Annual Report2013–2014

Department of the Premier and CabinetDepartment of Energy and Water Supply

Department of Energy and Water Supply Annual Report 2013–14ii

CS3539 09/14

ISSN 2201-2095

Interpreter statement

The Queensland Government is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds. If you have difficulty in understanding the annual report, you can contact us within Australia on 13 QGOV (13 74 68) and we will arrange an interpreter to effectively communicate the report to you.

Public availability

Copies of the Department of Energy and Water Supply (DEWS) annual report are available online at www.dews.qld.gov.au. Limited printed copies are available by calling 13 QGOV (13 74 68).

Enquiries about this publication should be directed to Business Planning and Achievement, Business and Corporate Partnerships, Department of Energy and Water Supply.

Email: contactus@dews.qld.gov.au Phone: 13 QGOV (13 74 68) Post: GPO Box 15456, CITY EAST QLD 4002

This publication has been compiled by Business Planning and Achievement, Business and Corporate Partnerships, Department of Energy and Water Supply.

© State of Queensland, 2014.

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Department of Energy and Water Supply Annual Report 2013–14

1Contents

Letter of compliance ....................................................................................... 3

Director-General message .............................................................................. 4

About the department .................................................................................... 6

Agency role and main functions ...................................................................................6

Operating environment ................................................................................................8

Governance—structure and management ....................................................... 11

Organisational structure .............................................................................................11

Governance structure..................................................................................................11

Governance management...........................................................................................20

Legislation and other government bodies ................................................................... 21

Governance—risk and accountability ............................................................ 22

Risk management ......................................................................................................22

External scrutiny ........................................................................................................22

Ombudsman’s audit of the complaints management system .......................................24

Audit and Risk Committee ..........................................................................................24

Internal audit .............................................................................................................25

Governance—human resources ..................................................................... 27

Public Sector Ethics Act 1994 .....................................................................................27

Queensland public service values .............................................................................28

Workforce planning, attraction, retention and performance ........................................29

Workforce profile .......................................................................................................28

Governance—information management ..........................................................31

Information systems .................................................................................................. 31

Recordkeeping ........................................................................................................... 31

Open data ................................................................................................... 32

Department of Energy and Water Supply Annual Report 2013–142Agency objectives and performance indicators .............................................. 33

Objective 1: Cost-effective, safe, secure and reliable energy and water supply ............33

Objective 2: Effective reform ......................................................................................38

Objective 3: Engaged stakeholders ............................................................................44

Objective 4: Optimise industry value ..........................................................................49

Objective 5: A capable, flexible and proud workforce ..................................................52

Agency service areas and service standards ..................................................55

Service areas ............................................................................................................. 55

Service standards ...................................................................................................... 55

Financial performance ...................................................................................57

Financial summary ..................................................................................................... 57

Our financial performance .......................................................................................... 57

Our income ................................................................................................................ 57

Our expenditure ......................................................................................................... 57

Financial statements .................................................................................... 58

Appendix 1: Compliance checklist ...............................................................108

Appendix 2: Legislation ............................................................................... 110

Appendix 3: Schedule of statutory authorities and instrumentalities ..............111

Appendix 4: Schedule of government-owned corporations ............................ 112

Appendix 5: Report of regulator’s activities under the Water Supply (Safety and Reliability) Act 2008 ...........................113

Appendix 6: Open data published datasets ................................................. 118

Glossary and acronyms ............................................................................... 121

Contacts .....................................................................................................123

Department of Energy and Water Supply Annual Report 2013–14

3Letter of compliance

12 September 2014

The Honourable Mark McArdle MP

Minister for Energy and Water Supply

GPO Box 15456

CITY EAST QLD 4002

Dear Minister

I am pleased to present the Annual Report 2013–2014 and financial statements for the Department of Energy and Water Supply.

I certify that this Annual Report complies with:

• the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009

• the detailed requirements set out in the Annual report requirements for Queensland Government agencies.

A checklist outlining the annual reporting requirements is included in this report on page 108, or can be accessed at www.dews.qld.gov.au.

Yours sincerely

Dan Hunt Director-General Department of Energy and Water Supply

Department of Energy and Water Supply Annual Report 2013–144Director-General message

The Department of Energy and Water Supply (DEWS) is transforming its business and creating a platform for strong and sustainable energy and water supply sectors. These sectors support the economic and lifestyle aspirations of all Queenslanders.

In 2013–14, we made significant progress on our vision for a prosperous Queensland through resilient and affordable energy and water supply sectors, delivering a number of significant policy and legislative reforms with tangible outcomes for Queensland’s electricity and water consumers.

The delivery of PowerQ and WaterQ in June were two very significant achievements in this financial year. Electricity and water are vital for all Queenslanders and underpin the government’s focus on developing Queensland’s strengths in tourism, agriculture, resources and construction.

Our Electricity Reform Implementation Program is a key vehicle to deliver the changes required to achieve the vision and direction set out in PowerQ: a 30-year strategy for Queensland’s electricity sector. It is a substantial, complex and holistic program of work consisting of 20-plus individual projects, which will collectively provide consumers with cost-effective electricity and ensure a viable, sustainable and competitive electricity industry for Queensland.

WaterQ: a 30-year strategy for Queensland’s water sector responds to the significant changes and challenges that our state will face over the next three decades. Within this time, more of Queensland’s population will live outside South East Queensland than ever before. WaterQ considers a number of strategic priorities to strengthen the resilience of the water sector to respond to these changes.

We released the draft North Pine Dam optimisation study and draft Wivenhoe and Somerset dams optimisation study for community consultation. These draft reports outline options to improve the use of existing dam infrastructure during a flood event to deliver better flood mitigation outcomes. The final reports will be delivered in late 2014, presenting alternative strategies for operating the North Pine, Wivenhoe and Somerset dams.

We also commenced an investigation of potential new dams to improve flood mitigation for Brisbane and Ipswich by looking at geotechnical, engineering, hydrological, environmental, social and economic factors, including the number of homes and buildings potentially affected. The results of the pre-feasibility study are expected in late 2014 and will include indicative costs and benefits for each site. As costs will only be indicative, further detailed feasibility assessments will be required should the government decide that an option, or combination of options, offer cost-effective flood mitigation benefits for downstream communities.

As a department, we are focusing our efforts on delivering better outcomes for Queenslanders through the DEWS Renewal Program. We have completed the majority of our internal functional reviews to determine the strategic challenges facing us as a department. This will enable us to focus our resources in the right areas and deliver better outcomes for energy and water consumers. 

Department of Energy and Water Supply Annual Report 2013–14

5We commenced development of our DEWS blueprint, which will be delivered in September 2014. This includes a renewed focus on our values to put our customers first, our ideas into action, unleash our potential, be courageous and empower our people. Similarly we will better define:

• our customers—Queensland consumers of energy and water and people we protect through dam safety and minimising flood effects.

• our owners—our Government and ministers, as elected representatives of Queenslanders.

• our partners—everyone who affects the water and energy supply chain or end users.

The next financial year will be another challenging and exciting time. We will establish electricity and water expert panels to provide us with advice as we implement our 30-year strategies—PowerQ and WaterQ. The panels will ensure the long-term success of our strategies by critically examining the emerging trends and challenges in our sectors, investigating opportunities to innovate and change, and recommending actions.

We will deliver our DEWS blueprint and the outcomes of our Renewal Program, and embed high performance across our organisation by supporting and developing the capability of our workforce.

These initiatives and many other projects will ensure we progress our important energy and water supply reform agenda for strong and sustainable energy and water supply sectors, continue to reduce red tape and deliver better energy and water infrastructure and supply planning solutions across our state.

Dan Hunt Director-General Department of Energy and Water Supply

Department of Energy and Water Supply Annual Report 2013–146About the department

The Department of Energy and Water Supply (DEWS) is a small government department that has delivered three major projects (among other initiatives) over the past 12 months to support the department’s vision of reduced cost-of-living pressures for Queenslanders through innovative and efficient energy and water supply services.

In 2014, two 30-year strategies—PowerQ and WaterQ—were released. On 1 April 2014, dam optimisation studies for Wivenhoe, Somerset and North Pine dams were released by the Premier, The Honourable Campbell Newman and the Minister for Energy and Water Supply, The Honourable Mark McArdle.

Agency role and main functions

The department was established on 3 April 2012, following machinery-of-government changes advised in the Public Service Departmental Arrangements Notice 1, 2012, under the Public Service Act 2008.

Note:

In September 2013, a new Director-General was appointed. Since then, the department has reviewed and developed a new vision, purpose and objectives.

Our vision

Our vision is for a prosperous Queensland through resilient and affordable energy and water supply sectors.

Our purpose

Our purpose is to develop and deliver an enabling and customer-focused environment for the energy and water sectors in partnership with stakeholders.

Our objectives

1. Focus on energy and water consumers

2. Transform the sectors

3. Be the best

4. Build partnerships

5. Support regions

The new DEWS vision, purpose and objectives have been guiding departmental direction.

However, for reporting purposes, the department is required to report against its 2013–17 strategic plan.

Department of Energy and Water Supply Annual Report 2013–14

7The department’s 2013-17 strategic plan states that the purpose of DEWS is to develop and deliver innovative policy, planning and regulatory solutions in partnership with its stakeholders.

To achieve this purpose, the department focused on five objectives:

1. deliver cost-effective, safe, secure and reliable energy and water supply

2. deliver effective reform

3. engage stakeholders

4. optimise industry value

5. deliver a capable, flexible and proud workforce.

The department’s functions are delivered through two main service areas—Energy and Water Supply—under the legislation listed in Administrative Agreements Order (No. 2) 2013 (Appendix 2: Legislation).

Energy

The Energy service area is responsible for policy development, reform and regulation of the Queensland energy sector to ensure cost-effective, secure and reliable energy supply. It is also responsible for establishing a long-term electricity strategy—informed by the outcomes of the government’s review on electricity sector reform—to address cost-of-living pressures and sustainability of the sector.

Energy delivers five services:

1. energy generation and fuel—responsible for developing and implementing policy that directly affects the generation of electricity and alternative energy, ensuring that effective emergency planning and response arrangements are in place and representing the Minister in state-owned energy entities

2. energy networks—responsible for developing and implementing policy that directly affects energy network service providers and influences national energy agendas

3. energy and consumer retail—responsible for developing and implementing policy that has a direct effect on end-use consumers of energy

4. energy sector regulation—responsible for regulating the energy sector in Queensland

5. energy sector reform—responsible for developing and implementing reform of the Queensland energy sector.

Water supply

The Water Supply service area is responsible for implementing water sector reform to address cost-of-living pressures. It is also responsible for establishing a long-term strategy for Queensland’s water sector and regulating water supply so that agriculture, mining, industry and regional and urban communities have access to a cost-effective, safe, secure and sustainable water supply.

Water Supply delivers five services:

1. water sector planning—responsible for providing advice on possible temporary full supply levels for the state’s flood mitigation dams, developing urban drainage design standards for stormwater-related flood risk, managing and reporting on the department’s response to the Queensland Floods Commission of Inquiry (QFCOI) recommendations, planning for adequate water supplies to underpin regional and economic growth, and managing a suite of non-commercial water assets held by the state

2. water supply regulation—responsible for regulating the quality of drinking water supplied by registered water service providers in Queensland

Department of Energy and Water Supply Annual Report 2013–1483. dam safety regulation—responsible for registering, assessing and monitoring the safety of large

referable dams in Queensland (a referable dam is one that presents a risk to two or more people if it fails, not including dams containing hazardous waste, a weir or large rainwater tanks)

4. water sector reform (legislation and policy)—responsible for developing and implementing policy on state and national water issues, and facilitating changes to water supply and related legislation

5. water sector reform (economic advice)—responsible for providing economic evaluation and advice on bulk and rural water pricing and regulation, and representing the Minister in state-owned water entities.

The department’s principal place of business is located in Mineral House, 41 George Street, Brisbane. The department has a regional office in Rockhampton that undertakes planning and maintains and manages the non-commercial water assets held by the department.

Operating environment

South East Queensland has one of the fastest growing populations of any Australian urban area. Queensland also has the most geographically dispersed population of any Australian state or territory, with major centres outside the south-east region.

Queensland’s population is expected to increase up to 8.9 million people by 2044. In South East Queensland, this could see an increase to more than 5.7 million people, and more than 2.2 million people in regional Queensland.

Energy

Queensland is the only National Electricity Market jurisdiction operating in the tropical cyclone belt.

Customers

• There are more than 2 million residential households and small business electricity and gas customers in Queensland.

• There are 21 000 large electricity customers.

Generators, transmitters and distributors

• There are five government-owned corporations providing generation, transmission (including interstate interconnectors) and distribution network infrastructure.

• There are 20 private entities operating 25 privately owned generators.

• There is a substantial gas transmission network with interstate interconnectors, Wallumbilla Gas Supply Hub, Brisbane Gas Short Term Trading Market (wholesale) and localised urban distribution networks.

• There are 18 active electricity and gas retailers.

• Queensland has the highest growth rate of rooftop solar photovoltaic system installation in Australia. There are over 350 000 households with solar photovoltaic system systems—about 1.1 gigawatts of capacity representing the state’s fourth largest ‘power station’.

Department of Energy and Water Supply Annual Report 2013–14

9Growth and geography

• Queensland has the highest rates of overall electricity demand growth in the eastern seaboard National Electricity Market, mainly due to liquefied natural gas/coal seam gas industry growth.

• Queensland is the only National Electricity Market jurisdiction operating in the tropical cyclone belt.

Water supply

Working in partnership with service providers, the government will facilitate water supply security assessments for potential high-growth regions.

Catchment, treatment and storage

• There are 170 registered water service providers delivering potable water, non-potable water and/or sewerage services. They include local governments, government-owned corporations, statutory authorities and private businesses.

• Seqwater and SunWater are state-owned bulk water entities. Seqwater owns and operates 26 dams for bulk water supply in South East Queensland. SunWater owns and operates 22 dams for bulk water supply outside South East Queensland.

• The Mount Isa Water Board and Gladstone Area Water Board are category 1 water authorities overseen by DEWS. The Mount Isa Water Board supplies bulk water to the Mount Isa City Council and industrial customers, while the Gladstone Area Water Board supplies treated and untreated water for domestic and industrial purposes to Gladstone Regional Council and local industries.

• There is regulation of 104 referable dams in Queensland, ranging in size from small privately owned dams (i.e. farm dams) to large government-owned dams.

Customers

• More than 4.4 million customers are serviced by a registered water service provider.

Growth and demand

• Demand for water will also grow strongly, with increasing challenges and competing uses. Ensuring demand is met requires collaboration across the urban, mining, agricultural and industrial sectors.

• A key water security challenge is managing demand between competing users. Working in partnership with service providers, the government will facilitate water supply security assessments for potential high-growth regions.

Machinery-of-government changes

There were no machinery-of-government changes for DEWS in the reporting period.

Department of Energy and Water Supply Annual Report 2013–1410Government’s objectives for the community

The department supports the government’s objectives for the community by contributing to:

• growing a four pillar economy through effective policy, planning and regulation to support cost-effective, safe, secure and reliable energy and water supply, and reducing regulatory burden.

• lowering the cost of living by identifying and implementing strategies to address cost pressures on electricity and water prices, and implementing energy and water sector reform.

• investing in better infrastructure and planning by developing and implementing 30-year strategies for Queensland‘s electricity and water supply sectors, and implementing relevant QFCOI recommendations.

• restoring accountability in government through effective stakeholder engagement, optimising shareholding value in state-owned entities and ensuring robust and streamlined regulatory requirements.

Other whole-of-government plans and initiatives

Queensland is a signatory to the National Partnership Agreement on Energy Efficiency (NPA-EE) between the federal government and all states and territories. The NPA-EE aims to deliver cost-effective energy efficiency gains through a nationally consistent and coordinated approach, while recognising the need for flexible approaches across jurisdictions.

Under the NPA-EE, the National strategy on energy efficiency has been developed. The strategy includes a series of nationally agreed measures to help identify improvements in energy efficiency for households and businesses to improve the productivity of the economy, achieve savings on energy bills and deliver significant low-cost greenhouse gas abatement.

All jurisdictions contribute funding to an agreed formula (50 per cent funded by the federal government and 50 per cent on a per capita basis from each jurisdiction). In 2013–14, Queensland’s contribution to national equipment energy efficiency work was $458 920 (including GST). 

Department of Energy and Water Supply Annual Report 2013–14

11Governance—structure and management

Organisational structure

Governance structure

DEWS has a two-tiered governance structure:

1. Executive Management Team (EMT)

2. EMT committees.

Director-GeneralEnergy and Water Supply

Dan Hunt

General ManagerEnergy Supply and Regulation

Alan Millis

General ManagerEnergy Pricing, Consumer and Retail

Benn Barr

General ManagerWater Supply Planning

Abel Immaraj

General ManagerWater Supply Policy

and EconomicsGayle Leaver

General ManagerQueensland WaterSupply Regulator

Bob Reilly

Chief Finance OfficerFiona Trenear

Chief CounselIn-House Legal

Executive DirectorBusiness Planningand AchievementSinead McCarthy

Executive DirectorHuman Resources

and CommunicationsCelia Venables

Deputy Director-GeneralWater SupplyKen Sedgwick

Deputy Director-GeneralEnergy

Karen Masnata

Deputy Director-GeneralBusiness and Corporate

Partnerships, DNRM and DEWSBrenda Parker

Department of Energy and Water Supply Annual Report 2013–1412Executive Management Team

EMT functions as the department’s board of management.

EMT meets weekly and oversees the current and future work requirements of the department and agrees on policy and strategic direction.

EMT takes a collaborative management approach to address the challenges facing the department, and works together to ensure optimal outcomes in line with the department’s strategic priorities.

The collective responsibility of EMT is to ensure integration and collaboration on strategic issues across the department and prioritisation of resources and capabilities to facilitate outcomes and delivery of key priorities.

EMT’s role includes developing and leading the organisation’s culture of integrity, including a focus on customers and service delivery. This includes the support, promotion and monitoring of the department’s integrity framework to minimise the opportunity for misconduct and enhance the department’s ethical standing and public confidence in how services are delivered.

EMT is supported by committees that are formed as required to perform specific tasks or assignments.

The committees provide advice and recommendations to the EMT for consideration and approval. The committees also contribute to monthly ‘dashboard’ reports to EMT, encompassing key performance and business-related indicators.

Committees include the:

• Finance Committee

• ICT Investment and Strategy Committee

• Staff Renewal Steering Committee.

EMT profiles

As at 30 June 2014, EMT’s membership was as follows:

• Dan Hunt, Director-General

• Karen Masnata, Deputy Director-General, Energy

• Ken Sedgwick, Deputy Director-General, Water Supply

• Brenda Parker, Deputy Director-General, Business and Corporate Partnerships

During 2013–14, Alan Mills relieved as Deputy Director-General, Energy, for one period and Benn Barr relieved for two periods.

Department of Energy and Water Supply Annual Report 2013–14

13Dan Hunt, Director-General

In September 2013, Dan Hunt was appointed as Director-General of the Department of Energy and Water Supply.

As Director-General, Dan is responsible for ensuring the department meets its accountability obligations and achieves its strategic objectives to deliver government priorities.

Since October 2006 Dan has served in a number of Director-General roles, including Director-General of the Department of Natural Resources and Mines (DNRM), Associate Director-General of Mines and Energy in the Department of Employment, Economic Development and Innovation, and Director-General of the Department of Mines and Energy.

During his time as Director-General of the DNRM, Dan achieved key reforms, including:

• streamlining and transforming the mining exploration and development approvals processes

• giving landholders greater flexibility to increase productivity and yield on the land

• unlocking spatial data to make it publically available

• delivering reforms in the areas of vegetation management

• developing the liquefied natural gas/coal seam gas industry

• resolving overlapping tenure and land access issues.

Other achievements during his 37-year career with the public service include the corporatisation of ports and rail infrastructure, the development of commercial contracts with Queensland Rail and the strategic policy coordination of national transport reform.

Karen Masnata, Deputy Director-General, Energy

In June 2012, Karen Masnata commenced as Deputy Director-General of Energy.

Karen is responsible for the Energy division within the department, which is focused on reducing cost-of-living pressures through innovative and efficient energy services.

Karen provides direction and leadership to deliver innovative policy, planning and regulatory solutions in partnership with our stakeholders to support cost-effective, safe, secure and reliable energy and water supply.

Karen is also responsible for the implementation of the government’s significant reform agenda, as well as the development and implementation of the 30-year electricity strategy, PowerQ.

Prior to this role, Karen held economic advisory roles with PricewaterhouseCoopers and Deloitte, and senior financial advisory roles with Queensland Treasury and the Queensland Treasury Corporation.

Karen has qualifications in law and corporate finance.

Department of Energy and Water Supply Annual Report 2013–1414Ken Sedgwick, Deputy Director-General, Water Supply

On 9 July 2012, Ken Sedgwick commenced as Deputy Director-General of Water Supply.

Ken is responsible for leading and implementing water policy, reform and regulation to ensure that the water supplied to Queensland communities is safe, reliable and delivered in a cost-effective way.

Ken is also responsible for the development of WaterQ, a 30-year strategy for the water sector.

Prior to this role, Ken was Acting Deputy Under-Treasurer in Queensland Treasury and Trade, where he also worked in a variety of senior roles, including leading Treasury’s involvement in the many structural changes that occurred within the Queensland water industry.

Prior to his Treasury career, Ken worked in the former Department of Primary Industries in Brisbane and Townsville.

Brenda Parker, Deputy Director-General, Business and Corporate Partnerships

Brenda is responsible for the efficient and effective delivery of strategic corporate services and business support programs in human resources, finance and performance management. She also leads the delivery of several other corporate functions, including legal, facilities management and web and creative services for multiple agencies under a corporate partnership model.

Prior to her current role, Brenda led the Corporate Services Renewal Taskforce at the Public Service Commission, which was responsible for identifying and implementing recommendations to improve the manner in which corporate services are delivered across all government agencies.

Brenda has held several positions in the public sector over the last 20 years, including key leadership roles in the provision of corporate services.

Brenda has a number of qualifications and accreditations in human resources, workplace health and safety, rehabilitation and risk management, and is a graduate of the Australian Institute of Company Directors.

Relieving arrangements during the reporting period

Both Benn Barr (General Manager, Energy Pricing, Consumer and Retail) and Alan Millis (General Manager, Energy Supply and Regulation) performed the role of Deputy Director-General, Energy during the reporting period. Alan Millis relieved for the period 29 July to 29 November 2013 and Benn Barr relieved for two periods. The first was from 1 July to 26 July 2013 and the second from 26 May to 30 June 2014.

Department of Energy and Water Supply Annual Report 2013–14

15EMT committees

In accordance with the department’s corporate governance framework, EMT is supported by committees formed to perform specific tasks or assignments.

Finance Committee

Role

The Finance Committee is the key governance committee for coordination and implementation of the financial management function within the department.

This committee’s role is to oversee a range of financial management functions, including monthly financial reporting, resource allocation and financial compliance.

Responsibilities

The committee’s responsibilities include:

• monitoring the financial performance of the department against its priorities and approved budgets

• ensuring a sound internal control environment is maintained

• considering significant projects, transactions and savings initiatives

• providing oversight of Queensland Shared Services in terms of financial services, compliance and internal controls

• monitoring financial policy development

• monitoring the use of financial resources and approving or endorsing budget adjustments.

Membership

Chair Fiona Trenear, Chief Finance Officer

Members Benn Barr, General Manager, Energy Pricing, Consumer and Retail

Bob Reilly, General Manager, Queensland Water Supply Regulator

Judith Thompson, Director, Office of the Director-General

Abhijeet Singh, Manager, Financial Services

Linda Chalmers, Senior Business Support Officer (Secretariat)

Meetings

This committee meets monthly. It is supported by monthly financial management reporting meetings held with respective finance representatives across the agency.

Key achievements

The committee has:

• provided a structured forum, with representation from all areas of the department, to oversee the preparation of the budget

• reviewed and monitored the financial position against the budget

Department of Energy and Water Supply Annual Report 2013–1416• considered and discussed reports from the Chief Finance Officer

• tracked and managed budget movements for the service delivery statement budget preparation.

ICT Investment and Strategy Committee

Role

The ICT Investment and Strategy Committee has been established to:

• ensure the agency’s information and communication technology (ICT) investment and assets are aligned with agency business priorities and plans, and support whole-of-government ICT directions

• provide whole-of-agency leadership, strategic direction and oversight in planning and delivering the portfolio of ICT-related initiatives in the agency

• provide assurance to the Director-General that information management and ICT in the agency are being appropriately governed to ensure return on investment through effective delivery of approved initiatives that meet government priorities.

Responsibilities

The committee has established reporting requirements to ensure that it receives information relevant to its role. The committee:

• reviews and monitors the agency’s investments in information management systems and technologies to ensure they are managed through appropriate governance processes and deliver stated outcomes and benefits

• monitors the health of ICT assets to address areas of risk

• authorises and directs the development of strategic and operational plans for ICT-enabled business

• prioritises the agency’s investments in information management systems and technologies consistent with the agency’s strategic direction, the ICT Partnership Board and government priorities

• scrutinises the delivery of approved and funded project and program allocations, and approves the reallocation of unused funds

• escalates significant risks to the ICT Partnership Board and/or the Director-General

• monitors information management and ICT service provider arrangements under the Business and Corporate Partnerships, including performance

• develops the agency’s information management capability.

Meetings

During 2013–14, the committee met approximately every two months.

Key achievements

The committee has:

• redeveloped the Water Industry Compliance Database to provide a modern information technology solution to support the dam safety regulation, drinking water quality and recycled water incidents functions

• completed the mobile service upgrade from Blackberry to iPhone—this upgrade allows the department to achieve cost savings in the longer term and provides better technology to support a more mobile workforce

Department of Energy and Water Supply Annual Report 2013–14

17• sentenced and disposed of time-expired government-owned corporation records stored at Iron

Mountain—using the Queensland State Archives General retention and disposal schedule for administrative records and Energy sector retention and disposal schedule: QDAN 618 v.1, Information and Technology Partners Records Management Services identified 9614 boxes that can be destroyed and 1311 that can be transferred to Queensland State Archives

• implemented VOIP and Lync enhanced messaging and conferencing technologies—these contemporary technologies provide the workforce with opportunities to participate in cost-effective and enhanced collaboration and communication across the state

• maintained corporate systems for the management of correspondence, finance and human resources, and the provision of information to the public through the department’s website.

Staff Renewal Steering Committee

The Staff Renewal Steering Committee is the body responsible for providing feedback from staff on agency renewal activities. In November 2013, all DEWS staff were invited to be one of two staff representatives on the Agency Renewal Committee. Due to the relatively large number of nominations and the high quality of ideas expressed in the applications, the Staff Renewal Steering Committee was formed.

Role

The role of the committee is to:

• provide staff representatives for Agency Renewal Committee meetings

• provide advice and feedback on renewal proposals and activities

• seek advice and feedback from staff on renewal proposals

• provide advice and feedback on staff engagement in renewal activities.

Membership

Name Role

Andrea Wold Manager, Energy Sector Regulation

Brent Cornford Project Delivery Officer, Floods Inquiry Response and Delivery

Daniel Harris Principal Program Manager, Floods Inquiry Response and Delivery

Dinesha Emmery Team Leader, 30 Year Water Plan

Lorelle Hatch Manager, Emergency Response

Tash Hurikino Policy and Legislative Analyst, Water Supply Policy and Economics

Therese Barrett Correspondence Coordination Officer, Ministerial and Executive Services

Vourn Lutton Principal Planner (Water Security), Water Supply Planning

Sophie Guest Principal Economic Analyst, Water Supply Policy and Economics

Lau Saili Principal Advisor, Networks and Demand Response

Zhivana Marks Policy Officer, Industry Services and Emergency Response

Kathie Standen (project sponsor) Director, Renewal

Melissa Bowerman (advisor) Manager, Corporate Communications

Ashley Bacon (advisor) Manager, Human Resources

Rachael Georgieff (secretariat) Project Officer, Renewal

Department of Energy and Water Supply Annual Report 2013–1418Meetings

Since its inception in November 2013, the committee has met formally nine times in 2013–14, with out-of-session meetings held when required.

Note:

In 2013, the Human Resource Management Committee and Work Health and Safety Governance Committeewere disbanded. As DEWS is a small agency, the decision was made that the subject matter of these two committees would be more efficiently addressed as agenda items at EMT and Audit and Risk Committee meetings.

Other committees

Agency Consultative Committee

The committee is co-chaired by the Executive Director of Human Resources and Communications, and an employee representative from the unions. It includes management representatives from across the department.

Together Queensland, the Industrial Union of Employees and the Association of Professional Engineers, Scientists and Managers Professional Australia were represented by union delegates who are employees of the department. Officials from both unions attend in an ex-officio capacity.

The role of the committee is to provide a forum to discuss a broad range of employee issues and provide an avenue for consultation between the department and unions. This includes ensuring the department implements and complies with all relevant arrangements under the Industrial Relations Act 1999, the Public Service Act 2008 and the State Government Departments Certified Agreement 2009 (the Core Agreement).

The committee met regularly and was the primary forum for consultation on the department’s current and emerging industrial issues, workforce strategy and organisational change issues.

Agency Renewal Committee

In September 2013, Cabinet approved the Whole-of-Government Integrated Renewal Plan (incorporating Commission of Audit implementation) and contestability framework. Cabinet also approved a governance and monitoring framework for the oversight of the renewal agenda across and within agencies. One component of the approved governance framework was the establishment of an Agency Renewal Committee, chaired by the Minister. In November 2013, the DEWS Agency Renewal Committee was formed and is the governance body overseeing delivery of DEWS renewal activities.

Department of Energy and Water Supply Annual Report 2013–14

19Membership

Chair Hon Mark McArdle, Minister for Energy and Water Supply

Deputy chair Dan Hunt, Director-General

Members Ken Sedgwick, Deputy Director-General, Water Supply

Karen Masnata, Deputy Director-General, Energy

Brenda Parker, Deputy Director-General, Business and Corporate Partnerships

Ross Musgrove, Chief Operating Officer and Deputy Director-General, Public Sector Renewal, Department of the Premier and Cabinet

Alex Beavers, Deputy Under-Treasurer, Queensland Treasury and Trade

Professor Paul Simshauser, Chief Economist and Group Head of Corporate Affairs, AGL

Rowena McNally, Chair, Mount Isa Water Board

Kathie Standen (secretariat), Director, Renewal

Andrea Wold (Staff Renewal Steering Committee representative)

Sophie Guest (Staff Renewal Steering Committee representative)

Meetings

The committee met three times during 2013–14.

Business and Corporate Partnerships Board

The Business and Corporate Partnerships Board is comprised of the Directors-General of the six agencies within the partnership—DEWS; DNRM; the Department of Tourism, Major Events, Small Business and the Commonwealth Games; the Department of Agriculture, Fisheries and Forestry (DAFF); the Department of Environment and Heritage Protection (EHP); and the Department of National Parks, Recreation, Sport and Racing.

The partnership operates through three corporate hubs embedded in DAFF, DNRM and EHP. Each hub delivers a set of core services (to the host and one adjunct agency) and a selection of cooperative services (to either five or six partnering agencies). The head of corporate for each Business and Corporate Partnerships (BCP) hub is also represented on the BCP board.

The board is collectively responsible for the long-term performance, business success and timely delivery of departmental key priorities within the BCP. Its role is to provide leadership and set the strategic direction of the partnership to enable it to meet its goals and objectives.

The partnership provides direct corporate services to support partnering agencies deliver government priorities. Under this model, the focus is on ensuring economies of scale, service integration, consistent service delivery, scalability, flexibility and responsiveness.

Department of Energy and Water Supply Annual Report 2013–1420Governance management

Public Sector Renewal Program

In July 2012, the Public Sector Renewal Program commenced. The program aims to deliver on the government’s vision to transform the Queensland Public Service—to be more efficient, deliver better outcomes for the community and achieve the best value for money for government services.

The program is being overseen by the Public Sector Renewal Board and the Renewal Oversight Committee.

DEWS Renewal Program

In October 2013, the DEWS renewal team was formed. This team’s role is to guide and implement renewal within the department. The Director of Renewal, reports directly the Director-General.

A key component of the team’s work is to review all functions in DEWS. The objective is to ensure that DEWS is focusing resources in the correct areas to realise benefits for Queensland’s energy and water consumers. For the 2013–14 year, the DEWS renewal team completed 16 reviews on functional areas within the department, with the remainder to be completed in the first quarter of 2014–15. Once all reviews have been completed, EMT will look at future delivery options, which will inform the development of the future catalogue of services.

The DEWS Renewal Program has also focused on redesigning the way in which the department relates to customers. Through process redesign projects, work units are identifying ways to improve the customer’s experience of the department.

Supporting the DEWS Renewal Program is the Agency Renewal Committee and the Staff Renewal Steering Committee.

Blueprint

In the 2013–14 year, the renewal team commenced the development of a draft blueprint for DEWS. The blueprint is a key part of the DEWS Renewal Program and sets out how we will operate in the future to deliver better outcomes for our customers. The blueprint focuses on three key areas that will enable the department to become more consumer-centric:

1. engage—demonstrating our intention to involve customers in our decision-making and reach them effectively

2. evidence and evaluation—obtaining and using customer information and intelligence to develop and review policy settings

3. effective partnering and communication—understanding the issues affecting customers and working with our partners to simplify processes for customers.

The departmental blueprint will be finalised early in the 2014–15 year, after consultation and input from a departmental committee and all staff (through a series of workshops and other forums).

Department of Energy and Water Supply Annual Report 2013–14

21Commission of Audit

DEWS is responsible for leading five Commission of Audit recommendations.

Recommendation Description

12 For the period that they remain in government ownership, electricity distribution and transmission businesses be required to achieve higher rates of return through increased efficiencies, better capital management and operational cost savings

14 The uniform tariff policy and supporting Community Service Obligations arrangements be refined over time to target the most needy consumers, reduce costs and volatility, and support wider retail competition in Queensland, for example, by the introduction of a tariff band

26 SunWater finalise the transfer of its irrigation channels to private irrigators and withdraw fully from this activity

28 SunWater remain as a government-owned corporation with a residual function to retain ownership and management of existing bulk water assets in regional Queensland

29 Any future bulk water storage facilities be developed by the private sector, unless there are compelling public good or market failure reasons not to do so (not directed at SEQ)

Work is underway on all five recommendations and are on track for delivery. DEWS is also working with our government partners to deliver a further eight recommendations.

Legislation and other government bodies

Legislation administered

As at 30 June 2014, legislation administered by the department is listed in Appendix 2.

Statutory authorities and instrumentalities

A schedule of energy and water supply statutory authorities and instrumentalities, including their reporting arrangements, is provided in Appendix 3.

Government-owned corporations

A schedule of energy and water supply government-owned corporations, including their reporting arrangements, is provided in Appendix 4.

Department of Energy and Water Supply Annual Report 2013–1422Governance—risk and accountability

Risk management

DEWS is committed to risk management as a cornerstone of its overarching governance framework. The risk management policy and procedure, which aligns with standard AS/NZS ISO 31000:2009: risk management—principles and guidelines, outlines the principles and responsibilities for risk management across the department.

Effective risk management ensures we can make informed decisions, meet our compliance obligations, improve stakeholder relationships and ensure the safety and wellbeing of employees and others.

Six strategic risks were identified for inclusion in the department’s 2013–17 strategic plan:

1. failure to execute sustainable solutions to reduce the pressure on cost of living

2. energy markets and water supply are not competitive or sustainable

3. failure to plan for and provide appropriate advice and responses to energy and water emergencies

4. stakeholders are not effectively engaged

5. lack of critical capability and capacity

6. major incidences of fraud and/or corruption.

Options have been developed to manage these strategic risks and their progress was reported quarterly to the EMT and the Audit and Risk Committee as a priority.

External scrutiny

The Queensland Audit Office (QAO) Results of audit: internal control systems—report to Parliament 6: 2013–14 identified that the three key internal control mechanisms listed below required various degrees of strengthening across a number of government departments:

1. Chief Finance Officer certification—improvements could be made in the design of processes by better documenting how the process will work, consulting earlier with the Director-General and clearly aligning and describing the significant financial reporting risks with relevant account balances and with the key internal controls being assessed

2. internal audit—a documented and approved internal audit work plan should be established, better allocation of internal audit resources, and long outstanding high risk internal audit issues should be addressed by management on a timely basis

3. audit committee oversight—at least half of the members of an audit committee should be independent.

The above recommendations have all been addressed by the department.

Department of Energy and Water Supply Annual Report 2013–14

23The QAO Monitoring and reporting performance—report 18: 2013–14 examined how departments measure, monitor and publicly report on their non-financial performance. We assessed the performance information in their service delivery statement from the 2013–14 State Budget papers. This report was only tabled in Parliament on 26 June 2014, so the department will work on implementation of the recommendations in 2014–15.

The QAO Results of audit: water sector entities 2012–13—report to Parliament 7: 2013–14 identified that the DEWS performance reporting framework should include the measures of financial sustainability used in the report for Seqwater, SunWater, Queensland Urban Utilities, Unitywater, Gladstone Area Water Board and Mount Isa Water Board. The department should also encourage these six entities to self-report against these measures of financial sustainability while the performance reporting framework is being developed.

The department has incorporated the QAO proposed financial sustainability measures into the key performance indicator reporting framework. The proposed financial sustainability indicators are currently being reviewed to assess whether they should be included in the six public sector water entities’ annual planning documents and/or financial monitoring reports.

The QAO Results of audit: energy sector entities 2012–13—report to Parliament 9: 2013–14 identified that the department and Queensland Treasury and Trade should include the indicators of financial sustainability used in the report in their performance reporting framework.

The department and Queensland Treasury and Trade are currently reviewing the proposed measures, most of which (or near equivalents) are already included in the department’s performance monitoring framework.

The QAO Contract management: renewal and transition—report to Parliament 10: 2013–14 identified that all public sector entities should:

• develop and implement a contract management capability framework

• develop and apply a risk/value matrix approach to define expectations for effective contract management and appropriate resource allocation to contracts

• validate the value-for-money proposition of a contract before extending or renewing it, through assessment of contract risk, demand, supply market and supplier performance

• implement a contract management life cycle system.

The Procurement Transformation division’s Procurement Transformation Program is currently underway to address the above recommendations.

The QAO Traffic management systems—report to Parliament 5: 2013–14, which was not targeted specifically at DEWS, was forwarded to the department for review and implementation of any beneficial recommendations.

The Crime and Misconduct Commission did not conduct a specific review of the department’s handling of misconduct matters in 2013–14, but undertook their normal monitoring processes. The department also helped the Office of the Queensland Ombudsman fulfil its function by providing information as requested in relation to a limited number of matters.

Department of Energy and Water Supply Annual Report 2013–1424Ombudsman’s audit of the complaints management system

For the period 1 July 2012 to 30 June 2013, DEWS participated in a voluntary audit of its Complaints Management System, undertaken by the Queensland Ombudsman.

The audit reviewed and evaluated the department’s:

• complaints management policies and procedures

• external visibility and accessibility (website)

• internal communications and training

• complaints resolution

• internal reporting

• monitoring effectiveness

• external reporting.

On 29 October 2013, the Queensland Ombudsman provided a copy of its audit report to the department.

In responding to the audit, DEWS noted that as a very small department it received one service delivery complaint during the 2012–13 year. For this reason, the audit largely focused on the policy and procedural framework that governs the management of service delivery complaints. The department accepted the audit recommendations, noting that considerations of best practice were already inherent in its policies and procedures.

The Queensland Ombudsman acknowledged DEWS response to the audit and made no further comments nor took any further action.

Audit and Risk Committee

The Audit and Risk Committee was established in accordance with section 35 of the Financial and Performance Management Standard 2009. The committee met six times in the period 2013–14. The committee observed the terms of its charter having due regard to the Audit Committee guidelines: improving accountability and performance issued by Queensland Treasury (June 2012).

The committee is directly responsible to the Director-General in discharging its responsibilities. It has the authority to:

• conduct or authorise investigations into matters within its scope of responsibility

• access information, records and personnel of DEWS to conduct investigations

• request the attendance of any employee, including executive staff, at Audit and Risk Committee meetings

• conduct meetings with DEWS internal auditors and external auditors as necessary

• seek advice from external parties as necessary.

The committee acts as a forum for dialogue between the Director-General, senior management, Internal Audit and the QAO.

The functions and role of the committee do not diminish the statutory and regulatory duties and responsibilities of the Director-General, nor do they detract from management’s responsibilities in relation to corporate governance, internal control, fraud prevention and risk management.

Department of Energy and Water Supply Annual Report 2013–14

25Membership

Name Role

Peter Dowling Independent external member (Audit and Risk Committee chair)

Patrice Sherrie Independent external member

Alan Millis General Manager, Energy Supply and Regulation (member)

Ken Sedgwick Deputy Director-General, Water Supply (member)

Until 31 December 2013, Susan Rankin also served as an external member (Audit and Risk Committee chair).

Committee members were provided with recommendations arising from QAO reports to Parliament that relate to the department. During 2013–14, 15 recommendations were actioned and closed. As at 30 June 2014, two recommendations remain open.

During 2013–14, the three external members of the committee received total remuneration of $11 400.

Internal audit

On 12 June 2012, the formation of the Queensland Government Internal Audit Service (QGIAS) was approved as a result of restructures to government departments. QGIAS is a business unit within the Department of Environment and Heritage Protection and provides internal audit services to five departments as part of the BCP.

The role, the operating environment and operating parameters of QGIAS are established in the Internal Audit Charter that has due regard to professional standards.

Purpose

QGIAS provides independent assurance and advice to the Director-General, senior management and the Audit and Risk Committee. It enhances the department’s corporate governance environment through an objective, systematic approach to evaluating the effectiveness and efficiency of corporate governance processes, internal controls, risk assessment and management practices. This is in keeping with the roles and responsibilities detailed in the Financial Accountability Act 2009.

QGIAS reports regularly to the Audit and Risk Committee.

The internal audit function is independent of management and external auditors.

In 2013–14, QGIAS:

• discharged the responsibilities established in the charter by executing the internal audit program of work developed through extensive consultation with the department’s senior executives and QAO, and QGIAS analysis of the department’s strategic objectives, operational and risk documents and other relevant documents from across the public and private sector

• provided reports on results of internal audits undertaken to the Audit and Risk Committee and Director-General

Department of Energy and Water Supply Annual Report 2013–1426• monitored and reported on the status of implementation of internal and external audit

recommendations to the Audit and Risk Committee (management is responsible for implementation of audit recommendations)

• liaised with QAO to ensure there was no duplication of ‘audit effort’

• supported management by providing advice on corporate governance and related issues, including fraud and corruption prevention programs and risk management

• allocated internal audit resources to those areas considered to present the greatest risk and where the work of internal audit can be valuable in providing positive assurance or identifying opportunities for positive change

• provided secretariat support to the Audit and Risk Committee.

Major achievements

In 2013–14. QGIAS:

• completed the prioritised audits under the Internal Audit Plan 2013

– financial delegations review

– Energy Sector Incentive Scheme close out

• completed the $80 South East Queensland water rebate review

• finalised the DEWS Strategic Internal Audit Plan—January 2014 to June 2015

• completed the finance function health check, improvements to end-of-month and end-of-year financial reporting review, and the recordkeeping practices review under the DEWS Strategic Internal Audit Plan—January 2014 to June 2015

• instigated a knowledge and information sharing forum across our customer agencies.

QGIAS activities include:

• financial, compliance and operational reviews

• information system and data integrity reviews

• special review assignments as requested by management.

These activities are undertaken having regard to the International standards for the professional practice of internal auditing.

QGIAS staff members belong to professional bodies, including the Institute of Internal Auditors, CPA Australia and the Information Systems Audit and Control Association. The department continues to support the ongoing professional development of internal audit staff.

QGIAS considers there are controls in place to minimise the opportunity of fraud or mismanagement in those areas of the department that were subject to internal audit in terms of the program of internal audits as approved by the Director-General.

Department of Energy and Water Supply Annual Report 2013–14

27Governance—human resources

Public Sector Ethics Act 1994

During 2013–14, the department increased employee awareness and understanding of the code of conduct for the Queensland Public Service via numerous communication mechanisms, including staff bulletins, intranet news articles and face-to-face communication. Employees could also access the code on the departmental intranet site. All new employees were required to complete the online course ‘Code of conduct and ethical decision-making’ as part of their induction, and existing employees were required to undertake online refresher training. This education and training was accessible to all employees in accordance with section 12K of the Public Sector Ethics Act 1994.

All employees were given access to education and training in public sector ethics and ethical decision-making in accordance with section 12K of the Public Sector Ethics Act 1994, and targeted face-to-face training was provided for middle managers in relation to exercising managerial discretion.

The department continues to build on and refine its integrity framework of policies, protocols and fact sheets to guide employees in their day-to-day duties and clarify the expectation of staff conduct. The importance of ethical conduct and ensuring employees are aware of appropriate behaviour standards continues to be a key element within employee performance and development agreements. In addition, to continue to support and develop a culture of high performance, managers and supervisors are offered performance leadership coaching support to start changing the way the department measures, manages and rewards performance.

The department maintains a specialist team of human resource practitioners to advise and assist managers to address any shortfalls in employee behaviour, including the undertaking of disciplinary action where warranted.

Department of Energy and Water Supply Annual Report 2013–1428Queensland public service values

DEWS will deliver policy and regulatory ideas to help ease the cost of living pressures of water and energy users in Queensland.

We will implement new and innovative solutions to reform and help develop the energy and water sectors over the next 30 years.

DEWS will be the best water supply and energy department in Australia which other states benchmark themselves against.

Innovation in ideas and policy development in DEWS will be supported, encouraged and rewarded.

The leadership team will lead by example and set a clear vision for the future to enable DEWS staff to deliver real outcomes for Queensland energy and water users.

What they mean for DEWS

DEWS is committed to recognising and embedding the public service values, and associated behaviours of our own people within the agency to promote a culture that will support ‘being the best’.

DEWS has a range of initiatives in place to create a committed culture of empowerment and satisfaction;engaging our people is pivotal in realising the department’s strategic priorities and reform commitments. Staff have been engaged with via the departmental newsletter, Director-General messages, staff forums, and communications from senior executives and the Staff Renewal Steering Committee. This committee acts as a conduit between staff and EMT, and encourages our people to be courageous, innovative and put their ideas into action—qualities that enable a more comfortable transition for the agency’s reform activities.

This is clear in the department’s Volunteer Program, which enables employees to feel empowered to volunteer their time and skills within the community in areas of interest, as well as supporting the development and retainment of high-level skillsand capabilities.

Workforce planning, attraction, retention and performance

During 2013–14, Human Resources partnered with business units to develop strategies and programs to further enhance the capability and skills of our workforce. This partnership supports the successful delivery of our services and enables the initiatives of the department’s Reform Program.

Internal capability and talent development programs—including the development of a high performance and capability framework, relieving opportunities and internal collaboration initiatives—enabled retention and succession strategies for critical expertise and skills within our workforce. Further, specialist advertising campaigns were undertaken to attract and secure the specialist technical expertise required for our hard-to-fill roles and newly identified workforce requirements.

Department of Energy and Water Supply Annual Report 2013–14

29The department’s recently developed Strategic Workforce Plan will further enable the successful attraction, development and retention of its workforce as critical business reform takes place. The workforce plan will work in collaboration with the department’s blueprint and Reform Program to ensure that DEWS attracts the right people and develops and retains our existing talent. It focuses on addressing workforce capacity and capability issues, empowering leadership, encouraging and rewarding our workforce, and identifying challenges and critical demographic elements that exist in our population and job market in order to enable our workforce to be responsive to any change.

DEWS also introduced the Staff Renewal Steering Committee to build-in opportunities for staff to engage in resolving strategic issues for the department and shaping a workplace of the future. This has provided greater buy-in to workforce strategy and a broader perspective to problem-solving.

Workforce profile

As at 30 June 2014, DEWS employed 231.4 full-time equivalent staff.

Unplanned leave

The final average rate for the sector during the 2013–14 period was 4.2 per cent, with DEWS at 3.7 per cent.

Performance and development agreements

All senior executive services officers within DEWS have completed performance and development agreements (PDAs) in the 2013–14 period. PDAs for the remainder of officers are maintained and managed by the divisions. Human Resources offered PDA sessions as part of the Leadership in Practice Program, to impress the importance and significance of establishing an agreement in consultation with supervisors.

Staff engagement

The Working for Queensland Employee Opinion Survey overall participation rate for DEWS in 2013 was 74 per cent, compared to the overall participation rate of 80 per cent in the 2014 survey (a 6 per cent increase).

Permanent separation rate

The implementation of the whole-of-government business renewal initiative, the ending of temporary contracts, resignation and retirements led to a 10.05 per cent permanent separation rate for DEWS for 2013–14.

Employee performance management

Upon commencement with the department, all employees are required to undergo comprehensive induction training, to ensure that their obligations and responsibilities as public service employees are articulated and fulfilled.

Department of Energy and Water Supply Annual Report 2013–1430The leaders within our organisation play a crucial role in actively supporting individuals and teams by encouraging a culture of innovation and continuous improvement, underpinned by individual PDAs and development opportunities. The department uses the sector-wide executive performance development framework developed by the Public Service Commission to assist senior executive service officers to meet and maintain the delivery of their responsibilities, as well as driving the government’s reform agenda and departmental commitments. In addition, performance leadership coaching support is delivered to managers and supervisors to begin changing the way performance is managed and measured (this provides linkages to creating a culture of rewarding and recognising staff).

Work–life balance

The department recognises the importance of flexible work arrangements and ‘family-friendly’ work practices as a contributor to maintaining a diverse, adaptive and high-performing workforce. Under existing policy, employees have the ability to utilise job-sharing, part-time employment, phased retirement, telecommuting and accrued leave time. 

The department’s policy on flexible working arrangements is published on the intranet and is accessible to all employees. With the revision of the departmental hours of work policy, the opportunity to further promote flexible work arrangements was done via intranet news items, departmental bulletins and through staff meetings.

Leadership and management development

The agency is committed to transitioning and achieving a culture of high performance and exceptional service delivery in line with the public service values. To attain this, development at all levels is imperative. The department has developed a high performance and capability framework, with an anticipated launch date of September 2014. The creation and development of a leadership cohort with aligned leadership values and behaviours is seen as the underlying foundation.

The department offers, and will continue to offer, a range of initiatives as part of a strategy for leadership transition. These include targeted development programs to align leadership behaviours, Leadership in Practice sessions, middle management development programs and the 3600 Executive Feedback Program.

Industrial and employee relations

The department maintains a comprehensive suite of policies, protocols and fact sheets developed through internal and external consultative processes to provide guidance on employee entitlements and resolving issues that may arise in the workplace. Additionally, ongoing consultative discussions are held with Together Queensland, the Industrial Union of Employees and Professional Australia through regular formalised meetings of the Agency Consultative Committee.

Essentially, the role of the committee is to ensure that the department implements and complies with all relevant arrangements under the Industrial Relations Act 1999, the Public Service Act 2008 and the State Government Departments Certified Agreement 2009 (the Core Agreement), with particular focus placed on current and emerging industrial issues, workforce strategy and organisational change issues.

Early retirement, redundancy and retrenchment

During the 2013–14 period, two employees received redundancy packages at a cost of $326 723. Employees who did not accept an offer of a redundancy were offered case management for a set period of time, where reasonable attempts were made to find alternative employment placements.

Department of Energy and Water Supply Annual Report 2013–14

31Governance—information management

Information systems

DEWS continues to operate, maintain and develop a range of information systems to support services, initiatives and corporate operations. Highlights include the following:

• The gas electricity certificates system (the system to track the Queensland Gas Scheme) is currently being decommissioned due to closure of the program. The closure of the Queensland Gas Scheme was approved by the Queensland Government as part of the Red Tape Reduction Program. Information and Technology Partners has developed a reporting database to assist with queries on the scheme in future years. Decommission of the current database will save DEWS around $200 000 per year in hosting costs.

• The Water Industry Compliance Database replacement project is now in stage four. Detailed business requirements for the dam safety component have been finalised and a request for information developed.

• On 17 June 2014, the dam safety regulation request for information (DEWS0614) was released to the market and closed on 7 July 2014. The evaluation panel is now in the process of evaluating responses.

Recordkeeping

DEWS is operating a recordkeeping strategy to ensure the department is compliant with the Public Records Act 2002, Public Service Act 2008 and Information Standard 40—Recordkeeping.

The Records Management unit is responsible for providing a compliant recordkeeping framework to the department through the provision of an electronic document and records management system (eDRMS), training, support and an end-to-end processing model. The department has audited the recordkeeping framework.

A single consolidated recordkeeping platform has been implemented for the department and legacy recordkeeping systems have been migrated into the recordkeeping platform. Data from RecFind, the QWCTRIM system and the Keeper system is available through the corporate eDRMS. E-learning packages and digital conferencing facilities have been used to deliver ongoing training. Business areas are increasingly moving to capture and manage records in digital format, and are minimising the production of paper-based records.

The Appraisal and Disposal Program identifies time-expired records for disposal. Over 9000 boxes of files have been identified for disposal. The program also identifies and prepares permanent records for transfer to Queensland State Archives. A significant program of work has been completed to assess inherited legacy records for which the department has responsibility. Work has commenced on updated retention and disposal schedules for the department.

Department of Energy and Water Supply Annual Report 2013–1432Open data

The open data initiative is about making Queensland Government data and information more open, transparent and accessible. This will encourage the private sector to develop innovative new services and solutions.

The department is committed to releasing as much data as possible in an easy-to-find and accessible manner. Released data is free and made available under the least restrictive licence, allowing for its use and re-use. Where practicable, the department publishes data in machine-readable formats that can be downloaded, indexed and searched by commonly used web applications.

The following three annual reporting requirements are now available through the Queensland Government open data website (www.data.qld.gov.au):

• consultancies

• Queensland cultural diversity policy

• overseas travel.

See Appendix 6 for a full listing of DEWS open data published datasets.

Department of Energy and Water Supply Annual Report 2013–14

33Agency objectives and performance indicators

Objective 1: Cost-effective, safe, secure and reliable energy and water supply

Energy

Our performance

Release of PowerQ

On 20 June 2014, the Queensland Government published PowerQ: a 30-year strategy for Queensland’s electricity sector.

The strategy was developed following extensive consultation with Queenslanders, consumer advocates, electricity market participants (e.g. generators, retailers, network businesses) and industry representatives.

The strategy is structured around a joint accountability model, reflecting the important roles of consumers, the electricity market and government. It sets out 8 strategies and more than 40 actions that the government will put in place over the short, medium and long term.

PowerQ will be delivered by working with industry and consumer advocates (with input from an expert panel) to ensure Queensland can respond and adapt to emerging market challenges and opportunities.

Disaster management

Two cyclone systems crossed the Queensland coastline between January and April 2014, affecting Ergon Energy’s network and customers.

At 3.30 am on 31 January 2014, Tropical Cyclone Dylan (category 2) crossed the Queensland coast at Hideaway Bay, south of Bowen. Close to 49 000 customer power outages were recorded, mostly in Ingham, Townsville, Proserpine, Mackay, Moranbah, Clermont and Emerald. Within 24 hours of the cyclone crossing the coast, fewer than 100 affected customers remained off supply.

Department of Energy and Water Supply Annual Report 2013–1434At 11.00 pm on 11 April 2014, Tropical Cyclone Ita (category 4) crossed the Queensland coast at Cape Flattery, near Cooktown. The cyclone generated damaging winds and heavy rainfall between Cooktown and Mackay, and caused localised flooding in the Ingham area. Electricity supply to around 46 000 customers was affected at some stage, mostly in Cooktown, Wujal Wujal, Ayton, Bloomfield, Rossville, Hopevale, Mossman, Daintree, Cairns, Innisfail, Ingham, Townsville, Proserpine and Mackay. Within five days of Tropical Cyclone Ita crossing the coast, all customers that could be safely reconnected had been, with less than 50 remaining off supply pending inspection or repairs by an electrical contractor.

Solar Bonus Scheme review

In March 2013, the Queensland Competition Authority forecast the Solar Bonus Scheme would cost $3.4 billion by 2028. The scheme is funded by electricity distributors Ergon Energy and Energex, which pass the cost on to the energy bills of all Queenslanders.

The funding model for customers not on the 44 cent feed-in tariff has been reformed. Electricity retailers, not the distributors, now pay for feed-in tariffs at prices that reflect the market value of solar energy. This means feed-in tariff payments to new solar power customers no longer push up the price of electricity. Customers on the 44 cent feed-in tariff will continue to have the contracts they entered into honoured, provided they maintain their eligibility for the scheme.

Future direction

PowerQ

Critical early actions include seeking productivity improvements to contribute to the stabilisation of electricity prices, reviewing the Electricity Act 1994 to reduce red tape and promote a modern and efficient market, and ensuring policy and regulatory settings encourage innovation and enable the deployment of new technologies that provide benefits to consumers and build on Queensland’s unique strengths.

To deliver these actions, DEWS, with input from an expert panel, will work with industry, consumer advocates and other stakeholders to ensure Queensland can respond and adapt to emerging market challenges and opportunities.

In addition, DEWS is working alongside the Public Sector Renewal Board to ensure its resources and strategic planning are focused on priority areas.

In 2015–16, DEWS will deliver the following PowerQ actions:

• action 1.2—identify opportunities for productivity improvements

• action 1.3—support consumer advocacy

• action 2.1—adopt national consumer protections and retail standards

• action 2.2—increase consumer engagement in the electricity market

• action 3.1—stimulate retail electricity markets by removing price regulation in South East Queensland subject to meeting certain preconditions, and investigating options to provide increased competition in regional areas

• action 3.2—review the potential impacts of opportunities from new technologies

• action 7.3—emphasise whole-of-system electricity productivity as a policy objective.

Each project will be developed to deliver the best possible outcome for Queensland consumers.

Department of Energy and Water Supply Annual Report 2013–14

35Water supply

Our performance

Release of WaterQ

June 2014 saw the release of WaterQ: a 30-year strategy for Queensland’s water sector. WaterQ’s vision is for a water sector that supports increased productivity, economic growth, strong and healthy communities, and a natural environment that is valued. 

It establishes the necessary long-term framework to deliver safe, secure and affordable water supplies into the future.

WaterQ identifies seven strategic priorities:

1. empowering customers and community education

2. equity and affordability

3. efficient use of water

4. responsible and productive water management

5. skilled and sustainable water sector

6. smart regulation that attracts private sector investment

7. innovative technology and infrastructure.

As a whole-of-sector 30-year strategy, it will be continually adjusted to reflect changing community needs.

Water security in South East Queensland

The department released a discussion paper on water security in South East Queensland, reviewing level-of-service objectives.

Level-of-service objectives help minimise the risk of water supply security issues for South East Queensland by specifying the long-term water supply requirements to be facilitated though Seqwater’s supply planning.

A review of the desired level-of-service objectives was undertaken to examine options that facilitate appropriate investment in the bulk water supply system—by providing more flexibility to optimise existing assets and adopting a more adaptive planning approach that aligns with community expectations.

After consultation and considering a range of public submissions on the discussion paper, this review culminated in a revised set of level-of-service objectives prescribed by regulation.

Department of Energy and Water Supply Annual Report 2013–1436Drinking water quality risk assessments

Under the Water Supply (Safety and Reliability) Act 2008, all drinking water service providers are required to have drinking water quality management plans in place. These plans are risk-based and identify processes and procedures to manage water quality risks, incidents and monitoring. These plans are assessed and approved by the department.

All drinking water quality plans have been assessed and approvals have been issued where they met the appropriate standards.

Work is continuing with the other service providers, with a view to having all plans approved in 2014–15.

Dam optimisation studies

The department released the Wivenhoe and Somerset dams optimisation study and North Pine Dam optimisation study, which assessed options aimed at better protecting homes and businesses from major flood events in the future.

The studies were undertaken by the government to implement recommendations of the QFCOI.

They investigated the operational options (including various full supply levels combined with different gate operations) to improve flood mitigation outcomes.

The studies assessed trade-offs between potential flood mitigation benefits, water supply security, community access and environment considerations.

From April to June 2014, public consultation meetings were held across various locations in South East Queensland.

In October 2014, final reports will be submitted for government consideration, with any approved changes to be implemented for this coming summer wet season.

Future direction

WaterQ

WaterQ actions require skills, expertise and investment from all levels of government, the private sector, research organisations, service providers and the community.

There are over 170 service providers in Queensland delivering water to our homes, businesses, industries, farms and mines.

Across the sector, there are a number of challenges that are affecting the ability to deliver water and sewerage services effectively. These relate predominantly to service provider size and location, population growth and climate variability.

To help identify innovative technologies and solutions to improve resilience, reliability and quality in the delivery of water and sewerage services, the department is establishing an industry-led innovation panel—a Water Expert Panel.

Department of Energy and Water Supply Annual Report 2013–14

37A Strategic Advisory Committee will also be established to oversee the implementation of WaterQ. It will also support the five yearly reviews of the strategy. This will ensure the strategy remains ‘live’ over the 30-year horizon.

The department will also continue to work closely with key stakeholders during the implementation phase.

Dam optimisation studies

In response to community feedback, the department is reviewing the preferred operational options in the Wivenhoe, Somerset and North Pine dams optimisation studies.

The final reports will present the completed optimisation studies, including the outcomes of community feedback.

The government will decide the best balance of flood mitigation, water supply security, protecting the dams and flood impacts. 

The optimised operations will be implemented by amendments to the dams’ flood mitigation manuals for this coming summer wet season.

Regional water supply security assessments

Significant population growth in many major urban centres across Queensland continues to place pressure on regional water supplies, and some local governments have requested assistance with water supply security planning.

WaterQ highlights a key action for the Queensland Government—to undertake water supply security assessments for potential high-growth regions.

The regional water supply security assessments (undertaken in partnership with the local water service provider) are aimed at assisting local service providers in their water supply planning activities and to develop a shared understanding of the challenges ahead.

These assessments seek to provide a regional context of water security and develop a shared understanding of the potential water security risks the community faces in the short, medium and longer term.

The department will facilitate a rolling program of regional water supply security assessments over the coming three years. Rockhampton, Mount Isa, Cairns and Townsville have been chosen for the first round of assessments based on a prioritisation methodology.

Department of Energy and Water Supply Annual Report 2013–1438Objective 2: Effective reform

Energy

Our performance

Competitive electricity market

Queensland is a diverse state that is nearly five times the size of Japan and seven times the size of Great Britain. This size creates not only different lifestyles, but different market dynamics. One key difference is that competition in regional Queensland’s retail electricity market is currently not as strong as it is in the south-east.

To capture the advantages of the competitive market while protecting customers in regional Queensland, reform to the Solar Bonus Scheme created two different feed-in tariff systems across the state.

To make sure regional Queenslanders were not disadvantaged by this change, Ergon Energy has been mandated to pay a feed-in tariff to its customers. In South East Queensland, a number of electricity retailers already voluntarily offered feed-in tariffs as part of their competition for customers. In established markets like this, there is often no need for ongoing price intervention as it can stifle competition.

Soon after deregulation took place, one retailer introduced three new energy contracts offering various discounts and feed-in tariff rates.

Australian Energy Market Commission cost recovery

On 21 May 2014, the Queensland Parliament passed the Electricity and Other Legislation Amendment Bill 2014, which included amendments that provide for the Queensland Government to recover future funding contributions to the Australian Energy Market Commission from the utility and gas industries.

The commission is the rulemaker for the national energy markets and provides strategic advice on market development issues. Their work impacts directly on policy and regulatory settings, including electricity price outcomes.

In future, the cost of Queensland’s annual contribution to the commission’s funding (approximately $4.4 million) will be borne by those who benefit directly from a well-regulated national energy market. This is consistent with best-practice regulation principles, and brings Queensland in line with other states and territories that already recover the cost of national regulation from industry.

The levy is to be recovered from regulated electricity and gas transmission companies in accordance with the division of the commission’s work between electricity and gas matters. Recovering the funds from the transmission companies is administratively the simplest point at which to recover the levy, but costs can be passed through to other market participants and their customers, who also ultimately benefit from the commission’s work.

Department of Energy and Water Supply Annual Report 2013–14

39The government continues to seek value for money from the commission and is on the Council of Australian Governments’ Energy Council Standing Council on Energy and Resources (with other jurisdictions), working to ensure its continued efficiency and effectiveness.

Electricity sector reform

On 20 May 2014, the National Energy Retail Law (Queensland) Bill 2014 and the Electricity Competition and Protection Legislation Amendment Bill 2014 were introduced into the Queensland Legislative Assembly. The Bills provide for the introduction of market monitoring and the commencement of the National Energy Customer Framework (NECF) in Queensland from 1 July 2015.

As part of its response to the final report of the Interdepartmental Committee on Electricity Sector Reform, the government conditionally agreed to adopt the NECF. Commencement of the NECF in Queensland is a key reform initiative to ensure customers across Queensland are appropriately protected, while supporting the government’s commitment to increasing retail competition and removing price controls in South East Queensland by 1 July 2015.

The proposed adoption of the framework in Queensland will repeal separate retail licensing, reporting and customer protection regimes in favour of a nationally harmonised regime covering both electricity and gas. Simplifying the way states and territories regulate energy retail operations across borders will create efficiencies for retailers and reduce regulatory compliance costs, thereby contributing to increased retail competition and reduced cost pressures.

The NECF brings improvements like a better safety net for vulnerable customers and a general bolstering of protections for gas customers. Further strengthening of protections for Queenslanders will be achieved through additional requirements on retailers to provide advanced notification to customers when a fixed benefit is about to end and prior notice if prices are to rise.

Release of PowerQ

The PowerQ strategy addresses current issues affecting the electricity industry as well as future challenges. These challenges include price rises, poor asset utilisation, a changing generation mix and a linear supply system that is ill-equipped to respond to changes in demand and technology.

The strategy is structured around a joint accountability model, reflecting the important roles of consumers, the electricity market and government. It sets out 8 strategies and more than 40 actions that the government will put in place over the short, medium and long term.

Queensland Gas Scheme and the Smart Energy Savings Program

The government introduced legislation to amend the Electricity Act 1994 to cease the Queensland Gas Scheme on 31 December 2013, and repeal the Clean Energy Act 2008 to cease the Smart Energy Savings Program.

The cessation of the Queensland Gas Scheme reduces compliance costs for retailers.

The cessation of the Smart Energy Savings Program removes a compliance burden and associated compliance costs for participants. This is estimated to provide savings of $1 million per year in industry compliance costs. It also enables large energy users to manage their energy savings without reporting them to the government.

Department of Energy and Water Supply Annual Report 2013–1440Reform of electricity network reliability standards

The prescriptive electricity network reliability standards that previously applied in Queensland delivered very reliable electricity supply but at too high a cost, putting upward pressure on electricity prices.

Changes to the reliability framework that came into effect on 1 July 2014 are forecast to save approximately $2 billion in capital expenditure on networks over the next 15 years and reduce upward pressure on network prices from 2019–20 onwards.

The new framework:

• removes the prescriptive distribution standards that required back-up infrastructure to be built even though it might only be used on rare occasions

• relaxes the equivalent standards for transmission to enable a more flexible approach, where outage risks to customers are low and significant cost savings are available.

• These changes, recommended by the Independent Review Panel on Network Costs and the Inter-Departmental Committee on Electricity Sector Reform, are more economical, outcome-based and customer-focused than the previous reliability standards.

The needs of Queensland customers are protected through:

• a combination of existing performance targets (known as minimum service standards)

• programs to improve the worst performing lines

• new ‘safety net’ measures that specify maximum allowable restoration times if high impact–low probability events occur (e.g. the very unlikely failure of a sub-transmission transformer that causes an outage over many suburbs).

The reforms add to the network businesses’ ongoing drive for efficiencies and capital expenditure savings.

Partnering with key stakeholders enabled efficient amendment of multiple regulatory instruments within tight time frames.

Network business efficiencies

Reforms to electricity network businesses’ operations in Queensland have reduced expenditure in the order of $3.8 billion in their current regulatory periods.

Future direction

Electricity sector reform

The Interdepartmental Committee on Electricity Sector Reform made 62 recommendations, with the majority of these accepted at least in principle by the Queensland Government. This reform program is on track and has made good progress in its first year, with 34 of the 62 recommendations already addressed. This incorporates the completion of 29 of the 45 recommendations of the Independent Review Panel on Network Costs.

The department remains on track to deliver the remaining committee reforms by mid 2016.

Department of Energy and Water Supply Annual Report 2013–14

41The next 12 months will be a busy period for the department as it continues to:

• execute the government’s reform agenda

• manage the electricity market’s transition from price regulation to market monitoring, to increase competition in South East Queensland from 1 July 2015

• support the adoption of the NECF and the delivery of enhanced customer protections and support.

Demand-side reform

DEWS was instrumental in bringing together DAFF and Ergon Energy in mid 2014 to establish the Irrigators Energy Savers Project. The project will identify opportunities to better manage energy use through demand reduction activities and achieve cost savings through the efficient use of electricity for water pumping and irrigation across the whole supply chain.

With the assistance of the Queensland Farmers’ Federation, 30 trial sites have been selected to participate in the project from a broad cross-section of agribusinesses throughout Queensland—such as sugarcane farms, orchards, fruit and vegetable farms, dairies, cotton and grain farms, vineyards and turf farms. Level 2 energy audits to the Australian standard will be carried out at each location to identify the sources of energy used at a site, the amount of energy savings that can be made and to provide an assessment of costs and savings. Based on preliminary findings, savings of up to 30 per cent may be achievable at some sites.

The project will produce case studies highlighting best practices that can be disseminated across the irrigation sector to improve efficiency and reduce costs. Ergon Energy, DAFF and the department will work with peak bodies, such as the Queensland Farmers’ Federation, to facilitate dissemination of information and uptake by farmers.

The department will continue to work with the farming industry and representative bodies in the future to identify other energy efficiency opportunities both on farm and in first-stage processing to assist this vital pillar of the Queensland economy.

Market monitoring in South East Queensland

Due to commence on 1 July 2015, the removal of retail price regulation and the introduction of a more effective market monitoring regime for residential and small business customers in South East Queensland will be central to the Queensland Government’s electricity reform agenda. Market monitoring is designed to increase competition in South East Queensland, reduce cost pressures and drive better outcomes for consumers in terms of product choice, market efficiency and customer service.

The required legislation to implement market monitoring, which is contained in the Electricity Competition and Protection Legislation Amendment Bill 2014, was introduced into Parliament on 20 May 2014 and is due to be debated in the second half of 2014. Essentially, the Bill amends the Electricity Act 1994 to remove ministerial power to set regulated prices in South East Queensland, but also provides an additional safety net through reserve ministerial power to reintroduce price controls if competition deteriorates. The legislation also establishes an effective market monitoring framework, which will allow the Queensland Competition Authority to monitor and report on the operation of the South East Queensland market, including price changes.

To maximise the success of the reform, the government identified and consulted on a number of key preconditions that must be met before price controls are removed. These preconditions include:

• confirming there is sufficient competition in South East Queensland to deliver real benefits for consumers

• ensuring adequate consumer protections are in place

• developing a strategy to improve customer engagement in the market

• establishing an effective regulatory framework with clearly defined roles and responsibilities for retailers, regulators and government

• developing a viable and credible methodology for setting prices in regional Queensland.

The preconditions for market monitoring are on track to be met by the end of 2014.

The Queensland Competition Authority will continue to set regulated retail electricity prices for customers outside South East Queensland, while the government finalises a longer term strategy to increase competition in regional areas. The government has also committed to maintain pricing support for regional customers and is investigating ways in which this could be delivered more effectively.

Department of Energy and Water Supply Annual Report 2013–1442Water supply

Our performance

Water Supply Services Legislation Amendment Act 2014

The Water Supply Services Legislation Amendment Act 2014 introduced a range of reforms that will transform the regulation of the water industry to focus on outcomes rather than process. These reforms include:

• streamlined approval processes for water and sewerage connections for South East Queensland distributor retailers and their customers—this will reduce red tape, design times and holding costs for developers, and facilitate quicker water and sewerage connections

• simplified recycled water regulation to better reflect risk—schemes that supply recycled water for lower exposure uses will no longer need an approved management plan, but most schemes will need to be registered

• removal of requirements for a range of mandatory prescriptive management plans that will be replaced with annual reporting on key performance indicators by service providers and the publication of an annual comparative report on the sector.

Queensland Floods Commission of Inquiry

The department oversees 42 of the Queensland Government’s 123 recommendations in the final report of the QFCOI.

So far, the department has implemented 36 out of the 42 recommendations, including:

• the public release of the optimisation studies for Wivenhoe, Somerset and North Pine dams

• establishing a Ministerial Advisory Council to provide independent advice on flood mitigation manuals

• streamlining the process for the Minister to make timely decisions on whether to temporarily lower flood mitigation dams before a potential flood.

The remaining six recommendations are longer-term initiatives that are underway.

Coal seam gas water

The department also achieved significant red tape reductions by removing regulatory duplication within the Water Supply (Safety and Reliability) Act 2008 (Water Supply), as identified in the Queensland Competition Authority review report on the state’s regulation of the coal seam gas (CSG) industry. Provisions in the Water Supply Act have been repealed, enabling the discharge of CSG water to water sources or the beneficial use of CSG water to be solely regulated by the Environmental Protection Act 1994 and the Waste Reduction and Recycling Act 2011 respectively.

Department of Energy and Water Supply Annual Report 2013–14

43Total asset management plan

The department owns and manages 22 water assets for the benefit of local communities in regional Queensland, and is developing a total asset management plan for these assets in accordance with the Queensland Commission of Audit recommendation.

The plan will ensure decisions in planning, investment, operations and maintenance will result in assets that are ‘fit for purpose’ and comply with regulations, as well as deliver services and benefits to the community.

The department’s dams and weir assets provide water supplies for small rural settlements, mines and irrigators, sites for recreation in remote locations and water reserves for droughts and bushfire fighting.

In 2013–14, the department completed the initial asset register and risk assessment, as well as the revaluation of its assets, with a total asset value of $237 million.

Future direction

Total asset management plan

In 2014–15, the department will complete the risk evaluation and optimisation, and develop a lifecycle asset program for the portfolio and individual plans for each of the structures.

The department is one of six state agencies selected to develop the total asset management plan framework and methodology.

Local management arrangements for SunWater irrigation schemes

The Commission of Audit recommended SunWater transfer its irrigation channels to private irrigators and withdraw fully from this activity. The government accepted this recommendation with the overarching caveat that such transfers should not result in additional costs when compared to the service continuing to be provided by SunWater.

Irrigators have indicated they want to explore local management, which, if implemented, would give them direct operational control of the schemes.

An independent project team has provided considerable support to the eight irrigator groups with the engineering, legal, financial and taxation due diligence that would be associated with any proposed business transfer.

Irrigators have developed business proposals for government’s consideration, demonstrating how they would operate the schemes as viable businesses.

The Queensland Government is due to consider the business proposals and the advice of the project team’s independent chair later in 2014.

Department of Energy and Water Supply Annual Report 2013–1444Objective 3: Engaged stakeholders

Energy

Our performance

Consumer and Retail Industry Reference Group

In 2012, the Consumer and Retail Industry Reference Group was established. Meetings and workshops provide a valuable means to explore proposed policy and regulatory changes in a collaborative manner with group members.

This group is a unique body where industry, consumer and advocacy groups, and energy regulators can openly discuss electricity issues and share information.

Representatives include:

• 13 electricity retailers and distributors

• 11 consumer and advocacy groups

• the Energy and Water Ombudsman Queensland

• peak energy industry bodies

• state and national regulators

• other government departments.

The group has helped shape protection for vulnerable customers and general protections under NECF legislation.

The group also provides an opportunity to understand the complexities of the industry and the reforms needed to address the challenges we are facing.

PowerQ consultation

The Queensland Government has delivered a Queensland first—PowerQ: a 30-year strategy for Queensland’s electricity sector.

The strategy was developed through a three-stage consultative process:

1. directions paper—released on 17 December 2012

2. discussion paper—released on 11 September 2013

3. final strategy—released on 20 June 2014.

The response from the public and industry was exceptional, with more than 225 formal submissions and more than 1300 individuals participating in a survey of residential electricity customers.

Department of Energy and Water Supply Annual Report 2013–14

45National Energy Customer Framework

Following a commitment by the federal government to implement the NECF (subject to state-specific variations to ensure regional customers are protected), DEWS has focused consultation activities on ensuring the NECF package results in the best possible outcomes for Queensland customers.

In late 2013, consultation on the 30-year electricity strategy discussion paper and focus groups with retailers and small customers sought stakeholder views about how to improve customer protections in general. A more specific focus was applied to implementation of the NECF and possible future enhancements to the package to promote greater customer engagement, market monitoring and appropriate customer protections. Submissions to the discussion paper broadly supported implementation of the NECF in Queensland. Focus groups supported the introduction of the NECF.

In early 2014, the department engaged energy retailers, distributors and consumer representatives in relation to possible variations to the NECF package in Queensland. This included a workshop in March 2014 focusing on the proposed variations. Workshop delegates commended the workshop approach, which allowed detailed discussion on important consumer protection variations. Some delegates also provided follow-up submissions outlining their key areas of interest. The depth of ongoing consultation culminated in the proposed legislation being tabled in Parliament in mid 2014. The Queensland NECF package reflects consideration of various stakeholders’ input, and seeks to balance these proposals with government’s broader reform objectives in the sector.

Future direction

PowerQ—consumer empowerment

Queensland aims to have the most competitive electricity prices in Australia. PowerQ will ensure the Queensland electricity market is cost-competitive nationally and that consumers will be empowered to become active players in the electricity market.

Reforms are underway, targeting costs within the Queensland Government’s influence by:

• driving efficiencies into network businesses

• adjusting reliability standards to balance service levels and costs to consumers

• removing red tape

• addressing state-based schemes, such as the Solar Bonus Scheme and Queensland Gas Scheme, to relieve cost pressures

• developing a tariff reform and metering strategy to give consumers more information about their electricity usage and greater choice in managing their costs, and to address longer term price pressures.

Other actions will be approached by:

• seeking productivity improvements

• supporting consumer advocacy

• getting tariff settings right

• developing low-cost solutions for isolated communities

• monitoring market changes.

Department of Energy and Water Supply Annual Report 2013–1446Water supply

Our performance

Ibis Dam safety upgrade

In June 2013, ownership of Ibis Dam was handed over to Tablelands Regional Council.

On 1 January 2014, Tablelands Regional Council transferred the dam to Mareeba Council.

Transferring ownership is consistent with the Queensland Government’s desire to empower local communities to better serve their own interests.

The dam, in the Atherton Tablelands, was built in around 1900 to supply water for Irvinebank town and mining operations. It was completely refurbished, at a cost of $11 million, to meet dam safety requirements and provide a source of non-potable water.

The department has helped Mareeba Council identify and deliver a cost-effective option for a sustainable supply—through seepage control and supply and demand management measures—to address community concerns about water supply.

Dam optimisation studies community consultation

From 1 April 2014 to 30 June 2014, community consultation on the optimisation studies for North Pine, Wivenhoe and Somerset dams was undertaken.

Five public meetings were held within the relevant communities and the issues raised were recorded and addressed where possible.

There were 61 submissions received, including the issues raised during the consultation sessions.

Analysis shows that the community generally supports the government’s preferred option.

Consultation reports are currently being prepared and are expected to be published following consideration by government in October 2014.

Statutory emergency action plans

There are 104 referable dams in Queensland (a referable dam is one that presents a risk to two or more people if it fails).

In line with a QGCOI recommendation, there is now a legislative requirement for dam owners to have an approved emergency action plan (EAP). Previously, non-statutory EAPs were required.

By 1 October 2013, all referable dam owners needed to submit draft statutory EAPs as part of this approval process.

Department of Energy and Water Supply Annual Report 2013–14

47Engineers from the Dam Safety area of the department conducted training and awareness sessions on how to prepare an EAP in Brisbane, Toowoomba, Bundaberg, Mackay, Emerald, Cairns, Townsville, Mount Isa and Rockhampton.

Almost 140 participants representing emergency management agencies and dam owners attended the presentations. Overall, the feedback received was positive.

All major dams now have non-statutory EAPs in place, while statutory EAPs have been assessed and approvals issued where appropriate.

The three referable dams owned and operated by DEWS have statutory EAPs in place.

Future direction

WaterQ—customer empowerment and education

A priority for WaterQ is to empower and educate customers so they will know more about their water services and make choices about how these services are delivered.

The sector will:

• encourage flexible pricing, including new tariff structures, to meet both customer and service provider needs—service providers will investigate alternative pricing options to meet customer and business needs

• provide greater product choices to customers by championing customer water plans—these plans will allow customers to choose the plan best suited to their lifestyle and that matches the volume of water for which they are willing to pay, encouraging water efficiencies

• improve customer awareness of services through engagement and information—service providers are encouraged to engage with their customers to understand their evolving trends and to inform customers on the value of their services.

Energy and water supply

Future direction

Blueprint—putting water and energy customers first

In August 2014, the DEWS blueprint is scheduled to be published. It will outline a fresh approach to how the department will operate by acknowledging that it works for its customers—Queensland energy and water consumers.

The blueprint will support the two 30-year strategies (PowerQ and WaterQ), which concentrate on sector transformation, by focusing on internal transformation within the department around six common behaviours:

1. engage—demonstrate the intention to reach out and involve customers

2. analyse—understand customers, their behaviours, experiences and long-term needs

3. apply—use knowledge and strong evidence to support decision-making

Department of Energy and Water Supply Annual Report 2013–14484. validate—continuously review work and policy settings to ensure they match changing community

needs

5. partner—work with partners intentionally and effectively, and look for new partners

6. communicate—understand issues of concern to customers.

Implementation of the blueprint across the department will change policy, planning and regulatory functions and their focus. It will also transform the department’s business and work practices, in particular the way in which it communicates and engages with its partners and the community.  

Successful implementation of the blueprint will require the development of tools and systems to access and analyse data, new ways of talking to customers and the skills and capabilities of the department’s workforce.

Department of Energy and Water Supply Annual Report 2013–14

49Objective 4: Optimise industry value

Energy

Our performance

Wallumbilla Gas Supply Hub

In March 2014, the Wallumbilla Gas Supply Hub commenced operation. The hub, which is operated by the Australian Energy Market Operator, offers gas market participants the opportunity to adjust their positions close to real time and optimise both production and use of gas.

Queensland initiated the gas supply hub concept in 2011, as a result of the findings of the 2011 Gas Market Review. In December 2011, the concept was also reflected in the federal government’s draft energy white paper. It was subsequently incorporated into the Gas Market Development Program of the Standing Council on Energy and Resources.

The Australian Energy Market Operator developed the supply hub concept at the request of the Standing Council on Energy and Resources, in consultation with the federal and Queensland governments, and industry stakeholders. In December 2012, the council agreed to proceed with implementation of the hub in early 2014 on a voluntary ‘brokerage’ model, which matches buyers and sellers at the hub using standard day-ahead and balance-of-day contracts.

Reappointment of Energy and Water Ombudsman Queensland

Mr Forbes Smith was reappointed as Energy and Water Ombudsman Queensland (EWOQ) for a further three years from 1 July 2014 to July 2017 by Governor in Council.

The Minister for Energy and Water Supply and the Premier approved Mr Smith’s reappointment based upon the excellent leadership he provided to the office of the EWOQ during his previous three-year term. In his time as ombudsman, Mr Smith oversaw the development of new strategic and business plans, and restructured the office of the EWOQ to improve outreach to customers.

An independent review in 2014 found that EWOQ was operating in an independent, fair and unbiased manner. Since commencing as ombudsman in 2011, Mr Smith has overseen the satisfactory resolution and closure of 14 096 electricity, gas and water cases. As ombudsman, Mr Smith also established a new Systemic Issues Monitoring Committee (which has led to a 110 per cent increase in the number of systemic issues identified by EWOQ) and developed a web-based, multi-agency complaints portal to help customers lodge complaints online. EWOQ’s performance was rated as satisfactory or better by 82 per cent of customers.

Department of Energy and Water Supply Annual Report 2013–1450Future direction

PowerQ

A policy and regulatory framework is being created that will readily respond to the changes that lie ahead and benefit everyone.

As new challenges emerge, they will need to be understood and responded to quickly. To ensure the strategy’s long-term success, the Queensland Government will establish a panel of experts to critically examine the emerging market challenges and opportunities, and recommend appropriate actions.

These panel members will include people who may not be directly involved in the electricity sector. They will be changed on a regular basis to ensure the panel has the necessary skills and expertise to understand the emerging issues within the sector. They will provide expert insight by exchanging ideas and knowledge, and bring fresh perspectives to both present and future changes.

The panel may consider the following potential topics:

• future trends and approaches to improving demand forecasts

• opportunities for supply-chain productivity improvements

• impacts from emerging technologies

• effects of new business models on consumers and market participants.

The expert panel will be officially launched in August 2014..

Water supply

Our performance

Non-commercial assets

The department owns and manages 22 water assets for the benefit of the local communities. The department is undertaking maintenance and repair works on these assets.

The portfolio includes dams such as Copperfield and Corella, and weirs such as Charles Lloyd Jones and Bajool.

These dams and weirs provide non-potable water supplies for small rural settlements, mines, irrigation, firefighting, construction, recreation and tourism in regional Queensland, and water reserves for future resources and agricultural developments.

These assets require maintenance and repairs in order to be safe, fit-for-purpose and to protect their value.

Based on a risk evaluation of workplace health and safety, as well as public safety, the department has commenced the installation of flood-alert gauging stations at Corella and Crooks dams. This will provide a safer operating environment for workers and protect downstream residents and visitors.

Department of Energy and Water Supply Annual Report 2013–14

51Future direction

Non-commercial water assets

Over the next two years, the department has prioritised works on Mungungo, Charles Lloyd Jones and Kariboe weirs, and upgrades on Jumna and Copperfield dams.

This is to ensure the safety of downstream communities, recreational visitors and our staff is maintained. The asset values will be maintained and they will continue to deliver services to the local community and visitors.

Department of Energy and Water Supply Annual Report 2013–1452Objective 5: A capable, flexible and proud workforce

Energy and water supply

Our performance

Flexible, skilled and performance-orientated workforce

DEWS is committed to building a flexible, skilled and performance-orientated workforce.

Internal capability and talent development programs (including the development of a high performance and capability development framework), relieving opportunities and internal collaboration initiatives enabled retention and succession strategies for critical expertise and skills within our workforce.

Specialist advertising campaigns were undertaken to attract and secure the specialist technical expertise required for our hard-to-fill roles and newly identified workforce requirements.

The department’s recently developed Strategic Workforce Plan will further enable the successful attraction, development and retention of its workforce as critical business reform and strategies take shape. Publication is anticipated for September 2014.

Staff Renewal Steering Committee

In November 2013, all DEWS staff were invited to nominate to be one of two staff representatives on the DEWS Agency Renewal Committee. Due to the relatively large number of nominations and the high quality of ideas expressed in the applications, a Staff Renewal Steering Committee was formed to support the DEWS Renewal Program.

Their initial role was to provide advice and feedback on renewal proposals, activities and staff engagement to the renewal team, and be a conduit between the renewal team and all staff in DEWS. They have now grown further as a committee, and in the second half of 2013–14 moved to add the role of undertaking short renewal initiatives to support the work of the DEWS renewal team and DEWS staff in their day-to-day roles. The committee has formed four sub-committees:

1. DEWS Culture

2. Professional Development

3. How We Do Business

4. Extending Out and Beyond DEWS.

Within these four sub-committees, initiatives have been developed and a work schedule drafted based on the vision that members have for the department and for staff. With these initiatives, the committee strives for a healthy and proud DEWS workforce.

The Staff Renewal Steering Committee is the first committee of its kind within Queensland Government, and shows DEWS’ considered response to renewal for both staff and its customers.

Department of Energy and Water Supply Annual Report 2013–14

53Working for Queensland Employee Opinion Survey

The department values its staff through effective communication and engagement. As a result of the 2013 employee opinion survey, there were a number of trends and themes identified that recognise areas of improvement for the agency.

These improvements and strategies are seen through an effective communication and engagement strategy, including more effective face-to-face engagement and communication, consistent messaging from executives, the creation of a monthly DEWSletter, a Staff Renewal Steering Committee, ‘Lunchbox’ information sessions and more accessibility to staff forums.

Further activity to create and sustain a culture of engagement, potential and high performance will be seen through the development and launch of the departmental high performance and capability framework in August 2014.

Performance and development agreements

To ensure business continuity and retention of corporate knowledge, the agency utilises the PDA process as a means for creating business continuity and identifying knowledge.

This process triggers and enables effective succession and retention planning for these skills and capabilities.

Workplace health and safety strategy

DEWS is committed to fostering a zero-harm culture.

To create and maintain a culture of zero harm, Human Resources has established the Workplace Health and Safety Strategy 2012–15.

The strategy focuses on four key elements to achieve a healthy and safe business, including:

1. governance—establish meaningful governance structures and accountabilities

2. risk management—implement an effective risk-management framework

3. leadership and capability—build workplace health and safety (WHS) leadership and workforce capability

4. consultation and culture—promote consultation and a positive safety culture.

To date, Human Resources has actively been working to:

• establish and maintain legal compliance

• build and sustain WHS policy commitment with adequate and informed resources

• design and implement an effective WHS management system

• integrate WHS targets and activities into business processes

• identify WHS hazards and effective management control as part of standard business practice

• continue to streamline reporting and investigation mechanisms

• provide education and support to build WHS capability in the business

• target promotion of health and wellbeing initiatives and programs across the department.

Department of Energy and Water Supply Annual Report 2013–1454Workforce performance reports

The department has developed systems to support its commitment to robust advice, decision-making, monitoring and reporting within the human resources space.

Workforce reports are generated monthly to monitor the agency’s workforce performance indicators. Decision-making is supported by a fostered governance and operating model.

Future direction

High performance and capability framework

The high performance and capability framework sets out how DEWS will embed high performance throughout the organisation and progress departmental objective three outlined in the strategic plan. The objectives of the framework are to:

• build and develop the capability of our workforce

• enhance performance and outcomes for our customers

• consolidate a high-performance culture, starting with our leadership.

In the initial phase of implementing the framework, six foundation projects have been identified. They are:

1. regular and systemic business planning throughout the department that

– links business plans for divisions and branches to the overall departmental strategic plan

– clearly articulates objectives and priorities for the division

– better develops meaningful measures for the department

– identifies and collates key performance measures.

2. performance measures and data that identifies high performance and drives DEWS to achieve its goals

3. a leadership strategy that recognises the key role leaders play in setting the benchmark for high performance and driving the development of the capabilities of their teams

4. a capability framework that identifies and assesses the capabilities critical for DEWS in driving high performance in line with the public service values

5. a refocus on the role of PDAs in building staff capability, driving high performance and managing any performance issues

6. a reward and recognition approach that recognises and encourages high performance.

Following the first year of the program and the development and implementation of the six foundation projects, the Framework Steering Committee will review and assess the success of the framework and identify possible new projects to continue the implementation of high performance within DEWS.

Department of Energy and Water Supply Annual Report 2013–14

55Agency service areas and service standards

Service areas

The department’s functions are delivered through two main service areas—Energy and Water Supply.

Energy is responsible for policy development, reform and regulation of the Queensland energy sector to ensure cost-effective, secure and reliable energy supply. It is also responsible for establishing a long-term electricity strategy—informed by the outcomes of the government’s review on electricity sector reform—to address cost-of-living pressures and sustainability of the sector.

Water Supply is responsible for implementing water sector reform to address cost-of-living pressures. It is also responsible for establishing a long-term strategy for Queensland’s water sector and regulating water supply and sewerage services so that agriculture, mining, industry, regional and urban communities have access to cost-effective, safe, secure and sustainable water supply.

Service standards

The performance statement below outlines the department’s performance against its service standards and other measures contained in the 2013–14 service delivery statement as part of the State Budget papers.

Performance statement

Notes2013–14

Target/est.

2013–14

Est. actual

2013–14

Actual

Service area: Energy

Service standards

Relative reduction in peak electricity network demand from demand management/energy efficiency initiatives and projects facilitated

1 115 MW cumulative target

115 MW cumulative target

115 MW cumulative target

Lead implementation and deliver relevant initiatives of the 30-year electricity strategy on time and within budget

2 90% 90% 100%

Percentage of stakeholders who rate the department’s engagement on key energy programs/initiatives as satisfactory or better

3 100% 80% 85%

Department of Energy and Water Supply Annual Report 2013–1456Notes

2013–14

Target/est.

2013–14

Est. actual

2013–14

Actual

Service area: Water Supply

Service standards

Lead implementation and deliver relevant initiatives of the 30-year water strategy on time and within budget

2 90% 90% 100%

Percentage of stakeholders who rate the department’s engagement on key water supply and sewerage services programs/initiatives as satisfactory or better

3 90% 80% 85%

Percentage of the state’s drinking water services that have appropriate drinking water quality monitoring and response frameworks in place

4 100% 92% 97.7%

Notes:

1. This measure contributes to the department’s strategic objective to ensure cost-effective, safe, secure and reliable energy and water supply. The reduction in peak electricity demand is maintained across financial years so the target and reported actual is a cumulative reduction (i.e. the reported actual in 2012–13 plus additional reductions to be achieved in 2013–14)—this measure has been discontinued for service delivery statement reporting purposes, as it is not an indication of the efficiency or effectiveness of the service area.

2. This measure contributes to the department’s strategic objective to ensure cost-effective, safe, secure and reliable energy and water supply, and to deliver effective reform. The department is responsible for leading implementation and for delivering relevant initiatives of PowerQ: a 30-year strategy for Queensland’s electricity sector and WaterQ: a 30-year strategy for Queensland’s water sector.

3. This measure contributes to the department’s objective to engage with our stakeholders. The measure assesses the level of stakeholder satisfaction with the department’s engagement on key programs/initiatives (e.g. PowerQ: a 30-year strategy for Queensland’s electricity sector and WaterQ: a 30-year strategy for Queensland’s water sector.

4. This measure contributes to the department’s objective to ensure cost-effective, safe, secure and reliable water supply. The measure is comprised of the percentage of drinking water service providers who have an approved drinking water quality management plan (DWQMP) or are operating under transitional arrangements by monitoring for Escherichia coli (E. coli) and responding to reported incidents appropriately. By 1 July 2014, all providers will be required to have an approved DWQMP in place.

Department of Energy and Water Supply Annual Report 2013–14

57Financial performance

Financial summary

The financial statements contain comprehensive financial data on:

• controlled entity, which refers to the funds and assets within the control of the department

• administered activities, which refers to activities where the department does not have control but is charged with administering the funds on a whole-of-government basis.

Our financial performance

The department delivered a sound policy, planning and regulatory environment to support cost-effective energy and water supply services. As shown in our Statement of Comprehensive Income on page 63, the department’s operating result (expenses minus revenue) was a loss of $0.6 million.

Our income

Income for 2013–14 was $62.8 million and was predominantly departmental services appropriation to deliver energy and water supply services.

Our expenditure

Expenses for the year amounted to $63.4 million, which included employee expenses of $27.2 million, supplies and services of $11.2 million and grants and subsidies expenditure of $22.5 million. Grants and subsidies expenditure included $16.2 million for the Dam Spillway Upgrade Program.

We remain committed to managing our financial performance and minimising our liabilities and risks. Our financial performance is closely monitored within our corporate governance framework to align with departmental priorities.

Department of Energy and Water Supply Annual Report 2013–14

121Glossary and acronyms

Term/acronym Definition

AASB Australian Accounting Standards Board

Agency A department or a statutory body as defined in the Financial Accountability Act 2009

ALCS Annual Leave Central Scheme

ARRs Annual report requirements for Queensland Government agencies

AS/NZS Australian Standard/New Zealand Standard

ATO Australian Tax Office

BCP Business and Corporate Partnerships

Blueprint Guides changes on how the department wants to operate and is integral to the DEWS renewal journey

CEO Chief Executive Officer

CEPEC Chief Executive Performance Evaluation Committee

CPA Certified Practising Accountant

CSG Coal seam gas

CSG RWMP Coal seam gas recycled water management plan

CSO Community service obligation

CSS Customer service standard

DAFF Department of Agriculture, Fisheries and Forestry

DEWS Department of Energy and Water Supply

DMP Drought management plan

DNRM Department of Natural Resources and Mines

DRC Depreciated replacement cost

DWQMP Drinking water quality management plan

EAP Emergency action plan

ED Exclusion decision

eDRMS Electronic document and records management system

EHP Department of Environment and Heritage Protection

EMT Executive Management Team

EWOQ Energy and Water Ombudsman Queensland

FAA Financial Accountability Act 2009

FBT Fringe Benefits Tax

FPMS Financial and Performance Management Standard 2009

GST Goods and Services Tax

GWTP Gladstone Water Treatment Plant

ICT Information and communication technology

KPI Key performance indicator

Lync Instant messaging

MEERA Modern engineering equivalent replacement asset

MOHRI Minimum obligatory human resource information

NCAP Non-current asset policy

Department of Energy and Water Supply Annual Report 2013–14122

Term/acronym Definition

NECF National Energy Customer Framework

PDA Performance and development agreement

QAO Queensland Audit Office

QDAN Queensland disposal authority number

QFCOI Queensland Floods Commission of Inquiry

QGIAS Queensland Government Internal Audit Service

QGIF Queensland Government Insurance Fund

QTT Queensland Treasury and Trade

QWCTRIM Queensland Water Commission Trim (now decommissioned as QWC closed)

Referable dam A referable dam is one that presents a risk to two or more people if it fails. This does not include dams containing hazardous waste, a weir or large rainwater tanks.

RWMP Recycled water management plan

SES Senior Executive Service

SLMP System leakage management plan

SVS State Valuation Service

Together Queensland Industrial union of employees

VOIP Voice Over Internet Protocol

WHS Workplace health and safety

YWTP Yarwun Water Treatment Plant

Department of Energy and Water Supply Annual Report 2013–14

123Contacts

Head office

Department of Energy and Water Supply

41 George Street BRISBANE QLD 4000

Post

Department of Energy and Water Supply GPO Box 15456 CITY EAST QLD 4002

Phone

General enquiries: 13 QGOV (13 74 68)

Energy enquiries: 13 43 87

Water supply enquiries: 13 QGOV (13 74 68)

Annual report enquiries

Department of Energy and Water Supply GPO Box 15456 CITY EAST QLD 4002

Email: contactus@dews.qld.gov.au

Phone: 13 QGOV (13 74 68)

Feedback

Feedback on the annual report can be provided at www.qld.gov.au/annualreportfeedback.

Web

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www.dews.qld.gov.au