Report 1

Water Corporation: Management of Water Pipes

Background

The Water Corporation is a Government Trading Enterprise (GTE) established in 1995. In 2012-13, the Water Corporation supplied 357.39 billion litres of drinking water across Western Australia. It operates and maintains a network of water, wastewater and drainage services that include dams and weirs, licensed bore fields and desalination plants. At June 2013, the total asset base had a replacement value of $31.6 billion.

As a GTE, the Water Corporation acts on commercial principles to make a profit consistent with maximising its long term value. However, it is solely owned by and provides annual dividend payments to the State Government.

The Water Corporation supplies water through a water services operating licence (licence). The Economic Regulation Authority is the independent regulator and administers licences under the Water Services Act 2012.

Water supply use and service charges to customers are set by the State Government each year. Charges are applied uniformly across the state regardless of the cost of supply. Some customers receive concessions on standard charges. These include pensioners, charitable bodies and local authorities for example. Where charges do not recover costs the Water Corporation can seek subsidy payments from the State Government. The Government has a policy of providing uniform prices across the state for the first 300 000 litres per residential service per annum.

The Water Corporation manages over 34 000 kilometres of water supply pipes across the state. Over half of these pipes are reticulation pipes generally located below ground. The remaining pipes are trunk and distribution mains which are above ground in country regions and below ground in the metropolitan area.

The rate of leaks and bursts and the amount of water lost are key measures of the performance and efficiency of pipes. Leaks and bursts are measured per 100 kilometres of pipe and water lost is measured in litres.

Water lost in a supply system affects the sustainability of supply, reduces revenue, and can undermine broader water saving initiatives. In 2012-13, the Water Corporation supplied over 357 billion litres of water, of which almost 314 billion litres was metered consumption. The difference of over 43 billion litres, or 12 per cent of total water supplied, was made up of almost 30 billion litres that was physically lost, and over 13 billion litres that was consumed but not billed for.

The 13 billion litres of water that was consumed but not billed for was made up of metering errors or customer meter inaccuracies accounting for 84 per cent; unbilled but authorised consumption (for example for firefighting use) accounting for 13 per cent; and unauthorised consumption (for instance theft) accounting for three per cent.

Water loss cannot be eliminated from any supply system but can be minimised. The Water Corporation has used an internationally accepted industry standard to estimate that just over 19 billion litres a year would be the minimum loss achievable based on the current size and configuration of its network.

The Water Corporation repairs trunk and distribution mains based on the results of regular inspections or when there are reported leaks and bursts. However, because reticulation pipes are below ground and cannot be easily or cost effectively inspected, they are generally repaired only when there are reported leaks and bursts. The Water Corporation will replace reticulation pipes and trunk and distribution mains before failure or the end of the standard economic life if their age, condition and performance indicate an increasing likelihood and consequence of failure.

This audit assessed if Water Corporation’s management of bursts, leaks and water loss from its water supply pipes contributes to sustainable water supply.

 
Page last updated: February 19, 2014

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