and any otherspecial requirements.David was nominated for his ongoing involvementacross a range of key projects and his willingnessto get involved in projects to achieve exceptionaloutcomes. As well as managing his own teamand undertaking normal daily activities, Davidhas been involved in many additional businessactivities. These have included actioning billingchanges for customers who were affected bybushfi res, preparation for changes in the Julyaccount and a range of work in relation to thedevelopment of our new billing system, includingthe provision of resources to support testing.“I am very humbled and proud to receive thisaward,” says David. “I am grateful for the ongoingsupport that I receive from my Yarra Valley Watercolleagues and also from my team, who all doa great job.”Team of the YearThe Bushfi re Community Aid TeamCongratulations to the Bushfi re Community AidTeam for receiving recognition as team of theyear for 2008/09.The team included: Andrew Tofari, Brian Cole,Daniel Fitzpatrick, Dani Mazzini, Deb Marson,Deb Stephens, Gary Gunn, Jane Cumming, JennyManassa, Jim Fontana, Leah Prosser, Maarten deBeurs, Mel Stott, Melissa Greenwood, MichelleDoran, Peter Murphy, Phil Wright, Rhett Chapman,Serge Battisti and Vincent Halloran.The team was recognised for their exceptionalefforts and dedication in the delivery of waterto affected communities following the Feburary2009 bushfi res. During this time, Yarra ValleyWater managed approximately 1,200 requestsfor water from people affected by the fi res,which resulted in nearly 800 deliveries of water.Additionally, the team serviced a number ofbusiness or support agencies during this timeincluding relief centres, schools, police stations,local businesses, the Country Fire Authority,the army and churches.David Snadden, General Manager InfrastructureServices says, “This was a tremendous effort byour staff in the face of devastating conditions.People affected by the bushfi res initially didn’tknow whom to ask for help, and water wasobviously a key issue. The Bushfi re CommunityAid Team made a fantastic contribution to supportthe community, and it is a credit to everybodyin the team for pulling together to help thosein need.”46 Yarra Valley Water Sustainability Report 2008/09

EfficiencyWe aim to achieve ourobjectives at the lowestcommunity cost andconsistently meetshareholder expectations

Yarra Valley Water leads the water industryin the efficient delivery of services.We have historically achieved the lowest operating costs per property in Melbourne and continue to rate as one of the most effi cientwater utilities in the country. We do this by reducing waste and improving business processes. We also focus on achieving our objectivesat the lowest community cost, while providing adequate returns to our shareholder, the Victorian Government.Achievememenentsts:In 2008/09 Yararrara Valalleley Wateter:• Achieveded a prorofifit greaeateter thantheprior year.• Mananaged our debtportfolio to takefululladvavantntagage ofredeductions in intereresest rates.• Activevelyinfluenenceced a chanangein a drafaftaccounting statandndarard thatwououldhavaveresultedin a loss of $24 million inrevenue annually to the company.• Undedertook substantial work to developour price submisissision to the EssentialServrvicicesComommimissssioion (ESC) for the200909/1/10-0-2012/1/13 regulatory period,resultining in a final decision which largelyreflectsourproposal for operating andcapipitatal expependndititure. This has resulted instrengththenenining the company’s financialperfrformancnce and capacityto deliveverour serviciceses. Weestimate thateven afterthe approvedprices are implemenenteted,the companany will continue to havaveone of thelowest operating costs perproperty in Australia.• Launchedan asset managementntimprovememenent strategy which will deliverimproved customer service and effificicencies.Areaforimprovemement:We will further improve opereratating costperpropertrty byconontinuing to challenge our cost baseincncluluding idedentntifying opporortunities to reducecosts through shared services arrarangemenentsts, process and information technology impmprovemementnts and innonovavatitionons that reduce the cost ofoperating our water and sewerage infnfrarastructcture.

Efficiency – Key performance indicators08/09target08/09actualAchievedReduce capital expenditurein line with reducedrevenues ($m)230.4 175.9 ✓Operating cost per propertyfor water supply services ($) 1 218.94 222.53 ✗Operating cost per propertyfor wastewater services ($) 1 266.11 275.51 ✗Managing controllableoperating expenditurein accordance withour target ($m)72.9 70.4 ✓1. During times of drought, Yarra Valley Water’s topographical and geological conditions, in conjunctionto our relative proximity to Melbourne catchments, have a significant impact on business operationsgenerally and more specifically in the following areas:– System pressures/bursts and leaks – Yarra Valley Water historically has a greater number of bursts andleaks than other areas of Melbourne resulting from the combination of the high water pressure due toour close proximity to Melbourne’s catchments and the clay-based geology. The recent record dryconditions have exacerbated the incidences of pipes cracking and misalignment, resulting in higherthan-usual costs for these activities.– Water quality – Yarra Valley Water’s proximity to the unfiltered water catchments/sources increases theincidence of water quality complaints attributed to naturally occurring sediments. The imposition of waterrestrictions during the drought has resulted in an increase in complaints and costs in this area due to thecessation of a proactive water mains cleaning program.– Sewer blockages and spills – Yarra Valley Water’s licence area includes a high percentage of ‘leafy green’suburbs. This aspect has resulted in the increased incidence of tree root infiltration into the seweragesystem as a consequence of trees looking for available water sources during times of drought. Theimpact of this phenomenon is an increase in the incidence of sewer blockages and spills consumingadditional resources.Efficiency49

Acting on efficiencygains for the benefitof the industryImportant actions have been taken this year toimplement fi ndings from a 2007 review by theVictorian Competition and Effi ciency Commission(VCEC), into Melbourne’s retail water sector.The review identifi ed strategic opportunitiesfor Melbourne’s four water retail businesses tocollaborate for greater effi ciency. This includedstreamlining processes to develop consistentapproaches to common issues.Developing economies of scalethrough shared services andstreamlined processesIn February 2008, the VCEC presented its fi nalreport, “Water Ways: Inquiry into the reform ofthe Metropolitan Retail Water Sector” to thestate government. The report recommendedretaining the existing retail structure of theindustry. In response to the report, theVictorian Government accepted 20 of VCEC’s21 recommendations, either in full or in part.One of these recommendations relates to theestablishment of a “shared services” modelwhereby Yarra Valley Water, City West Water,South East Water and Melbourne Waterdevelop and implement shared services and bulkprocurement to achieve a target level of savingsof at least $8 to $10 million per year.In response to this recommendation, themetropolitan water businesses jointly established ashared services project. The project has analysedthe operational and capital spend across the fourbusinesses and identifi ed opportunities toundertake joint procurement.Joint tenders will be undertaken in a number ofcategories to increase purchasing volumes andachieve reduced costs.The fi rst tender under the shared services projecthas been accepted. The tender was in relation tothe provision of banking services for Melbourne’swater retailers and will achieve substantial savings.The project will continue throughout the 2009/10fi nancial year and will also examine opportunitiesfor process improvements across the businesses– such as those involving developers and plumbers.Putting strategies inplace for new pricesIn June 2009, the Essential Services Commission(ESC) announced new prices for water andsewerage services for Melbourne’s waterconsumers for the period July 2009 to June 2013.The decision was in line with the VictorianGovernment’s vision that prices for water andsewerage services no more than double in realterms by 2013, with a cap of 14.8 per cent +CPI for 2008/09.50 Yarra Valley Water Sustainability Report 2008/09

Creating a stronger futurewith the 2009/10-2012/13Water PlanWe undertook substantial work to developour Water Plan for the 2009/10-2012/13regulatory period. The major objectives forour Water Plan were to:• maintain current service levels to customers;• maintain a vital focus on water conservation;• finance augmentations to Melbourne’swater supply.The ESC increased the allowance for capitalexpenditure by $137 million, acceptedYarra Valley Water’s effi ciency target of oneper cent per annum, and decreased theoperational expenditure by 3.7 per cent.This reduction was less than that appliedto other metropolitan retailers.For Yarra Valley Water customers the 2009/10price will increase the average bill from $585to $684 per year, a rise of around $1.90 perweek. By 2012/13 the average bill for Yarra ValleyWater customers will increase to around $960per year.This means Yarra Valley Water will continueto have one of the lowest operating costs perproperty in Australia.Our customers will experience slightly higherprice increases and average household billsthan customers served by other retailersbecause we have to fund one of Melbourne’smost signifi cant growth corridors to the northof the city and have more major projects to fund.The ESC’s decision endorses the following keyprograms that are designed to ensure wemaintain current service levels and furtherprotect the environment. These include:• The Northern Sewerage Project: Melbourne’slargest sewerage upgrade, designed to servicethe substantial urban growth in the northernsuburbs and improve waterway health.• The provision of other new water andsewerage infrastructure to serviceMelbourne’s northern growth corridor; andthe renewal of over 239 kilometres of watermains and 238 kilometres of sewer mains.• Continuation of our backlog sewerageprogram to prevent septic tank runoffharming the environment and presentinga public health risk.Our customers will also make a substantialcontribution to the construction of major waterprojects that include the re-connection of theTarago Reservoir, the North South pipeline, amajor upgrade of the Eastern Sewage TreatmentPlant and the construction of Australia’slargest desalination plant to provide a sourceof water that is independent of rainfall.Share Issue for transfer ofvarious infrastructure assetsbetween Yarra Valley Waterand Melbourne WaterA review by Yarra Valley Water and MelbourneWater identifi ed a number of assets thatshould be transferred to bring about improvedsystem operation.The transfer of these assets occurred on30 June 2009.The total book value of assets transferred fromYarra Valley Water to Melbourne Water was$2.97 million. The total book value of assetstransferred from Melbourne Water to YarraValley Water was $27.14 million. The assettransfers increased Yarra Valley Water’sinfrastructure assets by $24.17 million.Improving the waywe do businessYarra Valley Water’s Information Technology (IT)Strategy underpins the delivery of our strategicobjectives and contributes to the continualimprovement of our business.Our IT Strategy focuses on:• Information Management, includingknowledge management and access toinformation, business intelligence andrecords management.• reducing costs of operations by using thelatest technologies to optimise and rationalisehardware workforce collaboration andmobility, including right-time informationand working in the field more efficiently.During 2008/09 we launched our assetmanagement improvement strategy. This strategywill deliver improved customer service andmanagement effi ciencies.Implementation of a new mobile computingsolution has allowed us to transmit work ordersout to fi eld crews with greater accuracy andimproved fi eld response times.EfficiencyEffi ciency 51

Streamlining propertyand customer informationOur signifi cant investment in streamlining all ourproperty and customer information processes andsystems as part of the COMPASS program is dueto be delivered in early 2010. The program involvesa significant transformation of billing, metering,customer service, property management andinformation systems, and creates a single sourceof truth for property and customer related data.It positions us well to achieve ongoing effi ciencies.The program commenced in 2007/08 and involvesbusiness process reengineering and developingrelevant IT solutions that will support our businessprocesses into the future.The COMPASS program has already achieved somesignifi cant milestones this year and continues togain momentum as the new way of working isintroduced to our business units. A number ofkey lessons have been learned in developingthe program and these are being used to helpus optimise the design and with the introductionof new asset management systems.Financial efficiencyDebt ManagementOur debtor position was not affected by theglobal financial crisis, primarily as a result ofcontinued strong credit collection performance.However, within the collection cycle we haveseen a deferral of payments by customers withthe number of customers not paying on their fi rstaccount and a signifi cant increase in the volumeof referrals to our debt collection agency whencompared to 2007/08.In addition, the number of new customers requiringspecifi c assistance by our Customer SupportTeam has increased by 35 per cent in 2008/09.Taking action to securesustainable revenueIn April 2008, Yarra Valley Water forwarded asubmission to the International Financial ReportingInterpretations Committee (IFRIC) to detail ourconcerns regarding practical implementation ofthe proposed Draft Interpretation D24 CustomerContributions (IFRIC D24).The proposed international accounting interpretationapplies to situations where an entity receives anasset that meets the defi nition of a customercontribution (cash and assets) and has anobligation to use it to supply goods or services.Under the proposed interpretation, the companywould have been required to recognise Developerand New Customer Contribution revenue overthe asset’s useful life. The impact of this on thebusiness would have resulted in a loss of revenueof up to $24M per year.Following our submission and as a result of othercomments received, the IFRIC amended theinterpretation to continue to allow businesses torecognise this revenue when it is actually received.Continued development growthDespite the global fi nancial crisis, the number ofurban Development Applications remained strongwith total annual volumes similar to the previousyear. Development applications cover off newresidential and commercial estates, extensions andsubdividing land within the existing metropolitanarea. Total application numbers were 7,487compared to 7,339 the previous year. Lowerinterest rates and government incentives forhome buyers helped. We have forecast similardevelopment applications for 2009/10.Review of borrowing andfinance chargesAs a result of the global fi nancial crisis andthe reduction in interest rates, interest expenseon variable borrowings was signifi cantly lessthan budgeted.Our strategy to shorten the debt portfolio durationfrom fi ve to three years, and increase the level offl oating rate debt up to 30 per cent, enabled us tobenefi t from falling interest rates throughout thefi nancial year.52 Yarra Valley Water Sustainability Report 2008/09

New technology increases our workforce mobility and providesgreater accuracy and timeliness of customer responseWe fully deployed Mobile Field Computing (MFC) in November2008 in time for our high summer work load period. MFC isessentially a dispatch system that allows a mobile fi eld workcrew to receive and prioritise jobs, access essential assetinformation and return vital asset data back to the officewhich is used in planning replacement programs.“The Mobile Field Computing system provides real-timeinformation to staff working in the fi eld and there are severalbenefi ts to this,” says David Errey, Manager Field Maintenance,Infrastructure Services. “It allows crews in the fi eld to immediatelyaccess updated customer information and other key data andenables them to more quickly cost activities through real-timeestimates, improving the accuracy and speed of service toour customers.”Other improvements under MFC include improved access toproperty service plans, and increased ability to promptly actionYarra Valley Water’s customer call back policy once a job isfi nalised which improves our customer responsiveness.Additional improvements to system functionality are plannedfor 2009/10, which will see this system rolled out to ourmechanical and electrical technicians who undertake repairsat our pump stations.While the project was very complex and there were manychallenges to rolling out new technology and integrating dataand processes to fi eld staff, it was well accepted by users andthe efforts are more than outweighed by the effi ciency benefi tsand improved service delivery to customers.EfficiencyEffi ciency 53

Reviewing controllableexpenditureWe reviewed our existing controllable expenditurewith a view to discovering cost saving opportunities.This approach involved a review of 2008/09controllable operating expenditure at an activitylevel and building a budget from a zero base. Thefocus is on ensuring we are undertaking activitieseffi ciently and in line with the delivery of our2013 strategy. A comprehensive review has takenplace to provide assurance that all operatingexpenditure is directly related to the deliveryof our strategic intent.Fair Value ReportingUnder Financial Reporting Direction (FRD)103D Non-Current Physical Assets, issued bythe Treasurer of Victoria, we are now requiredto apply fair value calculation methodologieswhen reporting on our infrastructure assets.Given that FRD 103D is an overarching standardwhich does not specifi cally prescribe how tomeasure fair value, further guidance needed tobe obtained from AASB 116 Property, Plant andEquipment. The two approaches to measuring fairvalue are by using either an income approachor a replacement cost approach.The Victorian Auditor-General’s Offi ce hasaccepted our recommendation to use the incomeapproach methodology to value our infrastructureassets at fair value.This was an excellent outcome for Yarra ValleyWater as this approach is more effi cient and savesthe business from incurring signifi cant costs.Managing bulkwater entitlementsA Bulk Water Entitlement is the legal instrumentthat gives us legal ownership of the waterharvested by Melbourne Water on our behalf. Italso outlines our operating obligations in respectof water resources, for example, the maximumvolumes of water we may take from rivers.Bulk Water Entitlements are bound by a frameworkthat balances the future allocation of water betweenthe competing demands of protecting our riversand the extraction of water from our rivers forconsumption. The Department of Sustainabilityand Environment facilitates the process on behalfof the Victorian Government.Melbourne’s three water retailers jointly manageMelbourne’s Bulk Water Entitlements via the BulkEntitlement Management Committee, which wasestablished in January 2007.As of 18 May 2009, the Bulk Entitlements for theTarago and Bunyip Rivers came into effect. Underthese bulk entitlements, Melbourne Water, on behalfof Yarra Valley Water, City West Water and SouthEast Water is entitled to harvest the followingvolumes over any consecutive fi ve year period:• 24,950 million litres per year at Tarago Reservoir• 5,560 million litres per year at Bunyip Weir.Please refer to Appendix 3 for furtherdetail regarding our compliance with BulkWater Entitlements.Payment for the NorthernVictoria IrrigationRenewal ProjectOne of the signifi cant elements of the State’sWater Plan (June 2007) was the modernising ofVictoria’s Food Bowl at a cost of up to $2 billionto produce water savings of up to 450 GL per year.The fi rst stage of the Northern Victoria IrrigationRenewal Project (NVIRP) is planned to securewater savings of up to 225 GL annually for aninvestment of $1 billion. The water savings areto be shared equally between the irrigators, theenvironment and Melbourne. Melbourne’s waterretailers will jointly contribute $300 million towardsthis fi rst stage in exchange for a share of thesavings, which is 75 GL in the fi rst year andone third of actual water savings thereafter.Yarra Valley Water paid the fi rst contributionpayment of $15 million on 24 June 2009.54Yarra Valley Water Sustainability Report 2008/09

Appendix 1–EnvironmentalCost Statementsummary notes1. Costs include annual operational expenditureand depreciation charges on relevant itemsof capital expenditure. This year costs includethe annual environmental contribution of$17.5 million (2007/08 $16.72 million)paid by Yarra Valley Water to the VictorianGovernment. The contribution is used tofund initiatives that address adverse impactsto the environment associated with overextraction of water.2. Financing costs are excluded.3. Costs for future years have not beendiscounted. Future year costs are in2008/09 dollars.4. Average depreciation rates have beenapplied to capital expenditure (10-100year depreciation rate range).5. Average annual planned operationalexpenditure and depreciation charges from2009/10 onwards have been calculated bytotalling costs and dividing by the numberof years over which the costs are incurred.The ‘costs gap’ has been calculated as thedifference between 2008/09 internalisedcosts and annual average planned costs.6. Septic tanks/backlog refers to replacingseptic tanks with reticulated sewerage.7. Costs exclude a price component ofsewage charges paid by Yarra Valley Waterto Melbourne Water that relates toenvironmental impacts.8. Yarra Valley Water is committed to provideservices to our customers within thecarrying capacity of nature in accordancewith The Natural Step principles. Thegreenhouse gas reduction strategy beingfollowed by the business is based on theseprinciples and requires us to reduce annualnet emissions. In previous years we havepurchased the majority of our abatementcertificates from accredited NSW GHGabatement scheme sources (called NGAC)with the balance from a locally generatedsource (called OZGAC). An alternativesource of abatement became available butthe new alternative, the internally generatedshowerhead exchange abatements, are notaccredited by the ESC. Calculations showthat the business can claim 840 kg ofCO 2-e per exchanged showerhead. Thesecalculations are based on a conservativeassessment and conversion factorsprovided by the Australian GreenhouseOffice. Formal accreditation of the programand calculations is an onerous andexpensive process and not consideredjustified as Yarra Valley Water does notintend to sell the abatements.AppendixAppendix 55

Appendix 2 –Large water usersSince October 2006, an amendment to legislation requires us to identify and list our largest waterusers. This is done to provide transparency and to highlight their current water-saving efforts.Yarra Valley Water has worked closely with all of these customers to devise and implement awater conservation plan, the status of which is detailed below.Requirement 1: Number of customers who fallwithin each range(Section 77A Water Industry Act 1994, section 122ZJ Water Act 1989)Table: Customers by volume rangeWater Consumption (million litres per year)Number ofCustomers08/09Equal to or greater than 50 million litres and less than 100 million litres 28Equal to or greater than 100 million litres and less than 200 million litres 7Equal to or greater than 200 million litres and less than 300 million litres 2Equal to or greater than 300 million litres and less than 400 million litres 2Equal to or greater than 400 million litres and less than 500 million litres 0Equal to or greater than 500 million litres and less than 750 million litres 1Equal to or greater than 750 million litres and less than 1,000 million litres 0Greater than 1,000 million litres 2Total number of customers 42Requirement 2: Naming of major water usersand whether or not they participate in waterconservation programs(Section 77A Water Industry Act 1994, section 122ZJ Water Act 1989)CustomerWaterManagementPlan developedWaterManagementPlan commencedAlsco Pty Ltd (Mulgrave) ✓ ✓Amcor Fibre Packaging Australasia (Fairfi eld) ✓ ✓Austin Hospital ✓ ✓Box Hill Hospital ✓ ✓Broadmeadows Shopping Centre ✓ ✓Cadbury Pty Ltd ✓ ✓Centro Box Hill Shopping Centre ✓ ✓Centro The Glen Shopping Centre ✓ ✓Chadstone Shopping Centre ✓ ✓56 Yarra Valley Water Sustainability Report 2008/09

Chiquita Mushrooms Pty Ltd ✓ ✓CSL Limited – Bioplasma Division ✓ ✓Department of Defence (Simpson Barracks) ✓ ✓Eastland Shopping Centre ✓ ✓Epping Plaza Shopping Centre ✓ ✓Ford Motor Company (Broadmeadows) ✓ ✓Golden Circle Limited ✓ ✓Greensborough Plaza Shopping Centre ✓ ✓Huhtamaki Australia ✓ ✓Hospira ✓ ✓Inghams Enterprises Pty Ltd (Thomastown) ✓ ✓La Ionica Poultry ✓ ✓La Trobe University ✓ ✓Leading Synthetics Pty Ltd ✓ ✓Monash University ✓ ✓Nestle (Confectionery) ✓ ✓Nestle (Peters) ✓ ✓Northland Shopping Centre Pty Ltd ✓ ✓Pacifi c Brands Hosiery (Kayser) ✓ ✓Perpetual Trustees Australia Ltd ✓ ✓Princes Laundry Services Pty Ltd (Box Hill) ✓ ✓Repatriation Hospital ✓ ✓RMIT University ✓ ✓SCA Hygiene Australasia Pty Ltd ✓ ✓South Pacifi c Laundry ✓ ✓St Francis Xavier Cabrini Hospital ✓ ✓Stericlean Linen Service ✓ ✓The Cabrini Linen Service ✓ ✓The Northern Hospital ✓ ✓Transglobal Group Pty Ltd ✓ ✓Visy Pulp and Paper (Coolaroo) ✓ ✓Visy Pulp and Paper (Reservoir) ✓ ✓Westfi eld Shopping Centre (Doncaster) ✓ ✓AppendixAppendix 57

Appendix 3 –Bulk water entitlementsThe three metropolitan retail water businesses (Retailers) hold bulk entitlements to the water resourcesof the Yarra River, Thomson River and Silver/Wallaby Creeks (Goulburn River Basin) and Tarago andBunyip Rivers. The entitlements have been established as a collective ‘pool’. The Yarra River, Thomsonand Silver/Wallaby Creeks Bulk Entitlements were transferred to the Retailers on 30 October 2006while the Tarago and Bunyip River Bulk Entitlements came into effect 1 May 2009.The Retailers and Melbourne Water have entered into a Management Agreement and formed a BulkEntitlement Management Committee to jointly manage the ‘pooled’ entitlements as required by the bulkentitlement orders.Combined Thomson River, Yarra River and Silverand Wallaby Creeks EntitlementsTotal Melbourne Water Supply SystemThe long term average annual diversion limitThe 15 year rolling average annual diversion taken from the Yarra,Thomson and Goulburn Basins for the Melbourne supply systemAnnual diversion from the Yarra, Thomson and Goulburn Systems for 2008/09The total annual consumption in 2008/09555,000 ML425,100 1 ML289,600 ML371,200 ML1Compliance against the Bulk Entitlement diversion limit has been reported as the 15-year rolling average annual diversion from the combinedYarra, Thomson and Silver/Wallaby Creek systems.Thomson River entitlementsTemporary Qualifi cation of Rights – on 23 March 2007 the Minister agreed to relax the operatingtolerance placed on the achievement of minimum environmental fl ows downstream of Thomson Damuntil Stage 2 water restrictions are lifted in Melbourne. On 20 December 2007, the Minister for Waterfurther qualifi ed environmental fl ows on the Thomson River. This qualifi cation reduced the environmentalentitlement by 10,000 ML on 31 December 2007 and annually thereafter by 8,000 ML.Thomson RiverThe long term average annual diversion limit171,800 MLThe 15 year rolling average annual diversion142,600 2 MLAnnual diversion for 2008/0993,800 MLCompliance with recommended environmental fl ow regimeYesNumber of permanent transfersNilVolume of permanent transfers 0Number of temporary transfersNilVolume of temporary transfers 0Amendment to bulk entitlementNilTemporary or permanent transfer of a bulk entitlement or other entitlement NoFailures to comply with the provisions of the bulk entitlementNoDiffi culties experienced or anticipated in complying with the bulk entitlement No2Compliance against the Bulk Entitlement diversion limit has been reported as the 15-year rolling average annual diversion from theThomson system.58 Yarra Valley Water Sustainability Report 2008/09

Yarra River entitlementsTemporary Qualifi cation of Rights – on 20 October 2007, the Minister for Water agreed to reducethe Yarra River Environmental Entitlement by 10,000 ML/year on average for the period until eitherconstruction of Melbourne’s desalination plant is complete or Melbourne is no longer subject torestrictions more severe than Stage 2. From this time, the environmental fl ow rules in place priorto the granting of the Yarra River Environmental Entitlement in October 2006 will apply until Stage2 restrictions are lifted. These include the environmental fl ow rules set out in Schedule F7 (Watersof the Yarra Catchment) of the Victorian State Environment Protection Policy (SEPPs). Compliancewith revised environmental fl ows under the qualifi cation was achieved.Temporary Transfer – on 26 June 2007, the Minister for Water approved the temporary transfer ofup to 500 ML of water to Goulburn Valley Water. A total of 300 ML was transferred in 2007/08 anda further 164 ML in 2008/09. The transfer arrangements ceased on 30 December 2008.Yarra RiverThe long term average annual diversion limit400,000 MLThe 15 year rolling average annual diversion277,300 3 MLAnnual diversion for 2008/09194,700 MLCompliance with recommended environmental fl ow regimeYesNumber of permanent transfersNilVolume of permanent transfers 0Number of temporary transfers 1Volume of temporary transfers164 MLAmendment to Bulk EntitlementNilTemporary or permanent transfer of a bulk entitlement or other entitlement Yes (as above)Failures to comply with the provisions of the bulk entitlementNoDiffi culties experienced or anticipated in complying with the bulk entitlement No3Compliance against the Bulk Entitlement diversion limit has been reported as the 15-year rolling average annual diversion from theYarra system.Silver and Wallaby Creeks entitlementSilver and Wallaby CreeksThe 3 year rolling annual diversion limit66,000 MLThe 3 year rolling annual diversion3,380 4 MLAnnual diversion for 2008/091,070 MLNumber of permanent transfersNilVolume of permanent transfers 0Number of temporary transfersNilVolume of temporary transfers 0Amendment to Bulk EntitlementNilTemporary or permanent transfer of a bulk entitlement or other entitlement NoFailures to comply with the provisions of the bulk entitlementNoDiffi culties experienced or anticipated in complying with the bulk entitlement No4Compliance against the Bulk Entitlement diversion limit has been reported as the total harvest from 1 July 2006 to the 30 June 2009from the Silver and Wallaby system.AppendixAppendix 59

Tarago and Bunyip Rivers entitlementTarago and Bunyip RiversThe 5 year rolling annual diversion limit30,510 5 MLThe 5 year rolling annual diversion16,170 6 MLAnnual diversion for 2008/09 (May and June 2009 only)1,010 7 MLNumber of permanent transfersNilVolume of permanent transfers 0Number of temporary transfersNilVolume of temporary transfers 0Amendment to Bulk EntitlementNilTemporary or permanent transfer of a bulk entitlement or other entitlement NoFailures to comply with the provisions of the bulk entitlementNoDiffi culties experienced or anticipated in complying with the bulk entitlement No5Entitlement to 24,950 ML from Tarago River at Tarago Reservoir and 5,560 ML from Bunyip River at Bunyip Weir.6Tarago diversion of 14,730 ML (includes supply to Gippsland Water for four years only, from 1 July 2005) and modelled estimate for BunyipWeir of 1,440 ML.7For the period May-June 2009 diversions from Tarago Reservoir were 740 ML (Tarago-Westernport pipeline data for period 24-30 June only,which corresponds to reconnection of treatment plant) and diversions from the Bunyip Weir were 270 ML.60 Yarra Valley Water Sustainability Report 2008/09

Meeting ourreportingresponsibilitiesThis report is a comprehensive guide to ourbusiness performance and environmentalimprovements for the 2008/09 fi nancial year.To view our corporate governance and AnnualFinancial Report please visit www.yvw.com.au/about us/reports and publicationsYarra Valley Water undergoes comprehensivereviews by the Essential Services Commissionand adheres to International and Australianquality systems, certifi cations and standards.Yarra Valley Water welcomes comments andfeedback on our business performance andreporting. Please email enquiries@yvw.com.auor go to www.yvw.com.au to complete afeedback form.ISO14001 LicC0041SAI GlobalISO9001 Lic4568SAI GlobalISO27001 Lic20014SAI GlobalAS4801 Lic20056SAI GlobalLic HAC 00095SAI Global